Torma, J. v. Parrot Construction Corp. ( 2018 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JUDY TORMA, IN THE SUPERIOR COURT
OF
PENNSYLVANIA
Appellant
v.
PARROT CONSTRUCTION CORP.,
PAUL CHAMBERS,
Appellees No. 1105 WDA 2017
Appeal from the Order entered June 29, 2017,
in the Court of Common Pleas of Allegheny County,
Civil Division, at No(s): GD-15-017669.
BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.
MEMORANDUM BY KUNSELMAN, J.: FILED MARCH 27, 2018
Judy Torma appeals from the Order denying her Petition to Vacate or
Modify Arbitration Award and claims that a dispute over an agreement to
provide additional moving services was not covered by the arbitration clause
of the parties’ original construction contract. For the following reasons, we
affirm.
On May 15, 2014, Torma, on behalf of her parents, and Parrot
Construction Corporation,1 entered into a construction contract (“Construction
Contract”), in which Parrot agreed to renovate certain portions of a building
____________________________________________
1Appellee, Paul Chambers, is the President of Parrot Construction
Corporation.
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owned by Torma’s parents. The parties used a form contract produced by the
Associated General Contractors of America, which included the following
arbitration clause:
16.1 All claims, disputes and other matters in questions arising
out of, or relating to, this Agreement or the breach thereof, Except
with respect to the Architect/Engineer’s decision on matters
relating to artistic effect, and except for claims which have been
waived by the making or acceptance of Final Payment shall be
decided by arbitration in accordance with the Construction
Industry Arbitration Rules of the American Arbitration Association
then obtaining unless the parties mutually agree otherwise. This
Agreement to arbitrate shall be specifically enforceable under the
prevailing arbitration law.
A few weeks later, on June 6, 2014, the parties executed another
Agreement of Understanding (“Moving Contract”). Under this Agreement,
Parrot agreed to photograph, inventory, transport, store, and sell a number
of arcade and coin-operated machines owned by Torma’s parents, stored in
areas where Parrot needed access to perform the renovation/construction
work. Torma agreed to pay Parrot for transportation costs and other fees, as
well as a fee for selling any of the machines.
On March 27, 2015, Parrot filed an arbitration claim with the American
Arbitration Association (“AAA”), demanding payment for its work under both
the Construction and Moving Contracts. Parrot alleged that the Moving
Contract was a change order and, thus, an integrated part of the Construction
Contract. Torma filed an answer and counterclaim arguing, in pertinent part,
that the Moving Contract was separate and distinct from the Construction
Contract, and not covered by the arbitration clause of the original agreement.
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At the arbitration hearing on August 22, 2015, Torma objected to the
arbitrator considering the Moving Contract, arguing that the AAA lacked
jurisdiction over this claim. However, the arbitrator chose to hear all evidence
related to the Construction Contract and Moving Contract before issuing a
decision on whether he had jurisdiction.
On August 26, 2015, the arbitrator issued a written order stating that
the AAA had jurisdiction to hear the Moving Contract claim, characterizing the
Moving Contract as a Change Order under the Construction Contract. On
September 3, 2015, the arbitrator entered an award in favor of Parrot which
included, inter alia, $7,500 representing the balance due pursuant to the
Moving Contract.
On October 5, 2015, Torma filed a Petition to Vacate or Modify
Arbitration Award in the Court of Common Pleas. Therein, Torma claimed,
inter alia, that the arbitrator exceeded the scope of the arbitration agreement
by ruling on the Moving Contract. Consequently, Torma sought to have the
Arbitration award modified to exclude the amount attributable to the Moving
Contract.
