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Luzerne County v. D.A. Nolt, Inc.

United States District Court, M.D. Pennsylvania

September 5, 2014

D.A. NOLT, INC., Respondent.


A. RICHARD CAPUTO, District Judge.

Before the Court is a Petition to Stay Arbitration pursuant to 42 Pa. C.S.A. ยง 7304 filed by Petitioner Luzerne County ("County") (Doc. 7). The County wants arbitration to be stayed because the Court, instead of the arbitrator, must determine if the parties agreed to submit the underlying dispute to arbitration. Respondent D.A. Nolt, Inc. ("Nolt") asserts that the Petition should be denied because the arbitrator-not the Court-has the power to determine if the Court or the arbitrator should decide whether the underlying dispute is arbitrable.

The instant action arises from a dispute over delay costs stemming from a construction contract. The County hired Nolt as the Contractor on a construction project. Nolt initiated arbitration to recover damages arising from alleged delay costs. Arbitration is being held in abeyance by the parties' agreement.

Luzerne County argues that Nolt waived its claim by accepting final payment, and asserts that the Court, rather than an arbitrator, has the primary power to decide whether Nolt waived its claims. Nolt asserts that the arbitrator has the power to make this decision. At issue presently is whether an arbitrator has the primary power to decide if Nolt's claim is arbitrable, or if the Court has that power. Because there is clear and unmistakable evidence that the parties intended to submit nearly all disputes to an arbitrator, and the question of arbitrability is not listed as an exception to arbitration in their contract, the arbitrator has the primary power to address the question of arbitrability, and the County's petition for a stay of arbitration will be denied.

I. Background

A. Relevant Factual Background

Luzerne County and D.A. Nolt, Inc. entered into a contract on or about July 15, 2010, for Nolt to serve as the Contractor on the exterior restoration of the Luzerne County Courthouse in Wilkes-Barre, Pennsylvania, which the County owns. ( Contract, Doc. 7-3, 2-13.) This contract was in the form of the American Institute of Architect's (AIA) Standard Form of Agreement Between Owner and Contractor, 1987 edition, AIA Document A101 ("A101"). ( Id. at 2-13.) Incorporated into the contract was the 1987 edition of the "General Conditions of the Contract for Construction, " AIA Document A201 ("A201"). ( Id. at 15-40.)

Construction began as planned in September 2010. (Doc. 1, 25.) October 1, 2011 was set as the date of substantial completion. ( Id. ) However, delays and changes to the project arose throughout the building process. (Doc. 7-3, 46.) On October 31, 2011, the parties agreed to Change Order No. 5, extending the completion date to June 30, 2012. (Doc. 1, 26.) On June 21, 2012, Nolt wrote to the County and requested another extension, to November 30, 2012. (Doc. 7-3, 46.)

The parties agree that Nolt averred that the work was "substantially complete" by November 30, 2012. (Doc. 1, 10.) On February 11, 2013, Nolt submitted its final Application for Payment. ( Id. ) In response, the County notified Nolt that it would not make the payment until Nolt provided the County with all warranties required by the contract. ( Id. ) In June 2013, the County received the last of these warranties, and issued payment to Nolt by check for the full amount of Nolt's February Application for Payment. (Doc. 1, 31-6.) Nolt alleges that it is still owed $1, 589, 503.27 as a result of project delays. (Doc. 1, 10.)

B. Procedural History

Following an unsuccessful mediation on January 30, 2014, Nolt filed a demand for arbitration with the American Arbitration Association (AAA) on March 14, 2014. (Doc. 1, 9.) Shortly after, the County informed Nolt and the AAA that they believed that Nolt had waived its claim by accepting final payment. ( Id. at 11.) On March 28, the parties agreed to hold the arbitration in abeyance provided that the County file a petition to stay the arbitration.

Luzerne County filed present Petition for a Stay of Arbitration on March 31, 2014, in Luzerne County Court of Common Pleas. Nolt filed a Notice of Removal to this Court on April 29, 2014. The motion is fully briefed and ripe for disposition.

II. Legal Standard

The question before me is not whether Nolt waived its claim for damages; nor whether the issue of waiver should be arbitrated; but instead, who decides ...

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