# Petition for Writ of Certiorari — Mission Insurance v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1297%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1983 - **Citation:** 462 U.S. 1132 ## Text Rupreme Court, U8 FILED 92-1517 | MAR 16 1933 No. 7 | 9 OFFICE OF TRE CLERS — ee eee IN THE Siygreuw Curt of the United States OCTOBER TERM, 1992 W. M. SCHLOSSER COMPANY, INC., Petitioner, V. SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA, Respondent. Petition for a Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit PETITION FOR WRIT OF CERTIORARI HERMAN M. BRAUDE Counsel of Record ROGER C. JONES BRAUDE & MARGULIES, P.C. 1025 Connecticut Ave., N.W. Suite 200 Washington, D.C. 20036 (202) 293-2993 Counsel for Petitioner WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 QUESTION PRESENTED Whether the Federal Arbitration Act preempts a state rule of statutory construction, which precludes enforce- ment of a contract arbitration provision, where the state has statutorily conveyed the power to contract but is silent on the power to agree to an arbitration provision within a contract? (i) TABLE OF CONTENTS QUESTION PRESENTED TABLE OF AUTHORITIES OPINIONS BELOW JURISDICTION CONSTITUTIONAL AND STATUTORY PROVI- SIONS INVOLVED . STATEMENT OF THE CASE A. Statement of Facts . B. The Proceedings Below .......... REASONS FOR GRANTING THE WRIT I. VIRGINIA CANNOT NULLIFY THE EF- FECT OF THE FEDERAL ARBITRATION ACT ON SCHOOL BOARDS WHERE IT STATUTORILY CONVEYS THE POWER TO CONTRACT BUT IS SILENT ON THE POWER TO AGREE TO A CONTRACT AR- BITRATION PROVISION Il. THE RULE OF LAW CREATED BY THE FOURTH CIRCUIT’S APPLICATION OF THE DILLON RULE IN THIS CASE DI- RECTLY CONFLICTS WITH SECTION 2 OF THE FEDERAL ARBITRATION ACT, IN VIOLATION OF THE SUPREMACY CLAUSE = eae CONCLUSION (iii) Page 13 18 iv TABLE OF AUTHORITIES Cases Page Boogher v. Stifel, 825 S.W.2d 27 (1992) 15 City of Atlanta v. Brinderson Corp., 799 F.2d 1541 (11th Cir, 1986) oo 11 County of Middlesex v. Gevyn Constr. Corp., 450 F.2d 53 (1st Cir. 1971), cert. denied, County of Middlesex v. Gevyn Constr. Corp., 405 U.S. 955, 92S. Ct. 1176, 31 L. Ed. 232 (3972) ............ 12 Dean Witter Reynolds, Inc. vy. Byrd, 470 U.S. 2138, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985) 10 District of Columbia v. Bailey, 171 U.S. 161, 18 S. Ct. 868 (1897) ixetennas nnn am? 10 Johnson Controls, Inc. v. City of Cedar Rapids, 713 F.2d 370 (8th Cir. ee, 7,16 King County v. Boeing Co., 18 Wash. App. 595, pa 570 P.2d 713 (1977) ae 12 Lindon City v. Engineers Construction Co., 636 P.2d 1070 (Utah eee EI GE 12 Metropolitan Atlanta Rapid Transit Authority, 251 Ga. 15, 303 S.E.2d 1 (1983), vacated, 465 U.S. 1016, 104 S. Ct. 1263, 19 L. Ed. 670, deci- sion on remand, 253 Ga. 219, 320 S.E.2d 742 a... Seen ene hen) hel bh) eh So a 8 Moses H. Cone Memorial Hosp. v. Mercury Con- struction Corp., 460 U.S. 1, 103 S. Ct. 927, 74 L. Ed. 2d 765 SEE seal ncetsegaay oe 16 Saturn Distribution Corp., U8. ——, 11] S. Ct. 516, 112 L. Ed. 2d 527 (1990) 7,14 Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) ............. amin! 7,10, 15,17, 18 W’.M. Schlosser Co., Inc. v. School Board ef Fair- fax County, Va., 980 F.2d 253 (4th Cir. 1992) ___ 1,7 Statutes 9U.S.C.Sectionl] eeeuh coceeuuaccatae toes 2 9U.S.C. Section2. enc slbsmatsnaeedatketbehaale: 3,6, 13, 14 9U.S.C.Section4.. eee iesetinmauee tes 2 Vv TABLE OF AUTHORITIES—Continued 9 U.S.C. Section 15 28 U.S.C. Section 1254 28 U.S.C. Section 1291 . 28 U.S.C. Section 1332 Va. Code Section 22.1-71 Sup. Ct. R. 13.1 Sup. Ct. R. 13.4 IN THE Supreme Comet of the United States OCTOBER TERM, 1992 No. W. M. SCHLOSSER COMPANY, INC., . Petitioner, SCHOOL BOARD OF F'AIRFAX COUNTY, VIRGINIA, Respondent. Petition for a Writ of Certiorari to the United St. es Court of Appeals for the Fourth Circuit PETITION FOR WRIT OF CERTIORARI Petitioner respectfully prays that writ of certiorari issue to review the judgment and opinion of the United States Court of Appeals for the Fourth Circuit, in the case captioned W.M. Schlosser Co., Inc. v. School Board of Fairfax County, Va., 980 F.2d 253 (4th Cir. 1992). OPINIONS BELOW The opinion of the Court of Appeals for the Fourth Circuit is reported at 980 F.2d 253, and is reprinted in the Appendix hereto, pp. la-13a. The Order of the United States District Court for the Eastern District of Virginia (Hilton, J.) denying Peti- tioner’s Petition to Compel Arbitration and the transcript for the petition hearing are reprinted in the Appendix hereto, pp. 16a, 17a-26a. 2 The initial decision and Order of the magistrate judge of the United States District Court for the Eastern Dis- trict of Virginia, denying Petitioner’s Petition to Compel Arbitration and the transcript for the petition hearing are also reprinted in the Appendix hereto, pp. 27a, 28a-32a. . JURISDICTION Invoking federal diversity jurisdiction under 28 U.S.C. Section 1332, Petitioner filed a Petition to Compel Arbi- tration in the United States Distriet Court for the East- ern District of Virginia, pursuant to 9 U.S.C. Section 4, The dispute between the parties is the subject of a writ- ten arbitration agreement, which is governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. By Order dated December 13, 1991, the district court af- firmed the decision of the magistrate judge, which denied Petitioner’s Petition to Compel Arbitration. This decision was appealed to the United States Court of Appeals for the Fourth Circuit, pursuant to the pro- visions of 28 U.S.C. Section 1291 and 9 U.S.C. Section 15. The court of appeals affirmed the decision of the district court by decision dated November 18, 1992. On Decem- ber 16, 1992, the court of appeals denied Petitioner’s Petition for Rehearing and Suggestion for Rehearing En Bane and, by Mandate of the court, the November 18, 1992 judgment took effect as of December 23, 1992. The jurisdiction of this Court to review the judgment of the Fourth Circuit Court of Appeals is invoked under 28 U.S.C. Section 1254(1). This Petition is being dock- eted within 90 days from the entry of the order denying Petitioner’s petition for rehearing and the date by which the judgment of the court of appeals took effect, in accordance with Supreme Court Rules 13.1 and 13.4. 3 CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED U.S. Constitution, Article 4, Clause 2: This Constitution and the laws of the United States . shall be the supreme law of the land.... 9 U.S.C Section 2. Validity, irrevocability, and en- forcement of agreements to arbitrate A written provision in any maritime transaction or a contract evidencing a transaction involving com- merce to settle by arbitration a controversy there- after arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a con- tract, transaction, or refusal, shall be valid, irrevoca- ble, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. Virginia Code, Section 22.1-71. School board consti- tutes body corporate; corporate powers.—The duly appointed members shal! constitute the school board. Every such school board is declared a body corporate and, in its corporate capacity, is vested with all the powers and charged with all the duties, obliga- tions and responsbilities imposed upon school boards by law and may sue, be sued, contract, be contracted with and, in accordance with the provisions of this title, purchase, take, hold, lease and convey school property, both real and personal. School board mem- bers appointed by district or otherwise shall have no organization or duties except such as may be assigned to them by the school board as a whole. STATEMENT OF THE CASE This appeal arises from a decision of the United States Court of Appeals for the Fourth Circuit affirming the district court’s denial of a Petition to Compel Arbitra- tion, which was filed pursuant to the Federal Arbitration Act (“FAA”). The appeal raises a significant policy ——— 4 issue under the FAA and the U.S. Constitution Suprem- acy Clause concerning preemption of a state rule of statutory construction (7.e., the “Dillon Rule’) that was held to preclude enforcement of a contract arbitration provision, despite the decisions of numerous other state supreme courts and federal circuit courts which have held to the contrary when confronted with issues similar in nature. A. Statement of Facts In June 1988, Petitioner, W. M. Schlosser Company, Inc. (“Schlosser”), entered into a contract (“Contract’’) with Respondent, the School Board of Fairfax County, Virginia (“School Board” and/or “Owner’’) for the per- formance of certain construction renovation work relat- ing to the Falls Church High School (the “Project”). (Appendix p. 37a). The Contract, which was written by the School Board, consists of a number of documents in- cluding the American Institute of Architects (“AIA”) Standard Form of Agreement Between Owner and Con- tractor, ALA Document A101, January 1974 Ed.; General Conditions of the Contract for Construction, AIA Docu- ment A201, April 1970 Ed. (“General Conditions”) ; and Supplementary Conditions. These Contract documents are reprinted in the Appendix at pp. 37a-133a. With respect to the arbitration provision in question, Articles 2.2.7 and 2.2.10 of the Contract General Condi- tions specifically provide: 2.2.7 Claims, disputes and other matters in question between the Contractor and the Owner relating to the execution or progress of the Work or the interpreta- tion of the Contract documents shall be referred initially to the Architect for decision which he will render in writing within a reasonable time. » * * s 2.2.10 Any claim, dispute or other matter that has been referred to the Architect ... shall be subject to 5 arbitration upon the written demand of either party. However, no demand for arbitration of any such claim, dispute or other matter may be made until the earlier of: 9210.1 The date on which the Architect has rendered his written decision, or 2 The 10th day after the parties have presented their evidence to the Archi- tect or have been given a reasonable opportunity to do so, if the Architect has not rendered his decision by that date. (Emphasis added) (Appendix pp. 54a-55a). During the course of the Contract, Schlosser’s perform- ance was hindered, disrupted, impacted and delayed due to the actions, inactions and active interference of the Owner. As a result, Schlosser’s Contract performance was extended 209 calendar days and Schlosser suffered significant additional costs and damages. (Appendix p. 35a). On August 3, 1990, Schlosser submitted to the Owner a claim for its additional costs and damages, in the total amount of $1,152,941.00. Since the claim related to the “execution or progress of the work,” Schlosser also sub- mitted a copy of the claim to the architect for his deci- sion, consistent with Article 2.2.7 of the General Condi- tions. (Appendix p. 35a). Schlosser then waited a reasonable time for the archi- tect to issue a decision. In accordance with Article 2.2.10 of the General Conditions, when the architect failed to render a decision on Schlosser’s claim, Schlosser submitted to the Owner a written demand for arbitration. (Ap- pendix pp. 35a-36a, 136a). The Owner failed to respond to Schlosser’s demand for arbitration. (Appendix p. 36a). Therefore, Schlosser filed a Petition to Compel Arbitration in the U.S. District Court for the Eastern District of Virginia, invoking the 6 court’s diversity of citizenship jurisdiction pursuant to 28 U.S.C. Section 1332. (Appendix pp. 38a, 34a). B. The Proceedings Below A hearing on Schlosser’s Petition to Compel Arbitra- tion was held before Magistrate Judge Brinkema. (Ap- pendix pp. 28a-32a). In denying Schlosser’s petition, the Magistrate concluded that Virginia law does not empower school boards to enter into arbitration agreements with respect to construction contract claims, notwithstanding their power to contract. (Appendix p. 32a). The court also concluded that Schlosser’s claim was not subject to an arbitration agreement. (Appendix p. 3la). Schlosser appealed the Magistrate’s ruling to a district court judge and a hearing before the Honorable Claude M. Hilton was conducted on December 13, 1991. Judge Hilton also found that, despite their power to contract, school boards in Virginia do not have authority to agree to arbitrate and that, in any event, the arbitration clause had been removed from the Contract. (Appendix p. 26a). Based on these erroneous findings, Judge Hilton affirmed the Magistrate’s prior decision. (Appendix p. 16a). Schlosser appealed the district court’s decision to the United States Court of Appeals for the Fourth Circuit. On November 18, 1992, the court of appeals issued the opinion of Judges Luttig, Phillips and Niemeyer. The court declined to rule on the issue of whether the Con- tract contained an arbitration clause. Instead, the court held: (1) Based on the “Dillon Rule” of strict construction, Virginia school boards do not possess the power to agree to arbitrate contract disputes and that such power cannot be implied from the school board’s power to contract; and (2) The “Dillon Rule” is not preempted by the Fed- eral Arbitration Act since it falls within the excep- tion of 9 U.S.C. Section 2 as, “a rule of general ap- 7 plicability that defines and invalidates all ultra vires acts of local governing bodies.” W.M. Schlosser Co., Inc. v. School Board of Fairfax County, Va., 980 F.2d 253, 256, 257, 259 (4th Cir. 1992}. (Appendix pp. la, 7a, 8a, 12a-13a). On December 1, 1992, Schlosser filed a Petition for Rehearing and Suggestion for Rehearing En Banc. By Order dated December 16, 1992, the court of appeals denied this petition, without opinion. (Appendix p. 14a). Thereafter, by Mandate issued December 23, 1992, the November 18, 1992 judgment of the court of appeals took effect as of December 23, 1992. (Appendix p. 15a). REASONS FOR GRANTING THE WRIT The Fourth Circuit’s decision creates a rule of law that directly conflicts with the federal substantive law created by the FAA, standing as an obstacle to the accomplish- ment and execution of the full purposes and objectives of Congress in implementing the FAA. Pursuant to this rule of law, arbitration provisions in contracts with Vir- ginia school boards are rendered completely unenforce- able, even where the arbitration provision is governed by the FAA. Petitioner respectfully submits this outcome is in direct conflict with and ignores the Court’s decision in Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984), as well as the Fourth Circuit’s own opinion in Saturn Distribution Corp. v. Williams, 905 F.2d 719 (4th Cir. 1990), cert. denied, Williams v. Saturn Distribution Corp., —— U.S. , 111 S. Ct. 516. 