Petrolex II LLC v. Lyman Lofts Developers LLC The Bailey Group LLC, 290 A.3d 1288

Lyman Lofts Developers owned the Lyman Mill project; The Bailey Group (Bailey) was the general contractor under an AIA owner-contractor agreement that selected arbitration as the binding dispute-resolution method.
Bailey entered into subcontracts containing Section 5.2 requiring arbitration of any dispute “concerning the construction or application” of the subcontract and directing disputes to the Owner‑Contractor Agreement’s dispute procedures.
Several subcontractors filed mechanics’ liens for unpaid work; Petrolex II LLC paid certain subcontractors, obtained assignments of their claims, and substituted in as plaintiff against Bailey (and others) to pursue those claims.
Defendants moved in Superior Court to stay litigation and compel arbitration; the trial justice ruled Petrolex stood in the subcontractors’ shoes and compelled mediation/arbitration under the subcontract/AIA provisions and stayed the cases.
Petrolex appealed, arguing (1) the arbitration clause applies only to interpretive disputes (not the present legal dispute) and (2) the subcontracts’ pay‑if‑paid clause is void as against public policy and thus not subject to arbitration.
The Supreme Court reviewed arbitrability de novo and affirmed the Superior Court: Section 5.2 covers disputes over the “application” of the subcontracts (not surplusage), the AIA agreement selected arbitration, and any challenge to the pay‑if‑paid clause must be decided by the arbitrator.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether disputes here fall within the subcontract arbitration clause	Section 5.2 is limited to interpretation of subcontract language; this is a legal/pay dispute outside that scope	Clause covers "construction or application" of the subcontract, which includes disputes about how subcontract terms operate in the project	Arbitration applies; "application" includes putting terms into action, so disputes go to arbitration
Whether the pay‑if‑paid clause’s alleged invalidity defeats arbitration	Pay‑if‑paid is void as against public policy, so dispute is not arbitrable	Challenge to contract validity does not negate the arbitration clause; such threshold issues go to the arbitrator	Challenge to pay‑if‑paid must be decided in arbitration; Buckeye/Prima Paint rule controls
Whether Petrolex (assignee) can be compelled to arbitrate	Petrolex contends there is no relevant arbitration-triggering dispute between it and defendants	Petrolex assumed subcontractors’ positions by paying and taking assignments; therefore bound by subcontract terms including arbitration	Petrolex stands in subcontractors’ shoes; arbitration compelled and Superior Court stays affirmed

Rhode Island Council on Postsecondary Education v. Hellenic Society Paideia – Rhode Island Chapter, 202 A.3d 931 (R.I. 2019) (arbitrability is a question of law reviewed de novo; contract‑based arbitration principles)
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (challenge to the validity of the contract as a whole must be submitted to arbitrator)
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (arbitration clause enforceable even if underlying contract is alleged void)
Radiation Oncology Associates, Inc. v. Roger Williams Hospital, 899 A.2d 511 (R.I. 2006) (contract interpretation and arbitration analysis governed by parties’ intent as reflected in agreement)
Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58 (R.I. 2005) (contracts viewed as whole; ordinary meaning of words controls)
Andrukiewicz v. Andrukiewicz, 860 A.2d 235 (R.I. 2004) (avoid interpretations that render contract language surplusage)
School Committee of Town of North Kingstown v. Crouch, 808 A.2d 1074 (R.I. 2002) (doubts about arbitrability resolved in favor of arbitration)