Court Opinion

ID: 4327990
Source: CourtListenerOpinion
Date Created: 2018-11-05 17:37:43.402074+00
Date Added: 2024-06-11T14:47:46.557692
License: Public Domain

J-A12045-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 MARYANNE GALLAGHER                        :   IN THE SUPERIOR COURT OF
                                           :        PENNSYLVANIA
                                           :
              v.                           :
                                           :
                                           :
 M. GALLAGHER & F. MANCUSO                 :
 PARTNERSHIP, ROBIN MANCUSO                :
 DELUNA, JAMIE MANCUSO, FRANK              :   No. 3533 EDA 2017
 MANCUSO AND CROSS KEYS                    :
 MANAGEMENT, INC.                          :
                                           :
                                           :
 APPEAL OF: ROBIN MANCUSO                  :
 DELUNA, JAMIE MANCUSO AND                 :
 FRANK MANCUSO                             :

             Appeal from the Order Entered October 12, 2017
   In the Court of Common Pleas of Bucks County Civil Division at No(s):
                              2016-07570

BEFORE: BOWES, J., OTT, J., and FORD ELLIOTT, P.J.E.

CONCURRING AND DISSENTING MEMORANDUM BY BOWES, J.: FILED
NOVEMBER 05, 2018

      A valid agreement to arbitrate exists between Frank and Maryanne.

However, Robin and Jamie are not signatories to the Partnership Agreement

that contains the arbitration clause. To the extent that they seek to compel

Maryanne to arbitrate her claims against them, they must first demonstrate

that they can avail themselves of the arbitration clause and, secondly, that

the dispute falls within its scope.

      My colleagues frame the issue herein as solely one involving the scope

of the arbitration provision, and fail to ascertain first whether there is a valid
J-A12045-18

agreement among the parties. Since the dispute is not limited to Maryanne

and Frank and their partnership, but the combined conduct of Frank and third

parties not subject to the arbitration clause, the majority concludes that these

claims fall outside the scope of the arbitration provision. Moreover, because

these parties allegedly acted in concert, the majority adopts the reasoning of

the trial court that “bifurcation of these proceedings would frustrate the public

policy goal” of “swift and efficient judicial decision making[,]” and its reliance

upon our sister court’s decision in Sch. Dist. Of Philadelphia v. Livingston-

Rosenwinkel, P.C., 690 A.2d 1321 (Pa.Cmwlth. 2013), in affirming the order

denying arbitration of the claims at issue. Trial Court Opinion, 12/22/17, at

8.

      In my view, two of the claims against Frank are contemplated within the

scope of the arbitration clause. The arbitration provision in the Partnership

Agreement to which he was a signatory mandates arbitration for a

“controversy or claim arising out of this Partnership Agreement.” Partnership

Agreement, at ¶10.1. At Count I, Maryanne seeks damages for Frank’s breach

of the Partnership Agreement, i.e., his withdrawal from the Partnership

without giving Maryanne notice of his intent to do so and the opportunity to

purchase his interest. I submit that the breach of contract claim against Frank

falls squarely within the scope of the arbitration clause, that it is severable,

and that it should be disposed of in arbitration.     To the extent that Frank

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violated his fiduciary duties to Maryanne when he secretly sold part of his

partnership interest to Robin and Jamie, the issue is arbitrable.

      Robin and Jamie seek to compel arbitration of claims that they colluded

or conspired with Frank in that conduct. However, they are not signatories to

the Partnership Agreement, and for purposes of the breach of contract claim,

they were not alleged to be agents or employees of Frank who would be bound

by the arbitration agreement. See Provenzano v. Ohio Valley Gen. Hosp.,

121 A.3d 1085 (Pa.Super. 2015) (where an “obvious and close nexus” exists

between the non-signatories and the contract or the contracting parties, such

as “the relationship between a signatory principal and a non-signatory

agent[,]’’ if the principal is bound, the non-signatory agents and employees

are bound and can enforce the agreement). The fact that the claims against

Robin and Jamie are interwoven with the claim against Frank is not a sufficient

basis for mandating arbitration for reasons infra. Id. at 1097. Thus, as to

Count I, I believe only the breach of contract claim against Frank should

proceed in arbitration.

