Court Opinion

ID: 4377737
Source: CourtListenerOpinion
Date Created: 2019-03-15 19:36:36.888636+00
Date Added: 2024-06-11T07:39:57.870886
License: Public Domain

J-A05036-19

                                 2019 PA Super 78

 JOYCE A. MORSE                            :    IN THE SUPERIOR COURT OF
                                           :         PENNSYLVANIA
                     Appellant             :
                                           :
                                           :
              v.                           :
                                           :
                                           :
 FISHER ASSET MANAGEMENT, LLC,             :    No. 1104 WDA 2018
 STEWART HOLLINGSHEAD, AND                 :
 SHAWN WEIDMANN                            :

              Appeal from the Judgment Entered July 5, 2018
     In the Court of Common Pleas of Allegheny County Civil Division at
                          No(s): GD-09-010627

BEFORE: GANTMAN, P.J.E., SHOGAN, J., and MURRAY, J.

OPINION BY MURRAY, J.:                                FILED MARCH 15, 2019

      Joyce A. Morse (Appellant) appeals from the judgment entered after the

trial court denied her petition to vacate arbitration award with respect to Fisher

Asset Management, LLC (Fisher Asset), Stewart Hollingshead, and Shawn

Weidmann (collectively Appellees). We hold, inter alia, that if a trial court

sustains preliminary objections that seek enforcement of an agreement for

alternate dispute resolution pursuant to Pa.R.C.P. 1028(a)(6), and accordingly

dismisses a complaint, then the dismissal does not stay the action for purposes

of the statute of limitations.

      Appellee Fisher Asset is an investments-adviser firm, and Appellees

Hollingshead and Weidmann were its employees.             On January 4, 2008,

Appellant executed a contract with Fisher Asset to retain its services. The

contract included the following arbitration clause:
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        Any dispute, claim or controversy arising out of this Agreement or
        otherwise between [Appellees] and [Appellant], including but not
        limited to the breach, termination, enforcement, interpretation or
        validity of this Agreement and the scope and applicability of the
        agreement to arbitrate contained in this paragraph, shall be
        determined by an arbitration before the Judicial Arbitration and
        Mediation Service (“JAMS”) office closest to [Appellant’s] principal
        place of residence before one arbitrator who shall be a retired
        judicial officer. . . . The arbitration shall be administered by JAMS
        pursuant to the Comprehensive Arbitration Rules and Procedures.
        The laws of the State of Delaware shall govern the substantive
        rights of the parties. The arbitration shall be final and binding,
        and judgment on the award may be entered in any court having
        jurisdiction.     [Appellant] understands that by agreeing to
        arbitration, [Appellant] is waiving all rights to seek remedies in
        court, unless otherwise mandated by federal or state securities
        laws.

Appellees’ Brief in Support of Preliminary Objections, 5/5/10, Exhibit A

(Letters of Agreement, 1/4/08, at 5).

        On June 11, 2009, Appellant filed a civil complaint against Appellees in

the trial court, raising six counts: breach of fiduciary duty, common law fraud,

violations of the Unfair Trade Practices and Consumer Protection Law1

(UTPCPL), negligence, breach of contract, and failure to supervise. Appellees

filed preliminary objections, seeking dismissal of Appellant’s complaint on the

basis that the parties’ contract required that the dispute be submitted to

arbitration. The trial court agreed, and on May 13, 2010, it sustained the

preliminary objections and dismissed Appellant’s complaint. Appellant did not

appeal.

____________________________________________

1   73 P.S. §§ 201-1 to 201-9.3.

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      Nearly six years later, on March 4, 2016, Appellant filed an “Arbitration

Statement of Claim” with JAMS. Appellant acknowledged that this statement

of claim was substantially identical to her 2009 complaint. Appellant’s Petition

to Vacate, 4/17/17, at 2. Appellees moved to dismiss Appellant’s arbitration

claim, arguing that it was time-barred by statutes of limitations.            The

arbitrator agreed, and without holding a hearing, dismissed Appellant’s claim

with prejudice on March 10, 2017. According to Appellant, she was served

with the arbitrator’s decision on March 16, 2017.

