              IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA15-354

                              Filed: 1 December 2015

Forsyth County, No. 13 CVS 6669

T.M.C.S., INC. d/b/a TM CONSTRUCTION, INC., Plaintiff,

             v.

MARCO CONTRACTORS, INC., Defendant.


      Appeal by defendant from order entered 1 October 2014 by Judge Richard L.

Doughton in Forsyth County Superior Court. Heard in the Court of Appeals 23

September 2015.


      Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Clint S. Morse, for
      plaintiff-appellee.

      Cafardi Ferguson Wyrick Weis & Stanger, LLC, by Christopher A. Cafardi; and
      Bell, Davis & Pitt, P.A., by D. Anderson Carmen, for defendant-appellant.


      CALABRIA, Judge.


      Defendant Marco Contractors, Inc. (“Marco”) appeals from an order denying its

motion to compel arbitration. For the reasons that follow, we affirm.

                                   Background

      This case arises from a construction contract for the renovation of a Wal-Mart,

Inc. (“Wal-Mart”) retail store. Marco, a construction management company based in

Pennsylvania, regularly performs construction work for Wal-Mart.        Plaintiff TM

Construction, Inc. (“TM”) is a licensed North Carolina general contractor. On 18 April
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2013, John Yenges (“Yenges”) of Marco contacted TM’s president, Thomas Malone

(“Malone”), regarding construction at a Wal-Mart store in Winston-Salem, North

Carolina. Since it was an urgent job, Malone and Yenges met at the jobsite later that

day to discuss the scope and estimated cost of the work. TM promptly provided

Yenges with two written quotations—$35,250.00 for carpentry work and $44,388.00

for painting (“quotations”)—both of which specified that Marco would be primarily

responsible for providing the necessary materials. According to Malone, after Yenges

made slight revisions to the carpentry work, the two reached an agreement that TM

“would provide the services and limited specified materials based upon the terms of

the quotations” provided to Marco. Subsequently, Yenges arranged for delivery of the

necessary carpentry materials and painting supplies to the Wal-Mart jobsite.

       On or about 23 April 2013, Yenges approached Malone with a written contract

(“the contract”)1 to be executed between Marco and TM. While reviewing the contract,

Malone noticed that the total amount, $79,638.00, matched the total recited in the

quotations for labor and equipment, but the contract obligated TM to provide all

necessary materials for the construction project.             After Malone pointed out this

discrepancy in the scope of work, Yenges agreed that some of the new terms were

incorrect and indicated that the contract was Marco’s standard form agreement.


       1  For the sake of convenience, we refer to the document that Yenges delivered to Malone as
“the contract.” However, as discussed below, TM claims it is not bound by the terms of this document
and the trial court did not decide whether a valid and enforceable agreement existed between the
parties.

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Significantly, the contract contained an arbitration provision, which stated that any

disputes would be arbitrated in Pennsylvania at the option of Marco. The arbitration

provision also included a 30-day time limit on submitting a demand for arbitration.

Both men edited the contract provisions to match the quotations, but Yenges

eventually concluded that such efforts were unnecessary and indicated that he only

needed Malone to sign a draft for Marco’s files.         According to Malone, Yenges

represented that he would change the contract’s terms to mirror those of the

quotations. Apparently reassured, Malone signed a signature page of the contract—

which listed TM’s proposed subcontractors for the job—under the impression that the

terms would not be enforceable until Yenges made the appropriate changes. TM

continued the project work with the impression that it was performing under the

terms of the quotations.

      About six weeks later, in a letter dated 3 June 2013, James Good (“Good”) of

Marco demanded that TM cease work on the project, claiming that Marco had no

signed construction contract from TM on file. After Malone explained that Yenges

had not finished the previously agreed-upon revisions, Good asked Malone to send

Marco a signed copy of the contract that was to be amended. Since Good indicated

the quotations’ terms would be incorporated into the agreement, Malone signed and

initialed the contract and back-dated it to 24 April 2013, the approximate date Yenges




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and Malone identified and discussed the discrepancies.      Malone then faxed the

document to Good, who signed for Marco on 10 June 2013.

