University Casework Systems, Inc. v. Bahre, 2--175A7

• Decision Date: 11 April 1977
• Docket Number: No. 2--175A7,2--175A7
• Citation: 172 Ind.App. 624,362 N.E.2d 155
• Parties: UNIVERSITY CASEWORK SYSTEMS, INC., Plaintiff-Appellant, v. George BAHRE, d/b/a George Bahre Company, Defendant-Appellee.
• Court: Indiana Appellate Court

Page 155

362 N.E.2d 155

172 Ind.App. 624

UNIVERSITY CASEWORK SYSTEMS, INC., Plaintiff-Appellant, v. George BAHRE, d/b/a George Bahre Company, Defendant-Appellee.

No. 2--175A7.

Court of Appeals of Indiana, First District.

April 11, 1977.

Transfer Denied July 29, 1977.

John R. Carr, Jr., A. David Meyer, Buschamann, Carr & Schabel, Indianapolis, for plaintiff-appellant

H. Earl Capehart, Jr., Anthony W. Mommer, Krieg, DeVault, Alexander & Capehart, Indianapolis, for defendant-appellee.

LOWDERMILK, Judge.

CASE SUMMARY

This case was transferred to this office from the Second District in order to help eliminate the disparity in caseloads among the Districts.

Plaintiff-appellant, University Casework Systems, Inc. (UCSI), appeals from the trial court's judgment denying its petition seeking a permanent injunction to stay arbitration proceedings commenced by defendant-appellee, George Bahre, d/b/a George Bahre Company (Bahre).

We affirm.

FACTS

The facts essential for our disposition of this appeal are as follows: In November, 1970, Butler University invited contractors to bid for the construction of the Undergraduate Science Building and Holcomb Institute for Environmental Scientific Research located on the Butler University campus in Indianapolis, Indiana.

Butler University departed from the traditional procedure used in construction projects of inviting each contractor to bid for all of the work to be performed. Instead of seeking a general contractor who would perform all of the work by himself and through his subcontractors, Butler University divided the work into six (6) categories and invited separate bids for each of the six (6) categories of work. The six (6) categories of work for which separate bids were to be received were as follows:

(1) General Construction Work;

(2) Combined Plumbing and Heating, Ventilation and Air Conditioning Work;

(3) Plumbing Work;

(4) Heating, Ventilating and Air Conditioning Work;

(5) Electrical Work; and,

(6) Laboratory Equipment.

The form of contract to be executed between Butler University and the various contractors was 'The American Institute of Architects Standard Form of Agreement Between Owner and Contractor' ¹ and 'The American Institute of Architects General Conditions of the Contract for Construction.' ²

The prospective bidders were furnished, inter-alia, with the following information:

'* * *

B. Bidder for General Construction work agrees to coordinate, assume and accept all of Owner's interest, liabilities and obligations under Proposals accepted by Owner for Plumbing; Heating, Ventilating and Air Conditioning; Electrical Work; and Laboratory Equipment as well as Furnishing of Cut Stone already under contract between Owner and Ingles. Bidder for General Construction work shall include in his proposal all costs connected with such coordination and assumption of Owner's interests, including the cost of bond in favor of General Contractor should he require bond from such contractors who will become subcontractors under General Contractor.

D. Bidders for Plumbing; Heating, Ventilating and Air Conditioning; and Electrical Work and Laboratory Equipment work agree:

(1) That their proposals may form basis of contract to be entered into with Bidder for General Construction, and

(2) That Owner may assign all of its interests, liabilities and obligations under said proposal to successful Bidder for said General Construction. (Except for payments which will be made directly by Owner upon General Contractors approval of application for payments.)

* * *'

This information furnished to bidders was made a part of the parties' contract documents. Further, on the proposal form furnished bidders it was stated:

'* * *

COORDINATION OF ASSIGNED CONTRACTS

Bidder for General Construction Work agrees to coordinate, assume and accept all the Owner's interests, liabilities and obligations, except for payment of sums due under contracts resulting from separate proposals accepted by Owner of Furnishing of Cut Stone; Plumbing; Heating, Ventilation and Air Conditioning; Site Utilities; Electrical Work; and Laboratory Equipment. Above proposal for General Construction Work (Base Bid No. 1) includes all costs connected with such coordination and assumption.

