Erie Ins. Exchange v. Neishel, P. ( 2019 )

J. A19035/18
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
PATRICIA NEISHEL AND :
STANLEY NEISHEL, JR., : No. 1813 MDA 2017
:
Appellants :
Appeal from the Order Entered October 24, 2017,
in the Court of Common Pleas of Luzerne County
Civil Division at No. 2013-12705
BEFORE: GANTMAN, P.J., NICHOLS, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED: JANUARY 29, 2019
Patricia Neishel and Stanley Neishel, Jr. (“appellants”), appeal from the
October 24, 2017 order entered in the Court of Common Pleas of Luzerne
County that denied their motion for summary judgment against Erie Insurance
Exchange (“Erie”) and granted summary judgment in favor of Erie. We affirm.
The trial court set forth the following:
The result of the Court’s ruling was to deny the relief
sought in [appellants’] earlier Petition in which they
requested the Court to vacate the underlying
[underinsured motorist] Arbitration Award
(hereinafter sometimes referred to as the “Award”)
entered in the case.
By way of background, the Award was entered on
May 15, 2015, following an arbitration which was held
on May 5, 2015, before Attorney John Kennedy
([appellants’] selected arbitrator), Attorney
Enid Harris ([Erie’s] selected arbitrator), and Judge
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Joseph Musto (Retired) (the “neutral” arbitrator
selected by the other arbitrators). The amount of the
unanimous Award was $35,000.00, which the parties
agree did not exceed the amount of the available
third-party coverage.
On June 15, 2015, [appellants] filed a Petition seeking
to have the Award vacated on the ground that their
attorney, Ralph J. Johnston, Jr., Esquire, had,
sometime following the date of the arbitration (May 5,
2015), “learned” of a potential undisclosed financial
relationship between Attorney Harris and [Erie]
and/or [Erie’s] attorney in this matter, Robert T.
Panowicz, Esquire. [Appellants] are of the position
that this undisclosed relationship “disqualified”
Attorney Harris from serving as an arbitrator in the
matter and that, accordingly, the Award should be
vacated.
Discovery conducted by [appellants] in this matter did
in fact reveal that there was, historically, a financial
relationship between Attorney Harris and
Attorney Panowicz wherein Attorney Harris worked as
an independent contractor for Attorney Panowicz’s law
firm. This work apparently included working on files
which were referred to Attorney Panowicz by [Erie],
however, it was limited to files where the clients were
insureds of [Erie] and there was nothing in the record
to indicate that Attorney Harris worked on any file in
which [appellants were] a party. In addition, it
appears that Attorney Harris was never directly
compensated by [Erie] but, instead, was paid by
Attorney Panowicz for the work she performed for his
firm. Finally, although there was some conflict in the
record regarding when Attorney Harris last performed
any work for Attorney Panowicz’s firm, the latest
possible date appears to have been July 6, 2012.
[Appellants] argue that since this case was assigned
by [Erie] to Attorney Panowicz sometime prior to
July 6, 2012, there existed an ongoing relationship
between Attorney Panowicz and Attorney Harris that
precluded her from later serving as an arbitrator.
There was no evidence, however, that Attorney Harris
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ever worked on this case, or any case for that matter,
in which [appellants were] a party. In addition, it is
undisputed that Attorney Harris was not selected as
[Erie’s] arbitrator until August of 2013 and that the
arbitration itself was not conducted until May 5, 2015,
almost three years after Attorney Harris last
performed any work for Attorney Panowicz’s firm.
While in hindsight it is clear that [Erie’s] choice of
Attorney Harris as its arbitrator without, minimally,
disclosing the nature of her prior professional
relationship with [appellants’] counsel was less than
ideal, the Court was not persuaded that the law
required that the Award be vacated under the
circumstances of this case, especially where, as here,
the Award was unanimous and there was no evidence
whatsoever to indicate that Attorney Harris exerted
any influence over the other two arbitrators, one of
whom is a well-seasoned plaintiff’s attorney and the
other a retired judge.
Trial court opinion, 1/22/18 at 1-3.
The record reflects that following entry of its October 24, 2017 order
entering summary judgment in favor of Erie, appellants filed a timely notice
of appeal. The trial court did not order appellants to file a Pa.R.A.P. 1925(b)
statement of errors complained of on appeal. The trial court did, however, file
an opinion “furnished pursuant to the requirements of Pa.[R.A.P.] 1925(a).”
(Trial court opinion, 1/22/18 at 1.)
Appellants raise the following issue for our review:
Did the trial court err in entering summary judgment
in favor of Erie thereby denying the Petition to Vacate
the Arbitration Award where the Arbitration Hearing
was fundamentally flawed and failed to comport with
the requirements of procedural due process since the
defense arbitrator was not impartial, having worked in
the office of defense counsel over an extended period,
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specifically, on files assigned to defense counsel by
[Erie] in the arbitration proceedings?
Appellants’ brief at 3-4.
We begin our analysis with our standard of review:
When reviewing a trial court’s decision to grant a
motion for summary judgment, we adhere to the
following standard and scope of review.
We view the record in the light most
favorable to the nonmoving party, and all
doubts as to the existence of a genuine
issue of material fact must be resolved
against the moving party. Only where
there is no genuine issue as to any
material fact and it is clear that the
moving party is entitled to a judgment as
a matter of law will summary judgment be
entered. Our scope of review of a trial
court’s order granting or denying
summary judgment is plenary, and our
standard of review is clear the trial court’s
order will be reversed only where it is
established that the court committed an
error of law or abused its discretion.
