M2J2S, LLC v. United Telephone ( 2017 )

J-A11028-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
UNITED TELEPHONE COMPANY OF IN THE SUPERIOR COURT OF
PENNSYLVANIA, LLC D/B/A PENNSYLVANIA
CENTURYLINK
Appellant
v.
M2J2S, LLC D/B/A SERVICEMASTER
RESTORATION SERVICES, MICKEY RAPP
AND JESSIE BOCK
Appellees No. 1517 MDA 2016
Appeal from the Order Entered August 16, 2016
In the Court of Common Pleas of Cumberland County
Civil Division at No(s): 2015-04421
BEFORE: SHOGAN, J., MOULTON, J., and STEVENS, P.J.E.*
MEMORANDUM BY MOULTON, J.: FILED SEPTEMBER 05, 2017
United Telephone Company of Pennsylvania, LLC, doing business as
CenturyLink (“CenturyLink”), appeals from the August 16, 2016 order
entered in the Cumberland County Court of Common Pleas overruling in part
its preliminary objections to the complaint1 filed by M2J2S, LLC, doing
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*
Former Justice specially assigned to the Superior Court.
1
Co-plaintiffs Mickey Rapp and Jessie Bock asserted claims against
CenturyLink, which were dismissed by the trial court. Rapp and Bock have
not appealed from that decision.
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business as ServiceMaster Restoration Services (“ServiceMaster”). 2 Because
the trial court erred in construing the arbitration clause at issue, we reverse
and remand for further proceedings.
This case arises from a contract between CenturyLink and
ServiceMaster for the remediation of a property leased by CenturyLink.3
CenturyLink hired ServiceMaster to perform an emergency remediation of
the property, which had suffered extensive water damage and mold
contamination. On June 11, 2015, ServiceMaster and CenturyLink signed an
authorization for repairs and payment, stating that CenturyLink was hiring
ServiceMaster to do emergency roof leak and mold remediation services.
They also signed a “statement of authorization for mold,” which included the
following arbitration clause:
Any dispute between Owner [(CenturyLink)] and
ServiceMaster (including the interpretation of this
Agreement), except for non-payment of invoices for
ServiceMaster’s work, shall be submitted to binding
arbitration . . . . The arbitration shall be binding on all
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2
We note that ServiceMaster’s brief contains numerous citations to
unpublished memoranda of this Court. “[P]ursuant to this [C]ourt’s internal
operating procedures, ‘[a]n unpublished memorandum decision shall not be
relied upon or cited by a Court or a party in any other action or proceeding,’
subject to certain limited exceptions not relevant here.” Dubose v.
Quinlan, 125 A.3d 1231, 1247 n.6 (Pa.Super. 2015), app. granted in part,
138 A.3d 610 (Pa. 2016). We caution counsel to refer to the Superior Court
Internal Operating Procedures when practicing before this Court.
3
ServiceMaster asserts that CenturyLink held itself out as the owner of
the subject property.
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parties and judgment may be entered in any court having
jurisdiction.
Stmt. of Auth. for Mold, 6/11/15, ¶ 7 (bold in original). At the time of the
agreement, CenturyLink had indicated that there was no asbestos in the
building, and representatives of both companies walked through and saw no
asbestos “hot spots,” which would have been marked with orange paint.
ServiceMaster began work immediately.
According to ServiceMaster, once it began work, CenturyLink
interfered in numerous ways, the most serious of which was a site visit by a
CenturyLink contractor who, without wearing personal protective equipment,
removed materials from the property for asbestos testing. After this
incident, ServiceMaster and CenturyLink quarreled over the presence of
asbestos on the property.4
On July 23, 2015, CenturyLink sent ServiceMaster a notice of claims,
“which claimed . . . breaches of contact, claims of contractual undertakings,
and violation of asbestos removal and disposal regulations.” Compl. ¶ 127.
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4
According to the complaint, ServiceMaster claimed that any materials
in the building contained less than 2% asbestos, whereas CenturyLink
claimed that certain materials contained as much as 7% asbestos.
CenturyLink sent a letter reporting the contamination to the Pennsylvania
Department of Environmental Protection (“DEP”), which ServiceMaster
claims was fraudulent and deceptive. ServiceMaster accused CenturyLink of
failing to report that CenturyLink had allowed work to continue on the
property and served to “scapegoat ServiceMaster, conceal material acts and
omissions of CenturyLink, and trick [the] DEP in according CenturyLink safe
harbor.” Compl. ¶ 111.
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ServiceMaster responded to these allegations; CenturyLink did not reply
except to inform ServiceMaster that it had received its response.
