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HomeMy WebLinkAbout2004-5504 Civil HERRE BROS., INC. and RD.lA.M., L.P., Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW NO. 04-5504 CIVIL CINEMAGIC, Defendant IN RE: DEFENDANT' S PRELIMINARY OBJECTIONS BEFORE HESS, OLER AND GUIDO, II OPINION AND ORDER Before the court are preliminary objections filed by the defendant, Cinemagic. The complaint in the case avers the following facts. In April 2004, defendant, Cinemagic, entered into a sales agreement with RD.lA.M., whereby RD.lA.M. agreed to sell to Cinemagic real estate which Cinemagic intended to use for a new office building. As part of the agreement, Cinemagic would employ the services of RD .lA.M.' s sister company, Herre Brothers, an electrical/mechanical contractor, in the construction process. This requirement, which had been inserted by hand into the agreement stated that "It is [Cinemagic's] intent to contract with Pyramid Construction Services to Build new Facility [sic], who in turn will utilize Herre Bros. Inc. for mechanicallElectric Trades for a reasonable cost." (Agreement at 2) As consideration for the requirement, RD.lA.M. agreed to a reduction in the sale price of the property. Once the sale was completed, Cinemagic's designated contractor, Pyramid Construction Services, contacted Herre Brothers to start the construction process. Herre Brothers submitted design drawings of the necessary mechanical and electrical components for the new building, as NO. 04-5504 CIVIL well as an estimate of$138,360.00 for the work. After receiving the drawings and the estimate, Cinemagic refused to work with Herre Brothers. RD.J.A.M. and Herre Brothers ("the plaintiffs") responded by filing the instant action in October 2004, alleging two breach of contract claims: the first - by RD.J.A.M. - that Cinemagic had breached its agreement with RD.J.A.M. that it employ the services of Herre Brothers in exchange for a reduction in the cost of the real estate; and the second - by Herre Brothers - that cinemagic had breached its commitment to use Herre Brothers, an intended third party beneficiary of the agreement, for its electrical and mechanical needs. Cinemagic filed preliminary objections seeking to dismiss the entire action because RD.J.A.M. had agreed to arbitrate all disputes that arose from the agreement, and because Herre Brothers was not an intended third party beneficiary to the agreement. DISCUSSION We will sustain the first preliminary objection which will have the effect of referring this matter to arbitration. The arbitration will include, of necessity, the question of whether Herre Brothers was an intended third party beneficiary of the agreement, making Cinemagic's second preliminary objection moot. Under the Pennsylvania Rules of Civil Procedure, a party may file a preliminary objection to dismiss a claim when there is a prior agreement to settle the claim by alternative dispute resolution. Pa.RC.P. 1028(a)(6). Clause 29 of the Sales Agreement between Cinemagic and RD.J.A.M. states that the "Buyer and Seller agree to arbitrate any dispute between them... arising from this Agreement." (Agreement at 4) Because the dispute between the parties- 2 NO. 04-5504 CIVIL whether Herre Brothers is an intended third party beneficiary - clearly arises out of the agreement, the claim should be dismissed and the matter resolved by arbitration. Where it is clear that the dispute arises out of an agreement containing a valid arbitration provision, Pennsylvania courts "favor the settlement of [the dispute] by arbitration ... to promote the swift and orderly disposition of claims." Children's Hospital of Philadelphia v. American Arbitration Association, 331 A.2d 848, 850 (Pa.Super. 1974). The parties' dispute- whether Cinemagic was required to employ the services of Herre Brothers for its mechanical and electrical work - clearly arises from the agreement and is therefore governed by the arbitration provision. Because there is no question as to the validity of the arbitration provision in this case, the parties' dispute over the status of Herre Brothers as a third party beneficiary should be submitted to arbitration. ORDER AND NOW, this 24th day of March, 2006, the preliminary objection of the defendant in the nature of a request to compel arbitration is GRANTED and this matter is referred to arbitration. BY THE COURT, Kevin A. Hess, J. Thomas J. Weber, Esquire Carly J. Wismer, Esquire F or the Plaintiffs Charles E Haddick, Jr., Esquire J. David Ziegler, Esquire F or the Defendant 3 HERRE BROS., INC. and RD.lA.M., L.P., Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW NO. 04-5504 CIVIL CINEMAGIC, Defendant IN RE: DEFENDANT' S PRELIMINARY OBJECTIONS BEFORE HESS, OLER AND GUIDO, II ORDER AND NOW, this 24th day of March, 2006, the preliminary objection of the defendant in the nature of a request to compel arbitration is GRANTED and this matter is referred to arbitration. BY THE COURT, Kevin A. Hess, l Thomas l Weber, Esquire Carly l Wismer, Esquire F or the Plaintiffs Charles E Haddick, Jr., Esquire l David Ziegler, Esquire F or the Defendant :rlm