Opposition Brief — S&M Constructors, Inc. v. Foley Co.

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No. 92-56

In The “a

Supreme Court of the United States

October Term, 1992

S&M CONSTRUCTORS, INC.,

Petitioner,

“THE FOLEY COMPANY,

Respondent.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

Kevin E. GLYNN

Counsel of Record

WituaM J. DEBAUCHE

NiewaLp, Wa.peck & BROWN

1200 Main Street, Suite 4100

Kansas City, Missouri 64105

(816) 471-7000

Counsel for Respondent

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OR CALL COLLECT (402) 342-283

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QUESTION PRESENTED

1. When a subcontractor has filed a demand for

arbitration under an arbitration clause in its subcontract

with a general contractor, and when the general contrac-

tor has filed a counterclaim against the subcontractor in

that arbitration, may the subcontractor have the entire

arbitration stayed by court order because the subcontrac-

tor would also like to assert claims against the United

States Government in separate proceedings?

LIST OF PARTIES

Respondent the Foley Company has no subsidiary or

parent corporations.

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Page

Cases

AT&T Technologies, Inc. v. Communication Workers

OS Amie, So US. CEP CIPRO won ose cass ca nkains 13

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

SPP Tee Ter eT ey Ty Ter or eer ETT Tree 10, 15

Grinnell Fire Protection Systems Co., Inc. v. Regents

of University of California, 554 F.Supp. 495 (N.D.

ee N85 AA aN SARC e nds UREN EREA RRR OR GH OG Cees 15

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

e., Ge Ui BES CEI) «oc i cho ccenns 9, 10, 11, 14, 15

Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1 (1983)........... 10, 11, 15

S&M Constructors, Inc. v. The Foley Co., 959 F.2d 97

OO Te UN ooo cc ceels i ee 1

Shearson/American Express, Inc. v. McMahon, 482

cs o> 2. 3g Perr e Terr ere 9, 10, 12, 15

United States of America for the use and benefit of

Capital Electric Construction Co., Inc. v. Pool &

Canfield, Inc., 778 F.Supp. 1088 (W.D. Mo. 1991) .... 14

Wilko v. Swan, 346 U.S. 427 (1953)...............048. 15

STATUTES

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TABLE OF AUTHORITIES - Continued

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No. 92-56

In The

Supreme Court of the United States

October Term, 1992

S&M CONSTRUCTORS, INC.,

Petitioner,

THE FOLEY COMPANY,

Respondent.

Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

OPINIONS BELOW

The pertinent opinions below are included in the

Petitioner’s Appendix and in Respondent's Appendix.

The opinion of the United States Court of Appeals for the

Eighth Circuit, reported at 959 F.2d 97 (8th Cir. 1992), is

reprinted as Appendix A to Petitioner’s Appendix. The

opinion of the United States District Court for the West-

ern. District of Missouri, Western Division, Case No.

92-0412-CV-W-6, which is unreported, is reprinted as

Appendix B to Petitioner’s Appendix.

County, Missouri, dated February 10, 1992, is unreported

and is included in Respondent’s Appendix, pages 1-2.

Respondent agrees that Petitioner’s Petition was filed

within ninety (90) days of the judgment of the United

States Court of Appeals for the Eighth Circuit, and that a

Writ of Certiorari may be granted to review cases in the

Courts of Appeals pursuant to 28 U.S.C. §1254(1).

A copy of the Order of the Circuit Court of Jackson

JURISDICTION

STATUTES

There are no constitutional issues involved in this

case and no constitutional provisions are pertinent.

Respondent does not believe that the Contract Disputes

Act of 1978, 41 U.S.C. §601 et seqg., governs this case, but

acknowledges that petitioner has advanced arguments

containing 41 U.S.C. §§602, 605 and 606 of the Contract

Disputes Act of 1978. Respondent believes that only 9

U.S.C. §2 applies to this case.

STATEMENT OF THE CASE

Petitioner S&M Constructors, Inc. has submitted an

inaccurate, incomplete account of the facts. Respondent

the Foley Company incorporates the statement of the

facts set forth in the opinion of the United States Court of

Appeals for the Eighth Circuit (Petitioner’s Appendix,

pages A-1 through A-5). In addition, the Foley Company

will address S&M Constructors’ misstatements of fact and

—— nw ee

will provide additional facts which have a bearing on the

issues in this case.

The dispute between the parties arose out of S&M

Constructors’ subcontract with general contractor the

Foley Company for construction services at a federal

project known as Power Reliability Enhancement Pro-

gram (AJCC), Fort Ritchie, Maryland (herein “the Pro-

ject”).

Disputes arose between S&M Constructors and the

Foley Company on the Project and while construction

was still underway, S&M Constructors filed a Demand for

Arbitration with the American Arbitration Association on

October 24, 1990. (Respondent’s Appendix, pages 3-5).

Foley filed an Application to Stay Arbitration on Decem-

ber 6, 1990. S&M Constructors filed an Answer to Foley’s

Application to Stay Arbitration, on February 18, 1991.

S&M argued that arbitration should be compelled.

(Respondent’s Appendix, pages 6-11). On September 27,

1991, Foley dismissed its Application to Stay Arbitration

upon the agreement of the parties. (Respondent’s Appen-

dix, pages 12-14).

On November 1, 1991, counsel for S&M Constructors

and Foley attended a preliminary hearing with the arbi-

trators and a schedule for the arbitration was set, with

the arbitration hearing to commence on February 3, 1992.

Pursuant to the schedule set on November 1, Foley Com-

pany filed an Amended Answer and Counterclaim on

December 16, 1991, alleging damages of more than $2.3

million against S&M Constructors. (Respondent's Appen-

dix, pages 15-19). Both S&M Constructors and Foley

Company filed Statements of Facts in the arbitration for

the benefit of the arbitrators on January 16, 1991.

(Respondent’s Appendix, pages 20-29).

On January 23, 1992, S&M Constructors filed a Peti-

tion for a Temporary Restraining Order and a Preliminary

Injunction in the Circuit Court of Jackson County, Mis-

souri, to stop the arbitration from commencing. (Respon-

dent’s Appendix, pages 30-36). The Circuit Court of

Jackson County, Missouri initially issued a temporary

restraining order until the matter could be heard, but

then dissolved the temporary restraining order and

denied S&M Constructors’ motion for preliminary injunc-

tion on February 10, 1992. (Respondent’s Appendix,

pages 1-2).

On February 14, 1992, S&M Constructors filed a

Motion for Temporary Restraining Order in the United

States District Court, Western District of Missouri, to stop

the arbitration. (Respondent’s Appendix, pages 37-44).

The United States District Court issued its decision on

February 21, 1992, denying S&M Constructors’ Motion.

(Petitioner's Appendix, pages A6-A9).

On February 24, 1992, S&M Constructors filed several

pleadings in the United States Court of Appeals for the

Eighth Circuit, including a Motion for Stay Pending

Appeal, and a Motion for Temporary Stay of Arbitration.

(Respondent’s Appendix, pages 45-48). The United States

Court of Appeals for the Eighth Circuit issued its decision

denying S&M’s Motions on March 16, 1992. (Petitioner’s

Appendix, pages Al-A5).

S&M Constructors filed a Motion in the United States

Court of Appeals for the Eighth Circuit on March 18,

1992, to stay enforcement of the Court of Appeals’ deci-

sion pending an application to this Court for a Petition

for Writ of Certiorari. The United States Court of Appeals

issued its decision denying S&M Constructors’ Motion on

March 27, 1992.

The American Arbitration Association rescheduled

the arbitration for March 31, 1992. On March 30, 1992, one

day before the arbitration was scheduled to commence,

S&M Constructors filed a Chapter 11 bankruptcy Petition

in the United States Bankruptcy Court for the Northern

District of Ohio, Case No. B92-11872. S&M Constructors’

bankruptcy is still pending.

S&M Constructors’ demand for arbitration sought

damages against the Foley Company in the amount of

$1,112,648.63. (Respondent’s Appendix, pages 3-5). S&M

Constructors filed a pleading explaining to the arbitrators

that this amount consists of claims against the Foley

Company for non-payment of invoices in the amount of

$297,215.25, and other claims in the amount of

$815,432.88 for delays in obtaining security clearances,

claims for additional work and claims for changed condi-

tions. (Respondent’s Appendix, Pages 25-29).

S&M Constructors’ contentions at pages 2 and 3 of its

Petition are incorrect and misleading. S&M Constructors’

Demand for Arbitration, filed on October 24, 1990, sought

compensation from the Foley Company for delay claims

and other claims which S&M Constructors now contends

are claims to be made against the Government under the

Contract Disputes Act. (Respondent’s Appendix, pages

3-5, 25-26). The Foley Company has claims against S&M

Constructors because S&M’s work was deficient, defec-

tive, delayed far past the schedule required by the Gov-

ernment, and not in conformance with the Government’s

contract documents. (Respondent’s Appendix, pages

15-24). Thus, it is inaccurate for S&M to state that S&M

“properly requested periodic payments under the S&M-

Foley subcontract, several of which payments were

refused by Respondent.” S&M Constructors sought not

only those payments, but also delay damages and other

claims in its Demand for Arbitration, and the Foley Com-

pany had legitimate claims against S&M Constructors at

the time of the presentation of the periodic pay requests

which far exceeded the amounts of those requests.

