Lakeshore Engineering Services, Inc. v. Target Construction, Inc.

2 F. Supp. 3d 1038, 2014 U.S. Dist. LEXIS 24873, 2014 WL 793653
CourtDistrict Court, E.D. Michigan
DecidedFebruary 27, 2014
DocketCase No. 13-14498
StatusPublished
Cited by3 cases

This text of 2 F. Supp. 3d 1038 (Lakeshore Engineering Services, Inc. v. Target Construction, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lakeshore Engineering Services, Inc. v. Target Construction, Inc., 2 F. Supp. 3d 1038, 2014 U.S. Dist. LEXIS 24873, 2014 WL 793653 (E.D. Mich. 2014).

Opinion

OPINION AND ORDER (1) GRANTING PLAINTIFF’S APPLICATION/M0TION TO CONFIRM ARBITRATION AWARD (Dkt No. 1) AND (2) DENYING DEFENDANT’S MOTION TO VACATE ARBITRATION AWARD (Dkt. No. 4)

PAUL D. BORMAN, District Judge.

Before the Court are Plaintiff Lake-shore Engineering Services, Inc.’s (“Plaintiff’) Application/Motion to Confirm Arbitration Award (Dkt. No. 1) and Defendant Target Construction, Inc.’s (“Defendant”) Motion to Vacate Arbitration Award (Dkt. No. 4). Defendant’s Motion to Vacate Award is also titled as a Response to Plaintiffs Application and Motion to Confirm Arbitration Award. Plaintiff filed a Response to Defendant’s Motion to Vacate on November 25, 2013. (Dkt. No. 8). Defendant then filed its Reply. (Dkt. No. 9). A hearing on this matter was held on February 4, 2014.

This action is a companion to an earlier filed case in this Court, Lakeshore Engineering Services, Inc. v. Jeff Fegert, et al., No. 12-11071 (“Fegert”). That case was previously stayed pending this arbitration proceeding. (See No. 12-11071, Dkt. No. 11, Stipulated Order Staying case pending Arbitration and Allowing Lakeshore Engineering Services, Inc. Leave to file its First Amended Verified Complaint). On December 9, 2013, Magistrate Judge David R. Grand granted Plaintiffs Motion to Lift Stay and for Leave to File Second Amended Complaint in Fegert. (No. 12-11071, Dkt. No. 18). On January 13, 2014, Defendants Jeff Fegert and Steve Fulmer filed a Motion to Dismiss for Lack of Personal [1041]*1041Jurisdiction and Motion for Summary Judgment in Fegert. (No. 12-11071, Dkt. No. 21).

I. BACKGROUND

This action arises out of a construction project in St. Charles Parish, Louisiana. On March 2, 2010, the United States Army Corps of Engineers (“Army Corps”) contracted with Plaintiff to complete the “construction of the project sometimes referred to as the ‘Cross Bayou Drainage Structure — Phase 2/LPV 07b.2,’ ” or Army Corps “Project Number W912P8-10-C0050.” (Def.’s Br., Ex. 1, Fegert Aff., ¶ 3). Eventually, Plaintiff subcontracted the majority of this project to Defendant.

Plaintiff and Defendant entered into contract negotiations in June and July of 2010. (Pl.’s Resp., Ex. 1, Schmuck Dep. at 46). Plaintiff submitted a draft subcontract to Defendant. On August 11, 2010, Edward Riggs marked up the proposed draft subcontract, entitled “Cross Bayou Contract No. W912P8-10-C-0050 (“Subcontract”), and returned it to Plaintiffs project executive, Jignesh Patel.”1 (Pl.’s Resp. Ex. 3, Subcontract and cover letter). Defendant did not change or alter the “Governing Law and Arbitration” provision in ¶ 20.1 in the Subcontract. (Id. at 15). Plaintiff never signed Defendant’s marked up draft of the Subcontract. There is no dispute, however, that Defendant began work on site in August 2010.

On November 22, 2010, the parties executed a Change Order, which referenced “Contract Number W912P8-10-0050-C” and set forth “[t]he following items have been added to Targets contract ...” and listed demolition deconstruction, granular backfill, dewatering embankment, embankment, “rip rap” and “excavation TRS”. (PL’s Resp. Ex. 4, Change Order). This document included a total amount owing for the contract as $6,091,043.00 and included the signature of both parties. (Id.).

