E. Allen Reeves v. Old York, LLC

293 A.3d 284
Superior Court of Pennsylvania·Decided April 13, 2023·No. 1116 EDA 2022·Published·Cited by 4 cases

Opinion

2023 PA SUPER 65

E. ALLEN REEVES, INC. : IN THE SUPERIOR COURT OF : PENNSYLVANIA

:

v. :

:

:

OLD YORK, LLC AND :

METROPOLITAN PROPERTIES OF :

AMERICA, INC. : No. 1116 EDA 2022 :

APPEAL OF: OLD YORK, LLC :

Appeal from the Judgment Entered March 7, 2022 In the Court of Common Pleas of Montgomery County Civil Division at No(s): 2017-27160

BEFORE: KING, J., SULLIVAN, J., and STEVENS, P.J.E.* OPINION BY STEVENS, P.J.E.: FILED APRIL 13, 2023 Old York, LLC (“Old York”) appeals from the judgment entered in favor of E. Allen Reeves, Inc. (“Reeves”) pursuant to an order of the Court of Common Pleas of Montgomery County confirming an arbitration award. After careful review, we affirm.

In July 2015, Reeves entered a contract with Old York in which Reeves would serve as general contractor for the Colonade Amenities Building project (“the Project”) in Jenkintown. Reeves completed work on the Project on August 8, 2016.

On February 27, 2017, Reeves filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Eastern District of Pennsylvania. After Reeves’s bankruptcy filing, Old York stopped payment on its final deposit in Reeves’s

* Former Justice specially assigned to the Superior Court.

bank account. Old York refused to pay Reeves the $66,133 balance of the total project cost, which was approximately $1.3 million. The bankruptcy court confirmed Reeves’s bankruptcy plan in September 2017.

On November 17, 2017, Reeves filed a complaint seeking recovery of the unpaid invoices as well as penalties and attorneys’ fees under Section 12 of the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. § 512.1 On December 11, 2017, Old York filed preliminary objections raising two grounds for relief. First, Old York argued that bankruptcy law required Reeves to assume all executory contracts it wished to pursue before the bankruptcy court. Reeves had not identified the parties’ contract as an executory contract with material obligations left unfinished. As such, Old York claimed Reeves lacked standing to sue under the contract. Second, Old York claimed the parties’ contract required all disputes to be submitted to binding arbitration.

On January 2, 2018, Reeves filed an answer, conceding the dispute was subject to arbitration and requesting that the trial court stay the case pending arbitration. However, Reeves disputed that it lacked standing, asserting that the parties’ contract was not executory as Reeves had completed work on the Project before filing for bankruptcy. Thus, Reeves argued it was not required to assume the contract before the bankruptcy court.

1 Reeves brought his complaint against both Old York and Metropolitan Properties of America, Inc., Old York’s management company. As discussed infra, the arbitrator ultimately entered an award in favor of Reeves against Old York. As Metropolitan is not a party to this appeal, we will limit our discussion to Old York’s defense in this case.

Old York filed a response, arguing Reeves that had not performed all of its material obligations as Reeves had not paid its subcontractors and suppliers in full or provided Old York with lien waivers and warranties. Old York indicated that the parties’ contract did not require Old York to make a final payment until Reeves provided satisfactory evidence that all subcontractors had been paid and that there were no claims, obligations, or liens remaining.

On February 6, 2018, the trial court signed a form order provided by Reeves staying the case pending arbitration and overruling the preliminary objections. The order did not discuss whether Reeves had standing to sue.

Thereafter, the parties proceeded to the arbitration of Reeves’s claim along with a counterclaim filed by Old York. On December 6, 2019, the arbitrator entered an award in favor of Reeves and against Old York for the amount due along with interest (as set forth in the contract) as well as penalties and attorneys’ fees (pursuant to CASPA), totaling $159,941.78. The trial court also awarded Old York $5,500 on its counterclaim. As a result, the arbitrator’s total net award to Reeves was $154,441.78. After Reeves filed an application for modification of the award on December 16, 2019, the arbitrator entered a modified order on January 8, 2020.2 Old York filed motions to vacate the arbitration award, raising the sole argument that the parties’ contract provided that the arbitrator did not have

authority to award penalties and attorneys’ fees to either party. The trial court

2 The January 8, 2020 order simply clarified the breakdown of the December 16, 2019 order, but did not make any modifications to the award.

denied the motions, finding the arbitrator had authority under CASPA to award penalties and attorneys’ fees notwithstanding the language in the contract.

On November 20, 2020, Reeves filed a petition to confirm the arbitration award and requested the entry of judgment with additional interest, penalties, and attorneys’ fees under CASPA. The trial court entered an order indicating that a hearing would be held after the completion of “discovery, if any.”

On February 16, 2021, Old York served Reeves with a notice of deposition of Reeves’s corporate designee and a request for production of documents. On February 24, 2021, Reeves filed a motion for a protective order seeking to prevent Reeves from having to respond to Old York’s discovery request. On April 22, 2021, the trial court issued an order indicating Reeves would only be required to provide the documents it would introduce as evidence to seek damages beyond those imposed by the arbitrator.

At a hearing on the petition to confirm on May 26, 2022, Old York attempted to challenge Reeves’s standing on two grounds. First, Old York claimed for the first time that bankruptcy law required Reeves to file this action and arbitration in the name of Robert N. Reeves, Jr., the disbursing agent appointed by the bankruptcy court, not Reeves, LLC. Second, Old York again claimed that Reeves’s failure to assume the contract before the bankruptcy court led to a lack of standing. Further, Old York reiterated its claim that Reeves was not entitled to recover post-award attorneys’ fees under CASPA.

Upon learning that Old York intended to raise these claims before the bankruptcy court, the trial court stayed proceedings on the petition to give

the parties the opportunity to “seek any appropriate relief from the Bankruptcy Court.” After Old York sought relief in the bankruptcy court, Reeves filed a “Motion to Dismiss the Adversary Complaint.” On December 6, 2021, the Bankruptcy Court issued an order noting that it abstained from hearing this matter and dismissed the Adversary Case, citing comity with state courts and respect for state law.

On March 7, 2022, the trial court granted Reeves’s petition to confirm the arbitration award and entered judgment for Reeves and against Old York in the amount of $216,155.42. This total included the arbitration award and additional interest, penalties, and attorneys’ fees under CASPA. Old York filed this appeal and complied with the trial court’s direction to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b).

Old York presents the following issues for review:

1. Whether the lower court erred in overruling Old York’s preliminary objections challenging [Reeves’s] standing to pursue the underlying action, without a hearing or discovery, notwithstanding [Reeves’s] inconsistent and conflicting allegations in its bankruptcy proceedings?

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E. Allen Reeves v. Old York, LLC, 293 A.3d 284 (Pa. Ct. App. 2023).

293 A.3d 284 (E. Allen Reeves v. Old York, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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