The first two sentences in the first full paragraph of

page 3 of S&M’s Petition are inaccurate as S&M Construc-

tors’ Demand for Arbitration initially included delay

damages and other claims which S&M Constructors

asserts against the Government as well. (Respondent’s

Appendix, pages 3-5, 25-26).

S&M’s statement on page 3 that “Petitioner was in

agreement with Respondent that the arbitration should

be delayed since the Government, as cause of the delay,

was-inextricably linked to this cause of action” is false as

S&M Constructors filed an Answer to Foley’s initial

Application to Stay Arbitration in which S&M Construc-

tors disagreed with that contention and argued that the

arbitration should proceed and that the Government was

not a necessary party. (Respondent’s Appendix, pages

6-11). S&M’s final paragraph on page 4 is also false for

the same reason. S&M omits the fact that the Foley Com-

pany dismissed the Application to Stay Arbitration on

September 27, 1991. (Respondent’s Appendix, pages

12-14).

The entire first paragraph on page 5 of S&M Con-

structors’ Petition is false and misleading. It is true that

S&M Constructors submitted claims to the Government

for security clearance delays and for other Government

acts and omissions. However, S&M Constructors has

alleged the same security clearance delay claims and

other claims against Foley Company in the arbitration,

beginning with its Demand for Arbitration and continu-

ing through its submission of a Pre-hearing Statement on

January 16, 1991, (Respondent's Appendix, pages 3-5,

25-29). The Foley Company does not have additional

claims filed against the Government which aggregate in

excess of $2,000,000 as contended by S&M Constructors.

Instead, the Foley Company has asserted these claims

against S&M Constructors, as explained in its Amended

Answer and Counterclaim and Statement of Facts in the

arbitration. (Respondent's Appendix, pages 15-24). At the

time of the filing of this Brief in Opposition, the Foley

Company has not submitted any claims to the Govern-

ment (although Foley may submit claims to the govern-

ment in the future in order to avoid the over three

hundred days of liquidated damages which the Govern-

ment has asserted against the Foley Company for the

delays caused by S&M Constructors).

S&M Constructors’ statement in the second para-

graph on page 5 of its Petition that “Petitioner’s demands

against respondent in the arbitration proceeding are pre-

cisely the same claims for equitable adjustment that Peti-

tioner has submitted to the Contracting Officer against

the United States Government” is not true as some of the

claims submitted by S&M Constructors, as described in

S&M’s Preliminary Statement, have not been submitted to

the Government and are brought against Foley only, such

as the claims for non-payment of invoices. (Respondent’s

Appendix, pages 25-29).

S&M Constructors mentions Foley’s initial Applica-

tion to Stay Arbitration, which was dismissed by agree-

ment of the parties on September 27, 1991. (Respondent’s

Appendix, pages 12-14). However, S&M omits the fact

that it has reversed its position 180 degrees from the

Answer which it filed to Foley’s initial Application to

Stay Arbitration. (Respondent’s Appendix, pages 6-11). In

that Answer, S&M Constructors argued that Foley should

be compelled to arbitrate despite the fact that some of the

claims may be presented against the Government under

the Contract Disputes Act. (Respondent’s Appendix,

pages 6-11).

S&M Constructors falsely states at pages 5 and 6 of

its Petition that “Respondent’s Counterclaim is based

primarily on the premise that Petitioner is the cause of

the obstruction of Respondent’s scheduling and, there-

fore, prevented Respondent’s completion of the Project in

a timely manner” and that these delay claims are really

the fault of the Government. Many of the Foley Com-

pany’s claims against S&M Constructors do not relate to

delays for which the Government had any responsibility.

Instead, many of Foley’s claims against S&M relate to

S&M’s defective and deficient work, such as tunneling a

hole in a mountain at the wrong elevation, overexcavat-

ing many areas, failing to control wet zones during shot-

crete work, performing improper scaling of rock, causing

noxious smoke and fumes to fill the tunnels, and failing

to pay subcontractors and suppliers even after Foley had

paid S&M to pay the subcontractors and suppliers.

(Respondent’s Appendix, pages 15-24). These claims are

not delay claims and do not involve the Government.

S&M Constructors’ statement in the first sentence of

the first full paragraph on page 6 omits the fact that

approximately one year after S&M sought to compel arbi-

tration (Respondent’s Appendix, page 6-11), S&M filed

pleadings and appeals in every imaginable forum to stay

the arbitration which S&M initiated. After every appeal

failed, and one day before the arbitration was to com-

mence, S&M filed for bankruptcy and the automatic stay

provisions of 11 U.S.C. §362 stayed the arbitration.

SUMMARY OF ARGUMENT

S&M Constructors’ Petition for Writ of Certiorari

should be denied because the decision of the United

States Court of Appeals for the Eighth Circuit correctly

. States the applicable decisions of this Court. The Court of

Appeals’ decision does not conflict with the decision of

any other United States Court of Appeals, does not con-

flict with any Missouri state court decisions, and does not

depart from the accepted and usual course of judicial

proceedings.

The United States Court of Appeals for the Eighth

Circuit correctly stated that this Court has decided that

arbitration brought pursuant to a contract clause must go

forward even if one of the parties claims that bifurcated

proceedings will result. Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220 (1987); Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985); Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); Moses H.

Cone Memorial Hospital v. Mercury Construction Corp., 460

U.S. 1 (1983).

S&M Constructors has failed to meet its burden to

show congressional intent to preclude a waiver of judicial

remedies for claims brought under the Contract Disputes

Act. Shearson/American Express, at 226-227; Mitsubishi

Motors Corp., at 628.

There is no legal authority in support of S&M’s con-

tention that when a subcontractor has made a demand for

arbitration under an arbitration clause in a contract with

the general contractor, and the general contractor files

counterclaims against the subcontractor in that arbitra-

tion, the subcontractor may have the entire arbitration

stayed because the subcontractor would like to bring

claims against another party in another dispute resolu-

tion forum. There is no merit in S&M’s position.

ARGUMENT

The United States Court of Appeals for the Eighth

Circuit correctly decided this case, applying several deci-

sions of this Court which hold that a demand for arbitra-

tion under a contractual arbitration clause will be upheld

and the arbitration will be compelled to proceed even if

one party believes that the arbitration would result in

piecemeal litigation in other forums. Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220 (1987); Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614

(1985); Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

(1985); Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1 (1983). S&M’s arguments are

contrary to these decisions and S&M presents no contrary

authority of any consequence. S&M Constructors’ argu-

ments are without merit and this Court should deny

S&M’s Petition.

S&M Constructors filed the initial Demand for Arbi-

tration under its subcontract with the Foley Company.

S&M Constructors has not alleged that its subcontract

with the Foley Company should be revoked or that any

grounds exist for the revocation of the contract. Pursuant

to 9 U.S.C. §2, the arbitration clause in the subcontract

between S&M and Foley is “valid, irrevocable, and enfor-

ceable.” (Petitioner’s Appendix, page 13).

In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614 (1985), this Court held that an antitrust

dispute was subject to arbitration under the Federal Arbi-

tration Act, 9 U.S.C. §1 et seq., even if some of the claims

involved causes of action conferred by federal statutes.

This Court stated: “(b)y agreeing to arbitrate a statutory

claim, a party does not forego the substantive rights

afforded by the statute; it only submits to their resolution

in an arbitral, rather than a judicial, forum.” Id., at 628.

This Court also found that:

Having made the bargain to arbitrate, the party

should be held to it unless Congress itself has

evinced an intention to preclude a waiver of

judicial remedies for the statutory rights at

issue. Nothing, in the meantime, prevents a

party from excluding statutory claims from the

scope of an agreement to arbitrate. Id., at 628.

This Court restated this principle in Shearson/Ameri-

can Express and found that the burden is on the party

opposing arbitration to come forward with evidence of

Congressional intent to preclude a waiver of judicial

remedies for the statutory rights at issue. Id., at 226-227.

S&M Constructors has failed to meet its burden as it

has shown no congressional intent to preclude a waiver

of judicial remedies for claims brought under the contract

Disputes Act of 1978, 41 U.S.C. §601 et seg. S&M Con-

structors states that despite its initial Demand for Arbi-

tration against the Foley Company, in which it sought all

of its present claims against the Foley Company, it now

wants to bring some of its claims in a separate proceeding

under the Contract Disputes Act. S&M has stated no legal

authority and shown no congressional intent in support

of its contention that claims under the Contract Disputes

Act of 1978 should be considered non-arbitrable as a

matter of law, if such claims also fall within the arbitra-

tion clause of a contract.

Apart from these legal precedents, S&M Construc-

tors’ arguments are based upon a false and misleading

factual contention that all of the claims between S&M

Constructors and the Foley Company are also claims

which could be brought against the United States Gov-

ernment. The pleadings filed in the arbitration by both

S&M Constructors and the Foley Company disprove this

contention and show instead that both parties have

brought claims in the arbitration which are asserted only

against each other, and which could not possibly be

brought against the United States Government. (Respon-

dent’s Appendix, pages 3-5, 15-29). The Foley Company

has claims against S&M Constructors for S&M’s defective

and non-conforming work such as tunneling into a moun-

tain at the wrong elevation, failure to control wet zones

during shotcrete work, improper scaling of rock during

tunneling work, allowing noxious smoke and fumes to

enter tunnels, and failure to pay subcontractors and sup-

pliers even though the Foley Company had paid S&M

Constructors to pay those subcontractors and suppliers.

These claims are brought by the Foley Company against

S&M Constructors, not the United States Government.