      Subsequently, Marco employee Mary Crawford asked TM to provide a

quotation for additional work on the Wal-Mart’s nursery area, and Malone complied

with the request. In a separate communication, Good called Malone and asserted

that Marco would hold TM to the original terms of the contract, which did not conform

to the quotations. Although Malone responded that TM would not work under those

terms, Marco accepted TM’s proposal for the nursery job as additional work that was

not included in the original quotations. TM completed the original project as well as

the additional nursery work, and last furnished labor or materials on 14 August 2013.

      Both during and after TM’s performance, Marco issued several “change orders”

which reflected additions to and deductions from the contract price. Most of the

change orders reduced the contract price, that is, the amount Marco would pay for

TM’s services. For example, Marco issued three change orders reducing the scope of

TM’s work and two change orders reflecting deductions for paint and other materials

Marco had provided. In July and August 2013, TM sent Marco three invoices totaling

$101,780.00, but Marco agreed to pay only $38,833.94, the “revised contract total” as

determined by the change orders.

      On 4 September 2013, TM filed a claim of lien on the real property in Forsyth

County and served Marco with a claim of lien on funds. TM then filed a complaint in



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Forsyth County Superior Court seeking judgment on its claim of lien in the amount

of $101,780.00. TM’s complaint also alleged that the quotations represented the

parties’ contract and that Marco was in breach of it. Marco filed an answer in

December 2013. After court-ordered mediation proceedings failed to produce a

settlement, TM served Marco with discovery requests on 8 January 2014. The parties

then engaged in a protracted battle over discovery issues, which resulted in one order

granting TM’s motion to compel discovery and another order granting sanctions

against Marco.

      When TM filed a second motion for sanctions, Marco responded by filing a

motion for summary judgment. As an alternative form of relief, Marco also filed a

motion to compel arbitration proceedings in Pennsylvania.           After conducting a

hearing in Forsyth County, the trial court entered an October 2014 order denying

both of Marco’s motions. The trial court denied Marco’s summary judgment motion

because “genuine issues as to material facts” remained. As for the motion to compel

arbitration, the trial court expressly declined “to decide the issue of whether the . . .

[c]ontract (and its arbitration provision) [was] valid and enforceable.” The trial court

concluded that even if a valid and enforceable agreement existed, Marco failed to

demand arbitration within the time limit set forth in the contract. In addition, as “an

independent reason” to deny the motion to compel, the trial court concluded that TM

had been prejudiced by Marco’s “failure to timely seek arbitration.” Finally, the trial



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court ordered Marco to produce certain internal e-mails or provide affidavits that the

relevant messages could not be recovered. Marco appeals the denial of its motion to

compel arbitration.

                                       Analysis

      A. Grounds For Appellate Review

      As an initial matter, we note that an order denying a motion to compel

arbitration, although interlocutory, is immediately appealable. Moose v. Versailles

Condo. Ass'n, 171 N.C. App. 377, 381, 614 S.E.2d 418, 422 (2005). This is so because

“ ‘the right to arbitrate a claim is a substantial right which may be lost if review is

delayed[.] ’ ” Boynton v. ESC Med. Sys., Inc., 152 N.C. App. 103, 106, 566 S.E.2d 730,

732 (2002) (citation omitted).

      B. Choice Of Law

      While both Marco and TM acknowledge the choice of law issue lurking in the

background of this case, neither party makes a satisfactory attempt to resolve it.

Marco argues in a footnote that N.C. Gen. Stat. § 22B-2 should not be applied to

invalidate the choice of law provision located in Article 19 of the contract. Article 19,

entitled “CONTRACT INTERPRETATION,” provides that the parties’ agreement

“shall be governed by the Laws of the Commonwealth of Pennsylvania[.]”

      N.C. Gen. Stat. § 22B-2 (2013) states that a

             provision in any contract, subcontract, or purchase order
             for the improvement of real property in this State, or the


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             providing of materials therefor, is void and against public
             policy if it makes the contract, subcontract, or purchase
             order subject to the laws of another state, or provides that
             the exclusive forum for any litigation, arbitration, or other
             dispute resolution process is located in another state.

