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Deer Creek Homeownwers Association v. Deer Creek, Inc.

Superior Court of Pennsylvania

May 23, 2013

DEER CREEK HOMEOWNWERS ASSOCIATION
v.
DEER CREEK, INC., GAMBONE BROS DEVELOPMENT COMPANY AND GAMBONE BROS CONSTRUCTION COMPANY APPEAL OF: DEER CREEK, INC. DEER CREEK HOMEOWNWERS ASSOCIATION
v.
DEER CREEK, INC., GAMBONE BROS CONSTRUCTION COMPANY, GAMBONE BROS DEVELOPMENT COMPANY APPEAL OF: GAMBONE BROS DEVELOPMENT COMPANY DEER CREEK HOMEOWNWERS ASSOCIATION
v.
DEER CREEK, INC., GAMBONE BROS CONSTRUCTION COMPANY, GAMBONEBROS DEVELOPMENT COMPANY APPEAL OF: GAMBONE BROS CONSTRUCTION COMPANY

NON-PRECEDENTIAL DECISION

Appeal from the Order Entered March 23, 2012 & March 22, 2012 In the Court of Common Pleas of Montgomery County Civil Division No(s).: 2007-03678

BEFORE: PANELLA, OLSON, and FITZGERALD, JJ. [*]

MEMORANDUM

FITZGERALD, J.

Appellants, Deer Creek, Inc. ("DCI"), Gambone Bros. Development, and Gambone Bros. Construction (the latter two collectively referred to as "the Gambones"), appeal from the order of the Montgomery County Court of Common Pleas overruling their preliminary objections to the complaint filed by Appellee, Deer Creek Homeowners' Association. Appellants assert that the trial court erred in failing to compel arbitration. We affirm in part and reverse in part.

Appellee is an unincorporated unit owners' association in a planned residential community known as "Deer Creek."[1] Appellee's Compl., 9/23/10, at ¶¶ 1, 11. Appellee asserted that the Gambones, or entities or individuals related to the Gambones, formed DCI. Id. at ¶ 5. DCI, on July 26, 1996, executed and recorded the "Declaration"[2] creating Deer Creek and constituting Appellee. Id. at ¶¶ 5-6, Ex. A at 1. Appellee alleged that DCI and the Gambones were responsible for the construction of townhouses in Deer Creek. Id. at ¶ 18.

On April 3, 1997, DCI amended the Declaration, making Appellee responsible for the maintenance of the exteriors of the townhouses in Deer Creek. Id. at ¶ 12, Ex. D. at § 1.2. Appellee claimed it then became aware of construction defects in the townhouses, including the improper installation of stucco, roofing materials, caulking, windows, doors, and flashings. Id. at ¶¶ 14-15. Appellee alleged that the defective construction caused the townhouses to suffer leaks and water damage, and that the community's reputation, as a whole, was damaged. Id. at ¶¶ at 14-17.

Appellee commenced an action against Appellants on February 13, 2007, by writ of summons. On September 23, 2010, Appellee filed a complaint asserting claims in its own right and on behalf of individual unit owners in Deer Creek. Id. at ¶ 20. In support of its action on behalf of the owners, Appellee attached numerous agreements of sale between DCI and individual unit owners as Exhibit G to its complaint. The complaint contained the following counts against Appellants: Count I for damages for negligence; Count II for damages under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. §§ 201-1–201-9.3; and Count III for damages for breach of warranty.

DCI filed preliminary objections on October 12, 2010. The Gambones jointly filed preliminary objections on the following day. Appellants, in relevant part, asserted that Appellee's action was subject to arbitration provisions in the Declaration and the individual agreements of sale for the townhouses. Appellant DCI's Prelim. Objections, 10/12/10, at ¶¶ 1-7; Appellants Gambones' Prelim. Objections, 10/13/10, at ¶¶ 1-7.

Appellee answered DCI's preliminary objections on October 29, 2010, and the Gambones' preliminary objections on November 1, 2010. Appellee asserted that the arbitration provision in the Declaration did not apply to construction defects that were the responsibility of the "original developer and builder." See Appellee's Ans. to DCI's Prelim. Obj., 10/29/10, at ¶ 2. Moreover, Appellee claimed that the individual agreements of sale did not bind it to arbitration since it was not a party to those contracts. See id. at ¶ 5.

The trial court, on January 31, 2012, heard arguments on the preliminary objections. DCI, in relevant part, stated that Appellee was compelled to arbitrate based on provisions in the Declaration and the agreements of sale. N.T., 1/31/12, at 24. The Gambones acknowledged that they were not parties to either the Declaration or the agreements of sale, but requested that the court grant DCI's request for arbitration and stay the action against them pending arbitration. Id. at 4-5, 26. Appellee responded that: (1) it was entitled to proceed on its own behalf and on behalf of the owners in Deer Creek for damages to common areas such as the exterior of the townhouses; (2) the Gambones could not enforce arbitration provisions to which they were not parties; and (3) the Gambones were not entitled to a stay. Id. at 13-20.

On March 23, 2012, the trial court entered the instant orders overruling Appellants' preliminary objections. Appellants filed timely notices of appeal. The court did not order Appellants to file Pa.R.A.P. 1925(b) statements, but issued a Pa.R.A.P. 1925(a) opinion suggesting that its order was not immediately appealable. This Court, on May 2, 2012, consolidated DCI's and the Gambones' appeals.

Appellants have filed a joint brief in which they present the following question:

Did the [trial court] commit an error of law and an abuse of discretion in overruling the preliminary objections of all [Appellants] in the nature of alternative dispute resolution when the documents before the court unquestionably ...

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