Spartan Drywall v. Post Goldtex, L.P. ( 2016 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SPARTAN DRYWALL BUILDERS, INC., IN THE SUPERIOR COURT OF
D/B/A SPARTAN DRYWALL, INC. PENNSYLVANIA
Appellee
v.
POST GOLDTEX, L.P. AND POST
GENERAL CONTRACTING
Appellants No. 1182 EDA 2015
Appeal from the Order Entered April 8, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): June Term, No. 002448
BEFORE: LAZARUS, J., OTT, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED FEBRUARY 05, 2016
Appellants Post Goldtex, L.P. (“Post Goldtex”) and Post General
Contracting (“Post Contracting”) appeal from the order of the Honorable
Patricia McInerney of the Court of Common Pleas of Philadelphia County
overruling their preliminary objections to the Mechanic’s Lien Enforcement
Action of Respondent Spartan Drywall Builders, Inc., d/b/a Spartan Drywall,
Inc. (“Spartan”) and dismissing arbitration proceedings. After careful
review, we affirm.
On October 22, 2012, Post Goldtex and Spartan entered a construction
contract (the “Agreement”) for Spartan to install drywall and perform related
construction work at Post Goldtex Apartments located at 315 North 12 th
Street in Philadelphia (the “Property”). The Agreement consists of several
*Former Justice specially assigned to the Superior Court.
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documents that together constitute a “Contract Package” and provides that
Spartan would be compensated under a Timing and Payment Schedule.
On February 7, 2014, Spartan filed a Mechanic’s Lien against the
Property and any interest of its owners, which it alleged were Post Goldtex
and Post Contracting. On May 27, 2014, Post Goldtex filed a praecipe for a
rule to file a complaint upon the mechanic’s lien.
On June 16, 2014, Spartan filed the instant action against Post Goldtex
and Post Contracting. The trial court stayed the action after the parties
agreed to submit their dispute to mediation. Although the parties met with
a jointly-appointed mediator on one occasion, Post Goldtex concluded that a
second mediation session would not resolve the dispute and filed a demand
for arbitration on January 12, 2015.
In response, Spartan filed its First Amended Complaint, again naming
both Post Goldtex and Post Contracting as defendants, as it alleged that both
entities are “reputed owners” of the Property. Spartan sought a judgment in
the amount of $259,681.46 against Post Goldtex and Post Contracting for
their failure to pay Spartan for work, equipment, and materials pursuant to
their obligations in the Agreement.
On March 5, 2015, Post Goldtex and Post Contracting filed preliminary
objections asserting that the Agreement requires the parties to submit their
dispute to arbitration and that Post Contracting was improperly joined to the
mechanic’s lien action. Post Goldtex and Post Contracting also filed a motion
to stay the proceedings in this action and to compel Spartan to submit to
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arbitration. On April 8, 2015, the trial court entered an order overruling the
preliminary objections and denying the motion to stay the proceedings. This
timely appeal followed. Post Goldtex and Post Contracting complied with the
trial court’s order to file a Concise Statement of Errors Complained of on
Appeal pursuant to Pennsylvania Rule of Appellate Procedure 1925(b).
On appeal, Post Goldtex and Post Contracting claim that the trial court
erred in denying their preliminary objections when they allege that (1) the
Agreement contains an unequivocal agreement to arbitrate and (2) Post
Contracting was improperly joined as a party to this action. While as a
general rule, an order denying preliminary objections is interlocutory and is
not appealable as of right, there is a narrow exception for an order refusing
to compel a case to arbitration, which involves a jurisdictional question that
must be decided by the courts. Pisano v. Extendicare Homes, Inc., 77
A.3d 651, 654 (Pa.Super. 2013).
Our standard of review is well-established:
We review a trial court's denial of a motion to compel arbitration
for an abuse of discretion and to determine whether the trial
court's findings are supported by substantial evidence. In doing
so, we employ a two-part test to determine whether the trial
court should have compelled arbitration. The first determination
is whether a valid agreement to arbitrate exists. The second
determination is whether the dispute is within the scope of the
agreement.
Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa.Super. 2012) (quoting Smay v.
E.R. Stuebner, Inc., 864 A.2d 1266, 1270 (Pa.Super. 2004)).
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Arbitration is a matter of contract, and parties to a contract
cannot be compelled to arbitrate a given issue absent an
agreement between them to arbitrate that issue. Even though
it is now the policy of the law to favor settlement of disputes by
arbitration and to promote the swift and orderly disposition of
claims, arbitration agreements are to be strictly construed and
such agreements should not be extended by implication.
Elwyn, 48 A.3d at 461 (quoting Cumberland–Perry Area Vocational–
Technical School v. Bogar & Bink, 396 A.2d 433, 434–35 (Pa. Super.
1978)).
As noted above, the parties’ Agreement consists of several documents
that make up the “Contract Package.” The first document, entitled
“Agreement of Critical Business Terms,” was specifically drafted for this
project and designates Post Goldtex as “Owner” and Spartan as
“Contractor.” The Contract Package also includes, inter alia, (1) American
Institute of Architects (AIA) Form A201-1997, General Conditions of the
Contract for Construction (hereinafter “Form A201”) and (2) AIA Form A401-
2007, Standard Form of Agreement between Contractor and Subcontractor
(hereinafter “Form A401”).
Both Forms A201 and A401 contain provisions related to the
enforcement of the Agreement. Form A201 designates Post Goldtex as the
Owner of the Property and Spartan as the Contractor. With respect to
arbitration, Form A201 specifically states:
§ 4.5 MEDIATION
§ 4.5.1. Any Claim arising out of or related to the Contract …
shall be subject to mediation as a condition precedent to
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arbitration or the institution of legal or equitable proceedings by
either party.
***
§ 4.6 ARBITRATION
§ 4.6.1. Any Claims arising out of or related to the Contract …
shall … be subjected to arbitration. Prior to arbitration, the
parties shall endeavor to resolve disputes by mediation in
accordance with the provisions of Section 4.5.
AIA Document A201-1997, §§ 4.5, 4.6.1.
In contrast, Form A401 designates Post Contracting as the Contractor
and Spartan as the Subcontractor. Form A401 specifically states:
§ 6.1 MEDIATION
§ 6.1.1. Any Claim arising out of or related to this Subcontract
… shall be subject to mediation as a condition precedent to
binding dispute resolution
***
§ 6.2 BINDING DISPUTE RESOLUTION
For any claim subject to, but not resolved by mediation pursuant
to Section 6.1, the method for binding dispute resolution shall be
as follows:
[X] Arbitration pursuant to Section 6.3 of this Agreement
[X] Litigation in a court of competent jurisdiction.
AIA Document A401-2007, §§ 6.1.1, 6.2.
In denying Post Goldtex’s request to compel arbitration, the trial court
found that the Agreement as set forth in the Contract Package contained
conflicting language in that Form A201 requires mediation and then
arbitration only whereas Form A401 first requires mediation and then
subsequently allows either arbitration or litigation in a court of competent
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jurisdiction. To resolve this contract, the trial court looked to another
document in the Contract Package – the Agreement of Critical Business
Terms, which specifically addresses how to resolve conflicts in the AIA
documents:
AIA 401 AND A201 GOVERNING DOCUMENTS FOR ALL
OTHER TERMS; CONFLICTING STATEMENTS IN
DOCUMENTS:
The AIA 401 form of Contract as well as A201 General Conditions
of the Contract shall govern all other terms and conditions of the
contract between Contractor and Owner. All blanks to be filled-
in in the AIA contracts shall refer to terms in this document.
If there are any conflicting statements in the AIA contract
documents or any other documents in this contract
package, the statements in this document shall supercede
those in the other documents.
Agreement of Critical Business Terms, at 6 (emphasis added).