Similarly, S&M Constructors has claims which can be

brought only against the Foley Company, such as S&M’s

allegations that the Foley Company has wrongfully with-

held payments for invoices from S&M Constructors.

Thus, this case does not involve claims which were

brought in arbitration but which could also be brought

against the United States Government. This case could

not be simply transferred as a whole out of the arbitration

proceeding and into a proceeding against the United

States Government under the Contract Disputes Act.

S&M Constructors complains at page 8 of its Petition

that the United States Government could not be a party to

the proposed arbitration proceeding. However, this is a

common situation in construction arbitration proceed-

ings, as often one of the parties wishes that a surety,

architect, engineer or owner’s representative, who is not

a party to the arbitration agreement, could be brought

into the arbitration to share in the responsibility. This

Court and the United States Court of Appeals for the

Eighth Circuit have held that “arbitration is a matter of

contract and a party cannot be required to submit to

arbitration any dispute which he has not agreed to sub-

mit.” AT&T Technologies, Inc. v. Communication Workers of

America, 475 U.S. 643, 648 (1986); United States of America

for the use and benefit of Capital Electric Construction Co.,

Inc. v. Pool & Canfield, Inc., 778 F.Supp. 1088, 1090 (W.D.

Mo. 1991). The Court in Capital Electric, supra, held that a

subcontractor seeking to arbitrate with a general contrac-

tor under an arbitration clause in its subcontract could

not force a surety company, not a party to that contract, to

arbitrate. The fact that the United States Government is

not a party to the S&M-Foley contract is of no conse-

quence to the enforceability of the contract’s arbitration

clause. S&M Constructors could have excluded claims

against the United States Government from the contrac-

tual arbitration clause, but did not. Mitsubishi Motors, at

628.

S&M Constructors states on page 9 of its Petition that

the United States Court of Appeals for the Eighth Circuit

erred in not considering the “unique context of govern-

ment contracting”. S&M’s contention is contrary to this

Court’s holding in Mitsubishi Motors Corp., supra that

“(h)aving made the bargain to arbitrate, the party should

be held to it unless Congress itself has evinced an inten-

tion to preclude a waiver of judicial remedies for the

statutory rights at issue.” Id. at 628. S&M Constructors

has failed to show any congressional intent to preclude a

waiver of judicial remedies in the context of government

contracting. The “factual distinction” urged by S&M Con-

structors in the first paragraph on page 9 of its Petition is

not supported by any legal authority and représents only

an invention of S&M Constructors. S&M’s arguments in

the first full paragraph at page 10 of its Petition fail for

the same reason.

S&M Constructors relies on Grinnell Fire Protection

Systems Co., Inc. v. Regents of University of California, 554

F.Supp. 495 (N.D. Cal. 1982), but that case is inapplicable.

As noted by the United States Court of Appeals for the

Eighth Circuit, Grinnell does not involve the Contract

Disputes Act, involves the staying of diversity litigation,

and was decided before this Court’s decisions in Mit-

subishi Motors Corp., supra; Shearson/American Express,

supra; Moses H. Cone Memorial Hospital, supra; and Dean

Witter Reynolds, supra.

S&M Constructors relies on Wilko v. Swan, 346 U.S.

427 (1953), but this Court has held that an argument

based upon Wilko v. Swan is no longer persuasive under

these circumstances. Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220, 231-232 (1987).

S&M Constructors’ rhetoric about the “grave need”

for this Court to examine this issue ignores S&M’s failure

to come forward and meet its burden to show that Con-

gress has shown an intent to preclude a waiver of judicial

remedies for claims brought under the Contract Disputes

Act. Mitsubishi Motors Corp., at 628; Shearson/American

Express, Inc., at 226-227. S&M Constructors cites no appli-

cable legal authority and presents no Congressional

intent in support of its arguments. The decision of the

Eighth Circuit Court of Appeals is correct and S&M Con-

structors’ arguments are without merit.

CONCLUSION

For these reasons, petitioner’s Petition for Writ of

Certiorari should be denied.

Respectfully submitted,

Kevin E. GLYNN

Counsel of Record

WituiAM J. DEBAUCHE

Nigwa_p, WALDEcK & BROWN

1200 Main Street, Suite 4100

Kansas City, Missouri 64105

(816) 471-7000

Counsel for Respondent

App. 1

IN THE CIRCUIT COURT OF

JACKSON COUNTY, MISSOURI

AT KANSAS CITY

S&M CONSTRUCTORS, INC., )

ee Case No.

Plaintiff, CV92-1585

VS. ) Civil F

THE FOLEY COMPANY,

Defendant. )

ORDER DISSOLVING TEMPORARY RESTRAINING

ORDER AND DENYING PRELIMINARY INJUNCTION

This matter comes on for hearing before the Court

this 10th day of February, 1992. Plaintiff appears by coun-

sel Robert Andrews and Ronald Kraft and defendant

Foley Company appears by counsel Kevin Glynn and by

representative Ken Kure.

After hearing argument and reviewing the briefs of

the parties on the legal issues involved the Court finds

that:

1. A valid arbitration agreement exists between the

Parties as a provision of the written contract between the

parties.

2. The law obtaining in this state favors the enforce-

ment of arbitration agreements.

3. The Court determines that the disputes between

the parties are encompassed in the arbitration agreement.

4. The Court finds that the agreement to arbitrate

was freely entered into between the parties.

App. 2

5. The Court finds that pursuant to Section 435.355

of the Missouri Revised Statutes and having found exis-

tence of a valid arbitration agreement the Court is

required to dissolve the temporary restraining order

heretofore entered.

NOW THEREFORE IT IS ORDERED that the tempor-

ary restraining order heretofore entered is dissolved and

the Petition for Temporary Injunction is denied. The costs

of this action are assessed against the plaintiff.

/s/ Preston Dean

Judge

Date: February 10, 1992

Time: 9:30 A.M.

Copies to:

Kevin E. Glynn

Ronald Kraft

Robert Andrews

App. 3

MEDIATION Please consult the Construction Industry Medi-

ation Rules regarding mediation procedures. If you want the

AAA to contact the other party and attempt to arrange a

mediation, please check this box.

CONSTRUCTION INDUSTRY ARBITRATION RULES

DEMAND FOR ARBITRATION

Date: October 24, 1990

To: Name Foley Company

(of party upon whom the demand is made)

Address 7501 Front Street

City and State Kansas City, Missouri

ZIP Code 64120

Telephone (816) 241-3335 Fax (816) 241-4321

Name of Attorney -

(if known)

Attorney’s Address

City and State ZIP Code

Telephone (_ ) Fax

The named claimant, a party to an arbitration agree-

ment contained in a written contract, dated February 27,

1989, providing for arbitration under the Construction

Industry Arbitration Rules, hereby demands arbitration

thereunder.

(Attach the arbitration clause or quote it hereunder.)

SEE ATTACHMENT “A”

Nature oF DispuTe:

Moneys owing under contract, for additional

work performed, and for delay damages.

App. 4

CLAIM oR RetieF SoucHT: (amount, if any)

Monetary relief: $1,112,648.63

Please indicate the industry category of each party:

CLAIMANT: ___ Owner ___ Architect

___ Landscape Architect

___ Engineer __ Contractor

_x_ Subcontractor (specify tunnelling)

Interior Designer _ Other

RESPONDENT: — Owner ___ Architect

___ Landscape Architect

___ Engineer x_ Contractor

___ Subcontractor (specify __)

Interior Designer __ Other

HEARING LocaLe Requestep: Washington, D.C. -

(City and State)

You are hereby notified that copies of our arbitration

agreement and of this demand are being filed with the

American Arbitration Association at its Washington, D.C.

Regional office, with the request that it commence the

administration of the arbitration. Under the rules, you

may file an answering statement after notice from the

administrator.

Signed /s/ Robert J. Andrews Jr.

(May be signed by attorney)

Robert J. Andrews, Jr.

Title Attorney for Claimant

Name of Claimant S&M Constructors, Inc.

Address (to be used in connection with this case) 29100

Hall Street

App. 5

City and State Solon, Ohio ZIP Code 44139

Telephone (216) 248-0376 Fax (216) 248-8248

Name of Attorney Andrews & Ryan

Attorney’s Address 29100 Hall Street

City and State Solon, Ohio ZIP Code 44139

Telephone (216) 248-2009 Fax (216) 248-8248

To institute proceedings, please send three copies of

this demand with the administrative fee, as provided for

the rules, to the AAA. Send the original demand to the

respondent.

App. 6

IN THE CIRCUIT COURT OF

JACKSON COUNTY, MISSOURI

AT KANSAS CITY

THE FOLEY COMPANY

Plaintiff,

) CASE NO.

)

-VS- )

)

CV90-032241

S&M CONSTRUCTORS, INC.

Defendant.

DEFENDANT’S ANSWER TO PLAINTIFF’S

APPLICATION TO STAY ARBITRATION

Now comes S&M Constructors, Inc. (“S&M”) in

response to Plaintiff’s Application, pursuant to R.S.Mo.

Section 435.355 and prays that this Court deny Plaintiff’s

Application to Stay Arbitration and prays for an order to

compel arbitration. In support of this Answer, S&M

states:

1. S&M is an Ohio corporation in good standing

with its offices at 29100 Hall Street, Solon, Ohio 44139.

2. Upon information and belief, The Foley Co.

(“Foley”), is a Missouri corporation in good standing,

with its offices at 7501 Front Street, Kansas City, Missouri

64120.

