Court Opinion

ID: 4258509
Source: CourtListenerOpinion
Date Created: 2018-03-27 18:47:55.343775+00
Date Added: 2024-06-11T14:28:25.483767
License: Public Domain

J-A02040-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    JUDY TORMA,                                  IN THE SUPERIOR COURT
                                                           OF
                                                      PENNSYLVANIA
                             Appellant

                        v.

    PARROT CONSTRUCTION CORP.,
    PAUL CHAMBERS,

                             Appellees              No. 1105 WDA 2017

                  Appeal from the Order entered June 29, 2017,
               in the Court of Common Pleas of Allegheny County,
                     Civil Division, at No(s): GD-15-017669.

BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.

MEMORANDUM BY KUNSELMAN, J.:                       FILED MARCH 27, 2018

        Judy Torma appeals from the Order denying her Petition to Vacate or

Modify Arbitration Award and claims that a dispute over an agreement to

provide additional moving services was not covered by the arbitration clause

of the parties’ original construction contract. For the following reasons, we

affirm.

        On May 15, 2014, Torma, on behalf of her parents, and Parrot

Construction Corporation,1 entered into a construction contract (“Construction

Contract”), in which Parrot agreed to renovate certain portions of a building

____________________________________________

1Appellee, Paul Chambers, is the President of Parrot Construction
Corporation.
J-A02040-18

owned by Torma’s parents. The parties used a form contract produced by the

Associated General Contractors of America, which included the following

arbitration clause:

      16.1 All claims, disputes and other matters in questions arising
      out of, or relating to, this Agreement or the breach thereof, Except
      with respect to the Architect/Engineer’s decision on matters
      relating to artistic effect, and except for claims which have been
      waived by the making or acceptance of Final Payment shall be
      decided by arbitration in accordance with the Construction
      Industry Arbitration Rules of the American Arbitration Association
      then obtaining unless the parties mutually agree otherwise. This
      Agreement to arbitrate shall be specifically enforceable under the
      prevailing arbitration law.

      A few weeks later, on June 6, 2014, the parties executed another

Agreement of Understanding (“Moving Contract”). Under this Agreement,

Parrot agreed to photograph, inventory, transport, store, and sell a number

of arcade and coin-operated machines owned by Torma’s parents, stored in

areas where Parrot needed access to perform the renovation/construction

work. Torma agreed to pay Parrot for transportation costs and other fees, as

well as a fee for selling any of the machines.

      On March 27, 2015, Parrot filed an arbitration claim with the American

Arbitration Association (“AAA”), demanding payment for its work under both

the Construction and Moving Contracts.           Parrot alleged that the Moving

Contract was a change order and, thus, an integrated part of the Construction

Contract. Torma filed an answer and counterclaim arguing, in pertinent part,

that the Moving Contract was separate and distinct from the Construction

Contract, and not covered by the arbitration clause of the original agreement.

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      At the arbitration hearing on August 22, 2015, Torma objected to the

arbitrator considering the Moving Contract, arguing that the AAA lacked

jurisdiction over this claim. However, the arbitrator chose to hear all evidence

related to the Construction Contract and Moving Contract before issuing a

decision on whether he had jurisdiction.

      On August 26, 2015, the arbitrator issued a written order stating that

the AAA had jurisdiction to hear the Moving Contract claim, characterizing the

Moving Contract as a Change Order under the Construction Contract.           On

September 3, 2015, the arbitrator entered an award in favor of Parrot which

included, inter alia, $7,500 representing the balance due pursuant to the

Moving Contract.

      On October 5, 2015, Torma filed a Petition to Vacate or Modify

Arbitration Award in the Court of Common Pleas. Therein, Torma claimed,

inter alia, that the arbitrator exceeded the scope of the arbitration agreement

by ruling on the Moving Contract. Consequently, Torma sought to have the

Arbitration award modified to exclude the amount attributable to the Moving

Contract.

