Court Opinion

ID: 9411036
Source: CourtListenerOpinion
Date Created: 2023-07-25 17:26:09.340414+00
Date Added: 2024-06-11T17:21:02.479694
License: Public Domain

J-A06039-23

                                   2023 PA Super 130

  PENNENERGY RESOURCES, LLC                    :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :
                                               :
  WINFIELD RESOURCES, LLC AND                  :   No. 464 WDA 2022
  MDS ENERGY DEVELOPMENT, LLC                  :

                 Appeal from the Order Entered April 8, 2022
      In the Court of Common Pleas of Allegheny County Civil Division at
                           No(s): GD-19-008604

BEFORE: OLSON, J., NICHOLS, J., and PELLEGRINI, J.*

OPINION BY PELLEGRINI, J.:                               FILED: July 25, 2023

       PennEnergy Resources, LLC (PennEnergy) appeals from the order of the

Court of Common Pleas of Allegheny County (trial court) denying its petition

to vacate an arbitrator’s award of $2.4 million in damages in favor of MDS

Energy Development, LCC (MDS).

       Briefly, PennEnergy and Winfield Resources, LLC (Winfield) entered an

agreement to develop gas leases in Western Pennsylvania.          Winfield later

wanted to transfer part of its interest in the venture to MDS. The two executed

an agreement under which MDS would get almost half of Winfield’s working

interest and Winfield would get membership units in a not-yet-identified MDS

limited partnership that would develop the working interest.          PennEnergy

rejected the transfer and initiated arbitration against Winfield. After being

____________________________________________

* Retired Senior Judge assigned to the Superior Court.
J-A06039-23

joined to the arbitration, MDS counterclaimed for tortious interference with

contract but waited until the arbitration hearing to disclose that it was

prosecuting its claim for not only itself but also 2017 Marcellus Shale

Development-LP (MDS 2017), the limited partnership intended to receive the

working interest. While not disputing that a general partner may prosecute a

claim on a limited partnership’s behalf, PennEnergy objected to MDS not

disclosing that it was doing so until the arbitration. In his final award, the

arbitrator recognized that MDS was proceeding as general partner for MDS

2017 and awarded it $2.4 million in damages after finding that PennEnergy

tortiously interfered with the putative transfer between Winfield and MDS.

PennEnergy petitioned to vacate the award of damages and made several

arguments based on MDS prosecuting the claim in a representative capacity.

For its part, MDS countered that it could litigate the claim because it was MDS

2017’s managing general partner and PennEnergy knew about the limited

partnership’s role before the hearing. Finding this argument persuasive, the

trial court confirmed the award.

      On appeal, PennEnergy asserts several arguments for why the

arbitrator’s award should have been vacated.      Among others, PennEnergy

contends that the award was fundamentally unjust and beyond the arbitrator’s

power because:    (1) MDS never disclosed that it was acting in a fiduciary

capacity for the real party in interest that suffered damages, MDA 2017; (2)

there was no arbitration agreement between PennEnergy and MDS 2017; and

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(3) MDS 2017 was not an intended beneficiary of Winfield and MDS’s

agreement. For the reasons set forth in this Opinion, we reverse and vacate

the trial court’s order confirming the arbitration award of damages.

                                         I.

                                        A.

   In February 2012, PennEnergy entered into an asset purchase and sale

agreement (APSA) to buy gas leaseholds and rights from Snyder Associated

Companies and several of its affiliates, including Winfield. A few months later,

as required by the APSA, PennEnergy and Winfield entered into a joint

development agreement (JDA) to develop the leases within an 88,000-acre

area of mutual interest (AMI) in Butler and Armstrong Counties. Under the

agreement, PennEnergy owned about 80 percent of the working interest

within the AMI while Winfield’s portion was almost 20 percent.

   The dispute arose a few years later when Winfield notified PennEnergy that

it intended to transfer its working interest in three contract areas within the

AMI to MDS. In November 2017, Winfield notified PennEnergy of the potential

transfer through a draft “Notice of Joinder” naming MDS as the transferee of

its interest in the JDA. Under § 6.2 of the JDA, Winfield had a right to transfer

all or part of its interest provided that:

      A Transfer by any Party that is permitted pursuant to Section 6.1
      shall not be effective unless each other Party has received a
      document executed by both the transferring Party (or its legal
      representative) and the permitted transferee that includes: … (b)
      such permitted transferee’s express agreement in writing to be
      bound by all of the terms and conditions of this [JDA] and the

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       Applicable Operating Agreements; ... and (d) representations and
       warranties from both the transferring Party and the permitted
       transferee that the Transfer was made in accordance with
       applicable Law (including state and federal securities Law) and the
       terms and conditions of this [JDA] and any applicable Associated
       Agreements.

JDA, 7/12/12, ¶ 6.2 (R. 86a-87a) (emphasis added).

       PennEnergy did not consent to the joinder because MDS would not agree

to be bound by all the provisions in the JDA. Their disagreement centered on

whether MDS would be subject to the JDA for the entire AMI or only the

geographic area involved in the transfer.

       Notwithstanding PennEnergy’s refusal to consent to joinder, on February

5, 2018, Winfield and MDS executed a purchase and sale agreement (PSA).

The PSA states that the Seller (Winfield) agreed to sell, assign and transfer

9.93 percent of Winfield’s working interest from its participating interest share

from the JDA. MDS would in turn assign the working interest to a not-yet-

identified limited partnership of which MDS would be the managing general

partner. As compensation for the transfer, Winfield would receive units in that

unidentified limited partnership, later denominated as MDS 2017.1 The PSA

also provided that “[o]nly the parties hereto, their respective successors and

permitted assigned are intended to benefit from this Agreement and no other

____________________________________________

1 We note that after reviewing the record, we find no evidence that MDS ever

assigned the interest it received in the PSA to MDS 2017.

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Party, including the Limited Partnership, is intended to be a beneficiary

hereof.”

       Concurrent with their agreement, Winfield and MDS sent PennEnergy

notice of joinder. As laid out in the notice, MDS agreed only to be bound by

the JDA “specifically as it relates to and limited to” the three contract areas

within the AMI that it was receiving. Upon receiving the notice, PennEnergy

rejected it and challenged the validity of Winfield’s transfer of the 9.93 percent

interest to MDS because it refused to consent to all the provisions of the JDA.

       When PennEnergy later that month issued a capital call for the three

contract areas, Winfield tendered PennEnergy nearly $6.3 million (10 percent

of the total working interest) while MDS tendered almost $6 million (9.93

percent of the total working interest). After accepting Winfield’s tender but

rejecting MDS’s, PennEnergy informed Winfield that it was in default.

                                               B.

       With the dispute now clear, on March 9, 2018, MDS filed a two-count

complaint against PennEnergy for tortious interference with contract and

declaratory judgment in the Court of Common Pleas of Armstrong County. 2

____________________________________________

2 That case was captioned MDS ENERGY DEVELOPMENT, LLC, Plaintiff v.
PENNENERGY RESOURCES, LLC, v. WINFIELD RESOURCES, LLS, Interested
Party. In its complaint, MDS explained that Winfield was an interested party
under Section 7540 of the Declaratory Judgments Act, which provides that “all
persons shall be made parties who have or claim any interest which would be
affected by the declaration, and no declaration shall prejudice the rights of
persons not parties to the proceeding.” See Complaint, 3/9/18, ¶ 15 (R.

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Ten days later, on March 19, 2018, PennEnergy submitted a demand for

arbitration seeking declaratory relief against Winfield with the American

Arbitration Association (AAA).

