Here at Construction Law Musings, Hensel Phelps Construction Co. is best known as the company that got whipsawed between indemnity rules and the lack of a statute of limitations for state agencies. However a recent case out of the Federal District Court for the Eastern District of Virginia gave them a win and illustrates, once again, that failing to appear or respond is never a good option.
In Hensel Phelps Construction Co. v. Perdomo Industrial LLC, the Alexandria, VA federal court looked at an arbitration award entered for Hensel Phelps and against Perdomo under the Federal Arbitration Act. The facts of the case showed that Perdomo “double dipped” into the deep end of refusal or failure to respond. First of all, the contract required arbitration and any award was enforceable in any state or federal court having jurisdiction. Based upon this language, Hensel Phelps filed a demand for arbitration with the American Arbitration Association against Perdomo and its surety, AAA sent notice to both Perdomo and Surety, and. . . neither responded or appeared at what was ultimately 8 days of hearings. After hearing Hensel Phelp’s evidence and the total lack of defenses from Perdomo and Surety, the panel issued an award in favor of Hensel Phelps, finding Perdomo LLC in default and holding Perdomo LLC and Allied World jointly and severally liable in the amount of $2,958,209.71 and Perdomo LLC individually liable in the amount of $7,917,666.30 plus interest.
Hensel Phelps filed the action with the Alexandria court to confirm the arbitration award and after proper service of the petition Perdomo once again failed to respond. Not only that, Perdomo failed to appear at the hearing on the inevitable default judgment motion filed by Hensel Phelps. After finding that it had jurisdiction over the matter due to both the law and the contract, the Court held a default judgment was proper and that Hensel Phelps was entitled to the full award. In doing so, theCourt held that Perdomo did not request modification of the award in the proper time and that Hensel Phelps had petitioned the Court in a timely manner under the Federal Arbitration Act. In short, Hensel Phelps didn’t even have to work that hard because there were no defenses presented either by pleading or at the hearing (no one having appeared).
The takeaway, aside from having an experienced construction attorney on your side? ALWAYS SHOW UP! It was bad enough that Perdomo forfieted its right to defend itself at arbitration, but it then gave up what limited avenues of defense to the award that it may have had when it failed to pursue either modification or vacation of the award and then failed to even respond to the petition to confirm or motion for default judgment. While defenses to the confirmation of a proper arbitration award are limited, at least Perdomo would have been able to put up a fight.
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