      The trial court denied Torma’s Petition on all issues, including Torma’s

claim that the arbitrator did not have jurisdiction. Torma filed a Notice of

Appeal. By Memorandum dated January 11, 2017, this Court remanded the

case on the jurisdictional issue for hearing to determine whether the arbitrator

had jurisdiction over the Moving Contract. There, in pertinent part, we stated:

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         Upon review of the Construction Contract and the Moving
         Contract, we conclude that, contrary to the apparent view of both
         the arbitrator and the trial court, the terms of the two contracts
         do not clearly resolve the question whether disputes under the
         Moving Contract are subject to the arbitration clause in the
         Construction Contract. . . . Torma argues that the arbitration
         clause of the Construction Contract does not apply to the Moving
         Contract. According to Torma, ‘[t]he plain meaning of the
         language of the Moving Contract makes it clear that its scope
         applied to the moving storing and selling of personal property. . .
         [, which] has nothing to do with the design and construction of
         renovations to the. . . [b]uilding.’ Parrot argues in response that
         the Moving Contract ‘was a change order to the [Construction
         C]ontract as the removal of items and other preparations were
         necessary as part of the renovations.’ According to Parrot, “the
         parties contemplated and executed that agreement as part of the
         [C]onstruction [C]ontract and incorporated it and other change
         orders. Because we find that both of these interpretations are
         reasonably plausible, we remand the matter to the trial court so
         that the parties may present evidence to assist the trial court in
         determining whether the arbitrator had jurisdiction over the
         Moving Contract.

Torma v. Parrot Constr. Corp., et al., 363 WDA 2016, unpublished

memorandum at 15-18 (January 11, 2017).

         On June 5, 2017, the trial court held an evidentiary hearing which

focused on whether the language of the agreement, and the facts related

thereto, justified the arbitrator’s exercise of jurisdiction over the dispute

concerning Parrot’s moving, storage and sale of certain machines and

equipment which were stored in the building. From this hearing, the trial court

elicited the following facts surrounding the execution of the two documents in

issue.

         Torma hired Parrot to correct serious structural and other deficiencies in

a commercial building owned by her parents. A lot of old tools and other items

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were stored in the building which had to be moved and scrapped. There were

also old vending machines stored in the building. All these items had to be

removed so that Parrot could perform the construction/renovation work.

Torma was well aware that these things had to be moved so that construction

could start. Torma believed that the vending machines were valuable, and

tried to remove the machines on her own, but was unable to find someone to

do it. As a result, she asked Parrot to remove these things from the building

until the work was finished and scrap the junk. This resulted in the execution

of the Moving Contract on June 6, 2014, between Torma and Parrot. This was

one of several change orders executed under the Construction Contract.

      Thereafter, the trial court entered a decision on June 28, 2017,

concluding the arbitrator properly had jurisdiction over the Moving Contract,

because it was a change order to the original Construction Contract which

contained an arbitration clause requiring all claims to be arbitrated. Torma

appealed again; the matter is now before us.

      In this appeal, Torma raises the following issue:

      Whether the trial court erred as a matter of law or abused its
      discretion when it concluded that the Moving Contract was a
      change order to the Agreement, and therefore the arbitrator had
      jurisdiction over the Moving Contract.

Torma Brief at 5.

      The arbitration agreement in the instant case is governed by 42 Pa.C.S.

section 7341 et seq. which pertains to common law arbitration. 42 Pa.C.S. §

7341 et seq. Our standard of review of common law arbitration is very limited.

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In reviewing a trial court’s order on a petition to vacate or modify a common

law arbitration award, our review is limited as follows:

            The award of an arbitrator in a nonjudicial arbitration which
      is not subject to statutory arbitration or to a similar statute
      regulating nonjudicial arbitration proceedings is binding and may
      not be vacated or modified unless it is clearly shown that a party
      was denied a hearing or that fraud, misconduct, corruption or
      other irregularity caused the rendition of an unjust, inequitable or
      unconscionable award. The arbitrators are the final judges of both
      law and fact, and an arbitration award is not subject to reversal
      for a mistake of either. A trial court order confirming a common
      law arbitration award will be reversed only for an abuse of
      discretion or an error of law. The appellant bears the burden to
      establish both the underlying irregularity and the resulting
      inequity by clear, precise, and indubitable evidence.

