In Valli Construction, Inc. v. Alvites Concrete Services, No. 13-13-00295-CV (Tex. App – Corpus Christi, December 30, 2014), a Chevrolet dealership hired a general contractor, Valli, to build a structure for the company. Valli then hired two local subcontractors to complete concrete and plumbing work on the project. The Chevrolet dealer apparently asked the concrete subcontractor, Alvites, to begin working on the construction project before a formal written agreement was signed by the two contractors. After work had already begun, Alvites signed a Subcontractor Agreement that contained an arbitration provision requiring the parties to resolve any future disputes in a Northern California County.

Following completion of the construction project, a local nursery sued the Chevrolet dealership and Valli over the improvement. The car dealer then sued Valli and its subcontractors in Nueces County, Texas. Alvites responded to the lawsuit by filing a counterclaim against the Chevrolet dealer and a cross-claim against Valli for breach of contract and other claims. Next, Valli filed a motion to compel the concrete subcontractor’s claims against it to arbitration under the Federal Arbitration Act (“FAA”). Alvites opposed the motion by claiming the arbitration agreement included in the Subcontractor Agreement was unconscionable.

In support of its unconscionability claims, the concrete subcontractor presented an affidavit to the court that was signed by the company’s operations manager. According to the Alvites employee, his company was asked to begin work on the construction project after negotiating a price but before entering into a written contract. The manager claimed that Valli sent a subcontractor agreement to Alvites after work had already begun and the general contractor refused to discuss or negotiate its terms. The Alvites manager also stated his company signed the Subcontractor Agreement after being told to because project work had already commenced. In addition, the man’s affidavit alleged that Alvites had no bargaining power with regard to the terms of the Subcontractor Agreement, the concrete company did not understand the ramifications of the alternative dispute resolution provision, enforcing the arbitral provision’s venue requirements would place an undue burden on the Texas-based concrete subcontractor, and substantial delay would result if the allegedly unconscionable arbitration provision was enforced.

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