       In response to the demand, MDS and Winfield both filed motions in

Armstrong County to stay arbitration. PennEnergy, however, pointed out that

both the JDA and APSA contain broad arbitration provisions requiring all

contractual disputes be arbitrated.3 Agreeing with PennEnergy, the Court of

Common Pleas of Armstrong County denied the motions on April 4, 2018,

finding that “an applicable agreement to arbitrate exists and governs the

dispute,” and that there was “nothing in the record indicating that all parties

cannot participate in the already-initiated arbitration proceedings, as [MDS’s]

claims are based upon, and derivative of, the rights and obligations of the

applicable agreement between [PennEnergy] and [Winfield.]”4

       Accordingly, a few weeks later, on April 23, 2018, PennEnergy joined

MDS as a respondent to its pending arbitration. After being joined, MDS filed

____________________________________________

433a). MDS brought another action against PennEnergy in the Court of
Common Pleas of Butler County, No. 2020-10863, on behalf of another
limited partnership, this time with the caption reading: MDS ENERGY
DEVELOPMENT, LLC, as Managing General Partner for MDS 2018 - MARCELLUS
SHALE DEVELOPMENT, LP, Plaintiff, v. PENNENERGY RESOURCES, LLC,
Defendant. (R. 3802).

3 While not a party to the JDA, MDS was a signatory of the APSA.

4 See Order, 4/18/2018, at 1 (R. 466a).

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its counterclaim in the arbitration. However, rather than seek both monetary

damages for tortious interference and declaratory relief like it did in its state

court    action,   MDS    sought     only      declaratory   relief   that   PennEnergy’s

interpretation of the JDA’s transfer provisions were incorrect.

                                               C.

        In October 2018, MDS and Winfield rescinded their PSA. A month later,

MDS moved to dismiss itself from the arbitration, arguing that rescission of

the agreement had rendered moot any determination about its propriety. In

so doing, MDS contended that it believed that its tortious interference claim

remained pending in Armstrong County and was not referred to arbitration.

If the arbitrator disagreed, however, MDS requested that it be granted leave

to amend its counterclaim so that it could add its tortious interference claim.

As will become relevant when addressing whether there was an arbitration

agreement, PennEnergy opposed MDS’s attempt to get out of the arbitration

and reasserted the arguments it raised in opposition to MDS’s and Winfield’s

motions to stay arbitration. On December 18, 2018, the arbitrator issued a

procedural order denying MDS’s motion to dismiss but granting it leave to

amend its pleadings “so that the arbitrator can hear and decide its tortious

interference claims and other claims urged against PennEnergy in the

Pennsylvania state court.”5

____________________________________________

5 See Arbitrator’s Procedural Order Five, 12/18/18, at 2 (R. 3950a).

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       In accordance with the arbitrator’s order, on January 11, 2019, MDS

amended its counterclaim to include the tortious interference claim against

PennEnergy. In its claim, MDS alleged that PennEnergy improperly rejected

its transfer with Winfield, causing it to suffer damages “in the tens of millions

of dollars” because it missed out on tax deductions attributable to MDS’s

intangible drilling costs for the wells, lost opportunity costs and lost profits.6

                                               D.

       The four-day arbitration hearing was held in Pittsburgh in February

2019. At the hearing, MDS’s principal, Michael Snyder, testified that MDS was

suing on not only its own behalf but also MDS 2017 as its “representative” and

“fiduciary.” When asked why this representative status was not disclosed in

MDS’s claim, Snyder testified that he did not think it needed to be because

MDS is a fiduciary for the limited partnership.

       MDS also submitted its expert report of the damages that it was seeking

for its tortious interference claim. In his report, MDS’s expert described how

Winfield, rather than receive cash, would have received units in MDS 2017 in

consideration of transferring part of its working interest to MDS. In assessing

the economic benefit that MDS would have received from the working interest,

the expert relied on the financial model used by MDS in its communications

with its limited partnership investors.             In so doing, however, the expert

____________________________________________

6 See MDS’s Amended Counterclaims, 1/11/19, at 14 (R. 225a).

                                           -8-
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clarified that he had not been asked to determine the amount of the economic

benefit that should have been allocated between MDS, as the general partner,

and MDS 2017, as the limited partnership. In total, the expert calculated a

potential economic benefit between $9 million to $14 million that MDS would

have received “but for” PennEnergy’s rejection of the transfer.

       In its post-hearing brief, PennEnergy argued that MDS lacked standing

to recover for MDS 2017 since none of MDS’s pleadings asserted that it was

proceeding in a representative capacity for the limited partnership’s benefit.

While it did not dispute that MDS could bring a representative action as the

managing general partner of MDS 2017, PennEnergy contended that MDS

needed to include the limited partnership in the caption of its claim and

disclose its representative status and the damages that it was seeking.

       On May 14, 2019, the arbitrator issued his final award finding that

PennEnergy wrongfully withheld approval of joinder in the JDA between

Winfield and MDS.         He did so because he did not accept PennEnergy’s

argument that § 6.2 of the JDA requires that the transferee (MDS) had to give

its express agreement in writing to be bound by “all” of the terms of the JDA.7

____________________________________________

7 The arbitrator found that §6.2 does not preclude all transfers without consent

to all provisions of the JDA because “§ 6.1 grants Winfield the right to transfer
all or any portion of its rights or obligations under this Agreement (the JDA),
any of such Party’s Participating Interest Share, the Joint Interests or any
other rights or interests obtained or acquired hereunder. Clearly, under the
plain and unambiguous language, Winfield could transfer all or any portion of
its rights or obligations under the JDA. To interpret the intent of the parties

                                           -9-
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Consistent with that finding, the arbitrator further found that PennEnergy

tortiously interfered with the PSA. While finding that Winfield itself suffered

no damages, the arbitrator awarded MDS $2.4 million in damages after

considering the range of damages identified in the expert reports. Relevant

here, while not addressing PennEnergy’s arguments about MDS appearing in

a representative capacity for MDS 2017, the arbitrator identified MDS as the

general partner for MDS 2017, the entity who had suffered damages.8

                                               E.

       On June 13, 2019, PennEnergy petitioned to vacate the arbitration

award in the trial court, contesting only the arbitrator’s award in favor of MDS

for PennEnergy’s tortious interference.9            PennEnergy advanced several

grounds for vacating the award, almost all of which related to MDS’s

____________________________________________

as [PennEnergy] argues would create any inconsistency between the language
of § 6.1 and § 6.2(b) as well as with the language found in the rest of the
contract an arbitrator is not to construe language in one part of the contract
to nullify or undermine another part of the contract.” Final Award, 5/14/19,
at 14 (R. 45a). Because “[t]he arbitrators are the final judges of both law and
fact, their award [is] not ... subject to reversal for a mistake of either.” Cargill
v. Northwestern Nat. Ins. Co. of Milwaukee, Wis., 462 A.2d 833, 835
(Pa. Super. 1983) (citations omitted).

8 See Final Award, 5/14/19, at 2 (R. 33a).

9 MDS successfully moved to strike PennEnergy’s petition because PennEnergy

failed to attach a notice of presentment. PennEnergy appealed from the trial
court’s order but also filed and served an amended petition complying with
the trial court’s order. As a result, this Court later quashed PennEnergy’s
appeal. See PennEnergy Resources, LLC v. Winfield Resources, LLC,
1091 WDA 2019 (Pa. Super. June 26, 2020) (unpublished memorandum).

