Carvell, K. v. Edward D. Jones and Co., L.P.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
KEITH CARVELL : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
EDWARD D. JONES & CO., L.P., :
D/B/A EDWARD JONES :
INVESTMENTS; ART AMUNDSEN, : No. 713 MDA 2022
FINANCIAL ADVISOR; GINA BELL, :
SR. OFFICE ADMINISTRATOR; AND :
ESTATE OF KURT M. MATTER, :
DECEASED, BY STEPHANIE A. :
KROSNAR, ADMINISTRATOR :
:
:
APPEAL OF EDWARD D. JONES & :
CO., L.P., ART AMUNDSEN, AND
GINA BELL
Appeal from the Order Dated April 12, 2022
In the Court of Common Pleas of Dauphin County Civil Division at No(s):
2021-CV-05931-CV
BEFORE: BENDER, P.J.E., McLAUGHLIN, J., and STEVENS, P.J.E.*
MEMORANDUM BY BENDER, P.J.E.: FILED FEBRUARY 10, 2023
Edward D. Jones & Co., L.P. (“Edward Jones”), Art Amundsen, Financial
Advisor (“Mr. Amundsen”), and Gina Bell, Sr. Office Administrator (“Ms. Bell”)
(collectively, “Appellants”) appeal from the portion of the April 12, 2022 order,
which denied their preliminary objections in the nature of a petition to compel
arbitration of the crossclaims of the Estate of Kurt M. Matter, deceased (“the
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* Former Justice specially assigned to the Superior Court.
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Estate”). After careful review, we are constrained to reverse this portion of
the trial court’s order and remand for arbitration proceedings.
We glean the following relevant facts and procedural history from the
record. Kurt M. Matter (“Mr. Matter” or “the deceased”) died intestate on April
2, 2020, with no surviving spouse, children, siblings, or parents. Estate’s Brief
at 4. On July 9, 2020, an estate was opened for the deceased, to which his
cousin, Stephanie A. Krosnar, was appointed as the administrator
(“Administratrix”). Id. Shortly before his death, Mr. Matter inherited several
Edward Jones financial accounts from his late sister, Karen Storm. Id.1 On
July 22, 2020, Edward Jones’s senior office administrator, Ms. Bell, informed
the Estate that Mr. Matter had not listed any beneficiaries to any of his
accounts. Id.
In reviewing Mr. Matter’s personal effects, the attorneys for the
Estate came across an incomplete and unsigned Edward Jones
Beneficiary Form. The form contained Keith Carvell’s[2] name,
phone number, address[,] and social security number. The
Beneficiary Form was for only one of Mr. Matter’s accounts. [It]
contained miscellaneous handwritten writings from unknown
person(s) and was unsigned and undated. Upon finding the form,
the Estate contacted Edward Jones on July 29, 2020, to inquire as
to whether Edward Jones would accept the form. [Ms.] Bell …
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1 Specifically, Mr. Matter inherited the following three investment accounts
from his sister, which he continued to maintain with Edward Jones up until his
death: an individual retirement account (account no. XXX-XX234-1-2); an
individual account (account no. XXX-XX494-1-5); and another individual
account (account no. XXX-XX146-1-5) (collectively the “accounts”).
Appellants’ Brief at 8.
2 Keith Carvell was a purported friend of the deceased and is the plaintiff in
the underlying action.
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advised the Estate that the form was not valid and that [Edward
Jones] would not accept it. Ms. Bell further confirmed to the
Estate that Mr. Matter had no beneficiaries and had made no
attempts to name a beneficiary for his accounts.
Id. at 4-5 (citations to record omitted).
Accordingly, at the direction of the Estate, Edward Jones distributed the
funds in the deceased’s accounts to his Estate. Appellants’ Brief at 4.
However, Mr. Carvell purports to have been Mr. Matter’s “best friend” and
believes that he is the rightful beneficiary of these accounts. Id. Although
the Beneficiary Form was incomplete and was never submitted to Edward
Jones prior to Mr. Matter’s passing, Mr. Carvell avers that, at the very least,
it identifies him as the intended beneficiary and that such identification entitles
him to the funds formerly held in the accounts. Id. at 5.
