Court Opinion

ID: 4433603
Source: CourtListenerOpinion
Date Created: 2019-08-27 17:09:56.019299+00
Date Added: 2024-06-11T13:32:52.878093
License: Public Domain

J-A11045-19

                             2019 Pa. Super. 262

TTSP CORPORATION F/K/A THE ROSE                  IN THE SUPERIOR COURT
LOU CORPORATION F/K/A THE ROSE                      OF PENNSYLVANIA
CORPORATION

                         Appellee

                    v.

THE   ROSE     CORPORATION     (AS
SUCCESSOR IN INTEREST TO ROSE
ACQUISITION SUB 1, LLC AS ASSIGNEE
OF ROSE ACQUISITION COMPANY, LLC.

                         Appellant                   No. 1498 MDA 2018

              Appeal from the Order Entered August 23, 2018
              In the Court of Common Pleas of Berks County
                 Civil Division at Nos.: 17-18175; 18-885

BEFORE: BOWES, OLSON, and STABILE, JJ.

OPINION BY STABILE, J.:                             FILED AUGUST 27, 2019

     The Rose Corporation, as successor in interest to Rose Acquisition Sub

1, LLC as assignee of Rose Acquisition Company, LLC (hereinafter “Appellant”

or “Buyer”), appeals from the August 23, 2018 order of the Court of Common

Pleas of Berks County, which overruled Appellant’s preliminary objections in

favor of TTSP Corporation, f/k/a The Rose Lou Corporation, f/k/a The Rose

Corporation (hereinafter “Appellee” or “Seller”).    Upon careful review, we

reverse and remand.

     The facts and procedural history of this case are long, tortured and, at

times, convoluted. On November 4, 2016, Buyer and Seller entered into an

asset purchase agreement (the “Agreement”) pursuant to which Buyer
J-A11045-19

purchased for $1,250,000.00 Seller’s business that provided contract

manufacturing, industrial fabrication and related installation services.   The

Agreement, 11/4/16, at ¶ 2.1.1. The Agreement contained a purchase price

adjustment (“PPA”) provision, increasing or decreasing the purchase price “by

the amount by which the extent that Seller’s Closing Working Capital on the

Closing Date is less than or greater than” $519,394.00. Id. at ¶ 2.2.1. The

Agreement defined Closing Working Capital as “(x) accounts receivable (net

of reserves), plus useable and saleable inventory, plus prepaid expenses,

minus (y) trade accounts payables, plus accrued liabilities.”       Id.    The

Agreement contemplated that the closing shall occur on December 1, 2016.

Id. at ¶ 3.1. The Agreement further provided:

     2.2.2 Within thirty (30) days following the Closing Date, Buyer
     shall deliver to Seller Buyer’s calculation of the Purchase Price
     Adjustment, together with a written statement setting forth in
     reasonable detail Buyer’s calculation of Seller’s Closing Working
     Capital as of the Closing Date and December 31, 2015.

       ....

     2.2.3 The Proposed Purchase Price shall become final and binding
     upon the parties on the thirtieth (30th) day following the date on
     which the Proposed Purchase Price Adjustment was given to Seller
     in accordance with Section 12.7 below, unless Seller delivers
     written notice of its disagreement with the Proposed Purchase
     Price Adjustment (“Notice of Disagreement”) to Buyer prior to
     such date. Any Notice of Disagreement shall specify in reasonable
     detail the nature of any disagreement so asserted. If a Notice of
     Disagreement is received by Buyer in a timely manner, then
     during the thirty (30) day period following the delivery of the
     Notice of Disagreement, Buyer and Seller shall seek in good faith
     to resolve in writing any differences that they may have with
     respect to the matters specified in the Notice of Disagreement. If
     at the end of such thirty (30) day period the Buyer and Seller have

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        not resolved in writing the matters specified in the Notice of
        Disagreement, Buyer and Seller shall submit to an independent
        accounting firm (the Accounting Firm), as shall be agreed upon
        by Buyer and Seller in writing, for determination of the
        Purchase Price Adjustment. . . . The Accounting Firm will
        resolve the dispute pursuant to such procedures that it establishes
        and deems fair and equitable, provided that Buyer and Seller must
        each be afforded an opportunity to provide a written submission
        in support of its position and to advocate for its position personally
        before the Accounting Firm. Judgment may be entered upon the
        determination of the Accounting Firm in any court having
        jurisdiction over the party against which such determination is to
        be enforced.

Id. at ¶¶ 2.2.2 and 2.2.3 (emphasis added).

