Silver Dollar City, Inc. v. Kitsmiller Const. Co., Inc., 18910

• Decision Date: 15 March 1994
• Docket Number: No. 18910,18910
• Citation: 874 S.W.2d 526
• Parties: SILVER DOLLAR CITY, INC., a Missouri corporation, Respondent, v. KITSMILLER CONSTRUCTION COMPANY, INC., a Missouri corporation, Appellant.
• Court: Missouri Court of Appeals

Page 526

874 S.W.2d 526

SILVER DOLLAR CITY, INC., a Missouri corporation, Respondent, v. KITSMILLER CONSTRUCTION COMPANY, INC., a Missouri corporation, Appellant.

No. 18910.

Missouri Court of Appeals,

Southern District,

Division Two.

March 15, 1994.

Motion for Rehearing and Transfer

Denied April 6, 1994.

Application to Transfer Denied May 26, 1994.

Steven E. Marsh, Hulston, Jones, Gammon & Marsh, Springfield, for appellant.

James W. Newberry and Randy R. Cowherd, Schroff, Glass & Newberry, P.C., Springfield, for respondent.

CROW, Judge

The question is whether Kitsmiller Construction Company, Inc. ("Kitsmiller"), a Missouri corporation, is entitled to arbitration of a claim by it against Silver Dollar City, Inc. ("SDC"), a Missouri corporation. The dispute arises from a written agreement between the two dated June 27, 1991, wherein Kitsmiller promised to perform certain work on a construction project and SDC promised to pay Kitsmiller $648,656. The agreement contained an arbitration provision, quoted infra.

This suit began April 10, 1992, when SDC filed a two-count petition against Kitsmiller. The petition averred Kitsmiller was demanding arbitration of a claim against SDC for $341,432.17. By count I, SDC sought relief including a declaration that the arbitration provision was, for sundry reasons, unenforceable, together with an order that arbitration "be terminated and permanently stayed." In count II, SDC prayed for an injunction barring Kitsmiller from pursuing arbitration.

Kitsmiller counterclaimed, asking that SDC be required to submit to binding arbitration of Kitsmiller's claim.

Both parties ultimately moved for summary judgment. The trial court held Kitsmiller was not entitled to arbitration and that its exclusive remedy was chapter 429, RSMo 1986, as amended (mechanics' lien). Kitsmiller appeals.

The June 27, 1991, agreement ("the Contract") designates SDC as "the Owner" and Kitsmiller as "the Contractor." ¹ The Contract identifies the project as: "Grand Palace." The Contract also states, "The Architect is: Silver Dollar City, Inc."

Three provisions in the Contract are pertinent to the issues confronting us. The provisions are:

10.5 The Architect will interpret and decide matters concerning performance under and requirements of the Contract Documents on written request of either the Owner or Contractor. The Architect will make initial decisions on all claims, disputes or other matters in question between the Owner and Contractor, but will not be liable for results of any interpretations or decisions rendered in good faith. The Architect's decisions in matters relating to aesthetic effect will be final if consistent with the intent expressed in the Contract Documents. All other decisions of the Architect, except those which have been waived by making or acceptance of final payment, shall be subject to arbitration upon the written demand of either party.

10.8 All claims or disputes between the Contractor and the Owner arising out or relating to the Contract, or the breach thereof, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect unless the parties mutually agree otherwise and subject to an initial presentation of the claim or dispute to the Architect as required under Paragraph 10.5. Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association and shall be made within a reasonable time after the dispute has arisen. The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. Except by written consent of the person or entity sought to be joined, no arbitration arising out of or relating to the Contract Documents shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the Agreement under which such arbitration arises, unless it is shown at the time the demand for arbitration is filed that (1) such person or entity is substantially involved in a common question of fact or law, (2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration, (3) the interest or responsibility of such person or entity in the matter is not insubstantial, and (4) such person or entity is not the Architect or any of the Architect's employees or consultants. The agreement herein among the parties to the Agreement and any other written agreement to arbitrate referred to herein shall be specifically enforceable under applicable law in any court having jurisdiction thereof.

