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SANITARY SEWER AUTHORITY BOROUGH SHICKSHINNY v. DIAL ASSOCIATES CONSTRUCTION GROUP (06/16/87)

submitted: June 16, 1987.

SANITARY SEWER AUTHORITY OF THE BOROUGH OF SHICKSHINNY, APPELLEE,
v.
DIAL ASSOCIATES CONSTRUCTION GROUP, INC., APPELLANT



Appeal from the Order entered October 23, 1986 in the Luzerne County Court of Common Pleas, Civil No. 5341-C-1985, 4540-C-1986.

COUNSEL

Frederick S. Wolf, Lebanon, for appellant.

Anthony B. Panaway, Wilkes-Barre, for appellee.

Montemuro, Kelly and Cercone, JJ.

Author: Kelly

[ 367 Pa. Super. Page 208]

In this appeal we must determine whether the trial court acted properly in ordering a stay of an arbitration proceeding brought by the appellant, Dial Associates Construction Group ("Dial Associates"), against appellee, Sanitary Sewer Authority of the Borough of Shickshinny ("the Sewer Authority").*fn1 We reverse.

On June 11, 1984, the Sewer Authority and Dial Associates entered into a contract for sewer construction in the Borough of Shickshinny. The contract provided that all claims and disputes arising out of the contract would be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration

[ 367 Pa. Super. Page 209]

Association. A performance bond, guaranteeing the Sewer Authority that the project would be completed by Dial Associates in accordance with the contract, was issued by the United States Fidelity and Guaranty Company ("USF & G").

On December 10, 1985, the Sewer Authority brought suit under the performance bond against USF & G. The suit, brought in the Luzerne County Court of Common Pleas, alleged that Dial Associates had breached the construction contract, and that USF & G was therefore liable on the bond. In March 1986, USF & G joined Dial Associates as an additional defendant, alleging that, should the Sewer Authority prevail in its suit on the bond, USF & G would be entitled to indemnification from Dial Associates.

On July 28, 1986, a second action was instituted. Dial Associates filed for arbitration against the Sewer Authority with the American Arbitration Association, seeking damages for an alleged breach of the sewer construction contract.

Two months later, on September 30, 1986,*fn2 the Sewer Authority filed a petition in the Luzerne County Court of Common Pleas, requesting a stay of the arbitration matter pending final resolution of the common pleas action. At the time the Sewer Authority filed its petition, preliminary objections had been decided against USF & G in the common pleas action, and USF & G had filed an answer; Dial Associates had filed neither preliminary objections nor an answer to the complaint joining it as an additional defendant. The trial court, "[c]onsidering the time and effort already consumed in the lawsuit instituted in the [court of common pleas]," held that "a termination of that suit and the instigation of arbitration proceedings would be an unnecessary burden on both . ...


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