Roccograndi, E. v. Martin, T. ( 2019 )

J-S25016-19
2019 Pa. Super. 203
ELIZABETH A. ROCCOGRANDI AND : IN THE SUPERIOR COURT OF
CATHERINE E. PODOLAK : PENNSYLVANIA
:
:
v. :
:
:
THERESA A. MARTIN, TONI F. :
MADDEN, AND DONNA M. SHULTZ : No. 30 MDA 2019
:
Appellants :
Appeal from the Order Entered November 28, 2018
In the Court of Common Pleas of Luzerne County Civil Division at No(s):
2018-11641
BEFORE: STABILE, J., MURRAY, J., and MUSMANNO, J.
OPINION BY MURRAY, J.: FILED JULY 01, 2019
Theresa A. Martin, Toni F. Madden, and Donna M. Shultz (collectively,
Appellants) appeal from the trial court’s November 28, 2018 order pertaining
to arbitration, and confirming “the awards on May 11, 2018 and June 27, 2018
and the Gattuso Report dated August 15, 2018.” Trial Court Order and Decree
Confirming Arbitration Award, 11/28/18, at unnumbered 1. Upon review, we
affirm.
In his May 11, 2018 interim award, American Arbitration Association
arbitrator Steven Petrikis (Arbitrator) provided the following factual and
procedural background:
[Appellants] are sisters Theresa [A]. Martin, Toni F. Madden
and Donna M. Schultz []. [Appellees] are sisters Elizabeth A.
Roccograndi and Catherine E. Podolak []. All are the children of
Anthony Roccograndi. All parties are all trustees of certain trusts
of all ownership of My Brother’s Place (“MBP”), a former retail
home improvements store, and, currently, owner and operator of
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certain commercial real estate in Wilkes-Barre. MBP was founded
by Mr. Roccograndi and his four brothers, but Mr. Roccograndi
ultimately purchased his brothers’ interests. For many years, he
was the driving force for [MBP’s] retail stores and commercial
leasing properties. He became incapacitated in 2010, and died on
May 5, 2014.
At all relevant times, MBP was controlled by a Shareholder
Agreement dated January 26, 1992, and MBP’s Rules and
Regulations governing the Board of Directors of [MBP] dated June
5, 1994, executed by all [Appellants and Appellees].
[Appellants and Appellees] are all of the directors of MBP.
Ms. Podolak was the donee of a Power of Attorney for Mr.
Roccograndi during his incapacitation. Ms. Roccograndi served as
the [p]resident of MBP since 1995. [Appellants] through the trust
instruments were collectively the majority shareholders of MBP at
all relevant times, owning approximately 57.2% of MBP.
[Appellants and Appellees] were also parties to a Joint
Venture Agreement (“JVA”) known as Sisters’ Fund and dated
November 1, 1977. The Sisters’ Fund operated as a type of
private bank for savings, low interest home loans and/or
education for the parties, as well as a vehicle for investments by
the joint venturers. The JVA directs that Ms. Roccograndi and Ms.
Martin shall serve as co-managing agents upon the death of Mr.
Roccograndi.
On April 17, 2015, [Appellants] brought suit against
[Appellees] . . . in the Court of Common Pleas of Luzerne County.
The Complaint sought the liquidation of the assets of MBP, and an
accounting of the Sisters’ Funds Joint Venture []. Subsequently,
[Appellants] filed a Motion for Appointment of a Custodian or
Receiver requesting the Court to “appoint a receiver to liquidate
the business or, in the alternative, a custodian and to manage the
affairs of the corporation (MBP) and its assets.” [Appellees]
objected by asserting that all claims were subject to mandatory
arbitration. However, before the matters were directed to this
arbitration, the Luzerne County Court, by Order dated August 24,
2015, appointed Walter Grabowski, Esq. as the receiver of MBP
with directions to liquidate and close the retail operation of MBP.
