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Home My WebLink About2007-1509 Civil JAMES E. BAUMGARDNER, : IN THE COURT OF COMMON PLEAS OF Petitioner : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : CIVIL ACTION – LAW : NO. 07-1509 CIVIL BRAMBLES ARMS : ASSOCIATES, L.P., and : THOMAS W. GAUGHEN, : Individually, : Respondents : PETITION TO CONFIRM AWARD OF ARBITRATOR BEFORE HESS, J. OPINION AND ORDER Thomas W. Gaughen (Gaughen) is the general partner of Brambles Arms Associates, L.P. (Brambles Arms). Brambles Arms and Gaughen (collectively Developers) sought to construct a building consisting of 206 apartment units in Hampden Township, Pennsylvania. The Developers entered into a contractual agreement with James E. Baumgardner (Baumgardner) to provide “all professional design related services including architectural, engineering for mechanical, electrical, civil, landscaping and interior design and construction supervision services.” The agreement also contained an arbitration provision stating that all claims, disputes, and other matters in question would be decided by AAA arbitration under the Construction Industry Rules. On July 22, 2004, Baumgardner sent a letter to the Developers demanding payment for services rendered in the amount of the $210,871.08. The amount was based upon the professional fees owed for services completed ($200,829.60) plus a 5% termination expense ($10,041.48) as specified in the Parties’ Agreement. The Developers, however, refused to pay any of the money owed under the Agreement. Consequently, Baumgardner filed a demand for NO. 07-1509 CIVIL Arbitration with the AAA under the Construction Industry Arbitration Rules. The nature of the arbitration claim is explained in the demand for arbitration: This is a breach of contract claim. Claimant, James E. Baumgardner (“Baumgardner”) is an Architect who entered into a written agreement with Respondents, Brambles Arms Associates, a Pennsylvania Limited Partnership (“Brambles Arms”) and Thomas W. Gaughen (“Gaughen”) its general partner, for the design of an apartment complex in Hampden Township, Cumberland County. Brambles Arms and Gaughen terminated the Project because of a purported inability to obtain financing for the Project from the Department of Housing and Urban Development (“HUD”) that was insured by the Federal Housing Administration (“FHA”). Despite the fact that the design documents were approved by HUD and a Firm Commitment issued to Owners, Brambles Arms and Gaughen continue to refuse to pay Baumgardner for the professional services performed under the Parties’ Agreement. Baumgardner demands payment of the principal amount of $210,871.08 under the contract plus interest, penalties, attorneys fees, and costs as authorized by Pennsylvania’s Contractor Subcontractor Payment Act, 73 P.S. § 501 et seq. (Baumgardner’s Demand for Arbitration, Nature of Dispute p.1) (emphasis added). Gaughen responded by letter demanding that he be dismissed from the arbitration proceedings. He argued that he knew “of no state that allows a General Partner of a Limited Partnership to be named individually in an action, absent criminal fraud.” Baumgardner responded by citing Pennsylvania law to the effect that a general partner of a limited partnership is individually liable for all debts and obligations of the partnership. See Pa.C.S.A. 8533(b). Gaughen was never dismissed from the AAA arbitration and both respondents were subsequently represented in the arbitration proceedings. 2 NO. 07-1509 CIVIL On November 7, 2006, the arbitrator entered an Interim Award granting Baumgardner all relief that was sought in his demand for arbitration and retained jurisdiction to allow the submission of evidence concerning Baumgardner’s attorney’s fees and other costs. On February 8, 2007, the arbitrator issued a final award including attorney’s fees and costs in the amount of $68,412.71. The final award was served on the parties on February 8, 2007. The Arbitrator’s Final Award states that “Respondents shall promptly pay to Claimant the sum of THREE HUNDRED EIGHTY-FOUR THOUSAND ONE HUNDRED FIFTEEN AND FORTY-FOUR ONE HUNDREDTHS DOLLARS ($384,115.44), plus interest, which is inclusive of the award of attorneys fees and the amounts specified in the Tribunals November 7, 2006 Interim Award….” (emphasis added). Neither party filed an appeal of the arbitrator’s decision. Baumgardner filed a petition to confirm the arbitrator’s final award. Respondents Brambles Arms and Gaughen filed an Answer to the Petition to Confirm the Award opposing the entry of any judgment against Gaughen. The parties’ agreement specifically provided that the arbitration would be under the rules of the American