Court Opinion

ID: 4412971
Source: CourtListenerOpinion
Date Created: 2019-07-01 18:44:37.420748+00
Date Added: 2024-06-11T09:37:05.852249
License: Public Domain

J-S25016-19
                             2019 Pa. Super. 203

 ELIZABETH A. ROCCOGRANDI AND             :   IN THE SUPERIOR COURT OF
 CATHERINE E. PODOLAK                     :        PENNSYLVANIA
                                          :
                                          :
              v.                          :
                                          :
                                          :
 THERESA A. MARTIN, TONI F.               :
 MADDEN, AND DONNA M. SHULTZ              :   No. 30 MDA 2019
                                          :
                    Appellants            :

            Appeal from the Order Entered November 28, 2018
  In the Court of Common Pleas of Luzerne County Civil Division at No(s):
                              2018-11641

BEFORE: STABILE, J., MURRAY, J., and MUSMANNO, J.

OPINION BY MURRAY, J.:                                 FILED JULY 01, 2019

      Theresa A. Martin, Toni F. Madden, and Donna M. Shultz (collectively,

Appellants) appeal from the trial court’s November 28, 2018 order pertaining

to arbitration, and confirming “the awards on May 11, 2018 and June 27, 2018

and the Gattuso Report dated August 15, 2018.” Trial Court Order and Decree

Confirming Arbitration Award, 11/28/18, at unnumbered 1. Upon review, we

affirm.

      In his May 11, 2018 interim award, American Arbitration Association

arbitrator Steven Petrikis (Arbitrator) provided the following factual and

procedural background:

             [Appellants] are sisters Theresa [A]. Martin, Toni F. Madden
      and Donna M. Schultz []. [Appellees] are sisters Elizabeth A.
      Roccograndi and Catherine E. Podolak []. All are the children of
      Anthony Roccograndi. All parties are all trustees of certain trusts
      of all ownership of My Brother’s Place (“MBP”), a former retail
      home improvements store, and, currently, owner and operator of
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     certain commercial real estate in Wilkes-Barre. MBP was founded
     by Mr. Roccograndi and his four brothers, but Mr. Roccograndi
     ultimately purchased his brothers’ interests. For many years, he
     was the driving force for [MBP’s] retail stores and commercial
     leasing properties. He became incapacitated in 2010, and died on
     May 5, 2014.

           At all relevant times, MBP was controlled by a Shareholder
     Agreement dated January 26, 1992, and MBP’s Rules and
     Regulations governing the Board of Directors of [MBP] dated June
     5, 1994, executed by all [Appellants and Appellees].

            [Appellants and Appellees] are all of the directors of MBP.
     Ms. Podolak was the donee of a Power of Attorney for Mr.
     Roccograndi during his incapacitation. Ms. Roccograndi served as
     the [p]resident of MBP since 1995. [Appellants] through the trust
     instruments were collectively the majority shareholders of MBP at
     all relevant times, owning approximately 57.2% of MBP.

           [Appellants and Appellees] were also parties to a Joint
     Venture Agreement (“JVA”) known as Sisters’ Fund and dated
     November 1, 1977. The Sisters’ Fund operated as a type of
     private bank for savings, low interest home loans and/or
     education for the parties, as well as a vehicle for investments by
     the joint venturers. The JVA directs that Ms. Roccograndi and Ms.
     Martin shall serve as co-managing agents upon the death of Mr.
     Roccograndi.

            On April 17, 2015, [Appellants] brought suit against
     [Appellees] . . . in the Court of Common Pleas of Luzerne County.
     The Complaint sought the liquidation of the assets of MBP, and an
     accounting of the Sisters’ Funds Joint Venture []. Subsequently,
     [Appellants] filed a Motion for Appointment of a Custodian or
     Receiver requesting the Court to “appoint a receiver to liquidate
     the business or, in the alternative, a custodian and to manage the
     affairs of the corporation (MBP) and its assets.” [Appellees]
     objected by asserting that all claims were subject to mandatory
     arbitration. However, before the matters were directed to this
     arbitration, the Luzerne County Court, by Order dated August 24,
     2015, appointed Walter Grabowski, Esq. as the receiver of MBP
     with directions to liquidate and close the retail operation of MBP.
     He has done so. The Order also expressly stated that MBP’s “real
     estate rental business shall continue.” The Order also barred all

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      parties from conducting any transaction unless specifically
      authorized by the receiver or the Court.

