Kendrick Memorial Hospital, Inc. v. Totten

• Decision Date: 23 July 1980
• Docket Number: No. 1-180A12,1-180A12
• Citation: 408 N.E.2d 130
• Parties: KENDRICK MEMORIAL HOSPITAL, INC., Plaintiff-Appellant, v. Charles A. TOTTEN, Jr., Defendant-Appellee, and John Stapp and Arthur Miller d/b/a Stapp and Miller Construction Company, and Pioneer National Title Insurance Co., Defendants.
• Court: Indiana Appellate Court

Page 130

408 N.E.2d 130

KENDRICK MEMORIAL HOSPITAL, INC., Plaintiff-Appellant, v.Charles A. TOTTEN, Jr., Defendant-Appellee and John Stapp and Arthur Miller d/b/a Stapp and Miller Construction Company, and Pioneer National Title Insurance Co., Defendants.

No. 1-180A12.

Court of Appeals of Indiana, First District.

July 23, 1980.

Jack Rogers, Rogers, Tompkins & Gesse, Franklin, John T. Hume, III, and Michael E. Simmons, Smith & Jones, Indianapolis, for plaintiff-appellant.

Alan H. Lobley, Ice, Miller, Donadio & Ryan, Indianapolis, Young, Gholston & Young, Franklin, for defendant-appellee.

RATLIFF, Judge.

STATEMENT OF THE CASE

Plaintiff-appellantKendrick Memorial Hospital, Inc.(Kendrick) appeals from the granting of a Motion for Summary Judgment in favor of defendant-appelleeCharles A. Totten, Jr.(Totten).The record reflects that all other defendants in this cause have filed separate Motions for Summary Judgment, but rulings on these motions have been stayed pending appeal.

FACTS

The granting of a motion for summary judgment is appropriate only where there is no genuine issue of material fact presented by the case and where the moving party is entitled to judgment as a matter of law.Ind. Rules of Procedure, TrialRule 56(C).To determine whether a genuine issue exists the court will take as true all facts alleged by the non-moving party and will resolve all doubts against the moving party.Krueger v. Bailey, (1980) Ind.App., 406 N.E.2d 665.The facts, therefore, will be viewed in the light most favorable to the non-moving party, appellant Kendrick.

Appellant Kendrick entered into a contract with appellee Totten, an architect, on August 25, 1970, for the design and construction of a forty room proctological hospital.The contract contained the following provisions:

"11.1 All claims, disputes and other matters in question arising out of, or relating to, this Agreement or the breach thereof shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining.This Agreement so to arbitrate shall be specifically enforceable under the prevailing arbitration law.

"11.2 Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association.The demand shall be made within a reasonable time after the claim, dispute or other matter in question has arisen.In no event shall the demand for arbitration be made after institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.

"11.3 The award rendered by the arbitrators shall be final, and judgment may be entered upon it in any court having jurisdiction thereof."

Totten agreed to provide design and construction supervision services, and upon Totten's recommendations Kendrick entered into contracts with the other defendants.

Construction of the hospital was begun on May 20, 1971, but was not completed within the twelve month period required by the contract.Other problems arose during construction involving additional expenses and financing, changes in plans, and the quality of workmanship.On January 16, 1974, Totten executed the following document:

"To: Kendrick Memorial Hospital, Inc.

"To Whom It May Concern:

"I have requested that the check of $5,107.79 being held in escrow by the organization of Kendrick Memorial Hospital, Inc. since the date of 10-10-73, be delivered to me.

"In accepting this check which identifies the completion of payment in full for the services rendered in concern of the supervision of the construction of a 40 bed hospital as per contract dated August 25, 1971, I am accepting this said check with the following provisions:

"1.I recognize that the Hospital has many complaints of unfinished jobs by Best Electric Co. (now defunct, but serviced by holders of a completion bond serviced by Aetna Casualty Insurance Co.(sic)

"2.I recognize that the John Nading Plumbing Co. has several unfinished items in the 40 bed facility and must be completed as quickly as possible.

"3.I recognize that the contractors John Stabb and Arthur Miller have obligations for completion of unfinished items within this 40 bed facility.

