A North Carolina appellate court has ruled that arbitration in a contract dispute between Snipes Concrete and Hauling, LLC, and BC Construction Group, Inc. must occur in Michigan, not North Carolina. This decision affects the ongoing legal battle over unpaid work for a charter school project in Durham, North Carolina, and emphasizes the importance of arbitration agreements in interstate commerce.
The Court of Appeals of North Carolina issued its ruling on August 19, 2026, in case number 25-234. The court's decision reverses a previous order from the Durham County Superior Court, which had mandated that arbitration take place in North Carolina. This ruling is significant because it clarifies the application of the Federal Arbitration Act (FAA) in disputes involving interstate contracts.
Background
Snipes Concrete and Hauling, LLC (Snipes) is a North Carolina-based company that entered into a subcontract with BC Construction Group, Inc. (BCCG), a Michigan corporation, to provide concrete work for the Kestrel Heights Charter School project in Durham. Snipes alleged that BCCG failed to pay over $108,000 for the work performed, leading to the legal dispute.
In February 2024, BCCG sought to dismiss Snipes's complaint or compel arbitration based on a clause in their contract that required arbitration to take place in Brighton, Michigan. Snipes opposed this, arguing that the contract was performed entirely in North Carolina and therefore should be governed by North Carolina law, specifically General Statute Section 22B-2, which voids arbitration clauses requiring out-of-state arbitration for contracts related to real property improvements in North Carolina.
The Ruling
The appellate court, led by Judge Donna Stroud, found that the FAA applied to the arbitration agreement because the contract involved interstate commerce. The court stated, "Because the contract involves interstate commerce, the Federal Arbitration Act (FAA) applies and preempts North Carolina General Statute Section 22B-2." As a result, BCCG was entitled to enforce the arbitration agreement as written, including the forum-selection clause that specified Michigan as the arbitration venue.
The court reversed the lower court's decision that mandated arbitration in North Carolina and remanded the case, allowing BCCG to proceed with arbitration in Michigan. The ruling highlights the court's interpretation of the FAA's application in cases involving interstate transactions, emphasizing that state law cannot override federal law in this context.
Impact
This ruling has significant implications for future arbitration cases in North Carolina and beyond. It reinforces the validity of arbitration agreements in contracts involving interstate commerce and clarifies that federal law can preempt state statutes that seek to limit arbitration venues. The decision may encourage companies engaged in interstate commerce to include arbitration clauses in their contracts, knowing that such agreements will likely be upheld in court.
Furthermore, the ruling may affect other subcontractors involved in similar disputes, as it establishes a precedent that arbitration agreements must be honored as written, even if they designate an out-of-state venue. This could lead to increased reliance on arbitration as a means of resolving disputes in the construction industry and other sectors.
What's Next
Following the appellate court's ruling, the case will proceed to arbitration in Michigan as specified in the contract. There are no indications that BCCG intends to appeal the decision further, and no related cases are pending that could impact this ruling. The outcome of the arbitration will determine the final resolution of the payment dispute between Snipes and BCCG.