3. S&M is a subcontractor of Foley for a United

States Army Corps of Engineers project known as the

Power Reliability Enhancement Program, Fort Ritchie,

Maryland. The subcontract between S&M and Foley con-

tains an Arbitration and Enforcement Cost Clause requir-

ing that “disputes arising under this Agreement, or any

App. 7

instrument made to carry out the terms of this Agree-

ment, shall, where permitted by law, be submitted to

arbitration in accordance with the then obtaining rules of

the American Arbitration Association.” The arbitration

clause requires any hearings to be held in Kansas City,

Missouri. A copy of the subcontract and the arbitration

clause are annexed hereto as Exhibit “A”.

4. As a result of numerous irreconcilable disputes

between S&M and Foley, S&M filed a demand for arbitra-

tion that is currently before the American Arbitration

Association, Kansas City, Missouri.

5. The American Arbitration Association, by letter

dated November 26, 1990, requested the parties to choose

arbitrators and requested Foley to file its Answer and any

counterclaim by December 6, 1990. A copy of the letter of

the American Arbitration Association is annexed hereto

as Exhibit “B”.

6. Foley responded to the American Arbitration

Association by letter dated December 5, 1990 that trans-

mitted Foley’s Answer and Counterclaim in the arbitra-

tion styled S&M Constructors, Inc. and the Foley

Company, Case No. 57 110 0079 90 as well as a copy of its

Application to Stay Arbitration filed with this Court. A

copy of the transmittal letter and Answer and Counter-

claim of Foley are annexed hereto as Exhibit “C”.

7. Inits Application to Stay Arbitration, Foley states

that the subcontract with S&M provides, in Attachment 5,

Schedule D, paragraph 1, that “all the various contract

documents between the Owner and the Foley Co. are

incorporated by reference as if fully rewritten herein and

shall be binding upon and provide entitlement to, mutatis

App. 8

mutandis, The Foley Company Co. and Subcontractor.”

See Exhibit “A”, Attachment 5.

8. Foley maintains that the incorporation by refer-

ence language of Attachment 5, Schedule D, Paragraph 1

incorporates into the subcontract the “disputes” clause

contained in the prime contract between the United States

Army Corps of Engineers and Foley, which disputes

clause is binding upon S&M as subcontractor.

9. Similarly, Foley maintains that S&M is bound by

the provisions of the prime contract governing

“Changes,” which dictates a procedure for the assertion

of cost increases or changes in time of performance.

10. It is Foley’s contention that the Disputes and

Changes clauses of its contract with the United States

Army Corps of Engineers, by virtue of their incorporation

by reference, are the sole dispute resolution provisions

available to S&M.

11. Foley’s interpretation of the incorporation by

reference of the terms of the prime contract is at odds

with the plain language of the subcontract between Foley

and S&M, which states that “disputes arising under this

Agreement, or under any instrument made to carry out the

terms of this Agreement, shall . . . be submitted to arbitra-

tion....” [Emphasis Supplied] Through its incorporation

by reference, the prime contract is part of the subcontract

and as is clear from the foregoing, disputes arising under

this Agreement, including any disputes with respect to

the interpretation and application of the disputes and

changes clauses, are subject to arbitration.

App. 9

12. Foley, as the drafter of the contract, made no

reservation or limitation under the arbitration clause with

respect to the disputes or changes clauses of its prime

contract. Therefore, it must be bound by the terms of its

agreement with S&M to subject all disputes to arbitration.

At the least, the conflict between the provisions of the

prime and subcontract constitute an ambiguity that must

be construed against Foley as drafter. Slotkin v. Wilmering,

464 F.2d 418 (1972); Eastmont Construction Co. v. Transport

Mfg. & Equipment Co., 301 F.2d 34 (1962).

13. The American Arbitration Association requested

comments by S&M’s counsel to Foley’s Application to

Stay Arbitration, which comments set forth the foregoing

arguments. A copy of the request for comments and

response of S&M’s counsel are annexed hereto as Exhibit

a So

14. By letter dated January 11, 1991, the American

Arbitration Association stated in pertinent part:

The American Arbitration Association, after

reviewing the contentions of the parties and the

arbitration agreement, has determined that an

issue as to arbitrability exists which may be

determined by an arbitrator.

A copy is annexed hereto as Exhibit “E”.

15. The agreement to arbitrate contained in the

S&M subcontract with Foley is controlling when viewed

on the basis of both the plain meaning of the contract and

in the context of Foley as the party drafting the sub-

contract that contained the arbitration clause. This posi-

tion is consistent with the view expressed by the Third

Circuit Court of Appeals in Sharon Steel Corp. v. Jewell

App. 10

Coal & Coke Co., 735 F.2d 775, 778-779 (3rd Cir. 1984). The

Court held that “so long as the appellate’s claim of arbi-

trability was plausible, interpretation of the contract

should have been passed on to the arbitrator.” See, e.g.,

Pearl St. Development Corp. v. Conduit & Foundation Corp.,

41 N.Y.2d 167, 391 N.Y.S.2d 98 (1976); East Bernadino Cty.

Water Dist. v. City of San Bernadino, 109 Cal. Rptr. 510

(1973).

16. S&M requests that this Court find an agreement

to arbitrate between the parties and thereby allow this

matter to be resolved by arbitration before the American

Arbitration Association. -

WHEREFORE, Defendant S&M Constructors, Inc.

prays that this Honorable Court deny Plaintiff’s Applica-

tion to Stay Arbitration and enter its Order requiring

Plaintiff, The Foley Company, to arbitrate.

KRAFT, BROWER, GORDON and

ZELDIN

By: /s/ Ronald L. Kraft

Ronald L. Kraft - MO #21382

Attorney for Defendant

9237 Ward Parkway, Suite 200

P.O. Box 33156

Kansas City, MO 64114-0156

Telephone (816) 361-4800

Fax (816) 361-9865

OF COUNSEL

Robert J. Andrews, Jr.

Andrews & Ryan

29100 Hall St.

Solon, Ohio 44139

(216) 248-2009

App. 11

CERTIFICATE OF SERVICE

I hereby certify that a copy of the above and forego-

ing Defendant’s Answer to Plaintiff's Application to Stay

Arbitration was served by courier service this 18th day of

February, 1991, on:

Mr. Kevin E. Glynn

and Mr. William J. DeBauche

NIEWALD, WALDECK & BROWN

2500 Commerce Tower

911 Main Street

Kansas City, MO 64105

/s/ Ronald L. Kraft “4

Ronald L. Kraft

Attorney for Defendant

App. 12

IN THE CIRCUIT COURT OF

JACKSON COUNTY, MISSOURI

AT KANSAS CITY

THE FOLEY COMPANY,

)

fs. ) Case No.

Plaintiff, ) CV90-32241

“ ) Civil B

) (Filed

S&M CONSTRUCTORS, INC., Sep. 27 1991)

)

Defendant.

PLAINTIFF’S STIPULATION OF

DISMISSAL WITHOUT PREJUDICE

COMES NOW plaintiff, the Foley Company, by and

through its counsel; and dismisses its Application to Stay

Arbitration without prejudice.

NIEWALD, WALDECK & BROWN

A Professional Corporation

2500 Commerce Tower

911 Main Street

Kansas City, MO 64105

Telephene (816) 471-7000

Telecopier (816) 474-0872

/s/ William J. DeBauche

Kevin E. Glynn #21935

William J. DeBauche #32674

ATTORNEYS FOR PLAINTIFF

THE FOLEY COMPANY

App. 13

I hereby certify that a

true and correct copy of

the above and foregoing was

served by telecopier this

27 day of

SEPTEMBER, 1991 to:

Ronald Kraft

Kraft, Brower, Gordon

and Zeldin

9237 Ward Parkway, Suite 200

Kansas City, Missouri 64114

Robert Andrews

Andrews and Ryan

21900 Hall Street

Solon, OH 44139

Attorneys for Defendant

S&M Constructors, Inc.

/s/ William J. DeBauche

Attorneys for Plaintiff

The Foley Company

“App. 14

* IN THE CIRCUIT COURT OF

JACKSON COUNTY, MISSOURI

AT KANSAS CITY

THE FOLEY COMPANY,

)

Plaintiff, one

baa ) CV90-32241

S&M CONSTRUCTORS, INC., Civil B

Defendant. )

ORDER

The Court has reviewed plaintiff’s Stipulation of Dis-

missal Without Prejudice. The Court hereby dismisses

plaintiff’s Application to Stay Arbitration without preju-

dice, with each party to bear its own costs.

/s/ Gene R. Martin

Judge

Date: September 27, 1991

Copies to:

Kevin E. Glynn _

Ronald Kraft

Robert Andrews |

App. 15

AMERICAN ARBITRATION ASSOCIATION

S & M CONSTRUCTORS, INC.

and

THE FOLEY COMPANY

Case No.

57 110 0079 90

THE FOLEY COMPANY’S ANSWER AND

AMENDED COUNTERCLAIM

COMES NOW the Foley Company and for its Answer

and Amended Counterclaim, states:

1. Foley denies all of the allegations of S & M’s

Demand for Arbitration.

2. Foley is a Missouri corporation in good standing,

with its offices at 7501 Front Street, Kansas City, Missouri

64120.

3. S & M is an Ohio corporation with its offices at

29100 Hall Street, Solon, Ohio 44139.

4. S & M entered into a subcontract with Foley ona

project for the United States Corps of Engineers known as

Power Reliability Enhancement Program (AJCC), Fort

Ritchie, Maryland (herein “the project”).