                                          - 10 -
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prosecution of the tortious interference claim in a representative capacity on

behalf of MDS 2017.        PennEnergy alleged that the arbitrator exceeded his

powers by awarding MDS damages that were suffered by a third party, MDS

2017; that the arbitrator could not decide an issue between PennEnergy and

MDS 2017 that was not part of any arbitration agreement; and that MDS 2017,

as the real party in interest, needed to litigate its own claim.10 In making

these claims, PennEnergy did not dispute that MDS could litigate on MDS

2017’s behalf as its managing general partnership, but if it wished to so, it

needed to disclose that in the caption of its claim.11

       PennEnergy also asserted that the arbitrator lacked jurisdiction to award

any damages suffered by MDS 2017 because MDS and Winfield’s February

2018 PSA—which is the agreement that PennEnergy was found to have

interfered with—expressly disclaimed the limited partnership as a party or

____________________________________________

10 Section 8620 of Pennsylvania’s Uniform Limited Partnership Act provides,

in relevant part, that “(a) Separate entity.--A limited partnership is an entity
distinct from its partners. . . . (d) Powers.--A limited partnership has the
capacity to sue and be sued in its own name and the power to do all things
necessary or convenient to carry on its activities and affairs.” 15 Pa.C.S.
§ 8620.

11 In support for this contention, PennEnergy relied on Pennsylvania Rule of

Civil Procedure 2002, which provides, in relevant part, that “all actions shall
be prosecuted by and in the name of the real party in interest, without
distinction between contracts under seal and parol contracts.” Pa.R.Civ.P.
2002(a). Under the rule, when a plaintiff is “acting in a fiduciary or
representative capacity,” the plaintiff must disclose that capacity “in the
caption and in the plaintiff’s initial pleading[.]” Pa.R.Civ.P. 2002(b)(1).

                                          - 11 -
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intended beneficiary to the agreement.12 According to PennEnergy, to have

standing to recover for tortious interference with contract, a plaintiff must be

a party to the contract with which the defendant interfered or, in limited

circumstances,      the   intended     third-party   beneficiary   of   that   contract.

Consequently, PennEnergy argued, the arbitrator exceeded his powers in

awarding damages to MDS 2017 for a claim that it could not legally pursue.

       Responding to these arguments, MDS asserted that PennEnergy

“willfully ignores Pennsylvania precedent establishing that MDS, as managing

general partner of MDS 2017, had standing to arbitrate its claim for tortious

contractual interference against [PennEnergy] on behalf of MDS 2017.” 13 To

that end, MDS disavowed PennEnergy’s reliance on the Rules of Civil

Procedure for arguing that it had to include its representative capacity in the

caption of its state court civil action or arbitration counterclaim since

arbitration proceedings are not governed by the Rules. In any event, MDS

continued, PennEnergy was aware several months before arbitration that MDS

2017 would ultimately receive the working interest.

____________________________________________

12 See PennEnergy’s Omnibus Brief at 40-41 (R. 1619a-1620a).

13 See MDS’s Brief in Opposition to PennEnergy’s Petition to Vacate Arbitration

Award, 11/16/20, at 4 (R. 804a); see also at 16 (R. 816).

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                                               F.

       On April 8, 2022, the trial court denied PennEnergy’s petition and

confirmed the arbitrator’s award but acknowledged that the arbitrator’s award

bestowed $2.4 million in damages “to MDS 2017.” Trial Court Opinion (TCO),

4/8/22, at 1.       In its supporting opinion, the trial court first addressed

PennEnergy’s real party in interest claim, that is, whether MDS could represent

MDS 2017 in a representative capacity as its managing general partner.

Finding that MDS could so, the trial court explained:

             In this case, MDS 2017-LP would be the real party in
       interest. However, under Pennsylvania law, general partners of
       limited partnerships may sue on behalf of limited partnerships.
       “The rules establish that a ‘partner’ is an individual who bears
       unlimited liability for the partnership obligations and, as such, is
       authorized to prosecute and defend actions arising from the
       partnership’s activities.” In re Lawrence County Tax Claim
       Bureau, 998 A.2d 675, 680 (Pa. Cmwlth. 2010).[14] Further,
       “[p]artnerships are not recognized as separate entities like a
       corporation is; a limited partnership can only act through its
       designated agent (the general partner), and the general partner
       can be liable for the obligations of the limited partnership.” Id. at
       679. Therefore, MDS may litigate on behalf of MDS 2017-LP as
       the general partner of the limited partnership.

____________________________________________

14 In Lawrence County, the Commonwealth Court held that a general partner

in a partnership had authority to represent the partnership pro se to stop a
judicial sale of partnership property because the general partner could have
been held liable for the rights and obligations of the partnership in his
individual capacity. Lawrence Cty., 998 A.2d at 680.

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TCO at 12 (case citation altered).15           Having so found, the trial court also

agreed with MDS that it need not disclose its representative status in the

caption of its claim because the Rules of Civil Procedure do not apply to

arbitration proceedings. Id. at 12-13.

       The trial court next addressed PennEnergy’s argument that MDS failed

to disclose that it was acting in a representative capacity for MDS 2017. On

this point, the trial court found that MDS became aware of MDS 2017 at the

very least before the arbitration hearing because it sought discovery into

financial information about the limited partnership. Id. at 5, n.2. That being

the case, the trial court found that MDS’s failure to disclose that it was

____________________________________________

15 Section 8642 of Pennsylvania Uniform Limited Partnership Act of 2016
provides:
      (a) General rule.--Each general partner is an agent of the limited
      partnership for the purposes of its activities and affairs. An act of
      a general partner, including the signing of a document in record
      form in the partnership’s name, for apparently carrying on in the
      ordinary course the partnership’s activities and affairs, or
      activities and affairs of the kind carried on by the partnership,
      binds the partnership, unless the general partner did not have
      authority to act for the partnership in the particular matter and
      the person with which the general partner was dealing knew or
      had notice that the general partner lacked authority.

       (b) Act outside of ordinary course.--An act of a general partner
       which is not apparently for carrying on in the ordinary course the
       limited partnership’s activities and affairs, or activities and affairs
       of the kind carried on by the partnership, binds the partnership
       only if the partner had actual authority to take the act.

15 Pa.C.S. § 8642 (emphasis added).

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proceeding in a representative capacity did not rise to the level of that needed

to vacate an arbitrator’s award.

      As noted above, the Court has determined that MDS may litigate
      on behalf of MDS 2017, acting as its general partner. Also noted
      above, PennEnergy knew of MDS 2017 before the arbitration
      hearing began; notably, when it attempted to conduct discovery
      into the “unnamed limited partnership.” Frankly, [PennEnergy’s]
      argument fails to reach the “unconscionable” and “unjust”
      standard. MDS is legally entitled to litigate on behalf of MDS 2017
      and the fact that MDS 2017 was “not a named party” on the
      pleadings does not rise to the level of “unjust” or “unconscionable”
      that is required to vacate an arbitration award.

Id. at 16 (cleaned up).

      The trial court likewise rejected PennEnergy’s argument that the

arbitrator exceeded his powers because he could not award damages for any

loss suffered by MDS 2017 since it was not a third-party beneficiary under the

PSA. Id. at 17-18. On this point, the trial court found that MDS 2017 was an

assignee rather than a third-party beneficiary of the PSA because the

agreement unambiguously stated that MDS “shall assign” the acquired

interests to an MDS partnership developing the working interest. Id. at 18.

