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PARKING UNLIMITED v. MONSOUR MEDICAL FOUNDATION (05/14/82)

SUPERIOR COURT OF PENNSYLVANIA


filed: May 14, 1982.

PARKING UNLIMITED, INC., A CORPORATION,
v.
MONSOUR MEDICAL FOUNDATION, A CORPORATION, APPELLANT

No. 515 Pittsburgh, 1980, Appeal from the Order of the Court of Common Pleas, Civil Division, of Westmoreland County, 11244 of 1979.

COUNSEL

John R. Friedlander, Pittsburgh, for appellant.

B. Patrick Costello, Greensburg, for appellee.

Price, Brosky and Montemuro, JJ.

Author: Price

[ 299 Pa. Super. Page 291]

The issues presented for our consideration in this appeal are whether the court below erred in entering an order pursuant to a common law arbitration award and in refusing appellant permission to take depositions of additional witnesses.

The parties to the instant action entered into a written building contract*fn1 by which appellee, Parking Unlimited, Incorporated, agreed to furnish architectural and engineering services in connection with the construction of a parking garage and office building for appellant, Monsour Medical Foundation. The contract called for specified payments upon the performance of certain phases of the engineering work.*fn2 It also expressly provided for the arbitration of disputes arising out of the contract in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. When appellee sought payment of the balance of the contract price which it claimed to be due, appellant denied any liability because of appellee's allegedly unsatisfactory performance. The parties then submitted the entire controversy for decision by a panel of arbitrators.*fn3 Appellee averred full compliance with the contract and completion of its obligations thereunder and claimed $101,829,

[ 299 Pa. Super. Page 292]

    with interest, as the unpaid balance. Appellant, on the other hand, claimed that the set of plans and specifications prepared by appellee was valueless.

The arbitrators conducted a hearing on September 19, 1979.*fn4 On October 18, 1979, the arbitrators announced an award in favor of appellee for the total amount claimed. Thereafter, appellee filed a petition to confirm the arbitrators' award. Appellant answered that the contract was void ab initio since professional services cannot be performed by a business corporation and, by way of new matter, asserted that the arbitration award was a nullity since after-discovered evidence established that false testimony was given at the proceeding. At the same time, appellant also moved for discovery since the averments of new matter set forth in the answer were dehors the record. Appellee's reply to new matter denied that it had engaged in any improper activity, and asserted that the arbitrators made their award after a full and fair hearing. On May 2, 1980, the Honorable Richard E. McCormick entered an order, in which the Honorable Gilfert M. Mihalich concurred, granting appellee's petition to confirm the award and denying appellant's request for additional discovery. This appeal followed.

[ 299 Pa. Super. Page 293]

In arbitration agreements under common law, the arbitrator is the final judge of both law and fact, and there is no authority which sanctions the vacatur of his decision for a mistake of either.*fn5 Allstate Insurance Co. v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972); Harwitz v. Selas Corp. Page 293} of America, 406 Pa. 539, 178 A.2d 617 (1962). Every presumption is in favor of the award's validity. Reinhart v. State Automobile Insurance Association, 242 Pa. Superior Ct. 18, 363 A.2d 1138 (1976). Nevertheless, a party can succeed in having an arbitrator's award vacated if it is alleged and proven, by clear, precise and convincing evidence, that he was "denied a hearing or that there was fraud, misconduct, corruption or some other irregularity of this nature on the part of the arbitrator which caused him to render an unjust, inequitable or unconscionable finding." International Brotherhood of Firemen and Oilers, AFL-CIO Local 1201 v. School District of Philadelphia, 465 Pa. 356, 350 A.2d 804 (1976), quoting Nationwide Mutual Insurance Co. v. Barbera, 443 Pa. 93, 95, 277 A.2d 821, 823 (1971). See 42 Pa.C.S.A. § 7341.

In the instant case, appellant alleges neither misconduct, corruption, nor denial of a hearing. Rather, appellant seeks to overturn the award by alleging that because appellee, as a business corporation,*fn6 contracted to perform professional services in violation of the Professional Corporation Law, Act of July 9, 1970, P.L. 461, No. 160, § 2(4), the arbitrators' decision permitting recovery for its services amounted to such a capricious disregard of the law as to constitute an "other irregularity."*fn7 We disagree.

