McCarney v. Nearing, Staats, Prelogar and Jones

• Decision Date: 19 October 1993
• Docket Number: Nos. WD,s. WD
• Citation: 866 S.W.2d 881
• Parties: Stephen B. McCARNEY, et al., Respondents, v. NEARING, STAATS, PRELOGAR AND JONES, Appellants, Stephen B. McCARNEY, et al., Relators, v. The Honorable Frank CONLEY, Respondent. 47120, WD 47157.
• Court: Missouri Court of Appeals

Page 881

866 S.W.2d 881

Stephen B. McCARNEY, et al., Respondents, v. NEARING, STAATS, PRELOGAR AND JONES, Appellants, Stephen B. McCARNEY, et al., Relators, v. The Honorable Frank CONLEY, Respondent.

Nos. WD 47120, WD 47157.

Missouri Court of Appeals,

Western District.

Oct. 19, 1993.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Nov. 30, 1993.

Application to Transfer Denied Jan. 25, 1994.

G. William Quatman, Shughart, Thomson & Kilroy, P.C., Kansas City, for appellants Nearing, Staats, Prelogar and Jones.

W. Dudley McCarter, Behr, Mantovani, McCarter & Cappiello, P.C., St. Louis, for respondents Stephen B. McCarney, et al.

Louis J. Leonatti, Seigfreid, Runge, Leonatti, Pohlmeyer, Hagan & Seigfreid, P.C., Mexico, for respondent Honorable Frank Conley.

Before BRECKENRIDGE, P.J., and BERREY and SPINDEN, JJ.

BRECKENRIDGE, Presiding Judge.

This proceeding involves the consolidation of two cases pertaining to the construction of the Hawthorne Educational Services Building, a two-story office building in Columbia, Missouri. One of the consolidated cases concerns an appeal from a suit filed by Stephen B. McCarney, Michele T. Jackson, McCarney's wife, and Hawthorne Educational Services, Inc. (Hawthorne) against Nearing, Staats, Prelogar & Jones (Nearing) in which the trial court denied Nearing's application to compel arbitration. ¹ Nearing raises one point on appeal arguing that under the Federal Arbitration Act, the trial court must compel arbitration and erred in refusing to submit the case to arbitration because the contract provides for arbitration of all "disputes."

The second case involves whether this court's issuance of a preliminary writ of prohibition should be made absolute in a suit filed by Reinhardt Construction Company (Reinhardt) against McCarney. McCarney argues the following five points in support of his petition for writ of prohibition. In Point I, he argues that prohibition is the proper remedy because the trial court exceeded its judicial power by compelling McCarney to submit to arbitration; in the remaining points he asserts that the trial court erred in ordering McCarney to submit to arbitration in that: II) there is no binding arbitration provision in any contract or in the escrow agreement between McCarney and Reinhardt; III) Reinhardt waived its right to demand arbitration; IV) McCarney's counterclaim alleging fraudulent representation as to the escrow agreement is not covered by an arbitration provision; and V) an equitable mechanic's lien suit, not arbitration, is the exclusive remedy for Reinhardt's claims.

Nearing was hired to provide architectural services for the construction of the Hawthorne Educational Services Building. On April 17, 1989, Nearing and McCarney signed an agreement entitled "Standard Form of Agreement Between Owner and Architect." Reinhardt Construction Company (Reinhardt) was hired to serve as the general contractor for the project. McCarney and Reinhardt signed an agreement entitled "Standard Form of Agreement Between Owner and Contractor" on April 9, 1990.

On or about April 10, 1991, McCarney informed Reinhardt that it had fired Nearing and it did not hire a replacement architect. In order to complete the construction of the building, McCarney and Reinhardt executed an escrow agreement on August 28, 1991. The escrow agreement required McCarney to deposit $140,000 in an escrow account and set forth the manner in which the $140,000 Thereafter, Reinhardt, Nearing, and Miller Sash & Door, one of Reinhardt's subcontractors, filed mechanic's liens against the Hawthorne property in the amounts of $140,000, $24,559, and $20,179.14, respectively. Nearing did not file suit to foreclose by April 1, 1992, the end of the statutory six-month period in § 429.170, RSMo 1986, ² and its mechanic's lien expired as a matter of law. McCarney filed suit against Nearing on April 6, 1992. His amended petition, filed on June 4, 1992, alleged breach of contract and negligence. On June 24, 1992, Nearing filed a demand for arbitration with the American Arbitration Association in Kansas City, Missouri. Nearing filed an application to compel arbitration and to stay the lawsuit on July 16, 1992. In response, McCarney filed an application to stay arbitration. The trial court denied Nearing's application to compel arbitration and to stay the lawsuit. This appeal was filed in a timely manner thereafter. Under § 435.440.1(1), an order denying an application to compel arbitration is an appealable order. Brookfield School v. Tognascioli et al., 845 S.W.2d 103, 104 (Mo.App.1993).

was to be allocated to Reinhardt in return for the completion of certain work.

