Zoological Society v. INTECH Construction Inc.

48 Pa. D. & C.4th 542, 2000 Pa. Dist. & Cnty. Dec. LEXIS 259
CourtPennsylvania Court of Common Pleas, Philadelphia County
DecidedMay 16, 2000
Docketno. 1008
StatusPublished
Cited by2 cases

This text of 48 Pa. D. & C.4th 542 (Zoological Society v. INTECH Construction 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
Zoological Society v. INTECH Construction Inc., 48 Pa. D. & C.4th 542, 2000 Pa. Dist. & Cnty. Dec. LEXIS 259 (Pa. Super. Ct. 2000).

Opinion

SHEPPARD JR., J.,

This opinion is submitted in support of this court’s contemporaneous order granting the petition to stay arbitration filed by plaintiff, The Zoological Society of Philadelphia.

FACTUAL AND PROCEDURAL HISTORY

The plaintiff/petitioner, The Zoological Society of Philadelphia, entered into a contract, dated January 9, 1998, with the defendant/respondent, INTECH Construction Inc., for the construction of what is generally referred to as “The primate project.” Under the contract, the zoo is the owner and Intech is the general contractor.

The original contract sum was set at $15,490,000, “subject to additions and deductions as provided in the contract documents, including change orders.” See respondent’s brief at 5. The contract also provided a specific schedule for the completion of phases of the work. Certain additions and extensions of time were required as the project progressed, and procedures were implemented for effecting and recording these changes. See [544]*544id. at 5-6; petitioner’s brief at 2-3. Various disputes, which are the subject of the present action, have arisen between the parties regarding these additions and extensions in time.1

The contract contained an arbitration clause, providing that: “[a]ny controversy or claim arising out of or related to the contract, or the breach thereof, shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association ....” Exhibit A at ¶4.9.1.

However, this arbitration clause is further defined and limited by a specifically inserted clause, entitled “Arbitration of claims — limitation of dollar amount,” which states that: “[t]he provision of article 4.9 of the general conditions (and all other provisions of the contract referencing the aforementioned article), requiring binding and final arbitration of controversies and claims in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, shall apply only to controversies and claims having a dollar value not exceeding the sum of $100,000. With regard to controversies and claims in excess of the aforementioned [545]*545sum, the parties expressly reserve their respective rights to seek any and all appropriate redress available under applicable law, including, without limitation, institution of formal legal procedures. ” Exhibit A at insert A:4.9.1.1. (emphasis in original)

In addition, under paragraph 4.7.1 of the contract, a “claim” is defined as: “[a] demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of contract terms, payment of money, extension of time or other relief with respect to the terms of the contract... [and] also includes other disputes and matters in question between the owner and contractor arising out of or relating to the contract.” Exhibit A at ¶4.7.1.

On February 3, 2000, Intech filed a demand for arbitration with the American Arbitration Association in Philadelphia, claiming that the case involves “not fewer than 350 individual claims” which “will require [the zoo] to make payment to [Intech] in an amount hot exceeding $100,000 (per claim), the aggregate amount of the award . . . will be in excess of $2,500,000.” See exhibit B— demand for arbitration at 2.2 According to the demand filed by Intech, the claims allegedly include requests for the payment of money and extensions of time and arise out of alleged changes in the scope of the work required by the zoo; defects and deficiencies in the contract documents and design of the project; additional work required of Intech and alleged misconduct by the zoo which caused Intech to suffer delays in performing its work. See id. at [546]*5461. By letter dated February 28, counsel for the zoo raised its objections to arbitration.

Nonetheless, on March 6, 2000, the AAA notified counsel that it would “proceed with its further administration.” See exhibit D. Further, on March 9, 2000, after additional correspondence from both parties, the AAA notified both parties by telephone that it would proceed to administer the arbitration. See petition and answer at ¶15. On March 17, 2000, the zoo filed the instant petition to stay arbitration, pursuant to 42 Pa.C.S. §7304(b). On April 25, 2000, Intech filed its answer.

DISCUSSION

Legal Standard and the Parties’ Positions

This court may stay (or compel) arbitration proceedings on a showing that there is no agreement to arbitrate. 42 Pa.C.S. §7304(b). Compare 9 U.S.C. §4. Pennsylvania law holds that when one contracting party seeks to prevent another from proceeding with arbitration, judicial inquiry is limited to determining: (1) whether a valid arbitration agreement exists between the parties and, if so, (2) whether the dispute involved is within the scope of the arbitration provision. Midomo Co. Inc. v. Presbyterian Housing Development Co., 739 A.2d 180, 186 (Pa. Super. 1999). See also, Flightways Corp. v. Keystone Helicopter Corp., 459 Pa. 660, 663, 331 A.2d 184, 185 (1975); Smith v. Cumberland Group Ltd., 455 Pa. Super. 276, 283, 687, A.2d 1167, 1171, (1997); PBS Coal Inc. v. Hardhat Mining Inc., 429 Pa. Super. 372, 376-77, 632 A.2d 903, 905 (1993). Here, both the zoo and Intech agree that a valid agreement to arbitrate exists within the con[547]*547tract, but they disagree whether their dispute falls within the scope of the arbitration agreement. See petitioner’s brief at 5-6; respondent’s brief at 2.

In support of its petition to stay arbitration, the zoo contends that the dispute falls outside the scope of the arbitration provision since Intech’s claims, and the zoo’s claims in its own action, exceed the sum of $100,000. Petitioner’s brief at 4. In opposition, Intech asserts that the dispute is arbitrable since each claim is “separate and distinct” and each individual claim does not exceed the sum of $100,000. Respondent’s brief at 11. The issue presented is one of arbitrability: i.e., whether the present dispute falls outside the scope of the arbitration clause in the contract. Specifically, this court must interpret the operative effect of the “Limitation of dollar amount” clause, set forth at insert A:4.9.1.1 of the contract.

The Dispute Is Not Covered by the Arbitration Clause

First, Intech argues that this case is controlled by the Federal Arbitration Act and federal case law, and that the zoo and Intech “are parties to a written arbitration agreement contained in a contract evidencing transactions involving interstate commerce.” See answer at^7. In his affidavit, Louis T. Parise P.E., Intech’s senior project manager, attests that Intech, during the performance of the contract, contracted with numerous subcontractors and vendors, which were located both inside and outside of Pennsylvania, and that a substantial volume of goods, materials, tools and equipment flowed in the “stream of interstate commerce.” Exhibit 2 at ¶4.

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48 Pa. D. & C.4th 542, 2000 Pa. Dist. & Cnty. Dec. LEXIS 259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zoological-society-v-intech-construction-inc-pactcomplphilad-2000.