        Eventually, a dispute arose concerning the amount of the proposed PPA,

in response to which, on August 23, 2017, Seller petitioned the trial court to

appoint “an independent accountant/arbitrator” under Section 2.2.3 of the

Agreement and Section 7305 of the Uniform Arbitration Act (“Act”), 42

Pa.C.S.A.    §   7305.1       See    Petition    for   Appointment   of   Independent

Accountant/Arbitrator (the “Petition”), 8/23/17, at ¶¶ 7-17.              In particular,

Seller alleged that Buyer issued an untimely notice of PPA to Seller and that

“[p]ursuant to Section 2.2.3 of the Agreement, [Seller] served [Buyer] with a

____________________________________________

1   Section 7305 of the Act provides:
        If the agreement to arbitrate prescribes a method of appointment
        of arbitrators, the prescribed method shall be followed. In the
        absence of a prescribed method or if the prescribed method fails
        or for any reason cannot be followed, or when an arbitrator
        appointed fails to act or is unable to act and his successor has not
        been appointed, the court on application of a party shall appoint
        one or more arbitrators. An arbitrator so appointed has all the
        powers of an arbitrator specifically named in the agreement.
42 Pa.C.S.A. § 7305.

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[n]otice of [d]isagreement to the proposed purchase price adjustment”. Id.

at ¶¶ 6-7. Seller alleged that Section 2.2.3 of the Agreement calls for the

appointment of an independent accounting firm, as agreed upon by the

parties, to resolve any PPA disagreement. See id. at ¶ 10. However, Seller

alleged that the parties “have not been able to agree upon an accounting firm

to resolve the dispute between the parties.” Id. at ¶ 14. Finally, Seller alleged

that “[u]nder the Agreement, the accounting firm serves as the function of an

arbitrator.” Id. at ¶ 15. Based on its allegations, Seller requested that the

trial court issue an order “appointing an independent and objective accounting

firm to serve as if appointed by the parties in accordance with the provisions

of the Agreement.” Id. at 3. The Petition was docketed at 17-16574 (“Docket

1”).

       On October 3, 2017, Buyer filed a complaint against Seller. The next

day, on October 4, 2017, Buyer filed an amended complaint, asserting claims

for breach of contract and seeking injunctive and declaratory relief.2 At the

core of Buyer’s complaint lies its allegation that Seller failed to comply with

Section 2.2.3 of the Agreement by failing to negotiate in good faith with Buyer

to appoint an independent and impartial accountant.                  See Amended

Complaint, 10/16/17, at ¶¶ 59-67.              Specifically, and among other things,

Buyer alleged that Seller “baselessly declared an impasse, stonewalled,
____________________________________________

2 Buyer’s other breach of contract claim pertaining to Seller’s alleged use of a
business name confusingly similar to “The Rose Corporation” in violation of
the Agreement is not presently before us, as that issue is currently pending in
the trial court.

                                           -4-
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sought to circumvent the [Agreement] and its duties under it by claiming a

right to ‘arbitrate’ when none existed, and refused to agree in writing to the

selection of an independent accountant.” Id. at ¶ 70. Nonetheless, Buyer

requested as relief, inter alia, that the trial court appoint “one of the

independent    accountants    identified   and   proposed   to   [Seller],   or,

alternatively, that [Buyer] and [Seller] each be directed to select one

independent accountant and each to jointly agree on a third

accountant (to serve individually or on a panel of three).”           Id. at 14

(emphasis added).    Buyer’s complaint was docketed at 17-18175 (“Docket

2”).

       On October 16, 2017, Buyer filed an answer and new matter to Seller’s

Petition, wherein it specifically noted that Seller failed to negotiate in good

faith to select a mutually agreeable independent accountant under the terms

of the Agreement. Answer to the Petition, 10/16/17, at ¶¶ 9-14. Buyer also

denied that the Agreement “calls for an ‘arbitrator.’” Id. at ¶ 17.

       On the same day and concurrently with its answer, Buyer also filed

preliminary objections to the Petition, wherein Buyer alleged that the

Agreement did not contain an arbitration provision. See Buyer’s Preliminary

Objections to the Petition, 10/16/17, at ¶¶ 1-8 (“The parties nowhere in their

35-page contract agreed to arbitration”); see also id. at ¶ 22 (“The parties

did not bargain for an arbitrator and nowhere include that word in their

agreement with regard to their obligations to one another.”). Accordingly,

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Buyer requested that the Petition be dismissed for legal insufficiency because

Seller’s claim rested on a non-existent contractual duty. Id. at ¶¶ 30-35.

      On October 20, 2017, based on the parties’ stipulation to the relief

requested in Buyer’s October 4, 2017 “petition for consolidation,” the trial

court ordered that Docket 1 and Docket 2 be consolidated.

      On November 13, 2017, Seller filed preliminary objections to Buyer’s

amended complaint, noting that Seller did not dispute Buyer’s calculation of

the proposed PPA amount. See Seller’s Preliminary Objections to Amended

Complaint, 11/13/17, at ¶ 8. In seeking the dismissal of Buyer’s amended

complaint, Seller asserted that Buyer did not cite any provision of the

Agreement that justifies the relief requested by Buyer, i.e., the appointment

of an accountant. Id. at ¶¶ 10-11. Also, on November 13, 2017, Seller filed

a preliminary objection to Buyer’s preliminary objections to the Petition,

asserting that because Buyer “has already answered the Petition, [Buyer] has

waived any preliminary objections.”   See Seller’s Preliminary Objections to

Buyer’s Preliminary Objections to the Petition, 11/13/17, at ¶ 4. On December

4, 2017, Buyer filed a second amended complaint.

