Schuele v. Case Handyman & Remodeling Services, LLC

989 A.2d 210, 412 Md. 555, 2010 Md. LEXIS 21
CourtCourt of Appeals of Maryland
DecidedFebruary 19, 2010
Docket7 September Term, 2009
StatusPublished
Cited by41 cases

This text of 989 A.2d 210 (Schuele v. Case Handyman & Remodeling Services, LLC) 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
Schuele v. Case Handyman & Remodeling Services, LLC, 989 A.2d 210, 412 Md. 555, 2010 Md. LEXIS 21 (Md. 2010).

Opinion

BARBERA, Judge.

In this case, we are asked to decide whether under Maryland law a non-signatory to a contract may invoke equitable estoppel to enforce an arbitration provision contained within the contract. We are precluded from answering that question, however, because this case is before us on appeal from an order that is neither a final judgment nor an appealable interlocutory order. Accordingly, we shall vacate the judgment of the Court of Special Appeals and direct that the appeal be dismissed.

I.

On November 21, 2006, Petitioners Judith and Albert Schuele entered into a home improvement contract with Shaun Arnold, a Baltimore County contractor and franchisee of Respondents Case Handyman Services, LLC and/or Case Design/Remodeling, Inc. 1 Although Respondents and Petitioners refer to Mr. Arnold’s home improvement company as Professional Home Repair, Inc. (“PHR”), Mr. Arnold signed the contract as “Case Handyman Services” and accepted a $39,800 check payable to the order of “Case Handyman Services” as down payment on the contract. 2

*561 The contract consists of eight pages, sets forth a payment schedule, and describes the work Mr. Arnold was expected to complete. Printed on the back of each page of the contract is the “fine print,” which is titled “General Conditions” and contains an arbitration clause. The arbitration clause provides:

2. CLAIMS—Any controversy/claim arising out of or relating to this contract or its breach thereof, shall be settled by final and binding arbitration before a single arbitrator in the Baltimore metropolitan area in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(Underlining in original).

Under the contract, Mr. Arnold agreed to perform “remodeling and/or repair work” on Petitioners’ home in Towson, Maryland. After accepting Petitioners’ down payment, however, Mr. Arnold performed no work on the contract except to draft written plans for the remodeling project, for which Petitioners paid an additional $2,700. During the next several months, Petitioners made several requests that Mr. Arnold set a work schedule and begin work, but in March 2007, Mr. Arnold told Petitioners that “he no longer had their funds” and would not begin work on the project. Mr. Arnold also told Petitioners that he was considering filing for bankruptcy. Petitioners alleged in their complaint that Mr. Arnold has since filed for personal bankruptcy, naming PHR as his home improvement company in the filings.

The Lawsuit

On June 6, 2007, Petitioners filed a class action complaint against Respondents in the Circuit Court for Baltimore County. Petitioners alleged breach of contract (Counts I & II), *562 fraud by misappropriation (Counts III & IV), fraud or deceit (Count V), violations of the Maryland Consumer Protection Act (Count VI), and negligence (Count VII). In response, based on the arbitration clause in the contract between Petitioners and Mr. Arnold, Respondents filed a “Motion to Dismiss, or in the Alternative, to Compel Arbitration and Stay Proceedings” accompanied by a memorandum of law in support of the motion and a request for a hearing. In an order dated September 7, 2007, without a hearing, the Circuit Court granted Respondents’ motion to compel arbitration without explanation, noting that Petitioners had filed no response. The record indicates, however, that Petitioners filed a response to Respondents’ motion on August 31, 2007. On September 17, 2007, in an open court proceeding conducted without the parties’ knowledge, the Circuit Court struck its order and denied Respondents’ motion without written order. On September 24, 2007, Respondents filed a “Motion to Alter or Amend Judgment” and a request for a hearing. Petitioners filed their opposition to the motion to amend on October 11, 2007, and the Circuit Court denied Respondents’ motion to amend and request for a hearing in an order dated October 18, 2007. On November 2, 2007, Respondents noted an appeal to the Court of Special Appeals.

The Court of Special Appeals held that the Circuit Court erred in denying Respondents’ motion to compel arbitration. Case Handyman & Remodeling Servs., LLC v. Schuele, 183 Md.App. 44, 49, 959 A.2d 833, 836 (2008). The court first addressed whether either the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et. seq., or the Maryland Uniform Arbitration Act (“MUAA”), Md.Code (2006 RepLVoL), §§ 3-201 et. seq. of the Courts and Judicial Proceedings Article (“C.J.”), governed the contract at issue. The court determined that, regardless of whether the FAA applied to the contract, the application of the MUAA “provides the same result.” Case Handyman, 183 Md.App. at 54-56, 959 A.2d at 839-40. The court held that, because “the Schueles’ allegations [arose] out of and directly relate[d] to their contract with PHR,” Respondents, non-signatories to the contract, could *563 enforce the contract’s arbitration clause against Petitioners based on principles of equitable estoppel frequently applied by federal courts in arbitration cases. 3 Id. at 57-58, 68, 959 A.2d at 841-42, 844^5.

Next, the Court of Special Appeals held that the arbitration clause was valid even though it did not fully comply with the Code of Maryland Regulations (“COMAR”) 09.08.01.25, in part, because “COMAR 09.08.01.25 does not contain any penalty provisions or state that an arbitration clause is invalid if it fails to comply with the requirements of the regulation.” 4 Case Handyman, 183 Md.App. at 68, 959 A.2d at 847. Moreover, the court noted that any instances of non-compliance *564 were minor and the clause was sufficiently conspicuous to give Petitioners notice. Id. at 70, 959 A.2d at 848-49.

Petitioners filed a petition for unit of certiorari presenting three questions:

I. Did the Court of Special Appeals err in adopting federal law as controlling on the issue of whether equitable estoppel could be invoked by a non-party to a contract in order to enforce an arbitration provision, rather than applying state law to determine the provision’s enforceability?
II. Did the Court of Special Appeals err in holding that Petitioners were equitably estopped from avoiding contractual arbitration with a non-party, where the non-party disavows any cognizable connection to the contract at issue, and where the agreement does not manifest any intent or agreement to arbitrate the legal or factual issues related to Respondents’ own wrongdoing?
III.

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Cite This Page — Counsel Stack

Bluebook (online)
989 A.2d 210, 412 Md. 555, 2010 Md. LEXIS 21, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schuele-v-case-handyman-remodeling-services-llc-md-2010.