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PS Commercial Play, LLC v. Harp Contractors, Inc.

Court of Appeals of Ohio, Second District, Montgomery

May 26, 2017

PS COMMERCIAL PLAY, LLC Plaintiff-Appellee
v.
HARP CONTRACTORS, INC., et al. Defendants-Appellants

         Civil Appeal from Common Pleas Court T.C. NO. 16-CV-2584

          DANIEL A. BROWN, Atty. Reg. No. 0044132, Attorney for Plaintiff-Appellee

          ANDREW J. NATALE, Atty. Reg. No. 0042110 and NORA E. LOFTUS, Atty. Reg. No. 0079985, Attorneys for Defendant-Appellant Harp Contractors, Inc.

          OPINION

          DONOVAN, J.

         {¶ 1} This matter is before the Court on the Notice of Appeal of Harp Contractors, Inc. ("Harp"), filed September 6, 2016. Harp appeals from the trial court's August 9, 2016 decision overruling "Defendant's Motion to Stay Pending Arbitration." We hereby affirm the judgment of the trial court.

         {¶ 2} On May 23, 2016, PS Commercial Play, LLC, DBA Play & Park Structures ("Play & Park"), filed a Complaint against Harp and Ohio Farmers Insurance Co. ("Ohio Farmers"). The Complaint provides that "Harp was the prime contractor on a public works project undertaken by Harp with the Ohio Facilities Commission ('OSFC') and the Northmont City School District Board of Education ('Northmont') commonly known as Northmont City Schools - Kleptz Early Learning Center ('the Project') on the real property located at 1100 National Road, Clayton, OH 45315." According to the Complaint, "Play & Park was the subcontractor of Harp on the Project, " and a copy of the March 10, 2014 Subcontractor Agreement is attached to the complaint. The Complaint alleges that in "its contract with the OSFC and Northmont, and pursuant to Ohio Revised Code Section 153.54, Harp was required to provide a Payment Bond for the Project, " and a copy of the Payment Bond is also attached to the complaint. Play & Park asserted that Ohio Farmers was the surety on the Payment Bond.

         {¶3}The Complaint alleges that Play & Park "has provided materials for the Project for which it has not been paid, " and that it "is owed the entire amount of the Subcontract Agreement, the principal sum of $117, 285.96." According to the complaint, Play & Park "has demanded payment from Harp and Harp has failed or otherwise refused to pay the sums due and owing." The complaint provides that Play & Park also "notified Ohio Farmers of the amount due in accordance with" RC. 153.56(A), and that Ohio Farmers has refused to pay the amount due. In Count I of its Complaint, Play & Park asserts that "Harp's failure to pay Play & Park for labor performed and/or material supplied on the Project constitutes a breach of contract." In Count II, Play & Park asserts that "Ohio Farmers owes Play & Park the principal sum of $117, 285.96 under the Payment Bond." In Count III, Play & Park asserts that Harp has been unjustly enriched to Play & Park's detriment.

         {¶ 4} The attached Subcontract Agreement identifies Harp as the Contractor and Play & Park as the Subcontractor. Article 4, paragraph 4.1 provides in part: "Payments generally will be made within 45 days of Contractors billing to Owner for Subcontractor's work * * *." Article 10, paragraph 10.7 thereof provides in part as follows:

In Contractor's sole discretion, any and all claims or disputes between the Contractor and the Subcontractor arising out or relating to the Agreement or the Contract Documents, or the breach thereof, shall be decided by in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect unless the parties mutually agree otherwise. Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association and shall be made within a reasonable time after the dispute has arisen. * * *

         {¶ 5} On June 23, 2016, a "Stipulated Leave to Plead" was filed which provides: "We, the attorneys for the respective parties, do hereby stipulate that Defendants [Harp] and [Ohio Farmers] shall have an additional thirty (30) days, until July 25, 2016 to move, plead or otherwise answer Plaintiff's Complaint."

         {¶6}On July 25, 2016, "Defendants' Joint Answer to Complaint and Harp Contractors, Inc's Statement regarding Counterclaims" ("Answer") was filed, along with "Defendants' Motion to Stay Pending Arbitration" ("Motion"). The Answer provides in part that "Defendants state that Play & Park's work was untimely and defective, and Harp has not received payments from the owners for Play & Park's work." The Answer asserts the following defense: "Play & Park's claims are subject to mandatory and binding arbitration per the express written subcontract between the parties." The Answer further contains the following statement: "Harp has claims against Play & Park that are covered by the arbitration provision in the Subcontract, and Harp reasserts its right to pursue those claims through arbitration as set forth in Harp's Motion to Stay * * * In the event that this Court denies the Motion to Stay, Harp requests fourteen (14) days leave following the entry of the Order denying the Motion to assert its counterclaims against Play & Park."

         {¶ 7} The Motion provides that "Harp must be permitted to exercise its contractual right to have Play & Park'[s] claims decided through mandatory and binding arbitration, as required by the arbitration agreement Play & Park agreed to in writing." According to the Motion, "[i]n addition to the arbitration provision, the Subcontract also includes a 'pay if paid' provision that states that Harp is not required to pay Play & Park for any work unless and until Harp receives payment from the owner." The Motion further provides that the "Project owner has made claims against Harp relating to deficiencies in Play & Park's work and has withheld payment from Harp as a result of those alleged deficiencies, which form the basis of Harp's counterclaims against Play & Park." The Motion provides that Harp is not in default in proceeding with arbitration. The Motion provides as follows:

For over a year, Harp has taken every effort to get the owner to release funds to Harp, including the mandatory and lengthy administrative claims process. In an effort to mitigate its damages, including those against Play & Park, as alleged by the owner, Harp has continuously been investigating and working to try to resolve claims upstream with the owner so that it could then try to resolve claims downstream with the subcontractors. For these reasons, Harp had not previously filed arbitration. However, since it does not appear that Harp will be able to resolve its claims with Play & Park at this time, it will be filing an arbitration demand.
It is worthy to note that prior to filing its lawsuit, Play & Park did not request from Harp confirmation as to whether Harp would select arbitration to resolve the dispute, as customarily happens in the construction industry when arbitration is at one party's election. Typically, when a contract includes an arbitration provision that one party can elect at its sole discretion, or both parties must mutually agree upon, there is a pre-suit request from ...

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