Litton Bionetics, Inc. v. Glen Const. Co., Inc.

• Decision Date: 27 November 1981
• Docket Number: No. 5,5
• Citation: 437 A.2d 208,292 Md. 34
• Parties: LITTON BIONETICS, INC. v. GLEN CONSTRUCTION COMPANY, INC. et al.
• Court: Maryland Court of Appeals

Page 34

292 Md. 34

437 A.2d 208

LITTON BIONETICS, INC. v. GLEN CONSTRUCTION COMPANY, INC. et al.

No. 5.

Court of Appeals of Maryland.

Nov. 27, 1981.

Thomas C. Wheeler, Washington, D. C. (Pettit & Martin, Washington, D. C., Gerard E. Mitchell and Stein, Mitchell & Mezines, Rockville, on the brief), for appellant.

J. Richard Margulies, Washington, D. C. (Braude, Margulies, Sacks & Rephan, Chartered, Washington, D. C., on the brief), for appellee, Glen Const. Co., Inc.

Patrick J. Attridge, John A. King, Rockville, on the brief, for other appellee, A. Kent Dickey.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, COLE, DAVIDSON and RODOWSKY, JJ.

RODOWSKY, Judge.

The principal question presented in this case is whether a circuit court has the power to order that the arbitration of a dispute between the owner of a newly constructed building and the building's architect be consolidated with the arbitration of disputes between the owner and the building's general contractor. For reasons which follow, we shall hold that a circuit court is so empowered under the Maryland Uniform Arbitration Act, Md. Code (1974, 1980 Repl. Vol.), §§ 3-201 through 3-234 of the Courts and Judicial Proceedings Article.

Appellant, Litton Bionetics, Inc. (Litton), is the owner of a toxicology laboratory building in Rockville, Maryland for which one of the appellees, Dickey & Dickey (Dickey) of Fairfax City, Virginia, was architect. The architectural services agreement with Litton contains an arbitration provision which in relevant part reads:

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 Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law.

The other appellee, Glen Construction Company, Inc. (Glen), of Rockville, was the general contractor for the project. Its construction contract with Litton contains an arbitration provision which includes the same language as that quoted above. ¹ Litton authored both agreements.

Completion of the building was in December 1978. On April 25, 1980, Glen filed with the American Arbitration Association (AAA) a demand for arbitration against Litton in which Glen claimed $163,989 for delay. Litton, on June 16, answered and counterclaimed for $1,178,570, the largest components of which related to epoxy coating on concrete floors, the HVAC system, and claims of energy losses, lost profits and unabsorbed overhead.

On July 3, 1980, the AAA sent Glen and Litton a list of possible arbitrators "from which three shall be appointed," in accordance with § 13 of the AAA rules. ² It appears that the AAA exercised its discretion in determining that the Litton-Glen arbitration would be before a panel of three. ³

Glen's July 22 reply to the Litton counterclaim was a five-page letter. It referred in part to inspections of the epoxy coating and of the HVAC system by the architect's representatives. It contained a statement that Litton "should have specified a heavier duty class of supply and exhaust fans than the contract, in fact, specified."

Thereafter Litton, on September 8, 1980, filed with the AAA a demand for arbitration against Dickey alleging negligence and seeking damages, net of retainage, of $56,761.28. In its covering letter to the AAA, Litton pointed out that its demand against Dickey involved the same construction project as that in the Glen-Litton arbitration and advised that Litton was "presently attempting to obtain the consent of the other parties to consolidate these actions for hearing in one proceeding." When Glen objected to the consolidation, the AAA on September 22 wrote to all parties stating that, "(a) bsent the agreement of all parties or applicable contractual provisions authorizing joint arbitrations, the Association must administer the cases separately." Selection of the three-person panel for the Glen-Litton arbitration was completed by October 9, 1980 as the result of the absence of any objection to a person selected by the AAA to replace a previously selected arbitrator who had withdrawn.

Litton amended its demand for arbitration with Dickey on October 23, 1980 in order to claim $1,178,570, the amount of Litton's counterclaim in the Glen-Litton arbitration. This amended claim was in the alternative and stated that it would be withdrawn to the extent that Litton obtained recovery against Glen. The amended demand quoted those portions of Glen's reply to Litton's counterclaim in which Glen had referred to inspections by the architect's representatives and to the specifications for the project.

