Court Opinion

ID: 2752287
Source: CourtListenerOpinion
Date Created: 2014-11-17 22:07:38.331558+00
Date Added: 2024-06-11T12:45:39.529920
License: Public Domain

J-A25033-14

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

SUSAN SCHLISMAN,                                 IN THE SUPERIOR COURT OF
                                                       PENNSYLVANIA
                            Appellant

                       v.

URBAN SPACE DEVELOPMENT, INC.,

                            Appellee                  No. 686 EDA 2014

                      Appeal from the Order January 10, 2014
              in the Court of Common Pleas of Philadelphia County
                Civil Division at No.: October Term 2013 No. 1852

BEFORE: DONOHUE, J., WECHT, J., and PLATT, J.*

MEMORANDUM BY PLATT, J.:                         FILED NOVEMBER 17, 2014

        Appellant, Susan Schlisman, appeals from the order of January 10,

2014, which denied her petition to vacate or modify an arbitration award.

For the reasons discussed below, we affirm.

        We take the underlying facts and procedural history in this matter

from the trial court’s March 12, 2014 opinion.

              The instant appeal, filed by Petitioner-Appellant Susan
        Schlisman (hereinafter “Appellant”), emanates from [the trial
        c]ourt’s denial of Appellant’s Petition to Vacate or Modify
        Arbitration Award (hereinafter “Petition”) and confirmation of
        said award in favor of Respondent-Appellee Urban Space
        Development, Inc. (hereinafter “Appellee”).

             The underlying dispute in this matter stems from a June 7,
        2007 contractual agreement between [the] parties, the terms of
____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
J-A25033-14

     which called for Appellee to plan and oversee the construction of
     Smokin’ Betty’s, a restaurant [that] Appellant wished to open in
     downtown Philadelphia.      Under the terms of the contract,
     Appellant was to pay Appellee an initial design fee of $18,000,
     with subsequent payments of $20,000 and $15,252 to be made
     in return for Appellee’s submission of “intermediate” and “final”
     architectural schematics. In addition, Appellee was to be paid a
     monthly project management fee of $11,700, and was tasked
     with procuring finishes and furnishings [for Smokin’ Betty’s] in
     accordance with the construction schedule, for which Appellee
     would ultimately be reimbursed by Appellant. Finally, Appellant
     agreed to compensate for certain incidental costs incurred by
     Appellee during the performance of its contractual duties.

           A dispute eventually arose between the parties, with
     Appellant believing that Appellee had neither provided final
     schematics, nor properly performed its procurement duties.
     Appellant, in an apparent effort to forcibly rectify these alleged
     contractual breaches, ceased paying Appellee for its services,
     which led to Appellee stopping work on the Smokin’ Betty’s
     project altogether. Appellee followed this by filing suit against
     Appellant in the Court of Common Pleas, Philadelphia County on
     May 27, 2009.        Appellant filed preliminary objections to
     Appellee’s Complaint on June 17, 2009, in which Appellant
     argued (among other things) that the aforementioned contract
     mandated that the dispute be settled via arbitration, rather than
     in a court of law, and that the Court of Common Pleas was
     therefore without jurisdiction to adjudicate Appellee’s lawsuit.

           Appellee subsequently dismissed the suit without
     prejudice, via praecipe, and refiled the matter as a claim with
     the American Arbitration Association (hereinafter “AAA”) on
     August 30, 2009, requesting damages "in excess of $75,000."
     Appellant responded on April 14, 2012, filing an “Answering
     Statement and Counterclaim,” in which she maintained that
     Appellee’s [c]laim was without merit, requesting that judgment
     be entered in her favor for an amount in excess of $25,000
     exclusive of attorneys’ fees, interest, arbitration costs, and
     deserving of an award of punitive damages.

           Pursuant to AAA Rule R-14(a), the AAA subsequently
     provided the parties with a list of ten individuals who could serve
     as arbitrators for the matter, as well as each potential
     arbitrator’s resume. The parties ultimately agreed upon Donald

                                    -2-
J-A25033-14

     Degus of Degus Construction Consultants, selecting Mr. Degus
     as the sole arbitrator for the matter. Mr. Degus convened the
     arbitration hearing on September 6, 2012, holding additional
     proceedings on September 7, 2012 and February 19, 2013. On
     September 20, 2013, Mr. Degus entered an award in favor of
     Appell[ee] in the amount of $115,649.37, and denying all of
     Appellant’s counterclaims; the award was not accompanied with
     an opinion, findings of fact, or conclusions of law that would
     explain Mr. Degus reasoning.