    On December 19, 2017, the trial court issued the following order:

    [U]pon the Petition by [Seller], and the responses thereto by
    [Buyer], and preliminary objections thereto and oral argument
    thereon, it is hereby ORDERED that each party shall select an
    accountant, and those accountants shall agree on a third-party,
    independent accountant to act individually and in accordance with
    the parties’ contract.

                                    -6-
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Trial Court Order, 12/19/17 (unnecessary capitalization omitted). 3 The trial

court also overruled Seller’s preliminary objections to Buyer’s preliminary

objections to the Petition.       Id.   Finally, the trial court sustained Buyer’s

preliminary objections to the Petition that asserted the Agreement did not call

for an arbitrator. Id.

       On December 27, 2017, Seller filed preliminary objections in the nature

of a demurrer to Buyer’s second amended complaint.

       On January 24, 2018, more than thirty days following the issuance of

the trial court’s December 19, 2017 order directing the selection of

accountants, Seller filed a praecipe to discontinue its action at Docket 1, i.e.,

the Petition, which sought the appointment of an accounting firm.

       On January 24, 2018, Seller filed a complaint against Buyer, docketed

at 18-885 (“Docket 3”), asserting claims for breach of contract and unjust

enrichment. Seller alleged that, on December 28, 2016, Buyer delivered its

proposed PPA of $601,438.00 to Seller and that Seller did not disagree with

Buyer’s PPA calculation. See Seller’s Complaint, 1/24/18, at ¶¶ 64-65. As a

result, Seller argued that Buyer’s proposed PPA of $601,438.00 became final

and binding upon the parties. Id. at ¶ 66.

____________________________________________

3 Although Section 2.2.3 of the Agreement provides for the appointment of an
independent accounting firm, the parties never appealed the December 19,
2017 order sustaining Buyer’s preliminary objections to the Petition and
directing the parties to each select an accountant and for those to then select
a third. We, however, decline to resolve this issue, as it is not presently before
us.

                                           -7-
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       A day after Seller discontinued the action at Docket 1, on January 25,

2018, the trial court granted in part and denied in part Seller’s request to

reconsider the court’s December 19, 2017 order directing the selection of

accountants. Specifically, the court granted reconsideration only with respect

to the issue of attorney’s fees, but denied it in all other aspects.

       On February 21, 2018, the trial court overruled Seller’s preliminary

objections to Buyer’s second amended complaint (Docket 2), which alleged

breach of contract and sought declaratory and injunctive relief.

       On the same day, Buyer filed the instant preliminary objections to

Seller’s complaint (Docket 3) that sought to enforce Buyer’s proposed PPA of

$601,438.00, arguing, inter alia, that Seller was “legally barred by its own

previous petition which sought [the appointment of an accounting firm] and

resulted in relief contradictory to what it now seeks.”      Buyer’s Preliminary

Objections to Seller’s Complaint, 2/21/18, at ¶ 9. Specifically, Buyer asserted

the doctrine of judicial estoppel in objecting to Seller’s refusal to submit the

PPA dispute before an independent accountant based on Seller’s allegation

that it did not disagree with Buyer’s proposed PPA calculation. Id. at ¶ 10.

Additionally, Buyer alleged that, contrary to Seller’s claim, Buyer did not

provide a proposed PPA calculation to Seller on December 28, 2016. Id. at

¶¶ 3-4. In fact, Buyer alleged that it provided a proposed PPA calculation to

Seller on April 21, 2017,4 and that Seller issued a notice of disagreement
____________________________________________

4 We observe that Buyer provided the proposed PPA more than thirty days
after the December 1, 2016 closing.

                                           -8-
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thereto on May 3, 2017. Id. at ¶ 8. Thus, Buyer urged the trial court to take

judicial notice of Seller’s admission, as contained in the Petition, that Seller

had sent a notice of disagreement to Buyer following Seller’s receipt of the

proposed PPA calculation. Id. Finally and most importantly, Buyer asserted

that Seller’s complaint be dismissed for legal insufficiency under Pa.R.C.P. No.

1028(a)(4) because the Agreement required the parties to submit their

dispute to an independent accountant.5 Id. at ¶ 20.

       On March 8, 2018, Buyer petitioned the trial court to consolidate Docket

2 and Docket 3, which the trial court granted on March 27, 2018.

       On March 13, 2018, Seller filed an answer and new matter to Buyer’s

second amended complaint. In its answer, Seller once again asserted that

Buyer issued a proposed PPA calculation of $601,438.00 on December 28,

2016 with which Seller did not disagree. Likewise, on March 13, 2018, Seller

filed an answer to Buyer’s preliminary objections to Seller’s complaint, denying

Buyer’s allegations. On August 23, 2018, and noting only Docket 3 (Seller’s

complaint) in the caption of its order, the trial court overruled Buyer’s

preliminary objections to Seller’s complaint and directed Buyer to file an
____________________________________________

5 We note that Buyer did not assert dismissal of Seller’s complaint under
Pa.R.C.P. No. 1028(a)(6), relating to agreement for alternative dispute
resolution. Differently put, Buyer did not assert preliminary objections in the
nature of petition to compel arbitration. Nonetheless, given the relief
requested, i.e., referral of the PPA dispute to an independent accountant
consistent with Section 2.2.3 of the Agreement, we conclude that Buyer, in
essence, sought to compel arbitration.