On November 22, 2021, Mr. Carvell filed an amended complaint, naming
the Estate, Edward Jones, Mr. Amundsen, and Ms. Bell as defendants.3 In his
complaint, he alleged that Mr. Matter clearly stated his intention to name Mr.
Carvell as beneficiary of his accounts prior to his death and that Edward Jones
was aware of this intent. Amended Complaint, 11/22/21, at ¶¶ 38-39.4 He
further averred that, despite its knowledge regarding Mr. Matter’s intent and
the steps taken by Mr. Matter to name Mr. Carvell as the beneficiary, Edward
Jones liquidated and distributed the funds in the accounts to the Estate. Id.
at ¶ 43. Based on the foregoing, Mr. Carvell asserted that the Beneficiary
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3 Mr. Amundsen and Ms. Bell are both employed by Edward Jones.
4Mr. Carvell attempted to obtain a copy of the Beneficiary Form to no avail.
Id. at ¶¶ 28-31, 34, 36, 45-46, 50.
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Form grants him a claim to the Estate. Id. at ¶ 51. Hence, he brought the
following claims against Appellants and the Estate: Count I – Conversion
against the Estate; Count II – Conversion against Appellants; Count III –
Negligence against Appellants; Count IV – Fraud against the Estate. Id. at
10-15.
In Counts I and II, Mr. Carvell averred that, as the beneficiary, he was
entitled to possession and ownership of the funds in the Edward Jones
accounts, and that Appellants deprived him of this right by making an
unauthorized transfer of the funds to the Estate. Id. at ¶¶ 56, 66, 70, 73.
Likewise, he asserted that the Estate took unauthorized possession of the
funds. Id. at ¶ 60. Thus, Mr. Carvell concluded that both the Estate and
Appellants improperly converted assets belonging to him. Id. at ¶¶ 63, 74.
In Count III, Mr. Carvell asserted that, “[Appellants] owed [him] a duty to
account for the funds in the Edward Jones [a]ccounts and [to] properly
transfer the funds[,]” id. at ¶ 79, and that Appellants violated this duty “by
transferring the funds to [the] Estate without fully vetting and assessing the
status of the Beneficiary Form[,]” id. at ¶ 81, and “by liquidating and
distributing the funds … to [the] Estate.” Id. at ¶ 82.
Finally, Count IV alleged that “the Beneficiary Form is complete or
substantially and sufficiently complete to reflect the wishes of [the
deceased;]” however, the Estate knowingly made false statements to
Appellants and to Mr. Carvell indicating that the form is incomplete and invalid,
with the intention that other parties, including Appellants and Mr. Carvell,
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would rely on those statements. Id. at ¶¶ 87-88, 90-93. Indeed, Mr. Carvell
stated that he did rely on the Estate’s misrepresentation and that he delayed
legal action to his detriment. Id. at ¶ 94. He further averred that Edward
Jones relied on the Estate’s misstatement in its transferring of the funds from
Mr. Matter’s accounts to the Estate and that, as a result, Mr. Carvell suffered
damages. Id. at ¶¶ 95-96.
On December 23, 2021, the Estate filed an answer to the amended
complaint with new matter and crossclaims, in which it confirmed that Ms. Bell
had indicated to the Estate that the Beneficiary Form was invalid, and that Mr.
Matter had never designated — or attempted to designate — a beneficiary to
any of his Edward Jones accounts. See Estate’s Answer, New Matter, & Cross
Claims, 12/23/21, at ¶ 123. It further averred that, at no time, did anyone
at Edward Jones indicate to the Estate that Mr. Carvell was the “intended or
actual beneficiary” for the accounts. Id. at ¶ 124. The Estate maintained that
it is “the proper legal owner of all Edward Jones accounts formally owned by
the [d]ecedent[,]” as it acted in good faith, relying on representations made
by Edward Jones, in directing the liquidation and transferring of the funds.
Id. at ¶¶ 130, 132.
