School district must go to arbitration with contractor

Wednesday, Dec. 31, 2003 | 10:09 a.m.

CARSON CITY -- The Nevada Supreme Court ruled Tuesday that a $1 million dispute between the Clark County School District and a contractor over an addition to Basic High School must go to binding arbitration.

The court, in a unanimous decision, overturned the ruling of District Judge Stephen Huffaker, who had held that the School District did not have to go to arbitration in the case.

Harris Associates had been awarded a contract from the School District in 1998 to build the addition at the high school. A dispute arose in which the contractor claimed the district interfered with the method of construction, provided inadequate plans, failed to give Harris a valid extension of time and wrongfully withheld money.

Harris asked for the case to go to arbitration and the district refused, prompting Harris to file suit.

Nevada law says that any contract between a government and a private party must include a clause that permits arbitration of disputes that arise.

The School District said the contract language allows but does not order arbitration.

The court said the language in the law is ambiguous, but it said examination of the testimony given to the Legislature indicated the lawmakers wanted arbitration to be mandatory.

"It is reasonable to conclude that the Legislature would not enact a statute that makes dispute resolution easier and more efficient and then, simultaneously, grant the disputants the authority to circumvent the process and undermine the statute's purpose," the court decision noted.

The School District also argued that if binding arbitration is required, then it deprives the district of its constitutional right to a trial by jury.

The court said the Legislature waived the right of the school district and other governments to a jury trial when it enacted the law.

The case had been held in abeyance in District Court while awaiting the Supreme Court ruling.

In another ruling the court upheld the decision of the state Tax Commission that assessed Meridian Gold Company $860,628 in back taxes.

The commission had granted the mining company the right to use an accelerated depreciation schedule in 1991 based upon plans to close the operation at the Paradise Peak Mine in Mineral and Nye counties.

In 1993 Meridian laid off most of its mine employees and shut down its mill. But from mid-1993 to 1995 Meridian produced 45,000 to 47,000 ounces of gold through cyanide heap leach processing at the site.

The Tax Commission revoked the accelerated depreciation of Meridian and assessed the tax. Meridian filed suit.

Meridian claimed that producing gold through cyanide heap leaching did not constitute a mining operation. But the Supreme Court said the meaning of the phrase "mining operation" includes extracting precious metals from the earth and cyanide heap leaching fits that definition.