The trial court denied Torma’s Petition on all issues, including Torma’s
claim that the arbitrator did not have jurisdiction. Torma filed a Notice of
Appeal. By Memorandum dated January 11, 2017, this Court remanded the
case on the jurisdictional issue for hearing to determine whether the arbitrator
had jurisdiction over the Moving Contract. There, in pertinent part, we stated:
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Upon review of the Construction Contract and the Moving
Contract, we conclude that, contrary to the apparent view of both
the arbitrator and the trial court, the terms of the two contracts
do not clearly resolve the question whether disputes under the
Moving Contract are subject to the arbitration clause in the
Construction Contract. . . . Torma argues that the arbitration
clause of the Construction Contract does not apply to the Moving
Contract. According to Torma, ‘[t]he plain meaning of the
language of the Moving Contract makes it clear that its scope
applied to the moving storing and selling of personal property. . .
[, which] has nothing to do with the design and construction of
renovations to the. . . [b]uilding.’ Parrot argues in response that
the Moving Contract ‘was a change order to the [Construction
C]ontract as the removal of items and other preparations were
necessary as part of the renovations.’ According to Parrot, “the
parties contemplated and executed that agreement as part of the
[C]onstruction [C]ontract and incorporated it and other change
orders. Because we find that both of these interpretations are
reasonably plausible, we remand the matter to the trial court so
that the parties may present evidence to assist the trial court in
determining whether the arbitrator had jurisdiction over the
Moving Contract.
Torma v. Parrot Constr. Corp., et al., 363 WDA 2016, unpublished
memorandum at 15-18 (January 11, 2017).
On June 5, 2017, the trial court held an evidentiary hearing which
focused on whether the language of the agreement, and the facts related
thereto, justified the arbitrator’s exercise of jurisdiction over the dispute
concerning Parrot’s moving, storage and sale of certain machines and
equipment which were stored in the building. From this hearing, the trial court
elicited the following facts surrounding the execution of the two documents in
issue.
Torma hired Parrot to correct serious structural and other deficiencies in
a commercial building owned by her parents. A lot of old tools and other items
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were stored in the building which had to be moved and scrapped. There were
also old vending machines stored in the building. All these items had to be
removed so that Parrot could perform the construction/renovation work.
Torma was well aware that these things had to be moved so that construction
could start. Torma believed that the vending machines were valuable, and
tried to remove the machines on her own, but was unable to find someone to
do it. As a result, she asked Parrot to remove these things from the building
until the work was finished and scrap the junk. This resulted in the execution
of the Moving Contract on June 6, 2014, between Torma and Parrot. This was
one of several change orders executed under the Construction Contract.
Thereafter, the trial court entered a decision on June 28, 2017,
concluding the arbitrator properly had jurisdiction over the Moving Contract,
because it was a change order to the original Construction Contract which
contained an arbitration clause requiring all claims to be arbitrated. Torma
appealed again; the matter is now before us.
In this appeal, Torma raises the following issue:
Whether the trial court erred as a matter of law or abused its
discretion when it concluded that the Moving Contract was a
change order to the Agreement, and therefore the arbitrator had
jurisdiction over the Moving Contract.
Torma Brief at 5.
The arbitration agreement in the instant case is governed by 42 Pa.C.S.
section 7341 et seq. which pertains to common law arbitration. 42 Pa.C.S. §
7341 et seq. Our standard of review of common law arbitration is very limited.
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In reviewing a trial court’s order on a petition to vacate or modify a common
law arbitration award, our review is limited as follows:
The award of an arbitrator in a nonjudicial arbitration which
is not subject to statutory arbitration or to a similar statute
regulating nonjudicial arbitration proceedings is binding and may
not be vacated or modified unless it is clearly shown that a party
was denied a hearing or that fraud, misconduct, corruption or
other irregularity caused the rendition of an unjust, inequitable or
unconscionable award. The arbitrators are the final judges of both
law and fact, and an arbitration award is not subject to reversal
for a mistake of either. A trial court order confirming a common
law arbitration award will be reversed only for an abuse of
discretion or an error of law. The appellant bears the burden to
establish both the underlying irregularity and the resulting
inequity by clear, precise, and indubitable evidence.
Andrew v. CUNA Brokerage Services, Inc., 976 A.2d 496, 500 (Pa. Super.