On June 5, 1992, Reinhardt filed suit against McCarney in the Circuit Court of Boone County seeking recovery of $140,000 allegedly due it under the escrow agreement. In Count I, Reinhardt's petition alleged that Reinhardt had completed all work set forth in the agreement but that McCarney refused to authorize the disbursement of the funds allocated for each item. Count II of Reinhardt's petition set forth a claim for foreclosure on the mechanic's lien filed by Reinhardt. Count III of Reinhardt's petition prays for recovery in quantum meruit for the amount of the unpaid labor, materials, supplies and equipment supplied to the Hawthorne project.

McCarney filed various pleadings in response to Reinhardt's petition including a counterclaim, motion to consolidate, answer and motion to add additional parties. On July 22, 1992, Reinhardt filed a "Motion to Stay Proceedings Pending Arbitration." McCarney filed an application to stay arbitration on August 14, 1992. After hearing oral arguments on the various motions of the parties, the trial court entered its order sustaining Reinhardt's motion to stay proceedings pending arbitration. McCarney filed his petition for writ of prohibition. This court entered a preliminary order in prohibition and Respondent, the Honorable Frank Conley, filed his response. McCarney filed its reply. Thereafter, the matter was briefed and oral arguments were heard. The matter was submitted to the court for decision upon the record and briefs were filed. The facts stated in the petition for the writ will be taken as true and the matter ruled in a manner similar to a motion for judgment on the pleadings. State ex rel. Dunphy v. Eversole, 339 S.W.2d 506, 507 (Mo.App.1960).

This court will address the points raised in the appeal and the action for prohibition simultaneously as they generally are in regard to similar, if not identical, issues. In the interest of avoiding repetition, this court will not specifically refer to the points relied on in the parties' briefs. The first point raised by McCarney, however, will be addressed separately as it pertains to whether prohibition is an appropriate remedy.

McCarney argues in Point I that prohibition is the proper remedy because the trial court exceeded its jurisdiction by ordering McCarney to submit to arbitration since the dispute between McCarney and Reinhardt is not subject to arbitration. McCarney contends that unless an absolute order of prohibition is issued by this court, he will be subjected, without an adequate remedy of appeal, to duplicate proceedings and the possibility of conflicting determinations.

The writ of prohibition is an extraordinary remedy to be used cautiously and only in cases of extreme necessity. State ex rel. Douglas Toyota v. Keeter, 804 S.W.2d 750, 752 (Mo. banc 1991). Prohibition is primarily used to correct or prevent inferior courts and agencies from acting outside their jurisdiction. Id. Prohibition is not to be used in lieu of an appeal nor is it to be used as a substitute for the correction of alleged Respondent argues that prohibition is not the proper remedy in this case because an order compelling arbitration is not a final appealable order. In support of his position, Respondent cites McClellan v. Barrath Const. Co., Inc., 725 S.W.2d 656 (Mo.App.1987), a case in which the court held that an order compelling arbitration was not a final judgment from which an appeal could be taken.

or anticipated judicial errors. Id. Neither is prohibition to be used to adjudicate disputes which will be adequately redressed during the ordinary course of judicial proceedings. Id.

Respondent is correct in his contention that an order compelling arbitration is not a final appealable order because § 435.440 of the Missouri Arbitration Act does not authorize an appeal from an order compelling arbitration. Respondent, however, is mistaken in his assertion that such requires this court to find that a writ of prohibition is not the proper remedy in the instant case. Although McClellan does prohibit McCarney from appealing the trial court's order compelling arbitration, McClellan is silent as to whether McCarney could challenge the order by seeking a writ of prohibition.

Respondent also argues that because McCarney can appeal an arbitration award under § 435.440, this court should, rather than issuing a writ of prohibition, require McCarney to proceed to arbitration and then exercise his right to appeal if he is aggrieved by the arbitration award. Respondent contends that such an appeal is an adequate remedy and, thus, prevents the issuance of a writ of prohibition. Respondent's argument is "one which is closely considered at the preliminary writ stage, and less so after the parties have briefed and argued the case on the merits." State ex rel. St. Joseph Light & Power Co. v. Donelson, 631 S.W.2d 887, 892 (Mo.App.1982). Since the preliminary writ has been issued and the parties have briefed and argued the arbitration issue, this court will decide the case upon its merits. State ex rel. McClellan v. Kirkpatrick, 504 S.W.2d 83, 85 n. 1 (Mo. banc 1974); Donelson, 631 S.W.2d at 892.

The remaining issues in the instant case concern arbitration. Both the Federal Arbitration Act (FAA) and the Uniform Arbitration Act express the desire to...