Real Estate and Construction Law Blog On Federal Arbitration Act Ruling
“While Section 1298.7 of the California Code of Civil Procedure generally allows homebuyers to pursue defect litigation in court regardless of an agreement to arbitrate, the Third District Court of Appeal recently ruled the Federal Arbitration Act preempts California law and binds homebuyers to arbitration provisions when the transaction involves interstate commerce.”
Thus begins a rather interesting article by Bryce Jensen, Esq. of Sheppard Mullin. Although SHCC, Inc. does not by any means provide legal advice, what I think it says may have an impact on construction defect litigation in California. Essentially the case seems to reinforce arbitration clauses in construction contracts. The reasoning seems a little far-fetched however. Apparently the FAA (Federal Arbitration Act) only applies to transactions involving interstate commerce. How does a house built in California using local contractors involve interstate commerce? Simple – many of the building products (like wood for example) must be carried across the state line before making its way to the job site. Thus, interstate commerce and therefore, federal laws apply. Will window leaks be going before the U.S. Supreme Court soon? Only time, and a sprinkling of politics, will tell.
10 April 2007 | Construction, Construction Defect, Construction and Law, Litigation | Comments
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