5. In the course of S & M’s performance of its sub-

contract with Foley on the Project, S & M failed to per-

form its subcontract properly as (a) S & M was delinquent

in its performance on the submittals which were required

before initiation of work activity, (b) S & M started its

performance on the Project behind the schedule which

they had provided, (c) S & M failed to perform its wor! in

a timely fashion in accordance with the requirements of

lt oan

App. 16

the contract and in accordance with the approved sched-

ule; (d) S & M failed to pay its subcontractors and sup-

pliers, including amounts which Foley paid to S & M for

payment by S & M to those subcontractors and suppliers,

and (e) S & M’s work has been defective and deficient

and not in conformance with the contract requirements,

among other failures of performance by S & M.

6. Asa result of S & M’s delays, its defective, defi-

cient and non-conforming work, and its failures to pay its

subcontractors and suppliers, among other failures of

performance by S & M, S & M has breached its sub-

contract with Foley, has been negligent in the perfor-

mance of its subcontract, and in addition, S & M has

failed to comply with the indemnity clause in its sub-

contract with Foley.

7. Asa result of all of these failures by S & M, Foley

has sustained damages as set forth on Exhibit A, which is

attached. These damages are based on a projected com-

pletion date of January 25, 1992, and may be adjusted if

the project is completed on a different date.

WHEREFORE the Foley Company denies all of the

allegations of S & M Constructors, Inc.’s Demand for

Arbitration and prays that S & M Constructors, Inc. may

recover nothing on its Demand for Arbitration, and the

Foley Company prays for an award of damages on its

Counterclaim against S & M Contractors, Inc. in an

amount of $2,359,849.12, based on a projected completion

App. 17

date of January 25, 1992, and for ali costs, and for any

other relief which this panel may deem appropriate.

NIEWALD, WALDECK & BROWN

A Professional Corporation

2500 Commerce Tower

911 Main Street

Kansas City, Missouri 64105

(816) 471-7000

/s/ William J. DeBauche

Kevin E. Glynn #21935

William J. DeBauche #32674

ATTORNEYS FOR THE

FOLEY COMPANY

| hereby certify that a true and

correct copy of the above and fore-

going was mailed this 16 day of

DECEMBER, 1991 to:

Robert J. Andrews, Jr.

Andrews and Ryan

21900 Hall Street

Solon, Ohio 44139

Attorneys for S & M Constructors

/s/ William J. DeBauche

Attorneys for the Foley Company

App. 18

EXHIBIT A

SUMMARY OF DAMAGES

Subcontractors Cost

Pioneer Electric, Inc.

ACandS

W. C. Wiedenmann & Sons

D. L. George & Sons

Foley Company

Smoke-outs

Overexcavation Keyway Barrier

“C”, Substation Invert, Reservoir

Bottom, “B” Invert, “C” Invert,

“F” Invert

Scaling Areas “C” & “D”

Scaling Areas “B”, “E” & “PF”

Remove Fan Line Area “C”

Correct Wet Zones Area “G”

Overtime-Acceleration

Overexecavation in Area “G”

Overexcavation — At Cooling Towers

Assist S & M Coring Shotcrete

Install Chainlink Area “D”

Tight Removal Barrier “B”,

Intersection “F” & “G”, Sump Area “G”

Assist S&M Remove Tights & Grout

Voids

Engineering Error in “F”

Test Rock Bolts & Replace

Deficient Bolts

Cleanup & Dispose of Contaminated

Oil & Soil

Scheduling

Consulting Fees

Attorney Fees

Extended Field Overhead

Extended Home Office Overhead

116,280.08

1,817.00

29,826.00

64,132.26

, 9,832.54

53,722.02

12,228.79

15,529.19

605.27

1,585.89

25,479.73

82,081.05

29,397.58

475.44

2,586.38

3,720.00

18,597.24

30,620.98

3,389.59

1,210.00

4,000.00

20,000.00

46,578.08

426,579.27

222,272.00

App. 19

Liquidated Damages

Performance Cost Increase

Subtotal

Profit

Total

350,300.00

576,471.00

2,145,317.38

214,531.74

$2,359,849.12

App. 20

AMERICAN ARBITRATION ASSOCIATION

S & M CONSTRUCTORS, INC.

AND Case No. 57 110 0079 90

THE FOLEY COMPANY

THE FOLEY COMPANY’S STATEMENT OF FACTS

The Foley Company’s Amended Counterclaim

against S & M Constructors arises from S & M’s delays

and deficient and nonconforming work performed on its

subcontract with Foley, the general contractor, on a pro-

ject known as the Alternate Joint Communications Center,

a military installation in Pennsylvania. The contract was

administered by the U.S. Army Corps of Engineers from

its Fort Ritchie, Maryland office.

The project site contains national alternative commu-

nication centers in hardened facilities for the Department

of Defense, built into a mountain about seventy-five

miles from Washington, D.C. The project at issue in this

arbitration involved enlarging and modernizing the cen-

ter and enhancing the reliability of the mechanical sys-

tems. Foley’s contract involved increasing the size of the

facility by constructing additional tunnels and work

rooms. Much of the work took place in new areas of the

mountain not previously excavated or blasted. S & M

entered into a subcontract with Foley to perform blasting,

excavation and tunneling work. Foley Company per-

formed the general and mechanical construction follow-

ing S & M’s work.

App. 21

A summary of Foley’s claims against S & M are

contained on Exhibit A to Foley’s Amended Counter-

claim. Foley’s damages caused by 5S & M total

$2,359,849.12, assuming a completion date of January 25,

1992.

‘\

S & M’s performance of its subcontract was deficient

from the beginning, as S & M was delinquent in transmit-

ting submittals which were requisite prior to the initia-

tion of work activity. S & M commenced its performance

behind the schedule which it had provided. S & M’s

performance was deficient in many other instances as the

work progressed, so that Foley sustained 310 days of

delay to its work on the project as a result of S & M's

delinquent and deficient performance. The Corps of Engi-

neers has assessed liquidated damages against Foley at a

cost of $1,150.00 per day, for a total of approximately

$350,000.00 in liquidated damages assessed against Foley

as a result of S & M’s delinquent and deficient perfor-

mance.

S & M’s performance of its tunneling work was

defective, deficient and not in conformance with the con-

tract documents. S & M overexcavated many areas on the

project, including the tunnel inverts in Areas B, C and F;

the cooling tower and heat exchanger foundations located

in Area B; the keyway at the blast barrier in Area C; the

electrical substation invert, the reservoir bottom; and the

Mechanical Room in Area G. In addition, S & M was

responsible for an error in the elevation of Tunnel F. The

contract documents contained specific limits for excava-

tion, which S & M consistently breached.

App. 22

As a result of S & M’s excavation errors in many

areas, Foley Company in its subsequent performance of

the general and mechanical construction work was forced

to incur additional costs and delays because of Foiey’s

need to perform additional work to make up for S & M’s

excavation errors.

The Corps of Engineers would not accept S & M’s

shotcrete work in Area G, as S & M did not properly

control the wet zones in that area during construction.

The Corps would not accept the work until the wet zones

were properly abated. S & M refused to perform this

work, which was required by its subcontract, and Foley

was forced to perform it for S & M.

The Corps of Engineers also found S & M’s work in

several areas unacceptable with regard to the scaling of

rock from the invert to the apex. The Corps would not

permit any following work to be performed in these areas

tor safety reasons. S & M refused to perform this scaling

work in a manner acceptable to the Corps. Foley per-

formed S & M’s scaling work for S & M to keep the job

from being further delayed.

S & M also caused Foley to incur costs and time

delays due to smoke outs caused by S & M’s failure to

comply with the contract requirements for temporary

utilities. Noxious smoke and fumes emanated from exis-

ting tunnels and vent shafts, and the Corps found that

this problem was caused by S & M’s failure to perform its

work in accordance with the contract.

Foley has also learned that S & M failed to pay some

of its suppliers and subcontractors, even though Foley

App. 23

had paid S & M for the pay estimates for the time frame

when those costs were incurred.

The contract between Foley and S & M allows Foley

to charge its consulting fees and attorney’s fees for this

proceeding to S & M, and these amounts are included in

Exhibit A.

Foley has also charged extended overhead in <Accor-

dance with the formulas approved by the Courts. Foley

has charged S & M for the liquidated damages which the

Corps has charged Foley and which are attributable to S

& M’s delays. The excessive period of delay caused to

Foley by S & M’s breaches and failures caused Foley to

incur performance cost increases in several areas and

these costs are included on Foley’s Exhibit A as well.

Exhibit A contains other items which Foley will

explain in full at the arbitration. In this Statement, Foley

has presented the arbitrators with many of the most

significant delays and costs caused by S & M.

Foley believes that it owes nothing on S & M’s claim,

as S & M is seeking relief for areas of work in which S &

M performed deficient and non-conforming work and in

which S & M delayed Foley’s work. Further, Foley has

expended significantly more money to perform and cor-

rect S & M’s work than S & M contends remains as

unpaid contract balances. The amount withheld by Foley

App. 24

is a great deal less than the costs caused to Foley by S &

M’s delays and deficient and non-conforming work.

