Faith Technologies v. Horizon Construction
777 EDA 2017
| Pa. Super. Ct. | Oct 19, 2017Background
- Horizon was general contractor for a resort project and subcontracted electrical work to Faith; Faith sub-subcontracted portions to Hayden.
- Horizon’s subcontract with Faith contains an arbitration clause (Horizon may elect arbitration); Faith’s sub-subcontract with Hayden gives Faith sole discretion to demand arbitration.
- Horizon obtained payment bonds from Liberty Mutual; Faith obtained payment bonds from Continental. The payment bonds do not contain arbitration clauses or incorporate Faith’s subcontract arbitration term.
- Faith sued Horizon (and Liberty Mutual on a bond) asserting breach of contract, CASPA, conversion, and related claims (Action I); Hayden sued Faith and its surety and Faith filed a joinder against Horizon and Liberty Mutual (Action II); Faith filed a mechanic’s lien and suit against owner/CM (Action III).
- Trial court overruled preliminary objections and declined to compel arbitration, reasoning consolidation in court avoided piecemeal/inconsistent results; appeals followed. The Superior Court consolidated appeals; one appeal (Action III) was quashed for lack of appellate jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Faith’s claims against Horizon must be compelled to arbitration under the subcontract | Faith argued the court should retain all claims in one forum to avoid inefficiency and inconsistent results | Horizon argued the subcontract’s arbitration clause requires Faith’s claims against Horizon to be arbitrated | Held: Counts against Horizon (breach, CASPA, conversion, related claims) must be submitted to arbitration |
| Whether Faith’s claim against Liberty Mutual (payment bond) is subject to arbitration | Faith argued Liberty Mutual’s consent or practical efficiency should keep claim in court | Liberty Mutual argued the bond claim should be arbitrated with Horizon-disputes | Held: Liberty Mutual’s bond contains no arbitration clause and does not incorporate subcontract; Faith’s bond claim remains in court |
| Whether Faith’s joinder claims in Hayden action should be compelled to arbitration against Horizon/Liberty Mutual | Faith again sought centralized litigation | Horizon/Liberty Mutual sought arbitration for Faith’s claims against Horizon | Held: Same result — Faith’s claims vs Horizon arbitrable; claims vs Liberty Mutual remain in court |
| Whether the order denying a stay of the mechanic’s lien action (Action III) was appealable | CBK/EPT argued the stay should be granted pending arbitration appeals | Faith argued no stay required; trial court kept lien action in court | Held: Superior Court quashed appeal of Action III for lack of interlocutory appeal jurisdiction (order denying stay not immediately appealable) |
Key Cases Cited
- Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490 (Pa. 2016) (FAA preemption enforces arbitration provisions even if doing so causes related claims to proceed in separate forums)
- Fellerman v. PECO Energy Co., 159 A.3d 22 (Pa. Super. 2017) (arbitrable claims must be enforced despite inefficiency or separate proceedings against non‑arbitral defendants)
- Pisano v. Extendicare Homes, Inc., 77 A.3d 651 (Pa. Super. 2013) (standard of review and two‑part test for compelling arbitration)
- Messa v. State Farm Ins. Co., 641 A.2d 1167 (Pa. Super. 1994) (if valid arbitration agreement exists and claim is within its scope, controversy must be submitted to arbitration)
- Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46 (Pa. Super. 2017) (order overruling preliminary objections to compel arbitration is immediately appealable under 42 Pa.C.S. §7320)
- Berks Products Corp. v. Arch Ins. Co., 72 A.3d 315 (Pa. Cmwlth. 2013) (bond interpretation governed by the bond's language; absent arbitration clause, surety cannot compel arbitration)