Delaware Business Litigation Report

Superior Court Grants Defendant's Motion to Dismiss and Finds that Clause in Construction Contract Required Arbitration

Tekmen & Co. v. Southern Builders, Inc., C.A. No. 04C-03-007 RFS, 2005 WL 1249035 (Del. Super. Ct. May 25, 2005). The defendant contracted to build a hotel on the plaintiff's property. Following completion of the structure, the defendant had to return on numerous occasions to repair leaks. Eventually, the plaintiff filed a complaint, arguing that it was entitled to compensatory and punitive damages for breach of contract, negligence, and breach of warranty. The defendant moved to dismiss, claiming that under the terms of the contract all disputes must first be submitted to the architect and any remaining claims must be heard in binding arbitration. The court granted the defendant's motion to dismiss. In 1999, Southern Builders, Inc. agreed to build a hotel on Tekmen & Company's property. Following the completion of the building in 2000, Southern Builders had to return to fix leaks and other defects in the structure. In 2004, Tekmen filed an action in Superior Court for breach of contract, negligence, and breach of warranty. On its motion to dismiss, Southern Builders argued that the dispute had not been submitted to the architect as the contract required. Furthermore, the defendant argued that the contract required any remaining claims to be submitted to binding arbitration. Additionally, the court noted that the contract required mediation as a prerequisite for arbitration. Ultimately, the court determined that the contract's arbitration clause was enforceable. Accordingly, it dismissed the lawsuit, but found that the issue of whether Tekmen could enter arbitration even though it had not submitted the disputes to the architect or to mediation was an issue for arbitration. Authored by: Jason C. Jowers 302-888-6860 jjowers@morrisjames.com Share