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Judges rule on contractor dispute over new FBI headquarters

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The Indiana Court of Appeals reversed the denial of a general contractor’s motion to stay proceedings and compel arbitration regarding disputes with subcontractors, finding general contractor Welty Building Co. LTD did not waive its right to insist upon arbitration.

Welty was chosen as general contractor to construct the new FBI headquarters in Indianapolis. The building would be owned by Indy Fedreau Company LLC, and Ohio Farmers Insurance Co. provided a contract performance bond on Welty’s behalf. Welty hired 21 subcontractors to work on the project. Their agreements included an arbitration clause. But Indy Fedreau filed a lawsuit against Welty and OFIC in November 2011 alleging breach of contract, breach of bond, fraud and bad faith based on claims Welty ran up the costs of the project. Indy Fedreau also believed that Welty wasn’t timely paying the subcontractors, which resulted in mechanic’s liens. Several subcontractors also sued Welty.

Welty later filed a counterclaim in the Fedreau case, seeking to foreclose its own mechanic’s lien on the property. It joined the subcontractors with respect to the mechanic’s lien notices they had filed. This led to counterclaims being filed against Welty by the subcontractors. Welty and OFIC then sought to stay the subcontractors’ claims pending mediation and arbitration, which was denied. The trial court agreed with the subcontractors that Welty had waived its contractual right to insist upon arbitration.

“It is clear that Welty did not ‘elect’ to sue the subcontractors without first engaging in mediation or arbitration, nor did it voluntarily ‘institute’ a legal proceeding, to use the language of Article 37 of the subcontract. Welty’s hand was forced by Fedreau’s filing of the lawsuit against it, at which time Welty was compelled to countersue for foreclosure of its mechanic’s lien and to name the subcontractors as co-defendants on that claim,” Judge Michael Barnes wrote in Welty Building Co., LTD. and, Ohio Farmers Insurance Company v. Indy Fedreau Company, LLC, et al., 49A02-1206-PL-493.

The judges sent the case back to the trial court so that arbitration can be ordered between Welty and the subcontractors and that the litigation between those parties be stayed. The trial court did not assess whether the subcontractors’ claims against OFIC should be stayed pending arbitration, so the judges ordered the trial court to consider that issue.

 

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  1. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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