Court Opinion

ID: 3175319
Source: CourtListenerOpinion
Date Created: 2016-02-05 21:19:22.291987+00
Date Added: 2024-06-11T14:22:37.775889
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37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

____________________________________________

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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