Don’t ignore dispute resolution provisions in a construction contract. Sometimes, you may want to. But dispute resolution provisions should be one of the first provisions you look to when a dispute arises recognizing these provisions will be raised if you fail to comply. Not only will they be raised, but the presumption is they will be enforced. This is the situation that was raised in Seminole County, Florida v. APM Construction Corp., 2023 WL 3555356 (Fla. 5th DCA 2023).
Here, a contractor was terminated for cause by Seminole County. The contractor then filed suit against the County. The County moved to dismiss the lawsuit because the contractor failed to comply with contractual presuit administrative procedures in the contract prior to filing a lawsuit. While the trial court denied the County’s motion to dismiss, the appellate court granted the County’s petition for writ of certiorari quashing the trial court’s order denying the motion to dismiss. For purposes of granting the writ of certiorari, the appellate court held irreparable harm existed because “certiorari jurisdiction is properly exercised when a trial court permits a party to litigate when there is a contractual or legal obligation to first administrative proceed.” Seminole County, supra, at *2.
The contract between the County and its contractor contained the following dispute resolution provisions:
(a) In the event of a dispute related to any performance or payment obligation arising under this Agreement, the parties shall exhaust County administrative dispute resolution procedures prior to filing a lawsuit or otherwise pursuing legal remedies….
(b) In any lawsuit or legal proceeding arising under this Agreement [contractor] hereby waives any claim or defense based on facts or evidentiary materials that were not presented for consideration in County administrative dispute resolution procedures set forth in subsection (a) above which [contractor] had knowledge and failed to present during County administrative dispute resolution procedures.
Regardless of the termination for cause, the appellate court noted “nothing in the contract shows that the parties intended to expressly exclude post-termination disputes such as the one brought by [contractor] from the scope of its presuit administrative dispute resolution provisions.” Seminole County, supra, at *2. Thus, the presuit administrative dispute resolution procedures applied. The appellate court explained:
[Contractor] signed a contract in which it agreed that: (1) disputes regarding contract performance shall require the exhaustion of the administrative dispute resolution procedures prior to the filing of a lawsuit; and (2) the termination of [contractor’s] services under the contract by [the County] shall not affect any rights [the County] may have against [the contractor]. Furthermore, the contract contained no language that expressly excluded post-termination disputes—such as the claims being asserted in counts one and two of [the contractor’s] complaint—from the scope of the presuit administrative dispute resolution process. Lastly, we discern no present basis in the record to conclude that the required presuit administrative dispute resolution procedures will be futile.
Seminole County, supra, at *3.
Please contact David Adelstein at email@example.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.