            On October 20, 2013, Appellant filed [her] Petition in the
     Court of Common Pleas, Philadelphia County. Appellant stated
     that Mr. Degus had failed to disclose that, while he was
     arbitrating the parties’ dispute, he was actively managing
     construction projects and initiating legal actions in connection
     with his management duties, rather than merely acting as a
     consultant to such projects. Appellant maintained that [the]
     nature of these suits, as well as similarities between the kinds of
     work done by Mr. Degus and that done by Appellee, meant that
     Mr. Degus harbored an inherent [bias] against Appellant and
     could not have rendered an impartial arbitration award. In
     addition, Appellant argued that Mr. Degus had improperly
     interpreted the terms of the parties’ contract, and had made
     both factual and legal errors, positing that Mr. Degus’ failure to
     find in her favor was clear-cut evidence of his partiality. On this
     two-pronged basis, Appellant requested that the arbitration
     award be modified, or vacated in its entirety.

           In response, Appellee contended that Appellant had failed
     to provide a suitable basis for the granting of such relief.
     Appellee noted that Mr. Degus’ resume prominently stated that
     he was employed as a construction manager, and maintained
     that there had been extensive dialogue between the two parties
     before they jointly agreed to the selection of Mr. Degus.
     Appellee argued that the mere fact that both it and Mr. Degus
     operated in the same field, and had both filed lawsuits pertaining
     to construction-related disputes, fell far short of showing that
     Mr. Degus had been biased against Appellant and had rendered
     something other than an impartial decision.          In addition,
     Appellee maintained that the bulk of Appellant’s argument
     essentially rehashed the case it had presented at arbitration, and
     that Appellant was improperly attacking the merits of Mr. Degus’
     decision.

                                    -3-
J-A25033-14

             On January [10], 2014, [the trial c]ourt denied Appellant’s
      Petition and confirmed the arbitration award in favor of Appellee.
      In response, Appellant filed the instant appeal with the Superior
      Court of Pennsylvania on January 30, 2014. [The trial c]ourt
      issued an order on January 31, 2014, directing Appellant to
      provide a Statement of Errors pursuant to Pa. R.A.P. 1925(b);
      Appellant’s response was received by [the trial court] on
      February 21, 2014 and is attached to this opinion as Appendix A.

(Trial Court Opinion, 3/12/14, at 1-4) (record citations, footnotes, and some

quotation marks omitted).

      On appeal, Appellant raises the following questions for our review:

      I. Did the [trial] court err in refusing to vacate the arbitration
         award where the [a]rbitrator failed to disclose that he was
         suing [o]wners while deciding this arbitration case against an
         [o]wner demonstrating a conflict, bias and partiality, and an
         unfair and improper adjudication of the matter causing an
         unjust, inequitable and/or unconscionable result?

      II. Did the [trial] court err in refusing [to] vacate the arbitration
          award where the [a]rbitrator exceeded his authority by
          entering an award obviously contrary to the contract terms
          and applicable law and against the evidence presented at the
          [a]rbitration showing irregularities and misconduct in the
          arbitration process causing an unjust, inequitable and/or
          unconscionable award?

      III. Did the [trial] court err in refusing to enter [Appellant’s]
          requested [r]ule to [s]how [c]ause providing for discovery to
          support the grounds raised in [Appellant’s] [p]etition and/or
          acquire evidence to support reasons to set aside or vacate the
          arbitration award?

(Appellant’s Brief, at 3).

      In her first claim, Appellant contends that the trial court erred in

refusing to vacate the arbitration award because the arbitrator “was suing

                                      -4-
J-A25033-14

other [o]wners of projects on claims very similar to those raised by the

Appellee. This created a positional conflict.” (Id. at 20). We disagree.

      The arbitrator conducted the arbitration in this matter under the AAA

Construction Rules (see Petition to Vacate or Modify Arbitration Award,

10/20/13, Exhibit A at Article 11 § 11.02); thus this matter is governed by

the rules for common law arbitration. The standard of review for common

law arbitration is extremely limited:

                  The award of an arbitrator in a nonjudicial
            arbitration which is not subject to [statutory
            arbitration] or [to] a similar statute regulating
            nonjudicial arbitration proceedings 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.

      The arbitrators are the final judges of both law and fact, and an
      arbitration award is not subject to reversal for a mistake of
      either. A trial court order confirming a common law arbitration
      award will be reversed only for an abuse of discretion or an error
      of law.