                                           -9-
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answer within thirty days. On August 27, 2018, Buyer appealed. 6 The trial

court ordered Buyer to file a Pa.R.A.P. 1925(b) statement of errors complained

of on appeal. Buyer complied, raising a single assertion of error:

       The trial court erred in overruling the preliminary objections of
       [Buyer] to [Seller’s] complaint where (a) each of [Seller’s] claims
       is subject to binding alternative dispute resolution before an
       accountant, to be mutually selected by the parties, pursuant to
       the [Agreement]; (b) [Seller] is judicially estopped from pursuing
       its claims other than through alternative dispute resolution by an
       accountant in light of its previous petition for appointment of an
       accountant; and (c) [Seller’s] petition for appointment of an
       accountant and related representations constituted a judicial
       admission that its claims are subject to binding alternative dispute
       resolution before an accountant.

Rule   1925(b)      Statement,      9/24/18,       1-2   (unnumbered)   (unnecessary

capitalization omitted). In response, the trial court issued a Pa.R.A.P. 1925(a)

opinion, determining that Section 2.2.3 of the Agreement was an arbitration

provision. In this regard, the court found that “[g]iven the detailed provisions

governing recourse to an independent accountant in this case, including

written and in-person presentation of positions and the ability to enter the

accountant’s determination as a judgment, it stands to reason that the

independent accountant option here should be treated as an arbitration
____________________________________________

6  Our review of Docket 2 and Docket 3 indicates that the order overruling
Buyer’s preliminary objections to Seller’s complaint was recorded only on
Docket 3. Nonetheless, presumably out of an abundance of caution, Buyer
filed two separate notices of appeal, one at Docket 2 and the other at Docket
3. See Commonwealth v. Walker, 185 A.3d 969, 977 (Pa. 2018) (holding
that, for any appeal filed after June 1, 2018, “when a single order resolves
issues arising on more than one lower court docket, separate notices of appeal
must be filed” in each case; “[t]he failure to do so will result in quashal of the
appeal”) (footnote omitted).

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provision.” Trial Court Opinion, 11/13/18, at 6. Nonetheless, the trial court

concluded that a factual dispute existed with respect to whether Seller ever

issued a notice of disagreement to Buyer’s notice of PPA to trigger the dispute

resolution provision of Section 2.2.3 of the Agreement. As a result, the trial

court determined that it did not abuse its discretion in overruling Buyer’s

preliminary objections to Seller’s complaint at this procedural juncture and

declining to transfer the dispute to an independent accountant.

       On appeal, Buyer presents the following issue for our review.

       [I.] Did the trial court err in holding that the parties’ dispute is not
       within the scope of their agreement for alternative dispute
       resolution, where the trial court’s finding disregards the
       Commonwealth’s policy preference for alternative dispute
       resolution, fails to give effect to the parties’ intent as expressed
       in their agreement, and ignores that there is no factual dispute in
       light of [Seller’s] prior judicial admissions that the dispute should
       be submitted to resolution by an independent accountant?

Buyer’s Brief at 3 (unnecessary capitalization omitted).7

       Before we may address the merits of Buyer’s issue, we first must

determine whether we have jurisdiction to entertain this appeal, given the

manner by which Buyer has come to this Court. See LeFlar v. Gulf Creek

Indus. Park No. 2, 515 A.2d 875, 879 (Pa. 1986) (noting a court may raise

the issue of subject matter jurisdiction at any time); accord Cont’l Bank v.

Andrew Bldg. Co., 648 A.2d 551, 553 (Pa. Super. 1994).

____________________________________________

7 Based on the outcome of this case, we need not address Buyer’s argument
that Seller is barred by its own judicial admission from asserting that Seller
never issued a notice of disagreement upon its receipt of the proposed PPA
calculation from Buyer.

                                          - 11 -
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      In its brief, Buyer claims that this Court may exercise its appellate

jurisdiction by virtue of Pa.R.A.P. 311(a)(8) and Sections 7320(a)(1) and

7342(a) of the Act, 42 Pa.C.S.A. §§ 7320(a)(1), and 7342(a). See Buyer’s

Brief at 1 (unpaginated). We agree.

      As a general rule:

      An order overruling preliminary objections is interlocutory and not
      appealable as of right. There exists, however, a narrow exception
      to this oft-stated rule for cases in which appeal is taken from an
      order denying a petition to compel arbitration. Our decision law
      has made clear that the issue of whether a party agreed to
      arbitrate a dispute is a threshold, jurisdictional question that must
      be decided by the court.