Andrew v. CUNA Brokerage Services, Inc., 976 A.2d 496, 500 (Pa. Super.

2009) (internal citations and quotation marks omitted).       In particular, an

award may also be corrected if the arbitrator exceeds the scope of his

authority.   Gargano v. Terminix Int’l Co., L.P., 784 A.2d 188, 193 (Pa.

Super. 2001). “’The power and authority of arbitrators are wholly dependent

upon the terms of the agreement of submission, and they cannot exercise

authority as to matters not included therein, or validly determine the dispute

if they violate or act inconsistently with the terms of the submissions.’”

Boulevard Associates v. Seltzer P’ship, 664 A.2d 983, 987 (Pa. Super.

1995) (quoting Sley Sys. Garages v. Transportation Workers Union of

Am., 178 A.2d 560, 561 (Pa. 1962)).

      Torma argues that the trial court erred in concluding that the Moving

Contract was a change order, rather than an entirely separate contract

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between the parties.      According to Torma, “the Trial Court abused its

discretion because it relie[d] entirely upon the credibility of witness testimony

presented to support its conclusion; and that the Trial Court committed an

error of law by simultaneously ignoring the provisions of the documentary

evidence that unambiguously show the Moving Contract does not fall under

the Agreement’s definition of change order as a matter of law.” Torma Brief,

at 16. Torma emphasizes that “[w]hen interpreting agreements containing

clear and unambiguous terms, we need only examine the writing itself to give

effect to the parties.” Melton v. Melton, 831 A2d 646, 653-54 (Pa. Super.

2003). Where the rights are based on an unambiguous writing, the parties’

intent must be determined from the writing itself, not from testimony as to

the parties understanding or intent.    Personal belief is irrelevant. Grey Fox

Plaza v. Herbert, Rowland and Grubic, Inc., 2017 WL 519827 at 8 (Pa.

Comwlth. 2017). Consequently, Torma’s entire argument is premised solely

upon the documents themselves.

      Conversely, Parrot argues that the trial court did not err in concluding

the Moving Contract was a Change Order and thus, was subject to the

arbitration clause. The documents and testimony support this conclusion.

      Before addressing the core of the matter before us, we review the basic

principles of contract interpretation applicable to this claim.

      Generally, the intent of the parties, which governs the interpretation of

the contract, is to be ascertained from the writing itself. In most cases, the

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trial court is limited to examining only the contents of the actual agreements

between the parties. However, as a panel of this Court previously concluded,

contrary to Torma’s contention, the terms of the contracts in this matter were

not clear and unambiguous. The intent of the parties, regarding whether the

Moving Contract was subject to arbitration, was not evident from the face of

the documents. Under these circumstances, “parol evidence is admissible to

explain or clarify or resolve the ambiguity . . . .” Miller v. Poole, 45 A.3d

1143, 1146 (Pa.Super. 2012).

      “Where the words used in a contract are ambiguous, the surrounding

circumstances may be examined to ascertain the intent of the parties.”

Walton v. Philadelphia Nat'l Bank, 545 A.2d 1383, 1389 (Pa. Super. 1988).

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.” Windows

v. Erie Ins. Exch., 161 A.3d 953, 958 (Pa. Super. Ct. 2017) (quoting Walton,

supra). Concluding that the contracts were ambiguous, we remanded the

case to the trial court for testimony to ascertain the parties’ intent.

      The provisions in the contracts at issue in this case are no different now

than they were when the trial court entered its Decision of June 28, 2017, and

when this Court issued its Memorandum of January 11, 2017. Consequently,

for us to rely solely on the documents in this situation, as advocated by Torma,

would completely contradict our prior decision. The trial court did not err by

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conducting an evidentiary hearing and considering evidence outside the

documents themselves. To the contrary, the trial court did exactly as this

Court instructed.   Thus, in deciding this appeal, we look beyond the four

corners of the documents and consider all the evidence presented to the trial

court in this matter, both testimony and documentary.

