ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, May 18, 2012

Resistance to Arbitration Ruled Quixotic

Wind TurbinesIn M.A Mortenson Company v. Saunders Concrete Company, Inc., the Eight Circuit affirmed the District Court's decision to grant Mortenson's motion to compel arbitration in its dispute with its sub-contractor, Saunders, which allegedly supplied Mortenson with faulty concrete causing Mortenson to incur $4.5 million in repair costs on a wind turbine project.  

The arbitration clauses at issue was contained in a four-paragraph provision in the subcontract labled "Disputes."  Saunders attempted to resist arbitration by arguing that Paragrah 21.4 of the agreement violated New York's lien law and that the arbitration provision is unconscionable.  Following Rent-A-Center West, the Eighth Circuit observed that a court "must enforce 'a specific agreement to arbitrate' despite a litigant's challenges to the contract as a whole or to another provision of the contract."  Accordingly, Saunder's challenge to Paragraph 21.4 has no bearing on the enforceability of the arbitration provision, which is contained in Paragraph 21.2.  

The Court took about a nanosecond to reject Saunders' arguments that the arbitration provision was procedurally unconscionable because Saunders had no opportunity to negotiate it and that it was substantively unconscionable because it provided for arbitration in Mortenson's "sole discretion."  The Eighth Circuit affirmed the District Court's grant of Mortenson's motion to compel arbitration.


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