Id. Pursuant to section 22B-2, choice of law provisions are voided “when the subject

matter of the contract involves improvement to realty located in North Carolina.”

Price & Price Mech. of N.C., Inc. v. Miken Corp., 191 N.C. App. 177, 179, 661 S.E.2d

775, 777 (2008).

      Since the contract involved providing labor and materials for the improvement

of a Wal-Mart retail store (real property) located in North Carolina, it appears that

section 22B-2 should apply. Marco insists, however, that Pennsylvania law applies

because section 22B-2 is preempted by the Federal Arbitration Act (“FAA”), thus

rendering the contract’s choice of law provision enforceable. As recognized by this

Court, the FAA applies when a contract calling for arbitration “evidences a

transaction involving interstate commerce.”              Hobbs Staffing Servs., Inc. v.

Lumbermens Mut. Cas. Co., 168 N.C. App. 223, 226, 606 S.E.2d 708, 711 (2005).

“ ‘Whether a contract evidence[s] a transaction involving commerce within the

meaning of the [FAA] is a question of fact’ for the trial court[,]” King v. Bryant, 225

N.C. App. 340, 344, 737 S.E.2d 802, 806 (2013) (citation omitted), and this Court

“cannot make that determination in the first instance on appeal[.]” Cornelius v.

Lipscomb, 224 N.C. App. 14, 18, 734 S.E.2d 870, 872 (2012). More importantly,



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neither the FAA nor its potential application to this case was ever mentioned at the

hearing on Marco’s motion to compel arbitration, and the trial court refused to decide

whether the contract was valid and enforceable. As such, the issue of whether the

FAA preempts section 22B-2 is not properly before us2.

       Even if Marco had argued below that the FAA preempts North Carolina law,

its assertion that Pennsylvania law categorically applies here is incorrect. “The

[FAA] was designed to overrule the judiciary's longstanding refusal to enforce

agreements to arbitrate, and place such agreements upon the same footing as other

contracts.” Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ.,

489 U.S. 468, 474, 103 L.Ed.2d 488, 497 (1989) (internal citations and quotation

marks omitted). As the United States Supreme Court has recognized, “[t]he FAA

contains no express pre-emptive provision, nor does it reflect a congressional intent

to occupy the entire field of arbitration.”              Id. at 477, 103 L.Ed. 2d at 499.

Furthermore, in a case where the validity and enforceability of an arbitration

provision is disputed, general principles of state contract law must be applied to

determine these threshold issues. First Options of Chicago, Inc. v. Kaplan, 514 U.S.

938, 944, 131 L. Ed. 2d 985, 993 (1995) (“When deciding whether the parties agreed



       2  Marco makes the same preemption argument as to N.C. Gen. Stat. § 22B-3, which voids
forum selection clauses (requiring the prosecution or arbitration of an action in another state) in
contracts entered into in North Carolina. According to Marco, any contention that the contract’s forum
selection clause, which requires disputes to be arbitrated in Pennsylvania, is unenforceable pursuant
to section 22B-3 is meritless. TM makes no such contention, but in any event, we reject Marco’s
argument for the same reasons that we reject its section 22B-2 preemption argument.

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to arbitrate a certain matter[,] courts generally . . . should apply ordinary state-law

principles that govern the formation of contracts.”); Doctor's Associates, Inc. v.

Casarotto, 517 U.S. 681, 685, 134 L. Ed. 2d 902, 907 (1996) (emphasizing that state

law, “whether of legislative or judicial origin, is applicable if that law arose to govern

issues concerning the validity, revocability, and enforceability of contracts generally”)

(citation omitted); Park v. Merrill Lynch, 159 N.C. App. 120, 122, 582 S.E.2d 375, 378

(2003) (citing Kaplan for the proposition that “state law generally governs issues

concerning the formation, revocability, and enforcement of arbitration agreements”).

      The trial court denied Marco’s summary judgment motion since genuine issues

as to material facts regarding the renovation contract’s enforceability remain.

