Village of Cairo v. Bodine Contracting Co.

• Decision Date: 29 January 1985
• Docket Number: No. WD,WD
• Citation: 685 S.W.2d 253
• Parties: VILLAGE OF CAIRO, Missouri, Respondent, v. BODINE CONTRACTING COMPANY, Appellant. 35309.
• Court: Missouri Court of Appeals

Page 253

685 S.W.2d 253

VILLAGE OF CAIRO, Missouri, Respondent, v. BODINE CONTRACTING COMPANY, Appellant.

No. WD 35309.

Missouri Court of Appeals,

Western District.

Jan. 29, 1985.

Timothy R. Thornton, John H. Swoboda, Greensfelder, Hemker, Wiese, Gale & Chappelow, St. Louis, for appellant.

Dick H. Woods, Sheryl B. Etling, Stinson, Mag & Fizzell, Kansas City, for respondent.

Before DIXON, P.J., and SHANGLER and CLARK, JJ.

SHANGLER, Judge.

The Village of Cairo contracted with the Bodine Contracting Company for the installation of a comprehensive sewage and treatment facility. The system was designed in two sections: an interceptor sewer and a sewage collection system. Thus, each project was the subject of a separate bid and separate agreement. Bodine was low bidder on each project and was awarded the work for each by separate contract. A term of both, the Interceptor Contract and the Collection Contract, was that Bodine complete the work within 360 days after receipt of the notice to proceed or of a written work order. Work commenced on June 11, 1981, but neither project was completed within the time defined by contract. A dispute arose between the principals: Bodine contended that the progress payments due on each project had not been met and notified Cairo that unless received within the times specified, the contracts would be terminated. Bodine ceased all work on the projects on October 8, 1982, and on October 11, 1982, Bodine advised the mayor of Cairo that the Collection Contract was terminated. On that same day the mayor gave notice to Bodine that both contracts would be terminated pursuant to contract provisions, and on October 22, 1982, Cairo terminated them. The principals, each, asserted the right to termination under specific provisions of the contracts. A term of the Interceptor Contract allowed the contractor to terminate, upon a seven-day notice, if the certified pay estimates were not met after ten days of presentment. A term of each contract allowed the owner--Village of Cairo--to terminate upon ten days notice for failure of the contractor to correct the conditions cited as the basis for the termination.

The two contracts each contained an arbitration clause, but each was distinctive. Cairo financed the Interceptor Contract with a grant from the United States Environmental Protection Agency [and the Missouri Department of Natural Resources], and the terms of that contract were devised by that federal agency. Cairo financed the Collection Contract with a grant from the Farmers Home Administration of the United States Department of Agriculture, and the terms of that agreement were devised by that federal agency.

On November 2, 1982, Bodine made written demand for arbitration with the American Arbitration Association and cited the Village of Cairo as respondent. ¹ Cairo objected to administration by the A.A.A. on the ground that no agreement to arbitrate the disputes subsisted under either of the arbitration provisions. The arbitrator The motion by Bodine for an order to stay the suit by Cairo to enjoin the Administration of the A.A.A. arbitration and to compel Cairo to arbitration of the disputes [which culminated in the judgment under review] asserts the auspices of the Federal Arbitration Act [Title 9 U.S.C.], and alternatively, of the Missouri enactment of the Uniform Arbitration Act [§§ 435.350 to 435.470, RSMo Cum.Supp.1980]. The response of the Village of Cairo to the demand for arbitration was to deny jurisdiction of A.A.A. under either the Federal or Missouri Act. ² The response of the Village of Cairo to the motion to stay, however, was to acquiesce in the motion contention that the arbitration provisions of the contracts are amenable to jurisdiction under one or the other of the Acts. If--as Bodine asserts and Cairo does not affirmatively dispute--the contract transactions for the collection and interceptor systems involved commerce within the sense of §§ 1 and 2 of the Federal Arbitration Act, the question whether the pendent suit is referable to arbitration becomes a matter of federal substantive A written agreement to submit a present or future controversy to arbitration is "valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract"--both under the Federal and Missouri Acts ³ [9 U.S.C. § 2 and § 435.350, RSMo 1980]. The respective acts also empower a court to stay a judicial proceeding and to enforce an agreement to arbitrate, or to stay an arbitration where no agreement exists [9 U.S.C. §§ 3 and 4; § 435.355, subsections 1 through 4]. The motion of the contractor Bodine to enjoin the court action and to compel arbitration and the response of the Village of Cairo pose [as to the Interceptor Contract] whether the arbitral provision was operative under the proven circumstances, and [as to the Collection Contract], whether an arbitral provision subsisted at all. In such a determination, the court proceeds summarily without regard to the justiciability of the disputes asserted for arbitration. If the court finds agreement to arbitrate, and that the dispute is encompassed, the court must order arbitration; otherwise, the parties are left to the judicial resort [9 U.S.C. § 4; § 435.355, subsections 1 through 5]. The obligation to arbitrate, by the very terms of the Acts, rests on free assent and agreement [9 U.S.C. § 2 and § 435.350]. Thus, the subsistence and validity of an arbitration clause is governed by the usual rules and canons of contract interpretation. United Steelworkers of America v. Warrior & Gulf Navigation Company, 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960); Westbrook School Comm. v. Westbrook Teachers Ass'n, 404 A.2d 204, 207 (Me.1979), and see also the cases discussed in Recent Developments: The Uniform Arbitration Act, 48 Mo.L.Rev. 137, 147 (1983). That determination is relegated to the courts as a question of law [9 U.S.C. § 4 and § 435.355]. Drake Bakeries, Incorporated v. Local 50, etc., 370 U.S. 254, 256, 82 S.Ct. 1346, 1348, 8 L.Ed.2d 474 (1962); Demers Nursing Home v. R.C. Foss & Son, Inc., 122 N.H. 757, 449 A.2d 1231, 1232[1, 2] (1982). On these principles, "a party cannot be required to submit to arbitration any dispute which he has not agreed to submit." Atkinson v. Sinclair Refining Company, 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962); Williams v. Clean Coverall Supply Co., Inc., 613 S.W.2d 659, 662 (Mo.App.1980).

