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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2134 September Term, 2007

CASE HANDYMAN AND REMODELING SERVICES, LLC, ET AL. v.

JUDITH SCHUELE, ET AL.

Salmon, Woodward, Graeff, JJ.

Opinion by Graeff, J.

Filed: October 31, 2008

Appellants, Case Handyman and Rem odeling Services, LLC, and Case Design/Remodeling, Inc. (collectively, "Case Handyman"), appeal from an order of the Circuit Court for Baltimore County den ying their motio n to comp el arbitration w ith appellees, Judith and Albert Sc huele ("the Schueles" ). On appeal, Case Handyman presents the following two issu es for our review, which we have reworded and reorganized as follows: 1. Did the circuit court err in denying the motion to compel arbitration wh ere the Schueles are suing Case Handyman in connection with a contract containing a mandatory arbitration clause that covers "[a]n y controvers y/claim" arising f rom or relate d to the con tract? 2. Did the circuit court err in denying the motion to compel arbitration without holding a hearing?1 For the reasons that follow, we hold that the trial court erred in denying the motion

1

The three questions presented by Case Handyman are as follows:

1. Whethe r the Circuit Court erred, as a matter of law, in denying the Motion to Comp el Arbitration where th e Schuele s: (i) are suing Case on, and in connection with, a Contract that contains a mandatory arbitration clause that covers, "Any controversy/claim" arising from or related to the Contract; and (ii) raise allegations of substantially interdependent and concerted misconduct by Case and the signatory to the Contract, PHR? 2. Whether the Circuit Court erred, as a matter of law, in rendering a decision that was dispositive of the claim that the action was subject to arbitration without holding a hearing as Case requested and as Maryland Rule 2-311(f) required? 3. Whether the Circuit Court erred, as a matter of law, in denying Case's Motion to Alter or Amend, when it had an opportunity, but failed, to correct its errors in not holding a hearing on, and denying, Case's M otion to Compel Arbitration?

to compel arbitration. FACTUAL AND PROCEDURAL BACKGROUND On November 21, 2006, the Schueles entered into a home improvem ent contrac t with Shaun Arno ld, a Baltimore County contractor and franchisee of Case Handyman.2 Both Case Handyman and the Schueles refer to Mr. Arnold's home improvement company as Professional Home R epair, Inc. (PHR). 3 PHR signed the contract as "Case Handyman Servic es." At the bottom of each pag e of the co ntract was a street addres s in Hun t Valley, Maryland, and the phrase "Independently Owned and Operated." Pursuant to the agreement, PHR agreed to perform "remodeling and/or repair work" on the Schue les' home in Towson, Maryland, which included the construction of "a second story structure" containing "two bedrooms [and] two full bathrooms . . . ." For this work, the Schueles agreed to pay $165,000, of which they paid 20 percent, or $39,800, at signing. The Schueles wrote two checks to Case Handyman, one in the amount of $39,800 for the down payment, and the other for $2,700 for "written plans." The former check was made out to "Case Handyman Remodeling ," while the latter was payable to "Case Handyman Services." Case Handyman Services endorsed and deposited both checks. The eight-page contract set forth a payment draw schedule and described th e work to
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For purpo ses of this appeal, we will assume the accuracy of the background facts set forth in the c omplaint. PHR's name was apparently ascertained from the personal bankruptcy filing of its principal, Shaun Arnold, who, according to the Schueles, "identifies his home improvement company in the bankruptcy matter as `Professional Home Repair, Inc. . . .'" -23

be performed by the contractor. It also incorporated a "General Conditions" section, which contained an arbitration clause providing as follows: 2. CLAIMS - Any controversy/claim arising out of or relating to this contract or its breach thereof, shall be settled by final and binding arbitration before a single arbitrator in the Baltimore metropolitan area in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. (Emp hasis in o riginal.) In March, 2007, Arnold informed the Schueles that "he no longer had their funds, and that he would not begin work." He added that he was considering filing for bankruptcy protection. The Schueles assert in their complaint that Arnold later filed a "personal bankrup tcy, but no corporate franchise with the `Case' name is listed as a party in that bankruptcy matter." On Jun e 6, 2007, a fter PHR failed to com mence w ork on the project, and after Arnold filed for personal bankruptcy, the Schueles filed a class action complaint against Case Hand yman in the Circuit Court for B altim ore C ounty. 4 The complaint alleged breaches of contract (Coun ts I and II); fraud (Counts III thro ugh V); violations of the Maryland Consumer Protection Act (Count VI); and negligence (Count VII). In response, on Augus t 15, 2007, C ase Han dyman filed a "Motio n to Dismiss, or in the Altern ative, to Compel Arbitration and Stay Proceedings," along with a memorandum of law in support of its motion , and a request for a hearing. The circuit court, in an order dated

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The reco rd does no t reflect certifica tion of a clas s at this point. -3-

September 7, 2007, granted Case Handyman's motion to dismiss or compel arbitration, without explan ation. T he orde r stated th at it was issued " [u]po n cons ideratio n of . . . any hearing ," and noted that "[n]o response [was] filed" by the Schueles. The rec ord indicates, however, that the Schueles filed an opposition to Case Handyman's motion on August 31, 2007, and, according to Case Handyman, the court held no hearings on its motion. The docket entries reflect that, on September 17, 2007, the circuit court struck its September 7 order and denied Case Handyman's motion to dismiss or compel arbitration. No September 17, 2007 order is in the record, and Case Handyman stated in its M otion to Alter or Amend Judgment that "[t]here is no written order" explaining the basis for the September 17 ruling. The docket entries reflect the following: 0007000 Open Court Proceeding 09/17/07 09/17/07 000 JGT September 14, 20 07 Hon. John G. Turnbull, II Order da ted 9/7/07 to be stricken, a nswer w as filed. M otion to dismiss or Compel (Paper 4000) - Denied. 0008000 Ruling from Judge Turnbull - Strike 9/14/07 09/18/07 000 TBA Order of 9/7/07 (Answer[] was filed) Motion to dismiss or compel, Denied. Notices sent The parties agree that, despite the language referring to an "Open Court Proceeding," no hearing was h eld. On September 24, 2007 , Case H andyman f iled a Mo tion to Alter or Amend Judgment and a Re quest for H earing, and the Schue les filed an O pposition to Defend ants' Mo tion to Alter or Amend Judgment on October 11, 2007. By order filed on October 18, 2007, the circuit court denied Case H andyma n's mo tion. It further denied Case Handyman's request -4-

for a hearing, citing Maryland Rule 2-311.5 This appeal followed. DISCUSSION I. The issue presented in this appeal is whether the circuit court erred in denying Case Handyman's motion to dismiss or compel arbitration. Case Handyman offers several reasons why the circuit court erred in denying its motion. Initially, it argues that the arbitration provision in the home improvement contract is enforceable against the Schueles under the doctrine of "equita ble estoppe l," for two reasons: (1) their claims are predicated on the contract; and (2) the claims raise allegations of "`substantially interdependent and concerted misconduct'" by PHR and Case Handyman. Moreover, Case Handyman maintains that the court's ruling denying the motion to compel arbitration contravenes Maryland's public policy favoring the enforcement of arbitration agreements. Finally, Case Handyman contends that

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Maryland R ule 2-311 provides, in p art:

(e) Hearing

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