           As stated in the Scheduling Order entered in this matter
      dated February 13, 2017, the parties agreed as follows:

                   The parties have agreed that all claims and
             defenses set forth in the Demands and Answering
             Statements in the cases identified above are properly
             subject to this arbitration. The parties further agreed
             that to the extent said claims and defenses are not
             encompassed by such arbitration provisions, the
             parties submit all such claims and defenses to this
             arbitration and consent to the jurisdiction of the
             American Arbitration Association to resolve all such
             claims and defenses. . . .

      Accordingly, by the express agreement of the parties, jurisdiction
      of this arbitration encompasses all remaining claims.

                                 *       *     *

            At the parties’ request, a single hearing . . . was held
      November 15 through November 17, 2017, in Wilkes-Barre,
      Pennsylvania. . . . The parties submitted post-hearing briefs and
      post-hearing reply briefs.

Arbitrator’s Interim Award, 5/11/18, at 2-4 (underlining and emphasis

omitted).

      As    indicated   above,   after   conducting   a   hearing   and   receiving

submissions from both parties, the Arbitrator issued an interim award on May

11, 2018. The interim award issued legal conclusions on many issues, with

the Arbitrator ruling for and against both parties. See Arbitrator’s Interim

Award, 5/11/18, at 31 (“No party is blame free for this matter and no party is

wholly blameworthy.”).

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      In his interim award, the Arbitrator ordered both parties to provide

complete status updates no later than June 1, 2018. Id. at 30. Pertinent to

this appeal, the status updates were required to address “whether the co-

managing agents have agreed to the appointment of a person to liquidate

Sisters’ Fund and the date when a proposed distribution will be provided.”

Arbitrator’s Interim Award, 5/11/18, at 31. The Arbitrator retained jurisdiction

for the entry of a final award “following the consideration of the parties’

submission[s] of the status report[s].” Id.

      On June 27, 2018, the Arbitrator issued two final arbitration awards:

one pertaining to MBP, and one concerning the Sisters’ Fund. Both awards

incorporated the findings and conclusions of the May 11, 2018 interim award.

Arbitrator’s MBP Final Award, 6/27/18, at 3; Arbitrator’s Sisters’ Fund Final

Award, 6/27/18, at 2. The final award regarding MBP ordered, inter alia, the

conclusion of Attorney Grabowski’s receivership “thirty days from the date of

this Final Award.” Arbitrator’s MBP Final Award, 6/27/18, at 3.

      In the Sisters’ Fund final award, the Arbitrator stated:

            In my Interim Award dated May 11, 2018 the parties were
      directed to advise whether the co-managing agents of the
      Sisters[’] Fund had agreed to the appointment of the Gattuso
      Group to implement the liquidation of the Sisters[’] Fund in
      accordance with the terms of the Joint Venture Agreement. I
      received a report from [Appellants] on May 31, 2018, and a report
      from [Appellees] on June 1, 2018. The parties have in fact
      agreed to the Gattuso Group to perform that function. . . .

            In accordance with the agreement of the Parties, the
      Gattuso Group shall prepare its liquidation report pursuant to
      Section 15 of the JVA, and shall implement the decision of my

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      Interim Award on the matters arbitrated and decided therein. The
      reasoning set forth at length in the Interim Award is hereby
      incorporated by reference for this FINAL Award.

Id. at 1-2 (emphasis added).