He has done so. The Order also expressly stated that MBP’s “real
estate rental business shall continue.” The Order also barred all
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parties from conducting any transaction unless specifically
authorized by the receiver or the Court.
As stated in the Scheduling Order entered in this matter
dated February 13, 2017, the parties agreed as follows:
The parties have agreed that all claims and
defenses set forth in the Demands and Answering
Statements in the cases identified above are properly
subject to this arbitration. The parties further agreed
that to the extent said claims and defenses are not
encompassed by such arbitration provisions, the
parties submit all such claims and defenses to this
arbitration and consent to the jurisdiction of the
American Arbitration Association to resolve all such
claims and defenses. . . .
Accordingly, by the express agreement of the parties, jurisdiction
of this arbitration encompasses all remaining claims.
* * *
At the parties’ request, a single hearing . . . was held
November 15 through November 17, 2017, in Wilkes-Barre,
Pennsylvania. . . . The parties submitted post-hearing briefs and
post-hearing reply briefs.
Arbitrator’s Interim Award, 5/11/18, at 2-4 (underlining and emphasis
omitted).
As indicated above, after conducting a hearing and receiving
submissions from both parties, the Arbitrator issued an interim award on May
11, 2018. The interim award issued legal conclusions on many issues, with
the Arbitrator ruling for and against both parties. See Arbitrator’s Interim
Award, 5/11/18, at 31 (“No party is blame free for this matter and no party is
wholly blameworthy.”).
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In his interim award, the Arbitrator ordered both parties to provide
complete status updates no later than June 1, 2018. Id. at 30. Pertinent to
this appeal, the status updates were required to address “whether the co-
managing agents have agreed to the appointment of a person to liquidate
Sisters’ Fund and the date when a proposed distribution will be provided.”
Arbitrator’s Interim Award, 5/11/18, at 31. The Arbitrator retained jurisdiction
for the entry of a final award “following the consideration of the parties’
submission[s] of the status report[s].” Id.
On June 27, 2018, the Arbitrator issued two final arbitration awards:
one pertaining to MBP, and one concerning the Sisters’ Fund. Both awards
incorporated the findings and conclusions of the May 11, 2018 interim award.
Arbitrator’s MBP Final Award, 6/27/18, at 3; Arbitrator’s Sisters’ Fund Final
Award, 6/27/18, at 2. The final award regarding MBP ordered, inter alia, the
conclusion of Attorney Grabowski’s receivership “thirty days from the date of
this Final Award.” Arbitrator’s MBP Final Award, 6/27/18, at 3.
In the Sisters’ Fund final award, the Arbitrator stated:
In my Interim Award dated May 11, 2018 the parties were
directed to advise whether the co-managing agents of the
Sisters[’] Fund had agreed to the appointment of the Gattuso
Group to implement the liquidation of the Sisters[’] Fund in
accordance with the terms of the Joint Venture Agreement. I
received a report from [Appellants] on May 31, 2018, and a report
from [Appellees] on June 1, 2018. The parties have in fact
agreed to the Gattuso Group to perform that function. . . .
In accordance with the agreement of the Parties, the
Gattuso Group shall prepare its liquidation report pursuant to
Section 15 of the JVA, and shall implement the decision of my
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Interim Award on the matters arbitrated and decided therein. The
reasoning set forth at length in the Interim Award is hereby
incorporated by reference for this FINAL Award.
Id. at 1-2 (emphasis added).
On July 24, 2018, Appellees filed with the trial court a petition to modify
and/or vacate arbitration award pursuant to 42 Pa.C.S.A. §§ 7317, 7341, and
7342, in which they requested the Arbitrator’s final award be modified and/or
vacated to nullify the direction that Attorney Grabowski be terminated as
receiver of MBP. Appellee’s Petition to Modify and/or Vacate Arbitration
Award, 7/24/18, at 3. On August 9, 2018, the trial court granted the petition
to modify and ordered that Attorney Grabowski remain as the court-appointed
receiver until he complied with the directives set forth in the Arbitrator’s
interim arbitration award. Trial Court Order, 8/9/18.