Arbitration Association and that any award would be “final, and judgment may be entered upon it.” As such, the arbitration undergone by the parties was arbitration at common law. See Runewicz v. Keystone Insurance Co., 383 A.2d 189 (Pa. 1978). Under the Judicial Code, a Court of Common Pleas has a mandatory statutory duty to confirm the Arbitrator’s award in cases of common law arbitration. The standard of review for common law arbitration is exceptionally limited: The award of an arbitrator in a nonjudicial arbitration which is not subject to (statutory arbitration) or [to] a similar statute regulating nonjudicial arbitration proceedings is binding and 3 NO. 07-1509 CIVIL may not be vacated or modified unless it is clearly shown that a party was denied a hearing or that fraud, misconduct, corruption or other irregularity caused the rendition of an unjust, inequitable or unconscionable award. Sage v. Greenspan, 765 A.2d 1139, 1142 (Pa. Super. 2000). The arbitrators are the final arbiters of both law and fact, and the award is not reviewable for a mistake of either. Id. 42 P.S. 7342(b) addresses the issue of confirming the final awards of arbitrators. It provides, in relevant part, as follows: (b) Confirmation and judgment.- On application of a party made more than 30 days after an award is made by an arbitrator under § 7341 (relating to common law arbitration) the court shall enter an order confirming the award and shall enter a judgment or decree in conformity with the order… 42 Pa.C.S. § 7342(b). The court in U.S. Claims, Inc. v. Dougherty, 914 A.2d 874, 877 (Pa. Super. 2006), stated that § 7342(b) “require[s] that any challenge to the arbitration award be made in an appeal to the Court of Common Pleas, by filing a petition to vacate or modify the arbitration award within 30 days of the date of the award.” Furthermore, the court stated that a “party must raise alleged errors in the arbitration process in a timely petition to vacate or modify the arbitration award or the claims are forever waived.” Id. The court specifically says that any challenge to the arbitration process as a whole must be raised in a timely petition to vacate or modify the arbitrator’s award. Id. Furthermore, the court reasoned that a “challenge to the validity of an arbitration award asserted for the first time in opposition to a petition to confirm is procedurally inadequate to preserve claims for judicial review.” Id. Thus, we conclude that we are under a mandatory statutory duty to confirm the arbitrator’s award sub judice. Moreover, the identity of the parties is clear with judgment being 4 NO. 07-1509 CIVIL properly entered against both respondents including Gaughen. His liability is, in any event, consistent with Pennsylvania law with regard to general partners. ORDER th AND NOW, this 9 day of August, 2007, it is ordered and decreed that the award of the arbitrators entered between the parties and dated February 8, 2007, is hereby CONFIRMED, which award was in the aggregate amount of $384,115.44 plus interest. Accordingly, judgment is entered in favor of James Baumgardner and against Brambles Arms Associates, L.P. and Thomas W. Gaughen in the amount of $384,115.44 plus interest of 1% per month pursuant to 73 P.S. 505(d) plus penalty of 1% per month pursuant to 73 P.S. 512(a), both from March 13, 2007 until the date of this judgment, together with interest at the legal rate from the date of this judgment forward. BY THE COURT, _______________________________ Kevin A. Hess, J. Anthony Potter, Esquire For the Petitioner Victor Stabile, Esquire For the Respondents :rlm 5 JAMES E. BAUMGARDNER, : IN THE COURT OF COMMON PLEAS OF Petitioner : CUMBERLAND COUNTY, PENNSYLVANIA : vs. : CIVIL ACTION – LAW : NO. 07-1509 CIVIL BRAMBLES ARMS : ASSOCIATES, L.P., and : THOMAS W. GAUGHEN, : Individually, : Respondents : PETITION TO CONFIRM AWARD OF ARBITRATOR BEFORE HESS, J. ORDER th AND NOW, this 9 day of August, 2007, it is ordered and decreed that the award of the arbitrators entered between the parties and dated February 8, 2007, is hereby CONFIRMED, which award was in the aggregate amount of $384,115.44 plus interest. Accordingly, judgment is entered in favor of James Baumgardner and against Brambles Arms Associates, L.P. and Thomas W. Gaughen in the amount of $384,115.44 plus interest of 1% per month pursuant to 73 P.S. 505(d) plus penalty of 1% per month pursuant to 73 P.S. 512(a), both from March 13, 2007, until the date of this judgment, together with interest at the legal rate from the date of this judgment forward. BY THE COURT, _______________________________ Kevin A. Hess, J. Anthony Potter, Esquire For the Petitioner Victor Stabile, Esquire For the Respondents