      In claiming that the Moving Contract was a separate contract or

transaction, and not subject to the arbitration clause, Torma first argues that

the Construction Contract spelled out a very narrow and limited scope of work.

The Construction Contract describes the Project as: “Renovations to the front

wall and middle of the roof of existing space known located at 1007 Constance

Street, Pittsburgh, PA 15212”.     The Construction Contract further defines

Project in Article 1.3 as the “total construction to be designed and constructed

of which the Work is a part. The Work comprises the complete construction

required by the drawings and specifications.” Based upon these provisions,

Torma argues that the scope of the Construction Contract was solely for

renovation and construction to the front wall and middle of the roof of the

building based upon the Architect’s plans. Torma further suggests that this

scope could not be modified.

      Torma additionally argues that the term “Change Order” was defined in

the Construction Contract. According to Torma, based upon the definition of

“Change Order” in the Construction Contract, “Change Orders” can only be

issued in the following situations: 1) unknown or concealed condition; 2)

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change in price; 3) extension of time; and 4) an emergency. The Moving

Contract, additional services to be provided by Parrot, did not fall within any

of these categories, and thus cannot be considered a “Change Order”.

      Parrot argues that, although the Moving Contract is not termed a

“Change Order”, it nonetheless is a “Change Order” to the scope of the Project

as provided for under Article 9 of the Construction Contract. We agree.

      Obviously, the moving work performed by Parrot was not included in the

original scope of work. Contrary to Torma’s argument, however, the terms of

the Construction Contract did not preclude those services from being added.

Ariticle 9.1 permits the Owner to “order changes in the Project within the

general scope of this Agreement consisting of additions, deletions or other

revisions . . . .” Article 9.1.1 of the Construction Contract clearly states that

“[a] Change Order is a written order to the Contractor signed by the Owner or

his authorized agent and issued after the execution of the Agreement,

authorizing a Change in the Project . . . .” (emphasis added). Thus, the

Project could be redefined or expanded, and was not limited to renovations or

construction as argued by Torma. Moreover, the Moving Contract met the

technical requirements of a Change Order. It was executed by Torma a little

less than a month after the execution of the Construction Contract.            It

expanded the scope of the Project to include removal of the things stored in

the building.   Consequently, contrary to Torma’s argument, the Moving

Contract could be considered as a Change Order to the Project. The testimony

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adduced at the hearing before the trial court supports the trial court’s finding

that the Moving Contract was a change order rather than a separate

agreement.

      Before the renovation work could commence, the building had to be

cleared out; the building was full of items including, vending machines,

material, metal, old tools, and debris. Removal of these items is typically the

responsibility of the owner. Torma, however, was unable to arrange to have

the building cleared out on her own, and was being pressured by the city to

make the required repairs. Parrot told Torma that construction could not start

until the most of the items were cleared out of the building. Torma asked for

a proposal from Parrot to perform this work.         Consequently, the parties

entered into the Moving Contract. Parrot reasonably considered this to be a

Change Order as defined under the Construction Contract.

       The    presentation   of   testimony   to   explain   the   circumstances

surrounding the formation of the Moving Contract helped the trial court to

resolve the ambiguity between the Construction Contract and Moving

Contract. Because the removal of the items was necessary to carry out the

Construction Contract, we think the trial court properly found that the moving

services expanded the scope of the original services under the Construction

Contract and constituted a Change Order. In making this decision, as the trier

of fact, the trial court properly considered the credibility of Torma and

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Chambers as witnesses when they described the circumstances surrounding

the execution of the two contracts.

      Finally, the trial court’s interpretation is consistent with the long-

standing principle of contract law that “[w]here several instruments are made

as part of one transaction they will be read together, and each will be

construed with reference to the other; and this is so although the instruments

may have been executed at different times and do not in terms refer to each

other.” Neville v. Scott, 127 A.2d 755, 757 (Pa. Super. 1957).              We,

therefore, conclude that the trial court did not abuse its discretion in finding

that the Moving Contract was a Change Order to the Construction Contract

rather than a separate, unrelated agreement between the same parties.