In accordance with the Arbitrator’s Sisters’ Fund final award, the Gattuso
Group issued its report regarding the liquidation of the Sisters’ Fund on August
15, 2018 (Gattuso Report). In pro se objections filed with the Arbitrator on
September 5, 2018, Appellants made multiple challenges to the Gattuso
Report. At the request of the Arbitrator, Appellees filed a response to
Appellants’ objections, averring that the Arbitrator did not have jurisdiction to
rule on the objections. By email dated September 10, 2018, the Arbitrator
agreed with Appellees and denied Appellants’ objections for lack of
jurisdiction. Arbitrator’s Email, 9/10/18 (“For the reasons stated in
[Appellees’] Reply, I do not have jurisdiction to address the matters
[Appellants] have set forth.”).
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On October 11, 2018, Appellees filed with the trial court a Petition to
Modify Arbitration Award Pursuant to 42 Pa.C.S.A. §§ 7342(b) and 7341. In
their petition, Appellees requested that the trial court “enter an [o]rder
confirming the arbitration award and that judgment be entered against
[Appellants] in accord with terms of the awards, plus interest and costs and
such other relief as the Court deems appropriate.” Appellees’ Petition to
Modify Arbitration Award, 10/11/18, at 3.
In response, Appellants filed an answer to Appellees’ petition on October
29, 2018. Both parties filed briefs in support of their respective positions and
the trial court held argument on the matter on November 27, 2018. On
November 28, 2018, the trial court issued an order confirming “the awards on
May 11, 2018 and June 27, 2018 and the Gattuso Report dated August 15,
2018[.]” Trial Court Order and Decree Confirming Arbitration Award,
11/28/18, at unnumbered 1.
Appellants filed this timely appeal on December 28, 2018. Both the trial
court and Appellants have complied with Pennsylvania Rule of Appellate
Procedure 1925.
Appellants present one issue for our review:
Did the Trial Court err in confirming the Gattuso Report of August
15, 2018, when the report was prepared and issued well beyond
the date of the Final Arbitration Decision and cannot be
contemplated under the adoption procedure in 42 Pa. C.S.A. [§]
7342(b)?
Appellants’ Brief at 3 (footnote omitted).
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The arbitration agreement in this case is governed by 42 Pa.C.S.A. §
7341 et seq., which pertains to common law arbitration.1 42 Pa.C.S.A. § 7341
et seq. However, Appellants do not challenge the arbitrator’s award,2 but
instead, argue that the trial court “lacked the legal authority to adopt the
Gattuso [Report] issued August 15, 2018 as part of the adoption of the Final
Arbitration Award issued on June 27, 2018.” Appellants’ Brief at 10.
We initially note the scarcity of authority as to a trial court’s
interpretation of an arbitrator’s award. We also observe that we are not
presented with the “stereotypical” arbitration case where one party is awarded
a monetary award from the arbitrator, thus allowing the trial court to enter
judgment in favor of one party in its confirmation order. See Arbitrator’s
Interim Award, 5/11/18, at 31. Rather, in dealing with a financial fund
maintained and used by both Appellants and Appellees—all sisters—the
Arbitrator had to make many rulings for and against both sets of sisters. One
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1 “Because the agreements do not expressly provide for statutory arbitration,
the agreements are conclusively presumed to be pursuant to the procedural
rules of common law arbitration.” Moscatiello v. Hilliard, 939 A.2d 325,
330 (Pa. 2007). See also Sage v. Greenspan, 765 A.2d 1139 (Pa. Super.
2000) (Absent an express statement in the arbitration agreement, or a
subsequent agreement by the parties which calls for the application of
statutory arbitration provisions, an agreement to arbitrate is conclusively
presumed to be at common law).