      On March 17, 2017, Appellant filed, in the trial court, the instant petition

to vacate the arbitration award. She alleged that her claim with JAMS was

timely because: (1) her 2009 civil complaint was timely under the applicable

statutes of limitation; and (2) the trial court’s May 13, 2010 order dismissing

her complaint stayed the proceedings. Appellant further asserted that the

arbitrator improperly denied her a hearing. The trial court issued an order on

September 8, 2017, finding that Appellant’s arbitration claim was time-barred.

      Appellant appealed to this Court, but on December 22, 2017,

discontinued her appeal after acknowledging that an order denying a petition

to vacate an arbitration award is not appealable. See Morse v. Fisher Asset

Management, LLC, 1667 WDA 2017, Rule to Show Cause (per curiam) (Pa.

Super. Dec. 6, 2017) (“The proper procedure following entry of such order is

for the trial court to enter an order confirming the arbitration award, and an

appeal properly lies from entry of judgment following confirmation.”).

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       Seven months later, on July 5, 2018, Appellant filed a praecipe to enter

judgment, and the trial docket reflects that judgment was entered.2 Appellant

filed a second notice of appeal on August 2, 2018.3 The trial court ordered

Appellant to file a Pa.R.A.P. 1925(b) statement, and she timely complied. The

trial court’s Rule 1925(a) statement referenced its prior November 3, 2017

memorandum as explaining the reasons for its ruling.

       On appeal, Appellant presents the following issues:

       1. Whether the lower court committed reversible error by denying
       Appellant’s Petition to Vacate Arbitration Award and Appoint
       Arbitrator, where (i) Appellant commenced the action and satisfied
       all applicable limitations periods by timely filing and serving her
       Complaint, (ii) the arbitrator exceeded the power and authority
       given to him by the parties in their agreement and the applicable
       rules adopted therein, and (iii) the arbitrator denied Appellant a
____________________________________________

2 We note irregularities in the electronic certified record transmitted on appeal.
First, Appellant’s praecipe to enter judgment does not bear a “filed” time
stamp, nor is the praecipe entered as “filed” on the docket. Further,
Appellant’s proposed “Notice of Order, Decree or Judgment” includes a
signature line for the Department of Court Records, but is not signed.
Nevertheless, there are five identical docket entries, dated July 5, 2018,
entitled “Judgment on Order of Court,” which state “Notice of judgment sent.”
The “filing party,” however, is listed as Appellant, whereas judgment is
properly entered by the Department of Court Records.

3 To date, the trial court has not entered an order confirming the arbitration
award. See Sherman v. Amica Mut. Ins. Co., 782 A.2d 1006, 1007 n.1
(Pa. Super. 2001) (“Following the denial or dismissal of a petition to vacate or
modify an arbitration award, proper procedure requires the trial court to issue
an order confirming the arbitration award and to enter judgment on this
order.”). However, where the court has entered judgment, and “as it was the
court’s responsibility to issue a separate confirming order prior to the entry of
judgment, it is not appropriate to punish Appellant[ ] for this procedural
failure.” See id.

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       hearing, all of which constituted an irregularity resulting in an
       unjust, inequitable or unconscionable award?

       2. Whether, upon vacating the arbitration award, the court should
       appoint an arbitrator as requested in Appellant’s Petition to Vacate
       Arbitration Award and Appoint Arbitrator?

Appellant’s Brief at 4-5.4

       At the outset, we note our standard of review:

       Judicial review of a common law arbitration award is very narrow.
       Arbitrators are the final judges of law and fact and their award will
       not be disturbed for mistakes of either. Such awards are binding
       and may not be vacated or modified “even if blatantly at odds with
       the contract involved” absent “a showing of a denial of a hearing
       or fraud, misconduct, corruption, or similar irregularity leading to
       an unjust, inequitable, or unconscionable award.” [See] 42
       Pa.C.S.A. § 7341[.]

