Editor’s Note: The author, a construction attorney who has given his share or oral arguments in front of a jury, admits to, on occasion, putting jurors to sleep. His experience is that, as the third change order is introduced into evidence at trial, the jurors fall over in the jury box like bowling pins, each slumping in a different direction, eyes wide shut. While he does not take offense when this happens, he is concerned that he cannot be sure of justice from the drowsy juror.
In the late nineteenth century, the American Institute of Architects (AIA) began inserting arbitration clauses in its contracts. Optional arbitration provisions are fixtures in the mother of all construction documents (AIA A-201) and many other documents. Those provisions have gradually broadened from handling just change orders in the nineteenth century to just about anything arising on the construction site today between the contractors and/or owners. Arbitrators can even handle punitive damage matters (Drywall Systems v. ZVI Construction Co., Inc., 435 Mass. 664 (2002)).
Although it is the exception, there must be 50 ways to get a jury trial. A non-exclusive list of events which yield a jury trial in the construction context includes:
- there is no arbitration clause in the contract;
- the arbitration clause is not broad enough to handle the issue;
- the contract is terminated and the arbitration covenant is no longer operative;
- a consumer protection statute forbids it, typically for technical reasons (in residential construction);
- a purely tortious injury occurs such as a trade defamation or personal injury;
- multiple, non-signatory parties make it impossible, unwieldy or strategically undesirable;
- it is a post-construction dispute;
- a state bond claim statute or mechanic’s lien statute makes a jury trial mandatory;
- a government party cannot participate because arbitration is contrary to regulation; and
- the parties unwittingly waive the arbitration provision by participating in standard litigation too long.
Notwithstanding that there is strong policy in favor of finding the right to arbitrate, this right is ultimately a creature of contract. If the contract is infirm, the right to arbitrate is probably in question as well.
There is a strong countervailing policy in the civil jury trial right. It is guaranteed by the Seventh Amendment on the federal level and by many, if not all, state constitutions. Typically, if the claim is something similar to a cause of action triable to a jury in 1791 (when the Seventh Amendment was incorporated into the United States Constitution) it is subject to a jury trial. Since most construction claims are based on contract, this would encompass many of the somewhat esoteric elements of a construction claim such as delay, acceleration and unknown site conditions.
Thus, if the arbitration clause is ineffective, a contractor may not only miss out on the streamlined and technically appropriate arbitrator for these types of claims but may miss the chance for “bench” trial if the opponent asserts his or her Seventh Amendment right to a jury.
Many elements of a construction claim have their basis in traditional equitable concepts: restitution, specific performance, Quantum Meruit and attorney’s fees. No jury would be available if these types of claims end up in traditional court. Consequently, as a matter of strategy, there is little to be gained by any plaintiff in insisting that this type of claim be prosecuted outside arbitration.
Punitive damages recently became a jury triable claim in the federal courts (see Full Spectrum Software, Inc. v. Forte Automation Systems, Inc., 858 F.3d 666 (2017)). Since arbitration panels can also hear these types of claims, it would make an airtight arbitration agreement especially important.
This is not meant to cast aspersions on the jury system. The United States is fortunate to have such an effective system that has the flexibility to weigh a criminal case by using jury pool “A” and a construction case using jury pool “B.”
It is useful to pause, however, to consider how to plan construction contracts for the benefit of the construction industry and the court system.
