Eckstein v. Preston

41 V.I. 130, 1999 WL 970788, 1999 V.I. LEXIS 33
CourtSupreme Court of The Virgin Islands
DecidedOctober 7, 1999
DocketCivil No. 457/1994
StatusPublished

This text of 41 V.I. 130 (Eckstein v. Preston) is published on Counsel Stack Legal Research, covering Supreme Court of The Virgin Islands primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eckstein v. Preston, 41 V.I. 130, 1999 WL 970788, 1999 V.I. LEXIS 33 (virginislands 1999).

Opinion

HOLLAR, fudge

MEMORANDUM OPINION

This matter is before the Court on petitioner's application to vacate the arbitration award entered against him on May 31,1994, pursuant to 9 U.S.C. §§ 10(a)(2), 10 (a)(3), and 10 (a)(4),1 and to award him damages against respondents. For the reasons that follow petitioner's application is denied in all respects.

I. FACTS AND PROCEDURAL POSTURE

On July 13, 1992, petitioner Matthias Eckstein, d/b/a Irie Associates, (hereinafter "IRIE"), as the Contractor entered into a contract with respondents Malcolm and Susan Preston, (hereinafter "the Prestons"), as the Owners to build a house on Parcel No. 300-17, Estate Chocolate Hole, St. John, U.S. Virgin Islands. The contract provided, inter alia, that the basis of payment would be the [132]*132cost of the work, as defined by Article 7 of the contract, plus a ten percent (10%) contractor's fee, but also that the contract price for the work described in the original plans and specifications could not exceed a guaranteed maximum price of $483,000.00. Additionally, IRIE was to be paid cost plus ten percent (10%) for any change orders authorized by the validly executed contract.

During the course of building, several changes were made to the original design. Although IRIE consistently represented, until July 7,1993, that it could complete the project under budget, the project exceeded the maximum guaranteed price.

By July 7, 1993, IRIE informed the Prestons that final cost of building their house would be $620,521.00, or $137,521.00 more than the guaranteed maximum price. Upon being so informed, the Prestons sought to initiate a claim, via telephone, with the designer/draftsman, Gary Turner, on July 14, 1993.2 On July 16, 1993, Malcolm Preston, in a letter to Gary Turner, informed him that under the contract the maximum price was to be adjusted by change orders which had been approved in advance of the relative work being undertaken, and requested that he arrive at a corrected guaranteed maximum price so that the balance due could be ascertained. That correspondence served as a formal claim against IRIE's projected final cost of $620,521.00.

On August 16, 1993, the designer/draftsman rendered his decision on the Prestons' claim. He indicated that he had found no evidence supporting their claims and allegations, and that the sums attached to the contractor's proposed change orders were, in his opinion, reasonable and legitimate, if not conservative. He determined that the adjusted maximum price to be paid under the contract, as modified by four (4) change orders, was $592,497.25, representing a net increase of $109,497.25 over the original guaranteed maximum price of $483,000.00.

Dissatisfied with the designer/draftsman's decision, on September 14, 1993, the Prestons made demand for arbitration before the American Arbitration Association. In their demand for arbitration, [133]*133the Prestons asserted a breach of contract claim on the grounds that IRIE: (1) failed to continue or complete work on the project; (2) performed non-conforming work; (3) delayed the performance of the work; (4) expended an amount in excess of the properly adjusted guaranteed maximum price; (5) failed to properly account for, document or communicate costs, charges, bills, credits and change orders to claimants or the architect; (6) improperly billed them; (7) mis-appropriated project resources and materials; and (8) failed to properly credit them for savings in time and money. IRIE was provided with a copy of the Prestons' demand for arbitration by letter dated September 13, 1993. IRIE objected to the scope of issues raised by the Prestons' demand for arbitration in letters to the AAA dated September 27, 1993 and December 8, 1993.

On October 4, 1993, Lucy Zamora, Administrator of the American Arbitration Association in Miami, Fla., acknowledged receipt of the Prestons' demand for arbitration and advised IRIE that he should file any counterclaims it had, and that it had ten (10) days to respond to the claims by the Prestons, failing which, the claim would be assumed to have been denied. Included with the letter was a list of names selected by the Administration's panel from which one was to be appointed. The letter advised that the parties were to indicate their preferences and that the AAA would select a neutral, mutually acceptable arbitrator.

On October 21, 1993, IRIE responded to the Prestons' demand for arbitration. In its letter to the AAA Administrator, IRIE stated that only one claim had been properly submitted for a decision by the architect, and that claim had been found to be without merit. IRIE also filed its counterclaim, alleging that the Prestons had breached Articles 4.3.4 and 4.3.2 of the contract. These provisions provide as follows:

4.3.2. Decision of Architect. Claims, including those alleging an error or omission by the Architect, shall be referred initially to the Architect, as provided in Subparagraph 4.4. A decision by the Architect, as provided in Subparagraph 4.4.4, shall be required as a condition precedent to arbitration or litigation of a claim between the contractor and owner as to all such matters arising prior to the date final payment is due, regardless of (1) [134]*134whether such matters relate to execution and progress of work or (2) the extent to which the work has been completed. The decision of the Architect in response to a claim shall not be a condition precedent to arbitration or litigation in the event (1) the position of Architect is vacant, (2) the Architect has not received evidence or has failed to render a decision within agreed time limits, (3) the Architect has failed to take action required under Subparagraph 4.4.4 within 30 days after the claim is made, (4) 45 days have passed after the claim has been referred to the Architect, or (5) the claim relates to a mechanic's lien.
4.3.4 Continuing Contract performance. Pending final resolution of a claim including arbitration, unless otherwise agreed in writing the contractor shall proceed diligently with performance of the contract and the owner shall continue to make payments in accordance with the contract documents.
14.1.2 If one of the above reasons exists, the contractor may, upon several additional days' notice to the owner and Architect, terminate the contract and recover from the owner payment for work executed and for proven loss with respect to materials, equipment, tools, and construction equipment and machinery, including reasonable overhead, profit and damages.

Damages were also sought for all expenses, including attorney's and arbitration fees, incurred by it as a result of the alleged breach of contract. Lastly, IRIE requested that an arbitrator be appointed as soon as possible. On December 1, 1993, the AAA notified the parties that Mr. Pedro Lopez had been appointed Arbitrator. On December 31,1993, counsel for the Prestons disclosed, in a letter to the AAA, that Pedro Lopez had been called as a witness in a case by stateside counsel in Sparky's Waterfront Saloon, Inc. v. Topa Equities (V.I.), Ltd. Civil No. 1991/59, (D. V. I. 1994).

On January 14, 1994, the AAA informed the petitioner of its receipt of the December 31, 1993 disclosure by counsel for the Prestons.

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Cite This Page — Counsel Stack

Bluebook (online)
41 V.I. 130, 1999 WL 970788, 1999 V.I. LEXIS 33, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eckstein-v-preston-virginislands-1999.