SINGLEY, J., delivered the opinion of the Court.
In August, 1971, the petitioner, Frederick Contractors, Inc. (Frederick) entered into a contract with the respondent Bel Pre Medical Center, Inc. (Bel Pre), under which Frederick undertook to construct an addition to Bel Pre's nursing home in Silver Spring, Maryland for a stipulated sum of $341,732.00, subject to additions and deductions by change order. The agreement and the general conditions appended to it were on forms A101 and A201, respectively, promulgated in 1967 by the American Institute of Architects (the A.I.A.).
Construction was substantially completed in December, 1972. On 12 January 1973, Frederick's president, J. Bernard Vallandingham, Jr.; Bel Pre's president, Dr. Carsbie C. Adams; Bel Pre's architect, Louis Battistone, and Bel Pre's administrator and head nurse made a tour of the building for the purpose of preparing a "punch list," a copy of which was sent by Battistone to Bel Pre on 16 January with a covering letter which read:
Upon receipt of Battistone's letter, Frederick sent to Bel Pre a requisition for $148,335.00, the unpaid balance of the contract price, less $5,000.00, the amount to be withheld pending completion of the items on the punch list. About 27 January, Mr. Vallandingham met with Dr. Adams a second time. The record does not disclose what happened at this meeting, but it did not result in Frederick's receiving payment.
On 22 March, Frederick recorded a mechanics' lien in the office of the Clerk of the Circuit Court for Montgomery County, and on 30 April, filed in that court a bill of complaint to foreclose the lien. On 24 May, Bel Pre countered with a motion to strike the mechanics' lien, grounded on the contention that the contract between Frederick and Bel Pre compelled arbitration of disputes arising out of the contract, which Bel Pre had demanded. On 8 June, Frederick, in a letter to the American Arbitration Association, sought to protect its right to take part in the selection of arbitrators should it be ordered by the circuit court to participate in the arbitration proceedings.
The motion to strike came on for hearing on 12 June and was denied. Bel Pre answered the complaint, again relying on the arbitration provision of the contract. On 27 June, Frederick sought injunctive relief, contending that Bel Pre had failed to comply in timely fashion with the contract provision requiring that notice be given of intention to submit a controversy to arbitration. After an evidentiary hearing, an order was issued permanently enjoining Frederick and Bel Pre from proceeding with arbitration, and Bel Pre appealed to the Court of Special Appeals.
The Court of Special Appeals, in Bel Pre Medical Center, Inc. v. Frederick Contractors, Inc., 21 Md.App. 307, 320 A.2d 558 (1974) vacated the permanent injunction restraining the parties from proceeding in arbitration, and remanded
Under the terms of the contract, $365,000.00 of a construction loan commitment of $485,000.00 made by United Virginia Bank/First & Citizens National Bank to Bel Pre had been assigned by Bel Pre to Frederick to the end that Frederick would receive progress payments directly from the lender.
The record discloses that late in November, 1972, when Bel Pre was about to enter into permanent financing, Frederick was requested to execute a release of liens, which Frederick's counsel delivered on 1 December, subject to the condition that the proceeds of the permanent financing after payment of the construction loan be held in escrow to be disbursed in accordance with the construction contract. For reasons not apparent to us, this was never accomplished.
On 30 November, Bel Pre borrowed $1,400,000.00 from Metropolitan Federal Savings and Loan Association of Bethesda, a loan secured by a first deed of trust on the medical center.
The provisions of A.I.A. form A201, General Conditions of the Contract for Construction, on which Bel Pre relies, are these:
Assuming that the rejection of a requisition for payment is arbitrable,
If demand for arbitration was made by Bel Pre under § 7.10.2, assuming that the time limits contained in § 2.2.10 are clearly inapplicable, relating, as they do, to the earliest, and not the latest, time when the demand may be made, we encounter the mandate of § 7.10.2 that demand must be made within a reasonable time and in no event after the institution of legal or equitable proceedings based on the claim would be barred by the statute of limitations.
