Juneau Construction Company, LLC Juneau filed a complaint against GF/Legacy Dallas, Inc. Legacy along with a motion for stay of the lawsuit pending arbitration. Legacy failed to answer the complaint under the belief that it was not required to do so. While the dispute was being mediated prior to arbitration, Juneau obtained a default judgment against Legacy. We granted Legacy’s application for discretionary appeal of an order of the trial court denying Legacy’s motions to set aside the default judgment and open its default. For reasons which follow, we reverse the court’s denial of Legacy’s motion to set aside the default judgment and vacate the denial of Legacy’s motion to open the default. Legacy owns real property in Dallas, Georgia, known as The Legacy at Dallas The Legacy. Legacy entered into a contract with Juneau pursuant to which Juneau furnished labor and material for construction of improvements to The Legacy. The contract contains a clause providing that any claim arising under the contract shall be subject to arbitration and that, prior to arbitration, the parties shall endeavor to resolve disputes by mediation. A dispute arose between Legacy and Juneau regarding payment for work performed, and Legacy began withholding payments to Juneau. Shortly thereafter, Juneau filed a claim of a mechanics’ and materialmen’s lien in the amount of $189,216 against The Legacy. Juneau then filed a demand for arbitration with the American Arbitration Association AAA and sent a copy of the demand to Legacy.
At about the same time, Juneau filed a complaint against Legacy in the Superior Court of Fulton County to recover $234,216 for materials and labor, along with other damages. Juneau sought recovery of damages on theories of breach of contract, violation of the Prompt Payment Act, quantum meruit, and lien foreclosure. Simultaneously with filing the complaint, Juneau moved for a stay of the lawsuit pending arbitration. In its brief in support of the motion, Juneau acknowledged that arbitration was required under the parties’ contract and stated that it had filed the suit “only to preserve its claim of lien.”1 Juneau served Legacy with the complaint and summons. No order was entered on the motion for stay.
