Subcontractor’s Unjust Enrichment Claim Against Owner Not Stayed by Arbitration

Kegler Brown Construction Newsletter

A recent case decided by the Eleventh District Court of Appeals has decided that an unpaid subcontractor can assert an unjust enrichment claim in Court against the owner of the project even though there was an arbitration agreement in the prime contract between the owner and the general contractor. Owens Flooring Company v. Hummel Construction Company (2001), 140 Ohio App.3d 825.

The Court held that the issues between the owner and subcontractor were not referable to arbitration because there was no agreement in writing between those parties. Generally speaking, an arbitration provision only binds the specific parties to that agreement. The Court did however state that if the owner had filed suit against the subcontractor and contractor in an effort to escape its own arbitration agreement, then a stay of the legal proceedings against both (while arbitration proceeded) would be appropriate.

This case means that subcontractors will be free to assert lien claims, unjust enrichment claims or other claims against an owner that they do not have a contract with even if the owner and general contractor are entangled in a messy and lengthy arbitration. However, a different result might occur if the subcontractor had signed a subcontract, which stated that its claims against all parties must be stayed until such time as the arbitration between the owner and general contractor is resolved.