Sentry Engineering and Const., Inc. v. Mariner's Cay Development Corp.
| Decision Date | 23 September 1985 |
| Docket Number | No. 22423,22423 |
| Citation | 287 S.C. 346,338 S.E.2d 631 |
| Court | South Carolina Supreme Court |
| Parties | SENTRY ENGINEERING AND CONSTRUCTION, INC., Respondent, v. MARINER'S CAY DEVELOPMENT CORPORATION, Eastern Indemnity Company of Maryland, Jim Oswald, David Hartley, Tri-State Coatings, Inc., and Ben Peters Brick, Inc., Of Whom Mariner's Cay Development Corporation and Eastern Indemnity Company of Maryland are Appellants. MARINER'S CAY DEVELOPMENT CORPORATION, Appellant, v. SENTRY ENGINEERING & CONSTRUCTION CO., INC.; Rightway Drywall; Jim Oswald, d/b/a Oswald Wholesale Lumber; Tri-State Coating, Inc.; Sandpiper Utilities, Inc.; O'Dea Construction; Lakewood Construction Co.; Laverne Locklair; David Holland; Miles Gantt & John Gray Construction Co.; Fiberglass Insulators; Atlas Electric Co.; James M. Babcock; American Equipment Company, Inc.; K & S Construction Company, Inc.; Lawrence D. Kay; Landscaping & Design, Inc., d/b/a Garden Center, Inc.; Bill Mitchell; Ben Peters Brick, Inc.; Rhodes-Buck Building Supply, Inc.; Spartanburg Screens; McKinney Wholesale Plymart; Wickes Lumber; Wickes-Component Division; Charleston Lumber; C & S Door; McCoy Lumber; Interior Stairs; Miami-Carey- Fidelity; Pennco Windows; General Electric; Boro Wood Products; Hertz Rentals; Limehouse Crane Rentals; M & M Oil Co.; Renfrow Distributors Sani- Serva; Dorothy Clifton; O.L. Thompson Construction Company; Jennings Concrete Company; Mike Carroll; Henry Summers; Max Dupree; Carolina Carpets; Southeastern Liteweight Concrete Products; Good Earth Landscaping; Eden Roofing; Rast--T.V.; Boston Charleston; Sanders Brothers; Meeco Marina; Southeastern Marble; Delph Context; M & M Plumbing, Inc.; John Strickland; Swimming Pools of Spartanburg, Inc.; and Southern Fence Company, Inc., d/b/a Lowcountry Fence Company, Of Whom Sentry Engineering and Construction Co., Inc. is Respondent. . Heard |
Frank S. Potts of Lewis, Lewis, Bruce & Truslow, Columbia, for appellants.
Henry W. Brown of Quinn, Brown, Stanton & Boyle, Columbia, for respondent.
This action arises out of a breach of contract for condominium construction.
We affirm.
Appellant-Developer (MCDC) and Respondent-Builder (Sentry) executed a "Standard Form of Agreement Between Owner and Contractor" (Base Agreement) providing for the cost of construction. Concurrently, the parties executed a separate document entitled "Agreement for Profit and Overhead" (Side Agreement) for additional compensation above construction cost.
As the project neared completion, Sentry became concerned about payment. It filed a mechanic's lien for balances due under both Agreements and for change orders, to which MCDC filed an appropriate bond with Appellant Eastern Indemnity Company of Maryland as surety. Sentry exercised its contractual right of arbitration, filing a claim with the American Arbitration Association (AAA) in the amount of its mechanic's lien. Simultaneously, Sentry filed a petition in Circuit Court to foreclose its lien.
The Circuit Court rejected MCDC's objection to arbitration and ordered arbitration of all claims arising out of the contract documents. Rights were reserved to the parties to seek statutory relief after the filing of the AAA decision. Sentry then amended its arbitration demand to include claims for damages based on wrongful termination. Sentry also petitioned the Circuit Court for an injunction permitting it access to the site to correct deficiencies in the roof.
The AAA found Sentry entitled to $503,271.00. Pursuant to Sentry's motions, the Circuit Court adopted the AAA award as a judgment, granted Sentry summary judgment on its mechanic's lien foreclosure petition, assessed interest and awarded Sentry a reasonable attorney's fee of $80,000.00. The total judgment was $622,425.00.
MCDC asserts error in (1) ordering arbitration of the Side Agreement, (2) confirmation of the AAA award as a mechanic's lien judgment, (3) assessment of interest and (4) the award of attorney's fees.
MCDC contends that the Circuit Judge erred in holding:
(1) that the separate documents, one for construction costs and the other for profit, comprised a single unified agreement;
(2) that Sentry, by seeking Circuit Court relief, did not waive, but retained, its right to arbitration;
(3) that profit and overhead are components of "debt", as contemplated by the mechanic's lien statute, S.C.Code Ann.Sec. 29-5-10 (Supp.1984);
(4) that the arbitration award was convertible into a mechanic's lien judgment;
(5) that Sentry was entitled to interest;
(6) that Sentry was entitled to attorney's fees.