As a result, because the assignee stands in the shoes of the assignor, then

MDS 2017, as the intended assignee of the MDS’s working interest, could sue

a third party for tortious interference of a contract. Id. at 18-19. Thus, even

though MDS 2017 was not named in the PSA, MDS as its general partner could

sue on the limited partnership’s behalf and the arbitrator did not exceed his

powers. Id. at 19.

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      Finally, the trial court found that PennEnergy was judicially estopped

from arguing that the arbitrator exceeded his authority because there was no

agreement to arbitrate between itself and MDS 2017. Id. at 20. In so finding,

the trial court noted that PennEnergy successfully opposed MDS’s motion to

dismiss itself from the arbitration since the arbitrator agreed with its position

and kept MDS in the arbitration. Id.

      After confirmation of the arbitrator’s award, PennEnergy timely filed this

appeal to argue the trial court erred in dismissing its petition to vacate the

arbitrator’s award.

                                       II.

      In general, judicial review of arbitration awards is           “extremely

deferential.” Metromedia Energy, Inc. v. Enserch Energy Servs., Inc.,

409 F.3d 574, 578 (3d Cir. 2005). Rather, mindful of the strong policy in

favor of commercial arbitration, we begin with the presumption that the award

is enforceable. We do not entertain claims that an arbitrator has made factual

or legal errors. McKenna v. Sosso, 745 A.2d 1, 4-5 (Pa. Super. 1999). An

arbitrator is also not required to provide a rationale for his or her decision or

how it arrived at monetary damages. When parties agree to resolve their

disputes before an arbitrator without involving the courts, the courts generally

will enforce the bargains implicit in such agreements by enforcing arbitration

awards whether there are clear errors of law or fact, and it is hard to discern

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how the arbitrator arrived at the amount of money damages awarded. Hall

St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 584 (2008).

       This does not mean, though, that an arbitration award is not subject to

any judicial review.         Section 7314(a)(1) of the Pennsylvania Uniform

Arbitration Act (PUAA) states that an award can be vacated:16

       (1) On application of a party, the court shall vacate an award
       where:

              (i) the court would vacate the award under section 7341
       (relating to common law arbitration) if this subchapter were not
       applicable;

             (ii) there was evident partiality by an arbitrator appointed
       as a neutral of corruption or misconduct in any of the arbitrators
       prejudicing the rights of any party;

              (iii) the arbitrators exceeded their powers;

             (iv) the arbitrators refused to postpone the hearing upon
       good cause being shown therefor or refused to hear evidence
       material to the controversy or otherwise so conducted the
       hearing, contrary to the provisions of section 7307 (relating to
       hearing before arbitrators), as to prejudice substantially the rights
       of a party; or

             (v) there was no agreement to arbitrate and the issue of the
       existence of an agreement to arbitrate was not adversely
       determined in proceedings under section 7304 (relating to court
       proceedings to compel or stay arbitration) and the applicant-party
       raised the issue of the existence of an agreement to arbitrate at
       the hearing.

____________________________________________

16 While there was disagreement in the trial court, the parties appear to agree

that PUAA provisions regarding vacating an arbitration award apply.

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42 Pa.C.S. § 7314(a)(1).17

       As can been seen, Section 7314(a)(1)(i) allows a statutory arbitration

award to be vacated for the same reasons that a common law arbitration

award can be vacated, which is when “it is clearly shown that a party was

denied a hearing or that … other irregularity caused the rendition of an unjust,

inequitable or unconscionable award.” See 42 Pa.C.S. §§ 7314(a)(1)(i) and

7341.18

____________________________________________

17 Our standard of review of the denial of a motion to vacate an arbitrator’s

award is well-settled: “we will reverse a trial court’s decision regarding
whether to vacate an arbitration award only for an abuse of discretion or error
of law.” Joseph v. Advest, Inc., 906 A.2d 1205, 1208 (Pa. Super. 2006)
(citing Conner v. Daimler Chrysler Corp., 820 A.2d 1266, 1269 (Pa. Super.
2003)). In other words, on a motion to confirm or vacate an arbitration award,
we review the trial court’s legal conclusions de novo and its factual findings
for clear error. The threshold question of whether agreement to arbitrate
exists is one which the lower court, and reviewing courts, has the authority to
adjudicate. Patton v. Hanover Ins. Co., 612 A.2d 517, 520 (Pa. Super.
1992) (citation omitted).

18 “Irregularity refers to the  process employed in reaching the result of the
arbitration, not the result itself.” Gargano v. Terminix Int'l Co., L.P., 748
A.2d 188, 193 (Pa. Super. 2001). Moreover, the irregularity must “import []
‘such bad faith, ignorance of the law [,] and indifference to the justice of the
result’ as would cause a court to vacate an arbitration award.” F.J. Busse
Co. v. Zipporah, L.P., 879 A.2d 809, 811 (Pa. Super. 2005) (citation
omitted). “Notice and the opportunity to be heard are essential elements of
a fair hearing. Litigants require not simply notice that a hearing is to occur,
but also notice of the issues to be litigated. A principal function of pleadings,
even in their shortened, modern form, is to focus the litigants’ attention on
the issues so that they may marshal their evidence and prepare their
arguments.” Mellon v. Travelers Inc. Co., 406 A.2d 759, 762 (Pa. Super.
1979).

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                                      A.

      On appeal, PennEnergy argues, among other things, that the arbitrator

was without jurisdiction and exceeded his authority by awarding damages

incurred by MDS 2017 because it was not a party to the arbitration and did

not seek to be joined in the arbitration. PennEnergy also argues that its due

process rights were violated because, until the arbitration hearing, MDS never

disclosed that it was acting on behalf and seeking damages for MDS 2017.

For its part, MDS contends that as the managing general partner of MDS 2017,

it had the right to litigate on the limited partnership’s behalf, and that

PennEnergy knew before the hearing that MDS 2017 was the tax vehicle to

which MDS would convey its interest. MDS also asserts that PennEnergy is

judicially estopped from arguing that there was no arbitration agreement

because it opposed MDS’s motion to dismiss itself from the arbitration.

      Under the PUAA, the arbitrator’s award can be vacated if an arbitrator

“exceed[s] [his] powers” or determines issues when “there was no agreement

to arbitrate,” 42 Pa.C.S. §7314(a)(1)(iii) & (v), or when he awards damages

for injuries sustained by a third party not subject to an arbitration agreement

or joined as a party to the arbitration. See, e.g., Civan v. Windermere

Farms, Inc., 180 A.3d 489, 499 (Pa. Super. Ct. 2018) (“the arbitration panel

exceeded its power by determining that the panel had jurisdiction over the

contractor, the contractor never agreed to arbitrate disputes arising out of the

                                     - 19 -
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agreement of sale, and the buyers failed to obtain an order compelling the

contractor to arbitrate.”).

      Moreover, an arbitrator’s decision can be vacated when an arbitrator

makes an award for claims that were never raised by or against parties that

are not named in the arbitration. See, e.g., Mellon, 406 A.2d at 762; Alaia

v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 928 A.2d 273, 277 (Pa.

Super. 2007). See also Eljer Mfg. v. Kowin Dev. Corp., 14 F.3d 1250,

1256 (7th Cir. 1994) (“Though the arbitration clause is broadly worded, it

cannot be construed to delegate to the arbitrator the power to arbitrate

disputes between [plaintiff] and a third party.”); Nationwide Mut. Ins. Co.

v. Home Ins. Co., 330 F.3d 843, 848 (6th Cir. 2003) (holding arbitration

panel exceeds its authority when it mandates payment to a non-party).