2 Appellants “do not dispute that the law permits the [trial court] to enter an
order confirming an arbitration award.” Appellants’ Brief at 3 n.1. Rather,
they aver that “[t]he dispute arises out of the [c]ourt’s confirmation and
adoption of the Gattuso Report which was prepared long after the Final
Arbitration Award.” Id.
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of those rulings, involving the precise methodology for the Sisters’ Fund’s
liquidation, was admittedly outside the scope of the Arbitrator’s review.
Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 2 (“I do not intend to direct
the liquidation procedure, and I lack the necessary detailed and indeed expert
testimony to do so. The particulars of the liquidation methodology were not
part of this arbitration, and the subject matter arose only as a result of the
provision of the JVA calling for such liquidation during the course of the
drafting of the Interim Award. . . . I lack an adequate record to provide any
further direction to the liquidator beyond what I have provided in my Interim
Award.”).
In light of the forgoing, we find our decision in Hall v. Nationwide, 629
A.2d 954 (Pa. Super. 1993) to be instructive. The standard of review in
arbitration confirmation cases is whether, in interpreting the award, the trial
court exceeded its scope of authority by an abuse of discretion or error of law.
Hall, 629 A.2d at 956. See also Weinar v. Lex, 176 A.3d 907, 914 (Pa.
Super. 2017) (“A trial court order confirming a common law arbitration award
will be reversed only for an abuse of discretion or an error of law.”) (citing
Sage v. Greenspan, 765 A.2d 1139, 1142 (Pa. Super. 2000)). In Hall, an
insured petitioned to confirm the arbitrators’ award of damages pursuant to
an arbitration clause in the insured’s automobile insurance policy. This Court
affirmed the trial court’s confirmation of the award where: 1. the trial court’s
interpretation of the award was reasonable; and 2. the insurer failed to
challenge the arbitrators’ award within thirty (30) days. Hall, 629 A.2d at
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957. As our decision in Hall remains binding authority, we therefore apply it
to the facts before us.3
Section 7342(b), which governs common law arbitration, provides:
(b) Confirmation and Judgment.--On application of a party made
more than 30 days after an award is made by an arbitrator under
section 7341 (relating to common law arbitration), the court shall
enter an order confirming the award and shall enter judgment or
decree in conformity with the order.
42 Pa.C.S.A. § 7342(b). “We have consistently interpreted this language to
mean that the trial court is required to confirm the award unless the other
party has filed a petition to vacate or modify the award within 30 days of the
date of the award.” Civan v. Windermere Farms, Inc., 180 A.3d 489, 499
(Pa. Super. 2018) (citation omitted) (emphasis added). “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.” Id. (citation omitted). See
also 42 Pa.C.S.A. § 7341.
Pursuant to Section 7342(b), in a common law arbitration case, the
parties have only thirty days to challenge the arbitrator’s award. Id. Here,
Appellants failed to challenge the award within thirty days as required by
Section 7342(b). See Appellants’ Brief at 13 (“The Appellants did not file any
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3 For ease of review, we analyze these factors in reverse order.
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[p]etition to [m]odify.”). Their failure to do so “allowed the trial court to
confirm the award.” Hall, 629 A.2d at 957 (citations omitted).4 As Hall
remains controlling law and, admittedly, Appellants did not challenge the
Arbitrator’s award, See Appellants’ Brief at 12-13, our analysis turns to
whether the trial court’s interpretation of the arbitrator’s award was
reasonable and within its discretion. Hall, 629 A.2d at 956 (“The trial court
interpreted the . . . award letter to mean that the arbitrators awarded an
amount greater than the policy limits. Such interpretation was reasonable
and did not constitute an abuse of discretion.”).
