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Paschen Contractors, Inc. v. Calnan Co.

JULY 9, 1973.

PASCHEN CONTRACTORS, INC. ET AL., MOVANT-APPELLANT,

v.

JOHN J. CALNAN COMPANY, RESPONDENT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. EMMETT F. MORRISSEY, Judge, presiding.

MR. JUSTICE HALLETT DELIVERED THE OPINION OF THE COURT:

The movant filed a petition, under par. 2 of the Uniform Arbitration Act (Ill. Rev. Stat. 1971, ch. 10, sec. 102(b)), in the circuit court, seeking a stay of an arbitration proceeding pending between movant and respondent before the American Arbitration Association, on the ground that there is no agreement between movant and respondent to arbitrate any of the items sought by respondents to be arbitrated. The circuit court denied the petition and denied also the movant's oral motion for a stay pending a ruling by this court on appeal. The movant has now moved in this court for a stay, the matter has been argued orally here and both movant and respondent agree that this court should decide the case on its merits as soon as possible, which we now proceed to do.

The movant is a joint venture consisting of Paschen Contractors, Inc., Gust K. Newberg Construction Company and S.N. Nielsen Company, organized in Illinois for the purpose of constructing certain facilities at Kennedy-King College in Chicago pursuant to a contract with the Illinois Building Authority. The respondent is an Illinois corporation having its principal place of business in Chicago. Movant and respondent on October 9, 1970, entered into a written subcontract whereby respondent undertook to install the plumbing in said facilities.

On November 13, 1972, after the building had been constructed, respondent filed a demand for arbitration of certain disputes with movant and the arbitration so demanded is pending in Chicago before the American Arbitration Association. On May 2, 1973, the respondent filed an amended demand for arbitration of six items (we are advised that a seventh item, involving retentions, has since been paid and is therefore moot), which we shall set out in more detail later in this opinion.

On May 14, 1973, movant filed in the circuit court a motion for a stay of said arbitration under section 2(b) of the Uniform Arbitration Act (Ill. Rev. Stat. 1971, ch. 10, sec. 102(b)), which provides that:

"(b) On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. That issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration."

In addition to setting out the foregoing, the movant set out the contract involved and the items in dispute and took the position that no agreement exists to arbitrate any of said items.

The trial court denied the petition for a stay and also the movant's motion for a stay pending this appeal. On appeal, the movant also moves here for a stay pending our decision but we are advised that arbitration has been delayed before the Association pending our ruling.

As to items 1, 2, 3, 4 and 5, movant contends that, although paragraph 39 provides generally for the arbitration of "all disputes arising hereunder," it excludes items "determined by the architect pursuant to paragraph 21 hereof" which, in turn, incorporates paragraph 35 of the General Conditions, and takes the position that said five items were such as were to be determined by the architect and are thus excluded from the arbitration provision.

As to item 6 (claiming a "fair percentage of the funds received by the respondent herein for special training of minority group employees," etc.), movant takes the position that this claim is in no way "a dispute arising hereunder" but is a claim outside of the scope of the subcontract and is thus not arbitrable.

• 1 There are some four cases to date in Illinois dealing with arbitration under the Uniform Arbitration Act. In School Dist. No. 46 v. Del Bianco (1966), 68 Ill. App.2d 145, 215 N.E.2d 25, written by Mr. Justice Davis, formerly and now again on our Supreme Court, the Appellate Court for the Second District took the view, at page 155, that:

"Where there is an agreement to arbitrate and its scope is reasonably in doubt, the issue of arbitrability should be initially determined by the arbitrators, subject to the protective reservations of section 12 of the Act — under which the court may vacate an award under the varying conditions therein specified."

• 2 In Butler Products Co. v. Unistrut Corp. (7th Cir. 1966), 367 F.2d 733, although it affirmed a holding refusing arbitration, the court, at page 736, said:

"We look with favor upon arbitration as a means of removing contentions from the area of litigation. Hence if the scope of this arbitration agreement were `fairly debatable' or `reasonably in doubt', then its construction should go to the arbitrator. School District No. 46 v. Del ...


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