A-22-0319 Nelson Engineering Construction Inc. (Appellee) v. Ingredion Incorporated, Austin Building & Design, Inc., dba The Austin Company (Appellant), and Sioux City Foundry Company
Dakota County, District Judge Bryan C. Meismer
Attorneys for Appellant: Michael T. Eversden and Brian McKernan (McGrath North Mullin & Kratz); and Joseph E. Cavasinni and Ethan E. Zweig (Hall & Evans, LLC, pro hac vice)
Attorney for Appellee: Daniel L. Hartnett (Crary, Huff, Ringgenberg, Hartnett & Storm, PC)
Civil Action: Applicability of Arbitration Clause
Action Taken by Trial Court: Ingredion Incorporated (Ingredion) is the owner of property that is the subject of a construction project in Dakota County. Austin Building & Design, Inc. (Austin) is a general contractor on the project, and Nelson Engineering Construction, Inc. (Nelson) is a subcontractor. The contract between Ingredion and Austin calls for resolution of its disputes in state court, while the contract between Austin and Nelson calls for resolution of any claims through arbitration. Nelson filed an action against Ingredion and other lienholders, including Austin, in Dakota County District Court seeking to foreclose on construction liens and to recover in quantum meruit for expenses and labor provided for the project.
Austin later filed a motion to compel arbitration in the U.S. District Court for District of Nebraska (federal court) and filed a motion to stay proceedings in district court. The district court denied Austin’s motion to stay, and in its order addressed the merits of the arbitrability issue pending before the federal court. The court found that the language in the subcontracts providing for arbitration to be contrary to the language of the prime contract, which provides for disputes to be resolved in district court. The court further found that the prime contract contained language binding parties entering into subcontracts to the prime contract, and therefore the prime contract controlled. The court concluded that because the dispute resolution provisions of the prime contract were applicable, and the arbitration provisions in the subcontract did not apply, there was no reason to stay the action pending the federal court’s ruling on arbitration.
Assignments of Error on Appeal: Austin appeal, assigning that the district court erred in (1) denying Austin’s motion to stay pending the resolution of the petition to compel arbitration that Austin filed in federal court; (2) basing its decision regarding Austin’s motion to stay on an improper resolution of an issue not before it by failing to consider the appropriate factors for determining the issue; and (3) finding that the contract between Austin and Nelson does not contain an enforceable arbitration agreement.