State Farm Mutual Auto v. Dill, B. ( 2015 )

J-E03001-14
2015 Pa. Super. 6
STATE FARM MUTUAL AUTOMOBILE : IN THE SUPERIOR COURT OF
INSURANCE COMPANY, : PENNSYLVANIA
:
Appellee :
:
v. :
:
BARISHA DILL, :
:
Appellant : No. 3120 EDA 2012
Appeal from the Judgment entered December 19, 2012,
Court of Common Pleas, Philadelphia County,
Civil Division at No. March Term, 2012, 1370
BEFORE: BENDER, P.J.E., BOWES, PANELLA, DONOHUE, SHOGAN, ALLEN,
LAZARUS, WECHT and STABILE, JJ.
CONCURRING OPINION BY DONOHUE, J.: FILED JANUARY 13, 2015
I join the Majority opinion, as I agree that this Court may not consider
claims of error that were not raised before the arbitration tribunal at a time
when the errors could have been corrected and any prejudice mitigated.
Tindall v. Friedman, 970 A.2d 1159, 1174 (Pa. Super. 2009); Donegal
Ins. Co. v. Longo, 610 A.2d 466, 468 (Pa. Super. 1992). For the reasons
set forth in the Majority opinion, the Appellant waived the claims now
presented on appeal.
I write separately to disavow any suggestion that but for our finding of
waiver, I would conclude that the arbitrator selected by State Farm (Kevin
McNulty, Esq.) was disqualified to serve as an arbitrator in this case.
Pursuant to section 7305 of the Uniform Arbitration Act, if “the agreement to
J-E03001-14
arbitrate prescribes a method of appointment of arbitrators, the prescribed
method will be followed.” 42 Pa.C.S.A. § 7305. In this case, the agreement
specifies that “each party shall select a competent arbitrator,” and that
these two “shall select a competent and impartial third arbitrator.” State
Farm Mutual Automobile Insurance Policy, at 20 (emphasis added). The
issue presented here, then, is one of contract interpretation, namely what
constitutes a “competent arbitrator” under this agreement, and how (if any)
the description of the neutral third arbitrator as both “competent and
impartial” shapes this determination. But for the waiver of this issue, this
Court would have been tasked to glean the mutual intentions of the parties
regarding the phrase “competent arbitrator” to decide whether Attorney
McNulty’s prior involvement in the third party action disqualified his
participation as a “competent arbitrator” in this case.
This issue appears to be one of first impression for Pennsylvania
appellate courts. In Longo, this Court ruled that an arbitrator’s undisclosed
attorney-client relationship with one of the parties rendered him unqualified
to serve as an arbitrator, but the agreement in that case regarding the
selection of arbitrators did not include any of the “competent” and
“impartial” language at issue here. Longo, 610 A.2d at 467-68 (“[E]ach
party will select an arbitrator” and these “two arbitrators will select a
third.”). In Sheehan v. Nationwide Ins. Co., 779 A.2d 582 (Pa. Super.),
appeal denied, 792 A.2d 1254 (Pa. 2001), this Court held that the individual
-2-
J-E03001-14
selected to be the third arbitrator was competent to serve in that role even
though he had been an associate in a law firm that had represented one of
the parties 23 years previously. Id. at 585. Again, however, the relevant
language in Sheehan differed from that presented here, as the agreement
there provided only that each party would select “an arbitrator” and that
those two would “select a third competent arbitrator.” Id. at 584.
The contract language in the present case, pursuant to which the
parties each selected a “competent arbitrator” and those two arbitrators
selected a “competent and impartial” third arbitrator, suggests some
distinction between competence and impartiality. In other words, the
parties here may have agreed that only the third arbitrator (the neutral)
needed to be entirely free of any prior associations or other hint of partiality.
If so, the competence of the two arbitrators selected by the parties would be
judged by some lesser standard (e.g., a more general ability to determine
fairly the merits of the controversy before them). I note, for instance, that
the Uniform Arbitration Act repeatedly distinguishes between ordinary
arbitrators (like McNulty) and those appointed to act as “neutrals.” See,
e.g., 42 Pa.C.S.A. § 7314(a)(ii) (“[T]he court shall vacate an award where:
… there was evident partiality by an arbitrator appointed as a neutral or
corruption or misconduct in any of the arbitrators prejudicing the rights of
any party.”) (emphasis added); id. at § 7307(a)(5) (“If, during the course of
the hearing, an arbitrator for any reason ceases to act, the remaining
-3-
J-E03001-14
arbitrator or arbitrators appointed to act as neutrals may continue with
the hearing and determine the controversy.”) (emphasis added).
Because the issue presented is one of contract interpretation, I
disagree with the view of the Dissent that Rule 1302 of the Pennsylvania
Rules of Civil Procedure has any application here. Per Rule 1301 and 42
Pa.C.S.A. § 7361, Rule 1302 governs only in connection with compulsory
court arbitration of civil cases below a dollar amount fixed by local rule.
Pa.R,C.P. 1301; 42 Pa.C.S.A. § 7361. In compulsory arbitration, by rule
(Rule 1302(b)) arbitrators are appointed from a list of members of the bar,
and their qualifications are thus also set by rule (Rule 1302(e)). In this
case, in significant contrast, the arbitrators were selected in accordance with
the agreed-upon terms of the insurance policy (as described hereinabove),
and the qualifications of the arbitrators selected must be determined by
those same terms. Given that the issue was not preserved for review, the
interpretation of the insurance contract must await another case.
-4-