      Count II is a claim for unjust enrichment against Frank, Robin, and

Jamie, based upon the excessive fees that CK Management charged the

Partnership for back office services. As I read the complaint, Maryanne seeks

damages flowing from Frank’s conduct, in conjunction with Robin and Jamie,

on behalf of CK Management, rather than the Partnership. Even if there was

an agreement to arbitrate between Maryanne on the one hand, and Robin and

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Jamie on the other, a position the record does not support, these claims fall

outside the scope of the arbitration provision.    Moreover, I agree with my

colleagues that the claim against Frank is outside the scope of the arbitration

provision.

      Finally, Count V is a claim for breach of fiduciary duty by Maryanne

against Frank, Robin, and Jamie based on CK Management’s excessive fees

charged to the Partnership. Maryanne alleged that Frank, Robin, and Jamie

drained funds from the Partnership that rightfully belonged to her. Implicated

is Frank’s fiduciary duty to Maryanne and the Partnership, which in my view,

is governed by the arbitration clause. Although Robin and Jamie only owe

fiduciary duties to Maryanne if they are partners under the Partnership

Agreement, Maryanne pleads for purposes of this breach of fiduciary claim

that they are partners. Thus, I believe these claims are arbitrable.

      I acknowledge that my proposed disposition, which involves bifurcation

of claims, would tend to undermine our public policy goal of “swift and efficient

judicial decision making[,]” and result in piecemeal litigation. See Trial Court

Opinion, 12/22/17, at 8.     However, our Supreme Court held in Taylor v.

Extendicare Health Facilities, Inc., 147 A.3d 490 (Pa. 2016), that the

policy underlying the Federal Arbitration Act (“FAA”) trumps those concerns.

In Taylor, the Court held that although wrongful death claims were not

subject to an agreement to arbitrate, and Pennsylvania rules mandated that

wrongful death and survival actions be tried together, the FAA pre-empted our

                                      -4-
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state law and required that arbitrable survival claims be severed and

transferred to arbitration. In arriving at its holding, our Supreme Court relied

upon the U.S. Supreme Court’s decision in KPMG LLP v. Cocchi, 132 S. Ct.
23, 26 (2011), for the proposition that:

      When a complaint contains both arbitrable and nonarbitrable
      claims, the Federal Arbitration Act (FAA), 9 U.S.C.S. §§ 1 - 14,
      requires courts to compel arbitration of pendent arbitrable claims
      when one of the parties files a motion to compel, even when the
      result would be the possibly inefficient maintenance of separate
      proceedings in different forums. The FAA requires piecemeal
      resolution when necessary to give effect to an arbitration
      agreement.

      In Taylor, our High Court pointed to Dean Witter Reynolds, Inc. v.

Byrd, 470 U.S. 213, 218 (1985), where the United States Supreme Court

approved of bifurcation to give effect to an arbitration clause, “even where the

result would be the possibly inefficient maintenance of separate proceedings

in different forums.” See also Moses H. Cone Mem'l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 20 (1983) (“[The FAA] requires piecemeal

resolution when necessary to give effect to an arbitration agreement.”).

      In the nursing home arbitration cases, wrongful death and survival

claims often involve the combined negligence of several actors resulting in

death or serious injury. It is not unusual for some of the parties to be subject

to an arbitration agreement, while others are not. Despite the fact that much

of the proof is overlapping, our High Court has ordered that claims be

bifurcated to give effect to the arbitration agreements in accordance with

Taylor, even at the risk of duplication of damages and inconsistent verdicts.

                                     -5-
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See e.g. Tuomi v. Extendicare, Inc., 119 A.3d 1030 (Pa.Super. 2015),

vacated and remanded, Tuomi v. Extendicare, Inc., 2016 Pa. LEXIS 2565

(Pa. 2015).

      Despite piecemeal litigation, duplicative proof, and the potential for

inconsistent verdicts, I believe Taylor mandates bifurcation on the facts

herein to give effect to the arbitration provision. Moreover, I question the

vitality of our sister court’s decision in Sch. Dist. Of Philadelphia, supra,

and the majority’s reliance upon it, after Taylor.

      For the foregoing reasons, I concur in the majority’s affirmance of the

trial court’s refusal to compel arbitration of Count II in its entirety, as well as

the claims against Robin and Jamie in Count I. I am constrained to dissent

from my colleagues’ refusal to sever and transfer to arbitration the claims

against Frank in Count I, and all claims in Count V.

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