Rhee v. Brugman

1

NORMA RHEE AND HOON RHEE, H/W v. ADAM BRUGMAN AND 754 DARIEN STREET, LLC, 754 DARIEN STREET, LLC v. EVOLVE BUILD, INC. AND PEDRO PALMER CONSTRUCTION, INC.

APPEAL OF: 754 DARIEN STREET, LLC

No. 1303 EDA 2022

No. J-A28028-22

Superior Court of Pennsylvania

May 17, 2023

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

Appeal from the Order Entered April 22, 2022 In the Court of Common Pleas of Philadelphia County Civil Division at No(s) 210600757

BEFORE: PANELLA, P.J., LAZARUS, J., and SULLIVAN, J.

MEMORANDUM

LAZARUS, J.

754 Darien Street, LLC ("Darien"), appeals from the order, entered in the Court of Common Pleas of Philadelphia County, denying its motion to compel arbitration. Upon careful review, we affirm.

This case stems from a contract entered into on May 27, 2019 ("Agreement") between Darien, a real estate holding limited liability company, and appellee/contractor, Evolve Build, LLC ("Evolve") with respect to the construction of a single-family home at 754 South Darien Street, Philadelphia.

After disputes arose between the parties,^[1] Darien issued a 14-day notice of default pursuant to section 13 of the Agreement.^[2] On January 1, 2020, Darien terminated the Agreement. Thereafter, on June 19, 2020, Evolve filed a mechanic's lien claim in the Philadelphia Court of Common Pleas, claiming an amount due from Darien of $72,129.20.

On September 20, 2021, Norma and Hoon Rhee ("Rhees") owners of 752 South Darien Street, filed a second amended complaint bringing various claims against Darien and Adam Brugman stemming from Darien's development of 754 South Darien Street, which is adjacent to the Rhees' property. The Rhees alleged that their property had sustained damages- including cracking, holes, water infiltration, and mold-as a result of the work being performed on the neighboring property.

On August 31, 2021, Darien filed a joinder complaint, seeking to add Evolve and Pedro Palmer Construction, Inc. as third-party defendants. Evolve filed preliminary objections, arguing, inter alia, that the case must be transferred to arbitration pursuant to the Agreement. Darien did not respond to Evolve's preliminary objections, but rather, filed an amended joinder complaint on November 8, 2021, to which Evolve also preliminarily objected on the basis of the arbitration clause. On December 20, 2021, Darien filed a second amended joinder complaint. Evolve again filed preliminary objections raising, inter alia, the arbitration clause. On February 3, 2022, Darien filed a response to Evolve's preliminary objections. On February 17, 2022, the trial court entered an order sustaining Evolve's preliminary objections to the second amended joinder complaint and dismissing that complaint, with prejudice, as to Evolve.^[3] On March 4, 2022, Darien filed a petition seeking to compel Evolve to submit to arbitration pursuant to the Agreement. Evolve filed a response on March 24, 2022, in which it asserted that: (1) Darien had waived its arbitration claims and (2) Darien's claims are precluded by the doctrine of res judicata. On April 21, 2022, the trial court dismissed the petition, but did not specify the grounds on which it denied relief. Darien filed a timely notice of appeal, followed by a court-ordered Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. Darien raises the following claims for our review:

1. Did the court err by denying [Darien's] petition to compel arbitration where 42 Pa.C.S.[A.] § 7304(a) requires the court to order the parties to proceed with arbitration where, as here, a valid agreement to arbitrate has been shown and the party opposing the petition has refused to arbitrate?

2. Did the court err in concluding that there was not a valid agreement to arbitrate [] between the parties?

3. Did the court err when it failed to determine that Evolve [] refused to arbitrate the matter where, inter alia, Evolve specifically raised the issue as to the validity of a binding arbitration agreement that required the court to refer the matter to arbitration in its preliminary objections to [] Darien's joinder complaint?

4. Did the court err in concluding that [] Darien did not have a valid claim against Evolve that could be subjected to arbitration?

5. Did the court err in concluding that the dispute between [] Darien and Evolve was not within the scope of the arbitration agreement?

6.Did the court err in concluding that [] Darien did not make or waived any counter-argument to appellee's claim of untimeliness when [] Darien raised the issue-that procedural questions such as the propriety or timeliness of invocation of the arbitration provision must be resolved by the arbitrators-in its petition to compel arbitration at [¶] 22?

