Joseph F. Trionfo & Sons, Inc. v. Ernest B. Larosa & Sons, Inc.

Moore, J., delivered the opinion of the Court. The ever-expanding body of law with respect to “arbitration” is involved in this appeal which arises out of a controversy between a general contractor on a school construction project (the appellant) and the excavation and site-work subcontractor (the appellee). The narrow question presented is whether an agreement to arbitrate existed, as claimed by the general contractor, against whom the subcontractor recovered a judgment in excess of $200,000 after a thirteen-day jury trial. The Uniform Arbitration Act, ⁶⁰⁰ Md. Cts. & Jud.

Proc. Code Ann. §§ 3-201 et seq. (1974), adopted in 1965 in Maryland, does not address the substantive requirements for an agreement to arbitrate the subject matter of a dispute. Flood v. Country Mutual Insurance Co., 242 N.E.2d 149 (111. 1968).

See Bel Pre Medical Center, Inc. v. Frederick Contractors, Inc., 21 Md. App. 307 , 320 A. 2d 558 (1974) , rev’d on other grounds, 274 Md. 307 , 334 A. 2d 526 (1975) . I The construction of the New North Harford Middle School on Route 165 in Harford County forms the backdrop for this dispute. On January 21,1974, appellant, Joseph F. Trionfo & Sons, Inc., a general contractor, entered into an agreement with the Board of Education of Harford County for the building of the school. 1 The contract specifications included certain “Conditions of Contract.” Article 2 of the Conditions dealt with the architect, and contained a subsection entitled “Administration of the Contract.” The relevant portions of this subsection provided as follows: “The Architect will make periodic visits to the site to determine in general if the Work is proceeding in accordance with the Contract Documents. On the basis of his on-site observations as an architect, he will endeavor to guard the Owner against defects and deficiencies in the Work of the Contractor.

The Architect will not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work____ “Based on such observations and the Contractor’s Applications for Payment, the Architect will determine the amounts owing to the Contractor and will issue Certificates for Payment in such amounts, as provided. ⁶⁰¹ “The Architect will be, in the first instance, the interpreter of the requirements of the Contract Documents. The Architect will, within a reasonable time, render such interpretations as he may deem necessary for the proper execution or progress of the Work. “Claims, disputes and other matters in question between the Contractor and the Owner relating to the execution or progress of the Work or the interpretation of the Contract Documents shall be referred to the Architect for decision. [2] “All interpretations and decisions of the Architect shall be consistent with the intent of the Contract Documents. In his capacity as interpreter, he will exercise his best efforts to insure faithful performance by both the Owner and the Contractor and will not show partiality to either. “The Architect’s decision in matters relating to artistic effect will be final if consistent with the intent of the Contract Documents.” (Emphasis added.) On the same date, appellant entered into a subcontract with appellee, Ernest B. LaRosa & Sons, Inc., whereby, for the sum of $203,000, appellee was to “supply all labor, materiel and equipment” to complete the work under the main contract involving excavation, paving, landscaping and fencing. The agreement was made on a printed form headed by appellant’s full corporate name.

The second paragraph of the subcontract, after a description of the subcontractor’s responsibilities, contained the following boilerplate language, incorporating by reference certain sections of the agreement between the Board of Education as owner and the appellant as general contractor: “. . . all as provided for in the contract between Contractor and Owner as aforesaid, which said contract, plans, specifications and general conditions ⁶⁰² are hereby made a part hereof so far as the same are applicable to the work to be done hereunder, as fully as though the same were herein set out at length, and Sub-Contractor hereby assumes and agrees in carrying out this agreement to comply with all the stipulations and conditions of said contract, and the plans and specifications and general conditions accompanying the same or any parts thereof, that are applicable to the work to be done hereunder or that may be construed as applicable thereto by the architect or engineer in charge of said work; it being the intent hereof that in respect to the work covered hereunder Sub-Contractor shall be under the same obligations to Contractor under this contract as Contractor is to Owner under the terms of the general contract aforesaid, the Contractor shall be entitled to all the rights, privileges and remedies as against Sub-Contractor, which Owner may have or be construed to have under the general contract against Contractor, and that any direction or order of the architect or engineer aforesaid which may be binding upon or given to Contractor shall ipso facto be construed as binding upon or given to Sub-Contractor as soon as Sub-Contractor receives notice thereof.” (Emphasis added.) An addendum to the form contract between appellant and appellee further provided, in pertinent part: “If sub-contractor encounters rock, boulders, or buried logs, trees, stumps, or any sub-surface conditions the contract price shall be increased [$15.00] per cubic yard, and if blasting is required the cost thereof will also be added to the contract price.” 3 On March 26,1975, appellee brought an action at law in the ⁶⁰³ Circuit Court for Harford County against appellant, 4 alleging that in the performance of the subcontract, appellee did encounter and excavate rock and boulders and that extra compensation was due, under the terms of the subcontract, which appellant had failed and refused to pay. Appellant filed as its first pleading a “Motion Raising Preliminary Objection or in the Alternative to Order Arbitration and Stay These Proceedings.” A claim was therein made that the main contract designated the architect “as the arbitrator of all matters involving claims and disputes concerning amounts owing and interpretations of the Contract Documents,” and that such provision was effectively incorporated by reference into the subcontract. 5 Judge Harry E. Dyer, Jr. presided at the hearing on the motion, and denied appellant’s request that arbitration be ordered, holding essentially that: 1) The main contract provision in question was not an arbitration clause; 2) An architect was not a private, impartial third-party, and could not properly be designated an arbitrator; 3) The decision of the architect was not deemed to be “final,” and could not be considered a binding arbitration award. Judge Dyer further stated: “[T]he only consistent interpretation of the contract is to read the architect’s function as that of making the day to day decisions on the proper course of construction. The contract calls for the architect to render such decisions ‘within reasonable time,’ so that the execution of the work will progress....” ⁶⁰⁴ The case proceeded, no further steps being taken by appellant to compel arbitration of the dispute. 6 After a protracted jury trial before Judge Edward D. Higinbothom, a verdict was returned in favor of the subcontractor, and damages were awarded for removal of the rock under the terms of the addehdum to the subcontract.

