The AIA General Conditions call for designation of an “initial decision maker”—usually the project architect—to respond to disputes. The process leads to nonbinding mediation and binding arbitration, if necessary. But, can the initial decision become final and binding, a damage assessment to be confirmed in court, much like an arbitration award?
A Texas court recently rejected this argument. The decision, issued by the project architect, adopted a repair contractor’s pricing spreadsheet that was unsupported by documentation or expert opinion. It was not credible evidence. The contractor, regardless of the initial decision, had not lost the right to contest the owner’s damage claim.
The other case in this issue involved a state “insurance bad faith” statute that imposed punitive damages on insurers that demonstrated a lack of good faith in processing claims. The Pennsylvania Supreme Court was asked if the statute also applied to a construction contract payment bond surety that had refused to compensate an unpaid subcontractor.
