District Moving & Storage Co. v. Gardiner & Gardiner, Inc.

⁹⁸ BLOOM, Judge. This consolidated appeal arises from the entry of two orders by the Circuit Court for Prince George’s County (Taylor, J.), each compelling appellant, District Moving & Storage Co., Inc., to arbitrate claims it had asserted against the appellees, Gardiner & Gardiner, Inc., and Fedco Systems, Inc., respectively. As we agree with Judge Taylor’s decision that arbitration was proper under the circumstances, we shall affirm. In September of 1979, Hilliard & Bartko Joint Venture (HBJV) entered into a contract with appellee Fedco, a firm of architects, to design a storage warehouse to be located in Forestville, Maryland.

American Institute of Architects (AIA) Standard Form of Agreement Betweeji Owner and Architect (AIA Document B141) was signed by both parties. Later that year, HBJV contracted with appellee Gardiner & Gardiner to erect the structure and to function as general contractor. An AIA Standard Form Agreement Between Owner and Contractor (AIA Document A101) evidenced the agreement of the parties. At the time the contracts were executed, both Gardiner & Gardiner and Fedco were aware that HBJV planned to lease the structure to appellant and that appellant planned to utilize the building as its primary warehouse.

Both contracts contained binding arbitration clauses. The contract between HBJV and Fedco contains the following language: 11.1 All claims, disputes and other matters in question between the parties to this Agreement, arising out of, or relating to this Agreement or the breach thereof, 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. No arbitration, arising out of, or relating to this Agreement, shall include, by consolida ⁹⁹ tion, joinder or in any other manner, any additional party not a party to this Agreement except by written consent containing a specific reference to this Agreement and signed by all the parties hereto. Any consent to arbitration involving an additional party or parties shall not constitute consent to arbitration of any dispute not described therein or with any party not named or described therein.

This Agreement to arbitrate and any agreement to arbitrate with an additional party or parties duly consented to by the parties hereto shall be specifically enforceable under the prevailing arbitration law. The contract between HBJV and Gardiner & Gardiner states: 7.9.1 All claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof, except as provided in Subparagraph 2.2.11 with respect to the Architect’s decisions on matters relating to artistic effect, and except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.9.4 and 9.9.5, 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. * * * * * * No arbitration shall include by consolidation, joinder or in any other manner, parties other than the Owner, the Contractor and any other persons substantially involved in a common question of fact or law, whose presence is required if complete relief is to be accorded in the arbitration. No person other than the Owner or Contractor shall be included as an original third party or additional third party to an arbitration whose interest or responsibility is insubstantial. Any consent to arbitration involving an additional person or persons shall not constitute consent ¹⁰⁰ to arbitration of any dispute not described therein or with any person not named or described therein.

In March of 1983 HBJV and appellant filed suit in the Circuit Court for Prince George’s County against both appellees and several other parties who had been involved in the construction of the warehouse. The suit alleged breach of contract and negligence by both the architect and the contractor. As initial responses to the declaration, both Fedco and Gardiner & Gardiner filed petitions in equity to compel arbitration as to HBJV only, while demurring to appellant’s claims. In their demurrers, both Fedco and Gardiner & Gardiner took the position that since appellant had not been a signatory to either contract there was no contract with it that could be breached, nor was there any relationship between the parties giving rise to a duty owed by either the architect or the contractor to appellant.

These demurrers were sustained with leave to amend. The petitions to compel arbitration as to HBJV, on the other hand, were granted on August 26, 1983. All claims asserted by HBJV against Fedco and Gardiner & Gardiner in the law action were stayed and were to be submitted to arbitration. Appellant then filed an amended declaration alleging for the first time its status as a third party beneficiary.

Demurrers to this amended declaration by Fedco and Gardiner & Gardiner claimed that District had failed to state a cause of action in either contract or tort. Both appellees also maintained in their respective demurreres that, if appellant had any claim against either of them under their respective contracts with HBJV, it should be bound by the arbitration clauses found in both of those contracts. Both demurrers were sustained with leave to amend. A second amended declaration was then filed by appellant, reasserting its rights as a third party beneficiary under the contracts between HBJV and Fedco and HBJV ¹⁰¹ and Gardiner & Gardiner.

Demurrers thereto were overruled in March of 1984. Both Fedco and Gardiner & Gardiner then filed petitions in equity for orders compelling appellant to arbitrate the matters it had raised in its second amended declaration. An order was issued requiring appellant to show cause why the motions to compel arbitration should not be granted. A hearing was held before Judge Taylor on April 24, 1984.

The judge granted both motions to compel arbitration and noted: “All of the parties were apparently aware that it [the warehouse] was specifically designed and to be built to accommodate that company [District]. And if District is going to seek to claim the benefit because of its indirect relationship, then it would have to suffer the obligation of the contract as a consequence to its indirect relationship.” Appeals to this court were timely noted. The following issues are raised by appellant: I. Did the trial court err in compelling the appellant to arbitrate its claims pending in its law suit and in staying its prosecution of those claims, where the appellant was not a party that had signed the arbitration agreement but was a third party beneficiary of the contract?

II

Did the trial court err in failing to find that appellees had waived their rights to assert the arbitration provisions when they had demurred to two prior declarations filed in a law action? We shall answer “no” to both questions and affirm. I Appellant contends initially that Judge Taylor erred in his decision to compel it to arbitrate those claims it had asserted against both Fedco and Gardiner & Gardiner. More specifically, appellant maintains that although it was a third party beneficiary of the contracts between HBJV ¹⁰² and Fedco and HBJV and Gardiner & Gardiner it should not be bound by the arbitration clauses, because it was not a signatory to the contract.

Initially, we note that all parties and Judge Taylor concurred that appellant was in fact a third party beneficiary of the two disputed contracts. Appellant appears to fall within the definition of creditor beneficiary as explicated in the Restatement of Contracts § 133(l)(b). One is a creditor beneficiary when “performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary Weems v. Nanticoke Homes, Inc., 37 Md.App. 544, 552 , 378 A.2d 190 (1977), quoting from the Restatement of Contracts §