112 L. Ed. 2d 527 (1990) and the opinion of the Eighth Circuit in Johnson Controls, Inc. v. City of Cedar Rapids, 718 F.2d 370 (8th Cir. 1983). As recognized in Southland Corp., by “enacting [sec- tion] 2 of the federal | Arbitration] Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed 8 to resolve by arbitration.” 465 U.S. at 10. In doing so, this Court noted that, “Congress has thus mandated the enforcement of arbitration agreements” and that “con- tracts to arbitrate are not to be avoided by allowing one party to ignore the contract and resort to the courts.” 465 U.S. at 7 and 10. The Court also noted that there are only two limita- tions on the enforceability of arbitration provisions gov- erned by the FAA. First, such provisions must be in writing and part of a contract, “evidencing a transaction involving commerce”; and second, such clauses may be revoked only upon “grounds as exist at law or in equity for the revocation of any contract.” 465 U.S. at 10-1] and 16, n.11. [Emphasis added]. There is nothing else in the Act to indicate the “broad principle of enforce- ability is subject to any additional limitations under state law.” 465 U.S. at 11. Further, where state law directly conflicts with Section 2 of the Federal Arbitration Act, it violates the Supremacy Clause of the U.S. Constitution. 465 U.S. at 10. The instant case raises a preemption issue similar to that raised in Southland Corp.’ Although it does not ' The instant case is also similar to the unsettled questions of law raised in Local Division 732, Amalgamated Transit Union v. Metro- politan Atlanta Rapid Transit Authority, 251 Ga. 15, 303 S.E.2d 1 (1983), vacated, 465 U.S. 1016, 104 S. Ct. 1263, 79 L. Ed. 670, decision on remand, 253 Ga. 219, 320 S.E.2d 742 (1984). In Local Division 732, the Metropolitan Atlanta Rapid Transit Authority (“MARTA”) withdrew from binding interest arbitration with the Union contending that under Georgia law arbitration agreements were revocable at will. The Georgia Supreme Court agreed. 251 Ga. at 18-19, 303 S.E.2d at 4. The U.S. Supreme Court held its ruling on the Union’s petition for certiorari until it ruled in Southland Corp. It then vacated the Georgia Supreme Court’s decision and remanded for reconsidera- tion. 104 S. Ct. 1263. Despite this Court’s ruling, the Georgia Su- preme Court reentered its earlier judgment, ruling that “MARTA’s consent to arbitrate the terms and conditions of a new collective bargaining agreement was an unlawful delegation of legislative 9 involve a statute, as was the case in Southland Corp., the Fourth Circuit’s application of a common law rule of strict statutory construction, results in direct conflict with Section 2 of the Federal Arbitration Act, precluding enforcement of the arbitration clause contained in the parties’ contract. I. VIRGINIA CANNOT NULLIFY THE EFFECT OF THE FEDERAL ARBITRATION ACT ON SCHOOL BOARDS WHERE IT STATUTORILY CONVEYS THE POWER TO CONTRACT BUT IS SILENT ON THE POWER TO AGREE TO A CONTRACT ARBI- TRATION PROVISION Virginia Code Section 22.1-71 defines the general pow- ers and duties of school boards, as follows: Every such school board is declared a body corporate and, in its corporate capacity, is vested with all the authority” because it exceeded MARTA’s statutory authority. 253 Ga. at 222, 320 S.E.2d at 745. In doing so, the Georgia Supreme Court believed that the state’s restriction on public body arbitra- tion agreements fell within the exception in Section 2 of the FAA for defenses “applicable to all other contracts.” 253 Ga. at 223, 320 S.E.2d at 745. Much like the Fourth Circuit reasoned in the instant case, the Georgia Supreme Court reasoned that absent an express grant of statutory authority to agree to arbitration provisions, despite the existence of the statutory power to contract, the arbitration provi- sion within the agreement was unenforceable because it constituted an unlawful delegation of authority, which was a general contract defense under the “savings clause” in Section 2 of the FAA. Before this controversy between the Georgia Supreme Court and the U.S. Supreme Court could ultimately be resolved, the parties settled their case. Unquestionably, the lack of explicit authority to agree to arbitra- tion (despite the authority to contract) is not a ground that exists at law or in equity “for the revocation of any contract.” 465 U.S. at 16, n.11. Rather, as in Southland Corp., and as in this case, it is “merely a ground that exists for revocation of arbitration provisions in contracts” with Virginia school boards, which is in direct conflict with and is preempted by the FAA. 465 U.S. at 16, n.11. 10 powers and charged with al] the duties, obligations and responsibilities imposed upon school boards by law and may sue, be sued, contract, be contracted With, « The plain language of this statute gives to school boards the power to contract. in a corporate capacity as well as the power to sue and be sued. This power implicitly in- cludes the power to “gree to arbitration provisions within such contracts. The Fourth Cireuit’s decision to the con- trary, based on erroneous application of the “Dillon Rule” of strict Statutory construction, is illogical and ignores the fact that the purpose of the Federal Arbitration Act is to place arbitration agreements “upon the same fvot- ing as other contracts, where | they | belong.” Dean Witter Re ynolds, Ine. v. Byrd, 470 US. 213, 219, 105 S. Ct. 1238, 84 L. Ed. 24 158 (2985) (citing: H.R. Rep. No. 96, 68th Cong. Ist Sess. 1 (1984) '. See also, South- land Corp. v, Keating, 465 U.S. , 17 0h) continued, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984). The issue of whether the power to arbitrate contract disputes may be implied from the power to contract ‘granted to quasi public corporations, such as Virginia school boards) was decided almost 100 years ago by this Court in District of Columbia v. Bailey, 171 U.S. 161, 18 S. Ct. 868 (1897). The sailey Court squarely addressed application of the “Dillon Rule” on this issue, stating: 50, also, the power of a municipal corporation to arbitrate arises from its authority to liquidate and settle claims, and the rule on this subject is thus stated by Dillon (Mun. Corp. 4th ed. sec. 478) - ‘As a general proposition, municipal corporations have, unless specially restricted, the same powers to liquidate claims and indebtedness that natural per- sons have, and from that source proceeds power to adjust all disputed claims, and when the amount is ascertained to pay the same as other indebtedness. It would seem to follow therefrom that a municipal corporation, unless disabled by positive law, could 1] submit to arbitration all unsettled claims with the same liability to perform the award as would rest upon a natural person, provided, of course, that such power be exercised by ordinance or resolution of the corporate authorities.’ |[Hmphasis added]. 171 U.S. at 172. The Bailey Court then went on to reason: In the early case of Brady v. Brooklyn, 1 Barb. 584, 589, the power of a municipal corporation to submit to arbitration was ascribed to the capacity to con- tract, with a liability to pay, and it was held that corporations have al] the powers of ordinary parties aus With respect to their contracts, except when they are restricted cepressly, or by necessary implication. In the case of minor public officials or corporations, such as selectmen and school districts, the power to arbitrate has been clearly rested upon the existence of the right to adjust and settle claims of the particu- lar character which had been submitted to arbitra- tion. Die ve. Dummerston, 19 Vermont 262; Walnut v. Rankin, 70 Iowa 65. Indeed, the proposition that an independent agreement to submit to an award must depend for its validity upon the existence of the right to contract is so elementary that further citation of authority to support it is unnecessary. i lumphasis added}. 171 U.S. at 172. Citing Bailey, the Eleventh Circuit in City of Atlanta v. Brinderson Corp., T99 F.2d 1541 (11th Cir. 1986), recognized : The general rule is that, in the absence of statutory prohibition, a municipal corporation has the power to submit both present and future disputes to arbi- tration. Annot. 20 A.L.R. 30, 569, 572 (1968) Am. Jur. 2d, Arbitration and Award, Section 68 pp. 659- 571 (1962). Such a power is incident to its capacity to contract oy make settlements, and its power to sue and be sued. See, generally, McQuillin, 17 Mun, Cor. 12 Section 48.20 (3rd Ed.); City of Hartford v. Amen- can Arbitrators Ass’n., 174 Conn. 472, 391 A.2d 187 (1978); E.E. Trip Excavating Contractor, Ine. v. The County of Jackson, Michigan, 60 Mich. App. 221, 230 N.W.2d 556 (1975). | Emphasis added]. 799 F.2d at 1543." Based on this sound reasoning, the Brinderson court held that with respect to the City of Atlanta: | Their] power to arbitrate is ascribed to the capacity to contract. Accordingly, the City has the incident and necessarily implied power to arbitrate. 799 F.2d at 1543. See also, County of Middlesex ». Gevyn Constr. Corp., 450 F.2d 58, 55 (1st Cir. 1971), cert. denied, County of Middlesex v. Gevyn Constr. Corp., 405 U.S. 955, 92 S. Ct. 1176, 31 L. Ed. 232 (1972) (county recognized to have implied power to arbitrate contract claims based on its power to contract).* 2The Supreme Court of Utah reached the same conclusion in Lindon City v. Engineers Construction Co., 636 P.2d 1070, 1074 (Utah 1981). Citing the Supreme Court of Washington in King County v. Boeing Co., 18 Wash. App. 595, 570 P.2d 713, 717 (1977), the Lindon court acknowledged that: Arbitration is a contractual remedy for the settlement of dis- putes by extrajudicial means. It is a remedy freely bargained for by the parties, and ‘provides a means of giving effect to the intention of the parties, easing court congestion, and providing a method more expeditious and less expensive for the resolution of disputes.’ There is a strong public policy in favor of such remedy. ... The Lindon court further reasoned that: There appears to be no ‘public policy’ or other good reason why persons effectively and by contract, should not be able to agree to an out-of-court settlement. 7 * * ” The trend toward such inter se agreements without resort to litigation, reflects a good, practical way to resolve disputes. 636 P.2d at 1073. 3’ Numerous state supreme courts have also concluded that the power of municipal and/or quasi public corporations to arbitrate 13 The Fourth Circuit’s holding, therefore, on the issue of whether Virginia school boards have the power to agree to arbitrate is clearly in error. The Fourth Cir- cuit’s application of the Dillon Rule defies logic, the Dillon Rule itself and well established law. It also nullifies the import and effect of the Federal Arbitration Act, which attempts to place arbitration agreements on the same footing as contracts, where they belong. See, Dean Witter Reynolds, Inc., supra, 470 U.S. at 219. Il. THE RULE OF LAW CREATED BY THE FOURTH CIRCUIT'S APPLICATION OF THE DILLON RULE IN THIS CASE DIRECTLY CONFLICTS WiTH SECTION 2 OF THE FEDERAL ARBITRATION ACT, IN VIOLATION OF THE SUPREMACY CLAUSE In specifically addressing the preemption issue, the Fourth Circuit stated that the Dillon Rule, “is a rule of general applicability that defines and invalidates al] uw/tra vires acts of local governing bodies.” 980 F.2d at 259 The court concluded, therefore, “as ‘a general rule of contract formation,’ it constitutes a ‘ground as exist/s at law or in equity for the revocation of any contract,’ within the meaning of 9 U.S.C. Section 2 {and} as such. it falls within the exception to Section 2’s general mile of enforceability of arbitration provisions, and therefore is not preempted by the FAA {citations omited}.” 980 F.2d at 259. In reaching this conclusion, the court failed to recog- nize the distinction between a rule of statutory construe- tion ‘such as the Dillon Rule: and the result that may flow from application of the rule. While the Dillon Rule. by itself, is not subject to preemption, the result flowing from the court’s misapplication of the Dillon Rule in this case is subject to preemption. Essentially, the Court’s is implied from their power to contract, sue and be sued. See, generally, Annotation, 20 A.L.R. 3d 569. Power of Municipal Cor- poration to Submit to Arhitration. 14 reasoning process in this case creates a rule of law that goes solely to the arbitration provision in the School Board’s contract and not to contracts, generically, as con- templated by 9 U.S.C. Section 2. Further the preemption issue created by the end result stemming from this rule of law cannot be avoided by the court merely saying the Dillon Rule is simply a “rule of general applicability.” The Fourth Circuit’s decision in this case is also com- pletely inconsistent with their decision in Saturn Distribu- tion Corp. v. Williams, 905 F.2d 917 (4th Cir. 1990), cert. denied, Williams v. Saturn Distribution Corp., US. , 111 S. Ct. 516, 112 L. Ed. 2d 527 (1990). In Saturn, Judges Chapman and Wilkinson recognized with respect to 9 U.S.C. Section 2 that, “with few limita- tions, if a state law singles out arbitration agreements and limits their enforceability it is preempted.”* As stated in Saturn: State laws are subject to preemption not only if they directly contradict federal law, but also if they stand ‘as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ (Citation omitted]. The language of the FAA re- quires that states place no greater restrictions upon arbitration provisions than they place upon other con- tractual terms. . ao . * The Commissioner argues that the scope of FAA pre- emption is limited to laws covering existing arbitra- tion agreements, and does not extend to laws that prohibit or regulate the formation of arbitration agreements. We disagree. [Emphasis in original]. 905 F.2d at 722-723. The result flowing from the Fourth Circuit’s misappli- eation of the Dillon Rule in this case, however, creates 4 The Court proffered as possible exceptions, “fraud or the sort of overwhelming economic power which can render an agreement unconscionable.” 905 F.2d at 727. 15 precisely such a rule of law in Virginia as applied to arbitration provisions in contracts with local school boards. Under Southland Corp. and Saturn preemption would only occur, using the Dillon Rule, where a school board did not have the power to contract and the power to sue and be sued in the first instance. Then, and only then, would the Dillon Rule fall within the savings clause in section 2 of the FAA as a defense applicable to all contracts. Even more troubling, however, is the notion that the Fourth Circuit’s decision will allow the state to do by silence what it cannot do by statute. For example, if Virginia Code Section 22.1-71 granted school boards the power to contract but expressly provided that, “arbitra- tion provisions to resolve contractual disputes, contained in such contracts, are unenforceable,” then under South- land Corp. v. Keating, 465 U.S. 1, 16-17, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984), such a statute would be preempted.