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Finding no reason to vacate an earlier arbitration award that favored the builder in a house warranty dispute, a state court in Delaware vacated a later award from a second arbitrator that favored the homeowner as precluded by the first award.
In Country Life Homes, Inc. v. Shaffer, No. Civ.A. 2288-S, 2007 WL 333075 (Del. Ch. Jan. 31, 2007), Shaffer signed two contracts concerning the warranty of his new home: a Construction Contract with builder Country Life Homes (CLH) and a limited Home Buyer Warranty Program. Though both contracts contained arbitration agreements, each named a different arbitration administrator.
When Shaffer experienced structural problems with his home, he took the dispute to the American Arbitration Association (AAA), as stipulated in the Construction Contract, which implied broad warranties. CLH then took the dispute to Construction Arbitration Services (CAS), as stipulated in the Warranty Program, which contained a limited warranty.
Though its proceedings began only after the AAA claim had been submitted, CAS was the first to issue its award. The CAS arbitrators held that CLH was not liable for any damages because the two-year warranty had expired. Three months later, the AAA arbitrators awarded Shaffer over $18,000 in damages.
The Court, after determining that CAS was acting legitimately within the scope of the Warranty Program arbitration agreement, found no grounds for vacating its award. Since the agreement provided that the award was to be "final and binding," AAA's later award was necessarily precluded.
The Court noted that its decision was "somewhat unsettling" because there was no independent reason to vacate the AAA award in Shaffer's favor beyond preclusion by the CAS award.
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