G-BOYS EXCAVATING, INC. v. CHOATE CONSTRUCTION CO.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1243-05T21243-05T2

G-BOYS EXCAVATING, INC.,

Plaintiff-Respondent,

v.

CHOATE CONSTRUCTION COMPANY,

Defendant-Appellant.

____________________________________

 

Submitted March 21, 2006 - Decided April 4, 2006

Before Judges Skillman and Payne.

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3487-05.

Pepper Hamilton, attorneys for appellant (Raymond L. DeLuca, Jeffrey A. Carr and Stephanie L. Merk, of counsel; Mr. Carr and Ms. Merk, on the brief).

Archer & Greiner, attorneys for respondent (Thomas A. Muccifori and Mark G. Toscano, on the brief).

PER CURIAM

Defendant Choate Construction Company was the general contractor for a construction project in Delanco Township. Defendant entered into a subcontract with plaintiff G-Boys Excavating, Inc. to do site and utilities work for the project. Numerous change orders were executed by the parties during the performance of work under this contract.

On March 4, 2004, plaintiff made a written request for $122,561.80, representing a portion of the work performed under the change orders. After the owner refused to pay defendant for this additional work, defendant allegedly denied plaintiff's claim.

Plaintiff then filed this action in the Law Division seeking the recovery of $278,633.95 it claimed to be owed under change orders approved by defendant. Defendant moved to dismiss the complaint on the ground that the parties' contract required any claim by plaintiff under the contract to be resolved by arbitration. The trial court denied the motion, concluding that the arbitration clause of the contract was ambiguous and therefore did not require arbitration of plaintiff's claim.

We granted defendant's motion for leave to appeal from the order denying its motion to dismiss. We now reverse and direct that the parties' dispute be submitted to arbitration in accordance with the arbitration clause of the contract.

The arbitration clause, contained in Article X, section (A) of the contract, provides in pertinent part:

Any claim, dispute, or controversy between Contractor and Subcontractor, shall be conclusively resolved and settled as follows:

Subcontractor shall conclusively be bound by and abide by Contractor's decision, unless Subcontractor shall timely commence arbitration proceedings in strict accordance with the following provisions:

i. If Subcontractor decides to appeal the decision of the Contractor, then the controversy shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association prevailing at that time, and the arbitration decision shall be final and binding upon both parties[.]

Notwithstanding this clause's clear and unequivocal requirement that any claim by plaintiff shall first be submitted to defendant, and then, if defendant rejects the claim, "shall be decided by arbitration," the trial court concluded that this arbitration provision was rendered ambiguous by another provision of the contract, Article X, section (E), which deals with the payment of attorneys' fees and litigation expenses to the "prevailing party" in the event of arbitration proceeding or lawsuit between the parties. This provision states:

Should either party to this Agreement demand arbitration or institute a lawsuit to enforce any of the provisions hereof, to protect its interest in any matter arising under the Subcontract, to collect damages for the breach of the Subcontract, or to recover on a surety bond given by a party to the Subcontract, the prevailing party shall be entitled to recover, and the losing party agrees to pay, all reasonable attorneys' fees, costs, charges, and expenses expended or incurred therein.

We conclude that Article X, section (E) does not introduce any ambiguity into the clear and unequivocal requirement of Article X, section (A) that any claim by plaintiff against defendant must be submitted to arbitration. Article X, section (A) specifically provides that the sole method for resolution of any claim plaintiff may have against defendant is arbitration. Plaintiff's claims for additional payments under change order clearly constitute a "claim, dispute, or controversy between Contractor and Subcontractor" within the intent of this section of the contract.

In contrast, Article X, section (E) does not deal with the forum for resolution of disputes between the parties. Rather Article X, section (E) is what litigators commonly refer to as a fee-shifting provision. It provides that if there is any proceeding for the resolution of any dispute between the parties, whether the forum for resolution of the dispute is an arbitration or a lawsuit, the prevailing party shall be entitled to recover attorneys fees and other litigation expenses against the losing party. As defendant notes, there are various kinds of legal proceedings that could be brought by the parties to the contract that would not be subject to the mandatory arbitration provision of Article X, section (A), and therefore could be the subject of a "lawsuit," including an action by either party for confirmation or vacation of an arbitration award, an action such as this one in which plaintiff has attempted to bypass the arbitration clause of the contract, or since Article X, section (A) does not require arbitration of any claim defendant may have against plaintiff, a breach of contract action by defendant against plaintiff. Thus, Article X, section (E) provides for the award of attorneys fees and other litigation expenses to the prevailing party in any legal proceedings between the parties, and does not conflict with or introduce any ambiguity into Article X, section (A), which mandates arbitration of any claim plaintiff may have against defendant.

Plaintiff also argues that the dismissal of plaintiff's complaint should be affirmed because "the arbitration provision in Article X, Section (A) has not been triggered, and it would be inequitable to allow Choate to escape its obligation to G-Boys through its own inaction." This argument is not properly before us. It is well-established that "any question as to whether a party has satisfied the procedural preconditions of arbitration, . . . sometimes referred to as a question of 'procedural arbitrability,' generally should be decided by arbitrators rather than a court." Commerce Bank, N.A. v. DiMaria Construction, Inc., 300 N.J. Super. 9, 14 (App. Div.) (internal citations omitted), certif. denied, 151 N.J. 73 (1997), cert. denied, 522 U.S. 1116, 118 S. Ct. 1053, 140 L. Ed. 2d 116 (1998). Plaintiff's argument that defendant's alleged failure to respond to its claim prevented the triggering of the arbitration requirement of the contract presents an issue regarding a procedural precondition of arbitration that must be decided by the arbitrator.

Accordingly, the order denying defendant's motion to dismiss is reversed, and the parties are directed to submit their dispute to arbitration.

 

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A-1243-05T2

April 4, 2006