Shipp v. Phoenix Ins. Co., 51 A.3d 219, 221 (Pa.Super. 2012).
At the outset, we note that the parties expressly agreed to statutory
arbitration to resolve any dispute regarding underinsured motorist coverage
pursuant to the Arbitration Act of 1927.
Although the Act of 1927 was repealed and replaced
by the Act of 1980, the current statute contains
provisions that govern agreements to arbitrate under
the prior Act. Section 501(b) of the Act of 1980
provides that 42 Pa.C.S.A. § 7302(d)(2) shall apply to
agreements “which expressly provide for arbitration
pursuant to the former provisions of the Act of
April 25, 1927.” See Act of 1980, Oct. 5, P.L. 693,
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No. 142 (codified as the Historical Note to
42 Pa.C.S.A. § 7302(d)(2)). Thus, a court asked to
review an arbitration award made under the
provisions of the Act of 1927 may modify or correct
the award where it is “contrary to law and is such that
had it been a verdict of a jury the court would have
entered a different judgment or a judgment
notwithstanding the verdict.” 42 Pa.C.S.A.
§ 7302(d)(2); Meerzon v. Erie Insurance, 380 Pa.
Super. 386, 551 A.2d 1106 (Pa. Super. 1988).
Krakower v. Nationwide Mut. Ins. Co., 790 A.2d 1039, 1040 (Pa.Super
2001).
Apart from instances where the Commonwealth or a
political subdivision submits a controversy to
arbitration, the historical footnote accompanying
Section 7302 provides only two occasions where this
standard of review is applicable. The relevant
footnote states:
The provisions of 42 Pa. C.S.[A.]
§ 7302(d)(2) (relating to special
application) shall be applicable to any
nonjudicial arbitration pursuant to:
(1) An agreement made prior to
the effective date of this act
which expressly provides that
it shall be interpreted
pursuant to the law of this
Commonwealth and which
expressly provides for
statutory arbitration.
(2) An agreement heretofore or
hereafter made which
expressly provides for
arbitration pursuant to the
former provisions of the Act of
April 25, 1927 (P.L. 381,
No. 248), relating to statutory
arbitration.
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42 Pa. C.S.A. § 7302 (historical footnote[ n.2).] See
also Cigna v. Squires, 628 A.2d 899, 901 (Pa.
1993), appeal denied, 644 A.2d 161 (Pa. 1994);
Martin v. PMA Group, 617 A.2d 361, 363 (1992)
(holding that the historical note accompanying § 7302
provides for the applicability of the standard of review
set forth under § 7302(d)(2)).
Younkin v. Nationwide Ins. Co., 807 A.2d 275, 279 (Pa.Super. 2012).
Here, appellants argue that because the agreement contained a
provision to arbitrate under the Act of 1927, all repealed provisions of the Act
of 1927 govern their dispute. Appellants are mistaken. The Act of 1980 and
relevant case law make it clear that only where a court is asked to review an
arbitration award made under the provisions of the Act of 1927 may the court
modify or correct the award under the less stringent “contrary to law” standard
set forth in the Act of 1927 and preserved in Section 7302(d)(2) of the Act of
1980. See 42 Pa.C.S.A. § 7302(d)(2); see also Heintz, 804 A.2d 1209,
1214-1215 (Pa.Super. 2002), citing Krakower, 790 A.2d 1039.
Appellants did not, however, seek correction or modification of the
award alleging that it was contrary to law; rather, appellants moved to vacate
the award. Therefore, Section 7314 of the Act of 1980 applies. Under
Section 7314, a trial court may vacate an award of a board of arbitrators only
in a very limited set of circumstances. Section 7314 states, in pertinent part:
(1) On application of a party, the court shall
vacate an award where:
....
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(ii) 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[.]
Racicot v. Erie Ins. Exch., 837 A.2d 496, 500 (Pa.Super. 2003) (emphasis
added); see also 42 Pa.C.S.A. § 7314(1).
In their petition to vacate the arbitration award, appellants alleged that
“they received information suggesting that the arbitrator selected [by Erie]
may have a financial relationship with the office of [Erie’s counsel],
Robert T. Panowicz, Esquire.” (Appellants’ petition to confirm arbitration
award for the purpose of jurisdiction and to vacate the arbitration award at
2-3, ¶ 11). Appellants further alleged that “the suggested relationship
between [the arbitrator selected by Erie] and Robert T. Panowicz, Esquire, if
accurate, prohibited a fair and impartial hearing” that requires vacation of the
arbitration award. (Id. at 3-4, ¶ 15.)
Appellants, however, neither alleged nor demonstrated that their rights
were prejudiced by any evident corruption or misconduct on the part of
Attorney Harris. Rather, appellants merely alleged and demonstrated that
Attorney Harris worked on some of Attorney Panowicz’s cases as a legal
subcontractor and that it was possible that appellants’ case was assigned to
Attorney Panowicz when Attorney Harris rendered services to
Attorney Panowicz three years prior to the arbitration. This allegation,
however, is not a statutorily valid ground to vacate the arbitration award. See
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42 Pa.C.S.A. § 7314(1)(ii). Therefore, the trial court properly entered
summary judgment in favor of Erie.
Order affirmed.
Nichols, J. joins this Memorandum.
Gantman, P.J. concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date:01/29/2019
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