Schaper & Associates v. Soleimanzadeh

WILNER, Chief Judge. Appellants appeal from a judgment of the Circuit Court for Montgomery County confirming an arbitration award against them in the amount of $104,045. They complain that the award was invalid and should not have been confirmed because they were not given proper notice of the arbitration. We agree that the award was invalid when made and could, and presumably would, have been vacated had a timely petition to vacate it been filed.

But such a petition was not filed, and, for that reason, the court did not err in confirming the award. The dispute arose from an agreement under which appellants were to construct a two-story residence for appellees for the sum of $542,548. The contract was on the standard AIA form of contract between owners and contractors with two major modifications: (1) the clause incorporating the AIA General Conditions, in which appears the standard AIA arbitration clause, was deleted, and (2) a special arbitration clause was added. The arbitration clause written into the contract provided, in relevant part: “It is understood by all that in the event of disputes between the Owner and the Contractor all disputes will be decided by Arif Hodzic [the architect employed by the ⁵⁵⁷ owners] as an arbitrator____ Arbitrator’s decision will be final.

Owner or Contractor will not be allowed to take this decision to any higher court.” Signing the agreement as Contractor were Steve Schaper c/o Schaper Associates, by Steve Schaper, President, pnd Steve Schaper and Donald Schaper, personally. In an affidavit filed in their action to confirm the arbitration award, appellees asserted that “[d]uring late 1987 and early 1988, disputes arose between us and the Schapers and we requested that Mr. Hodzic arbitrate the dispute” and that “Mr. Hodzic arbitrated the dispute and determined that the contract had been breached by the Schapers and that they owed [us] $104,045.95.” The record also shows that, on March 22, 1988, Mr. Hodzic wrote a letter to Steve Schaper, at Schaper Associates, that he said was “in response to the dispute between the contractors, Steve and Donald Schaper of Schaper Associates and the owners____” In his letter, Mr. Hodzic stated, among other things, that: (1) the contractor stopped work after performing $233,-977 worth of work; (2) at that time, the architect had certified for payment $210,579, with the additional $23,398 to be retained until the end of the contract; (3) the contractor had failed to pay subcontractors and suppliers, as a result of which the owners had to pay them $283,306; (4) an additional $31,318 was owed but not yet paid to subcontractors and suppliers; (5) the owners asked him to arbitrate “and decide the exact amount of money the contractor owed them”; (6) “[o]n the basis of evidence provided by the owner,” the contractor owes $104,045, this being the difference between the $210,579 owed to the contractor and the $314,-625 paid or owed to subcontractors and suppliers; (7) the contractor “shall pay to the owner the entire amount at this time”; ⁵⁵⁸ (8) when the owner completes the building “we will determine at that time if there is any money left to be paid to the contractor or if the contractor will have to pay additional money to the owner”; (9) many mistakes had been discovered in the contractor’s work and corrective work was found to be necessary; (10) when the complete cost is determined, “we will prepare a final list of who is responsible for each cost”; and (11) “[t]he contractor is invited to submit any and all evidence for a counter claim. In the event that Mr. Hodzic does not receive a claim by April 10, 1988, the owner’s claim will stand and be considered as the valid one by all parties.” A copy of this letter was hand-delivered to Steve Schaper on March 24, 1988. There is no indication that Donald Schaper was given a copy of it prior to April 10.

When no counterclaim was received by April'10, the owners and the architect regarded the award as final. It was this award that the owners