° Since, however, Virginia Code Section 22.1-71 is silent as to arbitration (although it includes the power to con- tract and to sue and be sued) the Fourth Circuit permits the Dillon Rule of strict construction to revoke and render ®° The Missouri Court of Appeals recognized this logic in Boogher v. Stifel, 825 S.W.2d 27, 29 (Mo. 1992). In Boogher, the plaintiff argued his claims under the Missouri Human Rights Act were not arbitrable because the Federal Age Discrimination in Employment Act, did not expressly provide for arbitration. Citing Southland Corp., the Boogher Court reasoned that, “a state law which at- tempts to preclude enforcement of an arbitration agreement in a contract involving interstate commerce would be in conflict with the FAA and, therefore, in violation of the supremacy clause.” 825 S.W.2d at 29. Thus, the Boogher, Court concluded: Plaintiff’s argument is flawed because the Missouri Legislature could not enact a provision of the MHRA which precludes arbi- tration without violating the supremacy clause. Under the FAA, plaintiff’s age discrimination suit brought under the MHRA is subject to compulsory arbitration pursuant to his agreement. 825 S.W.2d at 29. 16 unenforceable the arbitration clause contained in the par- ties’ contract. This result is not only illogical but it allows contravention of the Federal Arbitration Act de- spite the fact that the Act constitutes, “a congressional declaration of a liberal federal policy favoring arbitra- tion agreements, notwithstanding any state substantive or procedural policies to the contrary.” Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765 (1983). See also, Southland Corp., supra, 465 U.S. at 16 (“In creat- ing a substantive rule applicable in state as well as fed- eral courts congress intended to foreclose state... at- tempts to undercut the enforceability of arbitration agreements”). When confronted with a similar situation, the Eighth Circuit Court of Appeals in Johnson Controls, Inc. v. City of Cedar Rapids, lowa, 713 F.2d 370, 376 (8th Cir. 1983) rejected contravention of the Federal Arbitration Act, applying federal substantive law over state law. In Johnson Controls the city’s contentions, which are not unlike the School Board’s contentions in this case, were rejected by the court: The city claims that at the time this contract was entered into, lowa law rendered executory arbitra- tion agreements generally unenforceable. [Citations omitted]. Iowa law also provides that municipalities are without power to make contracts that are incon- sistent with state law. [Citations omitted]. Thus, the city asserts that if the contract is construed as providing for mandatory arbitration, the contract would be ultra vires and void under Iowa law. e ” * * The city’s argument is misplaced. The arbitration act was specifically enacted to reverse antiquated state rules of law that make arbitration agreements revocable at will any time prior to the issuance of the arbitration award. {Citations omitted} Because federal substantive law preempts state laws govern- 17 ing the enforceability of arbitration agreements in interstate contracts, the present contract is not unen- forceable under applicable federal law. Hence, con- struing the contract as providing for mandatory arbitration would not be against controlling federal public policy. To the contrary, federal policy favors arbitration in interstate contracts. 713 F.2d at 376. Pursuant to this Eighth Circuit decision, a state law relating to contract formation which would render an arbitration provision ultra vires and void (as the court construed the Dillon Rule in this case) is preempted by federal substantive law created by the Federal Arbitra- tion Act. Further, as recognized in Johnson Comtrols, even if a state law prohibits a municipal corporation from entering into an arbitration agreement, the Federal Arbitration Act displaces the state’s power over the activi- ties of two parties in interstate commerce. 713 F.2d at 381. Based on this reasoning, the Fourth Circuit’s deci- sion in the instant case results in inconsistency with the Kighth Circuit’s decision in Johnson Controls. Although predating the U.S. Supreme Court’s decision in Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) (1984), the court’s rationale in Johnson Controls accords completely with the court’s decision in Svuthland Corp. As recognized by the South- land Corp. Court, in enacting Section 2 of the Federal Arbitration Act, Congress declared a national poliey favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims that the contracting parties agreed to resolve by arbitra- tion. 465 U.S. at 12-13. Certainly, the Fourth Cireuit’s application of the Dillon Rule in the instant case to re- quire a judicial forum notwithstanding the arbitration clause contained in the parties’ contract is contrary to not only the purpose and intent of the Federal Arbitration Act but also the law as stated by the United States Supreme Court. 18 CONCLUSION The Fourth Cireuit’s decision in this case not only ignores this Court’s holding in Southland Corp. v. Keat- ing, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) and the Supremacy Clause of the U.S. Constitution, it also creates precedent which substantially erodes federal substantive law created by the Federal Arbitration Act. By allowing a state rule of statutory construction to stand as a complete obstacle to the enforcement of an arbitra- tion provision, the Fourth Circuit is permitting states to accomplish by silence that which they cannot accom- plish by express statute. Federal substantive law requires the enforcement of an arbitration provision where, as in this case, they are part of a contract which involves in- terstate commerce. To the extent a state rule of statutory construction precludes enforcement of such an arbitra- tion provision, then its application violates the Supremacy Clause of the U.S. Constitution and it is preempted by the Federal Arbitration Act. In order to avoid inconsist- ent decisions between the circuits and to provide guidance for parties invoking the Federal Arbitration Act in state court proceedings, it is important for this Court to finally address and resolve the significant issue raised by this case, which involves conflicting federal substantive law and state law with respect to the validity and enforce- ability of a contract arbitration provision. Respectfully submitted, HERMAN M. BRAUDE Counsel of Record ROGER C. JONES BRAUDE & MARGULIES, P.C. 1025 Connecticut Ave., N.W. Suite 200 Washington, D.C. 20086 (202) 293-2993 Counsel for Petitioner APPENDICES tas a aN 2 ll CARMINA is alt OP CR iin tai Sis tie ead tthe i eK, Meson la APPENDIX A UNITED STATES COURT OF APPEALS FOURTH CIRCUIT No. 92-1008 W.M. SCHLOSSER COMPANY, INCORPORATED, Plainti ff-A ppellant, ¥. SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA, Defendant-A ppellee. Argued Sept. 29, 1992 Decided Nov. 18, 1992 As Amended Jan. 13, 1993 Herman Martin Braude, Braude & Margulies, P.C., Washington, D.C., argued (Roger C. Jones, on brief), for plaintiff-appellant. Thomas John Cawley, Hunton & Williams, Fairfax, Va., argued (Stuart A. Raphael, on brief), for defendant- appellee. Before PHILLIPS, NIEMEYER, and LUTTIG, Circuit Judges. OPINION LUTTIG, Circuit Judge: The W.M. Schlosser Company appeals an order of the district court denying its motions to compel arbitration and to appoint an arbitrator to resolve its construction € ‘ Za contract dispute with the School Board of Fairfax County, Virginia. We conclude that regardless of whether the School Board agreed to arbitrate the dispute in question, it lacked the legal authority to arbitrate under the laws of the Commonwealth of Virginia. We therefore affirm. I. The relevant facts necessary to the disposition of this appeal are not in dispute. On June 10, 1988, the W.M. Schlosser Company [Schlosser], a Maryland corporation, entered into a contract with the Fairfax County School Board {the School Board] for the performance of reno- vation construction at the Falls Church High School. The contract comprised a number of documents, the most important of which were two standard construction forms prepared by the American Institute of Architects, the AIA Standard Agreement and the AIA General Condi- tions, and a set of Supplementary Conditions that in- cluded extensive modifications to the terms of the AIA standard forms. J.A. at 5-41. The AIA General Conditions provide for the arbitra- tion of claims arising under the contract. Article 2.2.7 of the General Conditions stipulates that all disputes be- tween contractors and owners must first be referred to the project architect for an initial decision.’ Id. at 14. Article 2.2.10 states that “ al|ny claim, dispute or other matter that has been referred to the Architect . . . shall be subject to arbitration upon the written demand of either party.” Jd. Finally, Article 7.10, entitled “ARBI- TRATION,” provides that all contract disputes shall be arbitrated in accordance with the Construction Industry Arbitration Rules of the AIA and outlines the arbitration process. /d. at 20. In the Supplementary Conditions por- tion of the contract, Schlosser and the School Board left ‘Under Article 2.2.2 of the General Conditions, the project archi- tect is the agent and representative of the owner, which in this case is the School Board. J.A. at 14. 3a Articles 2.2.7 and 2.2.10 unchanged. Jd. at 27. They deleted Article 7.10 of the AIA General Conditions, how- ever, in its entirety. /d. at 302 Prior to completion of the Falls Church High School project, Schlosser alleged that it had been delayed in the performance of its contract obligations by the School Board, and on August 3, 1990, it served the Board with a claim for damages in the amount of $1,152,941. Schlosser submitted a copy of the claim to the project architect for an initial adjudication, pursuant to Article 2.2.7 of the General Conditions. /d. at 3. Several months later, the architect granted Schlosser a short extension of the time within which it was required to complete its work, but denied Schlosser’s damages claim. /d. at 75-79. On March 27, 1991, Schlosser presented the Board with a written demand for arbitration pursuant to Article 2.2.10 of the General Conditions. The following day, invoking the court’s diversity jurisdiction, Schlosser moved in the district court to compel arbitration and to designate and appoint an arbitrator under the terms of the Federal Arbitration Act |FAA|, 9 U.S.C. £8 1 ef seq. Schlosser’s petition was referred to a federal magistrate who, after conducting a hearing, denied both of Schlosser’s motions on the ground inter alia that the School Board lacked the authority tv arbitrate under Virginia law and thus that any attempt by the Board to contract to arbi- trate was unenforceable. J.A. at 103, 105. Schlosser appealed the magistrate judge’s decision to the district court. The district court adopted the magis- * The director of design and construction services for the school system stated in his declaration that because “neither the [School Board} nor any of its agents has the authority to enter into arbitra- tion agreements,” “it is the custom and standing practice of Fairfax County Public Schools to climinate standard form arbitration provi- sions contained in construction contracts.” Hanton Decl., J.A. at 70 * Schlosser initially appealed the magistrate’s decision to this court. We dismissed the appeal for lack of jurisdiction. W_M. Schlosser Co. v. Fairfax County Sch. Bd., No. 91-2515 (4th Cir Aug. 2, 1991). 4a trate’s recommendations, holding that the Board had no authority under Virginia law to arbitrate contract dis- putes. /d. at 125-26. This appeal followed.’ II. A. The question before the court is whether the School Board possesses the authority under the laws of the Commonwealth of Virginia to agree to arbitrate contrac- tual disputes, for if it does not, then any such agreement by the Board is unenforceable as. u/tra vires and the motion to compel arbitration therefore must. be denied. See Richmond Ry. Co. », Richmond, Ete., 145 Va. 266, 299, 123 S.E. 888, 898 (1926) (“When the contract is once declared ultra vires, the fact that it is executed does not validate it, nor can it be ratified so as to make it the basis of suit or action, nor does the doctrine of estoppel apply.” ) ; accord Richard L. Deal & Assocs., Inc. ». Com- monwealth, 224 Va. 61%, 299 S.K.2d 346 (19%3). The resolution of this question depends in turn upon applica- tion of the Dillon Rule, a rule of construction applicable in Virginia when determining the powers of local govern- ment: “There can be no question that Virginia long has followed, and still adheres to, the Dillon Rule of strict construction concerning the powers of local governing bodies.” Commonwealth +. County Bd., 217 Va. 558, 232 S.E.2d 30, 40 (1977). * The district court also held that Schlosser and the Board had not agreed to arbitrate disputes arising out of their contract. Be- cause we agree with the district court that the Board lacked the authority to arbitrate contract disputes, we need not and do not reach this question of contract interpretation. 5 The Virginia Supreme Court first recognized the Rule—some- times referred to as Dillon’s Rule —in Winchester y. Redmond, 93 Va. 711, 25 S.E. 1001 (1896). The Rule takes its name from John F. Dillon, a federal circuit judge, chief justice of the Iowa Supreme Court, and noted law professor. See infra note 6. Re va According to the Dillon Rule, local governing bodies such as counties, municipal corporations, and school boards “possess and can exercise only those powers @x- pressly granted by the General Assembly, those neces- sarily or fairly implied therefrom, and those that are essential and indispensable.” * City of Richmond v. Com- frere Club, 239 Va. 77, 387 S.E.2d 471, 473 (1990) (cit- ing cases); County Bd. v. Brown, 229 Va. 341, 329 S.B.2d 46%, 470 (1985); see also School Bd. v. Burley, 225 Va. 316, 37%, 302 S.B.2d 53, 55 (1983) (“A school board may exercise only the power granted it by the General Assem- bly.” ; Kellam v. School Bd., 202 Va. 252, 117 S.E.2d 96, 98 (1960) ‘school boards “constitute public quasi cor- porations that exercise limited powers and functions of a public nature granted to them expressly or by necessary implication, and none other’). The Rule is strictly con- strued and strictly enforced by the Virginia Supreme Court and the court does not liberally recognize govern- mental powers by implication. See Brown, 329 S.E.2d at 472 (power to lease realty cannot be implied from county’s express power to sell or convey realty); Com- monwealth v, County Bd., 222 S.E.2d at 44 (power to bargain collectively cannot be implied from expressly granted powers of school boards to contract, hire employ- ees, and set terms of employment). significantly, “{ilf there is any reasonable doubt whether legislative power exists, that doubt must be resolved against the loca] gov- erning body.” Confrere Club, 387 S.E.2d at 473 ‘em- ® See Winchester, 93 Va. at 714, 25 S.E. at 1002 (quoting 1 Dillon on Mun. Corp. § 89 (3d ed.))