A. Arthur Kober Co. v. Brook Developers, Inc.

2 Pa. D. & C.3d 371, 1976 Pa. Dist. & Cnty. Dec. LEXIS 73
CourtPennsylvania Court of Common Pleas, Philadelphia County
DecidedMay 14, 1976
Docketno. 959
StatusPublished

This text of 2 Pa. D. & C.3d 371 (A. Arthur Kober Co. v. Brook Developers, Inc.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Philadelphia County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A. Arthur Kober Co. v. Brook Developers, Inc., 2 Pa. D. & C.3d 371, 1976 Pa. Dist. & Cnty. Dec. LEXIS 73 (Pa. Super. Ct. 1976).

Opinion

TAKIFF, J.,

I. SUMMARY OF PLEADINGS AND ISSUES RAISED

Brook Developers, Inc., A. Abner Rosen, and the Estate of Abner Rosenberg, Deceased, by its executors, filed this petition on December 6, 1974, seeking to set aside an award against them and in favor of A. Kober Company, Inc., rendered in common-law arbitration proceedings. On July 31, 1975, this court issued an opinion and order sustaining in part and overruling in part preliminary objections filed by Kober. Briefly restating the factual background as summarized in our opinion of July 31, 1975, Kober was a general contractor who, by various contracts, agreed to build for Brook (the owner) a Pathmark and a W. T. Grant Store, an Eric Theatre and various small stores. Kober sought arbitration before the AAA when Brook failed to pay certain sums in connection with construction of the Eric Theatre and the small stores. The contractor sought payment of $118,104.64, of which $42,006 was claimed to be the balance due for construction of the Eric Theatre and the balance for the construction of the small stores. One major reason Brook refused to make payment was that it believed Kober constructed the small stores’ roof of faulty materials and the repair thereof cost $56,750. The arbitrators, after an initial hearing date of February 13, 1973, held six hearings during which evidence and arguments were presented by the parties. At the conclusion of the hearings, the arbitrators made an award dated October 29, 1974, of $158,664.49 to Kober, which apparently included an allowance of interest at a rate of ten percent, and professedly [373]*373awarded interest at a rate of ten percent from date of award to date of payment.

The order of July 31, 1975, sustained preliminary objections to the petition as to all matters except the allegations of paragraphs 1, 4 and 12(a). We have considered testimony offered at hearing as well as oral argument and briefs on the remaining averments in which petitioners allege that the award must be set aside because (a) the award of interest at ten percent rather than six percent was unlawful; (b) $42,006 was awarded contrary to the express provisions of the contract, the architect never having issued the required certificate of completion for the Eric Theatre; and (c) the entire proceedings and award were tainted by bias of the arbitrators.

FINDINGS OF FACT

1. A. Kober Company, Inc. “contractor” is a general contractor which agreed to construct for Brook Developers, Inc. “owner,” a shopping complex, including a Pathmark Store, a W. T. Grant Store, an Eric Theatre and various small stores. A. Abner Rosen and Abner Rosenberg were sureties on this agreement; Abner Rosenberg is now deceased and his estate is represented in this matter by its executors, Lillian Rosenberg, Jay Marc Schwamm and Irving H. Stoltz.

2. After completion of the structures, the contractor sought arbitration before the AAA on its claim against Brook Developers, Inc., and the sureties for sums allegedly due in connection with the construction of the Eric Theatre and the small stores.

3. Thomas J. Mangan, John Runzer, Esq., and [374]*374Edward C. Driscoll were appointed by the AAA to serve as arbitrators.

4. On the reverse' side of the notice of appointment, pursuant to instructions on the face thereof, Mr. Mangan stated:

“Please Note:
“Thomas J. Mangan is socially acquainted with both Michael Egnal and Morton Berman.”

5. It was the practice of the AAA to inform all interested parties of any disclosures made by arbitrators relating to possible partiality or bias.

6. Prior to the commencement of the first arbitration hearing on February 13, 1973, Mr. Mangan reiterated to all present the facts of his prior acquaintance with Mr. Berman, President of Kober Company, and Mr. Egnal, counsel for Brook Developers, Inc.

7. At no time prior to, or during the course of, the six hearings in arbitration of this matter was any objection made to Mr. Mangan’s participation as an arbitrator.

8. The arbitrators awarded $158,664.49 to A. Kober Company, Inc., which amount included $42,006 for the Eric Theatre construction.

9. The architect’s certificate of completion for the Eric Theatre, required on behalf of the tenant and owner by contract, was never furnished.

10. The architect informed the Kober Company by letter that the only reason he did not furnish said certificate was that he had been advised not to do so by the attorney who was counsel for the owner, the tenants and the sureties,

11. Neither the owner, sureties nor tenant ever demanded a certificate of completion from the architect.

12. The tenant, Samuel Shapiro, executed a [375]*375written acceptance of the building, commenced occupancy and paid rent to the owners.

13. The construction contract entered into by the parties on July 6, 1971, the so-called “Eric Contract,” limited the owner’s liability for cost of construction to $243,500.

14. For its performance in the construction of the Eric Theatre, the arbitrators awarded to the contractor the balance due on the total construction cost in the sum of $244,789.

15. The arbitrators awarded the excess of $1,289 to cover additional costs of completion incurred pursuant to two authorized change orders.

16. The $158,664.49 awarded by the arbitrators included interest at the rate of ten percent and directed that interest from the date of award to payment was also to be at ten percent.

II. DISCUSSION

Paragraph 12(a) of the petition avers that, at the conclusion of the hearings, counsel for Brook and the sureties learned for the first time that John J. Runzer, one of the arbitrators, “had had prior legal matters with counsel for the claimant.”

The depositions of claimant’s counsel, Samuel Moonblatt, and John J. Runzer were taken before this court on February 19, 1976, for discovery purposes only and not as evidence for hearing on this petition. Neither Mr. Runzer nor Mr. Driscoll was produced as a witness on March 8 and 15, 1976, when this case was heard on the merits, without a jury. Any allegation of bias on the part of either of those arbitrators was withdrawn by petitioners who made their sole claim of bias against the remaining arbitrator, Thomas J. Mangan.

Our earlier opinion overruling preliminary ob[376]*376jections stated that partiality of one or more of the arbitrators may be ground for setting aside an award. Section 18 of the Rules of the American Arbitration Association provides:

“Disclosure by Arbitrator of Disqualification — At the time of receiving his notice of appointment, the prospective Arbitrator is requested to disclose any circumstances likely to create a presumption of bias or which he believes might disqualify him as an impartial Arbitrator. Upon receipt of such information, the Tribunal Clerk shall immediately disclose it to the parties, who if willing to proceed under the circumstances disclosed, shall, in writing, so advise the Tribunal. If either party declines to waive the presumptive disqualification, the vacancy thus created shall be filled in accordance with the applicable provisions of this Rule.”

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2 Pa. D. & C.3d 371, 1976 Pa. Dist. & Cnty. Dec. LEXIS 73, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-arthur-kober-co-v-brook-developers-inc-pactcomplphilad-1976.