Morse, J. v. Fisher Asset Management ( 2019 )

J-A05036-19
2019 PA Super 78JOYCE A. MORSE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
FISHER ASSET MANAGEMENT, LLC, : No. 1104 WDA 2018
STEWART HOLLINGSHEAD, AND :
SHAWN WEIDMANN :
Appeal from the Judgment Entered July 5, 2018
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD-09-010627
BEFORE: GANTMAN, P.J.E., SHOGAN, J., and MURRAY, J.
OPINION BY MURRAY, J.: FILED MARCH 15, 2019
Joyce A. Morse (Appellant) appeals from the judgment entered after the
trial court denied her petition to vacate arbitration award with respect to Fisher
Asset Management, LLC (Fisher Asset), Stewart Hollingshead, and Shawn
Weidmann (collectively Appellees). We hold, inter alia, that if a trial court
sustains preliminary objections that seek enforcement of an agreement for
alternate dispute resolution pursuant to Pa.R.C.P. 1028(a)(6), and accordingly
dismisses a complaint, then the dismissal does not stay the action for purposes
of the statute of limitations.
Appellee Fisher Asset is an investments-adviser firm, and Appellees
Hollingshead and Weidmann were its employees. On January 4, 2008,
Appellant executed a contract with Fisher Asset to retain its services. The
contract included the following arbitration clause:
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Any dispute, claim or controversy arising out of this Agreement or
otherwise between [Appellees] and [Appellant], including but not
limited to the breach, termination, enforcement, interpretation or
validity of this Agreement and the scope and applicability of the
agreement to arbitrate contained in this paragraph, shall be
determined by an arbitration before the Judicial Arbitration and
Mediation Service (“JAMS”) office closest to [Appellant’s] principal
place of residence before one arbitrator who shall be a retired
judicial officer. . . . The arbitration shall be administered by JAMS
pursuant to the Comprehensive Arbitration Rules and Procedures.
The laws of the State of Delaware shall govern the substantive
rights of the parties. The arbitration shall be final and binding,
and judgment on the award may be entered in any court having
jurisdiction. [Appellant] understands that by agreeing to
arbitration, [Appellant] is waiving all rights to seek remedies in
court, unless otherwise mandated by federal or state securities
laws.
Appellees’ Brief in Support of Preliminary Objections, 5/5/10, Exhibit A
(Letters of Agreement, 1/4/08, at 5).
On June 11, 2009, Appellant filed a civil complaint against Appellees in
the trial court, raising six counts: breach of fiduciary duty, common law fraud,
violations of the Unfair Trade Practices and Consumer Protection Law1
(UTPCPL), negligence, breach of contract, and failure to supervise. Appellees
filed preliminary objections, seeking dismissal of Appellant’s complaint on the
basis that the parties’ contract required that the dispute be submitted to
arbitration. The trial court agreed, and on May 13, 2010, it sustained the
preliminary objections and dismissed Appellant’s complaint. Appellant did not
appeal.
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1 73 P.S. §§ 201-1 to 201-9.3.
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Nearly six years later, on March 4, 2016, Appellant filed an “Arbitration
Statement of Claim” with JAMS. Appellant acknowledged that this statement
of claim was substantially identical to her 2009 complaint. Appellant’s Petition
to Vacate, 4/17/17, at 2. Appellees moved to dismiss Appellant’s arbitration
claim, arguing that it was time-barred by statutes of limitations. The
arbitrator agreed, and without holding a hearing, dismissed Appellant’s claim
with prejudice on March 10, 2017. According to Appellant, she was served
with the arbitrator’s decision on March 16, 2017.
On March 17, 2017, Appellant filed, in the trial court, the instant petition
to vacate the arbitration award. She alleged that her claim with JAMS was
timely because: (1) her 2009 civil complaint was timely under the applicable
statutes of limitation; and (2) the trial court’s May 13, 2010 order dismissing
her complaint stayed the proceedings. Appellant further asserted that the
arbitrator improperly denied her a hearing. The trial court issued an order on
September 8, 2017, finding that Appellant’s arbitration claim was time-barred.