- a municipal corporation possesses and ean exercise the follow- ing powers, and no others: First, those granted in eXPress words ; Second, those necessarily or fairly implied in or incident to the powers expressly granted: Third, those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable. Any fair, reasonable doubt con- cerning the existence of power is resolved by the courts against the corporation, and the power is denied. Oa phases added); accord Stallings v. Wall, 235 Va. 313, 316, 367 S.E.2d 496, 497 (1988). B. Schlosser and the School Board agree that the state constitution does not expressly confer the power to arbi- trate on Virginia school boards. Both parties also appear to agree that such a power cannot be considered ‘‘essen- tial” or “indispensable” to the functioning of school boards. Therefore, if the power to agree to arbitrate is not expressly granted by statute or cannot be implied from a power explicitly conferred on school boards by the General Assembly, it does not exist. Schlosser contends that the authority to agree to arbi- trate is conferred in section 22.1-71 of the Virginia Code. That statute, which lists the corporate powers of the Com- monwealth’s school boards, provides that every school board is . . . vested with all the powers and charged with all the duties, obligations and responsi- bilities imposed upon school boards by law and may sue, be sued, contract, be contracted with and, in ac- cordance with the provisions of this title, purchase, take, hold, lease and convey school property. . . . Va.Code Ann. § 22.1-71 (Michie 1985) (emphasis added). Schlosser asserts that because the School Board has the “capacity to centract, [it] .. . clearly has the power to enter into construction contracts containing arbitration provisions for the resolution of claims relating to the con- tract.” Appellant’s Br. at 10-11.7 It is not entirely clear whether Schlosser contends that the grant of the power to contract in section 22.1-71 is an express conferral of the power to agree to arbitrate or 7 Alternatively, Schlosser contends that the authority to arbitrate may be implied from that portion of section 22.1-71 that grants school boards the power to sue and be sued. Appellant’s Br. at 13, 16. See infra note 10. ~ et Ta whether it contends that the power to arbitrate is implied in the power to contract. While neither contention is without force, ultimately each fails. Both the Public Procurement Act, Virginia Code §§ 11-35 et seq., and section 15.1-508 of the Virginia Code confirm that the Virginia General Assembly does not consider the grant of a right to contract as expressly conferring a right to agree to arbitrate. It is also evident from these statutes, especially when they are construed strictly as required by the Dillon Rule, that we are not at liberty to imply such a right from the School Board’s right to contract. C. The Public Procurement Act, which governs the pro- curement of goods and services by counties, cities, towns, and school divisions from nongovernmental sources, sets forth procedures for resolving contract disputes between public entities and private contractors. Section 11-69 of the Act requires in relevant part that “[{e]ach public body ... include in its contracts a procedure for consid- eration of contractual claims,” and mandates that “|t]he decision of the public body shall be final and conclusive unless the contractor appeals. . . .” Appeal of the final decision of the public body is limited to the “finvocation of] administrative procedures meeting the standards of $ 11-71, if available, or in the alternative [to] institu- tlion] [of] legal action |in the appropriate state court!.” Va.Code Ann. § 11-69 D. (Michie 1985).. Thus, under section 11-69 D., contract disputes are to be decided by the public body itself, with appeal available only through the public body’s administrative appeal procedure, if one exists, or to the courts. There is no provision for the dispute to be decided either initially or on appeal by an * Section 11-71 allows, but does not require, public bodies to “establish an administrative procedure for hearing . . . appeals from decisions on disputes arising during the performance of a con- tract.” Apparently, the School Board has not adopted any such procedure. Su arbitrator. Indeed, the Act would appear to prohibit, by negative inference, decision by an arbitrator, who by definition is neither a representative of the publie body nor a court of law.” The fact that the General Asssembly does not provide for arbitration in the very statute in which it prescribes the methods for public contract dispute resolution, we believe, is persuasive evidence that the Assembly does not regard the right to contract as expressly encompassing the right to agree to arbitrate. If the Assembly believed that the right to contract expressly subsumed such a right, arbitration almost certainly would be included in section 11-69 D. as one means by which contract disputes could be resolved. Our conclusion that the Genera] Assembly does not consider the right to contract as encompassing such a right is reinforced by the recent amendment of section 15.1-508 of the Virginia Code to provide expressly that counties may agree to arbitrate. In 1987, notwithstand- ing that county officials had Jong been authorized to contract by section 15.1-105 of the Virginia Code, the Assembly amended section 15.1-508 to include the foliow- ing express right to agree to arbitrate: “The governing body of a county may enter into a written agreement to submit any existing controversy to arbitration and may * Schlosser argues that the arbitration provision assertedly em- bodied in its contract with the School Board satisfies the require- ment in section 11-69 B. that “each public body shall include in its contracts a procedure for consideration of contractual claims.” Ses Appellant’s Br. at 14-15. We disagree. Section 11-69 B. clearly contemplates that the initial decision of any dispute will be ren- dered by the public body. See section 11-69 D. (“The decision of the public body shall be final and conclusive unless the contractor appeals... .”) (emphasis added). This requirement would appear to be satisfied, however, by the procedure outlined in Article 2.2.7 of the General Conditions, which pie vides that contract disputes are to be submitted initially to the project architect, given that the architect is the School Board’s agent. 4 Qu erecule a contract which contains a provision to submit lo arhitration any controversy thereafter arising.” 1987 Va. acts ¢. 483 (emphasis added). This amendment obvi- ously would have been unnecessary if the legislature believed that the power to contract conferred in section 15.1-105 expressly included the power to arbitrate. Finally, our conclusion that the power to contract dos not by definition include the power to agree to arbitrate is consistent with decisions of the highest court in Vir- ginia to have considered the question. See Hanover County Sch. Bd. v. Gould, (Hanover Cty.Cir.Ct. C-23- 1984, Apr. 4, 1984) ‘holding, on state constitutional] grounds, that school boards Jack authority to arbitrate) ; ‘f. Spotsylvania County Sch. Bd. v. Sherman Constr. Corp., 14 Va.Cir. 333 (1989) ‘implicitly assuming that right to agree to arbitrate not expressly conferred in right to contract) ; Spotsylvania County Sch. Bd. v. RE. Lee & Son, Inc., 5 Va.Cir. 48 (1962) (same). But ef. McKennie v. Charlottesville & Albemarle Ry., 110 Va. 70. 78, 65 S.E. 503 (1909) (municipality’s power to settle and compromise claims is “a necessary incident to it right to contract and to sue and be sued’). Together, the Public Procurement Act, the amendment to section 15.1-508, and the Virginia authority cited, are convineing evidence that school boards have not been ex- pressly accorded the power to arbitrate through the power to contract in section 22.1-71. D. Whether the power to contract is another question, but one which — he power to arbitrate may be implied from we also believe must be answered in the negative. The Virginia Supreme Court has consistently rejected elsims to implied power, absent compelling evidence that the General Assembly intended that such power be implicit in power enumerated. See Commonicvcalth v». County Bd. a 232 S.h.2d at 42 (“In questions of implied power. the 10a answer is to be found in legislative intent. To imply a particular power from a power expressly granted, it must be found that the legislature intended that the grant of the express also would confer the implied.” (emphasis added) ). Schlosser has offered no evidence that the General As- sembly intended for school boards to have the right to arbitrate, much less that it intended for such a right to be implied from the right to contract. Indeed, we believe that the legislature’s amendment of section 15.1-508 to confer expressly upon counties the power to agree to arbitrate disputes, without a corresponding amendment to section 22.1-71 to accord school boards the same power, “demonstrates a clear legislative intent to withhold from” school boards such power.'® See Brown, 329 S.E.2d at 472 ‘inferring legislative intent to withhold from coun- ties the power to lease government property from fact that municipal corporations, but not counties, had been granted a general power to lease property) ; Common- wealth v. County Bd., 282 S.E.2d at 42-44 (power to bargain collectively would not be implied from school boards’ express powers to contract, hire employees, and set the terms of their employment where legislature had selectively enacted legislation authorizing collective bar- gaining but had consistently rejected general authorizing legislation).'' This intention is underscored by the fact ' Prior to its amendment in 1987, section 15.1-508 only authorized counties to sue and be sued. A reasonable inference to be drawn from the fact that the leyislature amended this statute so as to expressly permit counties to arbitrate is that the legislature did not believe that the power to arbitrate could be implied from the power to sue and be sued. Schlosser’s alternative argument that the authority to arbitrate may be implied from section 22.1-71’s express grant to school boards of the power to sue and be sued, see supra note 7, therefore, also fails. "Cf, Tabler v. Board of Supervisors, 221 Va. 200, 269 S.E.2d 358 (1980) (county’s claimed power to require a minimum cash refund value on non-alcoholic beverage containers would not be implied where General Assembly had repeatedly rejected bills authorizing lla that the Public Procurement Act, as discussed supra, it- self appears to forbid arbitration. See Sherman Constr. Corp., 14 Va.Cir. at 339 (“[T]he contention that local school boards possess an implied power to submit con- struction contract disputes to binding arbitration clashes with the express provisions of the [Public Procurement | ae.” 35" Even if we were not convinced that the Virginia legis- lature does not intend for school boards to have the right to arbitrate contractual disputes, we would still hold that such a right cannot be implied. At the very least, the amendment to section 15.1-508, the terms of the Public Procurement Act, and the recited caselaw collectively raise a reasonable doubt as to whether Virginia school boards possess the authority to execute contracts contatn- ing arbitration provisions. The Dillon Rule, as noted, re- quires that any reasonable doubt over whether a particu- lar power exists be resolved against its existence, Accordingly, because the Virginia General Assembly has not expressly conferred upon school boards the power to arbitrate, and because such a power cannot, under the Dillon Rule, be implied from the express power to cone tract. we hold that the School Board lacked the legal authority to agree to a binding arbitration provision in its contract with Schlosser. Any agreement to arbitrate, therefore, was unenforceable. HI. Schlosser, perhaps anticipating our holding, contends that the Federal Arbitration Act preempts application of regulation of beverage containers) ; see also Deal, 299 S.E.2d at 347- 49 (Commonwealth could not be bound to arbitration agreement by its agents absent specific legislation authorizing such agents to submit disputes to arbitration). “2 RE. Lee & Son, supra, summarily concluded otherwise, but without citation to authority and without discussion of the limited avenues for dispute resolution authorized in the Public Procurement Act. 12a the Dillon Rule.’ It argues that any state law, such as the Dillon Rule, that prohibits enforcement of an arbitra- tion agreement runs afoul of the FAA because the FAA “is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any State substantive or procedural policies to the contrary,” Moses H, Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983), which requires that federal courts “rigorously enforce agreements to arbitrate,” Dean Witter Reynolds Inc. v. Byrd, 470 U.S, 218, 221, 105 S.Ct. 1238, 1243, 84 L.Ed.2d 158 (1985). This argument is unavailing. The FAA does embody “a national policy favoring arbitration.” Southland Corp. v. Keating, 465 U.S. 1, 10, 104 8.Ct. 852, 859, 79 L.Ed.2d 1 (1984). This policy is enunciated broadly in section 2 of the FAA, which pro- vides in pertinent part that [a] written provision in... a contract evidencing a transaction involving commerce to settle by vrbi- tration a controversy thereafter arising out of such contract or transaction, ... shall be valid, irrevoca- ble, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 9 U.S.C. § 2 (emphases added). And we have held that “|tlhe language of [section 2] requires that states place no greater restrictions upon arbitration provisions than they place upon other contractual terms,” and that gen- erally, “if a state law singles out arbitration agreements and limits their enforceability it is preempted.” Saturn Distrib, Corp. v. Williams, 905 F.2d 719, 722 (4th Cir.) (emphasis added; footnote omitted), cert. denied, ——~ U.S. ——-, 111 S.Ct. 516, 112 L.Ed.2d 527 (1990). In Saturn, for example, we invalidated a provision of the Virginia Motor Vehicle Dealer Licensing Act which pro- hibited automobile manufacturers and dealers from enter- ing into agreements that included mandatory alternative “This Constitution, and the Laws of the United States... shall be the supreme Law of the Land...” U.S. Const. Art. VI cl, 2. ’ 18a dispute resolution provisions. We held that the provision was preempted by the FAA because it “singleid| out arbitration clauses and unreasonably burden|ed] the abil- ity to form arbitration agreements.” 