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BCI Construction, Inc. v. 797 Broadway Group, LLC

United States District Court, N.D. New York

March 15, 2017

BCI CONSTRUCTION, INC., Plaintiff,
v.
797 BROADWAY GROUP, LLC, Defendant. 797 BROADWAY GROUP, LLC, Plaintiff,
v.
BCI CONSTRUCTION, INC., Defendant.

          COUCH WHITE LLP, Attorneys for BCI Construction, Inc.

          OFFICE OF DANIEL M. SLEASMAN, Attorneys for 797 Broadway Group, LLC

          JOEL M. HOWARD, III, ESQ., DANIEL M. SLEASMAN, ESQ.

          MEMORANDUM-DECISION AND ORDER

          SCULLIN, Senior Judge

         I. INTRODUCTION

         These consolidated cases involve a contract dispute between BCI Construction, Inc. ("Plaintiff") and 797 Broadway Group, LLC ("Defendant"). Pending before the Court are Plaintiff's motion to depose Arbitrator John J. Phelan III, see Dkt. No. 9; Defendant's motion to remand Case No. 1:16-CV-113 to state court, to dismiss Case No. 1:16-CV-1077 for lack of subject matter jurisdiction, and for attorney's fees, see Dkt. No. 11; and Defendant's motion to confirm/modify its arbitration award, see Dkt. No. 21.

         II. BACKGROUND

         In the summer of 2006, Schenectady County issued a request for proposal ("RFP") for office space to house the Schenectady County Department of Social Services ("SCDSS"). See Dkt. No. 1-1. Defendant, a real estate developer, invited Plaintiff, a general building contractor, and an architectural firm to assist in developing a response to the RFP. See id. Among the many considerations for the project was the outside wall finishing. After all the parties met, they determined that they would only repair and paint the outside walls. See id. Plaintiff provided pricing to Defendant to develop an appropriate rent-rate, which became part of Defendant's response to the RFP. Ultimately, Defendant was selected as the developer in the fall of 2007; and Plaintiff and Defendant entered into a lump-sum contract whereby Plaintiff would undertake all the necessary upgrades. See Id. at 1-2.

         Shortly after the project was completed, problems became apparent. The stucco that Plaintiff had installed on the exterior of the building began to detach, with portions falling to the street below, due to the residual moisture in the brick to which the stucco was attached. See id. at 2. When the parties could not amicably work together to fix the problem, Defendant unilaterally replaced the stucco shell with an EFIS wall system.

         Defendant initiated arbitration to collect the money it had expended to repair the exterior walls. See Id. Defendant argued that Plaintiff was responsible for investigating and testing the moisture of the brick on the building, which, had it done so, would have revealed that the planned stucco repairs would not have succeeded. See id. Plaintiff, on the other hand, maintained that it relied on the architectural firm's implicit acknowledgment that the stucco repair would work. See Id. In addition, Plaintiff argued that Defendant failed to disclose the moisture condition and it was otherwise hidden; thus, it was Defendant's failure to investigate that caused the damage. See id.

         John J. Phelan, III, served as the arbitrator for the parties' dispute. Mr. Phelan concluded, among other things, that Plaintiff was responsible for the final cost of construction because it had assumed the risk of additional costs by signing a lump-sum contract.[1] See id. Therefore, on August 25, 2016, Mr. Phelan ruled in favor of Defendant and awarded Defendant $472, 697.60 for the construction and $114, 136.98 for attorney's fees plus interest. See id. at 4; see also Dkt. No. 1-2.

         Plaintiff initiated the current litigation in this Court on September 1, 2016, pursuant to 9 U.S.C. § 10(a)(2) of the Federal Arbitration Act ("FAA"), asking the Court to vacate the award because the arbitrator, Mr. Phelan, was biased. See generally Case No. 1:16-CV-1077, Dkt. No. 1 at ¶¶ 14-22. Plaintiff subsequently moved to compel a deposition of Mr. Phelan to explore the extent of his potential conflict of interest. See Dkt. No. 9.

         Meanwhile, in New York Supreme Court, County of Albany, Defendant filed a petition pursuant to New York Civil Practice Laws and Rules ("C.P.L.R.") § 7511 to confirm its arbitration award. See Dkt. No. 11-1 at 3. Plaintiff removed the state-court case to this District pursuant to 28 U.S.C. § 1441. See Case No. 1:16-CV-1113, Dkt. No. 11-2 at 11. The Court consolidated the two cases. See Case No. 1:16-CV-1077, Dkt. No. 8. Defendant subsequently moved to remand Case No. 1:16-CV-1113 and to dismiss Case No. 1:16-CV-1077 for lack of subject matter jurisdiction.[2]

         III. ...


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