Vogt v. Liberty Mut. Fire Ins. Co., 900 A.2d 912, 919 (Pa. Super. 2006)

(citations omitted). This Court has stated:

       [A]n appellant “bears the burden to establish both the underlying
       irregularity and the resulting inequity by ‘clear, precise and
       indubitable evidence.’” “In this context, irregularity refers to the
       process employed in reaching the result of the arbitration, not the
       result itself.” A cognizable irregularity may appear in the conduct
       of either the arbitrators or the parties. Our Supreme Court has
       stated that the phrase “other irregularity” in the process employed
       imports “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.

____________________________________________

4 Although Appellant raises two issues in her statement of questions
presented, the summary of her argument presents three issues, and her
argument is divided under six headings. We remind counsel that “[t]he
argument shall be divided into as many parts as there are questions to be
argued.” See Pa.R.A.P. 2119(a).

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F.J. Busse Co. v. Zipporah, L.P., 879 A.2d 809, 811 (Pa. Super. 2005).

       In her first issue, Appellant characterizes the arbitrator’s dismissal of

her claim as an “irregularity” which must be vacated because her claims were

timely filed.5 Appellant’s Brief at 20. Appellant maintains that her timely-filed

2009 complaint in the trial court “stopped the running of any limitations

period”; that the court’s May 13, 2010 order (directing the parties to

arbitration) “automatically stayed” the case; and therefore “the original action

filed [in 2009] remains pending and, indeed, gave birth to this appeal.” Id.

at 20-23. Additionally, Appellant contends that JAMS does not impose any

time limitations for the filing of an arbitration claim, and thus the arbitrator

had no authorization to impose any on her.

       With respect to the application of a statute of limitations to an arbitration

matter, this Court has explained:

              Once it has been determined that the substantive
              dispute is arbitrable, all matters necessary to dispose
              of the claim are normally arbitrable as well. Such
              ancillary matters include procedural questions which
              grow out of the substantive dispute and bear on its
____________________________________________

5 Appellant appropriately contends that because the parties’ arbitration clause
did not expressly state that statutory arbitration would apply, any arbitration
would be governed by common law. See Appellant’s Brief at 18, citing 42
Pa.C.S.A. § 7302(a) (agreement to arbitrate a controversy shall be
conclusively presumed to be an agreement to arbitrate pursuant to common
law unless the agreement expressly provides for arbitration pursuant to
statute). See also id., citing 42 Pa.C.S.A. § 7341 (arbitration award “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”).

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            final disposition. Where the underlying dispute is
            arbitrable, the applicability of a statute of limitations
            is also.

      See also Merchants Mut. Ins. Co. v. American Arbitration
      Ass’n, . . . 248 A.2d 842[, 844] (Pa. 1969) (where arbitration
      clause provided that arbitrator has the power to consider all
      issues, the issue of the applicability of the statute of limitations
      came within the arbitrator’s purview); Woodward Heating & Air
      Conditioning Co. v. American Arbitration Ass’n, . . . 393 A.2d
      917, 920, n.4. (Pa. Super. 1978) (“whether a claim is barred by
      the statute of limitations should be determined by arbitration”)[.]

Andrew v. CUNA Brokerage Servs., 976 A.2d 496, 502 (Pa. Super. 2009)

(some citations omitted).      See also Appellees’ Brief at 22-23, citing

Woodward Heating & Air Conditioning Co., 393 A.2d at 920 n.4 (“It has

been held that whether a claim is barred by the statute of limitations should

be determined by arbitration.”).

      The statute of limitations for an action to recover damages for injury to

property which is founded on negligent tortious conduct is 2 years.          42

Pa.C.S.A. § 5524(7). The statute of limitations for an action upon a contract

is 4 years. 42 Pa.C.S.A. § 5525(a)(8). A UTPCPL claim is subject to the 6-

year statute of limitations under 42 Pa.C.S.A. § 5527(6); Fazio v. Guardian

Life Ins. Co. of Am., 62 A.3d 396, 411 (Pa. Super. 2012) (citation omitted).