Griest v. Griest, 183 A.3d 1015, 1021-22 (Pa. Super. 2018) (citations,

quotation marks and brackets omitted).         It is well-settled that “[u]nder

Pennsylvania law, an appeal may only be taken from an interlocutory order as

of right (Pa.R.A.P. 311), from a final order (Pa.R.A.P. 341), from a collateral

order (Pa.R.A.P. 313), or from any interlocutory order by permission

(Pa.R.A.P. 31[2], [Pa.R.A.P.] 1311, 42 Pa.C.S.A. § 702(b)).” Cont’l Bank,
648 A.2d at 553. Buyer here argues jurisdiction only on the basis of Rule 311,

which enumerates several categories of interlocutory orders that are

appealable as of right.    Specifically at issue here is Rule 311(a)(8), which

provides:

      (a) General rule. An appeal may be taken as of right and without
      reference to Pa.R.A.P. 341(c) from:
            ....
         (8) Other cases. An order which is made appealable by
         statute or general rule.

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Pa.R.A.P. 311(a)(8) (emphasis added). Buyer claims only that, under Rule

311(a)(8), the order sub judice is rendered appealable by Sections 7320(a)(1)

and 7342(a) of the Act. Section 7320(a)(1) of the Act provides that “[a]n

appeal may be taken from . . . [a] court order denying an application to compel

arbitration made under section 7304 (relating to proceedings to compel or

stay arbitration).” 42 Pa.C.S.A. § 7320(a)(1). Section 7342(a), relating to

common law arbitration, provides, inter alia, that Section 7320(a) of the Act,

except subsection (a)(4), is applicable also to common law arbitration. See

42 Pa.C.S.A. § 7342(a).

      To render an order overruling preliminary objections seeking to compel

arbitration appealable under the Act, a party must prove that the dispute is

bound by an arbitration agreement, which calls for either statutory or common

law arbitration. Armstrong v. Travelers Ins. Co., 115 A.3d 342, 345 (Pa.

Super. 2015), appeal denied, 128 A.3d 218 (Pa. 2015). Unless an arbitration

agreement expressly provides for statutory arbitration, the law presumes that

the parties intended to submit their disputes to common law arbitration. See

Derry Twp. Mun. Auth. v. Solomon & Davis, Inc., 539 A.2d 405, 410 (Pa.

Super. 1988) (“Because the arbitration provision contained in Derry’s

contracts with Solomon does not expressly provide for statutory arbitration,

the agreement does not overcome the presumption that the controversy will

be governed by the rules pertaining to common law arbitration.”). Indeed,

Section 7302 of the Act provides:

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       An 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
       or any other similar statute, in which case the arbitration shall be
       governed by this subchapter.

42 Pa.C.S.A. 7302 (emphasis added).

       With these principles in mind, we conclude that the Section 2.2.3 of the

Agreement contains a common law arbitration provision, even though the

provision does not contain the terms “arbitration” and “arbitrator.”8         As

previously noted, Section 2.2.3 of the Agreement provides in part:

       If at the end of such thirty (30) day period the Buyer and Seller
       have not resolved in writing the matters specified in the Notice of
       Disagreement, Buyer and Seller shall submit to an independent
       accounting firm (the Accounting Firm), as shall be agreed upon
       by Buyer and Seller in writing, for determination of the
       Purchase Price Adjustment. . . . The Accounting Firm will
       resolve the dispute pursuant to such procedures that it
       establishes and deems fair and equitable, provided that
       Buyer and Seller must each be afforded an opportunity to provide
       a written submission in support of its position and to advocate for
       its position personally before the Accounting Firm. Judgment
       may be entered upon the determination of the Accounting
       Firm in any court having jurisdiction over the party against
       which such determination is to be enforced.

____________________________________________

8 Moreover, as we noted earlier, Buyer’s preliminary objections to Seller’s
complaint sought to transfer the PPA dispute to an independent accountant
under Section 2.2.3 of the Agreement.

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The Agreement, 11/4/16, at ¶ 2.2.3 (emphasis added). Section 2.2.3 of the

Agreement expressly provides that if the parties are unable to resolve their

PPA dispute amicably and in writing within thirty days, then they shall submit

the dispute to a jointly-selected independent accounting firm.9 Critically, the

accounting firm is to resolve the parties’ dispute, employing procedures that

the accounting firm establishes so long as they are fair and equitable to both

parties.     Section 2.2.3 of the Agreement also requires that the parties be

afforded an opportunity to provide written submissions to, and appear

personally before, the accounting firm to advocate the parties’ respective

positions.      Finally, the Agreement contemplates that the independent

accounting firm’s determinations regarding the PPA, upon which judgment

may be entered in any court having jurisdiction over the non-prevailing party,

is final and binding upon the parties. Thus, given the essence of Section 2.2.3

of the Agreement, it is clear that it provides for arbitration, even in the

absence of the terms “arbitration” or “arbitrator.”10 Section 2.2.3 contains
____________________________________________

