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WESTMORELAND HOSPITAL ASSOCIATION v. WESTMORELAND CONSTRUCTION COMPANY (11/15/66)

decided: November 15, 1966.

WESTMORELAND HOSPITAL ASSOCIATION
v.
WESTMORELAND CONSTRUCTION COMPANY, APPELLANT



Appeal from decree of Court of Common Pleas of Westmoreland County, No. 3423 in Equity, in case of Westmoreland Hospital Association v. Westmoreland Construction Company.

COUNSEL

Edward B. Doran, for appellant.

B. Patrick Costello, with him Smith, Best, Williams, Costello & Snyder, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Musmanno. Mr. Justice Roberts concurs in the result.

Author: Musmanno

[ 423 Pa. Page 257]

On March 16, 1964, the Westmoreland Construction Company, hereinafter called the contractor, entered into a contract with the Westmoreland Hospital Association to erect an additional wing to the Westmoreland Hospital. During the performance of the construction work, the contractor complained that it was encountering delays in its operation because effective liaison between the hospital staff, the architectural firm and the contractor, was lacking. The contractor endeavored to correct the averred fault but was unsuccessful in its efforts. Because of the trouble here referred to, the contractor incurred an alleged loss of $37,203.

On May 19, 1965, the construction job was completed and on January 17, 1966, the contractor accepted a check in the amount of $67,421.26 in final payment for the job.

On December 28, 1965, the contractor filed a notice of demand for arbitration with the American Arbitration Association of Pittsburgh, charging that, because of failure of cooperation on the part of the Westmoreland Hospital Association, it had incurred losses in the amount of $37,203. The Hospital Association then filed a complaint in equity in the Westmoreland County Court asking that the contractor be enjoined from seeking arbitration of the indicated dispute on the ground that arbitration was not an available form of relief. The court of common pleas did so enjoin the contractor, and the contractor has appealed.

This Court has no difficulty in finding that the dispute here involved between the parties could be the

[ 423 Pa. Page 258]

    proper subject for arbitration, the agreement between them specifically declaring that "7. Arbitration. -- (a) It is mutually agreed that all disputes arising in connection with this contract shall be submitted to arbitration." (Emphasis supplied) Certainly, a dispute over expenditures and losses caused by delays in the execution of the contract would be a dispute "arising in connection with" the contract.

However, the arbitration clause is not applicable in this case for the reason that, by its very terms, it obviously was not meant to apply where the contract was completed and there could be no need for a speedy resolution of a dispute. A reading of the terms of arbitration make it clear that the purpose of providing for arbitration was to settle those differences, that, arising during the course of construction, might have unduly interrupted completion of the work. The agreement provided: "(b) The work under this contract shall not be stopped or delayed in any way during the arbitration proceedings except by written mutual consent of both parties to the contract, and such mutual consent shall stipulate whether extension of the time for completion of the contract will be authorized by such stoppage or delay. (c) Demand for arbitration in connection with any dispute shall be filed in writing with the Architect and with the other party to the contract. Any demand for arbitration shall be made within thirty days after the dispute has arisen if practicable, but, in any event, no demand for arbitration shall be made after the date of final payment except in the case of a dispute arising in connection with any guarantee provisions of the Contract Documents."

As the case comes to us, the contract had already been completed by the contractor when it applied for arbitration. Thus, there was no need for arbitration; the regular ...


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