      In affirming the trial court’s conclusion that the Moving Contract was a

Change Order to the Construction Contract, we believe we have resolved the

parties’ issue of whether the arbitration clause could cover the Moving

Contract dispute since it was part of the Construction Contract. Next, we will

briefly address whether the dispute did fall within the specific language of the

arbitration clause. In reviewing the arbitration clause, we keep in mind the

following legal principles.

      “Arbitration agreements are contracts and should be interpreted using

contract principles.” Bucks Orthopedic Surgery Associates, P.C. v. Ruth,

925 A.2d 868, 872 (Pa. Super. 2007). “The fundamental rule in construing a

contract is to ascertain and give effect to the intention of the parties.” Lower

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Frederick Twp. v. Clemmer, 543 A.2d 502, 510 (1988).              “The scope of

arbitration is determined by the intention of the parties as ascertained in

accordance with the rules governing contracts generally” as discussed in full

above. D & H Distrib. Co. v. Nationall Union Fire Ins. Co., 817 A.2d 1164,

1166 (Pa. Super. 2003). “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.” Setlock

v. Pinebrook Pers. Care & Ret. Ctr., 56 A.3d 904, 907–08 (2012) (quoting

Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa.Super.2012)) (citations and

quotation marks omitted; emphasis added).

      In this case, the arbitration clause of the Construction Contract

provided in pertinent part:

           All claims, disputes and other matters in questions arising
      out of, or relating to, this Agreement or the breach thereof,
      Except with respect to the Architect/Engineer’s decision on
      matters relating to artistic effect, and except for claims which have
      been waived by the making or acceptance of Final Payment shall
      be decided by arbitration. . . .

It is clear that the issue of payment for Parrot’s moving services, a matter of

contract, plainly arose out of the Construction Contract as modified by the

terms of the Moving Contract. Furthermore, the arbitration clause in this case

is very broad.   In Dodds v. Pulte Home Corp., 909 A.2d 348 (Pa. Super.

2006), this Court found that contractual language such as the language at

issue herein to be an “unlimited arbitration clause”. Dodds, 909 A.2d at 350.

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“Where an arbitration clause is unrestricted, the parties to the contract could

be compelled to arbitrate any claim that implicates a contractual

obligation.” Smay v. E.R. Stuebner, Inc. 864 A.2d 1266, 1274 (Pa.Super.

2004) (emphasis added).         Here, it is apparent that without the moving

services of Parrot, the original scope of the Construction Contract, i.e.,

construction of and renovation to the building, could not have been performed.

Thus, the moving services were fundamentally related to Parrot’s performance

of its obligations under the Construction Contract. Consequently, consistent

with the rationale of Smay, any issues with the moving services would

properly   be   subject   to   arbitration   under   the   Construction   Contract.

Additionally, but for the construction/renovation project, there would be no

Moving Contract. Clearly, the moving services arose out of, or are related to,

the Construction Contract and the work to be done thereunder.              Per the

language of the arbitration clause in this case, anything arising out of the

Construction Contract, such as the moving services, was subject to the

arbitration clause and properly within the arbitrator’s jurisdiction.          We,

therefore, conclude that the trial court did not commit an error of law in finding

that Torma and Parrot’s dispute over the moving services arose out of or was

related to the Construction Contract and thus subject to arbitration.

CONCLUSION

      After careful review of the contract provisions and the parties' intentions

as reflected in the contract documents as well as the testimony presented

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before the trial court, we conclude that the trial court did not abuse its

discretion or commit an error of law when it confirmed2 the arbitration award

with respect to the Moving Contract.

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 3/27/2018

____________________________________________

2We view the trial court’s decision as a confirmation of the arbitrator’s award
even though the trial court did not specifically enter an order stating that it
was confirmed. Another panel of this Court previously addressed this issue.
See Torma, 363 WDA 2016, unpublished memorandum at 15-18 n. 3.

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