GEMINI DRILLING AND FOUNDATION, LLC v. National Fire Ins. Co.

665 S.E.2d 505, 192 N.C. App. 376, 2008 N.C. App. LEXIS 1628
CourtCourt of Appeals of North Carolina
DecidedSeptember 2, 2008
DocketCOA07-1266
StatusPublished
Cited by8 cases

This text of 665 S.E.2d 505 (GEMINI DRILLING AND FOUNDATION, LLC v. National Fire Ins. Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GEMINI DRILLING AND FOUNDATION, LLC v. National Fire Ins. Co., 665 S.E.2d 505, 192 N.C. App. 376, 2008 N.C. App. LEXIS 1628 (N.C. Ct. App. 2008).

Opinion

ELMORE, Judge.

I. Background

This appeal arises from a contract between Blythe Construction, Inc. (Blythe or BCI) and Gemini Drilling and Foundation, LLC (plaintiff). On or about 1 May 2002, Blythe contracted with the North Carolina Department of Transportation (DOT) to make improvements to South Wilmington Street in Raleigh (Wilmington Street Project) for the sum of $4,574,263.03. On or about 17 May 2002, Blythe also contracted with the City of Raleigh to make improvements to Duraleigh Road in Raleigh (Duraleigh Project) for *379 $4,574,263.03. National Fire Insurance of Hartford (defendant) provided the surety payment bonds for Blythe for each of the projects. On 7 May 2002, Blythe entered into a subcontract with plaintiff to perform drilled shaft work on the Duraleigh Project for the sum of $598,816.92. On 17 May 2002, Blythe entered into a subcontract with plaintiff to perform drilled shaft work on the Wilmington Street Project for the sum of $253,630.82.

Blythe terminated its Wilmington Street subcontract with plaintiff on 26 March 2004. This termination followed a series of letters from Blythe to plaintiff alleging that Blythe had incurred damages as result of defendant’s “failure ... to uphold the terms of the Subcontract Agreement.” Although defendant had completed most or all of the work on the Duraleigh Road Project, Blythe notified defendant that it would “withhold any further payments for work completed to date on any contract with Gemini . . . .” (Emphasis in original.) Blythe explained that “[t]he cost incurred by Blythe will exceed any funds due to [defendant] under all contracts, for the impact of the actions and inactions of [defendant] on the S. Wilmington St. Bridge project.” Blythe estimated that defendant’s “total direct delay to Blythe’s critical path on the” Wilmington Street Project was at least 108 days. Blythe estimated that the potential liquidated damages for the project were $1,000.00 per day, and that it had “suffered extended overhead cost” for the project of at least $126,360.00.

Plaintiff filed a complaint against defendant, Blythe’s surety, on 17 June 2004. The complaint alleged that plaintiff had “duly performed all of its work under the Duraleigh Project and a substantial part of its work under the South Wilmington Street Project. Gemini was not able to complete its work on the South Wilmington Street Project because its subcontract was wrongfully terminated by Blythe.” Plaintiff alleged that it had demanded payment from Blythe for its work on the two projects and that Blythe had refused to make payment in full. Plaintiff determined that Blythe owed it $322,000.00 plus interest. Plaintiff alleged that it was “an intended beneficiary of the payment bonds issued by National Fire Insurance for Blythe in connection with the Projects” and that “[p]ursuant to the terms of the bonds and of the North Carolina Model Payment and Performance Bond Act (G.S. 44A-25 through 44A-35), Gemini [was] entitled to recover the sums due it directly from National Fire Insurance as the surety for Blythe.”

On 4 October 2004, defendant responded with a motion to stay the action pending arbitration in which it asked the trial court *380 to stay plaintiff’s action and compel arbitration. The subcontract between Blythe and plaintiff contains an arbitration clause, which defendant characterized as “an agreement between BCI and Gemini to resolve all disputes arising thereunder by arbitration, if BCI elects this option.” 1 Defendant reasoned that because it was entitled to every defense available to its principal, Blythe, it was entitled to elect arbitration.

Judge John R. Jolly, Jr., held a hearing on defendant’s motion and issued an order denying the motion on 11 May 2005. The record on appeal does not include a transcript of the hearing, but Judge Jolly explained his ruling in nine findings and conclusions. He concluded “that the arbitration provisions in the subcontracts between BCI and Plaintiff lack mutuality and sufficient consideration, and are against public policy. They therefore are not enforceable against Plaintiff, and Defendant’s Motion should be denied.”

After one continuance, the action was scheduled for trial on 3 July 2006. Defendant filed a motion for continuance on 27 June 2006, which Judge Narley L. Cashwell denied. Both parties then filed a joint pre-trial motion for a continuance, which Judge Cashwell denied. Both parties also waived a jury trial and consented to a bench trial before Judge Cashwell. After the trial, Judge Cashwell asked the parties to submit proposed orders. Judge Cashwell held that plaintiff was entitled to recover $200,764.80 plus interest from defendant for work performed for Blythe on the Duraleigh Road Project and $95,440.82 plus interest for work performed under the South Wilmington Street Project. He held that defendant should not recover from plaintiff under “its claim for setoff for damages and delays allegedly incurred in connection with the South Wilmington Street Project. . . .” He awarded costs and attorneys’ fees in the amount of $25,367.64 to plaintiff.

II. Motion to Compel Arbitration

Defendant first argues that the trial court erred by denying its motion to stay pending arbitration. We do not reach the merits of *381 defendant’s argument because we find that defendant waived whatever right it had to arbitrate this dispute. Defendant moved to stay pending arbitration on 4 October 2004, which motion Judge Jolly denied on 11 May 2005. Although an order denying a motion to stay pending arbitration is interlocutory, it is immediately appealable under N.C. Gen. Stat. § l-277(a) because it affects a substantial right. N.C. Gen. Stat. § l-277(a) (2007); Edwards v. Taylor, 182 N.C. App. 722, 724, 643 S.E.2d 51, 53 (2007). Moreover, both the North Carolina Uniform Arbitration Act (NCUAA) and the Federal Arbitration Act (FAA) specifically permit a party to immediately appeal an order denying a motion to compel arbitration. See N.C. Gen. Stat. § 1-567.18(a)(1) (2001) (repealed effective 1 January 2004) (“An-appeal may be taken from . . . [a]n order denying an application to compel arbitration . . . .”); 9 U.S.C. § 16(a)(1)(B) (2008) (“An appeal may be taken from ... an order . . . denying a petition under section 4 of this title [9 USCS § 4] to order arbitration to proceed . . . .”). However, “[t]he language of N.C.G.S. § 1-277 is permissive not mandatory. Thus, where a party is entitled to an interlocutory appeal based on a substantial right, that party may appeal but is not required to do so.” Dep’t of Transp. v. Rowe, 351 N.C. 172, 176, 521 S.E.2d 707, 710 (1999). Similarly, the language of N.C. Gen. Stat. § 1-567.18(a)(1) 2 and 9 U.S.C. § 16(a)(1)(B) is also permissive, not mandatory. Accordingly, defendant was not required to immediately appeal Judge Jolly’s order denying its motion to compel arbitration.

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Bluebook (online)
665 S.E.2d 505, 192 N.C. App. 376, 2008 N.C. App. LEXIS 1628, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gemini-drilling-and-foundation-llc-v-national-fire-ins-co-ncctapp-2008.