NIEWALD, WALDECK & BROWN

A Professional Corporation

2500 Commerce Tower

911 Main Street

Kansas City, Missouri 64105

(816) 471-7000

-, /s/ William J. DeBauche

Kevin E. Glynn #21935

William J. DeBauche #32674

ATTORNEYS FOR THE

FOLEY COMPANY

I hereby certify that a true and

correct copy of the above and fore-

going was mailed this 16 day of

January, 1991 to:

Robert J. Andrews, Jr.

Andrews and Ryan

4403 St. Clair Avenue

Cleveland, Ohio 44103-1125

Attorneys for S & M Constructors

/s/ William J. DeBauche

-, Attorneys for The Foley Company

SS ae ee

App. 25

AMERICAN ARBITRATION ASSOCIATION

S&M CONSTRUCTORS, INC.

and Case No. 57 110 0079 90

FOLEY COMPANY

PRE-HEARING STATEMENT OF

S&M CONSTRUCTORS, INC.

S&M Constructors, Inc. (“S&M”) and Foley Company

(“Foley”) entered into a subcontract dated February 27,

1989 in the amount of $5,200,000.00 for the performance

of certain excavation and shotcreting work at the Power

Reliability Enhancement Program (AJCC) (“Project”) Fort

Ritchie, Maryland. Foley was the prime contractor for the

Project under Contract No. DACA31-89-C-0008 which

contract was incorporated by reference into the S&M

subcontract.

From the outset of the Project, S&M experienced

numerous delays in the commencement and conduct of

its work, and performed work in excess of contract

requirements. These delays and extra work have been

due solely to the failure of the Government and/or Foley

to perform in accordance with the terms and specifica-

tions of the primary contract and hence the S&M/Foley

subcontract. By the terms of the subcontract agreement,

the obligations of the Government are assumed towards

S&M by Foley.

Foley has withheld payment from S&M in the

amount of $297,215.75 which is owing by Foley to S&M

under its subcontract, and has refused to compensate

S&M for its expenses incurred as a direct result of these

App. 26

delays, and certain requirements for equipment rentals

and for extra work. As a result, S&M has made a demand

for arbitration pursuant to Attachment 5, Schedule D of

the subcontract seeking monetary relief in the amount of

$1,112,648.63. Of the monetary relief sought, $297,215.75

represents amounts wrongly withheld by Foley under the

subcontract and $815,432.88 represents compensation

sought for delays relating to security clearance, addi-

tional work and changed conditions.

Under the terms and specifications of the prime con-

tract, certain areas of the Project were “restricted” and

required security clearance for all personnel working in

such areas. Specifically, the prime contract under Part IV,

Section L —- Instructions, Conditions and Notice to Bid-

ders stated under L.28

Security Conditions Affecting Work:

Some of the work required by this solicitation

may require access to restricted areas. Occasio-

nal delay in obtaining authorization for access

to these areas or escort to a work site may be

anticipated.

No time period is set forth in the Fort Ritchie contract

as required for obtaining security clearance. Before

S&M’s final schedule Foley/Government personnel rep-

resented that sixty (60) days should be scheduled and

anticipated by the Contractor as required to obtain secu-

rity clearances.

S&M, in reasonable reliance on such representations,

diligently and timely applied for security clearances for

its personnel but was unable to obtain security clearances

for the requisite number of skilled workers to commence

App. 27

and prosecute the work as scheduled. When S&M was

able to commence work, it was forced to do so without

the requisite number of supervisors and crew to perform

the work as originally scheduled and as reasonably antic-

ipated. At variance with its intended schedule but in

order to begin to accomplish its work, S&M was forced to

change its work schedule from three eight-hour shifts to

two ten-hour shifts. This modification of its anti¢gipated

procedure, necessitated by the unjustified secufity clear-

ance delays, and in contradiction to express’ representa-

tions made by upper-tier representatives, further delayed

S&M’s work due to the loss of efficiency caused by

extended work shifts and made S&M’s work more costly

because of the greater utilization of premium time to

enhance production.

The security clearance delays were well in excess of

the 60 days represented as required, or — for that matter —

any other reasonable standard, and interfered with the

proper execution of S&M’s work by limiting the number

of skilled personnel available to the project. S&M seeks

an equitable adjustment of its contract price and time for

these delays on the basis of constructive change, Govern-

ment/Foley furnished property, and failure to provide

access to the work. It is S&M’s contention that these are

compensable, not just excusable, delays.

S&M is also seeking an equitable adjustment in con-

tract price and time for directed changes for additional

work performed to seal water leaks after the required

shotcrete had been successfully applied. In addition,

S&M is seeking equitable adjustment in contract price

and time for changed conditions in the Area D Upshaft

which constituted a delay to S&M’s work. As a result of

App. 28

the changed condition, new plans had to be formulated,

and as a result, additional delays were suffered by S&M.

In all, S&M is seeking an equitable adjustment to its

contract in the amount of $1,112,648.63 and 184 calendar

days. These delays are at the heart of the arbitration

between S&M and Foley. S&M is seeking redress for the

balance of its contract amount plus compensable extra

work costs and extended delays, while Foley is seeking

compensation for delays allegedly caused by S&M, lost

performance and extended overhead relative to the

delays, liquidated damages and for additional costs rela-

tive to the direct and indirect cost of repairs which Foley

apparently claims were necessitated by S&M’s failure

properly to perform its work. In total, Foley is seeking

$2,359,849.12 in its Counterclaim.

Certain components of Foley’s claim are inconsistent.

Assuming, arguendo, that S&M’s delays are found not to

be either compensable or excusable, Foley is not entitled

to both actual and liquidated damages for delays caused by

S&M. Rather, Foley would be limited to the contract

provisions calling for liquidated damages. Moreover, cer-

tain of Foley’s claims relating to overexcavation are nec-

essary construction costs, and part of the inherent risk,

assumed by Foley when it deleted from S&M’s proposed

scope of subcontract work, and decided to take upon

itself, the obligation to perform the concrete work follow-

ing excavation. Foley was warned by S&M representa-

tives that the work deleted was more expensive than

Foley anticipated because of the impossibility (under-

stood by everyone familiar with underground construc-

tion — which Foley was not) of precisely controlling the

manner in which rock breaks in blasting. It is Foley’s

App. 29

contention that S&M improperly excavated in certain

areas, causing Foley additional expense. In fact, S&M

employed industry standard techniques to control break

as appropriate and practicable. Nevertheless, the rock

breakage, an inevitable concomitant of the drill-and-blast

method, is ultimately a function of geology.

While there are other numerous specific areas of

dispute to be determined in this proceeding, S&M’s basic

position is that Foley cannot impose upon S&M the

responsibility for delays that are actually compensable to

S&M and which resulted from causes attributable solely

to Foley and/or the Government as a result of Foley and/

or the Government's failure properly to understand or

schedule its own work.

Respectfully submitted,

ANDREWS & ASSOCIATES

JANUARY 16, 1992

/s/ Robert J. Andrews, Jr.

ROBERT J. ANDREWS, JR.

Regis. No. 0025043

4403 St. Clair Avenue

Cleveland, OH 44103-1125

(216) 881-8030

Attorney for Claimant

App. 30

IN THE CIRCUIT COURT OF

JACKSON COUNTY, MISSOURI

AT KANSAS CITY

S&M CONSTRUCTORS, INC.

Plaintiff,

)

) CV92-1585

)

V. )

)

Case No.

Division

THE FOLEY COMPANY, (Filed Jan. 23, 1992)

Defendant.

PETITION FOR TEMPORARY RESTRAINING ORDER

AND PRELIMINARY INJUNCTION

COMES NOW plaintiff S&M Constructors, Inc.

(“S&M”) and prays for judgment ordering a temporary

restraining order of the arbitration proceedings between

S&M and The Foley Company (“Foley”), Case No. 57 110

0079 90, before the American Arbitration Association,

Kansas City, Missouri, scheduled to commence February

3, 1992, and that a preliminary injunction be issued there-

after, enjoining such arbitration. In support of its Petition

S&M states:

1. S&M is an Ohio corporation in good standing

with its offices at 29100 Hall Street, Solon, Ohio 44139.

2. Foley is a Missouri corporation in good standing

with its offices at 7501 Front Street, Kansas City, Missouri

64120.

3. The dispute in arbitration arose under S&M’s

subcontract with Foley for excavation and other heavy

underground construction services rendered at United

States Army Corps of Engineers (“Corps of Engineers”)

App. 31

project known as the Power Reliability Enhancement Pro-

gram (AJCC), Fort Ritchie, Maryland (“Project”) for

which Foley was the general contractor.

4. S&M and Foley have filed claims with the Corps

of Engineers for equitable adjustment for compensable

delays resulting from the failure of the United States

Government to grant security clearances for S&M’s per-

sonnel in a timely manner, for changed conditions and for

additional work, which claims aggregate in excess of

$2,000,000. To date, the Contracting Officer for the Project

has not made a final determination of these claims.

5. In the scheduled arbitration proceedings, S&M

has made a demand against Foley for the same claims for

equitable adjustment as set forth in paragraph 4.

6. Foley has filed a counterclaim in the arbitration

proceedings seeking $2,359,849.12 for losses and extra

expense caused by S&M’s delays substandard perfor-

mance of its subcontract with Foley. Foley contends that

S&M’‘s delays in turn have delayed and impacted Foley’s

scheduling and completion of the Project in a timely

manner.

7. The delays for which Foley is basing its counter-

claim are, for the most part, concurrent with the delays

that are the basis of S&M’s claim for equitable adjust-

ment, and, similarly are based on commissions or omis-

sions on the part of the United States Government.

