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Pegasus Construction Corp. v. Turner Construction Co.

January 27, 1997

PEGASUS CONSTRUCTION CORPORATION, APPELLANT,
v.
TURNER CONSTRUCTION COMPANY, BELIEVED TO BE A NEW YORK CORPORATION; TINA GILBERT AND JOHN DOE GILBERT, WIFE AND HUSBAND; COMMUNITY COLLEGE DISTRICT NO. 8, BELLEVUE COMMUNITY COLLEGE, STATE OF WASHINGTON; AND FEDERAL INSURANCE COMPANY OF SEATTLE, RESPONDENTS.



Appeal from Superior Court of King County. Docket No: 93-2-06886-7. Date filed: 01/16/96. Judge signing: Hon. George A. Finkle.

Authored by Ronald E. Cox. Concurring: C. Kenneth Grosse, Susan R. Agid.

The opinion of the court was delivered by: Cox

COX, J. -- While this action was stayed pending arbitration, the arbitrator to whom the principal parties in this case had submitted their construction claims heard Turner Construction Company's motion to dismiss.

After considering all written and oral submissions of Turner and Pegasus Construction Corporation, the arbitrator ruled that neither party had complied with the terms in the prime contract for making claims.

Accordingly, he did not award either party any damages. Pegasus moved in the trial court to vacate the award, arguing that the arbitrator had committed misconduct by failing to hear evidence on the merits of its claims. The trial court denied Pegasus' motion, and the company appeals.

We affirm.

In July 1992, Pegasus, as subcontractor, entered into a written agreement to perform concrete form work and placement for Turner. Turner was the prime contractor on the Bellevue Community College (BCC) bookstore project. The subcontract incorporated by reference the terms of the prime contract between Turner and BCC.

In early November 1992, Pegasus ceased work on the subcontract.

Nearly four months later, Pegasus filed a claim against the bond and the retained percentage on the project. In March 1993, Pegasus commenced this action, claiming that Turner had breached the subcontract by failing to pay amounts due for labor and materials supplied to the project. Turner counterclaimed, seeking damages for Pegasus' failure to perform under the subcontract. One year later, the trial court granted Turner's motion to stay this action pending arbitration under the dispute resolution provision of the prime contract. Approximately one year later, Pegasus filed its demand for arbitration under the American Arbitration Association (AAA) Construction Industry Arbitration Rules.

In May 1995, Turner moved for summary judgment in this action. It claimed that Pegasus' failure to comply with the contractual claims procedure of the prime contract warranted dismissal of its claims. The trial court denied Turner's motion. In its oral decision, the court made clear that it was denying the motion because it was inappropriate to lift the stay and enter judgment while the arbitration was pending.

Turner then renewed its motion to dismiss by presenting it to the arbitrator. After reviewing all written declarations and hearing oral argument from both parties, the arbitrator ruled that Pegasus was not entitled to an award of damages because it had failed to comply with the claims procedure of the prime contract. Because Turner had also failed to comply with the claims procedure, the arbitrator ruled that Turner's counterclaims could not be the basis for a damages award.

Turner then returned to the trial court and moved for dismissal of this action based on the arbitrator's decision. Pegasus moved to vacate the arbitrator's award. The trial court granted Turner's motion and denied Pegasus'. Thereafter, the trial court denied Pegasus' motion for reconsideration. Pegasus appeals.

Arbitrator Misconduct

Pegasus argues that the arbitrator committed misconduct under RCW 7.04.160(3) by dismissing its claim on the basis of its failure to comply with the claims procedure in the prime contract. Pegasus contends that the arbitrator was ...


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