Sibley, J. v. McGogney, G. ( 2016 )

J. A15007/16
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
JACK SIBLEY, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
: No. 2091 EDA 2015
GLENN D. McGOGNEY, ESQUIRE AND :
ANTHONY D. DIPPOLITO :
Appeal from the Order Entered June 16, 2015,
in the Court of Common Pleas of Lehigh County
Civil Division at No. 2011-C-2381
BEFORE: FORD ELLIOTT, P.J.E., DUBOW AND JENKINS, JJ.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED SEPTEMBER 12, 2016
Jack Sibley appeals pro se from the June 16, 2015 order confirming
the arbitration award entered in favor of Glenn D. McGogney, Esq.
(“McGogney”), and appellee, Anthony D. Dippolito, M.D. (collectively,
“Defendants”).1 After careful review, we affirm.
The relevant facts and procedural history of this case, as gleaned from
the certified record, are as follows. On June 15, 2007, the parties entered
into an agreement (“Incorporation Agreement”) to form Barnett Food Group,
LLC (“the company”), for the purpose of opening a gentleman’s club at
premises that had previously operated as Lacey’s Pub & Grill, Inc. (“the
1
McGogney has not filed an appellate brief in this matter and appellee is
proceeding pro se.
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restaurant”).2 Pursuant to the Incorporation Agreement, the parties agreed
that any dispute between them would be submitted to private arbitration.
(See “Incorporation Agreement,” 6/15/07 at ¶ 11). It was determined that
each principal in this venture would invest $170,000 in the company in order
to convert the restaurant into a gentleman’s club and purchase the liquor
license from the restaurant. Appellant did not have the financial resources
to make such an investment, so Defendants agreed to loan appellant
$170,000, which would be secured by mortgages on a parcel of commercial
real estate owned by appellant (“the parcel”). McGogney subsequently
loaned appellant $85,000, and appellee loaned appellant $100,000.
Appellant, in turn, executed mortgage notes in favor of Defendants, which
were recorded with the Bucks County Recorder of Deeds on April 9, 2008,
and became liens on the parcel.
Thereafter, each Defendant separately executed a “satisfaction piece”
on the underlying mortgages, which were filed with the Bucks County
Recorder of Deeds on March 9, 2009. Each satisfaction piece included
language that stated, “the undersigned hereby certifies that the debt
secured by the above-mentioned Mortgage has been fully paid or otherwise
discharged, and that upon the recording hereof, said Mortgage shall be and
2
The record reflects that the Incorporation Agreement was also executed by
Reginald Heffelfinger, who is not a party to the underlying claim.
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is hereby fully and forever satisfied and discharged.” (See “Satisfaction
Piece,” 3/9/09.)
At some point, a great deal of animosity arose between the parties,
which culminated in appellant filing a two-count complaint against
Defendants in the Court of Common Pleas of Philadelphia County. Count I of
the complaint asserted a professional negligence claim against McGogney,
and Count II of the complaint raised causes of action for breach of contract
and breach of the implied covenant of good faith and fair dealing against
both Defendants. (See “Civil Action Complaint,” 7/26/10 at 8-9, ¶¶ 41-49.)
On June 28, 2011, this matter was transferred to the Court of Common
Pleas of Lehigh County. Thereafter, Defendants filed counterclaims against
appellant to recover the $85,000 and $100,000 that they had loaned him.
Defendants amended their respective counterclaims on April 27, 2012.
On September 14 and 17, 2012, McGogney and appellee filed separate
motions to transfer this case to arbitration, pursuant to the Incorporation
Agreement. On January 28, 2013, the trial court entered an order which
directed, inter alia, that “all claims and counterclaims . . . be submitted to
binding private arbitration as provided in the parties’ June [15,] 2007
agreement.” (Trial court order, 1/28/13 at 3.) Thereafter, on February 20,
2013, the trial court appointed Philip M. Hof, Esq. (“Arbitrator Hof”) as
arbitrator. Arbitration hearings were held on January 20, January 21,
February 11, March 21, and April 17, 2014. Thereafter, on May 30, 2014,
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Arbitrator Hof entered his decision and award. Specifically, on Count I --
professional negligence, Arbitrator Hof ruled in favor of appellant and against
McGogney in the amount of $389,147.26; and on Count II -- breach of
contract and breach of the implied covenant of good faith and fair dealing,
Arbitrator Hof ruled in favor of Defendants and against appellant. (“Decision
and Award of Arbitrator,” 5/30/14 at 2, 5.) On McGogney’s counterclaim,
Arbitrator Hof ruled in favor of McGogney and against appellant in the
amount of $172,718.84, noting that this amount represented “the principal
amount of the [mortgage] notes as well as interest on the amount due and
owing on the [mortgage] note.” (Id. at 6.) On appellee’s counterclaim,
Arbitrator Hof ruled in favor of appellee and against appellant in the amount
of $216,428.42, noting that this amount represented the principal and
interest due on the mortgage note as well as attorney’s fees. (Id. at 9.)
