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DERRY TOWNSHIP MUNICIPAL AUTHORITY v. SOLOMON AND DAVIS (03/14/88)

filed: March 14, 1988.

DERRY TOWNSHIP MUNICIPAL AUTHORITY, A PENNSYLVANIA MUNICIPAL CORPORATION, APPELLANT,
v.
SOLOMON AND DAVIS, INC., A PENNSYLVANIA CORPORATION, AND THE AMERICAN ARBITRATION ASSOCIATION, APPELLEES



Appeal from the Order of the Court of Common Pleas of Westmoreland County, No. 6717 of 1984 Civil at No. 6717 of 1984.

COUNSEL

David C. Pohland, Greensburg, for appellant.

John M. Purcell, Uniontown, for appellees.

Wieand, Montemuro and Popovich, JJ.

Author: Montemuro

[ 372 Pa. Super. Page 215]

Appellant Derry Township Municipal Authority ("Derry") appeals from an order of the Court of Common Pleas, Westmoreland County, denying the municipal authority's petition to vacate, modify or correct an arbitration award in favor of appellee Solomon and Davis, Inc. ("Solomon").

In May 1980, Derry awarded to Solomon three contracts, numbered 6, 7 and 8, for construction of various portions of a sanitary sewer system. As part of its contract obligation, Solomon was required to repave any areas dug up for the sewer construction. The case before us concerns a dispute that arose only in regard to Contracts # 6 and # 7. Under Contract # 7, repaving work was begun in the summer of 1980 and was completed around July 1981, before any work was begun under Contract # 6. In or around September 1981 a dispute arose concerning certain descriptions for repaving materials contained in all three contracts. See generally N.T., Arbitration Hearing, Vol. II, June 8, 1984, at 357-72. Solomon asserted that prior to bidding, it had contacted Derry's project engineer employed by Derry who had indicated that a material costing $2.00 per square yard could be used in the repaving. Solomon had made its bid accordingly. However, during paving restoration, Derry's project engineer allegedly directed Solomon to repave the streets, not with the material Solomon had planned and

[ 372 Pa. Super. Page 216]

    budgeted to use at $2.00 per square yard, but with another material at a cost of $18.00 per square yard. Derry paid the rate for the difference in materials under Contract # 7, but before work was begun under Contract # 6, attempted to hold Solomon to its $2.00 per square yard bid and tried to place responsibility for any mistake upon Solomon. Derry also challenged the quality of the paving materials actually used by Solomon. Derry then informed Solomon that there had been an overpayment under Contract # 7 and accordingly charged off a credit against Solomon for the difference. See Trial Court Opinion at 3-4.

Pursuant to its written contract with Derry, Solomon submitted its claim for excess payment over the bid price to the American Arbitration Association ("AAA"). The case was heard before a panel of three arbitrators, and, on August 23, 1984, the AAA entered an award in Solomon's favor on Contract # 6 and in Derry's favor on Contract # 7.*fn1 Both parties filed cross petitions to the Court of Common Pleas, Westmoreland County, to vacate, modify or correct the award. Before addressing the issues raised by the parties, the court had to determine whether it was reviewing a proceeding brought under common law or statutory arbitration, and then decide what standard of review to apply. The court concluded that the parties were proceeding under common law arbitration, that the standard of review was governed by the Arbitration Act of 1980,*fn2 and that, accordingly, neither party had alleged sufficient reasons to vacate, modify or correct the arbitration award.

Only Derry pursues its claim on appeal to this Court. The appeal raises three issues: (1) whether the court of common pleas concluded correctly that the parties were

[ 372 Pa. Super. Page 217]

    proceeding under the Arbitration Act of 1980 rather than the Arbitration Act of 1927;*fn3 (2) whether the court concluded correctly that the parties were proceeding under common law arbitration; and (3) whether the court applied the appropriate standard of review when it denied relief to Derry.*fn4 We affirm.

Whether the parties are proceeding under the 1927 Act or the 1980 Act is of critical importance to Derry's chances of relief on review in the court of common pleas. If the 1927 Act applies and the matter is one of statutory arbitration, Derry will obtain a relatively broad standard of review: the court will modify or correct an award if it is "against the law, and is ...


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