Therefore, we cannot and need not decide the choice of law issue because such a

determination is not necessary to resolve this appeal. Moreover, the relevant laws of

Pennsylvania and North Carolina are substantially the same, and they do not conflict

with the FAA. Park, 159 N.C. App. at 122, 582 S.E.2d at 378 (“The FAA only

preempts state rules of contract formation which single out arbitration clauses and

unreasonably burden the ability to form arbitration agreements . . . with conditions

on (their) formation and execution . . . which are not part of the generally applicable

contract law.” (internal citations and quotation marks omitted)); Gaffer Ins. Co. v.

Discover Reinsurance Co., 936 A.2d 1109, 1114 (Pa. Super. Ct. 2007) (“[R]egardless of

whether the contract is governed by federal or state arbitration law, we apply general



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principles of Pennsylvania contract law to interpret the parties' agreement.”). We

will apply the general contract rules of both states, for the result is the same either

way.

       C. Sufficiency Of The Trial Court’s Order

       Marco also argues that the trial court’s order lacks sufficient findings of fact.

According to Marco, “[b]ecause the trial court here failed and in fact refused to decide

the validity and enforceability of the [c]ontract and its arbitration provision, its denial

of Marco’s motion to compel arbitration must be reversed and remanded on this

ground alone.” Based on the circumstances of this case, we disagree.

       When, as here, one “party claims a dispute is covered by an agreement to

arbitrate and the other party denies the existence of an arbitration agreement, the

trial court must determine whether an arbitration agreement actually exists.” Moose,

171 N.C. App. at 381, 614 S.E.2d at 422 (citation and quotation marks omitted); N.C.

Gen. Stat. § 1-569.6(b) (2013). “This judicial determination involves the two-step

process of ascertaining: ‘(1) whether the parties had a valid agreement to arbitrate,

and also (2) whether the specific dispute falls within the substantive scope of that

agreement.’ ” Moose, 171 N.C. App. at 381, 614 S.E.2d at 422 (internal quotation

marks omitted) (quoting Raspet v. Buck, 147 N.C. App. 133, 136, 554 S.E.2d 676, 678

(2001)); Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa. Super. Ct. 2012) (“[W]e employ a two-

part test to determine whether the trial court should have compelled arbitration. The



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first determination is whether a valid agreement to arbitrate exists. The second

determination is whether the dispute is within the scope of the agreement.” (citation

omitted)).

      Our decisions in this context have consistently held that “an order denying a

motion to compel arbitration must include findings of fact” regarding the validity and

scope of an arbitration agreement. Griessel v. Temas Eye Ctr., P.C., 199 N.C. App.

314, 317, 681 S.E.2d 446, 448 (2009); see, e.g., Raspet, 147 N.C. App. at 136, 554

S.E.2d at 678 (adopting two-part test as to whether a dispute is subject to arbitration).

Whenever a trial court has failed to include these findings in its order, this Court has

routinely reversed and remanded for entry of an order that contains the necessary

findings. See, e.g., Pineville Forest Homeowners Ass'n v. Portrait Homes Constr. Co.,

175 N.C. App. 380, 387, 623 S.E.2d 620, 625 (2006) (reversing order denying motion

to compel arbitration and remanding for “a new order containing findings which

sustain its determination regarding the validity and applicability of the arbitration

provisions”); Cornelius, 224 N.C. App. at 16–17, 734 S.E.2d at 872 (reversing and

remanding because the “order provides no findings and no explanation for the basis

of the court's decision to deny the motion to compel arbitration”); Griessel, 199 N.C.

App. at 317, 681 S.E.2d at 448 (because “the trial court made no finding of fact as to

the existence of a valid agreement to arbitrate[,] . . . we must reverse the trial court's

order and remand for entry of findings of fact”).         Apparently, these cases were



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reversed and remanded because the trial court orders at issue did not the meet basic

requirements of appellate review. Specifically, nothing in the orders revealed the

basis of the trial court’s ruling. And while the validity and scope of a purported

agreement to arbitrate seem to be preliminary issues before the trial court in the

course of ruling on a motion to compel arbitration, we see no talismanic quality in the

resolution of these issues in every case; the appellate court simply must be able to

determine whether the lower court properly ruled on the motion.

