## Facts

- Riverdale Development Company, LLC contracted with May Construction Company to build a commercial/office building under an agreement requiring arbitration of contract disputes.
- May purchased a pre-engineered metal building from Ruffin Building Systems, Inc., and Ruffin participated in erecting the structure.
- Riverdale complained of construction defects and related damages and asserted claims including negligence and fraud.
- May initiated arbitration against Riverdale under the contract; Riverdale asserted counterclaims in the arbitration based on alleged defects and damages.
- While arbitration was pending, Riverdale sued May in circuit court and later amended the complaint to add Ruffin as a defendant.
- The arbitrator ruled for May and rejected Riverdale’s claims, including findings that Riverdale failed to prove the damages it sought.
- After the award, the circuit court dismissed Riverdale’s claims against May as precluded by the arbitration outcome.
- Ruffin, though not a party to the arbitration, moved for summary judgment arguing Riverdale’s claims against Ruffin were barred because the same factual issues had been litigated and decided in arbitration.
- The circuit court granted summary judgment to Ruffin on collateral estoppel grounds.

## Issues

1. Whether a nonparty to an arbitration may assert defensive collateral estoppel against a party to that arbitration based on the arbitration award.
2. Whether the arbitration award was sufficiently final and adjudicative to support issue preclusion.
3. Whether the issues in Riverdale’s claims against Ruffin were identical to, actually litigated in, and necessarily decided by the arbitration, and whether Riverdale had a full and fair opportunity to litigate them.

## Decision

- The Arkansas Supreme Court affirmed summary judgment for Ruffin.
- A valid, final arbitration award may support collateral estoppel to the same extent as a court judgment.
- Mutuality is not required for defensive collateral estoppel in Arkansas; a new defendant may invoke issue preclusion against a plaintiff who previously litigated and lost the same issues.
- Riverdale was estopped because the same issues concerning alleged defects and claimed damages were litigated and resolved against Riverdale in arbitration, after a full and fair opportunity to present its case.

## Legal Principles

- Collateral estoppel applies when: (1) the issue is the same as in the prior proceeding; (2) the issue was actually litigated; (3) the issue was determined by a valid and final judgment (or equivalent adjudication); and (4) the determination was essential to the prior result.
- Arbitration awards, when valid and final, can have issue-preclusive effect.
- Defensive nonmutual collateral estoppel is permitted; the focus is whether the party to be estopped previously had a full and fair opportunity to litigate the issue, not whether the party asserting estoppel participated in the prior proceeding.

## Conclusion

The court held that Riverdale could not relitigate defect-and-damages issues against Ruffin after losing those issues in arbitration against May, and it affirmed summary judgment for Ruffin based on defensive collateral estoppel arising from the arbitration award.


Riverdale Dev. Co. v. Ruffin Bldg. Sys., Inc., 356 Ark. 90, 146 S.W.3d 852 (Ark. 2004)