      On July 24, 2018, Appellees filed with the trial court a petition to modify

and/or vacate arbitration award pursuant to 42 Pa.C.S.A. §§ 7317, 7341, and

7342, in which they requested the Arbitrator’s final award be modified and/or

vacated to nullify the direction that Attorney Grabowski be terminated as

receiver of MBP.    Appellee’s Petition to Modify and/or Vacate Arbitration

Award, 7/24/18, at 3. On August 9, 2018, the trial court granted the petition

to modify and ordered that Attorney Grabowski remain as the court-appointed

receiver until he complied with the directives set forth in the Arbitrator’s

interim arbitration award. Trial Court Order, 8/9/18.

      In accordance with the Arbitrator’s Sisters’ Fund final award, the Gattuso

Group issued its report regarding the liquidation of the Sisters’ Fund on August

15, 2018 (Gattuso Report). In pro se objections filed with the Arbitrator on

September 5, 2018, Appellants made multiple challenges to the Gattuso

Report.    At the request of the Arbitrator, Appellees filed a response to

Appellants’ objections, averring that the Arbitrator did not have jurisdiction to

rule on the objections. By email dated September 10, 2018, the Arbitrator

agreed with Appellees and denied Appellants’ objections for lack of

jurisdiction.   Arbitrator’s Email, 9/10/18 (“For the reasons stated in

[Appellees’] Reply, I do not have jurisdiction to address the matters

[Appellants] have set forth.”).

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      On October 11, 2018, Appellees filed with the trial court a Petition to

Modify Arbitration Award Pursuant to 42 Pa.C.S.A. §§ 7342(b) and 7341. In

their petition, Appellees requested that the trial court “enter an [o]rder

confirming the arbitration award and that judgment be entered against

[Appellants] in accord with terms of the awards, plus interest and costs and

such other relief as the Court deems appropriate.”       Appellees’ Petition to

Modify Arbitration Award, 10/11/18, at 3.

      In response, Appellants filed an answer to Appellees’ petition on October

29, 2018. Both parties filed briefs in support of their respective positions and

the trial court held argument on the matter on November 27, 2018.            On

November 28, 2018, the trial court issued an order confirming “the awards on

May 11, 2018 and June 27, 2018 and the Gattuso Report dated August 15,

2018[.]”    Trial Court Order and Decree Confirming Arbitration Award,

11/28/18, at unnumbered 1.

      Appellants filed this timely appeal on December 28, 2018. Both the trial

court and Appellants have complied with Pennsylvania Rule of Appellate

Procedure 1925.

      Appellants present one issue for our review:

      Did the Trial Court err in confirming the Gattuso Report of August
      15, 2018, when the report was prepared and issued well beyond
      the date of the Final Arbitration Decision and cannot be
      contemplated under the adoption procedure in 42 Pa. C.S.A. [§]
      7342(b)?

Appellants’ Brief at 3 (footnote omitted).

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       The arbitration agreement in this case is governed by 42 Pa.C.S.A. §

7341 et seq., which pertains to common law arbitration.1 42 Pa.C.S.A. § 7341

et seq.   However, Appellants do not challenge the arbitrator’s award,2 but

instead, argue that the trial court “lacked the legal authority to adopt the

Gattuso [Report] issued August 15, 2018 as part of the adoption of the Final

Arbitration Award issued on June 27, 2018.” Appellants’ Brief at 10.

       We initially note the scarcity of authority as to a trial court’s

interpretation of an arbitrator’s award.         We also observe that we are not

presented with the “stereotypical” arbitration case where one party is awarded

a monetary award from the arbitrator, thus allowing the trial court to enter

judgment in favor of one party in its confirmation order.         See Arbitrator’s

Interim Award, 5/11/18, at 31.            Rather, in dealing with a financial fund

maintained and used by both Appellants and Appellees—all sisters—the

Arbitrator had to make many rulings for and against both sets of sisters. One

____________________________________________

1 “Because the agreements do not expressly provide for statutory arbitration,
the agreements are conclusively presumed to be pursuant to the procedural
rules of common law arbitration.” Moscatiello v. Hilliard, 939 A.2d 325,
330 (Pa. 2007). See also Sage v. Greenspan, 765 A.2d 1139 (Pa. Super.
2000) (Absent an express statement in the arbitration agreement, or a
subsequent agreement by the parties which calls for the application of
statutory arbitration provisions, an agreement to arbitrate is conclusively
presumed to be at common law).