While the arbitrators rendered their decision without opinion, it should be noted that their determination was delayed until both parties had an opportunity to brief the question

[ 299 Pa. Super. Page 294]

    whether appellee, as a business corporation, should be barred from recovery upon the contract.*fn8 In rebuttal to appellant's claim that the performance of engineering services is reserved exclusively for professional corporations or individual licensees, appellee adverted to the Professional Engineers Registration Law, Act of May 23, 1945, P.L. 913, § 6 (prior to the 1979 amendment), which deals specifically with firms and corporations. In pertinent part, that section provides:

The practice of engineering, and of surveying being the function of an individual or of individuals working in concerted effort, it shall be unlawful for any firm or corporation to engage in such practice, or to offer to practice, or to assume, use or advertise any title or description conveying the impression that such firm or corporation is engaged or is offering to practice such profession, unless the directing heads and employees of such firm or corporation in responsible charge of its activities in the practice of such profession are licensed and registered in conformity with the requirements of this Act, and whose name and seal shall be stamped on all plans, specifications, plates and reports issued by such firm or corporation.

63 P.S. § 153 (1968) (emphasis added). Appellee argued that since it was and is complying with the law concerning registration,*fn9 the intention of the legislature was that it should be entitled to recover pursuant to section six.

[ 299 Pa. Super. Page 295]

In these circumstances, we do not believe that the award in favor of appellee meets the "other irregularity" criterion articulated in Allstate Insurance Co. v. Fioravanti, 451 Pa. 108, 299 A.2d 585 (1973) and its progeny. Although there is no doubt that appellee, as a business corporation, contracted to provide engineering services, the arbitrators decided in good faith that the public policy declared by the legislature in section six of the Professional Engineers Registration Law expressly permits recovery for the services appellee rendered. See 15 P.S. § 2905 (Supp. 1980-81). Clearly, we cannot say that this conclusion evidences an indifference to the governing law sufficient for vacating an arbitration decision.

We now turn to appellant's allegation that the suppression by appellee of certain facts in the proceeding was tantamount to fraud and, concomitantly, that the trial court abused its discretion in denying appellant's motion for discovery. Appellant asserts that, after the arbitration award was entered, it discovered that Mulach Steel Corporation*fn10 [Mulach] had performed a substantial portion of the work for which appellee now seeks recovery and that appellee would have received an undisclosed kickback of $6000 in the event Mulach was awarded the final steel contract.*fn11 Appellant thus argues that the president of appellee-corporation

[ 299 Pa. Super. Page 296]

    committed perjury at the arbitration hearing when he failed to disclose these facts in response to questioning concerning the right of Parking Unlimited to recover for its services. This argument is patently spurious.

[ 299 Pa. Super. Page 297]

An offer to show fraud in attacking an arbitration award should indicate facts which, if proved, would be sufficient to sustain such a finding. Kann v. Bennett, 234 Pa. 12, 82 A. 1111 (1912). While it is true that appellee contracted with Mulach to provide certain engineering designs for which it had been hired by appellant,*fn12 there was nothing in the parties' agreement which required appellee to furnish, or appellant to approve, the names of any subcontractors that might participate in the design work. Indeed, after reviewing the contract and its legal effect as a whole, it is fair to say that appellee was an independent contractor, free from the control of appellant with respect to the means of performing the work to be done.*fn13 Cf. Hammermill Page 297} Paper Co. v. Rust Engineering Co., 430 Pa. 365, 243 A.2d 389 (1968) (judgment on the pleadings reversed where trial court predicated its decision on ground that engineering and construction firm was an employee as opposed to an independent contractor). See generally C. Dunham & R. Young, Contracts, Specifications, and Law for Engineers 111, 384-85 (2d ed. 1971). See also Mackay v. Benjamin Franklin R. & H. Co., 288 Pa. 207, 135 A. 613 (1927). Thus, Mulach's engagement as an engineering consultant was a normal and permissible incident to the parties' contract and we fail to see how any omission in this regard could have influenced, or is even material to, the arbitrators' decision that Parking Unlimited satisfactorily performed under its terms.*fn14

No discussion is necessary as to appellant's complaint that Mulach and Parking Unlimited agreed upon a secret $6000 "kickback" except to state that their subcontract delineated two alternative methods of compensation for the services to be performed by Mulach: $5000 if it was awarded the final steel work, or one percent of the construction cost of the work it had prepared (in this case, $11,000) if the final steel work was awarded to another contractor. In ordinary parlance, this was merely a discount provision and, as appellee significantly points out, there were fifteen contractors who bid on this phase of the project with no assurance to any, including Mulach, that it would be the successful bidder. In such circumstances, we cannot say that Mulach acted in collusion with appellee.*fn15

[ 299 Pa. Super. Page 298]

For all of the foregoing reasons, the order granting appellee's petition to confirm the arbitrators' award and denying appellant's request for additional discovery is affirmed.


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