Upon review, we conclude that the trial court’s order of November 28,
2018 constitutes a reasonable interpretation of the Arbitrator’s awards, and
was not an abuse of discretion. The trial court’s reasonable interpretation, in
conjunction with Appellants’ admitted failure to challenge the Arbitrator’s final
award within 30 days of its issuance, compels affirmance of the trial court’s
November 28, 2018 order.
In his May 11, 2018 interim award, the Arbitrator addresses the
appointment of the Gattuso Group as the liquidator with relation to the Sisters’
Fund:
With [Appellant] Martin and [Appellee] Roccograndi
remaining as co-managing agents, a deadlock is likely.
Accordingly, those agents are directed to retain an
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4“We affirmed the Order confirming the award because the appellant failed to
challenge the arbitrators’ award within thirty days pursuant to 42 Pa.C.S.A. §
7342(b).” Vogt v. Liberty Mut. Fire Ins. Co., 900 A.2d 912, 920 (Pa. Super.
2006).
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appropriate professional to liquidate and distribute the
Sisters’ Fund in accordance with the terms of this award.
It is suggested that the Gattuso Group, which has
considerable knowledge of the Fund activities and whose
findings have not been questioned by either party, be so
retained. I will retain jurisdiction and remain available to review
objections made to the proposed distribution after it is issued.
Again, I share the parties interest in insuring a full and final
resolution to all disputes.
If the co-managing parties are unable to agree on a person
to liquidate and distribute the funds in accordance with it and the
JVA, then counsel shall report that to me within twenty days of
the date of this Interim Award in accordance with the Conclusion
herein.
* * *
This is an Interim Award as a result of the nature of the
declaratory relief it provides. In accordance with the Interim
Award, the parties are to provide a complete status update no
later than June 1, 2018 which includes: . . .
2) whether the co-managing agents have agreed to the
appointment of a person to liquidate Sisters’ Fund and the date
when a proposed distribution will be provided.
All actions of the receiver and any liquidator of Sisters’ Fund
shall be in accordance with the terms of this Interim Award.
I will retain jurisdiction of both cases to take further action,
including the entry of a Final Award following consideration of the
parties’ submission of the status report above-described.
Arbitrator’s Interim Award, 5/11/18, at 27, 30-31 (emphasis added).
In accordance with the Arbitrator’s interim award and the status reports
of the parties, the Arbitrator’s June 27, 2018 Sisters’ Fund final award
instructed the Gattuso Group to produce a report on the liquidation of the
Sisters’ Fund:
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In my Interim Award dated May 11, 2018, the parties were
directed to advise whether the co-managing agents of the
Sisters[’] Fund had agreed to the appointment of the Gattuso
Group to implement the liquidation of the Sisters[’] Fund in
accordance with the terms of the Joint Venture Agreement. I
received a report from the [Appellants] on May 31, 2018, and a
report from the [Appellees] on June 1, 2018. The parties have
in fact agreed to the Gattuso Group to perform that
function.
[Appellants’] report of May 31, 2018, contains additional
requests for relief, requests for different relief than previously
granted, requests for further clarification and reconsideration.
Initially, I do not intend to direct the liquidation procedure, and I
lack the necessary detailed and indeed expert testimony to do so.
The particulars of the liquidation methodology were not a part of
this arbitration, and the subject matter arose only as a result of
the provision of the JVA calling for such liquidation during the
course of the drafting of the Interim Award. In short, just as with
the requested liquidation of MBP’s remaining assets, I lack an
adequate record to provide any further direction to the liquidator
beyond what I have provided in my Interim Award. Further
clarification of the Interim Award is unnecessary, and I do not
intend to reconsider the Interim Award in any respect.
In accordance with the agreement of the Parties, the
Gattuso Group shall prepare its liquidation report pursuant
to Section 15 of the JVA, and shall implement the decisions
of my Interim Award on the matters arbitrated and decided
therein. The reasoning set forth at length in the Interim Award
is hereby incorporated by reference for this FINAL Award. . . .
