Court Opinion

ID: 9765198
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:56:02.132492+00
Date Added: 2024-06-11T07:30:06.289818
License: Public Domain

DISSENTING OPINION BY
KLEIN, J.:
¶ 1 I believe that errors of law by an arbitration panel in a case such as this are not reviewable by this Court unless contrary to public policy, because this case is governed by the rules of common law arbitration, not statutory arbitration. Therefore, the only standard of review is for fraud, misconduct, corruption or other irregularity that caused the rendition of an unjust, inequitable or unconscionable award. See 42 Pa.C.S. §§ 7314, 7341. The only exception to this rule is when an arbitration decision violates stated public policy, not present in this case. Therefore, whether or not the underlying arbitration decision in this matter was correctly decided, I do not believe we can reach that issue or upset the arbitration award. Therefore, I am constrained to dissent.
¶ 2 Prior to the Uniform Arbitration Act of 1980, 42 Pa.C.S. § 7300 et seq., our Court had jurisdiction to review errors of law that may have occurred during arbitration. However, the Arbitration Act removed that jurisdiction with section 7314(a)(2), which states:
The fact that the relief awarded by the arbitrators was such that it could not or would not be granted by a court of law or equity is not a ground for vacating or refusing to confirm the award.
The legislature has made it abundantly clear that an error of law, up to and including a bald misapplication or misinterpretation of the law, is not reviewable by our Court and cannot be the reason for vacating or refusing to confirm an award. To change the situation, either the legislature has to change the law or the insurance company has to provide for different arbitration procedures.
¶ 3 The case law cited by the majority as the foundation for its decision was all based upon the prior law, not upon the Uniform Arbitration Act. The two leading decisions by our Court, Webb v. United Services Automobile Assoc., 227 Pa.Super. 508, 323 A.2d 737 (1974) (en banc); and Ellison v. Safeguard, 209 Pa.Super. 492, 229 A.2d 482 (1967), clearly pre-date the enactment of the Arbitration Act. The leading Supreme Court case, Davis v. Government Employees Insurance Co., 500 Pa. 84, 454 A.2d 973 (1982), was decided after the Act took effect, but the underlying factual scenario occurred in 1979,1 prior to the Act’s effect. As our Court pointed out in Sherman v. Amica, Mutual Insurance Co., 782 A.2d 1006 (Pa.Super.2001), a court of law was entitled to review an arbitration award for errors of law, even after the passage of the Arbitra*605tion Act, if the arbitration agreement was entered into prior to the effective date of the Act. Thus, all three cases which form the foundation of the majority opinion were decisions based upon prior law, not the Arbitration Act. This is further confirmed by the fact that Davis, the only case decided after 1980, does not refer to the Act.
¶ 4 Thus, any jurisdictional subject matter statement taken from those cases that contradicts the current statute would be inapplicable. The statement, taken from Webb, that “the courts will take jurisdiction only where the claimant attacks a particular provision of the clause itself as being contrary to a constitutional, legislative or administrative mandate, or against public policy, or unconscionable” is a simple statement of subject matter review that was applicable at the time, but which has been supplanted by statute. See 42 Pa.C.S. § 7314(a)(2).
¶ 5 Other cases cited by the majority to support the notion that appellate courts have taken jurisdiction to resolve disputes over the validity of some part of the uninsured motorist clause, see Majority Opinion at 595, n. 3, are inapplicable to the facts at hand. Both Harleysville v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968) and Nationwide v. Ealy, 221 Pa.Super. 138, 289 A.2d 113 (Pa.Super.1972) (en banc), pre-date the Arbitration Act and were appealed from declaratory judgment actions, not arbitration decisions. Bankes v. State Farm Mut. Auto. Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970) (en banc), pre-dates the Act and was appealed from a Court of Common Pleas decision rendered from a case stated trial. None of these cases stand for the proposition that under the Uniform Arbitration Act we currently have the ability to review errors of law of an arbitration panel. Similarly, the cases cited that allow for appellate review of the construction of words and phrases of an insurance policy all pre-date the Act and are similarly inapplicable.2 See Majority Opinion at 595, n. 4
¶ 6 While there have been some cases post-Act that have found an exception to the statutory rule forbidding review of arbitration decisions, all of those cases turn on the invocation of public policy. While some of the language in those cases sometimes refer to the Davis/USAA rule, a careful reading of the cases shows they all are either referring to prior law or invoking a public policy exception.
¶ 7 As noted above, Davis adopted the USAA rule for a factual scenario where the old law applied. Azpell v. Old Republic Insurance Co., 526 Pa. 179, 584 A.2d 950 (1991), states only in dicta that the Davis rule is viable. Azpell specifically avoids applying the rule. Finally, Hall v. Arnica, 538 Pa. 337, 648 A.2d 755 (1994), does claim to follow the Davis rule, but applies it in terms of public policy. Other cases have invoked the public policy exception to arbitration review. These cases are Burstein v. Prudential Prop. & Cas. Ins. Co., 570 Pa. 177, 809 A.2d 204 (2002); Zak v. Prudential Prop & Cas. Ins. Co., 713 A.2d 681 (Pa.Super.1998); and Caron v. Reliance Ins. Co., 703 A.2d 63 (Pa.Super.1997). Interestingly, none of these latter three cases cite to or rely on the Davis/USAA rule.
¶ 8 It is further worth noting that none of the above cited cases, from Davis through Caron, analyze the adoption of the Davis/USAA rule in terms of section 7314(a)(2), which is the section that forbids the courts from reviewing incorrect (contrary to law) awards. All prior analysis *606has simply centered around section 7314(a)(1). To this extent, all prior case is law is distinguishable. Absent cases dealing with public policy considerations, there is no Supreme or Superior Court case that has said that after the amendment to the act this Court has the power to review the decision of an arbitration panel for an error of law.
¶ 9 It is reasonable and consistent with the law to allow this Court to review an arbitration award to see if it violated public policy without allowing this Court to merely review the legal decision of the arbitrators. The Arbitration Act lists the various situations where the court may overturn an arbitration decision in section 7314(a)(1). Section 7314(a)(l)(iii), which statutorily allows the courts to vacate an award where the arbitrators have exceeded them powers, is the relevant clause. The determination of public policy may be seen as an improper use of power by a UM/UIM arbitration panel.
¶ 10 At the same time, “public policy” cannot be used merely to say that an arbitration panel made a mistake of law. Our Supreme Court has taken pains to limit the scope and definition of “public policy” to make sure it is not used merely to describe an error of law. The Supreme Court said:
Public policy is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interest. As the term “public policy” is vague, there must be found definite indications in the law of the sovereignty to justify the invalidation of a contract as contrary to that policy.... Only dominant public policy would justify such action. In the absence of plain indication of that policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts ... contrary to public policy. The courts must be content to await legislative action.
It is only when á given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community in so declaring. There must be a positive, well-defined, universal public sentiment, deeply integrated in the customs and beliefs of the people and in then conviction of what is just and right and in the interests of the public weal.... Only in the clearest cases, therefore, may a court make an alleged public policy the basis of judicial determination.
Hall v. Amica Mutual Ins. Co., 538 Pa. 337, 648 A.2d 755, 760 (1994) (citations omitted).
¶ 11 “Public policy”, therefore, is distinguishable from the situation presented here, where a panel of arbitrators has simply misapplied the law without purporting to define the policy of the Commonwealth. The misapplication of the law is specifically recognized as no reason to vacate an arbitration award under section 7314(a)(2). The legislature, in seeking to afford the benefits of arbitration to its citizens, has made allowances for the occasional, or even frequent, misapplication of the law. The legislature has not granted the power to determine public policy to a discrete group of private arbitrators who have no direct responsibility to the public at large.
¶ 12 By passing the Uniform Arbitration Act, our legislature accepted the fact that sometimes arbitration panels arrive at decisions that are contrary to law. Nonethe*607less, our legislature has forbidden appellate review of those decisions.3
¶ 13 The Hartford Insurance Company is charged with having knowledge of the laws of our Commonwealth. The Hartford knew, or certainly should have known, that a misapplication or misconstruction of the law is not subject to appellate review. If The Hartford had misgivings about its inability to contest such errors of law on appellate review, it could have drafted an arbitration clause that invoked the rules of the Arbitration Act of 1927,4 which would have allowed for such a review. See Goeller v. Liberty Mutual Ins. Co., 523 Pa. 541, 568 A.2d 176 (1990); Pantelis v. Erie Ins. Exchange, 890 A.2d 1063 (Pa.Super.2006). It did not. We are bound by the provisions of section 7314 and we cannot rewrite that statute especially when The Hartford itself had a perfectly acceptable means of achieving its goal.
¶ 14 For the foregoing reasons, I dissent.