905 F.2d at 723. The Dillon Rule, however, does not single out and dis- proportionately burden arbitration provisions. It is a rule of general applicability that defines and invalidates all ultra vires acts of local governing bodies. Unlike the provision drawn into question in Saturn, the Rule is not “an idiosyncratic rule specific to arbitration agreements,” but is instead “merely an unremarkable part of Vir- ginia’s general laws of contract formation.” Jd. at 725. As “a general rule of contract formation,” Supak & Sons Mfg. Co. v. Pervel Indus., Inc., 593 F.2d 135, 1387 (4th Cir.1979), it constitutes a “ground|] as exist{s] at law or in equity for the revocation of any contract,” within the meaning of 9 U.S.C. § 2. As such, it falls within the exception to section 2’s general rule of enforceability of arbitration provisions, and therefore is not preempted by the FAA. See Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 2527 n. 9, 96 L.Ed.2d 426 (1987) (under the FAA, “state law, whether of legislative or judicial origin, is applicable if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally”) (emphasis in original) ; Supak, 593 F.2d at 137 (“Section 2 [of the FAA] dictates the effect of a contractually agreed-upon arbitration provision, but it does not displace state law on the general principles governing formation of the contract itself.”). IV. For the reasons set forth, the appellant’s motions to compel arbitration and to appoint an arbitrator were properly denied. The decision of the district court is therefore affirmed. AFFIRMED, l4a APPENDIX B UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 92-1008 W. M. SCHLOSSER COMPANY, INCORPORATED, Plaintiff-A ppellant zy Vv. SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA, Defendant-A ppellee | Filed December 16, 1992] On Petition for Rehearing with Suggestion for Rehearing In Banc Appellant has filed a petition for rehearing with sug- gestion for rehearing in banc. No member of the Court requested a poll on the suggestion for rehearing in banc, and the original judicial panel voted to deny the petition ~ for rehearing. The Court denies the petition for rehearing with sug- tion for rehearing in bance. Entered at the direction of Judge Luttig, with the con- currence of Judge Phillips and Judge Niemeyer. For the Court, s/ Bert M. Montague Clerk ; a a 15a APPENDIX C UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 92-1008 CA-91-4-M W M SCHLOSSER Co INC Vv. SCHOOL BOARD [Filed December 23, 1992] MANDATE The judgment of this Court dated 11/18/92 takes ef- fect today. BERT M. MONTAGUE Clerk l6a APPENDIX D IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION Civil Action No. 91-0004-M W. M. SCHLOSSER Co., INC., Plaintiff, v. THE COUNTY SCHOOL BOARD OF FAIRFAX, VIRGINIA, Defendant. ORDER This matter came before the Court on the plaintiff’s appeal of the Magistrate Judge’s order of April 5, 1991. For reasons stated from the bench, it is hereby ORDERED that the decision of the Magistrate Judge is AFFIRMED. s/ Claude M. Hilton United States District Judge Alexandria, Virginia December 13, 1991 17a APPENDIX E UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION C.A. No. 91-4-M W. M. SCHLOSSER Co., et al., -VS- THE COUNTY SCHOOL BOARD OF FAIRFAX COUNTY, Defendant. HEARING ON MOTIONS December 13, 1991 Before: Claude M. Hilton, Judge APPEARANCES: Roger C. Jones, Counsel for the Plaintiff Thomas J. Cawley, Counsel for the Defendant [2] THE CLERK: Civil action 91-4-M, William Schlosser Company, Inc. versus the County School Board of Fairfax County, of Fairfax, Virginia, I am sorry. This matter comes on for motions. Are counsel ready, please? MR. JONIES: Good morning. Your Honor. My name is Roger Jones, and I represent the petitioner, William Schlosser Company. a bw la After somewhat of a circuitous journey, this matter comes before you on appeal from Magistrate Brinkema’s order denying the petition to compel arbitration under the Federal Arbitration Act. There is really two issues in this appeal. The first issue is whether the contract in question contains an arbitration provision. And the see- ond issue involves whether the school boards in Virginia have the power to enter into contracts containing arbi- tration provisions. And I would like to take them one at a time. On the first issue, a little background. Schlosser is a general contractor in Maryland, and they entered into a lump sum contract with the County School Board here in Fairfax to do some renovation work on the Falls Church High School. That contract was a 1974 AIA modified standard form contract. And it contained in Article 2.2.7 a requirement that claims and disputes relating to the exectuion or progress of the work be submitted to the architect for his 13] decision. In Article 2.2.10 of the contract it said the architects, those claims and dis- putes would be subject to arbitration. I think the conflict here with this issue stems from the fact that Article 7.10 of the contract involving the proce- dure for arbitration which was to be conducted at the American Arbitration Association under the standard form ATA agreement was deleted in the supplementary conditions to the contract. Basically the supplementary conditions said delete the content of Article 7.10. It did not say, delete the arbitration requirement. And it did not say, this contract is not subject to arbitration. THE COURT: But it did say that there would be no damages to be recovered for delay. MR. JONES: Well— THE COURT: That is right behind the leading— MR. JONES: That issue, Your Honor, I think is an issue that is not an issue in this petition. This is a peti- tion to compel arbitration, not a hearing on the merits of the case itself. 19a THE COURT: Why would that be a hearing on the merits? | mean, if you found the contract provided you couldn’t recover the damages asked for in your complaint, you wouldn’t send the case to arbitration, would you? MR. JONES: The arbitrators would have the ultimate '4| decision-making authority to decide whether the dam- ages claimed by petitioner in an arbitration forum were appropriate and proper, not the Court. The arbitration agreement would divest the Court of deciding the merits of the case, and it would be for the arbitrators to decide. That’s what agreements to arbitrate are all about. And that’s what the Federal Arbitration Act is all about, liberally construing agreements to arbitrate. THE COURT: I don’t disagree with what you are saying the law is. But I find it difficult to believe that if you have got a contract that says you can’t get damages at all, that you then appoint an arbiter and send that to arbitration for them to determine a contract. MR. JONES: Well, as Your Honor probably knows, there are numerous exceptions to what we call the no damage for delay clause in the contract. A recent one in this court which recognizes some of those exceptions, such as those involved with amounts of interference with the contractor’s work, bad faith and fraud. And at the arbi- tration hearing those are all issues that could be delved into and presented to the arbitrators factually for the arbitrators to determine whether the no damage for delay clause is enforceable or not enforceable. THI COURT: All right. MR. JONES: I would submit to the Court that the [5] agreement in this particular action is complete on its face, it is unambiguous. There is an arbitration provi- sion. I think the Schoo] Board recognizes the contract contains an arbitration provision, although they charac- terize it as an accidental reference left in the contract. The second issue involves whether school boards have the power to enter into contracts containing arbitration provisions, if you will. And the petitioner contends that OK 20a Virginia Code Section 22.1-71, which gives school boards their power to contract as well as the power to sue and be sued, gives the School Board in this case the power to enter into the construction contract in question which contains an arbitration provision relating to the resolu- tion of disputes for the particular construction work to be performed. There are a couple of Supreme Court cases, Dean Witter and Southland Corporation which suggests that the purpose of the Federal Arbitration Act is to put agreements to arbitrate on the same footing as contract agreements, they are one in the same. And they want to give agreements to arbitrate the same force and effect as a contract agreement. There is also a D.C. Circuit case, I think it is called Pierce, cites the same proposition. For that reason the petitioner believes the School Board had the power clearly to enter into this contract, and they had the power to enter into this contract which [6] contained an arbitration provision governing resolution of disputes relating solely to the contract itself, Now, the School Board has raised severa] issues. The first issue goes to how the Virginia Code Section 22.1-71 is construed. The School Board would argue that under the Dillon Rule that statute has to be strictly construed. And because that statute doesn’t say school boards have the power to arbitrate, rather it only says school boards have the power to contract, under Dillon Rule of con- struction, school boards don’t have the power to enter into agreements to arbitrate. Petitioner would contend in response to that issue that the statute does on its face say school boards have the power to contract. The Supreme Court has said that contracts are one in the same with agreements to arbi- trate. And for that reason the statute gives the School Board the power to enter into contracts containing arbi- ration clauses. There is a case that was issued by the Supreme Court of Virginia called Arlington County which interpreted 2la application of the Dillon Rule. And also looked at a rule called the reasonable selection of method rule. The Dillon Rule is whether the power exists. And the reasonable selection of method rule is whether the power has been properly executed. The Dillon Rule is a rule of strict construction. [7] The reasonable selection of method rule is a rule that is liberally construed in favor of the method chosen. The petitioner would submit that the statute gives the power to enter into the contract, and the agreement with the arbitration is a reasonable method to execute that power to contract. Arbitration provisions are fairly com- mon in the construction industry. It is a way of having complex construction cases resolved by arbitrators who often are familiar with construction and technical aspects of construction. And for that reason, many of the stand- ard contracts in the construction industry, including all of the AIA standard contracts, contain arbitration provi- sions and the parties agree to arbitrate their disputes relating to the construction work rather than litigate their disputes. Finally, the School Board has cited a number of cases that deal with arbitration agreements entered into with the School Board, really the collective bargaining agree- ments containing arbitration agreements. And in those rare cases, those two or three of them, the Supreme Court of Virginia has said that Article 8, Section 7 of the Virginia Constitution empowers the school boards to su- pervise their teaching staff, so to speak, and it would be an unconstitutional divestiture of that power granted by the Virginia Constitution to allow an arbitrator to decide policy concerning the teaching staff. [8] The cases all rationalize that where an agreement, in those cases it was a collective bargaining agreement, divest to an arbitrator to promulgate and establish pol- icy, that is ununconstitutional act. In this case we are not talking about promulgation or application of policy. In this case we are dealing with one specific contract for | 22a the renovation of certain work at a school, There is 2 claim that relates to the contract itself and nothing else. And the parties have agreed to arbitrate that claim under the mutual provision of the contract. The arbitrator’s de- cision is not going to set policy for the School Board on any other construction contracts, it is just going to de- cide the issues of the claim in question. For that reason the petitioner would ask the Court to sustain its appeal and enter an order compelling arbitra- tion in this dispute. Thank you. MR. CAWLEY: Good morning, Judge Hilton. Tom Cawley for the Fairfax County School Board. Your Honor, I think it is important to realize the con- text under which the deletion in question occurred here. Mr. Jones describes the deletion in 7.10 and then describes the fact that a couple of sections, 2.2.9, I think 2.2.10 were left in. He doesn’t point out, however, that the section that was deleted by the School Board was en- titled [9] Arbitration, and is the basic arbitration provi- sion in an AIA general condition. It is entitled Arbitra- tion and has and says, all claims. disputes and other matters arising out of, et cetera, shall be sent to arbitra- tion. And then it gives the procedures for actually arbi- trating or utilizing the arbitration process. It says that the American Arbitration Association processes will be used and the construction rules of the American Arbitra- tion Association will be employed. All of that is taken out. And what happened is that the sections that weren’t deleted had to go, were buried really in the section on architects. And many sections into the section on architects there was this section that says appeals from architects’ decisions could be arbitrated. Moreover, when the original petition was filed we filed an affidavit from the Director of Design and Construction of the school system that pointed out that the school sys- tem has never arbitrated. That there is no language or no document that ever evidenced any intention to arbi- 23a rate. That the first word arbitration that ever occurred in the dealings between these two parties occurred when there was a demand for arbitration filed the next day by this petition. And that in fact this contractor has con- tracted with the School Board in the past and of course had no arbitration provision. So, I think it is clear in the first instance that [10] there was no intention of the parties to have any sort