Renown, Inc. v. Hensel Phelps Construction Co.

In 1972 respondent Schaaf-Jacobs-Vinson (Schaaf) entered into a written contract to provide design, architectural, and engineering services for a winery which appellant Souverain Cellars proposed to build in Sonoma County. In 1973 Souverain entered into a written agreement with respondent Hensel Phelps Construction Company (Hensel) under which Hensel was to construct the winery in accordance with the plans and specifications furnished by Schaaf.

Both the design agreement and the construction agreement contained provisions for arbitration of disputes arising thereunder. However, both agreements expressly prohibited a demand for arbitration being made after the date when institution of legal proceedings on any underlying claim would be barred by the applicable statute of limitations. Furthermore, the construction agreement excepted from arbitration those claims which were deemed waived under the agreement by the making or acceptance of final payment.

Construction of the winery commenced in 1973 and work was substantially completed in 1974. Throughout this period appellants monitored the progress of construction through Jerry Graves, a full-time quality auditor employed by…