Carter Steel & Fabricating Co. v. Danis Bldg. Constr. Co.

• Decision Date: 12 February 1998
• Docket Number: No. 8-97-26,8-97-26
• Citation: 126 Ohio App.3d 251,710 N.E.2d 299
• Parties: CARTER STEEL & FABRICATING COMPANY, Appellee, v. DANIS BUILDING CONSTRUCTION COMPANY et al., Appellants.
• Court: Ohio Court of Appeals

Page 251

126 Ohio App.3d 251

710 N.E.2d 299

CARTER STEEL & FABRICATING COMPANY, Appellee, v. DANIS BUILDING CONSTRUCTION COMPANY et al., Appellants.

No. 8-97-26.

Court of Appeals of Ohio Third District, Logan County.

Decided Feb. 12, 1998.

McFadden, Winner & Savage, and James S. Savage, Columbus, for appellee.

Kegler, Brown, Hill & Ritter, Donald W. Gregory and Christopher J. Weber, Columbus, for appellants.

HADLEY, Judge.

Defendants-appellants, Danis Building Construction Company ("Danis") and the University of Dayton, appeal the judgment of the Logan County Common Pleas Court denying Danis's motion to dismiss and/or stay the proceedings pending arbitration. For the reasons that follow, we affirm the judgment of the trial court.

In June 1995, Danis and plaintiff-appellee, Carter Steel & Fabricating Company ("Carter"), entered into a contract whereby Carter agreed to supply and install steel for the construction of the Joseph E. Keller Hall School of Law on the University of Dayton campus. Danis was the general contractor for the project, and Carter was one of the subcontractors. As part of the agreement, the parties entered into an arbitration agreement.

Carter performed under the contract. The University of Dayton paid Danis for the steel. Danis, however, refuses to pay Carter $116,057 owed under the base contract. ¹ Carter contends that Danis refuses to pay the remaining base contract. Carter contends that Danis refuses to pay the remaining $116,057 because Danis is using that amount as a set-off allegedly owed by Carter to Kenhill Construction Company ("Kenhill"). ² Kenhill is a subsidiary of Danis.

On June 9, 1997 Carter filed a complaint against Danis in the Logan County Common Pleas Court for breach of contract and for damages under R.C. 4113.61, Ohio's Prompt Payment Act. ³ Danis filed a motion to dismiss the action, or, in the alternative, to stay the proceedings pending arbitration. Carter filed a motion for partial summary judgment seeking judgment for $116,057. The trial court denied Danis's motion to dismiss and/or to stay the proceedings. This appeal follows with Danis asserting one assignment of error:

"The trial court erred in denying appellants' motion to dismiss and/or stay pending arbitration."

Danis contends that the contract between the parties contains a mandatory arbitration provision to resolve any disputes involving damages claimed by the subcontractor (Carter) against the general contractor (Danis). Carter does not dispute the existence of the arbitration provision. Rather, Carter contends that a claim for payment under the base contract is not a matter referable to arbitration under the agreement.

The contract the parties entered into in June 1995 contained a section entitled "Disputes and Settlement." The section of the agreement in dispute provides the following:

"30.4 If any claim, dispute or other matter in question arises between Danis and Subcontractor with respect to interpretations of this Agreement, extra work or other charges in Subcontractor's Work ordered by Danis, or other disputes involving delays or damages claimed by Danis against Subcontractor or by Subcontractor against Danis, and if any such claim, dispute or other matter (i) is not [a covered dispute under] the provisions of Section 30.1 and (ii) is not resolved [within a reasonable time after a settlement meeting], but in no event later than the date of final payment, either party may file a demand for arbitration." (Emphasis added.)

The trial court found that the arbitration provision was limited in scope, and "was not intended to be used to compel payment of money due under the base contract."

" 'It is the policy of the law to favor and encourage arbitration and every reasonable intendment will be indulged to give effect to such proceedings and to favor the regularity and integrity of the arbitrator's acts. * * *' Campbell v. Automatic Die & Products Co. (1954), 162 Ohio St. 321, 329, 55 O.O. 195, 198, 123 N.E.2d 401, 405, certiorari denied (1955), 349 U.S. 929, 75 S.Ct. 771, 99 L.Ed. 1260. 'Arbitration is favored because its purpose is to "avoid needless and expensive litigation.' " Fairfield Eng. Co. v. Anchor Hocking Corp. (Apr. 10, 1986), Marion App. No. 9-84-37, unreported, 1986 WL 4367, quoting Springfield v. Walker (1885), 42 Ohio St. 543, 546, 1885 WL 49." Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 412, 701 N.E.2d 1040, 1044. In its attempt to encourage arbitration the General Assembly provided in R.C. 2711.02:

"If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement * * *." (Emphasis added.)

However, this presumption for arbitration is not absolute. Stillings v. Franklin Twp. Bd. of Trustees (1994), 97 Ohio App.3d 504, 508, 646 N.E.2d 1184, 1186-1187.

We must determine whether the trial court properly held that the issue in this action (complete payment under the base contract) was not referable to arbitration under the agreement between Danis and Carter.

The standard of review for this case is the "abuse of discretion" standard. Harsco Corp. v. Crane Carrier Co. (1997), 122 Ohio App.3d 406, 701 N.E.2d 1040; see, also, Bedford City School Dist. v. Trane Co. (Mar. 20, 1997), Cuyahoga App. No. 71024, unreported, 1997 WL 127194; Phillips v. Lee...