      Indeed, common threads run throughout our mandates reversing and

remanding for failure to make the requisite findings regarding the validity and

applicability of an arbitration agreement: in each case, the trial court’s order was

devoid of any meaningful findings and its rationale for denying the motion to compel

arbitration could not be determined on appeal. For example, in Cornelius, the case

upon which Marco relies, the trial court’s order denying the defendant’s motion to

compel arbitration stated only that the court had considered all pleadings, materials,

and briefs “submitted by the parties with regard to the motions” along with “the

materials and testimony submitted at the hearing on the motions . . . [and the]

arguments of counsel with regard to the motions.” 224 N.C. App. at 17, 734 S.E.2d

at 871 (2012). Because “the order provide[d] no findings and no explanation for the

basis of the [trial] court's decision to deny the motion to compel arbitration[,]” the

Cornelius Court reversed and remanded so the requisite findings could be made. Id.



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at 17, 734 S.E.2d at 872. Similarly, in U.S. Trust Co. v. Stanford Grp. Co., the trial

court’s order did “not set out the rationale underlying [its] decision to deny [the]

defendants’ motion” to compel arbitration. 199 N.C. App. 287, 291, 681 S.E.2d 512,

515 (2009) (per curiam). While the plaintiff had presented numerous possible bases

in fact and law that could support the denial below, this Court remanded for

additional findings because there was “no way of knowing which, if any, of those

arguments were persuasive to the trial court, or whether it relied upon some other

basis that might or might not be sustainable on appeal.” Id. at 292, 681 S.E.2d at

515; see also Ellis–Don Constr., Inc. v. HNTB Corp., 169 N.C. App. 630, 635, 610

S.E.2d 293, 296 (2005) (“While denial of [the] defendant's motion might have resulted

from: (1) a lack of privity between the parties; (2) a lack of a binding arbitration

agreement; (3) this specific dispute does not fall within the scope of any arbitration

agreement; or, (4) any other reason, we are unable to determine the basis for the trial

court’s judgment.”); Barnhouse v. Am. Express Fin. Advisors, Inc., 151 N.C. App. 507,

509, 566 S.E.2d 130, 132 (2002) (“In the instant case, there is no indication that the

trial court made any determination regarding the existence of an arbitration

agreement between the parties before denying [the] defendants’ motion to stay

proceedings. The order denying [the] defendants’ motion to stay proceedings does not

state upon what basis the court made its decision, and as such, this Court cannot

properly review whether or not the court correctly denied [the] defendants’ motion.”);



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Pineville Forest, 175 N.C. App. at 387, 623 S.E.2d at 625 (since the order at issue was

indistinguishable from that in Ellis-Don, the previous holdings in Ellis-Don and

Barnhouse required that the order be reversed and remanded); Steffes v. DeLapp, 177

N.C. App. 802, 805, 629 S.E.2d 892, 895 (2006) (“As we cannot determine the reason

for the denial, we cannot conduct a meaningful review of the trial court’s conclusions

of law and must reverse and remand the order for further findings.”). The essence of

all these opinions is that “[w]ithout findings, the appellate court cannot conduct a

meaningful review of the conclusions of law and ‘test the correctness of [the lower

court’s] judgment.’ ”   Ellis-Don, 169 N.C. App. at 635, 610 S.E.2d at 297 (citation

omitted).

      In the instant case, the trial court explicitly stated its grounds for denying

Marco’s motion to compel arbitration. Based on nineteen detailed findings, the court

concluded that “[e]ven if the [c]ontract was valid and enforceable,” (1) TM was

prejudiced by Marco’s delay in seeking arbitration such that Marco waived whatever

right it may have had to arbitrate, and (2) Marco “failed to timely serve an arbitration

demand” under the terms of the contract. While the court declined to decide whether

the contract and the arbitration provision were valid and enforceable, this approach

was eminently reasonable given the case’s procedural posture. In its motion for

summary judgment, Marco asked the trial court to conclude that the contract was

enforceable and rule in its favor based on TM’s purported violation of the agreement’s



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terms, a request the court denied since genuine issues of material fact remained

unresolved. Given the standstill that the parties’ discovery battle had produced,

there was an insufficient record to determine the contract’s enforceability. Even so,

for the purpose of ruling on Marco’s motion to compel arbitration, the trial court in

essence assumed that a valid arbitration agreement existed between the parties.