Appellant appealed to this Court, but on December 22, 2017,
discontinued her appeal after acknowledging that an order denying a petition
to vacate an arbitration award is not appealable. See Morse v. Fisher Asset
Management, LLC, 1667 WDA 2017, Rule to Show Cause (per curiam) (Pa.
Super. Dec. 6, 2017) (“The proper procedure following entry of such order is
for the trial court to enter an order confirming the arbitration award, and an
appeal properly lies from entry of judgment following confirmation.”).
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Seven months later, on July 5, 2018, Appellant filed a praecipe to enter
judgment, and the trial docket reflects that judgment was entered.2 Appellant
filed a second notice of appeal on August 2, 2018.3 The trial court ordered
Appellant to file a Pa.R.A.P. 1925(b) statement, and she timely complied. The
trial court’s Rule 1925(a) statement referenced its prior November 3, 2017
memorandum as explaining the reasons for its ruling.
On appeal, Appellant presents the following issues:
1. Whether the lower court committed reversible error by denying
Appellant’s Petition to Vacate Arbitration Award and Appoint
Arbitrator, where (i) Appellant commenced the action and satisfied
all applicable limitations periods by timely filing and serving her
Complaint, (ii) the arbitrator exceeded the power and authority
given to him by the parties in their agreement and the applicable
rules adopted therein, and (iii) the arbitrator denied Appellant a
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2 We note irregularities in the electronic certified record transmitted on appeal.
First, Appellant’s praecipe to enter judgment does not bear a “filed” time
stamp, nor is the praecipe entered as “filed” on the docket. Further,
Appellant’s proposed “Notice of Order, Decree or Judgment” includes a
signature line for the Department of Court Records, but is not signed.
Nevertheless, there are five identical docket entries, dated July 5, 2018,
entitled “Judgment on Order of Court,” which state “Notice of judgment sent.”
The “filing party,” however, is listed as Appellant, whereas judgment is
properly entered by the Department of Court Records.
3 To date, the trial court has not entered an order confirming the arbitration
award. See Sherman v. Amica Mut. Ins. Co., 782 A.2d 1006, 1007 n.1
(Pa. Super. 2001) (“Following the denial or dismissal of a petition to vacate or
modify an arbitration award, proper procedure requires the trial court to issue
an order confirming the arbitration award and to enter judgment on this
order.”). However, where the court has entered judgment, and “as it was the
court’s responsibility to issue a separate confirming order prior to the entry of
judgment, it is not appropriate to punish Appellant[ ] for this procedural
failure.” See id.-4-
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hearing, all of which constituted an irregularity resulting in an
unjust, inequitable or unconscionable award?
2. Whether, upon vacating the arbitration award, the court should
appoint an arbitrator as requested in Appellant’s Petition to Vacate
Arbitration Award and Appoint Arbitrator?
Appellant’s Brief at 4-5.4
At the outset, we note our standard of review:
Judicial review of a common law arbitration award is very narrow.
Arbitrators are the final judges of law and fact and their award will
not be disturbed for mistakes of either. Such awards are binding
and may not be vacated or modified “even if blatantly at odds with
the contract involved” absent “a showing of a denial of a hearing
or fraud, misconduct, corruption, or similar irregularity leading to
an unjust, inequitable, or unconscionable award.” [See] 42
Pa.C.S.A. § 7341[.]
Vogt v. Liberty Mut. Fire Ins. Co., 900 A.2d 912, 919 (Pa. Super. 2006)
(citations omitted). This Court has stated:
[A]n appellant “bears the burden to establish both the underlying
irregularity and the resulting inequity by ‘clear, precise and
indubitable evidence.’” “In this context, irregularity refers to the
process employed in reaching the result of the arbitration, not the
result itself.” A cognizable irregularity may appear in the conduct
of either the arbitrators or the parties. Our Supreme Court has
stated that the phrase “other irregularity” in the process employed
imports “such bad faith, ignorance of the law and indifference to
the justice of the result” as would cause a court to vacate an
arbitration award.