8. The subcontract between S&M and Foley has

caused a unique and conflicting situation based on the

contradictory terms of the subcontract governing dispute

App. 32

resolution. The S&M-Foley subcontract provides in

Attachment 5, Schedule D, paragraph 1 as follows:

1. Incorporation Provision. All the various con-

tract documents between the Owner and The

Foley Co. are incorporated by reference as if

fully rewritten herein and shall be binding upon

and provide entitlement to, mutatis mutandis,

The Foley Co. and Subcontractor.

Exhibit A annexed hereto.

Foley’s contract with the Owner, the United States Army

Corps of Engineers, contains a Disputes clause which

requires that “all disputes arising under or relating to this

contract shall be resolved under this clause.” A copy of

this Disputes clause is annexed hereto as Exhibit B. The

Disputes clause requires that any claims must first be

submitted to the United States Army Corps of Engineers

Contracting Officer for a written decision, which decision

shall be final unless the contractor appeals or files suit

under the Contracts Disputes Act 41 U.S.C. Sections

601-613.

9. In addition to the Disputes clause which is incor-

porated by reference into the subcontract between S&M

and Foley, the subcontract provides in Attachment 5,

Schedule D, paragraph 2, as follows:

2. Arbitration and Enforcement Costs - It is

agreed that disputes arising under this Agree-

ment, or under any instrument made to carry

out the terms of this Agreement, shall, where

permitted by law, be submitted to arbitration in

accordance with the then obtaining rules of the

American Arbitration Association. Any hearing

shall be held in Kansas City, MO. Any costs

App. 33

including, without limitation, legal fees incurred

by either party in the successful enforecement of

any rights hereunder, shall be borne by the

party against which said rights are enforced.

Exhibit A annexed hereto.

10. The foregoing arbitration clause is the basis for

the arbitration proceedings scheduled to commence on

February 3, 1992 in Kansas City, Missouri.

11. The conflict that arises by virtue of the contra-

dictory provisions for dispute resolution contained in

Attachment 5 of the subcontract is that a bifurcated pro-

ceeding has resulted. First, S&M has made its claims, as

has Foley, through the Government contract mandated

disputes resolution process, for equitable adjustment

based on compensable delays, additional work and

changed conditions for which claims a determination has

not yet been made. Second, the arbitration proceeding

involves claims identical with those claimed for in accor-

dance with the Government contract mandated disputes

resolution process. Third, the counterclaims asserted by

Foley in the arbitration are similarly identical with those

Foley has submitted in accordance with the Government

contract mandated disputes resolution process and are

integrally tied to a determination of the validity of S&M’s

claims relating to delays which may either be compens-

able or excusable delays and therefore a valid defense to

Foley’s counterclaims. ;

12. The result of commencing arbitration at this

time could be conflicting results that would be inequita-

ble to the parties by failing to provide a means by which

to redress these conflicts. By way of example, S&M could

App. 34

prevail in the arbitration, winning its award and defeat-

ing Foley’s counterclaim, yet Foley could lose its claim

before the Corps of Engineers or Board of Contract

Appeals which may find Foley is not entitled to addi-

tional compensation and that its delays (which would

include S&M’s) were neither compensable nor excusable.

In this instance, Foley would have no means of redress

because of the inherent limitation on the appeal of arbi-

tration awards. Similarly, S&M might prevail before the

Corps of Engineers or the Board of Contract Appeals with

a finding that its delays were compensable, yet lose in

arbitration and would have no means to reconcile its

position. Such a potential conflicting result indicates that

the issues are not yet ripe for arbitration.

13. In addition to the issue of potentially irreconcil-

able results, S&M maintains that the current arbitration

proceeding must be enjoined based on the preemption of

federal procurement.

14. The Project as well as Foley’s contract with the

Corps of Engineers is governed by federal government

procurement law which dictates the means and methods

of dispute resolution. By virtue of the incorporation of

Foley’s contract into S&M’s subcontract, the dispute reso-

lution mechanism dictated by Government regulations

are controlling and preempt the consensual provisions of

the subcontract relating to arbitration. Such a determina-

tion is clearly required where, as in the instant case, the

parties have submitted their disputes for resolution by

the Corps of Engineers Contracting Officer pursuant to

the Disputes clause of the prime contract.

App. 35

15. S&M maintains that should arbitration proceed,

such proceedings would be in violation of federal law

governing dispute resolution for government contracts

and that S&M, and indeed Foley, may sustain irreparable

harm resulting from conflicting decisions by the Corps of

Engineers and the arbitration for which result S&M has

no adequate remedy at law.

WHEREFORE, plaintiff S&M respectfully prays that:

A. This Court, by its order, temporarily restrain the

defendant from proceeding to arbitration before the

American Arbitration Association in Case No. 57 110 0079

90.

B. This Court, by its order, preliminarily enjoin the

defendant from proceeding to arbitration before the

American Arbitration Association in Case No. 57 110 0079

90.

App. 36

C. This Court grant such further relief as it deems

just and proper.

Respectfully submitted,

KRAFT, BROWER, GORDON AND

ZELDIN

By: /s/ Ronald L. Kraft

Ronald L. Kraft - MO #21382

By: /s/ Robert B. Zeldin

Robert B. Zeldin - MO #22372

9237 Ward Parkway, Suite 200

P.O. Box 33156

Kansas City, MO 64114-0156

Telephone (816) 361-4800

Fax (816) 361-9865

ATTORNEYS FOR PLAINTIFF

Of Counsel:

ANDREWS & ASSOCIATES

4403 St. Clair Avenue

Cleveland, OH 44103

Telephone (216) 881-8030

Fax (216) 881-3928

cecilia

App. 37

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

S&M CONSTRUCTORS, INC. ) CASE NO.

29100 Hall Street )

Solon, Ohio 44139

Plaintiff

JUDGE

(Filed Feb. 14, 1992)

-Vs-

)

THE FOLEY COMPANY ) 92-0142-CV-W

7501 Front Street )

Kansas City, Missouri 64120 .

)

Defendant

MOTION FOR TEMPORARY RESTRAINING ORDER

Now comes Plaintiff S&M Constructors, Inc. (“S&M”)

pursuant to Rule 65(b) of the Federal Rules of Civil

Procedure and moves this Court for a temporary restrain-

ing order to prevent Defendant The Foley Company

(“Foley”) from proceeding to arbitration with S&M in

Case No. 57 110 0079 90 before the American Arbitration

Association, Kansas City, Missouri, which was originally

scheduled to commence February 3, 1992. In support of

its Motion, S&M states:

1. S&M is an Ohio corparation in good standing,

with its offices at 29100 Hall Street, Solon, Ohio 44139.

2. Foley is a Missouri corporation in good standing,

with its offices at 7501 Front Street, Kansas City, Missouri.

3. Jurisdiction is predicated upon both diversity of

citizenship within the terms of 28 U.S.C. §1332 and

Federal subject matter jurisdiction under the Federal

App. 38

Arbitration Act, 9 U.S.C. §1 et seg. and the Contracts

Dispute Act of 1978, 41 U.S.C. §601 et seq.

4. The dispute between the parties arose out of

S&M’s subcontract with Foley for excavation and other

heavy underground construction services rendered at

United States Army Corps of Engineers (“Corps of Engi-

neers”) project designated as the Power Reliability

Enhancement Program (AJCC) (“Project”), Fort Ritchie,

Maryland.

5. Foley is the general contractor for the Project

under the prime contract with the Corps of Engineers and

contracted with the United States Government for all

construction aspects of the Project.

6. The S&M-Foley subcontract provides in Attach-

ment 5, Schedule D, paragraph 1:

1. Incorporation Provision. All the various con-

tract documents between the Owner and The

Foley Co. are incorporated by reference as if

fully rewritten herein and shall be binding upon

and provide entitlement to, mutatis mutandis,

The Foley Co. and subcontractor.

[Exhibit A annexed hereto.]

7. Foley’s prime contract with the Owner, the

United States Army Corps of Engineers, contains a Dis-

putes clause which states that “this contract is subject to

the Contracts Disputes Act of 1978, (414 S.C. 601-613)”

and which requires that “all disputes arising under or

relating to this contract shall be resolved under this

clause.” A copy of this Disputes clause is annexed hereto

as Exhibit B. The Disputes clause requires that any claims

App. 39

must first be submitted to the Corps of Engineers Con-

tracting Officer for a written decision, which decision

shall be final unless the contractor appeals to the Board of

Contract Appeals or files suit in the Claims Court under

the Contracts Dispute Act of 1978, 41 U.S.C. §601 et seq.

8. Whereas the Disputes clause of the prime con-

tract is incorporated by reference into the S&M-Foley

subcontract, the subcontract also provides in Attachment

5, Schedule D, paragraph 2:

2. Arbitration and Enforcement Cost. It is

agreed that disputes arising under this Agree-

ment, or under any instrument made to carry

out the terms of this Agreement, shall, where

permitted by law, be submitted to arbitration in

accordance with the then obtaining rules of the

American Arbitration Association. Any hearing

shall be held in Kansas City, Missouri. Any costs

including without limitation, legal fees incurred

by either party in the successful enforcement of

any rights hereunder, shall be borne by the

party against which said rights are enforced.

[Annexed hereto as Exhibit A.]

This arbitration clause is the basis for the pending

arbitration proceeding.