Consequently, the trial court’s conclusions would have been the same had it actually

decided the validity and enforceability issues. Because the trial court stated the

specific bases for its ruling, the order denying Marco’s motion to compel arbitration

is materially distinguishable from those entered in the cases cited above. Moreover,

it would be an exercise in futility to reverse and remand for further findings. Under

these circumstances, the trial court was justified in putting “the cart before the

horse.” Accordingly, we proceed to determine whether Marco’s motion to compel

arbitration was properly denied. See Samuel J. Marranca Gen. Contracting Co. v.

Amerimar Cherry Hill Assocs. Ltd. P'ship, 610 A.2d 499, 500–02 (Pa. Super. Ct. 1992)

(looking past the trial court’s refusal to decide the applicability and enforceability of

an arbitration clause and affirming an order denying a party’s motion to compel

arbitration, stating that the “trial court was correct in holding that the applicability

and/or enforceability of the arbitration clause is irrelevant since [the party] had

waived any right it may have had to such relief in this case”) (emphasis added)).

      D. Untimely Demand; Contractual Interpretation



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      Marco next argues the trial court erred in concluding that Marco surrendered

its right to arbitrate the dispute by serving an untimely demand for arbitration on

TM. We disagree.

      Because “[t]he law of contracts governs the issue of whether there exists an

agreement to arbitrate, . . . the party seeking arbitration must show that the parties

mutually agreed to arbitrate their disputes.” Routh v. Snap-On Tools Corp., 108 N.C.

App. 268, 271–72, 423 S.E.2d 791, 794 (1992) (internal citations omitted). “The trial

court's determination of whether a dispute is subject to arbitration . . . is a conclusion

of law reviewable de novo.” Moose, 171 N.C. App. at 382, 614 S.E.2d at 422 (citation

omitted).

      Since the right to arbitration arises from contract, it may be waived in certain

instances. Cyclone Roofing Co., Inc. v. David M. LaFave Co., Inc., 312 N.C. 224, 321

S.E.2d 872 (1984). Our Supreme Court has held that a party impliedly waives its

contractual right to arbitrate a dispute “if by its delay or by actions it takes which are

inconsistent with arbitration, another party to the contract [would be] prejudiced by

[an] order compelling arbitration.” Id. at 229, 321 S.E.2d at 876. Some contracts,

however, set a time limit for submitting a demand for arbitration, and failure to

comply with such terms results in a party’s forfeiture of its right to arbitrate. To that

end, North Carolina law recognizes a distinction between an untimely demand for

arbitration and a waiver of the right to arbitration. Adams v. Nelsen, 313 N.C. 442,



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448, 329 S.E.2d 322, 326 (1985) (“In this case, the contract contained . . . a time

limitation within which a party to the contract could make a demand for arbitration.

Therefore, the question of whether defendant ‘impliedly waived’ his right to demand

arbitration is not an issue in this case.”). “Where the parties have agreed that a

demand for arbitration must be made within a certain time, that demand is a

condition precedent that must be performed before the contractual duty to submit the

dispute to arbitration arises.”     1 Martin Domke, Gabriel Wilner & Larry E.

Edmonson, Domke on Commercial Arbitration § 19:1 (3d ed. 2015).

      Whenever a party seeks to arbitrate a dispute outside the time specified by the

arbitration agreement, it has made an untimely request and released—or forfeited—

its contractual right to demand arbitration. See Adams, 313 N.C. at 448, 329 S.E.2d

at 326; Dickens v. Pa. Tpk. Comm’n, 40 A.2d 421, 423 (Pa. 1945) (“There being in the

contract between the parties an arbitration agreement, its terms must be complied

with as a prerequisite to the right to arbitrate. We hold that the provision in the

contract that reference of question [sic] in dispute ‘must be made’ within 30 days ‘after

final quantities have been determined’ is an express ‘condition precedent’ to such

arbitration.” ); see also Adams Cnty. Asphalt Co. Inc. v. Pennsy Supply Inc., 2 Pa. D.

