Public Works Arbitration Statute Held to be Ambiguous in Nevada
Written by: Gene Backus
May an public owner in Nevada refuse arbitration and preserve its right to a jury trial? The answer is no according to a recent decision of the Nevada Supreme Court.
In Harris Associates v. Clark County School District, 119 Nev., Adv. Op. 66, 81 P.3d 532 (Nev. 2003), a public owner contracted for construction work. Disputes arose between the parties and the contractor demanded arbitration under the arbitration clause in the contract. The contract provided that the public owner could, in it’s sole discretion, upon receipt of a demand for arbitration reject the arbitration. The court looked at the statute, NRS 338.150(1), mandating in public work’s specifications the inclusion of a clause permitting arbitration of a dispute. The court deemed the statute ambiguous, since it could be read simply as requiring a clause in the contract for permissible arbitration or it could be read, as the contractor contended, to require the public owner to submit to binding arbitration.
In resolving the ambiguity in the public works statute, the court looked at Nevada legislative history and intent. The history reflected that the prior statute contained the discretionary term “may” and this was changed to “shall.” The history further demonstrated that the Legislature added an exemption for the Department of Transportation, which strongly suggested that the intent was for arbitration to be mandatory.
As to the right to a jury trial, which the school district asserted was a constitutional right under Williams v. Williams1, the court concluded that the Legislature in passing this arbitration statute consented on behalf of the State to waive the right to jury trial.
Although in a comprehensive rewrite of the public works’ law in Nevada, NRS 338.150 was amended, the new language does not appear to impact this decision and disputes with most public agencies will be resolved by way of arbitration under the construction industry’s rules for arbitration as administered by the American Arbitration Association or Nevada Arbitration Association.2
For more information regarding the public works arbitration statute, please contact Gene Backus.