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4 Although Appellant raises two issues in her statement of questions
presented, the summary of her argument presents three issues, and her
argument is divided under six headings. We remind counsel that “[t]he
argument shall be divided into as many parts as there are questions to be
argued.” See Pa.R.A.P. 2119(a).
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F.J. Busse Co. v. Zipporah, L.P., 879 A.2d 809, 811 (Pa. Super. 2005).
In her first issue, Appellant characterizes the arbitrator’s dismissal of
her claim as an “irregularity” which must be vacated because her claims were
timely filed.5 Appellant’s Brief at 20. Appellant maintains that her timely-filed
2009 complaint in the trial court “stopped the running of any limitations
period”; that the court’s May 13, 2010 order (directing the parties to
arbitration) “automatically stayed” the case; and therefore “the original action
filed [in 2009] remains pending and, indeed, gave birth to this appeal.” Id.
at 20-23. Additionally, Appellant contends that JAMS does not impose any
time limitations for the filing of an arbitration claim, and thus the arbitrator
had no authorization to impose any on her.
With respect to the application of a statute of limitations to an arbitration
matter, this Court has explained:
Once it has been determined that the substantive
dispute is arbitrable, all matters necessary to dispose
of the claim are normally arbitrable as well. Such
ancillary matters include procedural questions which
grow out of the substantive dispute and bear on its
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5 Appellant appropriately contends that because the parties’ arbitration clause
did not expressly state that statutory arbitration would apply, any arbitration
would be governed by common law. See Appellant’s Brief at 18, citing 42
Pa.C.S.A. § 7302(a) (agreement to arbitrate a controversy shall be
conclusively presumed to be an agreement to arbitrate pursuant to common
law unless the agreement expressly provides for arbitration pursuant to
statute). See also id., citing 42 Pa.C.S.A. § 7341 (arbitration award “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”).
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final disposition. Where the underlying dispute is
arbitrable, the applicability of a statute of limitations
is also.
See also Merchants Mut. Ins. Co. v. American Arbitration
Ass’n, . . . 248 A.2d 842[, 844] (Pa. 1969) (where arbitration
clause provided that arbitrator has the power to consider all
issues, the issue of the applicability of the statute of limitations
came within the arbitrator’s purview); Woodward Heating & Air
Conditioning Co. v. American Arbitration Ass’n, . . . 393 A.2d
917, 920, n.4. (Pa. Super. 1978) (“whether a claim is barred by
the statute of limitations should be determined by arbitration”)[.]
Andrew v. CUNA Brokerage Servs., 976 A.2d 496, 502 (Pa. Super. 2009)
(some citations omitted). See also Appellees’ Brief at 22-23, citing
Woodward Heating & Air Conditioning Co., 393 A.2d at 920 n.4 (“It has
been held that whether a claim is barred by the statute of limitations should
be determined by arbitration.”).
The statute of limitations for an action to recover damages for injury to
property which is founded on negligent tortious conduct is 2 years. 42
Pa.C.S.A. § 5524(7). The statute of limitations for an action upon a contract
is 4 years. 42 Pa.C.S.A. § 5525(a)(8). A UTPCPL claim is subject to the 6-
year statute of limitations under 42 Pa.C.S.A. § 5527(6); Fazio v. Guardian
Life Ins. Co. of Am., 62 A.3d 396, 411 (Pa. Super. 2012) (citation omitted).
We first consider Appellant’s contention that the trial court’s dismissal
of her 2009 complaint, on May 13, 2010, acted to stay the proceedings and
toll the statute of limitations. Appellees argue that when Appellant filed her
2009 complaint, Appellees had two procedural avenues to compel arbitration:
they could either file an application pursuant to 42 Pa.C.S.A. § 7304 and
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§ 7342 to compel arbitration and thus prompt a stay, or they could file
preliminary objections under Pa.R.C.P. 1028 to dismiss Appellant’s complaint.
