A legal dispute over responsibility for mold and construction defects at a Wilmington hotel has been sent back for arbitration after an appellate court found that a lower court wrongly dismissed the case. The ruling addresses whether prior settlements between the parties prevent further litigation about alleged problems discovered years after the original work was completed.
W.M. Jordan Company Incorporated, a Virginia-based general contractor, filed an appeal in the North Carolina Court of Appeals after New Hanover County Superior Court granted a motion to dismiss brought by Concrete Techniques and Design Inc., its North Carolina masonry subcontractor, on December 15, 2023. The appeal challenged both the authority of the trial court to rule on whether res judicata (a legal doctrine preventing re-litigation of settled matters) applied and whether it was correct to apply res judicata in this instance.
According to court documents, W.M. Jordan contracted with Wilmington Hotel Group LLC in August 2015 to build a hotel in Wilmington, North Carolina. W.M. Jordan then hired Concrete Techniques and Design as a subcontractor responsible for masonry and brick work on the project. Their agreement included an arbitration clause requiring all disputes be resolved through arbitration.
In March 2017, W.M. Jordan sued Concrete Techniques and Design alleging breach of contract, money owed, restitution, quantum meruit, and unjust enrichment related to delays and workmanship issues during construction. After mediation later that year, both parties signed a memorandum of settlement requiring Concrete Techniques and Design to pay $40,000 in exchange for releasing all claims made or that could have been made in connection with that civil action or related arbitration.
By December 22, 2017, both sides had negotiated final settlement language stating: “Plaintiff does . . . acquit and forever discharge [Defendant], .. . from any and all claims… which [Plaintiff] has made or which [Plaintiff] could have made in the Civil Action and/or related Arbitration.” W.M. Jordan then filed notice of voluntary dismissal with prejudice.
However, following a hurricane in 2019, mold issues were discovered inside the hotel. An investigation by Wilmington Hotel Group concluded in spring 2021 that improper installation of brick veneer cladding contributed to moisture problems inside the building. In June 2022, Wilmington Hotel Group initiated arbitration against W.M. Jordan alleging construction defects including substandard masonry work performed by subcontractors.
On August 28, 2023, W.M. Jordan filed suit against Concrete Techniques and Design again—this time seeking damages for breach of contract, breach of warranties (express or implied), contractual indemnity, negligence (in the alternative), as well as requesting referral to arbitration under their agreement. W.M. Jordan argued that it “neither knew nor could have known” about these specific masonry-related issues at the time of their earlier settlement.
Concrete Techniques and Design responded with a motion to dismiss under Rule 12(b)(6) of North Carolina’s Rules of Civil Procedure on September 22, 2023—arguing that res judicata barred any new lawsuit due to their prior settlement agreement covering all potential claims from the original dispute.
The trial court agreed with Concrete Techniques and Design’s argument regarding res judicata and dismissed W.M. Jordan’s complaint on December 15, 2023. W.M. Jordan appealed this decision.
In its analysis issued April 15, 2026 (No. COA24-479), the Court of Appeals reviewed whether state or federal law governed who decides if res judicata applies when there is an arbitration clause involved—a key point because federal law (the Federal Arbitration Act) requires arbitrators rather than courts decide such issues when interstate commerce is involved.
The appellate panel determined that because Plaintiff is based in Virginia while Defendant is based in North Carolina—and because the hotel serves interstate travelers—the transaction falls under federal jurisdiction via the Federal Arbitration Act (FAA). As stated: “Because the FAA applies, the arbitrator—not the trial court—should have decided the application of res judicata.”
As a result, “the trial court erred in granting Defendant’s motion to dismiss on res judicata grounds.” The appellate decision reverses dismissal and remands with instructions for referral to arbitration as originally required by contract between W.M. Jordan Company Incorporated and Concrete Techniques and Design Inc.
Attorneys representing W.M. Jordan Company Incorporated are Jeffrey B. Kuykendal and Walt Rapp from McAngus Goudelock & Courie PLLC; attorneys representing Concrete Techniques and Design Inc. are Steven A. Bader and Daniel G. Katzenbach from Cranfill Sumner LLP; Judge Clinton Rowe presided over proceedings at Superior Court level; Appellate Judges Stroud and Stading concurred with Judge Carpenter’s opinion; Case ID: No. COA24-479.