9 We use the terms “accounting firm” and “accountant” interchangeably
throughout this decision.
10 On this point, we find instructive and persuasive a number of state court
and federal district court decisions. See Kuhn Const., Inc. v. Diamond
State Port Corp., 990 A.2d 393, 397 (Del. 2010) (“We do not require the
magic word, ‘arbitration,’ to find that parties intended to arbitrate.”); 2200 M
St. LLC v. Mackell, 940 A.2d 143, 151 (D.C. 2007) (“Because “agreement to
have third parties decide disputes [is] the essence of arbitration, no magic
words such as ‘arbitrate’ or ‘binding arbitration’ or ‘final dispute resolution’ are
needed to obtain the benefits of [an arbitration clause]); Yeransian v.
Markel Corp., 2017 WL 3225987 (D. Del. July 21, 2017) (“While not a
traditional arbitration agreement—in that it never mentions an arbitrator or

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sufficient hallmarks inherent to an arbitration proceeding.11     Accordingly,

because Section 2.2.3 is an arbitration provision within the meaning of

____________________________________________

the term arbitrate—Section 3.2(d) of the [Contingent Value Rights
Agreement] is still a contractually agreed upon dispute resolution process by
which an Independent Actuary determines the final and binding Adjusted
Principal Amount.”); Seed Holdings, Inc. v. Jiffy Int’l AS, 5 F. Supp. 3d
565, 576 (S.D.N.Y. 2014) (“While Section 2.8 does not use the term
‘arbitration,’ it requires the parties to submit their dispute with respect to
working capital ‘to the binding determination of a third party accounting
firm.’”); Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1208 (9th Cir.
1998) (Noting that “[n]o magic words such as “arbitrate” or “binding
arbitration” or “final dispute resolution” are needed to obtain the benefits of
[the Federal Arbitration Act]”); accord AMF Inc. v. Brunswick Corp., 621
F. Supp. 456, 460 (E.D.N.Y. 1985); McDonnell Douglas Fin. Corp. v.
Pennsylvania Power & Light Co., 858 F.2d 825, 830 (2d Cir. 1988) (citing
with approval cases where submission of disputes to independent appraisers
and accountants qualified as arbitrations).

11 “Arbitration is a term that eludes easy definition.” AMF Inc., 621 F. Supp.
at 459. Indeed, the Act does not define the term “arbitration.” The term,
however, is defined in the Black’s Law Dictionary as “[a] method of dispute
resolution involving one or more neutral third parties who are usually agreed
to by the disputing parties and whose decision is binding.” Black’s Law
Dictionary (9th ed. 2009). Webster’s Third New International Dictionary
defines “arbitration” as “the hearing and determination of a case between
parties in controversy by a person or persons chosen by the parties or
appointed under statutory authority instead of by a judicial tribunal provided
by law.” Webster’s Third New International Dictionary, 110 (3d ed.1993). In
AMF Inc., the court noted that Arbitration is a creature of contract, a device
of the parties rather than the judicial process. If the parties have agreed to
submit a dispute for a decision by a third party, they have agreed to
arbitration. 621 F. Supp. at 460. “The arbitrator’s decision need not be
binding in the same sense that a judicial decision needs to be to satisfy the
constitutional requirement of a justiciable case or controversy.” Id.

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Sections 7320(a)(1) and 7342(a), we conclude that Buyer may invoke Rule

311(a)(8) to implicate the jurisdiction of this Court.12

       Having concluded that we properly may exercise jurisdiction sub judice,

we now turn to the merits of the issue on appeal. Distilled to its essence,

Buyer principally argues that the trial court erred in deciding a question of

procedural arbitrability, when such a question should have been reserved for

the arbitrator. See Buyer’s Brief at 25-29. Consequently, Buyer argues that

the trial court abused its discretion in overruling its preliminary objection in

the nature of a petition to compel arbitration.13 We agree.

       The relevant standard and scope of review in this context are as follows:

              Our review of a claim that the trial court improperly denied
       the appellant’s preliminary objections in the nature of a petition
       to compel arbitration is limited to determining whether the trial
       court’s findings are supported by substantial evidence and
       whether the trial court abused its discretion in denying the
       petition. In doing so, we employ a two-part test to determine
____________________________________________

12 Buyer had to file an appeal to preserve its objections to the order. See
Pa.R.A.P. 311(g)(1)(iv) (“Failure to file an appeal from an interlocutory order
refusing to compel arbitration, appealable under 42 Pa.C.S.A. § 7320(a)(1)
and subparagraph (a)(8) of this rule, shall constitute a waiver of all objections
to such an order.”).

13 To the extent Seller invites us to quash Buyer’s appeal based on judicial
estoppel or Buyer’s seeming acquiescence to the trial court’s jurisdiction, we
decline the invitation. Seller raises for the first time on appeal the argument
that Buyer is judicially estopped from arguing that the Agreement contains an
arbitration provision or that Buyer has consented to the trial court’s
jurisdiction by participating in this litigation. Differently put, because Seller
did not raise these issues in its answer to Buyer’s preliminary objections to
Seller’s complaint, or at any other time before the trial court, Seller has waived
them. See Pa.R.A.P. 301(a) (“Issues not raised in the lower court are waived
and cannot be raised for the first time on appeal.”).

