Birckhead Electric, Inc. v. James W. Ancel, Inc.
1:13-cv-02498
D. MarylandJun 5, 2014Background
- Birckhead Electric entered a subcontract with JWA on July 9, 2010 for electrical work at the Baltimore Army Reserve Center; arbitration clause referenced disputes between contractor and subcontractor, to be resolved by AAA arbitration at contractor's sole option.
- JWA obtained a payment bond with Hartford as surety; Birckhead performed labor and materials but alleges nonpayment of the full amount due.
- Birckhead last provided labor and materials on December 7, 2012; Birckhead sued the Defendants under the Miller Act and for breach of contract on August 27, 2013.
- Defendants moved to dismiss for lack of jurisdiction or stay pending arbitration; Birckhead opposed the motion; surreply motion followed.
- Court analyzed enforceability of a unilateral arbitration clause under Maryland law, focusing on mutuality and consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the arbitration clause enforceable given lack of mutual consideration? | Birckhead contends the clause binds only Birckhead, lacking mutual consideration. | JWA argues the clause is valid under commercial practice or distinguishes Questar on bargaining strength. | Arbitration clause unenforceable due to lack of mutual consideration. |
| Should the case be dismissed or stayed pending arbitration under the FAA? | Birckhead argues not all issues are arbitrable or that mutuality defects preclude staying/arbitration. | JWA seeks dismissal or stay pending arbitration when applicable. | Motion to dismiss or stay denied; arbitration unenforceable, case proceeds in court. |
| Is a surreply permitted to address a cited case on arbitration? | Birckhead seeks surreply to clarify Questar interpretation. | No surreply allowed unless exceptional circumstances. | Surreply motion denied. |
Key Cases Cited
- Cheek v. United Healthcare of Mid-Atlantic, Inc., 378 Md. 139 (Md. 2003) (mutuality and consideration required for enforceable arbitration)
- Noohi v. Toll Bros., Inc., 708 F.3d 559 (4th Cir. 2013) (binding to arbitration must be supported by consideration)
- Hill v. Peoplesoft USA, Inc., 412 F.3d 540 (4th Cir. 2005) (no single-sided arbitration clause without mutuality)
- Raglani v. Ripken Pro'l Baseball, 939 F. Supp. 2d 517 (D. Md. 2013) (one-sided arbitration provision examined for lack of consideration)
- Questar Homes of Avalon, LLC v. Pillar Construction, Inc., 388 Md. 675 (Md. 2005) (unrelated to validity of unilateral arbitrate rights among third parties; supports mutuality principle)