The primary issue on this appeal is stated in appellant’s brief in the following manner: “Did the Court err in failing to grant [Appellant’s] Motion Raising Preliminary Objection, and order arbitration in these proceedings?” A subsidiary question raised is whether the court erred in refusing to grant a removal from Harford County. We answer appellant’s inquiries in the negative. II As already stated, the language of the contract between the owner and the general contractor (incorporated by reference into appellee’s excavation subcontract), upon which appellant lays claim to an agreement to arbitrate, is the following: “Claims, disputes and other matters in question between the Contractor and the Owner relating to the execution or progress of the Work or the interpretation of the Contract Documents shall be referred to the Architect for decision.” We do not consider this clause to represent an agreement to arbitrate the subject-matter of the dispute between the parties, namely, the extent of the additional excavation work required to be performed by the subcontractor, and the additional compensation, pursuant to specific provisions of the subcontract, to which it was entitled. In so holding, it is not our view that, to constitute an agreement to arbitrate, the language employed must be the now familiar provisions of the standard form of agreement ⁶⁰⁵ adopted by the American Institute of Architects. 7 We recognize that no particular form of words is indispensable to the making of a valid agreement to adjust and mediate a dispute between contracting parties without resort to litigation.

Indeed, the language need not include the word “arbitrate” nor “arbitration.” Mencher v. B. & S. Abeles & Kahn, 84 N.Y.S.2d 718 (Sup. Ct. 1948). Neither is it fatal or improper, contrary to Judge Dyer's holding below, that a representative of one of the contracting parties — be it the architect, engineer or other third-party — is the one designated as the mediator whose decision is to be recognized as final and binding. See Nelley v. Mayor of Baltimore, 224 Md. 1 , 166 A. 2d 234 (1960); Mayor of Baltimore v. Allied Contractors, Inc., 236 Md. 534 , 204 A. 2d 546 (1964).

See also Mayor of Baltimore v. M. A. Talbott & Co., 120 Md. 354 , 87 A. 941 (1913); J. A. La Porte Corp. v. Mayor of Baltimore, 13 F. Supp. 795 (D. Md. 1936); Mayor of Baltimore v. Ault, 126 Md. 402 , 94 A. 1044 (1915). There must, however, be some reliable evidence from the language actually employed in the contract that the parties intended the disputed issue to be the subject of arbitration, the intent of the parties being the ⁶⁰⁶ controlling factor. Pumphrey v. Pumphrey, 172 Md. 323 , 191 A. 235 (1937). The cases upon which appellant relies involve agreements containing clear and unambiguous language and broader delegations of authority than that with which we are presented in this case.

Thus, in Nelley, supra, involving a dispute between a contractor and the City of Baltimore with respect to a claim for additional costs incurred in the construction of a sewer line, there was an actual arbitration clause, specifically designated as such and containing, in part, the following language: “ ‘To prevent disputes and litigations, the Director of Public Works will be the referee in case any question shall arise between the Contractor and the City touching the Contract, and his determination, decision and/or estimate shall be final and conclusive upon the Contractor and shall also be a condition precedent to the right of the Contractor to receive any moneys under the Contract.’ ” 224 Md. at 6 , 166 A. 2d at 236 . (Emphasis added.) It is of more than passing interest that the identical clause was also involved in Allied Contractors, supra, where the court