Court Opinion

ID: 4415885
Source: CourtListenerOpinion
Date Created: 2019-07-11 16:48:58.428312+00
Date Added: 2024-06-11T14:51:33.578245
License: Public Domain

J. A12031/19

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

ALL STAR BUILDING, INC.                  :     IN THE SUPERIOR COURT OF
                                         :           PENNSYLVANIA
                   v.                    :
                                         :
EDWARD THOMAS SCHMIDT,                   :         No. 1639 WDA 2018
                                         :
                        Appellant        :

              Appeal from the Order Entered October 18, 2018,
           in the Court of Common Pleas of Westmoreland County
                      Civil Division at No. 4187 of 2018

BEFORE: BENDER, P.J.E., DUBOW, J., AND FORD ELLIOTT, P.J.E.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:                     FILED JULY 11, 2019

      Edward Thomas Schmidt appeals from the October 18, 20181 order

entered in the Court of Common Pleas of Westmoreland County denying his

motion to vacate the arbitration award and granting All Star Building, Inc.’s

petition to confirm the arbitration award in the amount of $49,124.79. We

affirm.

      The trial court set forth the following factual and procedural history:

            The above-captioned case began as a breach of
            contract action instituted by All Star Building, Inc.
            (hereinafter referred to as “ASB”) against [appellant].
            The contract at issue was entered into between the
            parties on March 31, 2015 and addressed the
            construction    of   a    residence    in   Jeannette,

1 We note that appellant’s notice of appeal states that this is an appeal of the
order entered October 15, 2018. The order, while dated October 15, 2018,
was not entered until October 18, 2018. The caption has been amended to
reflect the date the order was entered.
J. A12031/19

          Pennsylvania. According to the claim raised by ASB,
          [appellant] breached the contract because he moved
          into the constructed residence prior to substantial
          completion, but failed to pay the remaining balance
          immediately upon doing so, as required under the
          contract. As a result of the alleged breach, ASB
          sought $88,031 in damages. [Appellant] counter-
          claimed, arguing that ASB’s failure to obtain a building
          permit before beginning construction was a breach of
          the contract that occurred prior to any potential
          breach on his part, which then relieved him of any
          obligation to perform on the contract. As a result of
          the alleged breach, [appellant] sought damages in an
          amount exceeding $120,000.

          In accordance with the terms of the contract, the
          parties’ claims were submitted to binding arbitration
          pursuant to the American Arbitration Association
          under the Construction Industry Arbitration Rules.
          Arbitration hearings were held January 22, 2018 to
          January 25, 2018 and on January 30, 2018. On
          August 16, 2018, the Arbitrator rendered a decision
          granting ASB $88,031 on its contract claim plus
          interest and granting [appellant] $45,067.17 on his
          counterclaim.

          The matter first came before this Court on
          [appellant’s] Motion to Vacate Arbitration Award
          Pursuant to 42 Pa.C.S.A. §7342(b), which was filed on
          September 17, 2018. [Appellant] argued that this
          Court should vacate the Arbitrator’s decision because
          it was based on an irregularity that led to an unjust,
          inequitable and unconscionable result. According to
          [appellant], the irregularity existed because the
          Arbitrator ignored ASB’s illegal construction, which
          preceded any breach that may be attributed to
          [appellant], and as a result the Arbitrator’s award
          enforced the illegal performance of a contract, which
          is unjust, inequitable and unconscionable.          In
          response to said motion, ASB filed a Petition to
          Confirm Arbitration Award, arguing that [appellant]
          failed to establish an irregularity in the Arbitrator’s
          process itself to justify this Court in vacating the

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            award, and asking this Court to enter judgment in its
            favor.

            Counsel for both parties appeared for oral argument
            on the matter, and this Court entered an Order on
            October 15, 2018 denying [appellant’s] Motion to
            Vacate Arbitration Award pursuant to 42 Pa.C.S.A
            §7342(b) and granting ASB’s Petition to Confirm
            Arbitration Award.

            In accordance with the Rules of Appellate Procedure,
            [appellant] then filed a Notice of Appeal on
            November 14, 2018.           The Court immediately
            requested a Concise Statement of Errors Complained
            of on Appeal in accordance with Pa.R.A.P. 1925(b).
            On December 19, 2018, [appellant] served this Court
            with said statement, alleging seven errors of this
            Court in reaching its October 15, 2018 Order,
            including that this Court erred by determining that the
            record provided was insufficient to make a
            determination as to whether the process employed by
            the arbitrator contained an irregularity and in
            determining that [appellant] failed to meet his burden
            to show that the process employed by the Arbitrator
            contained an irregularity. The following is this Court’s
            [Rule 1925(a)] Opinion in support of the October 15,
            2018 Order of Court.

Trial court opinion, 1/3/19 at 1-3.

