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Gray Construction, Inc. v. Envirotech Construction Corp.

United States District Court, E.D. Kentucky, Central Division, Lexington

December 21, 2018

GRAY CONSTRUCTION, INC., Plaintiff,
v.
ENVIROTECH CONSTRUCTION CORP., Defendant.

          MEMORANDUM OPINION AND ORDER

          Danny C. Reeves, United States District Judge.

         Plaintiff Gray Construction (“Gray”) filed a motion to strike the Defendant Envirotech Construction Corporation's (“Envirotech”) jury demand. [Record No. 60] This requires the Court to determine whether the jury waiver provision included in the subcontract between Gray and Envirotech is enforceable. The motion to strike Envirotech's jury demand will be granted because the jury waiver provision is severable and reflects the parties' intent at the time of contract formation.

         I.

         This action arises out of the construction of a business establishment in Versailles, Kentucky, known as More Than A Bakery. [Record No. 1] Gray, the general contractor for the project, entered into a subcontract with Envirotech to provide all labor and materials necessary for the installation of insulated metal panels at the business. [Record Nos. 1; 60-1] Unfortunately, the parties had a falling out, resulting in Gray's termination of the subcontract and Envirotech's abandonment of the project. [Record No. 1] Gray alleged that Envirotech was in default under the terms of the subcontract and withheld payment. [Record No. 1] The plaintiff then incurred additional expense to complete the work after Envirotech's involvement in the project ceased. [Record No. 1] Envirotech asserts that it is still owed money for the work that it performed, and recorded a lien against More Than A Bakery. [Record No. 1] Gray executed and recorded a bond to release the lien. [Record No. 2');">23-3]

         Gray filed this action on December 7, 2');">2017, claiming that Envirotech breached the parties' contract and violated a state statute by filing an illegal lien against More Than A Bakery. [Record No. 1] It also seeks a declaratory judgment, holding that it is not required to pay Envirotech but, instead, is entitled to payment from Envirotech. [Record No. 1] Envirotech answered and filed a counterclaim on January 2');">26, 2');">2018, alleging breach of contract against Gray. [Record No. 1] Envirotech filed an amended counterclaim on July 16, 2');">2018, and requested a trial by jury. [Record No. 39, p. 9]

         Gray filed a motion to strike Envirotech's jury demand on November 5, 2');">2018, contending that the subcontract includes a waiver of the right to a jury trial. [Record No. 60] Envirotech filed a response on November 2');">26, 2');">2018, asserting that it is not subject to the jury trial waiver provision because Gray had previously materially breached the subcontract. As a result, Envirotech claims that it is not required to comply with the subcontract. [Record No. 69');">69]

         The relevant parts of the subcontract state:

16.1 DISPUTE RESOLUTION. All claims, disputes and matters in question arising out of, or relating to, this Agreement or a breach thereof, except for claims which have been waived by the making or acceptance of final payment and the claims excluded or limited by Sections 6.2');">2 and 6.6, shall be resolved by mediation, arbitration, and/or litigation at Gray's sole option. . .
16.2');">2 DISPUTE RESOLUTION PROCEDURE. Prior to a demand for arbitration, or initiation of litigation of claims, the parties shall proceed as follows, as an express condition precedent to commencing formal claims against the other arising out of the dispute:
(a) The party asserting a claim shall do so in writing and within the notice period, if any, established for such claims by the Subcontract Documents. In the absence of a notice period set by the Subcontract Documents, the notice of claim shall be given as soon as practicable but in no event later than five (5) calendar days after the claimant is aware of the event from which the claim arises.
(b) The parties shall then attempt in good faith to negotiate a resolution of disputed claims during the next twenty (2');">20) calendar days before pursuing any other means of dispute resolution.
(c) If claims remain unresolved, the parties shall endeavor to resolve disputes by proceeding at the instance of either to non-binding mediation conducted under such rules as the parties may agree to employ. The parties shall divide the cost of the mediator evenly among them
(d) DISPUTES RELATED TO GRAY. Notwithstanding anything stated above, if any dispute shall arise between Gray and the Subcontractor pertaining in any manner to the construction or interpretation of this Agreement, or the rights or obligations of the parties, or to the breach of this Agreement which the parties are unable to settle by mutual agreement, Gray shall have the exclusive option either to have the dispute determined by ...

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