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Federal District Court in South Dakota Compels Arbitration Despite Defendant's Failure to First Submit the Dispute to the Project Engineer as Required by the Disputes Clause

Dlorah, Inc. v. KLE Constr., LLC, No. CIV. 16-5102-JLV, 2017 U.S. Dist. LEXIS 11043 (D.S.D. July 17, 2017)

Author: R. Zachary Torres-Fowler

9/14/2017

Read the full post at Constructlaw

Federal District Court in South Dakota Compels Arbitration Despite Defendant's Failure to First Submit the Dispute to the Project Engineer as Required by the Disputes Clause

Plaintiff, Dlorah, Inc. (Dlorah), filed suit against defendant, KLE Construction, LLC (KLE), in connection with an agreement for KLE to perform construction services at an apartment complex in Rapid City, South Dakota. According to Dlorah, KLE’s actions while carrying out the construction breached the agreement and constituted fraud/deceit.

KLE moved the court to compel arbitration or alternatively stay the proceedings pursuant to an arbitration clause contained in the parties’ agreement. Dlorah objected to KLE’s motion on three grounds: (i) defendant had not satisfied the conditions precedent to compel arbitration; (ii) the dispute at issue did not fall within the scope of the arbitration clause; and (iii) the arbitration clause was permissive, not mandatory, and therefore permitted Dlorah to file suit in court. After concluding that the parties had in fact entered into a binding arbitration agreement, the court considered and rejected each of Dlorah’s arguments.