Frizzell Construction Co. v. Gatlinburg, L.L.C.
9 S.W.3d 79 | Tennessee Supreme Court | 1999
What This Case Means for Subcontractors
Frizzell Construction sued Gatlinburg over unpaid hotel construction work in Tennessee. Gatlinburg countered claiming Frizzell fraudulently misrepresented its ability to complete the project. The Tennessee Supreme Court ruled that while the Federal Arbitration Act applies to this interstate construction contract, claims about how the contract was formed—like fraud—can be kept out of arbitration if the parties chose Tennessee law. This means subcontractors can sometimes argue fraud claims belong in court, not arbitration.
Key Takeaways
- •Arbitration clauses don't automatically cover everything—contract formation issues like fraudulent inducement may stay in court even with an arbitration requirement
- •Choosing a specific state's law in your contract can limit what goes to arbitration, giving you more control over where disputes are resolved
- •If you're accused of fraud in inducing a contract, you may be able to fight that claim in court rather than arbitration, even if the contract says to arbitrate
Parties may choose the arbitration law by which they intend to be governed.
Frequently Asked Question
If my construction contract has an arbitration clause, can I still take fraud claims to court?
Yes, possibly. Courts may exclude contract formation issues like fraudulent inducement from arbitration, especially if your contract specifies that state law governs. The specific language in your arbitration clause and choice of law matter. Consult your contract carefully and speak with an attorney about your state's rules.
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