      We first consider Appellant’s contention that the trial court’s dismissal

of her 2009 complaint, on May 13, 2010, acted to stay the proceedings and

toll the statute of limitations. Appellees argue that when Appellant filed her

2009 complaint, Appellees had two procedural avenues to compel arbitration:

they could either file an application pursuant to 42 Pa.C.S.A. § 7304 and

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§ 7342 to compel arbitration and thus prompt a stay, or they could file

preliminary objections under Pa.R.C.P. 1028 to dismiss Appellant’s complaint.

Appellees contend that because they filed preliminary objections, which were

granted, Appellant’s complaint was dismissed. Appellees’ Brief at 29-30. We

examine Section 7304 and Rule of Civil Procedure 1028.

      Section 7342 of our Judicial Code provides that Section 7304 applies to

common law arbitrations. 42 Pa.C.S.A. § 7342(a). Section 7304, in turn,

provides:

      § 7304. Court proceedings to compel or stay arbitration.

          (a) Compelling arbitration. — On application to a court to
      compel arbitration . . . and a showing that an opposing party
      refused to arbitrate, the court shall order the parties to proceed
      with arbitration. . . .

                                  *    *    *

           (d)    Stay of judicial proceedings. — An action or
      proceeding, allegedly involving an issue subject to arbitration,
      shall be stayed if a court order to proceed with arbitration has
      been made or an application for such an order has been made
      under this section. . . . If the application for an order to proceed
      with arbitration is made in such action or proceeding and is
      granted, the court order to proceed with arbitration shall include
      a stay of the action or proceeding.

42 Pa.C.S.A. § 7304(a), (d).

      Of further relevance, Rule of Civil Procedure 1028, “Preliminary

Objections,” states:

          (a) Preliminary objections may be filed by any party to any
      pleading and are limited to the following grounds:

                                  *    *    *

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            (6) . . . agreement for alternative dispute resolution[.]

            Note: An agreement to arbitrate may be asserted by
            preliminary objection or by petition to compel arbitration
            pursuant to the Uniform Arbitration Act, 42 Pa.C.S.[A.] §
            7304, or the common law, 42 Pa.C.S.[A.] § 7342(a).

Pa.R.C.P. 1028(a)(6) & note.

      Mindful of the foregoing, we agree with Appellees that when presented

with Appellant’s complaint in 2009, they could have sought enforcement of

the arbitration agreement by either filing preliminary objections or a petition

to compel arbitration. Had they opted to proceed with a petition to compel

under Section 7304 and the trial court granted it, the resulting court order

would have, consistent with Appellant’s argument, had to include a stay of the

proceeding. See 42 Pa.C.S.A. § 7304(d). However, Appellees opted to file

preliminary objections under Rule 1028, seeking dismissal.        Neither Rule

1028, nor any other Rule of Civil Procedure or other Pennsylvania authority,

provides that an order sustaining preliminary objections, with respect to

enforcing an agreement to arbitrate, stays an action.      We thus agree with

Appellees that when the court sustained their preliminary objections and

dismissed Appellant’s 2009 complaint, the action was not stayed.            As

Appellees note, Appellant did not appeal from the order dismissing her action.

Accordingly, the court’s May 13, 2010 order did not stay the 2009 action and

did not toll the statute of limitations.

      In reviewing Appellant’s additional argument — that no statute of

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limitations applied to her arbitration claim — we reiterate the language of the

parties’ arbitration clause:

      Any dispute, claim or controversy arising out of this Agreement .
      . . including . . . the scope and applicability of the agreement to
      arbitrate . . . shall by determined by an arbitration before [JAMS].
      The arbitration shall be administered by JAMS pursuant to the
      Comprehensive Arbitration Rules and Procedures.

See Appellees’ Brief in Support of Preliminary Objections, 5/5/10, Exhibit A

(Letters of Agreement, 1/4/08, at 5) (emphasis added).

