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.
Arbitration clauses don't automatically cover everything—contract formation issues like fraudulent inducement may stay in court even with an arbitration requirement