Standard Coatings & Constr. v. Swickard

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STANDARD COATINGS & CONSTRUCTION, ET AL. v. SABIN SWICKARD, ET AL.

No. 1400-2022

Court of Special Appeals of Maryland

November 29, 2023

UNREPORTED ^[*]

Circuit Court for Baltimore City Case No. 24-C-21-004745

Wells C. J., Nazarian, Storm, Harry C. (Circuit Judge, Specially Assigned), JJ.

OPINION

Nazarian, J.

The parties to this appeal seek to wash their hands of this bathroom renovation dispute. The contractors, Standard Construction &Coatings, LLC^[1] and Chung Yi, challenge the Circuit Court for Baltimore City's summary judgment in favor of their customers, homeowners Sabin Swickard and William Booz (the "Homeowners"), that denied Standard's petition to vacate an arbitration award, confirmed the award, and awarded the Homeowners attorneys' fees. Standard contends that the circuit court erred in granting summary judgment by failing to draw factual inferences in its favor as nonmovant and that the court abused its discretion in awarding attorneys' fees. We disagree and affirm.

I. BACKGROUND

Mr. Yi owns Standard, which is in the business of commercial and residential renovations. The underlying renovation began around August 2019, when Ms. Swickard and Mr. Booz hired Standard to renovate a bathroom in their Anne Arundel County home. In a written contract, the Homeowners agreed to pay Standard progress payments toward the contract price of $9,500 as work was completed.

The contract provided that if the Homeowners wanted defects in the work corrected, they needed to give "notice in writing, served via certified mail, of all allegedly defective materials or work ...." The agreement also defined the circumstances under which the Homeowners could terminate the contract for "unsatisfactory" work:

FAILURE TO ADEQUATELY PERFORM. Upon written notification from [the Homeowners] that Standard's performance is in any respect unsatisfactory, needs correction, or that Standard has failed to comply fully with the terms of this Agreement, [the Homeowners] may after ten (10) business days written notification and failure of Standard to correct the matter described in the notification, terminate the Contract and [the Homeowners] shall have all the rights and remedies provided at law or in equity, including those specified in Paragraph below

* * *

WARRANTY: Standard warrants against any loss or damage arising from any defect in materials and workmanship furnished under this Agreement .... Upon written notification via certified mail of defects from [the Homeowners], Standard shall proceed with reasonable diligence to investigate, and if necessary, replace any defective materials or perform any labor necessary to correct any defect in the Project and, upon failure of Standard to do so, [the Homeowners] may furnish or secure, at Standard's expense, such material or labor as are necessary to bring the work up to the required standard, all costs thus incurred thereupon becoming a debt immediately due and payable by Standard ....

RIGHTS OF [THE HOMEOWNERS] ON EARLY TERMINATION: In the event of termination of this Agreement by [the Homeowners] as provided herein, Standard hereby authorizes [the Homeowner] to perform and complete the Work and in connection therewith ....

* * *

The Parties further agree that if [the Homeowners] terminate this Agreement pursuant to the provisions of this paragraph, then Standard shall be paid for all Work that Standard has completed as of the date of termination.

The renovation began and the Homeowners paid three out of four progress payments, $7,125 in total, toward the contract price. The Homeowners also paid an additional $3,000 for plumbing materials and purchased tile for $2,725 that was not in the original scope of work. But Ms. Swickard quickly became dissatisfied with the quality of the work and on October 9, 2019, told Standard to stop working and requested a refund. Standard refused, and Ms. Swickard filed a Maryland Home Improvement Commission ("MHIC") Guaranty Fund claim^[2] on January 27, 2020, requesting $10,125, which represented the "[a]mount of original contract," in addition to $3,000 in extra charges.

A. The Arbitration.

The parties agreed to arbitrate their dispute through the Maryland Office of the Attorney General's free Arbitration Program. Both sides signed a form arbitration agreement that listed (only) Ms. Swickard as the "consumer." In the "Nature of Consumer's Claim" section of the form, the Homeowners stated that Standard "did not complete the project and some of the work in the bathroom is defective." The Homeowners claimed further that "they were overcharged $3,000 in plumbing costs," and they estimated damages in the amount of "$13,341.87, which includes the original contract price of $10,025.00 and the $3,000.00 plumbing charge."