2 Appellants “do not dispute that the law permits the [trial court] to enter an
order confirming an arbitration award.” Appellants’ Brief at 3 n.1. Rather,
they aver that “[t]he dispute arises out of the [c]ourt’s confirmation and
adoption of the Gattuso Report which was prepared long after the Final
Arbitration Award.” Id.

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of those rulings, involving the precise methodology for the Sisters’ Fund’s

liquidation, was admittedly outside the scope of the Arbitrator’s review.

Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 2 (“I do not intend to direct

the liquidation procedure, and I lack the necessary detailed and indeed expert

testimony to do so. The particulars of the liquidation methodology were not

part of this arbitration, and the subject matter arose only as a result of the

provision of the JVA calling for such liquidation during the course of the

drafting of the Interim Award. . . . I lack an adequate record to provide any

further direction to the liquidator beyond what I have provided in my Interim

Award.”).

      In light of the forgoing, we find our decision in Hall v. Nationwide, 629
A.2d 954 (Pa. Super. 1993) to be instructive.       The standard of review in

arbitration confirmation cases is whether, in interpreting the award, the trial

court exceeded its scope of authority by an abuse of discretion or error of law.

Hall, 629 A.2d at 956. See also Weinar v. Lex, 176 A.3d 907, 914 (Pa.

Super. 2017) (“A trial court order confirming a common law arbitration award

will be reversed only for an abuse of discretion or an error of law.”) (citing

Sage v. Greenspan, 765 A.2d 1139, 1142 (Pa. Super. 2000)).           In Hall, an

insured petitioned to confirm the arbitrators’ award of damages pursuant to

an arbitration clause in the insured’s automobile insurance policy. This Court

affirmed the trial court’s confirmation of the award where: 1. the trial court’s

interpretation of the award was reasonable; and 2. the insurer failed to

challenge the arbitrators’ award within thirty (30) days. Hall, 629 A.2d at

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957. As our decision in Hall remains binding authority, we therefore apply it

to the facts before us.3

        Section 7342(b), which governs common law arbitration, provides:

        (b) Confirmation and Judgment.--On application of a party made
        more than 30 days after an award is made by an arbitrator under
        section 7341 (relating to common law arbitration), the court shall
        enter an order confirming the award and shall enter judgment or
        decree in conformity with the order.

42 Pa.C.S.A. § 7342(b). “We have consistently interpreted this language to

mean that the trial court is required to confirm the award unless the other

party has filed a petition to vacate or modify the award within 30 days of the

date of the award.” Civan v. Windermere Farms, Inc., 180 A.3d 489, 499

(Pa. Super. 2018) (citation omitted) (emphasis added).        “The award of an

arbitrator in a 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.” Id. (citation omitted). See

also 42 Pa.C.S.A. § 7341.

        Pursuant to Section 7342(b), in a common law arbitration case, the

parties have only thirty days to challenge the arbitrator’s award. Id. Here,

Appellants failed to challenge the award within thirty days as required by

Section 7342(b). See Appellants’ Brief at 13 (“The Appellants did not file any

____________________________________________

3   For ease of review, we analyze these factors in reverse order.

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[p]etition to [m]odify.”).      Their failure to do so “allowed the trial court to

confirm the award.”       Hall, 629 A.2d at 957 (citations omitted).4     As Hall

remains controlling law and, admittedly, Appellants did not challenge the

Arbitrator’s award, See Appellants’ Brief at 12-13, our analysis turns to

whether the trial court’s interpretation of the arbitrator’s award was

reasonable and within its discretion. Hall, 629 A.2d at 956 (“The trial court

interpreted the . . . award letter to mean that the arbitrators awarded an

amount greater than the policy limits. Such interpretation was reasonable

and did not constitute an abuse of discretion.”).

