Pine Gravel, Inc. v. Cianchette

• Citation: 514 A.2d 1282,128 N.H. 460
• Decision Date: 12 August 1986
• Docket Number: No. 85-449,85-449
• Parties: PINE GRAVEL, INC. & a. v. Edward J. CIANCHETTE d/b/a Site Prep. & a.
• Court: Supreme Court of New Hampshire

Page 1282

514 A.2d 1282

128 N.H. 460

PINE GRAVEL, INC. & a. v. Edward J. CIANCHETTE d/b/a Site Prep. & a.

No. 85-449.

Supreme Court of New Hampshire.

Aug. 12, 1986.

Bernard J. Robertson, Exeter, by brief and orally, for plaintiffs, Pine Gravel, Inc. and David Bruce.

Maire & Fisher P.A., Seabrook (Susan S. Maire on brief and orally), for defendants, Edward J. Cianchette d/b/a Site Prep. and P.J. Stella Const. Corp.

BATCHELDER, Justice.

The plaintiffs (Pine Gravel, Inc. and David Bruce) appeal an order of the Trial Court (Wyman, J.) dismissing their action for breach of contract. The court granted the motion "in light of [a] contract provision that there should be arbitration before any legal proceeding might be brought." For the reasons that follow, we affirm.

This case arose from a construction project in the town of Hampton. The project involved site preparation and construction of offices and a warehouse for The Timberland Company. On November 15, 1984, Timberland Realty Trust, the owner, entered into a contract (the general contract) with P.J. Stella Construction Corporation, the contractor, in which P.J. Stella agreed to prepare the site and construct the project. P.J. Stella in turn entered into an agreement (the agreement) dated November 16, 1984 with Edward J. Cianchette d/b/a Site Prep., the subcontractor, in which Site Prep. agreed to perform site work in accordance with a prior bid letter. The agreement incorporated by reference the general contract. Site Prep. had previously entered into a subcontract (the subcontract) dated November 12, 1984 with the plaintiffs, as sub-subcontractors, in which the plaintiffs agreed to "furnish all labor, materials, and equipment for performance of ... site work." The subcontract states that the plaintiffs "shall be bound" to Site Prep. by the terms of the agreement, and "shall assume all the obligations and responsibilities" which Site Prep. assumed toward P.J. Stella. The subcontract also states that the conditions of the agreement "are a part of this subcontract."

The role of Site Prep. in this attenuated relationship was essentially that of a broker. It did not perform any site work. Rather, it arranged to hire the plaintiffs before it secured the agreement from P.J. Stella.

The agreement is a standardized construction contract. The agreement's arbitration clause states: "All disputes, controversies, or claims of any and all kinds which may arise out of, under, or in relation to this Agreement shall be submitted to and settled by arbitration." That provision also states: "Unless waivered [sic] by the Contractor, arbitration shall be a condition precedent to the institution of any legal proceedings and the award of the arbitrators shall be enforceable in accordance with the provisions of the law." The agreement's liens clause states:

"The Subcontractor further agrees that he will not file or caused [sic] to be filed any mechanic's lien for materials furnished or to be furnished and/or for labor performed or to be performed unless default shall first have been made by the Contractor in making a payment under this Agreement. The Subcontractor further agrees that if any subcontractor holding a subcontract from him or any material man supplying materials to him or any one claiming by or through such subcontractor or material man shall file or cause to be filed any lien, the Subcontractor will, upon notice from the Contractor, cause such lien to be cancelled and discharged within ten days from such notice."

The plaintiffs performed most of the work under the subcontract, but when a payment dispute arose with Site Prep., the plaintiffs sought a two-fold legal remedy. First, they brought a writ in a plea of breach of contract on August 6, 1985, alleging that Site Prep. had failed to make payments under the subcontract, that P.J. Stella was "responsible for said payment," and that the company and the trust received the benefit of site work and additional work and were unjustly enriched. Contemporaneously, the plaintiffs brought a petition pursuant to RSA 511-A:8, III, for an ex parte attachment of the real estate owned by the trust. The petition incorporated the writ, asserted that the plaintiffs had supplied labor and materials for the project, and sought to perfect a materialman's lien under RSA chapter 447. See Chagnon Lumber Co. v. Stone Mill Const. Corp., 124 N.H. 820, 823, 474 A.2d 588, 589 (1984). The plaintiffs further alleged that P.J. Stella and Site Prep. were out-of-State residents with insufficient in-State assets to secure the plaintiffs' claim. The petition to attach was granted on August 6, 1985 by Gray, J.

On August 29, 1985, Site Prep. and P.J. Stella filed a motion to dismiss. They alleged that the plaintiffs had failed to honor the provision of the agreement that "arbitration shall be a condition precedent to the institution of any legal proceedings," and requested, inter alia, dismissal of the plaintiffs' action and removal of the ex parte attachment. After a motion hearing the next day, the court dismissed the action on the ground that arbitration should have preceded any legal proceeding. The court's order, however, did not address the ex parte attachment. The plaintiffs appealed the dismissal of their action.

The record in this case is sparse and does not contain the general contract. This deficiency makes it impossible to know the full extent of the rights and obligations of the parties. Nevertheless, we are not constrained by that in addressing the two issues raised on appeal: (1) whether the court erred in dismissing the plaintiffs' action rather than ordering a stay of the proceedings pending the outcome of arbitration, and (2) whether a mandatory arbitration provision in a contract vitiates a signatory's statutory right to a materialman's lien.

We first address the court's dismissal of the action. The plaintiffs argue that the court should have stayed the action pursuant to RSA 542:2 pending the outcome of arbitration. Site Prep. and P.J. Stella counter that the arbitration provision, which was voluntarily entered into, states that arbitration is a condition precedent to the institution of any legal proceedings in this matter and requires dismissal of the action.

The record discloses that the plaintiffs agreed to the arbitration clause and to assume the obligations and responsibilities that Site Prep. had assumed toward P.J. Stella. Hence, the plaintiffs have a contractual duty to arbitrate disputes relating to the project. The plaintiffs do not dispute this fact; rather, they raise the issue whether the arbitration clause precludes this action.

At common law, an arbitration provision did not bar a suit in law or equity unless it stated that arbitration was a condition precedent to the right of a party to recover, in which case the agreement was binding. Smith v. B., C. & M. Railroad, 36 N.H. 458, 487 (1858). In 1929, the General Court enacted RSA chapter 542, the arbitration statute, which provides that a "written contract to settle by arbitration a controversy thereafter arising out of such contract ... [is] valid, irrevocable, and enforceable." RSA 542:1. It further provides for the issuance of a stay if an action is brought in violation of an arbitration provision. Id. § 2.

In Demers Nursing Home, Inc. v. R.C. Foss & Son, Inc., 122 N.H. 757, 449 A.2d 1231 (1982), this court upheld the dismissal of an action, after the defendant...