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Claim of Fraudulent Inducement of a Construction Contract Does Not Invalidate Arbitration Clause in That Same Contract

Koudela v. Johnson & Johnson Custom Builders, LLC, 2017 Ohio App. Lexis 5800 (December 29, 2017)

Author: Emily D. Anderson

2/08/2018

Read the full post at Constructlaw

Claim of Fraudulent Inducement of a Construction Contract Does Not Invalidate Arbitration Clause in That Same Contract

In this case, Nicolas and Monica Koudela (the Koudelas) entered into a construction contract with “Johnson & Johnson Builders” (the Agreement), whereby Johnson & Johnson Builders agreed to construct a single family home for the Koudelas in Ohio. However, Johnson & Johnson Builders was a fictitious name for Johnson & Johnson Custom Builders, LLC (J&J), and was not an entity registered with the Ohio Secretary of State.

In the Agreement, the parties agreed to submit all disputes to binding arbitration in Cleveland, Ohio. The arbitration clause further provided that the cost of the arbitration would be borne by the party initiating the claim.

After disputes arose on the project regarding the work performed by J&J, the Koudelas filed suit in the State Court of Ohio against J&J and its principals, alleging claims for fraud in the inducement, breach of contract, negligence, conversion, unjust enrichment/detrimental reliance, and a declaratory judgment that the arbitration clause in the Agreement was unenforceable. 

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