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Federal Court in California Rules That the Federal Arbitration Act Preempts California Statute That Requires Arbitrations Relating to California Construction Projects Take Place in California

Bell Prods. v. Hosp. Bldg. & Equip. Co., 2017 U.S. Dist. LEXIS 9183 (ND of Cal. Jan. 23, 2017)

Author: John H. Conrad

3/16/2017

Read the full post at Constructlaw

Federal Court in California Rules That the Federal Arbitration Act Preempts California Statute That Requires Arbitrations Relating to California Construction Projects Take Place in California

A Contractor, Hospital Building and Equipment Company (HBE) entered into a subcontract with a mechanical subcontractor, Bell Products, Inc. (Bell), on a design-build project for a California hospital. Bell sued HBE, asserting that HBE’s plans and specifications were deficient and failed to meet requirements of the applicable regulatory agencies, resulting in 15 months of delay to the project. Bell initially sued HBE in State Court. However, the case was removed to federal court, and the federal court stayed the proceedings pending conclusion of arbitration.

The subcontract provided that: all claims between HBE and Bell shall be decided by arbitration; the arbitration shall be per the Construction Industry Rules of the American Arbitration Association; the arbitration provisions shall be governed by the Federal Arbitration Act (FAA) and “unless [HBE] requests the locale to be the place of the Project, the arbitration locale shall be St. Louis, Missouri. Bell sought relief from the venue provision, based upon a California Statute, C.C.P. § 410.42(a)(1).