Additionally, the Estate asserted the following crossclaims against
Appellants: Count I – Negligence; Counts II & III – Negligent Supervision and
Training; Count IV – Breach of Fiduciary Duty; and Count V – Fraud. Id. at
¶¶ 133-204. In their negligence claim, the Estate averred that Appellants
owed it a duty of care and that they breached that duty when they:
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a. communicated with [Mr. Carvell], his counsel[,] and other
third parties without authorization from [the] Estate
regarding [the d]ecedent’s … [a]ccounts[;]
b. disclosed to [Mr. Carvell], his counsel[,] and other third
parties, confidential communication between [the d]ecedent
and/or [the] Estate with Edward Jones and its employees[;]
c. discussed confidential information regarding [the d]ecedent
and [his] Estate with [Ms.] Bell’s husband[;]
d. intentionally misrepresented to [Mr. Carvell] alleged
communications they had with [the d]ecedent before his
passing[;]
e. failed to disclose to [the] Estate or legal counsel
conversations [they] allegedly had with [the d]ecedent[,]
which would call into question whether there would be a
beneficiary to [his] accounts[;]
f. failed to disclose to [the] Estate the alleged existence of a
“previously signed beneficiary” form with [Mr. Carvell’s]
name[;]
g. intentionally withheld information [they] had which the …
Estate needed to properly evaluate whether there was a
beneficiary for any of [the d]ecedent’s accounts[;]
h. permitted [Ms.] Bell to falsify information which caused [Mr.
Carvell] to believe he was entitled to [Mr. Matter’s] Edward
Jones accounts[;] and
i. told [the] Estate unequivocally that there were no
beneficiaries to [the d]ecedent’s accounts, while at the same
time telling [Mr. Carvell] that he was the intended
beneficiary.
Id. at ¶¶ 138-39.
Moreover, the Estate averred that Edward Jones, by and through its
employees, Mr. Amundsen and Ms. Bell, acted intentionally and with malice
when it
withheld information it had which the … Estate needed in order to
evaluate whether there was a beneficiary for any of [the
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d]ecedent’s Edward Jones accounts[;] … permitted [Ms. Bell] to
falsify information which caused [Mr. Carvell] to believe he was
entitled to inherit [the d]ecedent’s Edward Jones accounts[; and]
relayed to [the] Estate unequivocally that there were no
beneficiaries to [the d]ecedent’s Edward Jones accounts, while at
the same time relaying to [Mr. Carvell] that he was the “intended
beneficiary.”
Id. at ¶¶ 141-43. It further claimed that Edward Jones, through its employee,
Ms. Bell, made the following false, negligent, and reckless statements: “[The
d]ecedent presented Edward Jones with a signed beneficiary form with [Mr.
Carvell’s] name on it[;] and … [the d]ecedent told [Ms.] Bell, Mark,[5] and Lisa
Coyne[6] that it was [the d]ecedent’s intention that everything go to [Mr.
Carvell.]” Id. at ¶ 144. The Estate averred that Appellants’ breach of their
duty caused it actual damages in excess of $50,000.00, in the form of
inheritance tax incurred on the accounts, as well as legal fees and costs for
litigation regarding the ownership of the accounts. Id. at ¶¶ 140, 148.
In its negligent supervision and training claims, the Estate asserted that
Edward Jones had a duty to exercise ordinary care in its supervision and
training of its employees—namely, Mr. Amundsen and Ms. Bell—and that it
breached this duty when it failed to properly supervise and train them. Id. at
¶¶ 150-51. Similarly, the Estate maintained that Mr. Amundsen had a duty
to exercise ordinary care in his supervision and training of his employee, Ms.
Bell, and that his failing to supervise Ms. Bell with respect to all matters
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5 Based on our cursory review, “Mark” is not identified any further in the
record.
6Lisa Coyne is the attorney who handled the estate of Karen Storm, Mr.
Matter’s sister. Amended Complaint at ¶ 13.