On August 12, 2015, ServiceMaster filed a writ of summons in the trial
court. On September 10, 2015, according to ServiceMaster, CenturyLink
notified ServiceMaster that there was a “serious asbestos issue” for which
“Centurylink was claiming approximately $164,000 in offset claims in
relation to the work.” Id. ¶ 145. The next day, counsel for ServiceMaster
responded to those claims and sent an acceptance of service form with a
copy of the writ of summons, asking CenturyLink’s counsel to accept service
on behalf of CenturyLink as previously promised. On September 16, 2015,
CenturyLink’s counsel sent, according to ServiceMaster, another “false and
fraudulent demand for immediate payment by ServiceMaster to CenturyLink
of $164,000.” Id. ¶ 151.
On October 19, 2015, CenturyLink filed preliminary objections to
ServiceMaster’s complaint, which included a preliminary objection based on
lack of subject matter jurisdiction. CenturyLink asserted that the arbitration
clause in the contract required the parties to arbitrate this matter.
According to CenturyLink,
[t]he dispute at issue . . . [was] ServiceMaster’s breach of
contract, including advising CenturyLink that there was no
asbestos present in the area where the mold abatement
work was to be completed and performing unlicensed
demolition of asbestos-containing materials, which
subsequently required CenturyLink to spend significant
sums investigating and completing clean-up and incur
costs for lost use of lease space and obtaining alternate
facilities.
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Prelim. Obj., 10/19/15, ¶ 16. CenturyLink asserted that “because the
dispute at issue is ServiceMaster’s breach of contract, this matter must be
arbitrated and the [trial court is] without subject matter jurisdiction.” Id. at
¶ 18.
ServiceMaster did not file a written response to the preliminary
objections, but instead requested argument. After argument, on August 15,
2016, the trial court overruled CenturyLink’s preliminary objection based on
lack of subject matter jurisdiction, concluding that the arbitration clause
excepted claims involving non-payment of ServiceMaster’s invoices and,
because ServiceMaster alleged CenturyLink’s non-payment of invoices,
ServiceMaster properly filed suit in the trial court.5 On September 15, 2016,
CenturyLink timely appealed to this Court.6
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5
As a result of the trial court’s ruling, CenturyLink filed an answer with
new matter and counterclaims on September 9, 2016.
6
On September 15, 2016, CenturyLink also filed a motion asking the
trial court to certify the August 15, 2016 order for interlocutory appeal. On
September 26, 2016, the trial court issued a rule upon ServiceMaster to
show cause as to why the trial court should not certify the order for
interlocutory appeal. ServiceMaster did not respond, and the trial court did
not issue an order certifying the matter for appeal. Even without such an
order, however, this Court has jurisdiction because “[a]n order overruling
preliminary objections seeking to compel arbitration is immediately
appealable as an interlocutory appeal as of right pursuant to 42 Pa.C.S.[] §
7320(a) and [Pennsylvania Rule of Appellate Procedure] 311(a)(8).”
Petersen v. Kindred Healthcare, Inc., 155 A.3d 641, 644 n.1 (Pa.Super.
2017).
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On appeal, CenturyLink asserts that the trial court abused its
discretion in finding that the dispute was not subject to binding arbitration.
CenturyLink argues that the true issue here is ServiceMaster’s breach of
contract, which falls within the scope of the arbitration clause. According to
CenturyLink, ServiceMaster’s allegation of CenturyLink’s non-payment of
invoices was nothing more than an effort to avoid arbitration after
CenturyLink sent its notice of claim. CenturyLink argues that because “[a]ll
claims made in [ServiceMaster’s c]omplaint stem from ServiceMaster’s
breach of contract[,] any alleged non-payment is the direct result of
ServiceMaster’s breach[] of contract.” CenturyLink’s Br. at 9-10.
“Our review of an order overruling preliminary objections seeking to
compel arbitration ‘is limited to determining whether the trial court’s findings
are supported by substantial evidence and whether the trial court abused its
discretion in denying the petition.’” Saltzman v. Thomas Jefferson Univ.
Hosps., Inc., __ A.3d __, 2017 WL 2823523, at *3 (Pa.Super. filed June
30, 2017) (quoting Callan v. Oxford Land Dev., Inc., 858 A.2d 1229,
1233 (Pa.Super. 2004)). In making this determination, we consider the
following principles:
(1) arbitration agreements are to be strictly construed and
not extended by implication; and (2) when parties have
agreed to arbitrate in a clear and unmistakable manner,
every reasonable effort should be made to favor the
agreement unless it may be said with positive assurance
that the arbitration clause is not susceptible to an
interpretation that covers the asserted dispute.
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Id. (quoting Callan, 858 A.2d at 1233). “Whether a dispute is within the
scope of an arbitration agreement is a question of law for which our scope of
review is plenary.” Id. (citation omitted).
Courts apply the following test to determine whether to compel
arbitration:
Where a party to a civil action seeks to compel
arbitration of that action, a two-part test is employed to
determine if arbitration is required. First, the trial court
must determine if a valid agreement to arbitrate exists
between the parties. Second, if the trial court determines
that such an agreement does exist, it must then determine
if the dispute involved is within the scope of the arbitration
provision. The scope of arbitration is determined by the
intention of the parties as ascertained in accordance with
the rules governing contracts generally.