As the trial court deemed the Agreement of Critical Business Terms to
be the controlling document in the Contract Package and noted that it
contained no language that designated arbitration as the parties’ choice
method for dispute resolution, the trial court concluded that it could not
compel arbitration on any party to the Agreement.
While Post Goldtex seems to acknowledge that Forms A201 and A401
have conflicting clauses about the choice method of dispute resolution, it
argues that the language in Form A201 should control as this document
concerned the agreement between Post Goldtex and Spartan as Owner and
Contractor. This argument ignores the fact that the parties agreed to
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integrate both of the Forms into the Agreement of Critical Terms and
expressly agreed that the language of both Forms “shall govern all other
terms of the contract between [Spartan and Post Goldtex].” Agreement of
Critical Business Terms, at 6. As Form 401 provides that any claim arising
out of or related to the Subcontract, after being submitted to mediation,
could be resolved by either arbitration or litigation, Spartan cannot be
compelled to arbitrate its claims against Post Goldtex when there is no clear
indication that the parties agreed to select arbitration as the exclusive
method for dispute resolution.1 Accordingly, the trial court did not err in
overruling Post Goldtex’s preliminary objection seeking to compel
arbitration.
Second, Post Contracting argues that it was improperly joined as a
defendant in this mechanic’s lien action as it alleges that it has no ownership
interest in the Property but merely served as a contractor. Asserting that a
mechanic’s lien is a statutory in rem action that addresses the rights of the
parties with respect to a parcel of property, Post Contracting argues that it is
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1
Although the parties identify Spartan as the Contractor in Form 201 with
respect to Post Goldtex as the owner of the Property and the Subcontractor
in Form 401 with respect to Post Contracting, this alternative
characterization does not affect Spartan’s ability to file a mechanic’s lien
against Post Goldtex under both designations. See Denlinger, Inc. v.
Agresta, 714 A.2d 1048, 1053 (Pa. Super. 1998) (finding trial court erred in
striking the construction company’s mechanic’s lien in which the entity was
alternatively characterized as both the contractor and subcontractor of the
project).
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not a proper party to this mechanic’s lien action as Spartan should have filed
a breach of contract action against it to recover money damages instead.
Our scope and standard of review is as follows:
A preliminary objection in the nature of a demurrer is properly
granted where the contested pleading is legally insufficient.
Preliminary objections in the nature of a demurrer require the
court to resolve the issues solely on the basis of the pleadings;
no testimony or other evidence outside of the complaint may be
considered to dispose of the legal issues presented by the
demurrer. All material facts set forth in the pleading and all
inferences reasonably deducible therefrom must be admitted as
true.
In determining whether the trial court properly sustained
preliminary objections, the appellate court must examine the
averments in the complaint, together with the documents and
exhibits attached thereto, in order to evaluate the sufficiency of
the facts averred. The impetus of our inquiry is to determine the
legal sufficiency of the complaint and whether the pleading
would permit recovery if ultimately proven. This Court will
reverse the trial court's decision regarding preliminary objections
only where there has been an error of law or abuse of discretion.
When sustaining the trial court's ruling will result in the denial of
claim or a dismissal of suit, preliminary objections will be
sustained only where the case i[s] free and clear of doubt.
Barton v. Lowe's Home Centers, Inc., 124 A.3d 349, 354 (Pa. Super.
2015) (quoting Weiley v. Albert Einstein Medical Center, 51 A.3d 202,
208–209 (Pa. Super. 2012)).
Upon review of the pleadings and the order and opinion of the trial
court, we find that the trial court correctly accepted as true the material
facts of the complaint in which Spartan asserted that Post Contracting (a/k/a
Post Brothers Apartments) is a reputed owner of the Property. At this stage
of the instant action, it was proper to overrule Post Contracting’s preliminary
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objection in the nature of a demurrer asserting that it had been improperly
joined as a defendant in this mechanic’s lien action.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/5/2016
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