Importantly, the agreement to arbitrate also contained broad language in which the parties agreed to arbitrate "all disputes . . . which arise out of the transaction described above":

I agree on my own behalf, or on behalf of the Business named below, to submit all disputes between myself and the other party, which arise out of the transaction described above to binding arbitration under the Rules of Arbitration of the Office of the Attorney General, Consumer Protection Division, a copy of which I have received, and the Maryland Arbitration Act.

I understand that in the event that any relief is awarded, the arbitrator will consider the costs of the goods, or services and any related damages arising from the transaction, but in no event will punitive damages or attorney's fees be considered. I agree to be bound by any arbitration award resulting from these proceedings, subject to a right to appeal under limited circumstances specified in the Maryland Arbitration Act. I also agree that no further legal action will be taken against the other party to this agreement arising out of the transaction described above as to the facts that are known or should be known to me today. I further agree that the Consumer Protection Division may seek confirmation of the decision rendered by the arbitrator and that jurisdiction and venue in this case shall rest with the Circuit Court for Baltimore City or in the Circuit Court where the arbitration was held.

The arbitration was conducted remotely on July 13, 2021. Both Ms. Swickard and Mr. Booz were present and represented by counsel, and Mr. Yi appeared on behalf of Standard, also with counsel. The resulting Arbitration Decision stated that "[t]he parties each affirmed, under oath, their understandings that . . . the Decision rendered by the Arbitrator will be guided by Maryland law and principles of equity" and that "[t]he Decision rendered will be legally binding upon the parties, subject only to such limited rights of appeal" specified in the MUAA.

By agreement, there is no transcript of the arbitration. According to the Arbitration Decision, the Homeowners each testified and presented testimony from three additional witnesses, two contractors and Mr. Booz's cousin, who referred Standard to the Homeowners initially and attempted to help the parties resolve the dispute. One witness, Darrin Saylers, a contractor, "testified that he had submitted a proposal to gut and remodel [the Homeowners'] bathroom for the estimated cost of $14,995.00." And in his opinion, the bathroom work had several problems, including shoddy tile work, a buckling subfloor, incorrect tile spacing, "other serious problems" with the tile work, and an incorrectly installed shower pan and shower framing.

The Arbitrator issued her decision on September 28, 2021 and awarded the Homeowners $9,975.00. The Arbitrator found that the Homeowners had "presented sufficient evidence that [Standard] materially breached its contract" to remodel the bathroom. The decision stated that "both parties failed to adhere to the terms of their [written] agreement as to scope of work, material, and the skill level of the bathroom remodel subcontractors." Nevertheless, "Mr. Yi agreed to multiple changes in the scope of work Ms. Swickard requested without objection or consideration of the contract requirement for a written change order."

The Arbitrator credited Ms. Swickard's testimony that she had "repeatedly asked Mr. Yi to meet with her at the house to view the problems she identified" and concluded that "[e]ven a lay person with no certifications in tile installation could see from the photographs [the Homeowners] submitted that the tile installation work was defective." The Arbitrator found the Homeowners' breaches of the written contract to not be material and that Standard "materially breached the contract when [Mr. Yi] failed to correct the serious problems with [the Homeowners'] bathroom remodel after being told on multiple occasions about the unworkmanlike tile installation by his subcontractors":

Although [the Homeowners] did not follow the formal contract procedure for notifying [Standard] of the defective work they did so by text and telephone calls almost daily. They also engaged two construction contractors to assess the job and asked their cousin to "mediate" the dispute with [Standard] which demonstrates their good faith. [Standard]'s only response to these efforts to address the unworkmanlike conduct of his subcontractors was to ask [the Homeowners] to let his crew complete the job because he could correct the defects with grout and a special tool once the work was completed. [The Homeowners] made the rational choice to reject [Standard]'s novel solution to [Standard]'s defective bathroom tile installation. [The Homeowners] terminated the contract, as was their right, under the terms of the FAILURE TO ADEQUATELY PERFORM provision of the Contract.

. . . [The Homeowners] have proved that they are entitled to a monetary award

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