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pertaining to the administration of the Edward Jones accounts was a breach
of this duty. Id. at ¶¶ 164-65. It further contended that Mr. Amundsen and
Ms. Bell committed the wrongful acts as enumerated in the Estate’s negligence
claim during their course of and within the scope of their employment with
Edward Jones and that the Estate suffered actual damages as a result of
Edward Jones’s and Mr. Amundsen’s failure to exercise reasonable care in their
training and supervision of their employees. Id. at ¶¶ 152-54, 167-69.
In its next claim, the Estate declared that Appellants owed a fiduciary
duty to Mr. Matter and that, by virtue of his death, Appellants owed a fiduciary
duty to the Estate. Id. at ¶¶ 179-80. It further averred that, despite a duty
of care and duty of loyalty owed to the Estate, Appellants communicated with
Mr. Carvell and his counsel, without the Estate’s authorization, regarding Mr.
Matter’s accounts, as well as confidential communications that Mr. Matter
and/or the Estate had with Appellants. Id. at ¶¶ 181-82. The Estate asserted
that Appellants breached their fiduciary duty by failing to act in the Estate’s
best interest, by disclosing confidential information to Mr. Carvell, intentionally
misrepresenting to Mr. Carvell alleged communications they had with Mr.
Matter before his death, and failing to disclose to the Estate certain
conversations they had with Mr. Matter, which would call into question
whether there would be a beneficiary to Mr. Matter’s accounts, and the alleged
existence of a previously signed beneficiary form. Id. at ¶¶ 183-90.
Finally, in its fraud claim, the Estate contended that Appellants made
material misrepresentations of fact when communicating with the Estate
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regarding Mr. Matter’s accounts, and that such misrepresentations were done
with the knowledge of their falsity and with the intent that the Estate would
rely on them. Id. at ¶¶ 198-200. Moreover, reliance on these false
statements caused actual damages to the Estate in an amount in excess of
$50,000.00. Id. at ¶¶ 201, 204.
On December 14, 2021, Appellants filed preliminary objections to the
amended complaint on the grounds that Mr. Carvell was required to arbitrate
his claims pursuant to a valid, binding arbitration agreement. Appellants’ Brief
at 7. See also Pa.R.Civ.P.1028(a)(6) (providing that preliminary objections
may be filed by any party to any pleading on the basis of an agreement for
alternative dispute resolution); Id. at Note (“An agreement to arbitrate may
be asserted by preliminary objection….”). In the alternative, they objected to
the amended complaint under Rule 1028(a)(4), for failure to state a claim.
Appellants’ Brief at 7. On January 13, 2022, Appellants filed separate
preliminary objections to the Estate’s crossclaims pursuant to Rule
1028(a)(6), arguing that the Estate was also required to arbitrate its
crossclaims against them based on a valid, binding arbitration agreement. Id.
at 7-8.
In support of their preliminary objections, Appellants explained that the
“Account Agreements” for each of the decedent’s Edward Jones accounts
contain an “Account Authorization” incorporating the full Edward Jones
account agreement for the respective type of account and an acknowledgment
that each contains a binding arbitration provision. Id. at 8. The Account
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Agreements for individual retirement accounts and individual accounts each
contain the following identical, arbitration provision:
Any controversy arising out of or relating to any of [Mr. Matter’s]
account(s) from its inception, business, transactions or
relationships [Mr. Matter has] now, had in the past or may in the
future have with [Edward Jones], its current and/or future officers,
directors, partners, agents, affiliates and/or employees, this
Agreement, or to the breach thereof, or transactions or accounts
maintained by [Mr. Matter] with any of [Edward Jones’s]
predecessor or successor firms by merger, acquisition or other
business combinations shall be settled by arbitration in
accordance with the [Financial Industry Regulatory Authority
(“FINRA”)] Code of Arbitration Procedure rules then in effect.
Appellants’ Preliminary Objections to the Estate’s Crossclaims (“Preliminary
Objections”), 1/13/22, at Exhibit 4 (Account Agreement at 6, ¶17(a))
(“Arbitration Agreement”).7
Moreover, Appellants asserted that “Mr. Matter intended to bind his
Estate, any beneficiaries, and any personal representative or administrators
of the Estate, to all aspects of the Account Agreement, including the …
arbitration provision,” Appellants’ Brief at 9, as evidenced by the following
language contained in the Account Agreements:
Binding Effect, Death, Incompetence, Disability, Succession.