On February 9, 2011, Defendant sent an email to Plaintiff which stated that a copy of the “sub contract Eddie and Dawn settled with ...” was attached and asked if Plaintiff required a “copy of addendum/change order 1, as well?” (Def.’s Br., Ex. 3, Email chain). Plaintiff’s representative, Dawn Schmuck, replied to that email stating “The originals were not left with me. I fedexed three originals to Eddie in the Texas office. I never agreed to a mark up especially one I never saw. I was told by Eddie he sent the two originals to Jignesh for review. The statements that you have made are not accurate.” (Id.).

Eventually, a dispute regarding work performance arose between Plaintiff and Defendant. On March 2, 2011, Army Corps issued Plaintiff a notice regarding its progress on the project and sought a detailed narrative explaining how the project would be completed on schedule. (PL’s Resp., Ex. 7, Army Corps Letter at 1). Plaintiff represents it forwarded this notice to Defendant and requested the narrative. Defendant, in turn, sent Plaintiff a letter that referred to title of the Subcontract “LES-TCI-0C01-001”, claimed Plaintiff was in “default”, and made numerous references to the “Subcontract.” This included the statement “[o]ur Subcontract was based on the Contract Plans you provided us ... [w]e must either agree on a price for the additional work or delete this item form the scope of our Subcontract.” (PL’s Resp., Ex. 8, 3/07/11 Letter, 1-2).

[1042]*1042On approximately March 15, 2011, Plaintiff terminated Defendant from the project and found a replacement contractor to complete the work. (Pl.’s Motion to Affirm, ¶ 11).

On June 29, 2011, pursuant to ¶ 20.1 of the Subcontract, Plaintiff filed a demand for Arbitration with the American Arbitration Association (“AAA”), claiming Defendant materially breached the Subcontract. (PL’s Resp. Ex. 11, Demand of Arbitration). On July 22, 2011, Defendant filed its Answering Statement, Answer and Counterclaim, which stated in a “preliminary statement, special appearance and reservation of rights” that Defendant was:

filing its answer and counterclaim in this proceeding in order to preserve its rights and remedies, Target appears specially for purposes of doing so, and Target specifically denies that it has an agreement to arbitrate any disputes with Lakeshore, including the issues for which Lakeshore has demanded arbitration in this proceeding. Target denies that the AAA or any other arbitration body or arbitrator(s) have jurisdiction over Target.

(Pl.’s Resp., Ex. 12, Def.’s Answering Statement, Answer and Counterclaim at 2). Defendant’s Answer also specifically admitted that the parties “entered into a subcontract ... which described the terms and conditions upon which work would be performed. This subcontract includes an arbitration provision. The value of this subcontract between Lakeshore and Respondent (including an agreed upon change order) is $6,031,043.” (Demand of Arbitration, ¶ 3; Def.’s Answer, at ¶ 3, “Target admits the allegations of paragraph three of the Demand.”). On April 1, 2012, Defendant filed an Amended Counterclaim which again restated that it continued to object to the “jurisdiction of the Arbitrator to hear this matter.”2 (Pl.’s Resp., Ex. 13, Def.’s Amend. Counterclaim at ¶ 1).

Defendant’s Amended Counterclaim asserted a claim for breach of contract, tort, statutory relief and unjust enrichment and sought more than a million dollars in damages from Plaintiff. There is no dispute that Defendant participated in the Arbitration proceedings which included a “lengthy discovery which included the exchange of thousands of documents and at least 16 depositions”, 8 days of hearings and the testimony of 10 witnesses. (PL’s Motion to Affirm, ¶¶ 18-19).

On October 15, 2013, the Arbitrator issued his Arbitrator’s Standard Final Award, finding that Defendant had “materially breached the Subcontract” and Plaintiffs termination of the Subcontract was proper and justified. (PL’s Motion to Affirm, Ex. 4, Award). The Award provided for net damages in the amount of $2,525,666.30 with interest on the net recovery to Plaintiff.

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2 F. Supp. 3d 1038, 2014 U.S. Dist. LEXIS 24873, 2014 WL 793653, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lakeshore-engineering-services-inc-v-target-construction-inc-mied-2014.