* * *'

Bahre was the successful bidder for the general construction work, and on January 19, 1971, Bahre entered into a separate contract with Butler University as general contractor. UCSI was the successful bidder for the furnishing and installation of laboratory equipment, and on January 19, 1971, UCSI entered into a separate contract with Butler University to perform this work.

UCSI in its contract with Butler University agreed to complete its work within 730 calendar days of January 19, 1971. UCSI did not substantially complete its contract until May 10, 1973. The contracts executed between Butler University and the various contractors had therein the following arbitration provisions:

'7.10 Arbitration 7.10.1 All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, except as set forth in Subparagraph 2.2.9 with respect to the Architect's decisions on matters relating to artistic effect, and except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.7.5 and 9.7.6, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

7.10.2 Notice of the demand for arbitration shall be filed in writing with the other party to the Contract and with the American Arbitration Association, and a copy shall be filed with the Architect. The demand for arbitration shall be made within the time limits specified in Subparagaphs 2.2.10 and 2.2.11 where applicable, and in all other cases within a reasonable time after the claim, dispute or other matter in question has arisen, and in no event shall it be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.'

ISSUES

1. Whether Bahre is an assignee of any right emanating from the contract executed between Butler University and UCSI.

2. Whether Bahre is a third party beneficiary of the contract executed between Butler University and UCSI.

3. Whether the Federal Arbitration Act is applicable to this action.

4. Whether Bahre's arbitration claim is within the scope of the contract executed between Butler University and UCSI.

DISCUSSION AND DECISION

ISSUE ONE

At the outset of this opinion we deem it important to emphasize that on appeal of claims which have been tried to the court without a jury this court will not disturb the judgment of the trial court unless clearly erroneous. Ind. Rules of Procedure, Trial Rule 52(A). The findings or judgment of the trial court will be found clearly erroneous only when upon our review of all the evidence we are left with a definite and firm conviction that the trial court erred. Nelson v. Butcher (1976), Ind.App., 352 N.E.2d 106, 107.

UCSI argues that the trial court erred in finding that Bahre was an assignee of the contract it had executed with Butler University. The crux of UCSI's argument is that the record is devoid of any evidence that Butler University ever assigned its contract with UCSI to Bahre.

We agree with UCSI that subsequent to Butler University's acceptance of Bahre's bid on January 19, 1971, there is no evidence in the record which shows an assignment of the Butler-UCSI contract to Bahre. However, this is not the end of our inquiry.

The parties to a contract are free to include any provisions therein they desire which do not offend the public policy of our state. We are unaware of any rule or policy which would prohibit a promisor (Bahre) from agreeing that upon the promisee's (Butler University) acceptance of his offer, and in exchange for a part of the consideration to be furnished by the promisee, that the promisor will accept an assignment of rights, and/or assume a delegation of duties, which the promisee has in separate contracts.

As we have noted, supra, the general information and the bid proposal form furnished Bahre provided, inter-alia, as follows:

'* * * B. Bidder for General Construction work agrees to coordinate, assume and accept all of Owner's interest, liabilities and obligations under Proposals accepted by Owner for Plumbing; Heating, Ventilating and Air Conditioning; Electrical Work; and Laboratory Equipment as well as Furnishing of Cut Stone already under contract between Owners and Ingles. Bidder for General Construction work shall include in his proposal all costs connected with such coordination and assumption of Owner's interests, including the cost of bond in favor of General Contractor should he require bond from such contractors who will become subcontractors under General Contract.

COORDINATION OF ASSIGNED CONTRACTS

Bidder for General Construction Work agrees to coordinate, assume and accept all of the Owner's interest, liabilities and obligations under separate proposals accepted by Owner for Furnishing of Cut Stone; Plumbing; Heating, Ventilation and Air Conditioning; Electrical Work; and Laboratory Equipment. Above proposal for General Construction Work (Base Bid No. 1) includes all costs connected with such coordination and assumption.

* * *'

At this point in our opinion we think it important to emphasize that the general subject of contractual assignments is fraught with problems in terminology. Only contractual rights arising under a contract may be assigned, whereas...