Construction Law Insights

Brush Arbor Home Constr. v. Alexander, 823 S.E.2d 249 (Va. Feb. 21, 2019)

Andrea and Mark Alexander (the “Alexanders”) sued Brush Arbor Home Construction, LLC (“Brush Arbor”), alleging that the home constructed by Brush Arbor for the Alexanders’ suffered from a variety of defects that caused the home to sustain water damage. Article 12 of the parties’ contract contained the following arbitration clause: “Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the Better Business Bureau under its Construction Industry Arbitration Rules, and judgment on the award by the arbitrator(s) may be entered in any court having jurisdiction thereof.” Brush Arbor filed a motion to compel arbitration. The circuit court denied Brush Arbor’s motion because “the Better Business Bureau does not have any construction industry arbitration rules” and, therefore, it would be “impossible to execute the term of the agreement.”

The Supreme Court of Virginia reversed the circuit court’s decision and held that the parties’ disagreement over the interpretation of Article 12, as well as the application of the doctrine of impossibility to this article of the contract, are controversies or claims arising out of or relating to the contract, or the breach thereof, and, therefore, an arbitrator must resolve those controversies and claims. The arbitrator will need to (1) interpret the arbitration clause, (2) depending on how the arbitrator interprets the arbitration clause, determine whether the impossibility defense applies, and (3) finally, depending on the arbitrator’s answer to that question, resolve the Alexanders’ underlying claims.

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