This Agreement supersedes any prior agreement of the parties,
and its terms shall be binding upon my heirs, beneficiaries,
personal representatives, agents, estate, executors,
successors, administrators, assigns, trustees and conservators
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7 Numerous Account Agreements are relevant to the instant dispute, each
containing its own, separately executed arbitration provision. Because these
arbitration provisions are identical to one another in both form and substance,
we refer to the provisions collectively herein as a singular “Arbitration
Agreement.”
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(“Successors”) as to all matters involving my Account with
[Edward Jones], including, but not limited to, the terms
relating to arbitration.
Preliminary Objections at Exhibit 4 (Account Agreement at 6, ¶14(g))
(emphasis added).
Likewise, Appellants asserted that the Administratrix agreed to arbitrate
any disputes in connection with the Edward Jones account that she opened on
behalf of the Estate after Mr. Matter’s death, by executing a fiduciary account
authorization and agreement (“Fiduciary Agreement”). Appellants’ Brief at 9-
10. The Fiduciary Agreement incorporated an Account Agreement and
included an acknowledgement that the incorporated Account Agreement
contains a binding arbitration provision. Id. at 10. The arbitration provision
incorporated into the Fiduciary Agreement signed by the Administratrix is
identical to the Arbitration Agreement contained in the Account Agreements
signed by Mr. Matter. Id.8
After hearing oral argument on Appellants’ preliminary objections, the
trial court issued a single order on April 12, 2022, in which it ruled on both
sets of objections. First, having determined that neither Mr. Carvell’s nor the
Estate’s claims against Appellants fall within the scope of the relevant
Arbitration Agreement, the trial court denied Appellants’ Rule 1028(a)(6)
objections to the amended complaint and the Estate’s crossclaims. See Trial
Court Order (“TCO”), 4/12/22, at 1-2 ¶1. Additionally, the trial court granted
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8 Because the Fiduciary Agreement incorporates language identical to the
Account Agreements signed by Mr. Matter, we refer to these agreements
collectively throughout as the “Account Agreements.”
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the objections in the nature of a demurrer as to the amended complaint, and
it dismissed Mr. Carvell’s claims against Appellants. See id. at 2-4 ¶¶2-4. As
such, the only claims that remain pending against Appellants are the Estate’s
crossclaims.9
On May 12, 2022, Appellants filed a timely notice of appeal, followed by
a timely, court-ordered Pa.R.A.P. 1925(b) concise statement of errors
complained of on appeal. Pursuant to Rule 1925(a)(1), the trial court
indicated that its April 12, 2022 order adequately addressed the issues raised
on appeal and, thus, it did not intend to file an additional opinion.
Herein, Appellants raise the following questions for our review, which
we address together for ease of disposition:
1. Did the trial court err by denying arbitration of the … Estate’s
crossclaims against … Appellants?
2. Did the trial court err by concluding that the … Estate’s
crossclaims against … Appellants fell outside the scope of the
binding [A]rbitration [A]greement between … Appellants and
[the] decedent[, Mr.] Matter?
3. Did the trial court err by concluding that the … Estate’s
crossclaims against … Appellants fell outside the scope of the
binding [A]rbitration [A]greement between … Appellants and
the … Estate?
Appellants’ Brief at 3.
Preliminarily, we recognize that an order overruling preliminary
objections is, generally, an interlocutory order and unappealable. In re
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9 Mr. Carvell’s claims against the Estate are also still pending but are not at
issue in this appeal.
