Sew Clean v. Dress for Success

• Decision Date: 17 July 2006
• Citation: 903 A.2d 1254
• Parties: SEW CLEAN DRYCLEANERS AND LAUNDERS, INC., Appellee, v. DRESS FOR SUCCESS CLEANERS, INC. and GIANT EAGLE, INC., Appellants. Sew Clean Drycleaners and Launders, Inc., Appellant, v. Dress for Success Cleaners, Inc. and Giant Eagle, Inc., Appellees.
• Court: Pennsylvania Superior Court

903 A.2d 1254

SEW CLEAN DRYCLEANERS AND LAUNDERS, INC., Appellee, v. DRESS FOR SUCCESS CLEANERS, INC. and GIANT EAGLE, INC., Appellants.

Sew Clean Drycleaners and Launders, Inc., Appellant, v. Dress for Success Cleaners, Inc. and Giant Eagle, Inc., Appellees.

Superior Court of Pennsylvania.

Argued March 28, 2006.

Filed July 17, 2006.

COPYRIGHT MATERIAL OMITTED

William L. Stang, Pittsburgh, for Giant Eagle and Dress for Success.

John P. Lacher, Pittsburgh, for Sew Clean.

BEFORE: FORD ELLIOTT, P.J., BOWES and JOHNSON, JJ.

OPINION BY BOWES, J.:

¶ 1 Dress For Success Cleaners, Inc. ("DFS Cleaners") and Giant Eagle, Inc. ("Giant Eagle") appeal from the June 20, 2005 order compelling arbitration of an action instituted by Sew Clean Drycleaners and Launders, Inc. ("Sew Clean"). Sew Clean has filed a cross-appeal. For reasons discussed infra, we quash the cross-appeal, vacate the June 20, 2005 order in part, and remand for proceedings consistent with this opinion.

¶ 2 The record reveals the following. DFS Cleaners provides dry cleaning services for various supermarkets pursuant to written contracts with the supermarkets and dry cleaning plants. Under these contracts, DFS Cleaners is permitted to set up a kiosk at a supermarket where patrons can deposit and retrieve their dry cleaning. The kiosks are staffed by a supermarket employee who has been trained by DFS Cleaners. When clothes are deposited, the garments are transported to an off-site dry cleaning plant that has contracted with DFS Cleaners to provide cleaning services. DFS Cleaners, the supermarket, and the dry cleaning plant subsequently split the proceeds in accordance with the terms of the respective contracts.

¶ 3 In the present case, DFS Cleaners entered into a "license agreement" with Sew Clean on October 7, 1999, wherein DFS Cleaners hired Sew Clean to perform dry cleaning services for garments deposited at various Giant Eagle Supermarkets in the Pittsburgh area. On November 2, 2002, employees of a local power company allegedly caused a power surge that damaged Sew Clean's electric dry cleaning equipment. As a result, Sew Clean was unable to meet its contractual obligations for a short period, and DFS Cleaners opted to terminate its license agreement with Sew Clean. Giant Eagle was not a party to the license agreement.

¶ 4 On December 27, 2004, Sew Clean filed a seven-count complaint against DFS Cleaners and Giant Eagle alleging, inter alia, that DFS Cleaners: (1) breached the agreement with Sew Clean by failing to pay Sew Clean for $80,000 worth of services performed under the contract; (2) fraudulently represented that it intended to continue performing services under the contract for an extended period, thereby causing Sew Clean to incur lost profits in excess of $1 million; and (3) breached a fiduciary duty to Sew Clean by terminating the agreement in bad faith. In addition, Sew Clean averred that Giant Eagle: (1) caused DFS Cleaners to breach the license agreement; (2) aided and abetted DFS Cleaners in making the aforementioned fraudulent misrepresentations by encouraging DFS Cleaners to terminate the agreement in bad faith; and (3) aided and abetted DFS Cleaners in breaching its fiduciary duty to Sew Clean by encouraging DFS Cleaners to terminate the agreement in bad faith.

¶ 5 On January 31, 2005, DFS Cleaners and Giant Eagle filed a petition to compel arbitration as to DFS Cleaners and Sew Clean and stay judicial proceedings against Giant Eagle. DFS Cleaners argued that Sew Clean was required to arbitrate all claims against it pursuant to the arbitration clause contained in section 4.2 of the license agreement, and Giant Eagle, which is not a party to the contract, averred that all claims against it should be stayed pursuant to 42 Pa.C.S. § 7304(d) pending the outcome of the arbitration proceedings. Specifically, Giant Eagle argued that a stay would serve the interests of judicial economy by avoiding piecemeal litigation of Sew Clean's claims against Giant Eagle, which are fundamentally intertwined with Sew Clean's claims against DFS Cleaners. By order dated June 20, 2005, the trial court granted the petition to compel arbitration as to DFS Cleaners but ruled that the action against Giant Eagle could proceed in the Allegheny Court of Common Pleas. This appeal and cross-appeal followed.

¶ 6 Herein, DFS Cleaners and Giant Eagle assert that the trial court erred in refusing to stay the court action against Giant Eagle pending the outcome of the arbitration proceedings. In its cross-appeal, Sew Clean argues, inter alia, that: (1) the trial court erred in determining that the present dispute falls within the scope of the arbitration clause contained in the license agreement; and (2) DFS Cleaners waived its right to arbitration.

¶ 7 We cannot address Sew Clean's arguments because they pertain to the component of the order in question that directed DFS Cleaners and Sew Clean to proceed to arbitration, and such orders do not constitute final, appealable orders. See Schantz v. Gary Barbera Dodgeland, 830 A.2d 1265 (Pa.Super.2003) (appeal quashed because order directing arbitration was not final order). Since the parties herein have been forced into court rather than put out of court, the portion of the order compelling DFS Cleaners and Sew Clean to submit to arbitration is interlocutory. Id.

¶ 8 However, we find that the remaining portion of the June 20, 2005 order, i.e., the part that allowed Sew Clean to proceed with its claims against Giant Eagle, is appealable as a collateral order under Pa.R.A.P. 313.

A collateral order is an order separable from and collateral to the main cause of action where the right involved is too important to be denied review and the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost.

Pa.R.A.P. 313(b). Our Supreme Court has observed:

The collateral order doctrine is a specialized practical application of the general rule that only final orders are appealable as of right. Thus, Rule 313 must be interpreted narrowly, and the requirements for an appealable collateral order remain stringent in order to prevent undue corrosion of the final order rule.

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