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      whether the trial court should have compelled arbitration. First,
      we examine whether a valid agreement to arbitrate exists.
      Second, we must determine whether the dispute is within the
      scope of the agreement.

            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. In making
      these determinations, courts must bear in mind: (1) arbitration
      agreements are to be strictly construed and not extended by
      implication; and (2) when parties have agreed to arbitrate in a
      clear and unmistakable manner, every reasonable effort should be
      made to favor the agreement unless it may be said with positive
      assurance that the arbitration clause involved is not susceptible to
      an interpretation that covers the asserted dispute. To resolve this
      tension, courts should apply the rules of contractual constructions,
      adopting an interpretation that gives paramount importance to the
      intent of the parties and ascribes the most reasonable, probable,
      and natural conduct to the parties. In interpreting a contract, the
      ultimate goal is to ascertain and give effect to the intent of the
      parties as reasonably manifested by the language of their written
      agreement.

Griest, 183 A.3d at 1022 (citations and quotation marks omitted).

“Pennsylvania has a well-established public policy that favors arbitration[.]”

MacPherson v. Magee Mem’l Hosp. for Convalescence, 128 A.3d 1209,

1219 (Pa. Super. 2015) (en banc) (citation omitted). In light of this policy

and as mentioned previously, “we employ a two-part test to determine

whether the trial court should have compelled arbitration.”        Id. (citation

omitted).   First, there must be a valid agreement between the parties to

arbitrate. Id. Second, the parties’ dispute must fall within the scope of the

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agreement.”14 Id. If the two-part test results in affirmative answers, then

“the controversy must be submitted to arbitration.”       Davis v. Ctr. Mgmt.

Grp., LLC, 192 A.3d 173, 182 (Pa. Super. 2018) (citation omitted).            The

resolution of the two-part test implicates substantive arbitrability, over which

the courts have jurisdiction. See Ross Dev. Co. v. Advanced Bldg. Dev.,

Inc., 803 A.2d 194, 199 (Pa. Super. 2002) (holding that courts, not

arbitrators, must decide questions of substantive arbitrability such as whether

there is a valid agreement to arbitrate and whether disputed claim is within

scope of agreement).

       If, however, a trial court concludes that arbitration is not warranted

because of a party’s failure to satisfy certain conditions precedent necessary

to trigger arbitration, such a conclusion is in error. It is established that “the

question of substantive arbitration is for the courts while procedural arbitration

is left to the arbitrators.”     Ross, 803 A.2d at 197.   Procedural arbitration

subsumes issues relating to the satisfaction of conditions precedent to

arbitration.15 See id. at (“[T]he threshold issue of whether the failure to meet
____________________________________________

14“Whether a dispute is within the scope of an arbitration agreement is a
question of law for which our scope of review is plenary.” Saltzman v.
Thomas Jefferson Univ. Hosps., Inc., 166 A.3d 465, 471 (Pa. Super.
2017).
15By way of background, the leading United States Supreme Court case on
procedural arbitrability is John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543 (1964). There, the Court explained the practical and policy reasons to
separate procedural arbitrability from substantive arbitrability. See id. at
561-64 (“Once it is determined, as we have, that the parties are obligated to
submit the subject matter of a dispute to arbitration, ‘procedural’ questions

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time limitations for submission of these claims to the architect is a condition

precedent for proceeding to arbitration is an issue for the arbitrators to initially

decide.”).

       Here, the parties do not appear to dispute that the two-part test has

been satisfied, and we agree.16 As we have detailed above, Section 2.2.3 is

indeed an arbitration provision, even in the absence of the terms “arbitration”

or “arbitrator.” Furthermore, given the plain language of Section 2.2.3, the

parties’ dispute about the proposed PPA calculation squarely falls within the

scope of Section 2.2.3 of the Agreement, which expressly and only pertains

to the PPA.

       The Proposed Purchase Price shall become final and binding upon
       the parties on the thirtieth (30th) day following the date on which
       the Proposed Purchase Price Adjustment was given to Seller
       in accordance with Section 12.7 below, unless Seller delivers
____________________________________________

which grow out of the dispute and bear on its final disposition should be left
to the arbitrator.”). The Supreme Court reiterated this distinction in Howsam
v. Dean Witters Reynolds, Inc., 537 U.S. 79 (2002).                 Substantive
arbitrability issues are gateway questions about the scope of an arbitration
provision and its applicability to a given dispute. Id. There is a presumption
that the parties intended courts to decide issues of substantive arbitrability,
that is, whether the provision covers the dispute. Id. at 82. The opposite
presumption, however, applies to procedural arbitrability issues, such as
waiver, or satisfaction of conditions precedent to arbitration. Id. at 83. That
is, the parties presume that the arbitrator will decide these issues, and if a
court decides them, the court commits reversible error. See id.