      Central to all PennEnergy’s issues is whether MDS 2017 was a party to

the litigation because MDS was a party and it served as the managing general

partner of MDS 2017. MDS first became involved in the litigation when it

brought its action in the Court of Common Pleas of Armstrong County against

PennEnergy for tortious interference based on wrongfully withholding approval

of the notice of its joinder in the PSA sought by Winfield. As noted, the Court

of Common Pleas of Armstrong County ordered that the case be referred to

arbitration because MDS’s rights were “based upon, and derivative of, the

rights and obligations” of Winfield’s under the JDA. Unlike the Butler County

case note above, see infra n.2, MDS made no mention in its Armstrong

                                    - 20 -
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County action that it was also seeking damages on MDS 2017’s behalf as its

managing general partner. Because MDS did not do so, PennEnergy joined

only MDS as a party to the arbitration after the Court of Common Pleas of

Armstrong County referred its action to the pending arbitration.          After

PennEnergy did so, MDS did not respond to the joinder that it was also acting

as the general partner of MDS 2017.

      As discussed, MDS filed its counterclaim after being joined but sought

only declaratory relief, as it believed that its tortious interference claim was

not referred to arbitration. It was not until its motion to dismiss was denied

that it counterclaimed for tortious interference only a month before the

arbitration.   Again, when it finally filed its counterclaim for tortious

interference in the arbitration, MDS made no mention of MDS 2017 or that it

was pursing the claim in a representative capacity on the limited partnership’s

behalf. By failing to so, PennEnergy claims, it did not become aware that MDS

was seeking damages until the time of the arbitration hearing.

      Notwithstanding that it was never named or mentioned in the pleadings

before the Court of Common Pleas of Armstrong County or in MDS’s

counterclaim, or that MDS was bringing this action as the general partner, the

arbitrator awarded damages to MDS as the general partner of MDS 2017. The

arbitrator seems to have accepted Snyder’s argument that MDS did not have

to disclose that it was not only seeking damages on its own behalf but also on

behalf of MDS 2017 as its “representative” and “fiduciary.” The trial court also

                                     - 21 -
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accepted that MDS 2017 does not have to be named because general partners

can bring actions on behalf of the limited partnership, and MDS was MDS

2017’s managing general partner making it a party to the action.

      While general partners can bring an action on behalf of a limited

partnership, that does not mean that any time a party sues that it is also suing

on behalf of any limited partnership that it happens to be a general partner.

A limited partnership “is an entity distinct from its partner” and has the

“capacity to sue and be sued in its own name.” 15 Pa.C.S. § 8620. Because

the limited partnership is a distinct entity, for a general partner to bring an

action on behalf of the limited partnership, it is required to do so in the name

of the limited partnership. See Pa.R.Civ.P. 2002(b)(1) (“A plaintiff may sue

in his or her own name without joining as plaintiff or use-plaintiff any person

beneficially interested when such plaintiff … is acting in a fiduciary or

representative capacity, which capacity is disclosed in the caption and in the

plaintiff's initial pleading.”). A party defending the claim should be on notice

who is seeking damages.

      Notice and the opportunity to be heard are essential elements of a fair

hearing. As the trial court noted, under Pennsylvania Rules of Civil Procedure,

requiring the party to be named in the caption does not apply to arbitration

proceedings. What those Rules ensure, however, is that a party’s due process

rights are protected by giving that party notice of the issues so that they may

marshal their evidence and prepare their arguments.            See Mellon v.

                                     - 22 -
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Travelers Inc. Co., 406 A.2d 759, 762 (Pa. Super. 1979).19          For similar

reasons, under 42 Pa.C.S. §7314(a)(1), courts may vacate an award when a

party’s due process rights are violated or when a hearing is not fair because

a party is deprived of knowing who the party is for which damages are being

sought.

       In this case, no one is contending that MDS 2017 brought the action in

its own name. What is being contended by MDS is that it brought this action

not only on its behalf but as general partner of MDS 2017, even if it did not

disclose that that is what it is doing. However, ignoring whether MDS 2017

could be a party to the arbitration even if notice were given, PennEnergy did

not receive the requisite notice that MDS was suing on behalf of MDS 2017 or

that MDS was seeking damages on MDS 2017’s behalf until the arbitration

began and to which it objected. Basic due process demands that notice be

given as to who is the party bringing the action and on whose behalf and what

damages are being sought. In other words, who has “skin in the game.”

       Contrary to Snyder’s testimony that it did not need to disclose that MDS

was not only seeking damages on its own behalf but also on behalf of MDS

2017 as its “representative” and “fiduciary,” when an entity that is a general

____________________________________________

19  We also note that Rule R-4(e) of the AAA Commercial Arbitration Rules
provides that “Information to be included with any arbitration filing includes:
(i). the name of each party; … [and] (iv). a statement setting forth the nature
of the claim including the relief sought and the amount involved[.]” AAA
Commercial Rules R-4(e)(i) & (iv).

                                          - 23 -
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partner of a limited partnership is part of an arbitration does not mean that

the limited partnership automatically becomes a party to litigation.20 Because

PennEnergy did not receive direct notice that MDS was acting as general

partner for MDS 2017 in the arbitration, the arbitration proceeding violated

PennEnergy’s due process rights to a fair hearing and, likewise, the arbitrator

lacked jurisdiction to hear the matter and exceeded his authority in awarding

damages to MDS 2017 because it was not a party to the action.

                                               B.

       That does not end the matter because, even if all that is true, MDS

contends that PennEnergy was aware or should have known that it was

bringing the action in a representative capacity on behalf of MDS 2017. To

begin, we note that such notice does not satisfy due process because there is

an affirmative duty on the part of a party seeking to hold another party for

____________________________________________

20  Yet this is what the trial court seems to hold in rejecting PennEnergy’s
complaints about MDS not disclosing its representative status. In support, the
trial court cited our Commonwealth Court’s decision in Lawrence County for
the proposition that a managing general partner and its limited partnership
can be treated interchangeably. As noted above, see infra n.14, in Lawrence
County, the Commonwealth Court merely allowed an individual general
partner of a limited partnership can personally appear and represent the
partnership pro se in legal actions. Lawrence Cty., 998 A.2d at 680. As the
Commonwealth Court later clarified, Lawrence County did not hold that a
limited partnership is “legally interchangeable” with its individual partners.
See Jamestown Condominium v. Sofavoy, 2019 WL 2401318, * 2 (Pa.
Cmwlth. May 3, 2019) (unpublished memorandum).

                                          - 24 -
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damages, even under the AAA Rules, to name that party and the claim it is

asserting against that party before it makes it obligated to pay damages.

      MDS’s position also benefits from its own failure to give direct notice

that it was bringing the action as the general partner of MDS 2017. If MDS

would have given such notice, then PennEnergy could have opposed MDS

2017’s participation because there was no agreement and MDS did not have

any rights to recover any damages under the dispute being arbitrated. (See

Part III of this Opinion). In any event, there is nothing that establishes that

PennEnergy indirectly knew that MDS was acting on behalf of MDS 2017 before

the arbitration hearing.