On June 30, 2014, appellant filed a petition to vacate, modify, and/or
correct the arbitration award. That same day, McGogney also filed a petition
to vacate the arbitration award. On April 20, 2015, the trial court entered
an order denying both petitions. On May 18, 2015, appellant filed a pro se
notice of appeal from the trial court’s April 20, 2015 order. On May 26,
2015, the trial court ordered appellant to file a concise statement of errors
complained of on appeal, pursuant to Pa.R.A.P. 1925(b), within 21 days.
Appellant complied with the trial court’s directive. On June 9, 2015, this
court entered an order directing appellant to show cause as to why his
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appeal should not be quashed as interlocutory. Following said order, the
trial court entered an order on June 16, 2015, confirming the arbitration
award. On June 17, 2015, the prothonotary gave notice, pursuant to
Pa.R.C.P. 236, that judgment had been entered in this matter. On June 18,
2015, the trial court filed a memorandum opinion addressing the claims
raised by appellant in his Rule 1925(b) statement.
Thereafter, on June 29, 2015, this court entered a per curiam order
quashing appellant’s May 18, 2015 appeal as interlocutory. See, e.g.,
Burke v. Erie Ins. Exch., 940 A.2d 472, 474 n.1 (Pa.Super. 2007) (stating
that an order denying a petition to vacate or modify an arbitration award is
not an appealable order; rather, an appeal properly lies from the order
confirming the arbitration award entered by the trial court); see also 42
Pa.C.S.A. § 7320(a). On July 10, 2015, appellant filed a pro se notice of
appeal from the June 16, 2015 order confirming the arbitration award. On
July 16, 2015, the trial court filed a one-page Rule 1925(a) statement
indicating that its prior opinion dated June 18, 2015, sets forth its reasons
for confirming the arbitration award.3
3
The record reflects that on June 10, 2016, appellant filed a pro se
post-submission communication that highlighted a number of exhibits to this
court. On July 14, 2016, this court entered a per curiam order indicating
that it was accepting appellant’s post-submission communication but
cautioned that, “only documents contained in the certified record on appeal
will be reviewed and considered.” (Per curiam order, 7/14/16.)
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On appeal, appellant raises the following issues for our review:
1. Whether the trial court abused its discretion
and exceeded its powers thus commit[ting]
reversible errors of law regarding the lack of
Subject [] Matter Jurisdiction regarding
[appellant’s] counterclaims by granting
[McGogney’s] and [appellee’s] Motion[s] to
Compel Arbitration filed on September 14,
2012, and September 17, 2012, “staying the
within matter, and all counterclaims are
directed to be submitted to binding private
arbitration as provided in the parties’ June
2007 agreement[,]” thereby transferring all
unrelated non-arbitrable [sic] counterclaims to
the absolute Jurisdiction of the Arbitrator?
2. Whether the trial court abused its discretion
and thus committed reversible error, by failing
to recognize [appellant’s] empirical evidence of
proof the Mortgage Satisfaction was valid and
enforceable and that no unpaid mortgages and
notes issue existed due to the Defendant[s’]
recorded Mortgage Satisfaction Pieces on
[appellant’s] commercial property as presented
to the Trial Court by [appellant], who [r]aised
these material issues of fact, declaring that the
Defendant[s’] claims were satisfied and legally
estopped, thereby precluding [] Defendant[s’]
counterclaims from binding private arbitration
which [appellant] informed the Trial Court
multiple times?
3. Whether the Arbitrator Hof abused its
discretion and abuse of powers and thus
committed reversible error, and “other
irregularities and fraud[,]” where
“[i]rregularity[”] refers to the process
employed in reaching the result of the
arbitration, not the result itself, thereby
resulting in malfeasance, misfeasance and
nonfeasance which resulted in the Arbitrator’s
Manifest Disregard of the Law which caused
the rendition of an unjust, inequitable or
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unconscionable award pursuant to 42 Pa.C.S.A.
§ 7341?
Appellant’s brief at 13. For the ease of our discussion, we have elected to
address appellant’s first two claims together.