        Upon review, we conclude that the trial court’s order of November 28,

2018 constitutes a reasonable interpretation of the Arbitrator’s awards, and

was not an abuse of discretion. The trial court’s reasonable interpretation, in

conjunction with Appellants’ admitted failure to challenge the Arbitrator’s final

award within 30 days of its issuance, compels affirmance of the trial court’s

November 28, 2018 order.

        In his May 11, 2018 interim award, the Arbitrator addresses the

appointment of the Gattuso Group as the liquidator with relation to the Sisters’

Fund:

             With [Appellant] Martin and [Appellee] Roccograndi
        remaining as co-managing agents, a deadlock is likely.
        Accordingly, those agents are directed to retain an
____________________________________________

4“We affirmed the Order confirming the award because the appellant failed to
challenge the arbitrators’ award within thirty days pursuant to 42 Pa.C.S.A. §
7342(b).” Vogt v. Liberty Mut. Fire Ins. Co., 900 A.2d 912, 920 (Pa. Super.
2006).

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      appropriate professional to liquidate and distribute the
      Sisters’ Fund in accordance with the terms of this award.
      It is suggested that the Gattuso Group, which has
      considerable knowledge of the Fund activities and whose
      findings have not been questioned by either party, be so
      retained. I will retain jurisdiction and remain available to review
      objections made to the proposed distribution after it is issued.
      Again, I share the parties interest in insuring a full and final
      resolution to all disputes.

             If the co-managing parties are unable to agree on a person
      to liquidate and distribute the funds in accordance with it and the
      JVA, then counsel shall report that to me within twenty days of
      the date of this Interim Award in accordance with the Conclusion
      herein.
                                   *    *    *

             This is an Interim Award as a result of the nature of the
      declaratory relief it provides. In accordance with the Interim
      Award, the parties are to provide a complete status update no
      later than June 1, 2018 which includes: . . .

           2) whether the co-managing agents have agreed to the
      appointment of a person to liquidate Sisters’ Fund and the date
      when a proposed distribution will be provided.

             All actions of the receiver and any liquidator of Sisters’ Fund
      shall be in accordance with the terms of this Interim Award.

            I will retain jurisdiction of both cases to take further action,
      including the entry of a Final Award following consideration of the
      parties’ submission of the status report above-described.

Arbitrator’s Interim Award, 5/11/18, at 27, 30-31 (emphasis added).

      In accordance with the Arbitrator’s interim award and the status reports

of the parties, the Arbitrator’s June 27, 2018 Sisters’ Fund final award

instructed the Gattuso Group to produce a report on the liquidation of the

Sisters’ Fund:

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            In my Interim Award dated May 11, 2018, the parties were
      directed to advise whether the co-managing agents of the
      Sisters[’] Fund had agreed to the appointment of the Gattuso
      Group to implement the liquidation of the Sisters[’] Fund in
      accordance with the terms of the Joint Venture Agreement. I
      received a report from the [Appellants] on May 31, 2018, and a
      report from the [Appellees] on June 1, 2018. The parties have
      in fact agreed to the Gattuso Group to perform that
      function.

              [Appellants’] report of May 31, 2018, contains additional
      requests for relief, requests for different relief than previously
      granted, requests for further clarification and reconsideration.
      Initially, I do not intend to direct the liquidation procedure, and I
      lack the necessary detailed and indeed expert testimony to do so.
      The particulars of the liquidation methodology were not a part of
      this arbitration, and the subject matter arose only as a result of
      the provision of the JVA calling for such liquidation during the
      course of the drafting of the Interim Award. In short, just as with
      the requested liquidation of MBP’s remaining assets, I lack an
      adequate record to provide any further direction to the liquidator
      beyond what I have provided in my Interim Award. Further
      clarification of the Interim Award is unnecessary, and I do not
      intend to reconsider the Interim Award in any respect.

            In accordance with the agreement of the Parties, the
      Gattuso Group shall prepare its liquidation report pursuant
      to Section 15 of the JVA, and shall implement the decisions
      of my Interim Award on the matters arbitrated and decided
      therein. The reasoning set forth at length in the Interim Award
      is hereby incorporated by reference for this FINAL Award. . . .

