Hanslin Builders, Inc. v. Britt Development Corp.

Decision Date30 March 1983
Citation445 N.E.2d 188,15 Mass.App.Ct. 319
CourtAppeals Court of Massachusetts

Gerard Arthur Powers, Boston, for defendants.

M. Robert Dushman, Boston, for plaintiff.


GREANEY, Justice.

This is an action by the plaintiff, a builder, to recover on two promissory notes executed by Britt Development Corp. and guaranteed by its principal, Edward L. Britt. The notes constituted part payment for the plaintiff's construction of single family houses in the town of Sandwich for the corporate defendant. They were executed on November 13, 1974, simultaneously with an agreement by which the parties agreed, in pertinent part, that the notes, which were to be held in escrow by the plaintiff's attorney, would be delivered after construction was completed on two remaining houses. The case was tried to a jury in the Superior Court. After the defendants rested, the judge allowed the plaintiff's motion for a directed verdict, Mass.R.Civ.P. 50(a), 365 Mass. 814 (1974). Judgment entered in the plaintiff's favor for the balance due on the notes, with interest.

The November 13, 1974, agreement between the parties provided for arbitration of certain disputes enumerated therein. The agreement further provided that the work required of the plaintiff would be deemed "completed" upon fulfillment of the terms of the building contracts and the issuance of certificates of occupancy. Occupancy certificates were issued on January 10, 1975. At some point thereafter, the notes were released from escrow. On March 5, 1975, an agent of the defendants indicated in a memorandum that certain (essentially) minor items needed completion. The memorandum mentioned no dispute. On June 18, 1975, the defendants' attorney wrote to the plaintiff's attorney to advise that payment would not be made on the notes because the houses had not been properly constructed. The letter failed to specify the nature of any of the alleged defects. The final sentence of the letter nominated an individual "to arbitrate any of the foregoing matters disputed," although no demand for arbitration was made or arbitrable dispute stated. The plaintiff commenced this action to collect on the notes on September 16, 1975. The defendants filed a motion to dismiss on October 14, 1975, alleging that the arbitration clause deprived the court of subject matter jurisdiction and that the complaint failed to state a cause of action because of the clause. The motion was denied. On November 18, 1975, the defendants moved to stay proceedings "pending arbitration." That motion was denied. The case was thereafter tried before a master (who found for the plaintiff), and again before a jury (that last proceeding resulting in the present judgment for the plaintiff). The defendants now claim that the judgment should be set aside and the case remanded for arbitration because the rulings on the motions erroneously denied them their rights under the agreement.

1. The motion to dismiss was correctly denied. "It is well settled that a clause providing for the resolution by arbitration of disputes arising under an agreement is not jurisdictional, Morales Rivera v. Sea Land of P.R., Inc., 418 F.2d 725, 726 (1st Cir.1969), and that the parties waive the arbitration clause if ... they proceed to [litigate] the issues in dispute without making a [proper] request for arbitration," Tumim v. Palefsky, 7 Mass.App. 847, 384 N.E.2d 1253 (1979), and cases cited. In addition to the fact that the arbitration clause could be waived, the motion judge could have noted that the parties had agreed, in the event of a default (such as the failure to pay on the notes), that they could pursue "all rights and remedies which the law may provide ...." In the absence of an adequate demand for arbitration by either party or recourse to proceedings to compel arbitration (see discussion, infra ), the judge could reasonably conclude that the complaint stated a claim on the notes sufficient to withstand a motion under Mass.R.Civ.P. 12(b)(6), 365 Mass. 755 (1974), Nader v. Citron, 372 Mass. 96, 104, 360 N.E.2d 870 (1977), and general post-rules pleading principles, see Charbonnier v. Amico, 367 Mass. 146, 152-153, 324 N.E.2d 895 (1975); and that the claim was not precluded by the arbitration clause.

There was also no error in the denial of the motion for a stay. Despite the last sentence of the defendants' June 18, 1975, letter, arbitration was never expressly demanded. The defendants did not seek an order to compel arbitration under G.L. c. 251, § 2(a ), and there is nothing in the record to indicate that the motion judge or the parties treated the motion for a stay as a motion for an order to compel arbitration. Compare Danvers v. Wexler Constr. Co., --- Mass.App. ---, --- & n. 3, Mass.App.Ct.Adv.Sh. (1981) 1258, 1260 & n. 3, 422 N.E.2d 782. When the motion for a stay was filed, the judge could have found that no proper claim for arbitration had been made, that no arbitration was pending, and that no order or application for an order to compel arbitration had been made under § 2(a). See G.L. c. 251, § 2(d ), inserted by St.1960, c. 374, § 1, providing that an action "shall be stayed if an order for arbitration or an application therefor has been made under [§ 2(a) ]." We note also that if an order to compel arbitration had been sought under G.L. c. 251, § 2(a ), and denied, it would have been immediately appealable under G.L. c. 251, § 18(a )(1). We think it contrary to the purposes of the arbitration statute and the policy of finality to allow a party to challenge the judgment on the basis of an arbitration clause when he has not pursued the clearly defined remedy provided by G.L. c. 251, § 2(a ), and has instead presented the case to a master and thereafter to a jury. See Tumim v. Palefsky, supra. Cf. Powell Gen. Contr. Co. v. Marshfield Housing Authy., 7 Mass.App. 763, 767-768, 390 N.E.2d 267 (1979).

2. The defendants argue that the judge improperly excluded evidence of the plaintiff's failure to arbitrate, which had been offered to show that the plaintiff had failed to abide by the November 13,...

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7 cases
  • Lamell Lumber Corp. v. Newstress Intern.
    • United States
    • Vermont Supreme Court
    • August 31, 2007
    ...failure to arbitrate divests a trial court of jurisdiction over a breach of contract claim."); Hanslin Builders, Inc. v. Britt Dev. Corp., 15 Mass. App.Ct. 319, 445 N.E.2d 188, 190 (1983) ("It is well settled that a clause providing for the resolution by arbitration of disputes arising unde......
  • Home Gas Corp. of Massachusetts, Inc. v. Walter's of Hadley, Inc.
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • January 11, 1989
    ...1, 14, 184 N.E. 279 (1933) (both decided before adoption of Uniform Arbitration Act). See also Hanslin Builders, Inc. v. Britt Dev. Corp., 15 Mass.App.Ct. 319, 321-322, 445 N.E.2d 188 (1983) (decided after adoption of Uniform Arbitration A court, thus, must consider "what set of facts will ......
  • Borah v. McCandless
    • United States
    • Idaho Supreme Court
    • April 2, 2009
    ...failure to arbitrate divests a trial court of jurisdiction over a breach of contract claim."); Hanslin Builders, Inc. v. Britt Dev. Corp., 15 Mass. App.Ct. 319, 445 N.E.2d 188, 190 (1983) ("It is well settled that a clause providing for the resolution by arbitration of disputes arising unde......
  • Bishara v. Brown, Daltas & Associates, Inc.
    • United States
    • Appeals Court of Massachusetts
    • December 19, 1985
    ...Arabia. The judge denied the motion, and the defendant appealed. See G.L. c. 251, § 18(a)(1); Hanslin Builders, Inc. v. Britt Development Corp., 15 Mass.App. 319, 322, 445 N.E.2d 188 (1983). The plaintiff, citing J. Dunn & Sons, Inc. v. Paragon House of New England, Inc., 110 N.H. 215, 265 ......
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