SC&A Construction, Inc. v. Potter.
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THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
SC&A CONSTRUCTION INC.,
Plaintiff,
v.
CHARLES POTTER, JR., and
VELDA C. JONES-POTTER,
Defendants.
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C.A. No.: 12L-09-022 FSS
E-FILED
Submitted: December 21, 2012
Decided: December 21, 2012
MEMORANDUM OPINION AND ORDER
Upon Plaintiff’s Motion to Dismiss Counterclaim in
Favor of Arbitration – GRANTED
Upon Plaintiff’s Request for Sanctions - DENIED.
This concerns how to litigate Contractor-Plaintiff’s mechanics’ lien and
Homeowner-Defendants’ compulsory counterclaim. Allegedly, the disputed work
was performed under a standard form construction agreement requiring binding
arbitration, but also allowing a mechanics’ lien’s filing.1 Consistent with the
Agreement’s plain terms, the contractor asks that its cautionary lien remain in place
until the entire dispute is resolved through binding arbitration. Homeowners counter
that one of them did not sign the Agreement. The court will address that first.
1
AIA Document A107™ - 2007 Standard Form of Agreement Between Owner and
Contractor for a Project of Limited Scope.
I.
From the pleadings and today’s oral argument, it appears Defendants
hired Plaintiff, a licensed contractor, to perform specific, extensive work on
Defendants’ house in North Wilmington, including installing a new roof. The
contractor and one defendant, Velda Jones-Potter, signed an AIA contract2 on May
12, 2011. It further appears this was a relatively big job, coming to over $215,000 and
spanning ten months. So far, nothing supports an inference that Charles Potter did not
know that substantial work was being performed by Plaintiff, month-after-month, on
the house titled in his and his wife, Velda Jones-Potter’s names. Potter has not plead
that he was unaware. At this point, it is unreasonable to assume Potter thought a
contractor had torn the roof off his house, re-framed the attic, installed a new roof
and did interior work, all without a written contract. The only contract mentioned in
the Complaint and Answer is the AIA agreement.
So far, Potter has not moved to dismiss. He answered the complaint and
he appears to be participating in the litigation relying, at least in part, on the
Agreement. His counterclaim seems to rely on the Agreement and, again, he has not
plead that he was not aware of it, much less that another agreement covered his
contractual relationship apart from and different than the Agreement his wife signed.
2
Id.
2
As this litigation plays-out, Charles Potter may show he was in the dark,
or otherwise disagreed with the Agreement bearing his wife and co-owner’s
signature. Potter argued today that his signature does not appear on the Agreement
because “he did not agree to these specific provisions.” For now, however, it is
reasonable to believe that even if Potter did not sign the contract, Potter knew the
work on his house was being performed under the Agreement and his missing
signature, viewed in context, is an insignificant omission.
Thus, at this initial stage, the court will proceed on the untested
assumption that by word or conduct, both Defendants adopted the Agreement. Put
another way, for now, the court accepts that Potter either acquiesced to the
Agreement, or he is estopped from denying it. As discussed below, the case will be
referred to compulsory arbitration and the arbitrator may revisit how it is that Potter
did not sign the Agreement.
II.
Generally, the Agreement requires that disputes be submitted first to the
project’s architect, then mediation, then binding arbitration, if necessary. Mediation
is in progress. If it comes to arbitration, the award may be entered as an enforceable
judgment. The Agreement also allows the filing of a mechanics’ lien.3
3
See §§ 5.1, 21.1-21.7.
3
Specifically, the Agreement provides:
§ 5.1 BINDING DISPUTE RESOLUTION
For any claim subject to, but not resolved by,
mediation pursuant to Section 21.3, the
method of binding dispute resolution shall be
as follows: . . . Arbitration pursuant to Section
21.4 of this Agreement[.]
Section 21.3, referred to in § 5.1, lays out the dispute resolution
procedure:
§ 21.3 The parties shall endeavor to resolve
their disputes by mediation . . . .[T]he request
may be made concurrently with the binding
dispute resolution but, in such an event,
mediation shall proceed in advance of binding
dispute resolution proceedings, which shall be
stayed pending mediation for a period 60 days
from the date of filing . . . .
Section 21.4, also referred to in § 5.1, ultimately provides for binding
arbitration:
§ 21.4 If the parties have selected arbitration
as the method for binding dispute resolution
in the Agreement, any claim, subject to, but
not resolved by, mediation shall be subject to
arbitration . . . . The award rendered by the
arbitrator . . . . shall be final, and judgment
may be entered upon it in accordance with
applicable law in any court having
jurisdiction thereof.
4
Section 21.2, however, contemplates Contractor’s filing a mechanics’
lien:
§ 21.2 If a claim, dispute or other matter in
question relates to or is the subject of a
mechanic’s lien, the party asserting such
matter may proceed in accordance with
applicable law to comply with the lien notice
or filing deadlines.
In summary, the Agreement unambiguously calls for mediation followed
by compulsory arbitration of “their disputes,” but also allows timely filing of a
mechanics’ lien. The Agreement, however, does not directly address the procedure
to follow where, as here, the contractor files a mechanics’ lien and the owner
responds with a compulsory counterclaim.4
III.
It has long been held that a mechanics’ lien, which did not exist under
common law, is a specific statutory remedy in rem.5 The lien is against a thing, not
a person. If Contractor prevails, it will have a lien on the property, not a judgment
against the property’s owners.
Over 100 years ago, in 1906, Judge Woolley discussed the arbitrabilty
4
See Stockman v. McKee, 71 A.2d 875, 881 (Del. Super. 1950) (“A permissive
counterclaim . . . is not a proper matter of pleading in a mechanic’s lien action.”).
5
Id. at 880.
5
of mechanics’ liens.6 Basically, he explained that a mechanics’ lien’s filing gave the
contractor a cautionary lien, which stayed on the record until the case was decided at
trial7 or, if the parties agreed, by arbitration or referees. Woolley is clear that if the
agreement, as here, refers all claims to alternative dispute resolution, that reference
includes the mechanics’ lien along with the attendant contractual disputes.8
In closing, this decision in no way limits the arbitrator’s authority to
reach any issue, including factual questions relating to arbitrability based on the
partially-signed contract, or otherwise. If they choose, Defendants may argue to the
arbitrator that each defendant had an individual agreement with Contractor, or
however Defendants put it.
In the end, if the arbitrator finds for Contractor, the lien will remain of
record until it is satisfied. If the arbitrator finds for Defendants, the lien will be
discharged and a judgment on the counterclaim, if damages are awarded, will be
entered against Contractor.
6
2 Victor B. Woolley, Woolley’s Practice in Civil Actions, §§ 1386, et seq. (1906).
7
Id. at § 1403 (“The effect of filing the statement is to create a lien upon the premises . . .
. This lien, however, remains cautionary, subject to be discharged or made permanent by the final
determination of an action scire facias.”).
8
Id. at §§ 1338, 1410.
6
IV.
As for sanctions, Defendants’ argument that the Agreement does not
apply to one of them was not frivolous and it was rooted in Plaintiff’s sloth. The court
will not make Defendants pay because Plaintiff did not get its paperwork in order.
Plaintiff’s request for sanctions is DENIED.
For the foregoing reasons, Plaintiff’s motion to dismiss Defendants’
counterclaim in favor of arbitration is GRANTED, and the entire case is
REFERRED to compulsory arbitration.
IT IS SO ORDERED.
/ s/ Fred S. Silverman
Judge
cc: Prothonotary
Donald Logan, Esquire
Samuel L. Guy, Esquire
7
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