. We know this because the original court term and number for the action was 6553 April Term, 1979. Thus, all relevant happenings took place before the 1980 Arbitration Act.

. McMonagle is from 1972; Barbera, 1971; Martin, 1970; Great American Insurance, 1969; Barr, 1969; Taylor, 1969; Medycki, 1968; Kuhn, 1968; and Kassler, 1974.

. The continuing conflict over what aspects of an award are reviewable is well demonstrated in Brennan v. General Accident Fire and Life Assurance Corp., 524 Pa. 542, 574 A.2d 580 (1990). Although decided by our Supreme Court in 1990, Brennan dealt with the tension between common law standards of review and the standard provided in the Arbitration Act of 1927. In Brennan, the arbitration panel reached beyond the issues presented it and issues an award in favor of the claimant. GA appealed and our Court reversed the arbitration award as being beyond the scope of the arbitrators. Our Supreme Court reversed and reinstated the arbitration award because the proper standard of review was common law which allowed for reversal only upon a showing of fraud, misconduct or some irregularity which caused the panel to issue an unjust, inequitable or unconscionable award.
The underlying issue in Brennan involved the interpretation of a setoff clause. However, it does not appear that on appeal anyone challenged the clause on either public policy grounds or being contrary to any other legal mandate. Thus, the Davis/USAA rule was not addressed.

. Even the briefest review of case law shows that a number of insurance companies have availed themselves of this option. Companies invoking the Arbitration Act of 1927 include Erie (Pantelis v. Erie Ins. Exchange, 890 A.2d 1063, (Pa.Super.2006)); USAA (O’Connor-Kohler v. United Services Auto. Ass’n., 883 A.2d 673 (Pa.Super.2005)(en banc)); Nationwide (Ricks v. Nationwide Ins. Co., 879 A.2d 796 (Pa.Super.2005)); National Union (D & H Distributing Co. Inc. v. Nat. Union Fire Ins. Co., 817 A.2d 1164 (Pa.Super.2003)); and Progressive (Bowersox v. Progressive Cas. Ins. Co., 781 A.2d 1236 (Pa.Super.2001)).