E. E. Tripp Excavating Contractor, Inc. v. Jackson County

• Decision Date: 08 April 1975
• Docket Number: No. 2,Docket No. 19526,2
• Citation: 60 Mich.App. 221,230 N.W.2d 556
• Parties: E. E. TRIPP EXCAVATING CONTRACTOR, INC., a Michigan Corporation, Plaintiff-Appellant, v. The COUNTY OF JACKSON, Michigan, a Michigan Municipal Corporation, acting By and Through the Jackson County Department of Public Works and the Jackson County Board of Public Works, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 556

230 N.W.2d 556

60 Mich.App. 221

E. E. TRIPP EXCAVATING CONTRACTOR, INC., a Michigan Corporation, Plaintiff-Appellant, v. The COUNTY OF JACKSON, Michigan, a Michigan Municipal Corporation, acting By and Through the Jackson County Department of Public Works and the Jackson County Board of Public Works Defendant-Appellee.

Docket No. 19526.

Court of Appeals of Michigan, Division No. 2.

April 8, 1975.

Rehearing Denied May 22, 1975.

Released for Publication June 26, 1975.

John Boghosian, Birmingham, for plaintiff-appellant.

Joseph C. Olk, Alvin G. Dahlem, Jackson, for defendant-appellee; Thomas C. Shearer, Grand Rapids, of counsel.

Butzel, Long, Gust, Klein & Van Zile by Robert J. Battista, Detroit, for amicus curiae.

Before T. M. BURNS, P.J., and D. E. HOLBROOK and KELLY, JJ.

KELLY, Judge.

I Facts

After competitive bidding, E. E. Tripp Excavating Contractor, Inc., Plaintiff-Appellant, was awarded the general contract for the construction of a sanitary sewer system in Blackman Township, Jackson County. The contract between plaintiff and the Jackson County Board of Public Works was in the amount of $1,330,958.24, and called for completion in one year.

The work was begun in November of 1971. In December, it was discovered that the subsoil conditions were unsatisfactory and that it would be necessary to reroute portions of the sewer. According to the contract, the project engineers Williams & Works were entitled to issue change orders and to adjust completion dates and compensation accordingly.

Attempts to negotiate price and completion date changes proved futile. Tripp claims that the county, through its engineers acting arbitrarily, refused to negotiate in good faith. The county claims that Tripp refused to proceed with certain work contrary to the contract. At any rate, co-operation between the project engineers and the general contractor dissolved in acrimony. On February 14, 1972 the project engineer notified Tripp that if it felt aggrieved it should resort to the arbitration remedy provided by the contract. On March 21, 1972, Tripp filed a demand for arbitration with the American Arbitration Association alleging numerous breaches of contract and requesting relief. On April 3rd the county filed its answer to Tripp's demand for arbitration, denied wrong-doing and requested affirmative relief. Accompanying the answer and counterclaim was the county's list of proposed arbitrators and a request for hearing dates. Some time after April 3rd and before May 4th, three attempts were made to agree on qualified arbitrators. On May 4th defendant county indicated its consent to what eventually became the three-man arbitration panel consisting of one contractor, one attorney, and one architect. During all this time Tripp continued to work on the various other areas of the sanitary sewer system which were not in dispute over the rerouting.

On May 11th, after the final members of the arbitration panel had been selected in accordance with the AAA's rules, the county notified Tripp and its surety by letter that the county was terminating the contract pursuant to § 3.13 of the General Conditions of the contract and that the contract would therefore terminate ten days after the date of the notice. The county's express justification for termination was that Tripp was in default. This letter stopped Tripp's activity on the project. The arbitration process however continued.

On June 2nd the Detroit office of the American Arbitration Association confirmed the three-man panel by phone and solicited acceptable dates from the parties. An hiatus of 19 days was followed by a letter from defendant-appellee's attorney addressed to the Regional Director of the American Arbitration Association. That letter is set forth here in its entirety:

'American Arbitration Association

Mr. Harry R. Payne II

Regional Director

Room 1035, Penobscot Building

Detroit, Michigan, 48226

'Re: Case No. 54 10 0011 72

E. E. TRIPP EXCAVATNG CONTRACTOR, INC.

and

JACKSON COUNTY BOARD OF PUBLIC WORKS

'Dear Mr. Payne:

'On June 2, 1972, we were contacted by your office and advised orally that a three-man Arbitration panel had been selected to hear the above caption case and an inquiry was made to an acceptable date for the Arbitration hearing.