Appellees contend that because they filed preliminary objections, which were
granted, Appellant’s complaint was dismissed. Appellees’ Brief at 29-30. We
examine Section 7304 and Rule of Civil Procedure 1028.
Section 7342 of our Judicial Code provides that Section 7304 applies to
common law arbitrations. 42 Pa.C.S.A. § 7342(a). Section 7304, in turn,
provides:
§ 7304. Court proceedings to compel or stay arbitration.
(a) Compelling arbitration. — On application to a court to
compel arbitration . . . and a showing that an opposing party
refused to arbitrate, the court shall order the parties to proceed
with arbitration. . . .
* * *
(d) Stay of judicial proceedings. — An action or
proceeding, allegedly involving an issue subject to arbitration,
shall be stayed if a court order to proceed with arbitration has
been made or an application for such an order has been made
under this section. . . . If the application for an order to proceed
with arbitration is made in such action or proceeding and is
granted, the court order to proceed with arbitration shall include
a stay of the action or proceeding.
42 Pa.C.S.A. § 7304(a), (d).
Of further relevance, Rule of Civil Procedure 1028, “Preliminary
Objections,” states:
(a) Preliminary objections may be filed by any party to any
pleading and are limited to the following grounds:
* * *
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(6) . . . agreement for alternative dispute resolution[.]
Note: An agreement to arbitrate may be asserted by
preliminary objection or by petition to compel arbitration
pursuant to the Uniform Arbitration Act, 42 Pa.C.S.[A.] §
7304, or the common law, 42 Pa.C.S.[A.] § 7342(a).
Pa.R.C.P. 1028(a)(6) & note.
Mindful of the foregoing, we agree with Appellees that when presented
with Appellant’s complaint in 2009, they could have sought enforcement of
the arbitration agreement by either filing preliminary objections or a petition
to compel arbitration. Had they opted to proceed with a petition to compel
under Section 7304 and the trial court granted it, the resulting court order
would have, consistent with Appellant’s argument, had to include a stay of the
proceeding. See 42 Pa.C.S.A. § 7304(d). However, Appellees opted to file
preliminary objections under Rule 1028, seeking dismissal. Neither Rule
1028, nor any other Rule of Civil Procedure or other Pennsylvania authority,
provides that an order sustaining preliminary objections, with respect to
enforcing an agreement to arbitrate, stays an action. We thus agree with
Appellees that when the court sustained their preliminary objections and
dismissed Appellant’s 2009 complaint, the action was not stayed. As
Appellees note, Appellant did not appeal from the order dismissing her action.
Accordingly, the court’s May 13, 2010 order did not stay the 2009 action and
did not toll the statute of limitations.
In reviewing Appellant’s additional argument — that no statute of
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limitations applied to her arbitration claim — we reiterate the language of the
parties’ arbitration clause:
Any dispute, claim or controversy arising out of this Agreement .
. . including . . . the scope and applicability of the agreement to
arbitrate . . . shall by determined by an arbitration before [JAMS].
The arbitration shall be administered by JAMS pursuant to the
Comprehensive Arbitration Rules and Procedures.
See Appellees’ Brief in Support of Preliminary Objections, 5/5/10, Exhibit A
(Letters of Agreement, 1/4/08, at 5) (emphasis added).