2009) (internal citations and quotation marks omitted). In particular, an
award may also be corrected if the arbitrator exceeds the scope of his
authority. Gargano v. Terminix Int’l Co., L.P., 784 A.2d 188, 193 (Pa.
Super. 2001). “’The power and authority of arbitrators are wholly dependent
upon the terms of the agreement of submission, and they cannot exercise
authority as to matters not included therein, or validly determine the dispute
if they violate or act inconsistently with the terms of the submissions.’”
Boulevard Associates v. Seltzer P’ship, 664 A.2d 983, 987 (Pa. Super.
1995) (quoting Sley Sys. Garages v. Transportation Workers Union of
Am., 178 A.2d 560, 561 (Pa. 1962)).
Torma argues that the trial court erred in concluding that the Moving
Contract was a change order, rather than an entirely separate contract
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between the parties. According to Torma, “the Trial Court abused its
discretion because it relie[d] entirely upon the credibility of witness testimony
presented to support its conclusion; and that the Trial Court committed an
error of law by simultaneously ignoring the provisions of the documentary
evidence that unambiguously show the Moving Contract does not fall under
the Agreement’s definition of change order as a matter of law.” Torma Brief,
at 16. Torma emphasizes that “[w]hen interpreting agreements containing
clear and unambiguous terms, we need only examine the writing itself to give
effect to the parties.” Melton v. Melton, 831 A2d 646, 653-54 (Pa. Super.
2003). Where the rights are based on an unambiguous writing, the parties’
intent must be determined from the writing itself, not from testimony as to
the parties understanding or intent. Personal belief is irrelevant. Grey Fox
Plaza v. Herbert, Rowland and Grubic, Inc., 2017 WL 519827 at 8 (Pa.
Comwlth. 2017). Consequently, Torma’s entire argument is premised solely
upon the documents themselves.
Conversely, Parrot argues that the trial court did not err in concluding
the Moving Contract was a Change Order and thus, was subject to the
arbitration clause. The documents and testimony support this conclusion.
Before addressing the core of the matter before us, we review the basic
principles of contract interpretation applicable to this claim.
Generally, the intent of the parties, which governs the interpretation of
the contract, is to be ascertained from the writing itself. In most cases, the
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trial court is limited to examining only the contents of the actual agreements
between the parties. However, as a panel of this Court previously concluded,
contrary to Torma’s contention, the terms of the contracts in this matter were
not clear and unambiguous. The intent of the parties, regarding whether the
Moving Contract was subject to arbitration, was not evident from the face of
the documents. Under these circumstances, “parol evidence is admissible to
explain or clarify or resolve the ambiguity . . . .” Miller v. Poole, 45 A.3d
1143, 1146 (Pa.Super. 2012).
“Where the words used in a contract are ambiguous, the surrounding
circumstances may be examined to ascertain the intent of the parties.”
Walton v. Philadelphia Nat'l Bank, 545 A.2d 1383, 1389 (Pa. Super. 1988).
While “[t]his Court may determine the existence of an ambiguity as a matter
of law, [ ] the resolution of conflicting parol evidence relevant to what the
parties intended by the ambiguous provision is for the trier of fact.” Windows
v. Erie Ins. Exch., 161 A.3d 953, 958 (Pa. Super. Ct. 2017) (quoting Walton,
supra). Concluding that the contracts were ambiguous, we remanded the
case to the trial court for testimony to ascertain the parties’ intent.
The provisions in the contracts at issue in this case are no different now
than they were when the trial court entered its Decision of June 28, 2017, and
when this Court issued its Memorandum of January 11, 2017. Consequently,
for us to rely solely on the documents in this situation, as advocated by Torma,
would completely contradict our prior decision. The trial court did not err by
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conducting an evidentiary hearing and considering evidence outside the
documents themselves. To the contrary, the trial court did exactly as this
Court instructed. Thus, in deciding this appeal, we look beyond the four
corners of the documents and consider all the evidence presented to the trial
court in this matter, both testimony and documentary.