9. In accordance with the Disputes clause of the

prime contract between Foley and the Corps of Engi-

neers, S&M, through Foley, has filed claims with the

Corps of Engineers for equitable adjustment for compens-

able delays resulting from the failure of the United States

Government to grant security clearances for S&M’s per-

sonnel in a timely manner and for other reasons; Foley

has additional claims against the government which

. App. 40

aggregate in excess of $2,000,000.00. S&M’s claims are

and Foley’s claims are soon to be before the Contracting

Officer for the Project and have not yet been decided.

10. S&M’s demand against Foley in the arbitration

proceeding is for the same claims for equitable adjust-

ment as in S&M and Foley’s claims against the Govern-

ment. Foley has filed a counterclaim in the arbitration

seeking $2,359,849.22 for losses and extra expense caused

by S&M’s delays and for its substandard performance

under the S&M-Foley subcontract.

11. Foley’s counterclaim is based on the premise

that S&M’s delays have delayed and obstructed Foley’s

scheduling and have, therefore, prevented Foley’s com-

pletion of the Project in a timely manner.

12. The delays upon which Foley is basing its coun-

terclaim are, for the most part, concurrent with the delays

that are the basis of the S&M and Foley claim for equita-

ble adjustment submitted to the Contracting Officer, and,

thus, are based on commissions or omissions of the

United States Government. The United States Govern-

ment, which would not be party to an arbitration between

Foley and S&M, is thus a necessary party whose presence

is required properly to resolve nearly all of the disputes

between the parties. Foley itself recognized this fact when

on December 6, 1990 it-filed its own Application to Stay

Arbitration in the Circuit Court of Jackson County, Mis-

souri at Kansas City.

13. The dispute between S&M and Foley raises a

question of the conflict between Federal law governing

the government procurement process and dispute resolu-

tion thereunder and the subcontract arbitration clause. It

App. 41

is S&M’s position that i) the Disputes clause and dispute

resolution remedies under the United States Government

procurement law and the Contracts Disputes Act of 1978

preempt consensual remedies such as arbitration, ii) there

has been an election to proceed under the Disputes clause

and the parties have not exhausted their administrative

remedies thereunder and, iii) Federal law governing gov-

ernment contracts is controlling to stay arbitration in this

instance.

14. The failure to issue a temporary restraining

order will cause irreparable harm to S&M since it will

then be committed to concurrent bifurcated proceedings

a) under the Disputes resolution process before the Corps

of Engineers and b) pursuant to arbitration. Such a deci-

sion creates duplicative effort and results which may be

inconsistent with judicial or legal economy and result in

inconsistent and irreconcilable decisions.

15. Both S&M and Foley have claims within the

Disputes resolution process mandated by Foley’s prime

contract with the Corps of Engineers and both seek equi-

table adjustment based on compensable damages, addi-

tional work and changed conditions.

16. With respect to S&M, the arbitration proceeding

involves claims identical to those subject to resolution

under the Disputes resolution.process mandated by the

prime Government contracts ~

17. Foley’s counterclaims in arbitration are gener-

ally identical with the claims Foley has submitted under

the prime contract’s Disputes clause and are integrally

tied to a determination of the validity of S&M’s claims

relative to delays which may either be compensable or

App. 42

excusable delays, and therefore, a valid defense to Foley’s

counterclaim.

18. The consequence of commencing arbitration at

this time could be conflicting results that would be ineq-

uitable to the parties by failing to provide a means to

redress these conflicts.

19. Such conflicting results would do irreparable

harm to S&M in the event S&M prevailed in one forum

but lost in another since there is no means to reconcile

these positions and awards in arbitration are effectively

unappealable.

20. The construction of subcontracts let under a

prime contract with the Government is governed by Fed-

eral law. American Pipe & Steel Corp. v. Firestone Tire &

Rubber, 292 F.2d 640 (9th Cir. 1961).

21. When, as in the instant case, there is a conflict of

policy between the dispute resolution process mandated

by the prime government contract and alternative means

of dispute resolution, Federal law has favored the Federal

Dispute resolution process or mechanism. See, Grinnell

Fire Protection Systems Co., Inc. v. Regents of the University

of California, 554 F.Supp. 495 (N.D. Cal. 1982); cf Bache

Halsey Stuart, Inc. v. French, 425 F.Supp. 1231 (D.D.C.

1977).

22. By incorporating the Disputes Clause of the

prime contract into the subcontract and by exercising

their rights thereunder, Foley and S&M have elected that

the Disputes clause and the Contract Disputes Act of 1978

is their rightful and primary avenue of redress. Once

there has been a final decision rendered pursuant to the

App. 43

Government contract dispute resolution process, any

remaining matters which do not involve the government

may be resolved in accordance with the arbitration clause

of the subcontract. Clearly, the dispute between S&M and

Foley is not, at this juncture, ripe for arbitration.

23. Upon the granting of S&M’s request for a tem-

porary restraining order, S&M shall file an application to

this Court for a Preliminary Injunction pursuant to Rule

65(a) of the Federal Rules of Civil Procedure.

WHEREFORE, plaintiff S&M Constructors, Inc. prays

that this Court grant its request for a temporary Restrain-

ing Order staying defendant The Foley Company from

proceeding to arbitration.

Respectfully submitted,

KRAFT, BROWER, GORDON

AND ZEDLIN

By: /s/ Ronald L. Kraft

RONALD L. KRAFT (Mo#21382)

9237 Ward Parkway, Suite 200

P.O. Box 33156

Kansas City, Missouri 64114-0156

Telephone (816) 361-4800

Fax (816) 361-9865

Of Counsel:

Robert J. Andrews, Jr.

Andrews & Associates

4403 St. Clair Avenue

Cleveland, Ohio 44103-1125

App. 44

STATE OF OHIO )

») SS:

COUNTY OF CUYAHOGA )

VERIFICATION

I, Ronan S. Marra, declare as follows:

I am Vice President of S&M Constructors, Inc. Plain-

tiff in the above captioned action and make this declara-

tion on behalf of Plaintiff in my capacity as Vice President

of Plaintiff.

I have read the foregoing Motion for Temporary

Restraining Order and know its contents. I am informed

and believe that the matters stated in the Motion are true,

and on that ground allege that the matters stated in it are

true.

I certify under penalty of perjury that the foregoing

is true and correct.

Executed this 10th day of February, 1992 at Cleve-

land, Ohio.

/s/ Ronan S. Marra

RONAN S. MARRA

SUBSCRIBED AND SWORN to before me, a Notary

Public this 12th day of February, 1992.

/s/ Charles H. Manning

Notary Public

CHARLES H. MANNING, ATTORNEY

NOTARY PUBLIC, State of Ohio

My Commission Has No Expiration Date

App. 45

IN THE COURT OF APPEALS

EIGHTH CIRCUIT

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

S&M CONSTRUCTORS, INC. : Case No.

Plaintiff-Appellant 92-0142-CV-W-6

-VS- : JUDGE

FOLEY COMPANY

: MOTION FOR

Defendant-Appellee : TEMPORARY STAY

OF ARBITRATION

WHILE MOTION TO

ENJOIN A DISTRICT

COURT ORDER IS

PENDING

Now comes the Plaintiff-Appellant, S&M Construc-

tors, Inc., by and through counsel, and respectfully

requests that this Honorable Court issue a one week

injunction of an order denying Plaintiff-Appellant’s

Motion to Stay Arbitration and issue an Order to Stay

Said Arbitration Pending Appeal.

This motion is being made pursuant to Rule 8 of the

Federal Rules of Appellate Procedure. Counsel has previ-

ously moved for a stay in District Court. Counsel has also

moved for an injunction by this Court of the District

Court Order Pending Appeal which is attached hereto.

The District Court denied counsel's application, and with

an arbitration set for February 25, 1992, it is necessary to

obtain an order staying arbitration while the motion and

the appeal are pending. The reasons supporting the

ones .

App. 46

granting of this motion are set forth in the following

brief.

Respectfully submitted,

KRAFT, BROWER, GORDON AND

ZEDLIN

/s/ Ronald L. Kraft

RONALD L. KRAFT

(MO Regis. 21382)

Attorney for Plaintiff-Appellant

App. 47

IN THE COURT OF APPEALS

EIGHTH CIRCUIT

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

S&M CONSTRUCTORS, INC. : Case No. 92-0142-CV-

Plaintiff-Appellant a

Ve : JUDGE

FOLEY COMPANY

: MOTION TO STAY

Defendant-Appellee - AN ORDER OF THE

: DISTRICT COURT

PENDING APPEAL

AND FOR AN

IMMEDIATE AND

TEMPORARY

INJUNCTION

STAYING

PROCEEDINGS

PENDING APPEAL

Now comes the Appellant, S&M Constructors, Inc.,

by and through counsel, and respectfully requests that

this Honorable Court stay the order denying its Motion to

Stay Arbitration while the order is challenged on appeal

and grant an Immediate Temporary Injunction Staying

Arbitration Pending Appeal.

This motion is being made pursuant to Rule 8 of the

Federal Rules of Appellate Procedure. Counsel previously

moved for a stay in the Federal District Court. The Dis-

trict denied counsel’s application and it is therefore nec-

essary to stay the scheduled arbitration while this appeal

App. 48

is pending. The reasons supporting the granting of this

motion are set forth in the- following brief.

Respectfully submitted,

KRAFT, BROWER, GORDON AND

ZEDLIN

/s/ Ronald L. Kraft

RONALD L. KRAFT

(MO Regis. 21382)

Attorney for Plaintiff-Appellant

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.