If our mechanics' lien law, Maryland Code (1957, 1973 Repl. Vol.) Art. 21, §§ 9-101 to 9-111,
Prior to 1 July 1973, Code, Art. 21, § 9-105 (d) (now Code (1974), Real Property Article § 9-105 (e)) required a notice of lien to be filed by an owner's contractor within six months of the completion of the work, and § 9-106 required a suit to enforce the lien to be brought within two years of the date
In the final analysis, it is for the courts and not the arbitrators to determine the timeliness of a demand for arbitration, Sanford Construction Co. v. Rosenblatt, 25 Ohio Misc. 99, 266 N.E.2d 267 (1970) (reasonable time); Methodist Church v. Glen-Rich Construction Corp., 29 A.D.2d 773, 287 N.Y.S.2d 728 (1968) (reasonable time); In re Duke Laboratories, 9 Misc.2d 779, 168 N.Y.S.2d 998 (1957), aff'd, 8 A.D.2d 800, 188 N.Y.S.2d 955 (1959) (time specified in contract); In re River Brand Rice Mills, Inc. v. Latrobe Brewing Co., 305 N.Y. 36, 110 N.E.2d 545 (1953) (time specified in contract).
The Court of Special Appeals, in a scholarly opinion, traced the history of arbitration in this country, which culminated in the Uniform Arbitration Act (the Act), enacted by our General Assembly by Chapter 231 of the Laws of 1965, Code (1957, 1968 Repl. Vol.) Art. 7, §§ 1-23.
That court concluded that the question whether a timely demand had been made was itself arbitrable, relying on the decision of the Supreme Court of the United States in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964), and
Because we reach the conclusion that the timeliness of a demand for arbitration is a threshold question, which is, in the first instance, for the courts, and because we are satisfied that Bel Pre's demand was made within the reasonable time stipulated by § 7.10.2 of the General Conditions, we turn to the task of harmonizing the provisions of the Act with the concept of our mechanics' lien law.
As we have already noted, Frederick took timely action to assert its lien, and the critical question is what effect the demand for arbitration had upon the pending action. As early as 1837, this Court held that an attachment would lie to enforce any award which might be made by arbitrators to whom the controversy was to be submitted for determination after the action had been instituted, Shriver v. State ex rel. Devilbiss, 9 G. & J. 1 (1837). See 2 J. Poe, Pleading and Practice § 164, at 121-22 (5th ed. 1925); Mullen, Arbitration under Maryland Law, 2 Md. L. Rev. 326, 334-36 (1938).
The result reached in Shriver was posited on two statutes. One was 9 & 10 William III Chapter 15 (1698), 2 J. Alexander, British Statutes in Force in Maryland 615-16 (Coe ed. 1912); see also Wisner v. Wilhelm, 48 Md. 1, 12 (1877). The other was Chapter 21 of the Laws of 1778, which the Shriver court held to be an extension and amplification of the rights accorded by the statute of William III to secure payment of an arbitration award. While Chapter 21 of the Laws of 1778 ultimately became Code (1957) Art. 75, § 16 and was repealed in 1965 incident to the passage of the Uniform Act, the statute of William III remains viable, since it does not appear among the British statutes which the General Assembly has declared no longer to be in force in Maryland, Code (1974), Real Property Article § 14-115.
As a consequence, we conclude that Bel Pre's demand for arbitration should have had the effect of staying the foreclosure proceeding until an award is returned from the
Because we have a viable precedent in our case law, we have no hesitancy in holding that while Bel Pre, by demanding arbitration, should have been allowed to stay the proceedings in the circuit court, such a stay will remain effective only until arbitration is concluded or Bel Pre's demand is withdrawn. In such event, an award in Frederick's favor may be enforced or alternatively Frederick's claim may be satisfied by the foreclosure of the lien. While the parties may have bound themselves by the general conditions of the contract to accept the resolution of disputes by arbitration, they in no way limited themselves in the manner by which payment of an award may be enforced, Code (1974), Courts and Judicial Proceedings Article § 3-202; Maryland Rule E 1.
Order of the Circuit Court for Montgomery County reversed, case remanded to Court of Special Appeals for remand to the trial court for further proceedings conformable to the views herein expressed.
Costs to abide the result.