16 Seller does not argue that Section 2.2.3 of the Agreement is an arbitration
provision or that the PPA dispute would not be subject to Section 2.2.3.
Rather, Seller contends that Buyer is judicially estopped from asserting that
Section 2.2.3 is an arbitration provision and that Seller never issued a notice
of disagreement to activate the appointment of an independent accounting
firm under Section 2.2.3 of the Agreement.

                                          - 20 -
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      written notice of its disagreement with the Proposed Purchase
      Price Adjustment (“Notice of Disagreement”) to Buyer prior to
      such date. . . . If at the end of such thirty (30) day period the
      Buyer and Seller have not resolved in writing the matters specified
      in the Notice of Disagreement, Buyer and Seller shall submit to an
      independent accounting firm (the Accounting Firm), as shall be
      agreed upon by Buyer and Seller in writing, for
      determination of the Purchase Price Adjustment. . . . The
      Accounting Firm will resolve the dispute pursuant to such
      procedures that it establishes and deems fair and equitable,
      provided that Buyer and Seller must each be afforded an
      opportunity to provide a written submission in support of its
      position and to advocate for its position personally before the
      Accounting Firm.        Judgment may be entered upon the
      determination of the Accounting Firm in any court having
      jurisdiction over the party against which such determination is to
      be enforced.

The Agreement, 11/4/16, at ¶ 2.2.3 (emphasis added).             Based on the

foregoing, Section 2.2.3 of the Agreement contains an arbitration provision,

which covers the parties’ dispute relating to the PPA calculation.

      Yet, the trial court reached an opposite conclusion with respect to

whether the parties’ PPA dispute fell within Section 2.2.3 of the Agreement.

In so doing, as Buyer points out, the trial court conflated the concepts of

substantive and procedural arbitrability. The court reasoned the PPA dispute

fell outside of the scope of Section 2.2.3 because it was unclear whether Seller

triggered the arbitration provision of Section 2.2.3 by issuing a notice of

disagreement.    However, as mentioned earlier, the question of whether a

condition precedent to arbitration, such as a notice of disagreement here, has

been satisfied implicates procedural arbitrability, which is to be determined by

an arbitrator.

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      In Ross, the appellant argued that once the trial court affirmatively

addressed questions of substantive arbitrability, it erred in resolving the issue

of whether the appellant had satisfied a condition precedent to arbitration,

i.e., submission of the appellant’s claim to an architect, under an arbitration

provision. On appeal, we agreed. In so doing, we noted:

      [s]ince 1980, there has been a long line of cases that hold that if
      it appears that a dispute relates to a contract’s subject matter and
      the parties agreed to arbitrate, all issues of interpretation and
      procedure, including requirements preliminary to the presentation
      of any claims, are for the arbitrators to resolve.

Ross, 803 A.2d at 198-99 (citations omitted). We ultimately concluded that

the trial court may only address questions of substantive arbitrability such as

whether there is a valid arbitration agreement and whether the disputed claim

is within the scope of that agreement. Id. at 199. Because the trial court

ruled on a question of procedural arbitrability, such as timeliness in invoking

the arbitration clause and the merits of the dispute, we held that it “invaded

the province of the arbitrators when it considered questions of procedural

arbitrability.” Id.

      Consistent with Ross and the foregoing authorities, we are constrained

to conclude that the trial court erred in failing to transfer the parties’ PPA

dispute to an independent accountant. Our review of the record reveals the

trial court decided an issue of procedural arbitrability, see Trial Court Opinon,

11/13/18, at 8 (“[I]t certainly appears that the independent accountant

process goes into effect only when there is a notice of disagreement.”), when

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it determined that it was unclear from the record whether Seller issued a

notice of disagreement sufficient to trigger the appointment of an accountant

under Section 2.2.3 of the Agreement.              In so determining, the trial court

invaded the province of the arbitrator, tasked with resolving questions of

procedural arbitrability.      Again, because the parties agreed to arbitration

(appointment of an independent accountant) under Section 2.2.3 of the

Agreement, which applies to their PPA dispute, it was an error for the trial

court to address procedural arbitrability. Accordingly, we conclude that the

trial court abused its discretion in overruling Buyer’s preliminary objections to

Seller’s complaint and failing to transfer the dispute to an independent

accountant.17, 18

       Order reversed. Cased remanded. Jurisdiction relinquished.

____________________________________________

17“Typically, a trial court’s order directing a dispute to arbitration will not be
deemed final, as it does not address the merits of the parties’ claims but
merely transfers their existing dispute to another forum in accordance with
the arbitration provision of the underlying contract.” Fastuco v. L.W. Molnar
& Assocs., 950 A.2d 980, 986 (Pa. Super. 2008) (citation omitted).

18 Although we discuss Dockets 1 and 2 for purposes of providing a complete
picture of the PPA dispute at issue, we note that our decision relates only to
Docket 3 and does not affect the procedural posture of the Petition (Docket 1)
or Buyer’s complaint (Docket 2).

                                          - 23 -
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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 08/27/2019

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