Court Opinion

ID: 4117110
Source: CourtListenerOpinion
Date Created: 2017-01-19 20:13:17.64002+00
Date Added: 2024-06-11T14:34:36.641991
License: Public Domain

J-A28023-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MCGINN, SMITH & CO., INC., DAVID L.             IN THE SUPERIOR COURT OF
SMITH AND WILLIAM F. LEX,                             PENNSYLVANIA

                       v.

DUCKKYU CHANG, INDIVIDUALLY AND
AS TRUSTEE OF CUMBERLAND
PATHOLOGY ASSOCIATES, LLC AND KEE
CHANG,

                            Appellees

APPEAL OF: WILLIAM F. LEX
                                                     No. 716 EDA 2016

                 Appeal from the Order Entered August 26, 2010
              In the Court of Common Pleas of Philadelphia County
                  Civil Division at No(s): 00144 Feb. Term 2010

BEFORE: PANELLA, SHOGAN, and PLATT,* JJ.

MEMORANDUM BY SHOGAN, J.:                         FILED JANUARY 19, 2017

       Appellant, William F. Lex (“Lex”), appeals the order entered August 26,

2010, that partially granted a petition to confirm an arbitration award

entered against him and denied his petition to vacate the award.      For the

following reasons, we quash the appeal.

       The trial court summarized the factual and procedural history of this

case in an earlier appeal as follows:

            [Lex] appeals this court’s Order of August [26], 2010
       which partially granted the Petition to Confirm Arbitration Award
____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
J-A28023-16

     filed by Duckyu Chang’s [sic] and Kee Chang [(“the Changs”)],
     and denied [the] Petition to Vacate the Arbitration Award filed by
     Lex..[sic] The Petitions before this Court originated from an
     arbitration proceeding, (“Arbitration”) before the Financial
     Industry Regulation Authority, (“FINRA”). The Changs’ [sic] filed
     an action raising claims of breach of contract and fraud against
     McGinn, Smith & Co, Inc., (“MSC”) David L. Smith and William
     Lex.     The Changs filed a proceeding before the [FINRA]
     Arbitration. The allegations and claim[s] related to the conduct
     of MSC, Smith and Lex in the securities industry. On December
     31, 2009, after a ten day evidentiary hearing, the FINRA
     Arbitration Panel unanimously rendered an Award finding MSC,
     Smith, and Lex, jointly and severally liable to the Changs in the
     amount of $805,110.00. On January 29, 2010, MSC, Smith, and
     Lex filed a Joint Petition to Vacate the Arbitration Award. On
     February 18, 2010, the Changs filed an answer to the Joint
     Petition to Vacate and filed a Petition to Confirm Arbitration
     Award.

            During the pendency of these Cross Petitions, the U.S.
     District Court entered a Temporary Restraining Order in the case
     of Securities and Exchange Commission v. McGinn, Smith & Co.,
     Inc., et al. Civil Action No. 10-CV-00457-GLS-RFT on April 20,
     2010. At the oral argument before this court, MSC and Smith
     contended that the District Court Order resulted in a stay in all
     pending actions including those cross petitions. The Changs’
     [sic] argued that the District Court Order should not stay this
     court’s determination as to whether the Arbitration Award should
     be confirmed or vacate[d]; that the stay only affected the
     payment of any such award.          The Arbitration Award found
     against MSC/Smith and Lex jointly and severally. Lex argued
     that should this court find that the District Court Order did in fact
     result in a stay of these proceeding[s], then he should have the
     benefit of that stay and this court should not enter a partial
     order. This court directed the parties to submit [] memorandum
     on this issue. In addition to arguing the effect of the District
     Court Order, this court also heard argument on the underlying
     Petitions to Vacate and Confirm. Thereafter, this court entered
     an Order which stayed the Petitions pending as to MSC and
     Smith. This court found that the District Court Order did not
     affect the Petitions regarding Lex. This court denied the Lex
     Petition to Vacate and granted the Changs’ [sic] Petition to
     Confirm [against] Lex. This appeal followed.

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J-A28023-16

Trial Court Opinion, 11/17/10, at 1-2 (internal footnote omitted) (emphasis

in original).

      The trial court described the subsequent procedure in its Addendum to

Opinion as follows:

      [T]he appeal was quashed [by the Superior Court] on August 2,
      2011, because not all parties and claims had been disposed of
      and this court’s Order was not final.

            After the appeal was quashed no further activity appeared
      on the docket. On December 2, 2015, this court notified Lex’s
      counsel of the court’s intention to terminate the case for lack of
      docket activity pursuant to [Pa.R.J.A.] 1901. Counsel was given
      sixty days to file a Statement of Intention to Proceed, or the
      case would be terminated. No Statement was filed and on
      February 1, 2016, the case was administratively closed.

            Lex . . . filed the instant appeal [on February 24, 2016,]
      claiming the August 25, 2010 Order became final once the case
      was administratively closed. The court notes that the parties
      have not filed a Praecipe or otherwise notified the court that the
      stay in the SEC action has been lifted.

Addendum to Opinion, 3/21/16, at unnumbered 2-3.           We also note the

record does not reflect that any party filed an application for reinstatement

of this matter, as contemplated by Pa.R.J.A. 1901, and Pa.R.C.P. 230.2.