This is a FINAL Award. This Award is in full adjudication of
all claims and counterclaims submitted in this Arbitration. All
claims and counterclaims not expressly granted herein are hereby
denied.
Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 1-2, 3 (emphasis added).
Pursuant to the Arbitrator’s interim award, the parties were required to
select a third party to author a liquidation report with regard to the Sisters’
Fund. Arbitrator’s Interim Award, 5/11/18, at 27. The Arbitrator specifically
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suggested the Gattuso Group, given their “considerable knowledge of the
Fund[’s] activities and whose findings have not been questioned by either
party.” Id. By their own admission, Appellants expressly agreed that the
Gattuso Group be retained to author the liquidation report. Appellants’ Brief
at 16.5
In accordance with the unchallenged agreement of Appellants and
Appellees, in his final award, the Arbitrator specifically instructed the Gattuso
Group to prepare a liquidation report, and in doing so, implement the
Arbitrator’s decisions set forth in his interim award “on the matters arbitrated
and decided therein.” Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 3.
After the issuance of the Arbitrator’s Sisters’ Fund final award,
Appellants had 30 days in which they could have challenged his decision to
appoint the Gattuso Group to prepare a liquidation report. Admittedly,
Appellants did not do so. Appellants’ Brief at 12.6 In lieu of challenging the
Arbitrator’s final award with the trial court, Appellants instead filed pro se
objections on September 5, 2018 with the Arbitrator, who at that point lacked
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5 “The Appellants and Appellees agreed to the Gattuso Group as the party to
prepare the liquidation report to ‘implement the decisions of the Arbitrator’s
Interim Award on the matters arbitrated and decided therein.’” Appellants’
Brief at 16 (citation omitted).
6 “The Appellants are acutely aware that they had a right to seek a
modification of the award pursuant to the applicable standards set forth in 42
Pa. C.S. § 7341 within thirty (30) days of its issuance.” Appellants’ Brief at
12 (emphasis added). “As a result, the Appellants could have sought
modification under §7341 through July 27, 2018.” Id. (underlining omitted).
“The Appellants did not, nor did they intend to.” Id. (emphasis added).
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jurisdiction—as explained by the Arbitrator in his September 10, 2018 email
to the parties.
Thereafter, as instructed by the Arbitrator in his final award, the Gattuso
Group issued its report on August 15, 2018. Given the specific language
provided in the Arbitrator’s interim and final awards, it was reasonable for the
trial court to include the Gattuso Report in its November 28, 2018 order
confirming the Arbitrator’s awards. The trial court did not abuse its discretion,
given the Arbitrator’s specific instructions that “the Gattuso Group shall
prepare its liquidation report . . . and implement the decision of my Interim
Award.” Arbitrator’s Sisters’ Fund Final Award, 6/27/18, at 3.
Further, although the Appellants argue otherwise,7 the fact that the
Gattuso Report was produced after the issuance of the Arbitrator’s final award
is immaterial. Because the Gattuso Group was not ordered by the Arbitrator
to produce the liquidation report until the issuance of his final award on June
27, 2018, it would have been impossible for the Gattuso Report to be created
before then. As such, it was reasonable for the trial court to include the
Gattuso Report, upon its completion, in the November 28, 2018 order.
Consistent with the foregoing, the trial court interpreted the Arbitrator’s
June 27, 2018 final award to require that the Gattuso Report be included as
part of the Arbitrator’s final award. Such interpretation was reasonable and
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7 “The Gattuso Report was not only not a part of the Final Arbitration Award,
it was not even generated until forty-nine (49) days after the Final Arbitration
Award.” Appellants’ Brief at 14.
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did not constitute an abuse of discretion. Hall, 628 A.2d at 956. The trial
court’s reasonable interpretation, in combination with Appellants’ failure to
challenge the award in a timely matter, leads us to conclude that no relief is
due. Accordingly, we affirm the trial court’s November 28, 2018 order.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/1/2019
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