"I am aware that the Board of Directors of the hospital (Kendrick Memorial Hospital, Inc.) and the Administrator of this Hospital are at this time, quite concerned with the completion of the project and find this situation to be a distressing factor.In accepting the check of $5,107.79 as payment in full for my services rendered, I actually have not completed my service to this not-for-profit corporation and I hereby obligate myself to see that the new construction is completed to the satisfaction of the Hospital Directors, and the Hospital Administrator.If this matter is not completed within 60 days, I am aware that the Hospital Corporation has the aim of bringing the matter of completion to the Courts of Indiana and I shall become a portion of those so named because of failure to complete contracts as signed August 25, 1971.

/s/ Charles A. Totten,

Jr., A.I.A.

"Attest to Signature:

s/s Inez Sims"

On September 29, 1976, Kendrick filed a civil action against Totten and the other above-named defendants for compensatory damages alleging overcharges, repairs of poor workmanship, lost revenues, and increased financing costs and also for punitive damages alleging wilful and wanton acts of fraud and misrepresentation.All defendants answered alleging the arbitration provision in the contract at issue as an affirmative defense.For approximately two and one-half years thereafter all defendants participated in discovery procedures and preparation for trial.Prior to the first trial date set by the court for August 17, 1978, Totten moved to continue the trial date because his local counsel would be out of town.On May 11, 1979, Totten filed his Motion for Summary Judgment which was granted by the trial court on June 6, 1979, and plaintiff-appellant Kendrick's complaint against Totten was ordered dismissed without prejudice.The court's Order on Motion for Summary Judgment is stated as follows:

"ORDER ON MOTION FOR SUMMARY JUDGMENT

"This came before the Court on the motion of the defendantCharles A. Totten, Jr. for judgment pursuant to Rule 56 on his affirmative defense raising the arbitration clause in the written contract between plaintiff and the defendant Totten.The Court having read the briefs and considered the argument of counsel on June 1, 1979 now sustains such motion for the following reasons:

"1.There is no genuine issue of material fact with respect to whether or not the written contract between plaintiff and the defendant Totten contains the following provisions:

" '11.1 All claims, disputes and other matters in question arising out of, or relating to, this Agreement or the breach thereof shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining.This Agreement so to arbitrate shall be specifically enforceable under the prevailing arbitration law.

" '11.2 Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association.The demand shall be made within a reasonable time after the claim, dispute or other matter in question has arisen.In no event shall the demand for arbitration be made after institution of legal or equitable proceedings based on such claim, dispute or other matter in question which would be barred by the applicate (sic)statute of limitations.'

"2.There is no genuine issue of material fact with respect to whether or not the defendant Totten in his original answer and in his amended answer raised the foregoing provisions of the contract as an affirmative defense.

"3.There is no question but that under IC 34-4-2 (sic) but that the foregoing provision of the contract is valid and binding on the parties or that the plaintiff's claim against the defendant Totten arises out of or relates to such written contract or the breach thereof.

"4.Defendant Totten did not waive his right to rely upon the foregoing provisions when he executed the document dated January 16, 1974, attached to plaintiff's Response to Defendant Totten's Motion for Summary Judgment the execution of which the defendant Totten admits.

"5.Defendant Totten had no obligation to demand arbitration under the foregoing provisions of the contract since he was not making any claim against the plaintiff.

"6.The defendant Totten raised the issue of arbitration in his answer.Since that time the defendant Totten has taken no action which would indicate that he was not continuing to rely upon such defense or otherwise had waived such defense, and the plaintiff had not shown that there is a genuine issue of material fact as to whether or not there was such a waiver.

"For the foregoing reasons plaintiff's complaint against the defendantCharles A. Totten, Jr. should be dismissed without prejudice to the plaintiff pursuing his claim against such defendant under the arbitration provisions of their contract.The Court expressly determines that there is no just reason for delay in the entry of judgment in favor of the defendant Totten and judgment shall be entered accordingly.

"Entered this 6 day of June, 1979.

/s/ Larry J. McKinney___

/s/ JUDGE, Johnson Circuit Court"

ISSUES

On appeal Kendrick raises three issues for our consideration.

I.Whether the trial court erred when it held that the contract between Kendrick and Totten contained a binding arbitration provision and that Totten had properly raised that provision as an affirmative defense in this action.

II.Whether the trial court erred when it held that Totten had not expressly or impliedly waived his right to arbitration under the contract at...