'At that time, I advised your office that on or about May 12, 1972, Jackson County Board of Public Works had issued a notice to E. E. Tripp Excavating Contractor, Inc. pursuant to the provisions of the construction contract advising the contractor of his default and of the county's intent to terminate the contract ten (10) days after issuance of the notice. I further indicated that in view of the issuance of the default and termination of the contract upon the expiration of the ten (10) day period, it was the position of the Jackson County Board of Public Works that the claimant, E. E. Tripp Excavating Contractor, Inc. were not entitled to proceed with the Arbitration and that as far as the Jackson County Board of Public Works was concerned, any further proceeding by the American Arbitration Association in the above caption case should be stayed.

'The purpose of this letter is to officially confirm the position of the Jackson County Board of Public Works. As previously indicated, it is the position of the Jackson County Board of Public Works that the claimant, E. E Tripp Excavating Contractor, Inc. has no right to proceed with the Arbitration and that the American Arbitration Association should cease and desist from any further proceedings in this matter for the following reasons:

'1. On May 12, 1972, the Jackson County Board of Public Works issued a notice of default to the contractor indicating its intention to terminate the contract ten (10) days after issuance of the notice of default because of the contractor's breach of the terms and conditions thereof. The ten (10) day notice period has expired and at this time, the county considers the contract terminated. Having breached the contract, it is the county's position that the contractor has no right to have Arbitration over the objection of the the county at this time.

'2. In the Claimant's Demand for Arbitration, the claimant alleged (sic) that the county had breached the contract. As previously indicated, the county's answer to the Demand for Arbitration, it is the county's position that the question of breach of contract is not a matter within the jurisdiction of the American Arbitration Association to decide, but rather a decision that is properly determined by court of proper jurisdiction. There is ample case authority to support the county's position in this regard.

'3. It should be pointed out that even where an issue in dispute is subject to Arbitration pursuant to the provisions of the contract between the parties, under the provisions of Section 3.04 of the general conditions to the contract it is stated, 'The Contractor shall not delay the work because Arbitration proceedings are pending unless he shall have written permission from the engineer to do so and such delay shall not extend beyond the time when the Arbitrators shall have opportunity to determine whether the work shall continue to be suspended pending decision by the Arbitrator to such a dispute.' The county wishes to point out that with regard to the items in dispute, the contractor has failed to proceed with the work in accordance with the provisions of Section 3.04. This fact in itself constitutes a breach of the terms and conditions of the contract by the contractor and is a waiver by the contractor of his right to Arbitration under the contract.

'Accordingly, the Jackson County Board of Public Works respectfully requests that the American Arbitration Association cease and desist from any further proceedings in the above caption case. If any additional information is needed by the association from our client to verify the above stated position in order for the association to determine to cease and desist from any further activity on this file, we would be happy to furnish the same upon request.

'In the event that your office should determine to proceed to hold a hearing in the case and to reach a determination on the merits, I would appreciate being advised of your official position in this regard and request that we be notified of any hearing dates scheduled.

'Thank you for your cooperation.

'Very truly yours,

'Thomas C. Shearer.'

No copy of defendant's letter to the AAA was sent to plaintiff. It drew a response in the form of a letter directed to counsel of record dated June 28, 1972, postponing the arbitration hearing to July 10th and acknowledging receipt of the previously reported letter. The AAA Administrator's letter is quoted in part:

'This will acknowledge Mr. Shearer's letter of June 21, 1972, in the above entitled matter, a copy of which is enclosed to Claimant's attorneys and to the arbitrators.

'The Association, after reviewing the comments of the parties, has determined that an issue as to arbitrability exists which could be determined by an arbitrator. We will proceed with further administration of this matter unless otherwise requested by both parties, or unless the moving party is stayed by court order.'

No application was made for a stay of proceedings by the defendant county. On July 7th, by telephone and by letter, defense counsel was notified that the hearing would proceed as scheduled on July 10th. On the hearing date, plaintiff appeared with its counsel and witnesses. Counsel for defendant was again notified by phone that arbitration was about the proceed. He declined to appear or participate.

The arbitration hearing commenced July 10th and concluded July 13, 1972. Seven witnesses testified and some 47 exhibits were introduced. The arbitration panel awarded plaintiff $870,565.10. The award was not itemized. When defendant failed to satisfy the award, plaintiff brought suit in a three-count complaint. Count I sought confirmation of the...