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Estate of Atkinson, 231 A.3d 891, 897 (Pa. Super. 2020); Griest v. Griest,
183 A.3d 1015, 1021-22 (Pa. Super. 2018). “The law is clear, however, that
an order overruling preliminary objections that seek to compel arbitration is
an interlocutory order appealable as of right pursuant to 42 Pa.C.S. §
7320(a)(1) and Pa.R.A.P. 311(a)(8).” Estate of Atkinson, 231 A.3d at 897
(citations omitted). See also Pa.R.A.P. 311(a)(8) (“An appeal may be taken
as of right and without reference to Pa.R.A.P. 341(c) from … [a]n order that
is made final or appealable by statute or general rule, even though the order
does not dispose of all claims and of all parties.”); 42 Pa.C.S. § 7320(a)(1)
(“An appeal may be taken from … a court order denying an application to
compel arbitration made under section 7304 (relating to proceedings to
compel or stay arbitration).”). Accordingly, we determine that we have
jurisdiction over this appeal.
We further acknowledge that each of the Account Agreements executed
by the parties “contain identical governing law provisions, which expressly
provide that ‘the parties’ respective rights and duties[] shall be governed by
the laws of the State of Missouri.’” Appellants’ Brief at 10 (citation omitted).
Nevertheless, the parties do not allege that Missouri substantive law with
respect to interpreting arbitration provisions differs from Pennsylvania’s law.
In fact, Appellants assert that there is “no legally significant distinction
between the laws of Pennsylvania and Missouri with respect to [the same]
and[,] thus[,] no conflict of law is presented.” Id. at 10 n.3. Accordingly, we
will apply Pennsylvania substantive law in our analysis of this case. See ADP,
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Inc. v. Morrow Motors Inc., 969 A.2d 1244, 1246 n.2 (Pa. Super. 2009)
(applying the forum state’s substantive law where neither party raised a
choice-of-law issue or alleged a substantive difference between the laws of
the forum state and the laws of the state which the parties chose to govern
their “master service agreement”).
Additionally, we note that Pennsylvania’s Rules of Civil Procedure apply
here. See Sheard v. J.J. DeLuca Co., Inc., 92 A.3d 68, 76 (Pa. Super.
2014) (“As a general rule, the law of the chosen forum governs all procedural
matters.”); ADP, Inc., 969 A.2d at 1246 n.2 (“[C]hoice of law analysis only
applies to conflicts of substantive law. Whenever Pennsylvania is the chosen
forum state for a civil action, our state’s procedural rules, i.e., the
Pennsylvania Rules of Civil Procedure, govern, no matter what substantive law
our courts must apply in resolving the underlying legal issues.”) (internal
citation omitted).
Thus, in reviewing the merits of Appellants’ claims, we apply the
following standard and scope of review:
Our review of a claim that the trial court improperly denied
the appellant’s preliminary objections in the nature of a
petition to compel arbitration is limited to determining
whether the trial court’s findings are supported by
substantial evidence and whether the trial court abused its
discretion in denying the petition.
In doing so, we employ a two-part test to determine whether the
trial court should have compelled arbitration. First, we examine
whether a valid agreement to arbitrate exists. Second, we must
determine whether the dispute is within the scope of the
agreement.
…
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Whether a claim is within the scope of an arbitration provision is
a matter of contract, and as with all questions of law, our review
of the trial court’s conclusion is plenary.
Griest, 183 A.3d at 1022 (citation omitted). “The scope of arbitration is
determined by the intention of the parties as ascertained in accordance with
the rules governing contracts generally.” Smay v. E.R. Stuebner, Inc., 864
A.2d 1266, 1273 (Pa. Super. 2004). “Both Pennsylvania and federal law
impose a strong public policy in favor of enforcing arbitration agreements.”
Estate of Atkinson, 231 A.3d at 898 (citation omitted). “Accordingly, if a
valid agreement to arbitrate exists and the dispute falls within the scope of
the arbitration agreement, the dispute must be submitted to arbitration and
the lower court’s denial of arbitration must be reversed.” Id. (citations
omitted).
Based on our review of the record, Appellants have established that Mr.
Matter entered into a valid Arbitration Agreement, which is binding on the
Estate. See Preliminary Objections at Exhibit 4 (Account Agreement).