The crux of appellant’s first claim is that the trial court lacked subject
matter jurisdiction to transfer Defendants’ respective counterclaims to
arbitration. (Appellant’s brief at 37.) In support of this contention,
appellant maintains that the Incorporation Agreement is the only contract
between the parties that contains an arbitration clause, and “nowhere in the
four corners of [said agreement]” does it reference “[Defendants’] personal
loans secured by Mortgages and Notes to [appellant].” (Id. at 32, 39-40.)
Appellant further contends that the trial court lacked subject matter
jurisdiction to transfer Defendants’ counterclaims to arbitration because
their mortgages and notes “were satisfied and legally estopped, thereby
precluding [them] from binding private arbitration.” (Id. at 41-45.) We
disagree.
“Subject matter jurisdiction relates to the competency of a court to
hear and decide the type of controversy presented.” Roman v. McGuire
Mem'l, 127 A.3d 26, 29 (Pa.Super. 2015), appeal denied, 134 A.3d 57
(Pa. 2016) (citation omitted). “Issues pertaining to jurisdiction are pure
questions of law, and an appellate court’s scope of review is plenary.
Questions of law are subject to a de novo standard of review.” Robert
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Half Int'l, Inc. v. Marlton Techs., Inc., 902 A.2d 519, 524-525 (Pa.Super.
2006) (citations omitted).
The test of jurisdiction is whether the trial court is
competent to hear and determine controversies of
the general nature of the matter involved.
Jurisdiction lies if the court had power to enter upon
the inquiry, not whether it might ultimately decide
that it could not give relief in the particular case.
When there is no jurisdiction, there is no authority to
pronounce judgment. Where a court lacks
jurisdiction in a case, any judgment regarding the
case is void.
Roman, 127 A.3d at 30 (citation omitted).
Instantly, appellant’s complaint raised claims for professional
negligence and breach of contract and/or implied covenant of good faith and
fair dealing, which are both cognizable causes of action in the Court of
Common Pleas of Lehigh County. (See “Civil Action Complaint,” 7/26/10 at
8-9, ¶¶ 41-49; see also 42 Pa.C.S.A § 931(a) (stating, “the courts of
common pleas shall have unlimited original jurisdiction of all actions and
proceedings, including all actions and proceedings heretofore cognizable by
law or usage in the courts of common pleas.” (emphasis added)).) As
discussed, both of these causes of action arose out of the Incorporation
Agreement executed in connection with the parties’ joint business venture to
develop a “gentleman’s club.” Paragraph 11 of the Incorporation Agreement
explicitly provided that all disputes arising under the agreement were to be
resolved in arbitration:
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This Agreement shall be interpreted under the laws
of Pennsylvania and venue shall be in Lehigh County
for any dispute arising hereunder. Because of the
confidential nature of this Agreement, the parties
hereto waive Court enforcement hereof and
agree that a single arbitrator shall jointly be
chosen in advance of any dispute to resolve any
and all disputes between the parties hereto.
Incorporation Agreement, 6/15/07 at ¶ 11 (emphasis added). Appellant
does not allege that this agreement was amended or modified by any
subsequent oral or written contracts between the parties.
Defendants, in turn, responded to appellant’s complaint by filing
counterclaims to recover the money that they loaned appellant so that he
was able to join the business venture detailed in the Incorporation
Agreement. Appellant’s contention on appeal that these counterclaims are
not part of the subject matter of this dispute, and thus, the trial court does
not possess the jurisdiction to transfer them to arbitration, is both
disingenuous and entirely devoid of reason. Clearly, the proceeds of the
$85,000 and $100,000 loans that the Defendants made to appellant were
inextricably intertwined with the capitalization and performance of the
parties’ obligations set forth in the Incorporation Agreement.
Additionally, we find that the trial court’s jurisdiction to transfer these
counterclaims is not thwarted by the fact that each Defendant executed a
“satisfaction piece” on the underlying mortgages. Irrespective of this fact,
the record is clear that no actual monetary payment has ever been made to
satisfy either obligation, and thus, the defense of accord and satisfaction
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was not applicable in this matter. In his decision and award, Arbitrator Hof
found that:
Each Defendant has alleged that the underlying
debt remains unpaid and that [appellant] has never
asserted that payment was made. ...
Substantively, [appellant] has failed to rebut the
evidence presented by each Defendant that [he] was
obligated under each note.
....
All parties agree that the underlying debt
obligations were not paid. Regardless of the
motivation of each Defendant to file satisfaction
pieces, the mortgages were satisfied because of
reasons that do not include payment of the
underlying obligation. The note remains a viable
option entitling each Defendant to payment in full,
together with interest as set forth in the note.