ruled nevertheless that an issue of arbitrability existed and that the A.A.A. would continue with the administration of the arbitration. Cairo thereupon brought a suit in the circuit court to enjoin the arbitration and for a declaratory judgment, and a separate count for damages for the Bodine breach of contract. The court adjudicated the separate count for injunction and declaratory judgment in favor of the petition and determined that Cairo was not under obligation to submit any of the disputes to arbitration because no contract to arbitrate those claims subsisted between the principals. The court enjoined Bodine from any demand for arbitration of those disputes. The appeal to this court is from that judgment. § 435.440.1(1) law [see Appendix note 2]. Moses H. Cone Memorial Hospital v. Mercury Construction Corporation, 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983); State ex rel. St. Joseph Light & Power Company v. Donelson, 631 S.W.2d 887, 890 (Mo.App.1982). If not, the state law applies. The question presented by the motion--the arbitrability of the demands--and the judicial mechanism to determine the question are the same, whether under the Missouri or Federal Act, and the counterpart sections are promulgated in much the same language. [Subsections 1 and 2 of § 435.355 compared with §§ 2 and 3 of 9 U.S.C.]. Those states which subscribe to the Uniform Arbitration Act, moreover, share the disposition of the Federal Arbitration Act to enforce arbitration agreements as a matter of the cogent public policy in favor of resolution of disputes without resort to the courts. United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960); Ellis v. Rocky Mountain Empire Sports, Inc., 43 Colo.App. 166, 602 P.2d 895, 897 (1979); Detroit Automobile Inter-Insurance Exchange v. Reck, 90 Mich.App. 286, 282 N.W.2d 292, 294 (1979), and the other cases collected in Recent Developments: The Uniform Arbitration Act, 48 Mo.L.Rev. 137, 147 n. 95 (1983). And, indeed, the litigants--Bodine and Cairo--intersperse their briefs and arguments with citations from the substantive case law developed under the state and federal Acts--all without distinction.

The court rested judgment on premises that, as to the Interceptor Contract, the arbitration provision imposes a condition to arbitration that the contractor work progress during any such proceedings, ⁴ but that Bodine discontinued work on October 8, 1982, and never resumed performance before the demand for arbitration on November 2, 1982. The court determined that, as to the Collection Contract, the dispute involved interpretation of the contract documents, a subject expressly excluded from arbitration by that term of agreement.

The Interceptor Contract

The arbitration terms of the Interceptor Contract provide:

30. ARBITRATION

30.1 All claims, disputes and other matters in question arising out of, or relating to, the CONTRACT DOCUMENTS or the breach thereof, except for claims which have been waived by the making and acceptance of final payment as provided by Section 20, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. 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 any court having jurisdiction thereof.

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