The Base Agreement provided specifically for arbitration, to which the Side Agreement was silent. MCDC contends that the two documents constituted separate contracts, so that Sentry was entitled to arbitration of the Base Agreement dispute only. We disagree.
In Klutts Resort Realty v. Down 'Round Development Corp., 268 S.C. 80, 232 S.E.2d 20 (1977), this Court held
The general rule is that, in the absence of anything indicating a contrary intention, where instruments are executed at the same time, by the same parties, for the same purpose and in the course of the same transaction, the courts will consider and construe the instruments together. The theory is that the instruments are effectively one instrument or contract. [Emphasis supplied].
268 S.C. at 88, 232 S.E.2d at 24.
The Circuit Court found as a fact that the two documents comprised a single, integrated agreement. We agree.
This litigation involves a breach of contract and the enforcement of a statutory lien. Both are actions at law. Moore v. Crowley & Associates, Inc., 254 S.C. 170, 174 S.E.2d 340 (1970) (breach of contract); Raines v. Sanders, 134 S.C. 284, 132 S.E.2d 581 (1926) (mechanic's lien). In a non-jury case the findings of fact will not be disturbed unless found to be without reasonable evidentiary support. Townes Associates, Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).
The Side Agreement, by reference, incorporates the Base Agreement and its general conditions. A modification is defined in the Base Agreement as a written amendment signed by both parties. The Side Agreement meets this definition. Thus, each incorporates the other. This reasonably supports the Circuit Judge's finding of a single, integrated contract subject to arbitration.
The two documemts refer to different components of the contract's price term: payment for actual work and payment for profit. Under the Klutts test, the purpose of both is the same: compensation for project construction. The Circuit Court correctly ordered that Sentry's claims under both documents be decided by arbitration.
Additionally, S.C.Code Ann. Sections 15-48-130 (Supp.1984) and 15-48-140 (Supp.1984) provide the exclusive procedures for vacating or modifying awards where arbitrators exceed their powers or award upon a matter not properly submitted to them. MCDC filed no motion to vacate or modify within 90 days of delivery of a copy of the award. Consequently, the award became the law of the case.
MCDC asserts Sentry's acts in filing a petition for a prohibitory injunction allowing it to complete roof work are inconsistent with a right to arbitrate. It argues further that the prejudice resulting to it by Sentry's action constituted a waiver of arbitration. Sentry counters that the petition for injunction did not seek to litigate any issue raised by arbitration, but was simply an attempt to correct work complained of by MCDC.
Federal decisions require a showing of prejudice when waiver is asserted. Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968) holds that it is not inconsistency, but the presence or absence of prejudice which is determinative. In this context prejudice is undue burden on the objecting party, brought about by delay in the other party's making its demand for arbitration. Batson Yarn and Fabrics Machinery Group, Inc. v. Saurer-Alma GmbH-Allgauer Maschinenbau, 311 F.Supp. 68 (D.S.C.1970); Episcopal Housing Corp. v. Federal Ins. Co., 269 S.C. 631, 239 S.E.2d 647 (1977). MCDC shows no prejudice by delay, only the inconvenience of litigating the petition for injunction.
"[W]aiver may not be inferred from the fact that a party does not rely exclusively on the arbitration provisions of a contract, but attempts to meet all issues raised in litigation between it and another party to the agreement." Germany v. River Terminal Ry. Co., 477 F.2d 546, 547 (6th Cir.1973).
Sentry at all times sought to enforce its right to arbitrate under the contract; it is clear it had no intention to waive the right, and no waiver is shown.
In the arbitration procedure Sentry claimed the balance due for profit under the Side Agreement. The Circuit Court adopted the AAA award as a mechanic's lien judgment. MCDC asserts that profit and overhead are not proper components of a mechanic's lien. We disagree.
The parties by express contractual provisions fixed the compensation for full performance. Overhead and profit under the Side Agreement were components of the contract price.
S.C.Code Ann. Section 29-5-10 (Supp.1984) provides
Any person to whom a debt is due for labor performed or furnished or for materials furnished and actually used ... by virtue of an agreement ... shall have a lien ... [Emphasis supplied].
In Williamson v. Hotel Melrose, 110 S.C. 1, 96 S.E. 407 (1918), this Court upheld a contractor's mechanic's lien for "oversight" and supervisory services. The general rule on whether overhead and profit are lienable is stated in 53 Am.Jur.2d Mechanic's Liens, Section 107 (1970):
Since the statutes provide a lien for labor performed and materials furnished, the question arises, particularly where a contractor works under a cost-plus contract, whether items which are not direct labor or material...
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