& C.4th 331, 335–36 (Com. Pl.) aff'd sub nom. Adams Cnty. v. Pennsy, 570 A.2d 1084

(Pa. Super. Ct. 1989) (“[W]e can conceive of contract provisions which, by their clarity,

would set out provisions that would show clearly that the contracting parties agreed



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that conditions precedent had to be met before arbitration would be appropriate and,

similarly, would specify, without question, that if certain conditions were not met,

arbitration was not available.”). Here, the trial court ruled that even if a valid

arbitration agreement existed, Marco’s demand to arbitrate the dispute was untimely

and therefore barred under the terms of the arbitration provision.

      The arbitration provision at issue provides, in pertinent part, as follows:

             All claims or disputes between the Subcontractor and the
             Contractor arising out of or related to this Subcontract or
             the breach thereof or either party’s performance of their
             obligations under this Subcontract shall be decided by
             arbitration, at the option of the Contractor, in accordance
             with the Construction Industry Arbitration Rules of the
             American Arbitration Association (“AAA”) currently in
             effect. Notice of the demand for arbitration shall be filed in
             writing with the other party to this agreement and, upon
             acceptance by the Contractor, if required, filed with the
             AAA. Such notice must be made within 30 days after the
             claim or dispute has arisen or within 30 days after the
             Subcontractor’s work under this Subcontract has been
             completed, whichever is later. Arbitration under this
             paragraph, if involved, shall be held in Allegheny County,
             Pennsylvania, and shall be the Subcontractor’s exclusive
             remedy, to the exclusion of all other remedies, including
             the filing of a mechanic’s lien or construction lien, for any
             dispute within the scope of this paragraph.

(emphasis added). Marco argues the provision “requires the party asserting a claim

arising or related to the [c]ontract to submit to the other party a written notice of

demand for arbitration, rather than the converse.” According to Marco, “[f]or a claim

by [TM], such notice would activate Marco’s ‘option’ to ‘accept’ the demand, or to



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instead allow the dispute to proceed in some other forum other than arbitration.” As

Marco’s reasoning goes, since TM never demanded arbitration, “Marco was never ‘on

the clock’ to accept the demand or otherwise move to compel arbitration when it filed

a motion to that end in September 2014.”

      General principles of state contract law govern the interpretation of an

arbitration agreement’s terms. Trafalgar House Constr., Inc. v. MSL Enters., Inc.,

128 N.C. App. 252, 256, 494 S.E.2d 613, 616 (1998); Gaffer Ins. Co., 936 A.2d at 1113.

In construing the terms of a contract, courts “must give ordinary words their ordinary

meanings.” Internet E., Inc. v. Duro Commc'ns, Inc., 146 N.C. App. 401, 405, 553

S.E.2d 84, 87 (2001) (citation omitted). When the language of an arbitration clause

is “clear and unambiguous,” we may apply the plain meaning rule to interpret its

terms. See Ragan v. Wheat First Sec., Inc., 138 N.C. App. 453, 459, 531 S.E.2d 874,

878 (2000) (applying the plain meaning rule to interpret the scope of an arbitration

clause).

              “Where the language of a contract is plain and
             unambiguous, the construction of the agreement is a
             matter of law; and the court may not ignore or delete any
             of its provisions, nor insert words into it, but must construe
             the contract as written, in the light of the undisputed
             evidence as to the custom, usage, and meaning of its
             terms.” . . . If the plain language of a contract is clear, the
             intention of the parties is inferred from the words of the
             contract.”




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                TM CONSTRUCTION, INC. V. MARCO CONTRACTORS, INC.

