Moses H. Cone Memorial Hospital v. Mercury Construction Corp.

Moses H. Cone Memorial Hospital (hospital) (defendant) contracted Mercury Construction Corporation (contractor) (plaintiff) to build additions for the hospital. The hospital drafted the contract, which contained dispute-resolution provisions. All disputes regarding interpretation of the contract or performance were to be referred to J. N. Pease Associates (Pease), the architectural firm that oversaw the project. With a few express exceptions, Pease’s dispute decision could be submitted to binding arbitration within specified time limits under the contract’s broad arbitration provision. At Pease’s request, the contractor agreed to withhold any potential claims against the hospital for delaying the project until the construction was substantially completed. Construction was completed several months after the deadline, and the delay was due to the hospital’s actions. After completion of the project, the contractor submitted claims for delay and impact costs to Pease. The hospital notified the contractor that it would not pay the claims. The hospital filed suit against the contractor and Pease in North Carolina state court, asserting that the contractor had no right to arbitration and no legal basis for its claims. The contractor filed suit in federal district court to compel arbitration under the Federal Arbitration Act (FAA). The district court stayed the contractor’s suit pending resolution of the similar state-court claims regarding the contractor’s arbitration rights. The contractor appealed the stay to the United States Court of Appeals for the Fourth Circuit, which reversed the district court’s decision and found the parties’ contractual dispute to be within the scope of the arbitration agreement. The court remanded the case with instructions to compel arbitration, and the hospital appealed to the United States Supreme Court.