On the next day, October 24, 1980, Litton filed a petition against Glen and Dickey on the equity side of the Circuit Court for Montgomery County. The relief sought was a declaratory judgment that the Glen-Litton and Litton-Dickey arbitrations be consolidated and that a mandatory injunction be issued directing Glen and Dickey to consent to the consolidation. The defendants were directed to show cause why the relief requested should not be granted at a hearing set for November 28, 1980.

There is no record of what transpired at the hearing on November 28. No testimony was presented and no exhibits were formally marked into evidence. Rather, it appears that the parties argued to the court on the basis of their pleadings and from contracts and letters which had been attached to their pleadings and legal memoranda. ⁴ By a written order of December 5, 1980 the trial court denied Litton's petition. That court gave no statement of the grounds for its decision as required by Md. Rule 18 b, and there is no record that any party requested one. Arbitration proceedings have been stayed, pending appeal, by order of the trial court. Litton's petition for certiorari and Glen's cross-petition were granted prior to consideration of Litton's appeal by the Court of Special Appeals.

There are basically two issues on the merits: (1) whether the court below had power to order consolidation and, if so, (2) whether the failure to consolidate was an abuse of discretion in this case. Litton contends that this power exists under both the Maryland Arbitration Act and under the Federal Arbitration Act, 9 U.S.C. §§ 1-14, which it says applies here.

Glen also moves to dismiss the appeal.

I

In support of its motion to dismiss Glen argues that the order appealed from is interlocutory because it in effect directs arbitration of two disputes which are to proceed separately. Glen relies on Maietta v. Greenfield, 267 Md. 287, 297 A.2d 244 (1972), which held that an order directing arbitration is not appealable. Maietta involved the application of the Maryland Uniform Arbitration Act as found in Code (1957, 1968 Repl. Vol.), Art. 7, Title, "Arbitration and Award." Section 18 of that Act specified six types of court orders involving arbitration from which an appeal could be taken. ⁵ These did not include an order to arbitrate.

However, Article 7 was repealed with the adoption of the Courts and Judicial Proceedings Article as part of the Code revision project. Acts of 1973, 1st Sp. Sess., ch. 2, § 2 at 388. The treatment of the provisions of former Art. 7, § 18 in the revision is an instance in which a substantive change was intentionally made. The change lies in Md.Code (1974, 1980 Repl.Vol.), § 12-301 of the Courts and Judicial Proceedings Article, which in relevant part reads:

(A) party may appeal from a final judgment entered in a civil or criminal case by a circuit court. The right of appeal exists from a final judgment entered by a court in the exercise of original, special, limited, statutory jurisdiction, unless in a particular case the right of appeal is expressly denied by law. (Emphasis added.)

Prior to this enactment, the general rule with respect to appealability of judgments in civil cases was as described in Simpler v. State ex. rel. Boyd, 223 Md. 456, 460-61, 165 A.2d 464, 466 (1960):

(W)here the lower court proceeds in the exercise of its usual and general jurisdiction, an appeal will lie from any final judgment it may pronounce in a civil case. But to this general rule, there are certain exceptions, and one of these exceptions is that where a special or limited jurisdiction is conferred upon the circuit courts ... to be exercised in a particular mode, and not according to the ordinary course of the common law, no appeal will lie from their judgments, unless expressly provided for by statute. (citation omitted.)

The Revisor's Note to § 12-301 (1974 Vol.) makes plain that the rule requiring specific statutory authorization for an appeal to lie from judgments entered in actions where the court was exercising a special statutory jurisdiction was viewed as "something of a trap." The Note then says:

It seems more reasonable to let the broad general language include appeals in such cases unless the legislature expressly decides to deny them. This approach will eliminate the necessity of deciding whether a given jurisdiction is common law or special, limited and statutory. It will also permit the repeal of numerous special appeal provisions, such as Article 7, § 18 .... ( ⁶ (citation omitted.)

The rule applied in Maietta is no longer the law. The present Maryland Uniform Arbitration Act does not expressly deny the right of appeal from a final judgment entered by a court in the exercise of jurisdiction under that statute. Thus, the question is simply whether the order appealed from constitutes a final judgment. Because the order denied all of the relief sought by Litton and completely terminated the action in the circuit court, it is an appealable, final judgment. Department of Public Safety v. LeVan, 288 Md. 533, 419 A.2d 1052 (1980).

II

A

In this case there is no genuine dispute between the...