      Instantly, the trial court found no error in the arbitrator’s decision, which

the court “incorporated” in its November 3, 2017 memorandum. See Trial

Court Memorandum, 11/3/17, at 2. The arbitrator observed that the parties

did not “expressly incorporate a statute of limitations into the arbitration

clause of their agreement.”       Arbitrator’s Decision, 3/10/17, at 3.        The

arbitrator recognized, as Appellant argued, that JAMS rules “do not expressly

mention whether statutes of limitations will apply if a dispute is filed in

arbitration.” Id. Nevertheless, the arbitrator emphasized that “JAMS does

recognize that statute of limitation arguments may arise in defending claims,

and . . . JAMS Rule 18 allows arbitrators to hear dispositive motions on this

issue.” Id. On appeal, Appellant does not acknowledge nor challenge the

arbitrator’s reliance on the JAMS rule.

      After careful consideration of the parties’ arguments, the certified

record, and prevailing legal authority, we agree with the trial court that the

issue of the applicability of the statutes of limitations was properly before the

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arbitrator. See Andrew, 976 A.2d at 502 (restating that where an arbitration

clause provided that an arbitrator has the power to consider all issues, the

issue of the applicability of the statute of limitations came within the

arbitrator’s purview). Further, our review has yielded no “irregularity” in the

arbitrator’s decision, nor any error by the trial court.

         Appellant also contends that the arbitrator erred in dismissing her claim

without a hearing. Appellant disregards the JAMS rules, to which the parties

agreed when they entered the contract, and which, as Appellees emphasize,

“specifically allow for summary disposition without a hearing.” Appellees’ Brief

at 38.

         To the extent Appellant relies on Andrew, 976 A.2d 496, which held

that the plaintiff was entitled to an evidentiary hearing before the arbitrator

on the issue of whether his claims were time-barred by the statute of

limitations, we find that case to be distinguishable. In Andrew, the plaintiff

filed an arbitration claim against an investment firm pursuant to an arbitration

clause in the parties’ contract. Andrew, 976 A.2d at 498. The defendant

firm filed a motion to dismiss, arguing that all of the plaintiff’s claims were

barred by the applicable statute of limitations. Id. The plaintiff responded

that one of the defendant’s employees “made material misrepresentations and

omissions to him about the status of his investments upon which he

reasonably relied, such that he did not become aware of his losses until

[later],” and “that an evidentiary hearing was necessary in order to determine

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when he knew or reasonably should have known that losses had occurred.”

Id. On appeal, this Court agreed, reasoning “that the arbitration panel should

have conducted a hearing to consider evidence and testimony as to whether

[the plaintiff’s] causes of action [were] timely.” Id. at 503.

       In this case, the trial court rejected Appellant’s reliance on Andrew,

pointing out that in Andrew, the plaintiff sought an arbitration hearing to

adduce facts as to when his cause of action arose and “involved the

applicability of the discovery rule . . . which is not an issue herein.”6     On

appeal, Appellant does not dispute the trial court’s distinguishing the facts and

posture of the Andrews decision from this case, nor does she claim that an

evidentiary hearing is warranted to determine when her cause of action arose.

There is no dispute as to when Appellant’s cause of action arose, and

moreover, our review reveals no “irregularity . . . in the conduct of the

arbitrator.” See F.J. Busse Co., 879 A.2d at 811. In sum, we find no merit

to Appellant’s claim that she was entitled to a hearing before the arbitrator.

       Finally, Appellant asserts that the arbitrator “doomed” her case, and

asks this Court to appoint “one or more arbitrators, from the Pittsburgh bar. . .

to hear this case.” Appellant’s Brief at 31. Appellees, citing the language in

____________________________________________

6 The trial court also reasoned that Appellant waived this issue because
Appellant “never sought a hearing before the arbitrator.”     Trial Court
Memorandum, 11/3/17, at 2. As the certified record does not include the
pleadings filed with the arbitrator, we do not consider whether Appellant
waived this claim.

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the parties’ arbitration clause, counter that the “agreement unequivocally

requires that [arbitration] be heard by a retired judge from JAMS in

Philadelphia.” Appellees’ Brief at 42. While we agree with Appellees, the issue

is moot because our disposition negates any need for the appointment of an

arbitrator.

      For the foregoing reasons, we affirm the trial court’s order denying

Appellant’s petition to vacate arbitration award.

      Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 3/15/2019

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