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EDWARD T. MCGARRY AND CAROL B. MCGARRY v. BROADMOOR CUSTOM HOMES (06/27/89)

submitted: June 27, 1989.

EDWARD T. MCGARRY AND CAROL B. MCGARRY
v.
BROADMOOR CUSTOM HOMES, INC., APPELLANT



Appeal from the Order entered February 10, 1989 in the Court of Common Pleas of Monroe County, Civil Division, at No. 1219-1988.

COUNSEL

Michael C. Deschler, Bethlehem, for appellant.

James A. Swetz, Stroudsburg, for appellees.

Del Sole, Tamilia and Cercone, JJ.

Author: Del Sole

[ 387 Pa. Super. Page 44]

Appellant takes this appeal seeking to contest an award of counsel fees granted to Mr. and Mrs. McGarry, plaintiffs in the underlying action. Although we do not condone Appellant's conduct which prompted the McGarry's to bring the instant action, the posture of this case requires that the trial court's order be reversed.

The parties in this case had entered into an agreement concerning the construction of a single family house. This agreement contained a clause requiring that any and all disputes be settled by arbitration. The trial court found that a dispute later arose which the McGarrys sought to resolve in an amicable non-adversarial manner, but they were not successful. Despite a binding obligation to proceed to arbitration, the McGarrys' demands to take such action went unanswered. The underlying action was then filed with the trial court on June 13, 1988. On July 11, 1988, Appellant filed preliminary objections asserting the existence of an arbitration clause in the construction agreement. The court sustained the preliminary objection, dismissed the McGarrys' complaint, directed the parties to proceed to arbitration, and awarded the McGarrys counsel fees, later accessed at $1,475.77. The court dismissed the McGarrys' claim that Appellant had waived the provisions directing arbitration by concluding that any prejudice in the form of a delay, "could have been remedied by Plaintiffs filing an action to compel arbitration." Trial court opinion, 10/17/88 at 6.

[ 387 Pa. Super. Page 45]

After conclusion of the subsequent hearing to assess the amount of counsel fees the court issued an opinion in which it wrote: "we find that Defendant's actions, which delayed arbitration in this case and caused plaintiff unnecessary expenditures, were sufficiently dilatory, arbitrary and vexatious in nature to support the imposition of counsel fees under 42 Pa.C.S.A. § 2503." Trial court opinion, 2/10/89 at 3. The court found that Appellant's unjustified refusal to arbitrate resulted in delay and unnecessary expense. Accordingly the court issued an order assessing counsel fees against Appellant.

Appellant does not contest the reasonableness of the amount of counsel fees awarded. Rather, Appellant contends that the court erred in granting the McGarrys' request for counsel fees since Appellant did not engage in dilatory obdurate or vexatious conduct during the pendency of this matter. It is Appellant's position that the underlying action did not become "pending" until the McGarrys filed their complaint. Appellant further asserts that after the complaint was filed, it filed its preliminary objections promptly, and in all other ways acted appropriately so as not to delay the conclusion of the case. Appellant also points to the fact that the McGarrys could have limited the delay in bringing the matter to arbitration by filing an action to compel arbitration. See 42 Pa.C.S.A. § 7304(a).

The applicable statutory provision for an award of counsel fees states:

The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:

(7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious ...


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