                                     Opinion of the Court



State v. Philip Morris USA, Inc., 193 N.C. App. 1, 12-13, 666 S.E.2d 783, 791 (2008)

(citations omitted omitted); see also Capek v. Devito, 767 A.2d 1047, 1050 (Pa. 2001)

(“ ‘[W]hen a written contract is clear and unequivocal, its meaning must be

determined by its contents alone.’ In construing a contract, we must determine the

intent of the parties and give effect to all of the provisions therein.” (citation omitted)).

       The prefatory phrase found in the arbitration provision plainly states that all

claims or disputes between the parties “shall” be arbitrated, “at the option” of Marco,

“in accordance with the [applicable rules] of the American Arbitration Association

(“AAA”).” By including this language in the contract, Marco stacked the deck in its

favor by reserving a unilateral right to decide whether any potential dispute would

be arbitrated. But the demand obligations imparted by the notice language in the

arbitration provision are clearly bilateral in nature. According to the arbitration

provision’s terms, if either Marco or TM wished to arbitrate a dispute, written

“[n]otice of the demand for arbitration” had to be filed “with the other party to” the

agreement “within 30 days after the claim or dispute [arose] or within 30 days after”

TM completed its work under the contract, whichever was later. Despite this clear

language, Marco insists that it never had cause to demand arbitration because such

a demand “should already have been [made] by” TM. Rather conveniently, however,

Marco fails to explain what portion of the provision gave it the right to demand

arbitration nearly a year after TM filed its claim of lien. Furthermore, it is illogical



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                                   Opinion of the Court



to believe that TM would demand arbitration when it took the position that no valid

agreement to arbitrate existed between the parties.

      Marco also has nothing to say about the option language included in the

provision, which requires notice of an arbitration demand to be filed with the AAA

“upon acceptance by [Marco], if required.” Pursuant to the plain meaning of this

language, if TM demanded arbitration, Marco could either accept the demand or

reject it and proceed to utilize the litigation machinery. As TM points out, notice

would only be filed with the AAA upon Marco’s acceptance of an arbitration demand.

Yet if Marco exercised its option to demand arbitration, notice would promptly be

sent to the AAA.     In other words, Marco, as the initiating party, would not be

“required” to accept a demand made by itself. Again, Marco was in the driver’s seat,

but if it wished to arbitrate the dispute, Marco had the responsibility to make a timely

demand to that effect in light of TM’s refusal to do so.

      Finally, Marco drafted the contract and arbitration provision contained within

it. “Pursuant to well settled contract law principles, the language of the arbitration

clause should be strictly construed against the drafter of the clause.” Harbour Point

Homeowners’ Ass’n, Inc. ex rel. its Bd. of Dirs. v. DJF Enters., Inc., 201 N.C. App. 720,

725, 688 S.E.2d 47, 51 (2010). Based on the language drafted by Marco, TM and

Marco were both subject to the 30-day time limit placed on arbitration demands

related to disputes under the contract. Since TM filed a claim of lien on the real



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                TM CONSTRUCTION, INC. V. MARCO CONTRACTORS, INC.

                                   Opinion of the Court



property and served a claim of lien on funds on 4 September 2013, a dispute had

arisen from the contract and Marco was obligated to file a demand for arbitration by

early October 2013. Unfortunately for Marco, its motion to compel arbitration filed

on 9 September 2014 was nearly a year too late. As a result, Marco forfeited its

purported right to arbitrate the dispute with TM, and the trial court properly denied

Marco’s motion to compel arbitration.

                                     Conclusion

      Given our holding that Marco forfeited its purported right to demand

arbitration, we need not address Marco’s additional argument that the trial court

erred by ruling that its delay in demanding arbitration prejudiced TM and

constituted a waiver of its right to arbitrate. Because the trial court’s order contained

detailed findings which support its conclusions, we are not required to remand this

case for a determination of whether a valid and enforceable arbitration agreement

existed between the parties. Whether Pennsylvania or North Carolina contract law

is applied, under the plain language of the allegedly enforceable agreement, Marco

made an untimely demand for arbitration. Accordingly, we affirm the trial court’s

order denying Marco’s motion to compel arbitration.

      AFFIRMED.

      Judges STROUD and INMAN concur.




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