7. Did the court err where it made a determination on the merits that [] Darien's claim against Evolve arose in January 2020, and that [] Darien waived its right to enforce the arbitration agreement where [] Darien's claim against Evolve cannot arise until the measure of damages for the claimed breach is known to [] Darien under the terms of Section 13 (pp. 11-12) of the Construction Agreement between the parties.

Brief of Appellant, at 5-6 (unnecessary capitalization omitted).

Prior to addressing the claims Darien raises on appeal, we must first determine whether it has preserved for appellate purposes the sole issue relevant to the trial court's ruling-waiver of arbitration. In its brief, Evolve asserts that "Darien failed to address the issue of waiver of the arbitration provision of the [Agreement] in its [Rule] 1925(b) [s]tatement," and, accordingly, "any and all arguments relative to [Darien's] waiver of the arbitration provisions . . . are waived." Brief of Appellee, at 10. Evolve argues that "Darien was specifically on notice of the issue of waiver upon which the [t]rial [c]ourt's ultimate order issued," as Evolve "explicitly argued below that the issue of waiver prevented the enforcement of the arbitration clause[.]" Id. at 9, 10.

In response, Darien argues that it "complied with the appellate rules of procedure when it identified the errors complained of on appeal due to the vagueness of the [o]rder, and did not waive any argument[.]" Reply Brief of Appellant, at 4. Darien asserts that, in its Rule 1925(b) statement, it "identifie[d] the issues for appeal in general terms since it [could not] readily discern from the [o]rder the basis for the [c]ourt's decision." Id. at 3.

Following the trial court's issuance of its Rule 1925(a) opinion, in which it explained the reasoning behind its decision, Darien filed a motion to amend its Rule 1925(b) statement "in an abundance of caution[,] as . . . it believed the specific waiver issue was already subsumed by Issues Nos. 1, 2, and 4 in its initial [Rule 1925(b) statement]." Id. at 4. However, the trial court did not rule on the motion^[4] until after Darien submitted its opening brief in this Court.

Pennsylvania Rule of Appellate Procedure 1925(b)(4)(vii) provides that issues not included in an appellant's Rule 1925(b) statement are waived on appeal. "Each error identified in the [s]tatement will be deemed to include every subsidiary issue that was raised in the trial court[.]" Pa.R.A.P. 1925(b)(4)(v). Here, we disagree with Darien that it preserved the waiver issue in its Rule 1925(b) statement because the issue was subsumed by issues 1, 2, and 4 raised therein. Those claims are as follows:

1. [Darien] respectfully submits that the trial court erred as a matter of law and/or abused its discretion by denying [Darien's] petition to compel arbitration where 42 Pa.C.S.[A.] § 7304(a) requires the court to order the parties to proceed to arbitration where, as here, a valid agreement to arbitrate has been shown and the party opposing the petition has refused to arbitrate. See Ross Dev. Co. v. Advanced Bldg. Dev., Inc., 803 A.2d 194, 196 (Pa. Super. 2002); Midomo Co. v. Presyterian Hous. Dev. Co., 739 A.2d 180 (Pa. Super. 1999).

2. The court erred as a matter of law or abused its discretion to the extent that the court failed to determine that a valid agreement to arbitrate existed between the parties.

. . .

4. The court erred as a matter of law or abused its discretion to the extent that the court determined that [Darien] did not have a valid claim against Evolve that could be subjected to arbitration. See Midomo[, supra].

Rule 1925(b) Statement, 6/1/22, at ¶¶ 1, 2, 4 (unnecessary capitalization omitted).

The above claims, which Darien contends "subsume" the issue of waiver, all relate to the validity of the arbitration agreement or whether Darien's claims fell within its scope. We fail to discern how the issue of waiver is reasonably suggested by any of the above claims.

However, our analysis does not end here. In this case, the trial court's order denying Darien's petition to compel arbitration did not specify the reasons for the denial.

If the reasons for the court's order do not appear in the record, it may be impossible for the appellant to be sufficiently specific in formulating questions on appeal. As our Supreme Court has held,

unless one knows the basis for a court's order, there is no way to specifically challenge its rationale. . . .

When one seeking to appeal has no basis in the record to discern the basis for the order being challenged, [Rule] 1925(b) must not be employed as a trap to defeat appellate review, requiring specifically stated challenges to the resolution of issues before there has been any revelation as to how the issues have been resolved.

Ryan v. Johnson, [] 564 A.2d 1237, 1239 ([Pa.] 1989).

When the reasons for a trial court's ruling are vague or not discernable from the record, then an appellant may be forced to file a vague Rule 1925(b) statement, and it would be unjust to

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