of arbitration. And it would be absurd to think that the parties would delete the basic arbitration provision that explains how things would be arbitrated and how they would come about and the procedures for accomplishing that and then say that parenthetically some unstructured method of arbitration would be used to appeal architects’ decisions. Moreover, as Your Honor points out, it would be espe- cially ironic if the very section that replaced the arbitra- tion section, which was a no damage for delay clause, then became the very substance of the claim that is sup- posed to be sent to arbitration. But going bevond that point, the fact of the matter is that in Virginia there simply is no power on the part of school boards to arbitrate. And Mr. Jones said that the Dillion Rule of construction is a rule of construction construing statutes. And while sometimes it is used to construe statutes, more fundamentally the Dillion Rule I think is a rule to construe powers, to construe whether or not local government has a particular power. And obviously, and I know Your Honor is familiar with this, but the Commonwealth versus Arlington County case, which was a Commonwealth versus Arlington County and Arlington County School Board case, dis- cussed at length the application of the Dillon Rule of the construction of powers [11] to try to determine what powers a local school division in a local county govern- ment would have. With respect to school boards, that case said school boards exercise limited powers and functions a 24a of a public nature granted to them expressly or by neces- sary implication and none other. And I think the thing that is so dispositive on this question of whether school boards have the power to arbi- trate is the fact that in 1987 the General Assembly de- cided to give to county governments the right to arbitrate. And they did so by amending 15.1-508, which talks, which follows the basic section about how counties may sue and be sued, et cetera. And they added this language, the governing body of a county may enter into a written agreement to submit any existing controversy to arbitra- tion and may execute a contract which contains a provi- sion to submit to arbitration any controversy thereafter arising. Now, whether you look at the Dillon Rule of construc- tion or you even use just basic contract principles, in- clusio unius est exclusio alterius I believe it is, it seems to me clear that if the counties are expressly given the power to arbitrate and school boards can point to no statute that gives them a similar power, it would be impossible to say under either contract construction prin- ciples or the Dillon Rule that school boards have the power to arbitrate. (12] And that analysis in fact was utilized by the Su- preme Court of Virginia in that case of Arlington County versus Brown where the County of Arlington argued that it had the power to enter into a lease. And it said, well, we have the power to transfer land, we have the power to sell. Therefore. we must have the power to lease. And the Supreme Court pointed out that cities expressly had the power to lease under Virginia law. And, therefore, if cities expressly had the powers to lease, and the county couldn’t point to a similar power, then clearly the inten- tion of the legisltaure was not to grant a similar power. I think it is clear that the school boards in Virginia don’t enjoy the power to arbitrate. Finally, the Federa! Arbitration Act doesn’t change that result. Now, the Federal Arbitration Act would have 25a an impact on a specific statute in a state that singled out arbitration and was designed to prevent it. But it does not have an impact on general contractual provisions which might have the effect of not having an arbitration provision in a contract. And those clearly enunciated principles are found in the Supak case by the Fourth Circuit. In that case there Was a situation where a buyer in in South Carolina was buying materials from a New York supplier, and in the confirmation of sale the New York supplier when he would send the [13] confirmation of sale would put in that the parties agreed to arbitrate. And that case, when there was a dispute as to whether they had to go to arbitration, was determined under UCC 2-207 which says that in a confirmation of sale, if there is a material change in the terms, then those material changes don’t give rise to a new contract. Or don’t become a contractual provision. And there the other side said, well, the Fed- eral Arbitration Act requires this arbitration to go for- ward. And the Fourth Circuit said, no, it doesn’t. This is not a situation where we have a singling out of a statute that is intended to do away with the right to arbitrate. It is a basic rule of construction of contracts which causes the situation where there is no arbitration provi- sion, and it would apply to many things that might be material changes. You compare that case to the Saturn case where a Virginia statute which did single out arbitration was struck down because of the fact that there was to that extent pre-emption by the Federal Arbitration Act. But the Federal Arbitration Act is not designed to, as one court said, to occupy the entire field of arbitration. And it does permit by its own terms an exception that permits arbitration except upon such grounds as exist at law or in equity for the revocation of any contract. That’s what we have here. We have a general [14] contractual provision, which is the Dillon Rule, which VARY prevents school boards from arbitrating. And, therefore, there is no federal pret Daypt hon On that issue, And we would ask that the decision of Magistrate Syinkema be upheld, rite COURT: All right. Well, TE find that it) was the intent of the parties that the arbitration clause be removed from. this. contra lt was removed. The pri- mary arbitration clause was taken out of the contract. fh went even further when they took it out and said they couldn’t even make a claim for these kinds of damages. It is just clear the intent of the parties was to take out the arbitration provisions in the contract even though it may have been mentioned in passing in another area or two of the contract. I also find the School Board doesn’t have any authority to arbitrate in Virginia, I do not find the decision of the magistrate to be clearly erroneous, and it will be affirmed. MR. CAWLEY: Thank you, Yeur Honor. HEARING CONCLUDED 27a APPENDIX F IN TH UNITED STATES DISTRICT COURT FOR THE EASTIERN DISTRICT OF VIRGINIA ALMXANDRIA DIVISION Civil Action No, 91-4-M W. M. SCHLOSSER COMPANY, INC Pla intiff, THE COUNTY SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA, Defendant. i Filed April » 199] ORDER For the reasons stated in open court, petitioners Mi tions to Designate an Arbitrator and f an Order to Compel Arbitration are DENIED. The Clerk is directed to forward conic (orde) ty counsel of record lontered this 5th day of A) ril, 1991. Leonie M. Brinke) LEONIE M. B TA | ec \I f r APPENDIX G IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION Civil Action Number 91-4-M W. M. SCHLOSSER COMPANY, INC., Petitioner, VS. THE COUNTY SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA, Respondent. Friday, April 5, 1991 Courtroom IV United States District Courthouse Alexandria, Virginia The above-entitled matter came on to be heard before THE- HONORABLE LEONIE M. BRINKEMA, United States Magistrate, in und for the United Siates District Court for the Eastern District of Virginia, beginning at 10:59 o’clock a.m. APPEARANCES: On Behalf of the Petitioner: ROGER C. JONES, ESQUIRE BRAUDE & MARGULIES, P.C. [2] On Behalf of the Respondent: THOMAS J. CAWLEY, ESQUIRE HUNTON & WILLIAMS a ee ee 29a 3] PROCEEDINGS THE CLERK: Civil action 91 dash 4 M, W.M. Schlosser Company versus The County Board of Fairfax County. MR. JONES: Good morning, Your Honor. THE COURT: Good morning. MR. JONES: Roger Jones on behalf of the Petitioner. THE COURT: I’m sorry; the door was slamming. MR. JONES: I’m sorry; Roger Jones on behalf of the Petitioner, W.V. Schlosser. THE COURT: And for the County? MR. CAWLEY: Excuse me; Thomas Cawley for the School Board, Your Honor. THE COURT: All right; now, this comes before me on two motions of the Petitioner, one to designate an arbitrator and one for an order to compel arbitration. MR. JONES: That’s correct, Your Honor. THE COURT: I’ve looked at both your pleadings. I understand that the School Board’s position is, number one, that it was certainly their intent when they entered this contract that arbitration not be a part of the contract. (4] And they’ve cited to a miscellaneous provision within the contract which negates, in their opinion, arbi- tration. I understand you're saying that they only negated a particular portion of the A.I.A. contract. MR. JONES: Negated not really a portion; the pro- cedure by which arbitration is pursued under the A.I.A. contract, that procedure is that the American Arbitra- tion Association— Article seven point ten that was deleted simply deleted that procedure. The supplementary condition did not say arbitration is deleted from this contract. It just said delete article seven point ten. The under- lying arbitration agreement in article two, two point two point ten, is still intact. That wasn’t deleted by any supplementary condition. a 30a THE COURT: But of course what I have here is a —this is sort of a classic contract problem. I have two parties to a contract. There is language in dispute. One side says, ‘We didn’t intend for that.’ And they’re also saying further, ‘We’re not legally able—|5]we couldn’t contract that, even if we wanted to.’ You’re saying, ‘This is what the parties agreed to.’ And furthermore, ‘You can do it under the law.’ MR. JONES: Well, I think if you read the provisions consistent with each other and compatible with each other, which is black letter contract law, if you read article two point two point ten, that claims relating to execution and the progress of the work which had been referred to the architect are subject to arbitration. You read the supplementary condition deleting article seven point ten as deleting the procedure to proceed with that arbitration at the American Arbitration Association. And it just leaves—it doesn’t—there’s no method pre- scribed in that contract for arbitration, which is okay. The Federal Arbitration Act then sets up a procedure where they can go to court and have designated arbi- trators. There’s a lot of reasons why parties might want to delete the procedure of arbitration under triple A. It’s expensive. [5| Over the years, it’s—it’s taking more time now. THE COURT: I’m curious; were you the attorneys involved in negotiating the contract? MR. CAWLEY: No, Your Honor. THE COURT: No; so, neither of you knows what the—have you talked with the various negotiators as to what their understanding was at the operation of that provision? MR. CAWLEY: Your Honor, I am counsel for The School Board. And in general—lI’ve been counsel for The School Board for 15 years—and we’ve always advised them that they don’t have the right to arbitrate. 3la The particular formatien of this contract was done—I believe the architect had something to do with it and the staff was involved. But I don’t believe there were attorneys on either side, to my knowledge. MR. JONES: No; the Petitioner in this case is a Maryland company. He’s coming here to Virginia to do some renovation work on a high school. If there was a dispute about execution or the progress of the work, I’m sure that they intended to have [7] it submitted to arbitration versus going to trial with a Jury in Fairfax County. Arbitration may be a more impartial way of resolving any sort of dispute between the parties. THE COURT: All right; well, I’ve read the contract that you all attached to the pleadings. And I’ve looked at your briefs real carefully. I can’t grant the motion. I am convinced, as I read the law, that Mr. Cawley’s argument is the better of the two. I don’t think—there certainly is unclarity as to what the parties intended with the language of the contract. But I think that the case law and the argument made as to the legal ability of The School Board to contract for arbitration is the sounder of the two arguments. So, I’m going to deny your motion to designate an arbitrator and the motion to compel arbitration. MR. JONES: And just so I understand, it’s based on the fact that THE COURT: I’m not at all clear that the parties intended— [8] MR. JONES: Okay. THE COURT: From my reading of the contract, I don’t think it was the intent of at least one party to the contract to allow for arbitration. I think they attempted to do that with the language that may not have been as artfully drafted as it should have been to make it crystal clear that there is no arbi- tration available in this contract. 32a And secondly, I don’t think that Virginia law em- powers school boards to enter into that kind of an arbi- tration agreement. MR. JONES: Notwithstanding the provisions of the Virginia Code 22— THE COURT: That’s correct. MR. JONES: -—point 1 dash 71? THE COURT: That’s correct; I don’t think it applies to the school boards. All right, sir? MR. JONES: Thank you. MR. CAWLEY: Thank you, Judge Brinkema. [9] (Whereupon, at approximately 11:06 o’clock a.m., the hearing in the above-entitled matter was concluded.) 33a APPENDIX H IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION Miscellaneous No. 91-0004-M W.M. SCHLOSSER COMPANY, INC. 2400 5ist Place Hyattsville, Maryland 20781, Petitioner, v. THE COUNTY SCHOOL BOARD OF FAIRFAX COUNTY, VIRGINIA 10700 Page Avenue Fairfax, Virginia 22030 Respondent. Serve: JANE TIMIAN Clerk, Fairfax County School Board 10700 Page Avenue Fairfax, Virginia 22030 PETITION FOR ORDER TO COMPEL ARBITRATION 1. Petitioner, W.M. Schlosser Company (‘Schlosser’), is a Maryland corporation with its principal place of busi- ness in Hyattsville, Maryland. Petitioner is engaged in the business of construction contracting as a general con- tractor. 2. Respondent is the School Board of Fairfax County, Virginia (hereinafter sometime referred to as the “Owner”’’), 34a 3. This Petition is filed pursuant to the provisions of 9 U.S.C. $4 for an Order to Compel Arbitration of a claim, which is the subject of a written arbitration agree- ment that is governed by the Federal Arbitration Act, 9. U.S.C. $1, et seg. since the underlying transaction in- volves interstate commerce and is between parties of different states. Respondent has failed and refused to arbitrate said claim. 4. This Court has jurisdiction pursuant to the provi- sions of 28 U.S.C. § 1332, based upon diversity of citizen- ship and since the amount in controversy exceeds $50,000, exclusive of interest and costs. 