Cutler Associates, Inc. v. Palace Construction, 4:15-cv-40021

Cutler Associates (MA) contracted as design-builder for Mount Ida College's New Hall (2007); Cutler subcontracted exterior sheathing work to Palace/Colby (2007 subcontract contained arbitration and indemnity clauses).
Construction completed in 2008; Mount Ida notified Cutler of alleged exterior sheathing defects and sought at least $640,000 in damages in 2014.
Cutler sued Palace/Colby, PCI, and Optimum in MA Superior Court on July 3, 2014; initial service deadline missed, case dismissed without prejudice, then state court extended time and defendants were served in January 2015.
Mount Ida filed a demand for arbitration (January 2015); Cutler moved to add defendants and then moved in federal court to stay and compel arbitration after removal; defendants moved to dismiss for insufficient service and failure to state a claim.
The subcontract’s dispute-resolution clause required CEO-level site meeting, mediation, then AAA arbitration for most disputes (with carveout for >$80,000 requiring Cutler’s consent).
District court denied dismissal for deficient service (deferring to state court extension), stayed merits dismissal, and granted Cutler’s motion to stay the action and compel arbitration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether service was untimely and warrants dismissal	State court properly extended time; service now effective	Plaintiff failed to serve within 90 days; dismissal required	Denied as to service; district court honored state-court extension and refused to overturn it
Whether claims must be arbitrated (existence/scope)	Subcontract broadly covers "all claims relating to this Subcontract," so dispute is arbitrable	Arbitration steps refer to an on-site meeting during construction; clause should be limited to disputes arising during construction	Granted: arbitrability (including scope) is for arbitrator where clause is broad; court compels arbitration
Whether preconditions (CEO meeting, mediation) were satisfied	Even if preconditions weren't met, whether they were satisfied is for the arbitrator	Preconditions not met, so dispute not arbitrable	Court found challenges to preconditions presumptively for arbitrator and did not bar arbitration
Whether Cutler waived right to arbitrate by litigation conduct	Minimal litigation occurred; moving to compel arbitration was timely; no substantial prejudice	Delay and prior litigation conduct constitute waiver and prejudice (including potential tolling/statute-of-repose issues for third-party claims)	No waiver: court found little litigation activity, minimal prejudice, and thus compelled arbitration

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6))
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible, not merely conceivable)
Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002) (procedural gateway questions about arbitration presumptively for arbitrator)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy strongly favors arbitration)
AT&T Techs., Inc. v. Communs. Workers of Am., 475 U.S. 643 (1986) (ambiguities in arbitration clauses resolved in favor of arbitration absent clear exclusion)
Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1 (1st Cir. 2014) (apply ordinary contract principles to arbitration clauses; resolve scope ambiguities for arbitration)
Marie v. Allied Home Mortg. Corp., 402 F.3d 1 (1st Cir. 2005) (waiver/default analysis under FAA; litigation conduct may waive arbitration but burden to show prejudice rests on opposing party)