Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc.

450 A.2d 1304, 294 Md. 443, 1982 Md. LEXIS 319
CourtCourt of Appeals of Maryland
DecidedOctober 7, 1982
Docket[No. 127, September Term, 1981.]
StatusPublished
Cited by56 cases

This text of 450 A.2d 1304 (Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc., 450 A.2d 1304, 294 Md. 443, 1982 Md. LEXIS 319 (Md. 1982).

Opinion

Davidson, J.,

delivered the opinion of the Court.

In 1976, the appellant, Charles J. Frank, Inc. (contractor), and the appellee, Associated Jewish Charities of Baltimore, Inc. (owner), entered into a contract for the construction of a Jewish community center (project). The construction contract contained an arbitration clause providing, among other things, that "[a]ll claims, disputes and other matters in question arising out of, or relating to, [the] Contract ... shall be decided by arbitration in accordance with the ... Rules of the American Arbitration Association. . . .”

The contractor subcontracted the required earthwork to Consolidated Excavators, Inc. (subcontractor). The subcontract incorporated an arbitration clause identical to that contained in the construction contract.

A dispute arose between the subcontractor and the contractor as to whether the subcontractor’s removal of earth from the project’s football field was extra work entitling it to additional compensation. In the Circuit Court for Baltimore County, the subcontractor sued the contractor for $10,172.00 (Baltimore County case). The contractor pleaded to the merits and filed a third party claim against the owner alleging that the owner was liable to the contractor for any judgment the subcontractor might recover, as well as for an amount representing the contractor’s profit on that portion of the subcontractor’s work. The owner filed various pleadings to the third party claim, including a demurrer and an answer. Although the *446 dispute was arbitrable, no party sought arbitration. Ultimately, the subcontractor, contractor, and owner settled, and on 28 January 1980, a consent judgment was entered.

Subsequently, the contractor demanded the balance of $139,579.11 due under the construction contract. The owner refused to pay because of alleged faulty construction work, unrelated to the earthwork involved in the Baltimore County case. On 31 March 1980, in accordance with the construction contract, the contractor filed a Demand for Arbitration with the American Arbitration Association.

On 15 May 1980, in the Circuit Court of Baltimore City, the owner filed a Petition to Stay Arbitration (Baltimore City case) contending that the contractor had waived its right to arbitration by litigating its third party claim against the owner in the Baltimore County case. Additionally, in the Superior Court of Baltimore City, the owner filed a declaration against the contractor, its surety, and Nelson/Salabes, Inc., the project architect (Superior Court case), seeking damages for alleged faulty construction, design, and supervision. The architect filed a third party claim against the mechanical and electrical engineers, the structural engineers, and the swimming pool designers.

On 20 April 1981, in the Superior Court case, the contractor filed a Motion to Stay Proceedings, alleging that the claims asserted by the owner were issues required to be resolved by arbitration. The contractor’s motion to stay was granted, pending resolution of the Baltimore City case. Because the contract between the architect and the owner did not contain an arbitration clause, the Superior Court case against the architect was not stayed. On the same day, 20 April 1981, in the Baltimore City case, the contractor filed a Petition to Order Arbitration.

On 3 June 1981, in the Baltimore City case, the trial court initially determined that the contractor had waived its right to arbitrate those issues resolved in the Baltimore County case. The trial court specifically found that the issues in the Baltimore County case "aside from .. . arising out of the *447 same contract, [had] no connection with the Superior Court suit or [the contractor’s] claim for arbitration.” The trial court noted that unless the construction contract contained a clause stating that "waiver for one situation is not waiver as to another,” a waiver of the arbitration clause for one purpose would constitute a waiver for all purposes. Accordingly, the trial court then held that by litigating its third party claim against the owner in the Baltimore County case, the contractor had waived the contractual arbitration clause "for all purposes under that contract” and, therefore, had waived its right to arbitrate unrelated issues arising under the same contract with the owner.

Moreover, the trial court acknowledged that were it to order arbitration of such unrelated issues, the owner might be compelled to arbitrate its claim against the contractor and to litigate its claim against the architect because, unlike the contract between the owner and the contractor, the contract between the owner and the architect did not contain an arbitration clause. Emphasizing that the owner had voluntarily entered into these particular contractual arrangements, the trial court specifically concluded that the prospect of duplicative proceedings with a potential for inconsistent results was not an appropriate basis upon which to stay arbitration. Nevertheless, having determined that the contractor had waived its right to arbitrate the unrelated issues raised in the Superior Court case, the trial court granted the owner’s petition to stay arbitration and denied the contractor’s petition to order arbitration.

The contractor appealed to the Court of Special Appeals. We issued a writ of certiorari before consideration by that Court. We shall reverse the judgment of the Circuit Court of Baltimore City.

The initial question here is whether the contractor, by participating as a party in a judicial proceeding that resulted in a final judgment on an issue arbitrable under its contract with the owner, has waived the right subsequently to arbitrate unrelated issues arising under the contract. Additionally, if the contractor did not waive that right, the remaining question would be whether the owner, then *448 participating in multiparty litigation, was entitled to an order staying arbitration in order to prevent multiple proceedings with the possibility of inconsistent results.

I

Arbitration is the process whereby parties voluntarily agree to substitute a private tribunal for the public tribunal otherwise available to them. The Maryland Uniform Arbitration Act, enacted in 1965, 1 now Maryland Code (1974, 1980 Repl. Vol.) §§ 3-201 through 3-234 of the Courts and Judicial Proceedings Article, embodies a legislative policy favoring enforcement of executory agreements to arbitrate. Aetna Casualty & Sur. Co. v. Insurance Comm’r, 293 Md. 409, 421, 445 A.2d 14, 19 (1982); Maietta v. Greenfield, 267 Md. 287, 291, 297 A.2d 244, 246 (1972); Bel Pre Medical Center, Inc. v. Frederick Contractors, Inc., 21 Md.App. 307, 320, 320 A.2d 558, 565 (1974), modified, 274 Md. 307, 334 A.2d 526 (1975).

This Court has recognized that arbitration is a matter of contract which the parties should be allowed to conduct in accordance with their agreement. C. W. Jackson & Assocs. v. Brooks, 289 Md. 658, 666, 426 A.2d 378, 382 (1981);

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Bluebook (online)
450 A.2d 1304, 294 Md. 443, 1982 Md. LEXIS 319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/charles-j-frank-inc-v-associated-jewish-charities-of-baltimore-inc-md-1982.