      Appellant presents the following issues for our review:

      1.    Does the failure of an Arbitration Panel to follow the very
      law which the Panel itself acknowledges is applicable and
      controlling, which results in a judgment against an individual for
      over $800,000.00, constitute an irregularity so as to render the
      Award inequitable and unconscionable, thus requiring a court to
      vacate the Award?

      2.     In an arbitration between an investor and a broker, is the
      failure to follow Pennsylvania’s law on contributory negligence
      where the Arbitration Panel has found “definitive fault” on the

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      part of the investor/claimant, such a fundamental irregularity
      leading to an unjust and unconscionable result so as to require
      the Court to interpose itself and vacate the Award?

Appellant’s Brief at 1.

      Before addressing the merits of Lex’s claims, we must determine

whether we have jurisdiction.         “Since we lack jurisdiction over an

unappealable order it is incumbent on us to determine, sua sponte when

necessary, whether the appeal is taken from an appealable order.” Gunn v.

Automobile Ins. Co. of Hartford, Connecticut, 971 A.2d 505, 508 (Pa.

Super. 2009).

      Of relevance to this determination is the trial court’s August 26, 2010

order. It provided, in relevant part, as follows:

      1) The Petition to Vacate filed by McGinn, Smith, and David L.
      Smith and that portion of the Petition to Confirm that applies to
      this entity and individual, are [] stayed pursuant [to] a
      Temporary Restraining Order entered in the matter of S.E.C. v.
      McGinn, Smith & Co., et. al. [1 10-CV-457 (GLS/RFT)], in the
      United States District Court of the Northern District of New York.
      These matters may be reactivated by the parties herein by
      praecipe indicating the Stay imposed by said Court is lifted.

      2. The Petition to Confirm the Arbitration Award as to [Lex] is
      GRANTED and the Arbitration Award entered under Duckkyu
      Chang, et. al. v. Thomas F. Lex, No. 08-04924 is AFFIRMED.
      The Petition to Vacate filed by [Lex] is DENIED. The Stay
      previously mentioned, [sic] does not affect the actions pending
      against [Lex].

      3. Judgment in the amount of $805,110.00 plus court [costs]
      and interest at the rate of six percent (6%) per annum from
      January 29, 2010, is hereby entered in favor of [the Changs]
      and against [Lex].

Trial Court Order, 8/26/10, at 1-2.

                                      -4-
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       Pursuant to 42 Pa.C.S. § 742, this Court has jurisdiction over appeals

from final orders. Rule 341 of Pennsylvania Appellate Procedure defines a

“final order” as any order that, inter alia, “disposes of all claims and of all

parties[.]” Pa.R.A.P. 341(b).

       Accordingly, the trial court’s August 26, 2010 order partially granting

the Changs’ petition to confirm the arbitration award was not a final,

appealable order as it did not dispose of all parties and all claims. Thus, this

Court quashed Lex’s first appeal from this order.1

       As noted, the trial court on February 1, 2016, administratively closed

the case due to docket inactivity. Lex indicates in his brief that out of an

abundance of caution he filed the current notice of appeal so as to ensure

that his appeal rights would be preserved.       Lex’s Brief at 3 n.1.      (“Lex

recognizes that there has been no adjudication on the merits in the Common

____________________________________________

1
    This Court’s Memorandum provided in relevant part as follows:

       The trial court’s order did not dispose of the claims presented in
       favor of or against McGinn, Smith & Co., Inc. and David L.
       Smith. Stated differently, the trial court’s order did not dispose
       of all claims and of all parties. Consequently, the order is not
       appealable as a final order.

             Furthermore, we can discern no other manner in which the
       order could be considered immediately appealable. For these
       reasons, we do not have jurisdiction to consider the merits of
       [Lex’s] issues. We quash the appeal.

McGinn, Smith & Co, Inc. v. Chang, 2646 EDA 2010, 32 A.3d 821 (Pa.
Super. filed August 2, 2011) (unpublished memorandum at 3).

                                           -5-
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Pleas Court of the Petition to Vacate and the Petition to Confirm Smith and

[MSC’s] portion of the original filings.”).

        However, as referenced by the trial court in its Addendum to Opinion,

there is no indication in the certified record that the stay regarding MSC and

Smith pending in federal court has been lifted. See Addendum to Opinion,

3/21/16, at unnumbered 2-3 (“The court notes that the parties have not

filed a Praecipe or otherwise notified the court that the stay in the SEC

action has been lifted.”). As there is no evidence of record that the stay in

federal court has been lifted, we must proceed with the understanding that

the stay is still in effect. Furthermore, the trial court has not issued an order

disposing of all parties and all claims, and indeed cannot if there is a pending

stay in federal court.2 We are once again constrained to conclude that the

order    entered August 26, 2010, is not a final, appealable               order. 3

Additionally, given the information available to us in the certified record, we

can discern no other manner in which the order could be considered

immediately appealable. Because we lack jurisdiction to review this matter,

we quash Lex’s current appeal.

        Appeal quashed.
____________________________________________

2
   Moreover, as the record before us supports the conclusion that the federal
stay is currently pending, it appears that the trial court’s order
administratively closing the matter due to docket inactivity was in violation
of that stay.
3
    A final order “disposes of all claims and of all parties[.]” Pa.R.A.P. 341(b).

                                           -6-
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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/19/2017

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