Iser Elec. Co., Inc. v. Fossier Builders, Ltd.

• Decision Date: 16 May 1980
• Docket Number: No. 79-706,79-706
• Citation: 84 Ill.App.3d 161,405 N.E.2d 439,39 Ill.Dec. 686
• Parties: , 39 Ill.Dec. 686 ISER ELECTRIC COMPANY, INC., Plaintiff, v. FOSSIER BUILDERS, LTD., Defendant-Counterplaintiff-Appellee, and Paul D. Carrier and Joan C. Carrier, Defendants-Counterdefendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 439

405 N.E.2d 439

84 Ill.App.3d 161, 39 Ill.Dec. 686

ISER ELECTRIC COMPANY, INC., Plaintiff, v. FOSSIER BUILDERS, LTD., Defendant-Counterplaintiff-Appellee and Paul D. Carrier and Joan C. Carrier Defendants-Counterdefendants-Appellants.

No. 79-706.

Appellate Court of Illinois, Second District.

May 16, 1980.

Ross, Hardies, O'Keefe, Babcock & Parsons, Keith Schoeneberger, Chicago, for defendants-counterdefendants-appellants.

Pierce, Daley & Penn, Richard J. Daley, Chicago, for defendant-counterplaintiff-appellee.

NASH, Justice:

This is an interlocutory appeal from an order of the trial court denying a motion to stay proceedings on a counter-claim or, alternatively, to direct arbitration of its issues between defendants.

Defendant-Counterplaintiff, Fossier Builders, Ltd. (hereinafter referred to as Fossier), entered into a contract on December 10, 1977, with defendant-counterdefendants, Paul D. Carrier and Joan C. Carrier (hereinafter referred to as the Carriers), for the construction of a home in Burr Ridge, Illinois, at a cost of $198,441. The contract contained a general arbitration clause which provided that "all claims, disputes and other matters in question between the Contractor (Fossier) and the Owner (Carriers) arising out of, or relating to, the Contract, Documents or the breach thereof * * *, shall be decided by arbitration * * *."

Fossier subcontracted the electrical work on the home to plaintiff, Iser Electric Company, Inc., agreeing to pay plaintiff $6,152 for these services. On July 28, 1978, after construction by Fossier and various subcontractors had commenced but before completion of the building, the Carriers terminated their contract with Fossier pursuant to a provision of it which permitted the owner to do so if the contractor was not performing in accordance with the contract. This provision also allowed the owner to take possession of the site, materials and equipment and finish the work by other means. It is alleged that after termination of their agreement with Fossier the Carriers entered into a new contract with plaintiff for completion of the electrical work on the house.

On October 3, 1978, plaintiff brought this action against both Fossier and the Carriers, in separate counts of the complaint, seeking damages for breach of the contracts which each of them had with plaintiff. It is alleged the balance due under their respective contracts for electrical work performed by plaintiff on the premises to be $4,050 and recovery of that sum is sought from each defendant.

Fossier answered plaintiff's complaint and on June 14, 1979, filed a counterclaim against the Carriers seeking damages for their alleged breach of the construction contract entered into between these parties in December 1977 by wrongfully terminating it. The Carriers then filed a motion pursuant to section 2(b) of the Uniform Arbitration Act (Ill.Rev.Stat.1977, ch. 10, par. 102(b)) for an order severing the counterclaim or staying its prosecution pending arbitration, as provided for in their contract with Fossier, and to require Fossier to proceed by arbitration with its claim against the Carriers. The trial court denied the Carriers' motion and they appeal.

In denying Carrier's request to compel arbitration the trial court found it would be counter-productive to enforce the arbitration agreement between Fossier and the Carriers as, under the circumstances of this case, that would not result in economy of litigation and would create the possibility of conflicting findings by an arbitrator and the court. It noted that the plaintiff would not be bound by the arbitration agreement between these defendants.

The Carriers contend the trial court erred in its determination that the arbitration clause of their contract with Fossier did not require Fossier to prosecute its claims against them through arbitration. Fossier contends, however, that the court properly balanced the policies furthered by arbitration with the interests of the several parties and the policies of the civil practice act in declining to sever the counterclaim and compel arbitration in this multi-party litigation.

Section 2(a) of the Uniform Arbitration Act (Ill.Rev.Stat.1977, ch. 10, par. 102(a)) provides:

"(a) On application of a party showing an (arbitration) agreement * * *, and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied."

It is well established that parties are only bound to submit to arbitration those issues which by clear language they have agreed to arbitrate and that such agreements will not be extended by construction or implication. (Flood v. Country Mutual Insurance Co. (1968), 41 Ill.2d 91, 242 N.E.2d 149; see also Farris v. Hedgepeth (1978), 58 Ill.App.3d 1040, 16 Ill.Dec. 311, 374 N.E.2d 1086; Donoghue v. Kohlmeyer & Co. (1978), 63 Ill.App.3d 979, 20 Ill.Dec. 794, 380 N.E.2d 1003; Silver Cross Hospital v. S.N. Nielsen Co. (1972), 8 Ill.App.3d 1000, 291 N.E.2d 247; Harrison F. Blades, Inc. v. Jarman Memorial Hospital Building Fund, Inc. (1969), 109 Ill.App.2d 224, 248 N.E.2d 289.) The issue of whether a dispute is within the scope of an arbitration clause should be determined early and be controlled by judicial guidelines (Farris v. Hedgepeth, 58 Ill.App.3d at 1043, 16 Ill.Dec. at 313, 374 N.E.2d at 1088; Borg. Inc. v. Morris Middle School District No. 54 (1972), 3 Ill.App.3d 913, 916, 278 N.E.2d 818, 821; Sections 2(b) and 12(a)(5) of the Uniform Arbitration Act (Ill.Rev.Stat.1977, ch. 10, pars. 102(b) and 112(a)(5)).

It is clear in the present case that the issues between Fossier and the Carriers asserted in the counterclaim are within the scope of their arbitration agreement. It alleged that the Carriers wrongfully breached the construction contract by discharging Fossier and damages are sought. These parties had agreed to submit to arbitration "all claims, disputes and other matters in question * * * arising out of, or relating to, the contract, documents or the breach thereof * * *".

Having determined that the dispute between defendants is within the scope of their arbitration agreement we must next decide whether this case, or some part thereof, should have been stayed by the trial court pending arbitration.

Section 2(d) of the Uniform Arbitration Act (Ill.Rev.Stat.1977, ch. 10, par. 102(d)) provides that:

"(d) Any action or proceeding involving an issue subject to arbitration shall be stayed if an order for arbitration or an application therefor has been made under this Section or, if the issue is severable, the stay may be with respect thereto only."

Fossier acknowledges that no Illinois reviewing court has considered its contention that a court may properly refuse to compel arbitration involving some, but not all, of the parties to multi-party litigation. It relies primarily on Prestressed Concrete, Inc. v. Adolfson & Peterson, Inc. (1976), 308 Minn. 20, 240 N.W.2d 551 to support its argument that a court need not enforce an arbitration agreement in a multi-party action where some, but not all, of the parties are contractually bound to arbitration. In Prestressed a subcontractor brought an action...