United States District Court, D. Hawaii
ORDER DENYING MOTION TO COMPEL ARBITRATION AND/OR
MEDIATION AND JOINDER THEREIN
OKI MOLLWAY UNITED STATES DISTRICT JUDGE.
Marisco, Ltd., hired Defendant GL Engineering &
Construction, Pte., Ltd. (“GLEC”), to construct
and deliver a dry dock. Marisco says that GLEC did not timely
complete and deliver the dry dock and instead left Marisco
with an unfinished dry dock that did not meet specifications.
Marisco further asserts that GLEC's principals,
Defendants Lim Sing Tian and Raymond Gan, misrepresented
their experience and ability.
moves to compel Marisco to arbitrate its claims.
Alternatively, GLEC says that Marisco should have attempted
to mediate this matter before filing suit and that this court
should dismiss the First Amended Verified Complaint or stay
the case pending mediation. See ECF No. 9. Tian and
Gan substantively join in the motion. See ECF No.
11. This court is unpersuaded by the motion and joinder and
wanted a floating dry dock in Hawaii. See First
Amended Verified Complaint ¶ 18, ECF No. 6, PageID #
226. On December 17, 2015, GLEC submitted a bid for the
construction of the dry dock. Id. ¶ 24, PageID
December 30, 2015, Marisco sent GLEC $50, 000 Singapore
dollars to rent a location in Indonesia to build the dry
dock, with the understanding that the funds would be applied
toward the outstanding balance owed on the down payment of
the contract price. Id. ¶ 30, PageID # 229.
January 4, 2016, Tian and Gan met with Marisco
representatives in Hawaii. Marisco says that Tian and Gan
falsely represented 1) that GLEC had the experience, skill,
and manpower to construct the dry dock per its
specifications; and 2) that the Indonesia location was
suitable for the construction and launching of the dry dock.
Id. ¶¶ 31-37, PageID # 229-31.
days later, on January 7, 2016, Marisco told GLEC that the
dry dock absolutely had to be completed and delivered by a
“drop-dead date” of September 30, 2016.
Id. ¶ 41, PageID # 232.
January 9, 2016, GLEC increased its bid to build the dry dock
by $690, 000. In seeking this additional amount, Tian and Gan
promised that they would personally ensure completion and
delivery of the dry dock by September 30, 2016. Id.
¶ 44, PageID # 233. Marisco says it relied on that
promise when it agreed to have GLEC build the dry dock and
when it agreed to the increased price. Id. ¶
the January 2016 meetings, Marisco told GLEC that the dry
dock had to be built at a place where the water was at least
five meters deep, so the dry dock could eventually be
launched without damaging it. Id. ¶ 48, PageID
# 234. Tian and Gan represented that they understood the
depth requirement and that they would each personally ensure
that it would be met so that the dry dock could be launched
January 20, 2016, Marisco and GLEC entered into the agreement
to build the dry dock. Id. ¶ 49, PageID #
234-35; ECF No. 6-1 (copy of Dry Dock Construction
Agreement). GLEC agreed to build and perform all the work
required by the dry dock plans. Agreement ¶ 1.1, ECF No.
6-1, PageID # 272. In return, Marisco agreed to pay a total
of $9 million, with $1.8 million due immediately, followed by
eight progress payments of $900, 000, each progress payment
to be paid upon completion of an additional 12.5% of the
construction of the dry dock. Agreement ¶ 2.3(a), ECF
No. 6-1, PageID # 274.
warranted that, when the dry dock was tendered for delivery,
it would be free from defects in workmanship, would conform
to the specifications, would be in a finished condition, and
would be fit for its intended purpose. Agreement ¶ 4.1,
ECF No. 6-1, PageID # 277. Section 4.4 of the agreement
required GLEC to promptly correct nonconforming work after
being notified of any defect and after GLEC had inspected the
work to confirm the defect.
16 of the agreement concerns “Dispute Resolution”
16.1 Reference to a Surveyor.
The Parties must use the procedure set forth in
Section 2.[5 for arbitration by an agreed
surveyor to resolve disputes over contract administration,
materials, and workmanship. The disputes referable to the
agreed surveyor under the procedure outlined in
Section 2.5 are: (a) status of work for
progress payments under Section 2.5; (b)
impact of Force Majeure on contract performance under
Section 3.5; and (c) impact of any change
orders on contract Sum and Delivery under Section
16.2 Negotiation; Mediation; Litigation.
For any dispute that may arise out of this Agreement, the
Parties are to meet and use their best efforts to resolve the
dispute by agreement. The Parties are to meet to discuss the
possibility of a mutually agreed upon procedure to resolve
any specific dispute that has arisen. The procedure may be
streamlined or simplified in any manner the parties
determine. If no mutual agreement of the Parties is affected,
then the dispute resolution will proceed as follows. Any
dispute that may be referred to a surveyor as provided in
Section 16.1 but cannot be resolved by such
reference and good faith efforts of the Parties to resolve
such dispute, and any other dispute, controversy, or claim
arising out of or relating to this Agreement, including any
question regarding breach, termination, or invalidity
thereof, is to be resolved by litigation under
Section 18.6[, which requires litigation in
the state or federal courts in Hawaii].
2.5 of the ...