19.1 The Contract shall be governed by the law of the place where the Project is located.

While Kitsmiller was working on the project, disputes arose regarding change orders, progress of the work, payment of vendors and subcontractors, and other subjects. Kitsmiller eventually left the project site on or about October 21, 1991.

One of the facts established by the pleadings is: "[Kitsmiller], under date of December 20, 1991, served a Notice of Intent to File Mechanic's Lien."

On February 10, 1992, Kitsmiller filed a mechanic's lien against the Grand Palace in the office of the Clerk of the Circuit Court of Taney County ² in the sum of $341,432.17.

Kitsmiller thereafter filed a "Demand for Arbitration" with the American Arbitration Association. The document is dated February 11, 1992. It avers, inter alia:

Nature of Dispute: Contract dispute for breach of contract in connection with Grand Palace project ... for delayed and withheld payments, for delayed and withheld change orders and payments for extra/additional work performed at [SDC's] request, for acceleration and lost efficiency costs, expenses and damages due to changed and increased scope of work and incomplete plans, and for delays, bad faith, hinderance, interference and lack of cooperation on the part of [SDC].

As to the relief sought, the document states: "$341,432.17, plus interest. Award to be enforced as Judgment of Mechanic's Lien in Circuit Court of Taney County, Missouri."

SDC's motion for summary judgment alleges: "[O]n February 21, 1992, [SDC] filed its answer to [Kitsmiller's] demand to the American Arbitration Association." In its brief, Kitsmiller acknowledges this.

The record contains an affidavit of SDC's "Vice President-Finance and Treasurer" stating that by letter dated April 3, 1992, the American Arbitration Association declared it would proceed with arbitration unless stayed by court order. The affidavit further states the American Arbitration Association submitted a list of potential arbitrators and that unless SDC responded by April 13, 1992, it would be deemed to have approved all of them. This evidently prompted SDC to file the instant suit which, as reported earlier, was commenced April 10, 1992.

On May 14, 1992, Builders Steel Co., Inc., filed in the Circuit Court of Taney County a petition to enforce a mechanic's lien against the Grand Palace, naming as defendants Tulsa Steel Mfg. Company, Inc., and SDC. That action was assigned number CV792-265CC. We henceforth refer to it as "case 265."

SDC filed a motion in case 265 praying that Kitsmiller be joined as a party per § 429.280, RSMo 1986. On July 2, 1992, that motion was granted.

On August 5 or 6, 1992, Kitsmiller filed a cross-claim and counterclaim in case 265. In that pleading, Kitsmiller averred SDC owed Kitsmiller $341,432.14, but asked that case 265 be stayed pending the outcome of arbitration between Kitsmiller and SDC or, alternatively, that any proceedings in case 265 between Kitsmiller and SDC be stayed pending the outcome of arbitration. Kitsmiller further prayed for judgment against SDC in the amount of the eventual arbitration award and for a mechanic's lien in such amount.

Turning from case 265 back to the instant suit, we find the next relevant occurrence was August 31, 1992, when Kitsmiller filed an "Application to Compel Arbitration." It cited the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and § 435.355.1, RSMo 1986, ³ and prayed for an order compelling SDC to submit to arbitration of Kitsmiller's claim in accordance with paragraph 10.8 of the Contract (quoted supra ).

9 U.S.C. § 2, a part of the Federal Arbitration Act ("FAA"), reads:

A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Section 435.350 reads:

... a provision in a written contract, except contracts of insurance and contracts of adhesion, to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract....

Section 435.355.1 reads:

On application of a party showing an agreement described in section 435.350, and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party; otherwise, the application shall be denied.

On September 8, 1992, Kitsmiller filed in the instant suit an amended application to compel arbitration, citing the same statutes as its motion of August 31, 1992.

On September 10, 1992, the trial court held a hearing in the instant suit. A docket entry that date reads, in pertinent part: "Motion to Compel Arbitration denied."

On April 23, 1993, SDC filed its motion for summary judgment in the...