             This is a FINAL Award. This Award is in full adjudication of
      all claims and counterclaims submitted in this Arbitration. All
      claims and counterclaims not expressly granted herein are hereby
      denied.

Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 1-2, 3 (emphasis added).

      Pursuant to the Arbitrator’s interim award, the parties were required to

select a third party to author a liquidation report with regard to the Sisters’

Fund. Arbitrator’s Interim Award, 5/11/18, at 27. The Arbitrator specifically

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suggested the Gattuso Group, given their “considerable knowledge of the

Fund[’s] activities and whose findings have not been questioned by either

party.” Id. By their own admission, Appellants expressly agreed that the

Gattuso Group be retained to author the liquidation report. Appellants’ Brief

at 16.5

       In accordance with the unchallenged agreement of Appellants and

Appellees, in his final award, the Arbitrator specifically instructed the Gattuso

Group to prepare a liquidation report, and in doing so, implement the

Arbitrator’s decisions set forth in his interim award “on the matters arbitrated

and decided therein.” Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 3.

       After the issuance of the Arbitrator’s Sisters’ Fund final award,

Appellants had 30 days in which they could have challenged his decision to

appoint the Gattuso Group to prepare a liquidation report. Admittedly,

Appellants did not do so. Appellants’ Brief at 12.6 In lieu of challenging the

Arbitrator’s final award with the trial court, Appellants instead filed pro se

objections on September 5, 2018 with the Arbitrator, who at that point lacked
____________________________________________

5 “The Appellants and Appellees agreed to the Gattuso Group as the party to
prepare the liquidation report to ‘implement the decisions of the Arbitrator’s
Interim Award on the matters arbitrated and decided therein.’” Appellants’
Brief at 16 (citation omitted).

6 “The Appellants are acutely aware that they had a right to seek a
modification of the award pursuant to the applicable standards set forth in 42
Pa. C.S. § 7341 within thirty (30) days of its issuance.” Appellants’ Brief at
12 (emphasis added). “As a result, the Appellants could have sought
modification under §7341 through July 27, 2018.” Id. (underlining omitted).
“The Appellants did not, nor did they intend to.” Id. (emphasis added).

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jurisdiction—as explained by the Arbitrator in his September 10, 2018 email

to the parties.

       Thereafter, as instructed by the Arbitrator in his final award, the Gattuso

Group issued its report on August 15, 2018.         Given the specific language

provided in the Arbitrator’s interim and final awards, it was reasonable for the

trial court to include the Gattuso Report in its November 28, 2018 order

confirming the Arbitrator’s awards. The trial court did not abuse its discretion,

given the Arbitrator’s specific instructions that “the Gattuso Group shall

prepare its liquidation report . . . and implement the decision of my Interim

Award.” Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 3.

       Further, although the Appellants argue otherwise,7 the fact that the

Gattuso Report was produced after the issuance of the Arbitrator’s final award

is immaterial. Because the Gattuso Group was not ordered by the Arbitrator

to produce the liquidation report until the issuance of his final award on June

27, 2018, it would have been impossible for the Gattuso Report to be created

before then.      As such, it was reasonable for the trial court to include the

Gattuso Report, upon its completion, in the November 28, 2018 order.

       Consistent with the foregoing, the trial court interpreted the Arbitrator’s

June 27, 2018 final award to require that the Gattuso Report be included as

part of the Arbitrator’s final award. Such interpretation was reasonable and
____________________________________________

7 “The Gattuso Report was not only not a part of the Final Arbitration Award,
it was not even generated until forty-nine (49) days after the Final Arbitration
Award.” Appellants’ Brief at 14.

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did not constitute an abuse of discretion. Hall, 628 A.2d at 956. The trial

court’s reasonable interpretation, in combination with Appellants’ failure to

challenge the award in a timely matter, leads us to conclude that no relief is

due. Accordingly, we affirm the trial court’s November 28, 2018 order.

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/1/2019

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