Pittsburgh Logistics Sys., Inc. v. Professional Transp. & Logistics,
Inc., 803 A.2d 776, 779 (Pa.Super. 2002) (internal citations and quotation
omitted).
Here, neither party disputes the validity of the arbitration clause.
Therefore, we must determine whether the dispute between CenturyLink and
ServiceMaster falls within the scope of that clause.
I. Scope of the Arbitration Clause
“A claim’s substance, not its styling, controls whether the complaining
party must proceed to arbitration or may file in the court of common pleas.”
Callan, 858 A.2d at 1233. With respect to contract interpretation, the
“courts are responsible for deciding whether, as a matter of law, written
contract terms are either clear or ambiguous; it is for the fact[]finder to
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resolve ambiguities and find the parties’ intent.” Windows v. Erie Ins.
Exch., 161 A.3d 953, 957 (Pa.Super. 2017) (quotation omitted).
A contract is ambiguous if it is reasonably susceptible of
different constructions and capable of being understood in
more than one sense. The “reasonably” qualifier is
important: there is no ambiguity if one of the two
proffered meanings is unreasonable. Furthermore,
reviewing courts will not distort the meaning of the
language or resort to a strained contrivance in order to
find an ambiguity. Finally, while ambiguous writings are
interpreted by the finder of fact, unambiguous ones are
construed by the court as a matter of law.
Id. (internal citations and emphasis omitted). “When an ambiguity in
contractual language exists, ‘parol evidence is admissible to explain or clarify
or resolve the ambiguity, irrespective of whether the ambiguity is patent,
created by the language of the instrument, or latent, created by extrinsic or
collateral circumstances.’” Id. at 958 (quoting Miller v. Poole, 45 A.3d
1143, 1146 (Pa.Super. 2012)). While
[t]his Court may determine the existence of an ambiguity
as a matter of law, [] the resolution of conflicting parol
evidence relevant to what the parties intended by the
ambiguous provision is for the trier of fact. Where the
words used in a contract are ambiguous, the surrounding
circumstances may be examined to ascertain the intent of
the parties.
Id. (quoting Walton v. Philadelphia Nat’l Bank, 545 A.2d 1383, 1389
(Pa.Super. 1988)).
In its opinion, the trial court concluded that the term “except for non-
payment of invoices for ServiceMaster’s work” (“except clause”) “clear[ly]
state[d] that arbitration was expressly limited to disputes related to quality
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of contracted services and excluded contract balance claims.” In re: Opinion
Pursuant to Pa.R.A.P. 1925(a), 11/14/16, at 3. The court therefore found
that “the claims of the [c]omplaint are outside the arbitration clause” and
overruled CenturyLink’s preliminary objection. Id. The trial court’s ruling is
premised on an implicit conclusion that the except clause is unambiguous.
We disagree.
The except clause is reasonably susceptible to two constructions. The
first construction, which would render the arbitration clause narrow and
favor ServiceMaster, would exclude from binding arbitration any issue that
involves, either directly or indirectly, the non-payment of invoices. The
second construction of the except clause, which would render the arbitration
clause broad and favor CenturyLink, would require binding arbitration for all
issues except those that involve only the non-payment of invoices. The
parties have not offered, nor have we found, any case law that interprets the
language contained in this particular clause.7
Based on the language of the except clause, and the lack of case law
interpreting similar language, we conclude that the except clause is subject
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7
We note that this Court recently decided a case involving an
arbitration clause that required arbitration of “any dispute between [them],
except those for nonpayment of fees,” but we resolved that issue based
upon a reading of the claims involved, rather than on a pure construction of
the except clause. See Fellerman v. PECO Energy Co., 159 A.3d 22, 30
(Pa.Super. 2017) (concluding that plaintiffs’ tort claims arose “from duties
they claim were owed them by [defendant] pursuant to the inspection
agreement”).
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to more than one reasonable interpretation. Because the provision is
ambiguous, the trial court erred in construing the clause as a matter of law.
Accordingly, we remand8 this case to the trial court for further proceedings.
Those proceedings may include an evidentiary hearing to allow the parties to
present parol evidence concerning the meaning of the except clause.
Whether or not the parties avail themselves of that opportunity, the role of
the trial court is to determine, as a matter of fact, the meaning of the
clause. See Trizechahn Gateway LLC v. Titus, 976 A.2d 474, 483 (Pa.
2009) (“[A]mbiguous writings are interpreted by the finder of fact[.]”).
Order reversed. Case remanded with instructions. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/5/2017
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8
CenturyLink and ServiceMaster both present a number of other
arguments that we need not address in light of our disposition.
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