Instantly, the trial court found no error in the arbitrator’s decision, which
the court “incorporated” in its November 3, 2017 memorandum. See Trial
Court Memorandum, 11/3/17, at 2. The arbitrator observed that the parties
did not “expressly incorporate a statute of limitations into the arbitration
clause of their agreement.” Arbitrator’s Decision, 3/10/17, at 3. The
arbitrator recognized, as Appellant argued, that JAMS rules “do not expressly
mention whether statutes of limitations will apply if a dispute is filed in
arbitration.” Id. Nevertheless, the arbitrator emphasized that “JAMS does
recognize that statute of limitation arguments may arise in defending claims,
and . . . JAMS Rule 18 allows arbitrators to hear dispositive motions on this
issue.” Id. On appeal, Appellant does not acknowledge nor challenge the
arbitrator’s reliance on the JAMS rule.
After careful consideration of the parties’ arguments, the certified
record, and prevailing legal authority, we agree with the trial court that the
issue of the applicability of the statutes of limitations was properly before the
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arbitrator. See Andrew, 976 A.2d at 502 (restating that where an arbitration
clause provided that an arbitrator has the power to consider all issues, the
issue of the applicability of the statute of limitations came within the
arbitrator’s purview). Further, our review has yielded no “irregularity” in the
arbitrator’s decision, nor any error by the trial court.
Appellant also contends that the arbitrator erred in dismissing her claim
without a hearing. Appellant disregards the JAMS rules, to which the parties
agreed when they entered the contract, and which, as Appellees emphasize,
“specifically allow for summary disposition without a hearing.” Appellees’ Brief
at 38.
To the extent Appellant relies on Andrew, 976 A.2d 496, which held
that the plaintiff was entitled to an evidentiary hearing before the arbitrator
on the issue of whether his claims were time-barred by the statute of
limitations, we find that case to be distinguishable. In Andrew, the plaintiff
filed an arbitration claim against an investment firm pursuant to an arbitration
clause in the parties’ contract. Andrew, 976 A.2d at 498. The defendant
firm filed a motion to dismiss, arguing that all of the plaintiff’s claims were
barred by the applicable statute of limitations. Id. The plaintiff responded
that one of the defendant’s employees “made material misrepresentations and
omissions to him about the status of his investments upon which he
reasonably relied, such that he did not become aware of his losses until
[later],” and “that an evidentiary hearing was necessary in order to determine
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when he knew or reasonably should have known that losses had occurred.”
Id. On appeal, this Court agreed, reasoning “that the arbitration panel should
have conducted a hearing to consider evidence and testimony as to whether
[the plaintiff’s] causes of action [were] timely.” Id. at 503.
In this case, the trial court rejected Appellant’s reliance on Andrew,
pointing out that in Andrew, the plaintiff sought an arbitration hearing to
adduce facts as to when his cause of action arose and “involved the
applicability of the discovery rule . . . which is not an issue herein.”6 On
appeal, Appellant does not dispute the trial court’s distinguishing the facts and
posture of the Andrews decision from this case, nor does she claim that an
evidentiary hearing is warranted to determine when her cause of action arose.
There is no dispute as to when Appellant’s cause of action arose, and
moreover, our review reveals no “irregularity . . . in the conduct of the
arbitrator.” See F.J. Busse Co., 879 A.2d at 811. In sum, we find no merit
to Appellant’s claim that she was entitled to a hearing before the arbitrator.
Finally, Appellant asserts that the arbitrator “doomed” her case, and
asks this Court to appoint “one or more arbitrators, from the Pittsburgh bar. . .
to hear this case.” Appellant’s Brief at 31. Appellees, citing the language in
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6 The trial court also reasoned that Appellant waived this issue because
Appellant “never sought a hearing before the arbitrator.” Trial Court
Memorandum, 11/3/17, at 2. As the certified record does not include the
pleadings filed with the arbitrator, we do not consider whether Appellant
waived this claim.
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the parties’ arbitration clause, counter that the “agreement unequivocally
requires that [arbitration] be heard by a retired judge from JAMS in
Philadelphia.” Appellees’ Brief at 42. While we agree with Appellees, the issue
is moot because our disposition negates any need for the appointment of an
arbitrator.
For the foregoing reasons, we affirm the trial court’s order denying
Appellant’s petition to vacate arbitration award.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/15/2019
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