      Appellant raises the following issues for our review:

            (1)   Whether the Court erred by confirming and
                  refusing to vacate the Arbitrator’s Award by
                  determining that the record was insufficient to
                  make a determination as to whether the process
                  employed by the Arbitrator contained an
                  irregularity[?]

            (2)   Whether the Court erred by determining the
                  evidence submitted by Appellant suggested at
                  most [an] error of law occurred, thus not
                  subjecting the arbitration award to reversal[?]

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              (3)    Whether the Court erred by granting [ASB’s]
                     Petition to Confirm Arbitration Award, which was
                     a violation of public policy as it enforced the
                     illegal performance of a contract[?]

Appellant’s brief at 4.

       Preliminarily, we note that this case involves a matter of common law

arbitration because the agreement between the parties does not expressly

provide for statutory arbitration. See 42 Pa.C.S.A. § 7302(a) (stating, “[a]n

agreement to arbitrate a controversy on a nonjudicial basis shall be

conclusively presumed to be an agreement to arbitrate pursuant to

Subchapter B (relating to common law arbitration) unless the agreement to

arbitrate is in writing and expressly provides for arbitration pursuant to this

subchapter [(Subchapter A – Statutory Arbitration)] or any other similar

statute . . . .”).

              Our standard of review of common law arbitration is
              very 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

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            reversed only for an abuse of discretion or an error of
            law.

U.S. Claims, Inc. v. Dougherty, 914 A.2d 874, 876-877 (Pa.Super. 2006)

(citations, internal quotation marks, parentheses, and brackets omitted),

appeal denied, 928 A.2d 1291 (Pa. 2007). See also 42 Pa.C.S.A. § 7341

(stating that, an award in a common law, nonjudicial arbitration “is binding

and may not be vacated or modified unless it is clearly shown that a party was

denied a hearing or that fraud, misconduct, corruption or other irregularity

caused the rendition of an unjust, inequitable or unconscionable award.”).

“The appellant bears the burden to establish both the underlying irregularity

and the resulting inequity by clear, precise, and indubitable evidence.”

Toll Naval Associates v. Chun-Fang Hsu, 85 A.3d 521, 525 (Pa.Super.

2014) (citations and internal quotation marks omitted).

            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.

Id. at 529, citing Allstate Ins. Co. v. Fioravanti, 299 A.2d 585, 589 (Pa.

1973).

      Here, appellant first claims the trial court erred when it concluded that

there was insufficient evidence to find that an irregularity in the process

employed by the arbitrator had occurred and that the trial court, therefore,

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had no legal basis to vacate the arbitration award. (Appellant’s brief at 9, 11.)

Appellant argues that the deposition transcript of Michael Stack, the chief

building inspector for Penn Township, was sufficient evidence of the “the

enforcement of illegal performance of a contract” which, appellant claims, was

the irregularity in the process employed by the arbitrator. (Id.)

      The trial court explained that:

            [t]he hearings held before the Arbitrator were not
            transcribed. In addition, the decision of the Arbitrator
            did not include an Opinion supporting the award of
            damages, and no explanation was provided by the
            Arbitrator as to how the decision made was reached.

            . . . . [T]he record provided to this Court did nothing
            to show the process employed by the Arbitrator in
            reaching her result. Without a transcript of the
            hearings, this Court could not compare the deposition
            testimony of Michael Stack to witnesses heard by the
            Arbitrator at the hearing. Without a reasoned decision
            from the Arbitrator, this Court had no knowledge of
            how the Arbitrator weighed the credibility of Michael
            Stack in comparison to other witnesses, no knowledge
            of how the Arbitrator made her findings of fact and
            conclusions of law, and no knowledge as to how the
            testimony and evidence presented before her affected
            her determination as to whether or not the contract
            was performed illegally in contravention of public
            policy. Instead, the evidence provided merely showed
            the Arbitrator’s break down of how the damages were
            awarded to each party.

Trial court opinion, 1/3/19 at 4 (footnote omitted).

      The trial court did not abuse its discretion in concluding that without a

written opinion or a hearing transcript, there was insufficient evidence to

determine whether an irregularity in the process had occurred. Appellant has

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failed to meet his burden of presenting clear, precise, and indubitable evidence

that an irregularity occurred in the process employed by the arbitrator.

Consequently, appellant’s claim fails.

      In his second and third issues, appellant claims that the trial court’s

refusal to vacate the arbitration award resulted in the enforcement of an illegal

contract and a violation of public policy. (Appellant’s brief at 12-22.) We

agree with the trial court’s conclusion that without a reasoned decision by the

arbitrator or a transcript of the hearing, there is “no knowledge of how the

testimony and evidence presented before [the arbitrator] affected her

determination as to whether or not the contract was performed illegally in

contravention of public policy.” (Trial court opinion, 1/3/19 at 4.) Appellant’s

claims, therefore, lack merit.

      Consequently, we discern no error of law or abuse of discretion in the

trial court’s confirmation of the arbitrator’s award.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/11/2019

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