Court Opinion

ID: 4174404
Source: CourtListenerOpinion
Date Created: 2017-06-05 19:16:46.155529+00
Date Added: 2024-06-11T14:23:39.110375
License: Public Domain

J-A06003-17

                              2017 PA Super 174

US SPACES, INC.                                  IN THE SUPERIOR COURT OF
                                                       PENNSYLVANIA
                         Appellant

                    v.

BERKSHIRE HATHAWAY HOMESERVICES,
FOX & ROACH

                                                      No. 2354 EDA 2016

                 Appeal from the Order Entered July 7, 2016
            In the Court of Common Pleas of Philadelphia County
                     Civil Division at No(s): XX-XXXXXXX

BEFORE: PANELLA, J., SHOGAN, J., and RANSOM, J.

OPINION BY PANELLA, J.                                  FILED JUNE 05, 2017

      Rules 206.1 – 207.7 of the Rules of Civil Procedure govern civil petition

practice in Pennsylvania. These rules provide that petition practice will

proceed through the issuance, to the respondent, of a rule to show cause

why the relief requested should not be granted. See Pa.R.C.P. 206.4. As a

default, the decision to issue such a rule is discretionary with the trial court.

See id. However, the Courts of Common Pleas are permitted to adopt a local

rule that modifies the default and instead provides for issuance of the rule to

show cause “as of course.” Pa.R.C.P. 206.4(a)(1).

      In this appeal, we are asked to determine whether a trial court can

decide to refuse to issue a rule to show cause where a local rule provides for

issuance “as of course.” We conclude that the adoption of such a local rule
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acts to constrain the discretion of the trial court in all but the most egregious

cases. We therefore reverse and remand for further proceedings.

      On June 24, 2016, Appellant U.S. Spaces, Inc., filed a petition to

vacate an arbitration award in the Philadelphia Court of Common Pleas. In

its petition, U.S. Spaces asserted that a dispute over its entitlement to

realtor fees between itself and Appellee, Berkshire Hathaway Home Services,

Fox & Roach, had been submitted to arbitration in accordance with the

professional association that both parties are affiliated with. The arbitration

panel was scheduled to hear the matter on April 25, 2016. However, the

panel declined to hold a hearing due to the absence of U.S. Spaces’s broker

of record, who was not scheduled to be a witness at the proceeding.

      Implicit in the petition’s allegations is that the panel entered a final

decision against U.S. Spaces. U.S. Spaces appealed the panel’s decision to a

procedural review tribunal pursuant to the association’s arbitration rules.

That tribunal affirmed the original panel’s decision on June 10, 2016. U.S.

Spaces subsequently requested that the Court of Common Pleas vacate the

arbitration award under 42 Pa.C.S.A. 7341, common law arbitration, on the

basis that it was denied a full and fair hearing of its claims.

      The Court of Common Pleas reviewed U.S. Spaces’s petition and did

not issue a rule to show cause. Rather, it entered an order denying the

petition on July 7, 2016. U.S. Spaces then filed this timely appeal.

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      As noted previously, Pa.R.C.P. 206.4 provides the Courts of Common

Pleas two options in responding to the filing of a petition. The default option,

codified in Pa.R.C.P. 206.5, provides the court discretion in whether to issue

a rule to show cause when presented with a petition. The alternative,

codified in Pa.R.C.P. 206.6, must be chosen by the adoption of a local rule

and provides for the issuance of a rule to show cause “as of course.”

      The purpose of Rules 206.5 through 206.7 is to create a record
      from which the court may determine disputed issues of fact
      raised by the petition and answer. If the answer does not raise
      disputed issues of fact, then the petition and answer are ready
      for decision by the court without the fact-finding process and
      new Rule 206.7(b) so states.

Pa.R.C.P. 206.4, Comment.

      If a respondent does not file an answer to a rule to show cause, “all

averments of fact in the petition may be deemed admitted[.]” Pa.R.C.P.

206.7(a). “The rule provides some flexibility by giving the court discretion to

consider an answer not timely filed. If an answer is never filed, there would

be little basis upon which the court might exercise its discretion and the

averments of fact in the petition would be deemed admitted.” Pa.R.C.P.

206.7, Comment. If the respondent files an answer that does not raise

issues of material fact, the petitioner may request that the court decide the

matter as a matter of law. See Pa.R.C.P. 206.7(b).

      Where a respondent files an answer raising issues of material fact,

both parties are entitled to proceed with discovery as permitted by the court.