Decision and Award of Arbitrator, 5/30/14 at 7-9.
Appellant now avers that “the Mortgages and Notes were satisfied by
agreement between the parties in which [appellant] would return and
redeem the 25% shares in [the company] to [Defendants] in exchange for
the executed Mortgage Satisfaction Pieces[.]” (Appellant’s reply brief at 2.)
However, Arbitrator Hof clearly found no evidence in the record to support
this contention. It is well settled that, “[n]either we nor the trial court may
retry the issues addressed in arbitration or review the tribunal’s disposition
of the merits of the case.” F.J. Busse Co. v. Sheila Zipporah, L.P., 879
A.2d 809, 811 (Pa.Super. 2005), appeal denied, 587 Pa. 694 (Pa. 2006)
(citation omitted). Accordingly, for all the foregoing reasons, we conclude
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that the trial court possessed the subject matter jurisdiction to transfer all of
the aforementioned claims to arbitration. Appellant’s assertions to the
contrary must fail.
Appellant next argues that the arbitration award should be vacated
because Arbitrator Hof “committed fraud, misconduct, corruption [and] other
irregularit[ies]” which resulted in an “unjust, inequitable or unconscionable
award pursuant to 42 Pa.C.S.A. § 7341.” (Appellant’s brief at 47-48.) In
support of this contention, appellant baldly avers that Arbitrator Hof
conspired with the defendants to utilize rescinded or outdated law; failed to
disclose his professional and personal relationship with McGogney’s defense
counsel; permitted defendants to conceal evidence, forge documents, and
procure false witness testimony from appellee; and “disregard[ed] the clear
terms of the parties’ contract.” (Id. at 48-52.) These claims are belied by
the record.
Preliminarily, we note that this case concerns a matter of common law
arbitration, rather than 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 or any other similar statute. . . .”).
Our standard of review of common law arbitration is extremely limited:
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The award of an arbitrator in a [common law
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 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
reversed only for an abuse of discretion or an error
of law.
Toll Naval Associates v. Chun-Fang Hsu, 85 A.3d 521, 525 (Pa.Super.
2014) (citations and internal quotation marks omitted). Thus, this court
may not interfere with a binding common law arbitration award unless fraud,
misconduct, corruption, or another irregularity or impropriety in the
arbitration process is affirmatively proven. See 42 Pa.C.S.A. § 7341.
In the instant matter, our review reveals that appellant has failed to
demonstrate that the trial court abused its discretion in confirming the
May 30, 2014 arbitration award entered in favor of the Defendants. The
majority of appellant’s assertions pertain to alleged mistakes of law or fact
on the part of Arbitrator Hof, and as we explained, “an arbitration award is
not subject to reversal for a mistake of either.” Toll Naval Associates, 85
A.3d at 525. Moreover, we agree with the trial court’s conclusions that
appellant has failed to present competent evidence to support his conclusion
that Arbitrator Hof committed fraud, misconduct or an irregularity. As the
trial court reasoned in its opinion:
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[Appellant] also avers that Arbitrator Hof was
guilty of misconduct. . . . [Appellant’s] petition
essentially contends that Arbitrator Hof conspired
with Defendant McGogney and Attorney
James Huber, Defendant Dippolito’s former counsel,
to present and rely on outdated case law and commit
subornation of perjury.
....
Neither [McGogney] nor [appellant] presented
evidence in support of their respective allegation that
establish to the required “clear, precise, indubitable”
standard that either of them “was denied a hearing
or that fraud, misconduct, corruption or other
irregularity caused the rendition of an unjust,
inequitable or unconscionable award.” Each of them
presented their own conclusory characterization of
the arbitration proceedings; neither [appellant nor
McGogney] presented competent evidence to
support their conclusions.
Trial court opinion, 6/18/15 at 2-3 (quotation marks in original).
Here, appellant’s brief includes nothing more than baseless
accusations and innuendo of Arbitrator Hof’s purported misfeasance that is
wholly unsupported by the record. In an appeal from a common law
arbitration award, appellant alone “bears the burden to establish both the
underlying irregularity and the resulting inequity by clear, precise, and
indubitable evidence.” Andrew v. CUNA Brokerage Services, Inc., 976
A.2d 496, 500 (Pa.Super. 2009) (emphasis added). Clearly, appellant has
not satisfied his burden in this instance. Accordingly, his final claim of error
must fail.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/12/2016
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