5. All conditions precedent for the filing of this Peti- tion have been satisfied. 6. On or about June 10, 1988, Respondent entered into a Contract with Petitioner (hereinafter the “Contract”’), for the performance of certain construction renovation work relating to Falls Church High School (hereinafter the “Project”). The Project is located in Fairfax County, Virginia. A copy of said Contract, with its General and Supplementary Conditions, is attached hereto as Ex- hibit A. 7. The Contract provides in pertinent part: 2.2.7 Claims, disputes and other matters in question between the Contractor and the Owner relating to the execution or progress of the work or the inter- pretation of the Contract documents shall be referred initially to the architect for decision which he will render in writing within a reasonable time. * * + * 2.2.10 Any claim, dispute or other matter that has been referred to the architect ... shall be subject to arbitration upon the written demand of either party. However, no demand for arbitration of any such claim, dispute or other matter may be made until the earlier of: 35a 2.2.10.1 The date on which the architect has ren- dered his written decision, or .2 The 10th day after the parties have pre- sented their evidence to the architect or have been given a reasonable opportunity to do so, if the architect has not rendered his decision by that date. [Emphasis added]. 8. During the course of the Contract, Schlosser’s per- formance was hindered, disrupted, impacted and delayed due to the actions, inactions and active interference of the Owner. The Owner’s conduct in this regard consti- tuted a breach of the Owner’s Contract obligations. As a result of the Owner’s breaches of Contract, Schlosser’s Contract performance was extended 209 calendar days and Schlosser suffered significant additional costs and damages. 9. On or about August 3, 1990, Schlosser submitted to the Owner a claim for its additional costs and damages stemming from the extended Contract performance, in the total amount of $1,152,941. In accordance with Arti- cle 2.2.7 of the Contract, Schlosser also submitted a copy of this claim to the architect for his decision. 10. On or about October 9, 1990, the Owner advised Schlosser that Schlosser’s claim was being reviewed by the architect. By letter dated January 10, 1991, Schlosser noted to the Owner that its claim, “was initially copied to the architect and we expect his decision on our entire claim, in accordance with the Contract requirements.” A copy of this letter is attached hereto as Exhibit B. De- spite the fact that a reasonable time has elapsed, the architect has failed to render in writing a decision on Schlosser’s claim. 9. In accordance with Article 2.2.10 of the Contract, on March 27, 1991, Schlosser submitted to the Owner a written Demand for Arbitration with respect to their | 36a claim for extended Contract performance. A copy of this Demand for Arbitration is attached hereto as Exhibit C. To date, the Owner has failed to respond to this Demand for Arbitration. 10. By separate motion, filed contemporaneously here- with, Petitioner also seeks this Court to designate and appoint an impartial arbitrator(s) pursuant to 9 U.S.C. Ss 3 ©, WHEREFORE, Petitioner, W.M. Schlosser Company, Inc. respectfully requests this Court to enter an Order directing that arbitration of Petitioner’s claim proceed in the manner provided for in the parties’ Arbitration Agreement and as required by the Federal Arbitration Act, and for such other and further relief as this Court deems just and appropriate. Respectfully submitted, - By: /s’ Roger C. Jones Rear? C. JONES Va. Bar No. 25256 BRAUDE & MARGULIES, P.C. 1828 L Street, N.W. Suite 900 Washington, D.C. 20036 Counsel for Plaintiff W.M. Schlosser Company, Inc. Dated: 3.28.91 37a EXHIBIT A THE AMERICAN INSTITUTE OF ARCHITECTS | Loco} AIA Document A101 STANDARD FORM OF AGREEMENT BETWEEN OWNER AND CONTRACTOR where the basis of payment is a STIPULATED SUM This Document Has Important Legal Consequences: Consultation With An Attorney Is Incouraged With Respect To Its Completion Or Modification Use only with the latest Edison of AIA Document A201, General Conditions of the Contract for Construction. This document has been approved and endorsed by The Associated General Contractors of America. AGREEMENT Contract #090-88-RE-599 made this 9th day of June in the year of Ninteen Hun- dred and Eighty-Eight BETWEEN the Owner: The County School Board of Fairfax County, Virginia 10700 Page Avenue Fairfax, Virginia 22030 and the Contractor: W. M. Schlosser Company, Ince. 2400 S51st Place Hyattsville, Maryland 20781 — 38a the Project: Renewal of Falls Church High School the Architect: The Fairfax Architects, P.C. 246A West Broad Street Falls Church, Virginia 22046 The Owner and the Contractor agree as sei forth below. ARTICLE 1 THE CONTRACT DOCUMENTS The Contract Documents consist of this Agreement, Con- ditions of the Contract (General, Supplementary and other Conditions), Drawings, Specifications, all Addenda issued prior to execution of this Agreement and all Modifi- cations issued subsequent thereto. These form the Con- tract, and all are as fully a part of the Contract as if attached to this Agreement or repeated herein. An enumeration of the Contract Documents appears in Arti- cle 7. ARTICLE 2 THE WORK The Contractor shall perform all the Work required by the Contract Documents for the provision of all labor, materials, equipment and services necessary for the re- newal of the existing building at Falls Church High School, 7521 Jaguar Trail, Falls Church, Virginia 22042. ARTICLE 3 TIME OF COMMENCEMENT AND COMPLETION The Work to be performed under this Contract shall be commenced on or about June 10, 1988 and shall be sub- stantially completed on or before August 31, 1989. 39a The project shall be constructed in phases. The Architect shall determine and certify when the work is substantially completed for each phase. Work shall commence and be substantially completed on or before the dates shown in section 01010 entitled summary of the work, Paragraph 3.1.B, “Schedule for Delivery of the Work”. Should the work not be substantially completed by the dates specified for each phase, it is understood and agreed that there will be deducted the sum of $200.00 for each phase, per con- secutive calendar day, as liquidated damages, but not as a penalty, for each day’s delay thereof until substantial completion of each phase is certified by the Architect. Should the totai project not be substantially completed by August 31, 1989, it is understood and agreed that there will be deducted the further sum of $600.00 per consecu- tive calendar day, in addition to any other sum due here- under for the total project, as liquidated damages, but not as a penalty, for each day’s thereof until substantial com- pletion is certified by the Architect and accepted by the Owner. ARTICLE 4 CONTRACT SUM he Owner shall pay the Contractor for the performance of the Work, subject to additions and deductions by Change Order as provided in the Conditions of the Con- tract, in current funds, the Contract Sum of nine million three hundred seventy six thousand dollars ($9,376,000) consisting of: $8,777,000 Base Bid 599,000 Alternate No. 1 $9,376,000 ARTICLE 5 PROGRESS PAYMENTS Based upon Applications for Payment submitted to the Architect by the Contractor, the Owner shall make prog- 40a ress payments on account of the Contract Sum to the Contractor as provided in the General and Supplementary and Special Conditions. “The form for each progress payment shall be the Fairfax County School Board’s ‘Requisition for Partial Payment’ and will be obtained from the School Board’s Design and Construction Department. The form shall be completed in detail and submitted in six (6) copies. The Owner shall make a Progress Payment to the Contractor on the basis of a duly certified and approved. estimate of the work performed during the preceding calendar month under this contract, but to insure proper performance of this contract, the Owner shall retain five (5) percent of the amount of each estimate properly allocable to labor, materials and equipment incorporated in the work and ten (10) percent of the amount of each estimate properly allocable to materials and equipment suitably stored at the site until final completion and acceptance of all work covered by this contract. The Contractor shall include a similar provision limiting retainage on progress pay- ments in all subcontracts it enters into pursuant to the Contractor’s performance of this Contract.” ARTICLE 6 FINAL PAYMENT Final payment, constituting the entire unpaid balance of the Contract Sum, shall be paid by the Owner to the Contractor Thirty (30) days after Substantial Comple- tion of the Work unless otherwise stipulated in the Gen- eral and Supplementary Conditions, provided the Work has been satisfactorily completed, the Contract totally completed, and a tinal certificate for Payment has been issued by the Architect. 4la ARTICLE 7 MISCELLANEOUS PROVISIONS 7.1 Terms used in this Agreement which are defined in the Conditions of the Contract shall have the meanings designated in those Conditions. 7.2 The Contract Documents, which constitute the en- tire agreement between the Owner and the Contractor, are listed in Article 1 and, except for Modifications issued after execution of this Agreement, are enumerated as follows: (List below the Agreement, Conditions of the Contract (General, Supplementary, and other Conditions), Draw- ings, Specifications, Addenda and accepted Alternates, showing page or sheet numbers in all cases and dates where applicable. Standard Form of Agreement Between Owner & Contrac- tor, AIA Document A101 January 1974. General Conditions of the Contract for Construction, AIA Document A201 April 1970. Specifications: See attached pages 1 through 3, pages 1, li. Drawings: Civil C-1 through C-4 Architectural A-0 through A-60 Structural S-1 and S-2 Mechanical M-1 through M-88 Plumbing P-1 through P-34 Electrical E-1 through E-51 Addenda: Addendum No. 1 dated May 13, 1988. Addendum No. 2 dated May 18, 1988 Addendum No. 3 dated May 20, 1988 Addendum No. 4 dated May 23, 1988 Addendum No. 5 dated May 24, 1988 Accepted: Base Bid and Alternate No. 1 _ 42a This Agreement executed the day and year first written above. This Agreement, under seal, is executed in 4 counterparts each deemed as original. OWNER The County School Board of Fairfax County, Virginia s {[lIllegible| Chairman s Jane Timion Clerk of the School Joard SEAI CONTRACTOR W.M. Schlosser Company, Inc. s’ [Illegible] President s’ [Illegible] Corporate Secretary |SEAL} 43a Section 00700 General Conditions THE AMERICAN INSTITUTE OF ARCHITECTS | Loco | AIA Document A201 GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION This Document Has Important Legal Consequences: Consultation With An Attorney Is Encouraged With Respect To Its Modification TABLE OF ARTICLES 1. CONTRACT 9. PAYMENTS AND DOCUMENTS COMPLETION 2. ARCHITECT 10. PROTECTION OF PERSONS AND 8. OWNER PROPERTY 4. CONTRACTOR 11. INSURANCE 5. SUBCONTRACTORS 12. CHANGES IN THE 6. SEPARATE WORK CONTRACTS 18. UNCOVERING AND 7. MISCELLANEOUS CORRECTION OF PROVISIONS WORK 8. TIME 14. TERMINATION OF THE CONTRACT This document has been approved and endorsed by The Associated Gencral Contractors of America. SSS aaa tda INDEX Acceptance of Defective or Non-Conforming Work 13.3 Access to Work 2.2.0 Accident Prevention 2.2.4, 18 Addendum, Definition of 1.1.1 Additional Costs, Claims for 12.2.1 Additional Work ' 12 Administration of the Contract 2.2 Agreement, Extent of Bee. Allowances, Cash A.S.7 Applications for Payment 2.2.5, 9.2.1, 9.3.1, 9.3.3, 9.4.1, 9.4.2, 9.6.1, 9.6.7, 9.7.2 Arbitration, Owner-Contractor Claims and Disputes 2.2.6 through 2.2.12, 7.19 ARCHITECT 2 Architect, Definition of 2.1 Architect's Access to the Work 2.2.0 Architect's Authority 22.2, 23.12, 32:14, 2.2.04; S84, keh Architect’s Authority to Reject Work yy Ae Architect’s Decisions 2.2.6 through 2.2.12 Architect's interpretations 1.2.5, 2.2.6 through 2.2.11, 12.1.6 Architect's Full-Time Project Representative 2.2.16 Architect’s States a2 Architect’s Visits to Site 2.2.3, 2.2.4, 2.2.16, 7.8, 9.7 Bonds. Contract (Performance, Labor and Material Payment) 1.5 Builder’s Risk Insurance (See Property Insurance) ii.a Cash Allowances 1.8.1 Certification for Payment 2.2.5, 2.2.15, 5.4.2, 9.4, 9.3.1, 9.6.1, 9.7. 2 CHANGES IN THE WORK 12 Changes, Minor 2.2.14, 12.3 Change Orders 2.2.14, 4.8.1, 12.1 Change Orders, Definition of 12.1.2 Claims and Disputes Between the Contractor and the Owner 2.2.6 through 2.2.12, 7.10 Claims for Additional Cost or Time 8.3.2, 8.3.3, 12.1.6, IS, Lee Claims for Damages ..1.4, 8.3 Claims of the Subcontractor 5.3. 1.4 A4fia Cleaning up A.16,6.4 (‘odes A.7.2. 18.2.3 Commencement of the Work 7.0.4, 6.hoe Communications 2.2.2, 3.2.4, 4.9.1, 4.17 COMPLETION, PAYMENTS AND 9g Completion Substantial 2.2.15, 8.1.3, 8.2.3. 9.7 Contract, Definition of 1.1.2 Contract Bonds 7.6 CONTRACT DOCUMENTS | Contract Documents, Copies Furnished and Ownership of 1.3 Contract Documents, Definition of se Contract Documents, Execution, Correlation, intent and interpretation |.2 Contract Modifications Be ee Ae (Contract Sum, Changes of lak, Dee Contract Sum, Definition of 9.1.1 Contract Termination by Contractor 14.1 Contract Termination by Owner 14.2 Contract Time 214 Contracts, Separate e CONTRACTOR 4 Contractor, Definition of 4 Contractor, Stopping the Work by the 2 Contractor, Termination of the Contract by the { Contractor’s Liability Insurance te Contractor’s Relations with Subcontractors | 2.4.3.3 Contractor’s Responsibility for Protection and Safety 2 Contractor’s Responsibility for Those Performing the Work ! Contractor’s Review of Contract Documents 2.2, 4.2 Contractor’s Superintendent 1.9.1, 10.2.5 Contractor’s Supervision and Construction Procedures 1.3 Contractors, Mutual Respensibilit f 3.2 Copies Furnished of Drawings and Specifications 3.1 Correction of Work 3.2 Cutting and Patching of Work ie Cutting and Patching Under Separate Contracts : 46a eRe “Soe SN a cinerssenasdannasnuinetnannecsmmeneencns 7.4, 8.3 I Se ac nccaccspunnanenssesumenbneeasceccascsersscieeiens 8.3.4 I III WOE. oo ceccs ce nanecseaenctsbedinssiusnernineanacncrercesennnh a ne LEFT ATE TON RCL SY OTRO ROE 4.16, 6.4 Deductions for Uncorrected Work .......................-........-... 18.8.1 Defective or Non-Conforming Work, I I a aaa neon presser tka a entsranntenieaniecienmnenes 13.3 Delays and Extension of Time ...................2.........:.22:00000+- 8.3 Documents, Execution of the Contract _.......... oy Sat ala 12.1 Drawings and Specifications at the Site ........000........... 