      First, MDS claims that “Michael Snyder made clear that the tortious

interference claims were being litigated on behalf of both MDS and MDS 2017,

with MDS, the managing general partner of the MDS 2017 limited partnership,

acting as representative and fiduciary for MDS 2017.       (R. 23a; R. 1468a;

(3038a; 3078-79a).”        MDS’s Brief at 9.     That argument is somewhat

misleading. While Snyder did testify that he was suing on behalf of MDS 2017,

he only made those statements in his testimony at the arbitration hearing

where he testified that he did not think that he had to disclose that MDS was

seeking damages on MDS 2017’s behalf.          The other citations refer to his

                                    - 25 -
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deposition testimony that was taken after the arbitration hearing as part of

PennEnergy’s motion to vacate the arbitration award.21

       The only direct evidence that MDS can point to that PennEnergy had any

notice that it was bringing this action as MDS’s general partner was in its pre-

hearing brief it filed shortly before the hearing. In its pre-hearing brief, MDS

asserted:

       PennEnergy’s misconduct, having no discernible business purpose
       and seemingly undertaken out of spite for Winfield’s principal—
       Michael Snyder’s father—and MDS, damaged MDS (both itself and
       as representative for [MDS 2017], on whose behalf MDS acquired
       the interests) in the term of millions of dollars.

MDS’s Pre-Hearing Brief at 2 (R. 1128a). Even though it never mentioned

MDS 2017 in its amended counterclaim, MDS claimed that this one sentence

among many shows that PennEnergy was put on notice that MDS brought the

tortious interference claim on behalf of itself and as a representative for MDS

____________________________________________

21 The first citation, R. 23a, cites PennEnergy’s petition to vacate where it
recounts that Snyder stated for the first time at the arbitration hearing that
MDS was operating in a representative capacity. The citation at R. 1468a is
from the arbitration hearing where he admitted that MDS’s counterclaim did
not disclose that MDS was suing as a fiduciary and representative on behalf
of MDS 2017, and stated that he did not think that MDS had to disclose its
representative capacity. The citations, meanwhile, at R. 3038a and R. 3078-
79a, are from Snyder’s April 20, 2021 deposition taken in conjunction with
PennEnergy’s petition to vacate. His testimony at R. 3038a merely states that
MDS is the general partner of MDS 2017, that it has no officers or employees
and that it was never mentioned in the pleadings. At R. 3078-79a, Snyder
merely reiterates his testimony at the arbitration hearing that MDS was under
no obligation to disclose its representative capacity before the arbitration
hearing that it was also suing as MDS 2017.

                                          - 26 -
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2017. Slipping a statement into a pre-hearing brief, however, does not amend

the pleadings or put a party, presuming that even if it were read, on legal

notice that a party is being added or the claim is being amended; it is the

same as springing the issue at the arbitration hearing.

        A pre-hearing brief addressing the party’s position cannot add new

parties or advance new claims in the proceeding. Rather, formal notice is

required. Arbitration rules are loose, but not that loose; otherwise, the rules

themselves would violate due process. In any event, Penn Energy objected

to inclusion of this claim at the hearing, the first opportunity that it had, that

it did not have fair notice that MDS was bringing this action on behalf of MDS

2017.

        Second, MDS claims that even if PennEnergy did not have direct notice,

it knew or should have known that MDS was bringing this action because

depositions, pre-hearing briefs and expert damages reports made PennEnergy

aware of the damages that MDS was asserting tortious interference claims

both for itself and as representative for MDS 2017.          In support of this

argument, MDS cites:

        •     A September 2018 deposition of Winfield’s principal, David
        Snyder, where PennEnergy’s counsel asked whether it was correct
        that “MDS Energy Development LLC would assign the interest it
        acquired from Winfield to this 2017 MDS limited partnership.” Mr.
        Snyder responded that it was. (R. 1125a).

        •    In September 2018 when PennEnergy deposed Michael
        Snyder and questioned him at length about MDS’s role as the
        managing general partner of limited drilling partnerships. Mr.

                                     - 27 -
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     Snyder explained how investors directly invested into the MDS
     limited partnership. (R. 1125-26a).

     •      A December 2018 pre-arbitration hearing brief where
     PennEnergy itself described the MDS claim as tortious interference
     with the agreement “by which MDS would acquire its share
     and Winfield would become a unit-holder in an MOS-
     affiliated investment partnership.” (R. 1126-27a, emphasis
     in original).

     •     In a pre-hearing submission, PennEnergy asserted that MDS
     had “divulged that the transaction required a further transfer of the
     Winfield Participating Interest Share to an MDS-related
     investment partnership, and Winfield would receive units in
     that partnership, but no cash.” (R. 1127a, emphasis supplied).

     •      MDS’s pre-hearing expert damages report clearly stated
     that, in place of cash, Winfield would receive units in MDS 2017 in
     consideration of the transfer of the 9.93 percent working interest
     from Winfield to MDS. (R. 1127a). The MDS expert did not
     allocate the economic benefits to derive from the working interest
     among MDS, MDS 2017 and other entities. (R. 1127-28a).

     Again, indirect notice does not satisfy the due process requirement and

a party’s obligation to give a party notice of who is seeking redress. In any

event, none of those above actions would put PennEnergy on notice that MDS

was bringing an action on behalf of MDS 2017. PennEnergy was not required

to divine in what capacities MDS was acting when MDS did not say for whom

it was acting. MDS also asserts that PennEnergy was aware of the damages

that MDS asserted, both for itself and as representative for MDS 2017,

because it sought more discovery into the identities of the hundreds of

investors in MDS 2017, (R. 1128a) which MDS opposed.               Even when

responding to PennEnergy’s request merely weeks before the arbitration

hearing, MDS never stated that it was acting as the general partner for MDS

                                    - 28 -
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2017, which may have led to a different outcome on whether the discovery

request was granted.22

                                               C.

       PennEnergy also contends that the trial court erred when it held that

Penn Energy was “judicially estopped” from arguing that it had no arbitration

agreement with MDS 2017. Judicial estoppel applies only when a party takes

an inconsistent position that a court relies on to resolve a disputed issue. See,

e.g., Trowbridge v. Scranton Artificial Limb Co., 747 A.2d 862, 864 (Pa.

2000) (requiring that a party assume an inconsistent position that was

“successfully maintained”).23        As a result, the trial court never addressed

____________________________________________

22 In the Butler County case referred to in footnote 2, MDS 2018 had 698
general partners. Section 8646(a) of the Uniform Limited Partnership Act
provides: “General rule.--Each general partner has equal rights in the
management and conduct of the limited partnership’s activities and affairs.
Except as provided in this title, any matter relating to the activities and affairs
of the partnership is decided exclusively by the general partner or, if there is
more than one general partner, by a majority of the general partners.”
15 Pa. C.S. § 8646(a) (emphasis added).

23 In re Adoption of S.A.J., 838 A.2d 616, Pa. 2003), our Supreme Court

stated: “the purpose of judicial estoppel is to uphold the integrity of the courts
by ‘preventing parties from abusing the judicial process by changing positions
as the moment requires.’” Id. at 621 (quoting Trowbridge, 747 A.2d at
865). In Tops Apparel Mfg. Co. v. Rothman, 244 A.2d 436 (Pa. 1968), our
Supreme Court stated that “[a]dmissions ... contained in pleadings,
stipulations, and the like are usually termed ‘judicial admissions’ and as such
cannot be later contradicted by the party who made them.” Id. at 438
(internal footnote omitted). In Tops, we noted our longstanding reliance on
this principle and stated that “[w]hen a man alleges a fact in a court of justice,
for his advantage, he shall not be allowed to contradict it afterwards. It is
against good morals to permit such double dealing in the administration of

                                          - 29 -
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PennEnergy’s contention that it did not have an agreement to arbitrate MDS

2017’s claims.

