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In the Matter of the Arbitration Between J.D. Shehadi, L.L.C. v. Us Maintenance

October 5, 2011


The opinion of the court was delivered by: Schiller, J.


Frances Halliday-Cornell fell and was injuredat a Bed Bath & Beyond in Paramus, New Jersey. She claims that the accident resulted in part from the negligence of US Maintenance, Inc. ("USM") and J.D. Shehadi, L.L.C. ("Shehadi"), the companies responsible for maintaining the flooring that caused her accident. USM and Shehadi had a subcontracting agreement to maintain the flooring at the Bed Bath & Beyond where Halliday-Cornell was injured. An arbitrator ruled that Shehadi, the subcontractor, was required to indemnify USM based on the incident at Bed Bath & Beyond. Now before the Court is Shehadi's petition to vacate the arbitrator's award. In response, USM seeks to confirm the arbitrator's award. For the reasons that following, the Court will confirm the arbitrator's award.


USM is a general contractor of services for Bed Bath & Beyond at its various stores. (Shehadi Br. in Support of Pet. to Vacate Arb. Award [Shehadi Br.] at 1.) It subcontracted some of its work to Shehadi, a company that installs floor covering. (Id. at 2.) Halliday-Cornell sued Bed Bath & Beyond and USM for negligence after she fell at a Bed Bath & Beyond. (USM's Br. in Opp'n to Pl.'s Pet. to Vacate Arb. Awards ("USM's Opp'n") Ex. 3 [USM's AAA Br.] at Ex. C [Halladay-Cornell Am. Compl.].) In February of 2011, Halliday-Cornell amended her complaint to include Shehadi as a defendant. Halliday-Cornell alleged that Shehadi: (1) installed, repaired, and/or maintained "the plywood, carpet, vinyl and transition strip" in the store where Halliday-Cornell was injured; (2) was responsible for installing, maintaining, and repairing the floor of the store; (3) negligently installed, maintained, and/or repaired that flooring; and (4) caused injury to Halliday-Cornell as a result of its negligence. (Shehadi Br. Ex. A [Second Am. Compl.] at 6-7.)

According to Shehadi, at the location where Halliday-Cornell fell, USM contracted with another party to design and install the sub-flooring that would be the base for Shehadi's floor covering installation. (Shehadi Br. at 2.) Shehadi was subcontracted to install carpeting and vinyl over the sub-flooring but had no role in the design and installation of the sub-floor. (Id.)

Prior to the incident, Shehadi and USM had entered into a subcontractor agreement which provided:

Indemnification. To the fullest extent permitted by applicable law, [Shehadi] shall defend and hold harmless [USM] and [USM's] customer and [USM] and [USM's] customer's respective officers, directors, employees, agents, shareholders, partners, joint venturers, affiliates, successors and assigns ("Indemnified Parties") from and against any and all liabilities, obligation, claims, demands, causes of action, losses, expenses, damages, fines, judgments, settlements, and penalties, including, without limitation, costs, expenses and attorneys' fees incident thereto, arising out of, based upon, occasioned by or in connection with:

(1) [Shehadi's] performance of (or failure to perform) [its] duties under this Agreement;

(2) a violation of law of any negligence, gross negligence or willful misconduct by you or your affiliates, subcontractors, agents or employees during either [Shehadi's] performance you [sic] your [sic] duties under this Agreement or otherwise while [Shehadi] [is] on the property of one of [USM's] customers;

(3) Damage to property and injuries, including without limitation death, to all persons, arising from any occurrence caused by any act or omission of [Shehadi] or [Shehadi's] personnel related to the performance of this Agreement. . . .

The indemnification obligation specified in this paragraph shall be construed as to extend to all legal, defense and investigation costs, as well as other costs, expenses, and liabilities incurred by the Indemnified Parties, including but not limited to interest, penalties, and fees of attorneys and accountants (including expenses), from and after the time when any Indemnified Party receives notification (whether verbal or written) that a claim or demand has been made or is to be or may be made. Except as otherwise provided by law, the Indemnified Parties' right to indemnification under this paragraph shall not be impaired or diminished by any act, omission, conduct, misconduct, negligence or default (other than gross negligence or willful misconduct) of the Indemnified Parties. (Shehadi Br. Ex. B [Subcontractor Agreement] ¶ 5B.)

USM tendered its defense to Shehadi, but Shehadi rejected the tender. (Shehadi Br. at 2.) USM then filed for arbitration with the American Arbitration Association in Philadelphia, Pennsylvania. (Id. at 2-3.) The arbitrator, Bernard Beitch, Esquire, issued an Interim Award and Final Award, both of which found in favor of USM and against Shehadi. (Id. Exs. C & D [Arb. Awards].) Shehadi was ordered to assume the defense and indemnification of USM and Bed Bath & Beyond. Beitch also ordered Shehadi to reimburse USM $43,582.51 in counsel fees and costs. (Id.)


The Federal Arbitration Act ("FAA") provides that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. ยง 2. The FAA establishes the strong federal policy in favor of ...

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