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See Pa.R.C.P. 206.7(c), (d). The burden, however, rests with the petitioner

to establish its right to relief. See Pa.R.C.P. 206.7(c).

      The scheme set forth by Rules 206.1 – 206.7 provides flexibility for

courts to handle petitions in a manner consistent with the need for

consistent docket management. In counties that do not adopt a local rule,

the default provides that the court will act as a “gatekeeper,” reviewing

petitions for their merit. The level of proof that the rule requires to be

appended to such petitions is an issue not currently before us. At the very

least, however, it is clear that, under the default rule, the court has the

discretion to deny the issuance of a rule to show cause on a wide variety of

grounds.

      In contrast, those counties that adopt a local rule providing for the

issuance of a rule to show cause “as of course” do so to limit not only the

time spent by the court in reviewing petitions initially, but also to limit the

necessity of appending volumes of evidence to the petition. If the local rule

requires the issuance of a rule to show cause “as of course,” the only valid

reason to deny the issuance of a rule to show cause is if the allegations in

the petition, taken as true, do not provide for a legal remedy. It is left to the

parties to narrow down the relevant issues at stake through the filing of the

petition and any subsequent answers. A petitioner need not append any

evidence to its petition, as any allegation in the petition may be admitted to

by the respondent, thereby obviating the need for proof.

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      Here, it is undisputed that the Court of Common Pleas of Philadelphia

County has adopted a local rule pursuant to Pa.R.C.P. 206.4. The local rule

provides for the issuance of a rule to show cause “as of course” for any

petition, as set forth in Pa.R.C.P. 206.6. See Phila.Civ.R. 206.4(c). The local

rules also provide that a “Petition to Set Aside Arbitration Award” is a

petition subject to the mandates of Pa.R.C.P. 206.1 – 206.7. See

Phila.Civ.R. 206.1(a).

      It is furthermore undisputed that Berkshire Hathaway Home Services,

Fox & Roach did not file an answer in the Court of Common Pleas, as the

court did not issue a rule to show cause. Thus, the only valid basis for the

court’s decision is that the allegations in U.S. Spaces’s petition, taken as

true, do not provide a legal basis for relief.

      U.S. Spaces conceded in the court below that this matter was

governed by the rules for common law arbitration. See Petitioner’s Brief in

Support of Petition to Vacate Arbitration Award, 6/24/16, at *3 (pages

unnumbered in document). The Judicial Code provides that common law

arbitration is binding and “may not be vacated or modified unless it is clearly

shown that a party was denied a hearing or that fraud, misconduct,

corruption or other irregularity caused the rendition of an unjust, inequitable

or unconscionable award.” 42 Pa.C.S.A. § 7341.

      Judicial review of a common law arbitration award is severely limited

as otherwise arbitration would be an unnecessary stage of litigation, causing

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only delay and expense without settling the dispute.           See Cargill v.

Northwestern Nat’l Ins. Co., 462 A.2d 833, 834 (Pa. Super. 1983).

      The arbitrators are the final judges of both law and fact, and an
      arbitration award is not subject to a reversal for a mistake of
      either. Neither we nor the trial court may retry the issues
      addressed in arbitration or review the tribunal's disposition of the
      merits of the case. Rather, we must confine our review to
      whether the appellant was deprived of a hearing or whether
      fraud, misconduct, corruption or other irregularity tainted the
      award. The appellant bears the burden to establish both the
      underlying irregularity and the resulting inequity by clear,
      precise, and indubitable evidence. In this context, irregularity
      refers to the process employed in reaching the result of the
      arbitration, not to the result itself.

McKenna v. Sosso, 745 A.2d 1, 4 (Pa. Super. 1999) (internal citations and

quotation marks omitted). “[T]he right to a fair hearing comprises the right

to notice and the right to an opportunity to be heard.” Id. (citation omitted).

      Here, U.S. Spaces has alleged that it was denied its right to an

opportunity to be heard when the arbitration panel decided the matter

without a hearing. It asserts that the arbitration panel’s decision that the

broker of record was required to be present was contrary to the rules agreed

upon by the parties for arbitration of disputes. We cannot conclude that

these allegations are insufficient as a matter of law. Under § 7341, these

allegations, if proved, are sufficient to vacate the arbitration award. We

therefore reverse and remand for further proceedings.

      Order reversed. Case remanded for proceedings consistent with this

opinion. Jurisdiction relinquished.

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 6/5/2017

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