     The trial court invoked judicial estoppel solely based on a statement in

PennEnergy’s brief in opposition to MDS’s November 28, 2018 motion to

dismiss itself from the arbitration. In that brief, PennEnergy stated:

       … Further, under Pennsylvania law, when a party, such as MDS,
       claims a right or a benefit under an agreement even though it is
       not a signatory to that agreement, it may nevertheless be
       compelled to arbitrate a dispute, particularly where the facts of
       the matter are “inexplicably intertwined,” with claims already
       subject to arbitration. …

PennEnergy’s Brief in Opposition to MDS’s Motion to Dismiss, 12/12/18, at 9-

10 (R. 4663a-4664a).

     The trial court took that statement to mean that when PennEnergy

opposed MDS’s motion to dismiss itself from the arbitration, it was somehow

also opposing MDS 2017’s dismissal from the action. As a result, the trial

court concluded that it was judicially estopped from contending that it did not

have an agreement to arbitrate with MDS 2017.

     However, when PennEnergy filed its brief opposing MDS’s attempt to get

____________________________________________

justice.” Id. at 438, n. 8 (citing Wills v. Kane, 2 Grant 60, 63 (Pa. 1853)).
“Federal courts have long applied this principle of estoppel where litigants play
‘fast and loose’ with the courts by switching legal positions to suit their own
ends.” Trowbridge, 747 A.2d at 865 (quoting Ligon v. Middletown Area
School District, 136 Pa. Cmwlth. 566, 584 A.2d 376, 380 (1990)). We note,
without taking a position, that it did not include briefs as one of the
submissions for which judicial estoppel applied.

                                          - 30 -
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out of the arbitration, PennEnergy did not know that MDS was also bringing

the action on behalf of MDS 2017. As can be seen, the cited passage from

PennEnergy’s 2018 opposition brief refers only to MDS and makes no mention

of MDS 2017, which is unsurprising, since it did not yet know that MDS was

litigating the tortious interference claim on behalf of MDS 2017.

    Because it was unaware that MDS was bringing the action as general

partner of MDS 2017, we do not see how that statement in PennEnergy’s brief

opposing MDS’s motion to dismiss itself from the action contradicts its position

now that MDS 2017 did not have an arbitration agreement with PennEnergy.

Simply, judicial estoppel does not apply because PennEnergy took no position

on MDS 2017’s participation because it did know that MDS was in the future

going to allege that it was acting both for itself and as MDS 2017’s general

partner in the arbitration proceeding. Newman Dev. Grp. of Pottstown,

LLC v. Genuardi’s Fam. Mkt., Inc., 98 A.2d 645, 656 (Pa. Super. 2014)

(rejecting application of judicial estoppel where no inconsistent position

existed).

    That then leaves the question whether the arbitrator’s award should be

vacated because “there was no agreement to arbitrate” between PennEnergy

and MDS 2017. See 42 Pa.C.S. § 7314(a)(5).

      Whether a claim is within the scope of an arbitration provision is
      a matter of contract, and as with all questions of law, our review
      of the trial court’s conclusion is plenary. “The scope of arbitration
      is determined by the intention of the parties as ascertained in
      accordance with the rules governing contracts generally. These
      are questions of law and our review is plenary.”

                                     - 31 -
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      Arbitration is a matter of contract, and parties to a contract cannot
      be compelled to arbitrate a given issue absent an agreement
      between them to arbitrate that issue. Even though it is now the
      policy of the law to favor settlement of disputes by arbitration and
      to promote the swift and orderly disposition of claims, arbitration
      agreements are to be strictly construed and such agreements
      should not be extended by implication.

Elwyn v. DeLuca, 48 A.3d 457, 461 (Pa. Super. 2012) (citations omitted).

      To begin with, there is no dispute that MDS could arbitrate its

contractual claim against it because both parties were signatories of the APSA,

which, as noted, contained a broad arbitration clause. Likewise, there can

also be no dispute that PennEnergy and MDS 2017—which is a distinct entity

from its partners and has the capacity to sue and be sued in its own name—

do not have an arbitration agreement. Indeed, if MDS 2017 sought to pursue

a tortious interference claim against PennEnergy in its own name, it would not

be able to pursue that claim through arbitration proceedings.       We are not

aware, however, of any authority for the proposition that MDS seeks to

advance, namely, that a general partner can arbitrate a contractual claim

against another party in a representative capacity for a limited partnership

even though that limited partnership and the other party do not have an

arbitration agreement.

      In the absence of such authority, we are constrained to apply our

established precedent that arbitration agreements should not be extended by

implication, which, in this case, means that PennEnergy and MDS’s arbitration

agreement in the 2012 APSA cannot be extended as providing for future

                                     - 32 -
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representative actions by one party for the benefit of an as-yet-created limited

partnership. If we were to hold the opposite, then a general partnership could

always secure an arbitral forum for a limited partnership’s claims even if that

limited partnership did not have an arbitration agreement with the party from

which it sought recovery.    Again, we hold that the trial court erred in not

vacating the arbitrator’s award because “there was no agreement to arbitrate”

between PennEnergy and the real party in interest, MDS 2017.

                                      D.

      Accordingly, to summarize thus far, the arbitrator’s award must be

vacated under Section 7314(a)(1) of the PUAA because the proceeding was

“irregular” since PennEnergy did not receive notice that MDS was bringing this

action as MDS 2017’s general partner; there was no agreement to submit to

arbitration any claims by MDS 2017; and the arbitrator exceeded his authority

by addressing a claim over which he had no jurisdiction to arbitrate.

                                     III.

      Even assuming that requisite notice was given by MDS that it was also

bringing the tortious interference claim as the general partner of MDS 2017,

the award must still be vacated because the arbitrator did not have jurisdiction

and/or exceeded his authority by awarding damages incurred by MDS 2017.

It lacked jurisdiction because PennEnergy never agreed to arbitrate any claim

for tortious interference damages sought by MDS 2017, as well as because

                                     - 33 -
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MDS-2017 did not have rights in any February 2018 PSA between MDS and

Winfield that subjected PennEnergy to arbitration.

      In this case, the contractual obligation that PennEnergy was deemed to

have breached under its JDA with Winfield was whether it wrongfully withheld

approval of the joinder of MDS to succeed to some of Winfield’s contractual

interests in that agreement. After PennEnergy’s refusal to approve joinder,

MDS and Winfield still decided to execute the February 2018 PSA that provided

for MDS’s interests to be conveyed to an unnamed MDS limited partnership,

later identified outside of that agreement as MDS 2017. The damages the

arbitrator awarded were not incurred by Winfield or MDS but for losses

purportedly incurred by MDS 2017.

      Arbitrators only have jurisdiction over claims and damages which the

parties agreed to arbitrate. Ignoring that only MDS was made a party to the

arbitration by the Court of Common Pleas of Armstrong County, only MDS was

joined in the arbitration, and that MDS 2017 was not even named in the

February 2018 PSA, the arbitrator might have had jurisdiction to award

damages if MDS 2017 any rights under the February 18, 2018 PSA if proper

notice had been given. Though not a party to the PSA, MDS may have been

able to bring the tortious interference claim where it was treated as a third-

party beneficiary to the PSA.

      As we have explained:

      Our Supreme Court adopted the Restatement (Second) of Torts
      § 766 in Adler, Barish, Daniels, Levin and Creskoff v.

                                    - 34 -
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      Epstein, 482 Pa. 416, 393 A.2d 1175, 1182 (1978). Section 766
      of the Restatement defines the tort of intentional interference with
      existing contractual relations and provides:

        One who intentionally and improperly interferes with the
        performance of a contract (except a contract to marry)
        between another and a third person by inducing or otherwise
        causing the third person not to perform the contract, is
        subject to liability to the other for the pecuniary loss resulting
        to the other from the failure of the third person to perform
        the contract.