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

denied,   784   A.2d   119   (Pa.   2001)     (citations   omitted).   We   note,

“Pennsylvania has a well-established public policy that favors arbitration,

and this policy aligns with the federal approach expressed in the Federal

Arbitration Act.” Knight v. Springfield Hyundai, 81 A.3d 940, 947 (Pa.

Super. 2013) (citation omitted).

                                        -5-
J-A25033-14

      In essence, Appellant alleges that the arbitrator was biased.        (See

Appellant’s Brief, at 19-22). However, for an aggrieved party to

      prevail on these grounds, actual fraud must be shown, involving
      collusion with one of the parties, or misconduct intended to
      create a fraudulent result. An argument that the arbitrators
      were prejudiced or partial, or that they reached an award so
      unjust that it constitutes constructive fraud, will not be heeded.
      Similarly, an irregularity will not be found simply upon a showing
      that an incorrect result was reached. An irregularity which
      requires reversal of a common-law arbitration award refers to
      the process employed in reaching the result of the arbitration,
      not to the result itself.

Gwin Engineers, Inc. v. Cricket Club Estates Dev. Grp., 555 A.2d 1328,

1329 (Pa. Super. 1989) (citations and quotation marks omitted).

      Here, Appellant has failed to show any evidence of either actual fraud

or collusion.   Appellant claims that the arbitrator “held himself out as a

construction consultant” and did not disclose that he acted as a “[p]roject

[m]anager under contracts similar to the Appellee.”     (Appellant’s Brief, at

20-21). However, the arbitrator’s resume specifically lists his profession as

“Construction Manager, General Contractor”.     (Memorandum in Support of

Answer, 11/12/13, Exhibit G). Thus, Appellant was aware at the time she

agreed to the arbitrator that he worked as a construction manager.

      Moreover, Appellant has failed to point to any specific actions, other

than deciding in favor of the other party, which would indicate any bias on

the part of the arbitrator.   Appellant must show, and has not, “a direct

relationship between a party to an arbitration proceeding and a designated

arbitrator . . .   such as the existence of a prior employer-employee or

                                    -6-
J-A25033-14

attorney-client relationship, before the requisite partiality of that arbitrator is

established.” Land v. State Farm Mut. Ins. Co., 600 A.2d 605, 607 (Pa.

Super 1991). As the trial court aptly stated,

       a more relaxed standard would invite any dissatisfied claimant to
       allege partiality on the part of the opposing party’s arbitrator and
       thus require court supervision of arbitration thereby frustrating
       the purpose of favoring such non-judicial dispute resolution in
       the first place. Regarding the latter, as already noted, the
       narrow scope of review afforded to [the trial court] did not allow
       for an examination of an award on its merits. Thus, while
       Appellant clearly disputed the substance of [the arbitrator’s]
       determination, it was not [the trial court’s] placed to decide
       whether [the arbitrator’s] decision was based upon errors or law
       or fact.

(Trial Ct. Op., 3/12/14, at 6) (citations, quotation marks, and footnote

omitted). Appellant’s first claim fails to merit relief.

       Appellant’s second and third issues fail as well. Because Appellant has

not demonstrated that the arbitrator was biased or acted in collusion with

Appellee, under our extremely limited standard of review, she has not shown

that the trial court abused its discretion or made an error of law in denying

her petition to vacate or modify the arbitration award.1 See Sage, supra at

____________________________________________

1
  Appellant’s reliance on Sheehan v. Nationwide Ins. Co., 779 A.2d 582
(Pa. Super. 2001), appeal denied, 792 A.2d 1254 (Pa. 2001) is misplaced.
(See Appellant’s Brief, at 21).        Firstly, Sheehan involved statutory
arbitration not, as in the present matter, common law arbitration. See
Sheehan, supra at 583. Statutory arbitration has a much broader standard
of review than common law arbitration. See Runewicz v. Keystone Ins.
Co., 383 A.2d 189, 193-94 (Pa. 1978). Secondly, in Sheehan, this Court
affirmed the denial of a petition to set aside arbitration, finding that the fact
that the arbitrator had worked for the appellee some twenty-three years
(Footnote Continued Next Page)

                                           -7-
J-A25033-14

1142; Land, supra at 607; Gwin, supra at 1329. Accordingly, we affirm

the trial court’s order.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/17/2014

                       _______________________
(Footnote Continued)

prior to the arbitration and had not disclosed that fact did not render the
arbitrator incompetent. See Sheehan, supra at 584-85. Thus, Sheehan
provides no support to Appellant.

                                            -8-