In claiming that the Moving Contract was a separate contract or
transaction, and not subject to the arbitration clause, Torma first argues that
the Construction Contract spelled out a very narrow and limited scope of work.
The Construction Contract describes the Project as: “Renovations to the front
wall and middle of the roof of existing space known located at 1007 Constance
Street, Pittsburgh, PA 15212”. The Construction Contract further defines
Project in Article 1.3 as the “total construction to be designed and constructed
of which the Work is a part. The Work comprises the complete construction
required by the drawings and specifications.” Based upon these provisions,
Torma argues that the scope of the Construction Contract was solely for
renovation and construction to the front wall and middle of the roof of the
building based upon the Architect’s plans. Torma further suggests that this
scope could not be modified.
Torma additionally argues that the term “Change Order” was defined in
the Construction Contract. According to Torma, based upon the definition of
“Change Order” in the Construction Contract, “Change Orders” can only be
issued in the following situations: 1) unknown or concealed condition; 2)
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change in price; 3) extension of time; and 4) an emergency. The Moving
Contract, additional services to be provided by Parrot, did not fall within any
of these categories, and thus cannot be considered a “Change Order”.
Parrot argues that, although the Moving Contract is not termed a
“Change Order”, it nonetheless is a “Change Order” to the scope of the Project
as provided for under Article 9 of the Construction Contract. We agree.
Obviously, the moving work performed by Parrot was not included in the
original scope of work. Contrary to Torma’s argument, however, the terms of
the Construction Contract did not preclude those services from being added.
Ariticle 9.1 permits the Owner to “order changes in the Project within the
general scope of this Agreement consisting of additions, deletions or other
revisions . . . .” Article 9.1.1 of the Construction Contract clearly states that
“[a] Change Order is a written order to the Contractor signed by the Owner or
his authorized agent and issued after the execution of the Agreement,
authorizing a Change in the Project . . . .” (emphasis added). Thus, the
Project could be redefined or expanded, and was not limited to renovations or
construction as argued by Torma. Moreover, the Moving Contract met the
technical requirements of a Change Order. It was executed by Torma a little
less than a month after the execution of the Construction Contract. It
expanded the scope of the Project to include removal of the things stored in
the building. Consequently, contrary to Torma’s argument, the Moving
Contract could be considered as a Change Order to the Project. The testimony
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adduced at the hearing before the trial court supports the trial court’s finding
that the Moving Contract was a change order rather than a separate
agreement.
Before the renovation work could commence, the building had to be
cleared out; the building was full of items including, vending machines,
material, metal, old tools, and debris. Removal of these items is typically the
responsibility of the owner. Torma, however, was unable to arrange to have
the building cleared out on her own, and was being pressured by the city to
make the required repairs. Parrot told Torma that construction could not start
until the most of the items were cleared out of the building. Torma asked for
a proposal from Parrot to perform this work. Consequently, the parties
entered into the Moving Contract. Parrot reasonably considered this to be a
Change Order as defined under the Construction Contract.
The presentation of testimony to explain the circumstances
surrounding the formation of the Moving Contract helped the trial court to
resolve the ambiguity between the Construction Contract and Moving
Contract. Because the removal of the items was necessary to carry out the
Construction Contract, we think the trial court properly found that the moving
services expanded the scope of the original services under the Construction
Contract and constituted a Change Order. In making this decision, as the trier
of fact, the trial court properly considered the credibility of Torma and
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Chambers as witnesses when they described the circumstances surrounding
the execution of the two contracts.
Finally, the trial court’s interpretation is consistent with the long-
standing principle of contract law that “[w]here several instruments are made
as part of one transaction they will be read together, and each will be
construed with reference to the other; and this is so although the instruments
may have been executed at different times and do not in terms refer to each
other.” Neville v. Scott, 127 A.2d 755, 757 (Pa. Super. 1957). We,
therefore, conclude that the trial court did not abuse its discretion in finding
that the Moving Contract was a Change Order to the Construction Contract
rather than a separate, unrelated agreement between the same parties.