        Rest. (2d) of Torts § 766.

Salsberg v. Mann, 262 A.3d 1267, 1270 (Pa. Super. 2021), appeal granted,

275 A.3d 964 (Pa. 2022).

      To prevail on a claim for intentional interference with a contract, a

plaintiff is required to prove, by a preponderance of the evidence, four

elements:    (1) the existence of a contractual relationship between the

complainant and a third party; (2) the purposeful action on the part of the

defendant intended to harm the existing relationship; (3) the absence of

privilege or justification on the part of the defendant; and (4) actual harm to

the complainant as a result of the defendant’s conduct. See Maverick Steel

Co. v. Dick Corp./Barton Malow, 54 A.3d 352, 354-55 (Pa. Super. 2012).

      Under the first element of the tort, the plaintiff must be a party to the

contract or a third part beneficiary.

      In order for a third party beneficiary to have standing to recover
      on a contract, both contracting parties must have expressed an
      intention that the third party be a beneficiary, and that intention
      must have affirmatively appeared in the contract itself. Scarpitti
      v. Weborg, 609 A.2d 147, 149 (Pa. 1992). Furthermore,

                                        - 35 -
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         to be a third party beneficiary entitled to recover on a
         contract it is not enough that it be intended by one of the
         parties to the contract and the third person that the latter
         should be a beneficiary, but both parties to the contract
         must so intend and must indicate that intention in the
         contract; in other words, a promisor cannot be held liable to
         an alleged beneficiary of a contract unless the latter was
         within his contemplation at the time the contract was entered
         into and such liability was intentionally assumed by him in his
         undertaking.

Kirschner v. K & L Gates LLP, 46 A.3d 737, 762 (Pa. Super. 2012) (quoting

Spires v. Hanover Fire Ins. Co., 364 Pa. 52, 70 A.2d 828, 830–31 (1950)

(emphases in original), overruled in part by, Guy v. Liederbach, 459 A.2d

744 (Pa. 1983)) (parallel citations omitted).

      While parties are free to explicitly state that a contract provision is

intended to create third-party beneficiary rights and identify, by name, the

holder of those rights, we also note that “[p]arties may explicitly state that a

contract is not intended to create third-party beneficiary rights or identify the

specific persons who do not hold these rights, as noted in Section 302(1) of

the Restatement (Second) of Contracts.” McGaffic v. City of New Castle,

74 A.3d 306, 312 (Pa. Cmwlth. 2013).

      Here, MDS 2017, through MDS prosecuting as its general partner

prosecuting the claim, did not have any rights under the PSA because that

agreement explicitly disclaimed that the limited partnership, later identified as

MDS 2017, was a third-party beneficiary under the agreement. That provision

reads in full as follows:

                                     - 36 -
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      No Third Party Beneficiary.   Only the Parties hereto, their
      respective successors and permitted assigns are intended to
      benefit from this Agreement and no other Party, including the
      Limited Partnership, is intended to be a beneficiary hereof.
      (Emphasis added.)

PSA, ¶ 5(d) (R. 381a). The agreement defines the “limited partnership” as

“the MDS partnership development developing said working interest,” which

would be MDS 2017. Id. ¶ 3 (R. 380a). Under the express term of MDS and

Winfield’s   agreement   then,   the     unnamed   limited   partnership,   later

denominated MDS 2017, was not a party or an intended third-party

beneficiary of the contract with which damages that PennEnergy was alleged

to have tortiously interfered.

      Even if proper notice that MDS were purportedly prosecuting the tortious

interference claim as its general partner, MDS 2017 has no rights in that

agreement or standing to recover on MDS and Winfield’s agreement as a third-

party beneficiary. That agreement expressly stated that there would be no

third-party beneficiaries under the agreement.       In so stating, MDS and

Winfield expressly provided that the MDS limited partnership, which was

ultimately intended to be MDS 2017, was not an intended beneficiary. Thus,

even though the agreement contemplated that Winfield would be paid in the

form of units in MDS 2017, the agreement still explicitly disclaimed that there

was any intent to make MDS 2017 a beneficiary. Consequently, because it

was neither a contracting party nor an intended third-party beneficiary, MDS

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J-A06039-23

2017 would be unable to recover against PennEnergy for tortiously interfering

with MDS and Winfield’s agreement.

      As discussed, the trial court found PennEnergy’s claim unavailing

because, as PennEnergy itself acknowledged in its petition to vacate, MDS was

required under the agreement to assign its acquired interest to a limited

partnership. That provision provided, in relevant part:

      (b) [MDS] shall assign the Acquired Interests to the Limited
      Partnership pursuant to a form of assignment instrument that is
      reasonably satisfactory to [Winfield], which form of assignment
      instrument shall reference this unrecorded Agreement to the
      effect that [Winfield] has certain rights, as provided, with respect
      to the granting of such assignment and the re-assignment of the
      Acquired Interests.

PSA, ¶ 3(b) (R. 381a).

      Besides there being no evidence that MDS ever executed such an

assignment, even if one had occurred, that would not provide the arbitrator

with authority to arbitrate a claim with a party and claim that PennEnergy did

not agree to arbitrate.

      In any event, the trial court’s interpretation of the contract elevates this

paragraph     over   the   provision   expressly   disclaiming   that   the   limited

partnership, MDS 2017, is not a third-party beneficiary.           As PennEnergy

highlights,

      It is well-settled that clauses in a contract should not be read as
      independent agreements thrown together without consideration
      of their combined effects. Terms in one section of the contract,
      therefore, should never be interpreted in a manner which nullifies
      other terms in the same agreement. Furthermore, the specific
      controls the general when interpreting a contract.

                                       - 38 -
J-A06039-23

Trombetta v. Raymond James Fin. Services, Inc., 907 A.2d 550, 560 (Pa.

Super. 2006) (citations omitted) (emphasis added).                Indeed, “[i]t is

fundamental that one part of a contract cannot be so interpreted as to annul

another part and that writings which comprise an agreement must be

interpreted as a whole.” Southwestern Energy Prod. Co. v. Forest Res.,

LLC, 83 A.3d 177, 187 (Pa. Super. 2013) (citation omitted).

      Again, MDS and Winfield included a provision in their agreement

addressing third-party beneficiaries and expressly provided that no other

party, including the MDS limited partnership, was a third party beneficiary of

the agreement. However, by finding that MDS 2017 was an assignee of MDS’s

rights to the PSA, of which there was no proof of an assignment, the trial court

effectively read the provision providing for MDS 2017’s eventual assignment

as   annulling   MDS   and   Winfield’s   unambiguous    provision     specifically

disclaiming the limited partnership as a beneficiary.      Applying the above

principles, we cannot agree with this reading, as it essentially reads the

provision for no third-party beneficiaries out of the contract.

      Accordingly, for all these reasons, we vacate the trial court’s order

confirming the arbitration award and remand with instructions to vacate the

                                     - 39 -
J-A06039-23

arbitrator’s award limited to paragraph five of the arbitrator’s May 14, 2019

final award.24

       Order     reversed    and    remanded       with   instructions.   Jurisdiction

relinquished.

       Judge Olson joins the Opinion.

       Judge Nichols concurs in the result.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/25/2023

____________________________________________

24 Because we have vacated the award for the aforesaid reasons, we need not

address PennEnergy’s additional claim that damages could not be recovered
because its conduct amounted to a good faith dispute over contract terms.

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