4.12 Drawings and Specifications, Ownership of ............. RRA 1.3.2 Drawings, Arrangement of ......................---...--2-00-+- a 1.2.4 Drawings as Written Interpretations —......................... 1.2.5 EES OOO Sele SE AS SR EON Ord hat Re 3.2.2 Emergencies ...... Ee LANE ON TMLee SURE LL ROD Pe WD 10.3 Execution, Correlation, Intent and Interpretations of Py ae oe > a an ea anne rere 12 I RE eo 7a a gene asm ca neaisendencneeds 8.3, 12.1 ER RI ie SEATS ED: Ee aL TO CEPOL NNT LD. 12 I MO IN oro csc on sarreseessssencicencnrcstacaeseomtreansstcaes 9.6 re I ee rn daeaaniee anpaueneataea tana 1.2.5, 12.3, 12.4 I te ope venservastn cee meeneueananentenroavanennaad ees 9.7 Fire, Extended Coverage, Vandalism and Malicious I I oar ccs tts ccc seccnneeena acne . ea Governing Law ..... nL PRE seiisnaie siaasaainteupatiareeeeae 7.1 enn I od 3, sas ss erece onan nnmeci nee paaeesoanseeameaaaes 7.5 Guarantee ......- "UEP ARERR ea a A santana actadesmecerenciacs 9.3.3, 13.2.2 I ero oe aaa es eskne aceee hag eeeaeetaicas 4.18 Information and Services Required of the Owner ene 3.2 Inspection _.......... Reeiaiakbacae ican tka cd aniveen deca terenmmartareses 2.2.15, 7.8, 9.7 Instructions to the Contractor eee eae Nese eanl see B tere 2.2.2, 3.2.4 INSURANCE .......... eee ae a lenient 11 Insurance, Builders Risk (See Property a do erence etn cu anoens meee Abate y 11.3.1 Insurance, Contractor’s Liability —........................ aces 11.1 Insurance, Fire, Extended Coverage, Vandalism, and Whatieiee TEIMCMAGE onc.n..ncncecceecnccccccenc.sccsscccrvencsesscessssns: _ 11.3.1 I. TI A I ogocia cra nes seeesaotev nce s recennenangstaeaesnye 11.4 Insurances, Owner® LARDITIGY .......00:0icc. > » », ios ~ . > » » ». > oo ‘ ! ! ' . Se OoPWN ' ' ! ' ' ' eet et et OO me] CD CT eR WD OCmonNaAa uk wWNHK OC . oe ee + ~ WDWWWHWWWWNHNNNHNNNNHDE woos Mok WD = auf Whi 1 © 0 9) a i a i ie i i eee a as ' ' ' ' ' ' ' ! i ' ' ' > mm ct ta nw — 120a Section 00950 Drawings Index Description Cover Sheet Site Plan Drainage Divides and Erosion Siltation Control] Plan Plan and Profile—Sight Distance Architectural Site Plan Overall Floor Plan and Finish Schedule Demolition Plan—Part A Demolition Plan—Part B Demolition Plan—Part C Demolition Plan—Part D Demolition Plan—Part FE First Floor Demolition Plan—Part E Second Floor Demolition Plan—Part F Demolition Plan—Part G Demolition Plan—Part H Demolition Plan—Part I First Floor Demolition Plan—Part I Second Floor Demolition Pla:i—Part J First Floor Demolition Plan—Part J Second Floor Demolition Plan—Part K Floor Plan—Part A Floor Plan—Part B Floor Plan—Part C Floor Plan—Part D Floor Plan—Part E First Floor Floor Plan—Part E Second Floor Floor Plan—Part F Floor Plan—Part G Floor Plan—Part H Floor Plan—Part I First Floor Floor Plan—Part I Second Floor Floor Plan—Part J First Floor Floor Plan—Part J Second Floor Floor Plan—Part K Exterior Elevations Wall Sections—Part A, B, & C Building & Wall Sections—Part D Wall Sections & Details—Part D&E Sections & Details—Part F Auditorium Details—Part F Wail Sections—Part G Building & Wall Sections—Part J Canopy Details Foor Schedule Door Details Door & Window Details Toilet Room Layouts & Elevations Sheet No. A-43 A-44 A-45 A-46 A-47 A-48 A-49 A-50 A-51 A-52 ~ »~ ». Yn a al ' ' ' ono qo Ok WS > Dd ' ' ' : ' ' 2 WOR NK Ne OOO OO: © co -) NNN p> \P bos tot bs es = = ad ' — a — a ~ M-7 M-8 M-9 M-10 M-il M-12 M-13 M-14 M-15 M-16 M-17 M-18 M-19 M-20 M-21 M- M- M- M- M-! 7) .) rmormnrrt : ot > Ot = — Description Equipment Layout Equipment Layout- Equipment Layout- Equipment Layout Equipment Layout- Equipment Layout Equipment Layout Equipment Layout Equipment Layout Equipment Layout- Equipment Layout Equipment Layout-- Equipment Layout Equipment Layout Roof Plan Roof Details Roof Details 12la Part A Part B Part C Part D Part E Part E Part F Part G Part H Part I First Floor Part I Second Floor Part J First Floor Part J Second Floor Part K ‘loor Floor First if second Stage Dimming Plan Foundation Plans Structural Framing Foundation Plans Structural Framing Plans Plans Mechanical Notes and Symbols Demolition Plan—Part A Demolition Plan—Part B Demolition Plan—Part ( Demolition Plan—Part D Demolition Plan—Part E First Floo: Demolition Plan—Part E Second Floor Demolition Plan—Part F Demolition Plan—Part G Demolition Plan—Part H Demolition Plan—-Part I First Floo1 Demolition Plan—Part I Second Flo Demolition Plan—Part J First Floor Demolition Plan—Part. Demolition Plan—-Part K Floor Plan—Part A Floor Plan—Part B Fioor Plan-—Part C Floor Plan—Part Floor Plan—Part i Floor Plan—Part E Fir . I i ! Floor Plan Part Floor Plan—Part G Floor Plan—Part H Floor Plan Part I First Floor Floor Plan—Part I Second Floor 122a Sheet No. Description M-27 M-28 M-29 M-30 M-31 M-32 P-1 WOU UU hy ' ' ' a) -& wh oO or vVuvUvuU UU at tt et pt ' a) A ePWwWNMFK OD MAS ' — DUUDU UU UD orortonmrnwrrr BPnwNMNeK OO DMsD coromdotsindoiotons coco M-Ba-a-Ba-Ba-Ha- Mala Ba-Ha-) Floor Plan—Part J First Floor Floor Plan—Part J Second Floor Floor Plan—Part K Boiler Room Layout Partial Floor Plans & Details Roof Plan Details Details Details Equipment Schedules Equipment Schedules Equipment Schedules Plumbing Notes & Symbols Demolition Plan-——Part A Demolition Plan—Part B Demolition Plan—Part C Demolition Plan—Part D Demolition Plan—Part E First Floor Demolition Plan—Part E Second Floor Demolition Plan—Part F Demolition Plan—-Part G Demolition Plan—Part H Demolition Plan—Part I First Floor Demolition Plan—Part I Second Floor Demolition Plan—Part J First Floor Demolition Plan—Part J Second Floor Demolition Plan—Part K Floor Plan—Part A Floor Plan—Part B Floor Plan—Part C Floor Plan—Part D Floor Plan—Part E First Floor Floor Plan—Part E Second Floor Floor Plan—Part F Floor Plan—Part G Floor Plan—Part H Floor Plan—Part I First Floor Floor Plan—Part I Second Floor Floor Plan—Part J First Floor Floor Plan—Part J Second Floor Floor Plan—Part K Roof Plan Sanitary Riser Water Riser Water Riser Gas Risers Symbols, Notes and Schedules Demolition Plan—Part A Demolition Plan—Part B 128a Sheet No. Description ' P= ERP E OE ORES RP ECR RoR oR ok) = _ oe E-49 E-50 E-51 Demolition Plan—Part C Demolition Plan—Part C Demolition Plan—Part E First Floor Demolition Plan—Part E Second Floor Demolition Plan—Part F Demolition Plan—Part G Demolition Plan—Part H Demolition Plan—Part I First Floor Demolition Plan—Part I Second Floor Demolition Plan—Part I First Floor Demolition Plan—Part J Second Floor Demolition Plan—Part K Lighting Plan—Part A Power Plan—Part A Lighting Plan—Part B Power Plan—Part B Lighting Plan—Part C Power Plan—Part C Lighting Plan—Part D Power Plan—Part D Lighting Plan—Part E First Floor Power Plan—Part E First Floor Lighting Plan—Part E Second Floor Power Plan—Part E Second Fleor Lighting Plan—Part F Power Plan—Part F Lighting Plan—Part G Power Plan—Part G Lighting Plan—Part H Power Plan—Part H Lighting Plan—Part I First Floor Power Plan—Part I First Floor Lighting Plan—Part I Second Floor Power Plan—Part I Second Floor Lighting Plan—Part J First Floor Power Plan—Part J First Floor Lighting Plan—Part J Second Floor Power Plan—Part J Second Floor Lighting Plan—Part K Power Plan—Part K Fire Alarm Svstem Sound System Clock and Security System Fire Alarm Riser Diagram First Floor Fire Alarm Riser Diagram Second Floor & Sound Riser Diagram Details Fire Alarm and Sound System Electrical Riser Diagram and Panel Board Schedule Overall Floor Plan 124a Section 01010 Summary of the Work, Alternates Allowances PART 1—-GENERAL 1.1 Project Work Identification: A. General: Name of project is “Falls Church High Schoo] Renewal”, as indicated on contract documents by The Fairfax Architects, P.C. The project number is 29-110. Contract documents are dated 5-1-88. B. Contract Documents indicate the work of the Contract, and related provisions of project which may include but are not necessarily lim- ited to the following: 1. Existing site conditions and restrictions. 2. Alterations and coordination and existing work. 3. Other work to be performed concurrently by Owner. 4. Requirements for Owner partial occupancy prier to substantial completion of work of Contract. 1.2 Miscellaneous and General Provisions: A. Related Documents: 1. Drawings and general provisions of the Con- tract, including General and Supplementary Conditions and Division-! through Division- 16 Specification sections, apply to work of this section, and each with the other. B. Examination of Site and Pre-Bid Conference: 1. Bidders are required to visit the site, com- pare the drawings and specifications with all 125a work in place, and inform themselves of all conditions, including other work, if any, be- ing performed. Failure to visit the site and or attend the pre-bid conference will in no way relieve the successful bidder from the responsibility to furnish any materials or perform any work that may be required to complete the work in accordance with drawings and specifications without addi- tional cost to the Owner, or extension of Contract Time. On Thursday, May 19, 1988, at 9:00 A.M., a pre-bid conference will be conducted at the Office of Design and Construction Services, School Administration Building, 10700 Page Avenue, Fairfax, Virginia. Alterations and Coordination: 1. bo General: The work of this Contract includes coordination of entire work of project; in- cluding preparation of schedules, any re- quired general coordination drawings dia- grams, and control of site utilization: from the beginning of activity, through the project close-out and warranty perious. Alterations: Where not indicated other- wise, requirements of contruct documents apply for alteration work in same manner as for new work. Primarily, alteration work can be described as normal architec- tural, mechanical and electrical alterations. Cutting and Patching: 1. Definition: includes cutting and patching of both previously existing work and nominally completed portions of Contract work. Ex- cludes shop fabrication of work, and normal installation procedures, including the drilling 126a of holes to install fasteners. Excludes special categories of work identified as alterations, demolition, cleaning, removal replacement of noncomplying work and similar activities; although some of these activities may re- quire cutting and patching. General: Specific requirements and limita- tions for cutting and patching are shown and specified for certain types or work, and specified in other sections of Division 1 as required quality control procedures for gen- eral application to performance of the Work. E. Completion of the Work; Time: 1. The Work shall be executed and substantially completed within the time specified, and should the Work not be substantially com- pleted, and so certified by the Architect, it is understood and agreed that there will be deducted from the final payment as liqui- dated damages, but not as a penalty, for each day’s delay beyond the date of substan- tial completion and until certified as sub- stantially complete and accepted by the Owner and Architect, per consecutive cal- endar day, the sum of $200.00 for each in- terim completion date, and the sum of $600.00 for the total project completion date. 1.3 Alternates: A. Definitions: Alternates are defined as alternate products, materials, equipment, installation, or systems for the work, which may, at Owner’s option and under terms established by Instruc- tion to Bidders, be selected and recorded in the Contract (Owner-Contractor Agreement) to ei- ther supplement or displace corresponding basic requirements of contract documents. Alternates 127a may or may not substantially change scope and general character of the Work; and must not be confused with “allowances”, “unit prices”, “change orders”, “substitutions”, and other simi- lar provisions. General Provisions: Each alternate is described herein, and is defined by abbreviated language, recognizing that drawings and specifications sec- tions document the requirements. Coordination of related work is required to ensure that all work affected by each selected alternate is com- plete and properly interfaced with work of the alternate. Notification: Immediately following award of Contract, prepare and distribute to each entity to be involved in performance of the work, a notification of status of each alternate. Indicate which alternates have been. 1) Accepted, 2) Rejected, and 3) Deferred for consideration at a later date as indicated. Include full description of negotiated modifications to alternates, if any. Schedule of Alternates: 1. Alternate No. 1 (Add): Provide DDC Auto- matic Temperature Controls as described in Specification Section 15900. 2. Alternate No. 2 (Add): Provide Greenhouse as described in Specification Section 13123. 3. Alternate No. 3 (Add): Provide carpet as described in Specification Section 09680 in lieu of VCT in the following spaces: E-29, E-51, and E-52. J-13, J-15, J-16, J-22, J-24, J-25, J-27, J-28, J-29, J-40, J-41, and J-44. 128a 2E-5, 2E-7, 2E-8, 2E-9, 2E-10, 2E-11, 2E-12, 2h-14, 2E- ‘18, 2E-21, 2E-22, 2E-23, 2E-24, 21-25, 2E-26, 2E-27, and 2E-28. 21-1, 21-2, 21-3, 21-5, 21-6, 21-7, 21-9, 21-10, 21-11, 21-12, 21-13, 21-14, 21-15, and 21-16. 2J-1, 2J-2, 2J-3, 2J-4, 2J-5, 2J-6, 2J-7, 23-9, 23-10, 2J-12, 2J-13, 2J-15, 2J-17, 2J-18, 2J- 19, and 2J-20. 1.4 Allowances: A. Contingency Fund: > Contractor shall include in the Base Bid the sum of One Hundred Fifty Thousand Dollars ($150,000.00), exclusive of overhead, profit, and bond mark-ups, to cover the cost(s) of authorized reimbursement for contingencies that may arise during the course of the Con- tract. At the end of the Project, any monies remaining in the Fund shall be deducted from the final payment and returned to the Owner. Contingency Fund shall be listed as a line item on the Schedule of Values and the Application for Payment. B. Temporary Classroom Trailer Leasing: 2 Contractor shall include in the Base Bid the sum of Twenty-five Thousand Dollars ($25,000!, exclusive of overhead, profit, and bond mark-ups, to cover the ecost(s) of au- thorized reimbursement for the leasing of classroom trailer(s). Classroom trailer al- lowance shall be listed as a line item on the Schedule of Values and the Application for Payment. 129a C. Existing Elevator Improvements: 1. The Contractor shall include in the Base Bid the sum of Fifteen Thousand Dollars ($15,000), exclusive of overhead, profit, and bond mark-ups to cover the cost(s) of im- provements to existing elevator. Existing elevator improvements allowance shall be listed as a line item on the Schedule of Values and the Application for Payment. PART 2—NOT APPLICABLE PART 3—EXECUTION 3.1 Summary of the Work: Briefly and withou [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1297%3A1. Public record. Not legal advice.