In affirming the trial court’s conclusion that the Moving Contract was a
Change Order to the Construction Contract, we believe we have resolved the
parties’ issue of whether the arbitration clause could cover the Moving
Contract dispute since it was part of the Construction Contract. Next, we will
briefly address whether the dispute did fall within the specific language of the
arbitration clause. In reviewing the arbitration clause, we keep in mind the
following legal principles.
“Arbitration agreements are contracts and should be interpreted using
contract principles.” Bucks Orthopedic Surgery Associates, P.C. v. Ruth,
925 A.2d 868, 872 (Pa. Super. 2007). “The fundamental rule in construing a
contract is to ascertain and give effect to the intention of the parties.” Lower
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Frederick Twp. v. Clemmer, 543 A.2d 502, 510 (1988). “The scope of
arbitration is determined by the intention of the parties as ascertained in
accordance with the rules governing contracts generally” as discussed in full
above. D & H Distrib. Co. v. Nationall Union Fire Ins. Co., 817 A.2d 1164,
1166 (Pa. Super. 2003). “Even though it is now the policy of the law to favor
settlement of disputes by arbitration and to promote the swift and orderly
disposition of claims, arbitration agreements are to be strictly construed
and such agreements should not be extended by implication.” Setlock
v. Pinebrook Pers. Care & Ret. Ctr., 56 A.3d 904, 907–08 (2012) (quoting
Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa.Super.2012)) (citations and
quotation marks omitted; emphasis added).
In this case, the arbitration clause of the Construction Contract
provided in pertinent part:
All claims, disputes and other matters in questions arising
out of, or relating to, this Agreement or the breach thereof,
Except with respect to the Architect/Engineer’s decision on
matters relating to artistic effect, and except for claims which have
been waived by the making or acceptance of Final Payment shall
be decided by arbitration. . . .
It is clear that the issue of payment for Parrot’s moving services, a matter of
contract, plainly arose out of the Construction Contract as modified by the
terms of the Moving Contract. Furthermore, the arbitration clause in this case
is very broad. In Dodds v. Pulte Home Corp., 909 A.2d 348 (Pa. Super.
2006), this Court found that contractual language such as the language at
issue herein to be an “unlimited arbitration clause”. Dodds, 909 A.2d at 350.
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“Where an arbitration clause is unrestricted, the parties to the contract could
be compelled to arbitrate any claim that implicates a contractual
obligation.” Smay v. E.R. Stuebner, Inc. 864 A.2d 1266, 1274 (Pa.Super.
2004) (emphasis added). Here, it is apparent that without the moving
services of Parrot, the original scope of the Construction Contract, i.e.,
construction of and renovation to the building, could not have been performed.
Thus, the moving services were fundamentally related to Parrot’s performance
of its obligations under the Construction Contract. Consequently, consistent
with the rationale of Smay, any issues with the moving services would
properly be subject to arbitration under the Construction Contract.
Additionally, but for the construction/renovation project, there would be no
Moving Contract. Clearly, the moving services arose out of, or are related to,
the Construction Contract and the work to be done thereunder. Per the
language of the arbitration clause in this case, anything arising out of the
Construction Contract, such as the moving services, was subject to the
arbitration clause and properly within the arbitrator’s jurisdiction. We,
therefore, conclude that the trial court did not commit an error of law in finding
that Torma and Parrot’s dispute over the moving services arose out of or was
related to the Construction Contract and thus subject to arbitration.
CONCLUSION
After careful review of the contract provisions and the parties' intentions
as reflected in the contract documents as well as the testimony presented
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before the trial court, we conclude that the trial court did not abuse its
discretion or commit an error of law when it confirmed2 the arbitration award
with respect to the Moving Contract.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/27/2018
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2We view the trial court’s decision as a confirmation of the arbitrator’s award
even though the trial court did not specifically enter an order stating that it
was confirmed. Another panel of this Court previously addressed this issue.
See Torma, 363 WDA 2016, unpublished memorandum at 15-18 n. 3.
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