Appellants have also established that the Administratrix entered into a
separate, valid Arbitration Agreement on behalf of the Estate in connection
with the Estate’s Edward Jones account. See Preliminary Objections at Exhibit
5 (Fiduciary Agreement). Moreover, there is no dispute over the existence or
validity of the Arbitration Agreements. See TCO at 2 ¶1; Appellants’ Brief at
13 (stating that “the parties … have acknowledged the validity of the
[A]rbitration [A]greement[] and likewise do not dispute that it is binding on
them”); Estate’s Brief at 10 (“The Estate does not dispute that there is a valid
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[A]rbitration [A]greement….”). Thus, we are satisfied that the first prong of
the test for determining whether arbitration should have been compelled has
been met.
Next, we address whether the Estate’s crossclaims are within the scope
of the Arbitration Agreement. In doing so, we are further guided by the
following principles:
(1) arbitration agreements are to be strictly construed and
not extended by implication; and (2) when parties have
agreed to arbitrate in a clear and unmistakable manner,
every reasonable effort should be made to favor the
agreement unless it may be said with positive assurance
that the arbitration clause involved is not susceptible to an
interpretation that covers the asserted dispute.
To resolve this tension, courts should apply the rules of
contractual constructions, adopting an interpretation that gives
paramount importance to the intent of the parties and ascribes
the most reasonable, probable, and natural conduct to the parties.
In interpreting a contract, the ultimate goal is to ascertain and
give effect to the intent of the parties as reasonably manifested
by the language of their written agreement.
Where a contract dispute arises between parties to a contract
containing an unlimited arbitration clause, the parties must
resolve their dispute through arbitration. Unless the parties
impose some limitation on the arbitrator’s authority, the arbitrator
may decide all matters necessary to dispose of any disputed
claims subject to arbitration and, the court may not impose any
restrictions sua sponte. Accordingly, “all” contract disputes does
mean “all” contract disputes unless otherwise agreed by the
parties.
Callan v. Oxford Land Development, Inc., 858 A.2d 1229, 1233 (Pa.
Super. 2004) (internal citations and quotation marks omitted).
Instantly, the trial court concluded that the Estate’s crossclaims fall
outside the scope of the Arbitration Agreement and, therefore, denied
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Appellants’ request to compel arbitration. TCO at 2 ¶1. In support of its
decision, the trial court explained:
Although this is a broad arbitration provision, we find that it does
not encompass the issues in the present case, which involve the
question of whether or not [Mr. Carvell] should receive the
proceeds of the Edward Jones account(s) that had been held by
Mr. Matter prior to his death. Thus, the dispute does not arise out
of or relate to the accounts themselves. Rather, it relates to the
relationship between [Mr. Carvell] and Mr. Matter, and whether
Mr. Matter intended to provide for [Mr. Carvell] after he died. For
these reasons, we find that the claims brought by [Mr. Carvell]
and the crossclaims brought by [the] Estate against [Appellants]
fall outside of the scope of the arbitration provision. As such, we
will not compel arbitration.
Id.10
Appellants argue that the trial court erred in denying their request to
compel arbitration of the Estate’s crossclaims, as these claims clearly fall
within the scope of the Arbitration Agreement. In support of their argument,
they aver:
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10 While the trial court presents the foregoing explanation as the basis for its
decision to deny arbitration of both Mr. Carvell’s claims against the Estate and
the Estate’s crossclaims, its reasoning only applies to Mr. Carvell’s claims,
which have been dismissed and are, therefore, no longer relevant in this
matter. See id. (stating that the dispute “relates to the relationship between
[Mr.Carvell] and Mr. Matter, and whether Mr. Matter intended to provide for
[Mr. Carvell] after he died”); contra Appellants’ Brief at 15 (noting that the
Estate’s crossclaims “charge that … Appellants are separately and
independently liable to [the Estate] for alleged acts and omissions committed
with respect to Mr. Matter’s accounts following his death” and have nothing to
do with Mr. Carvell’s relationship with the deceased). The trial court fails to
shed light on its reasoning for finding that the Estate’s crossclaims do not fall
within the scope of the Arbitration Agreement. Nevertheless, our scope of
review is plenary; thus, this omission does not impede our review.
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[T]he factual and legal bases of each crossclaim both “arise out
of” and “relate to” Mr. Matter’s accounts. Indeed, the … Estate’s
crossclaims confirm as much, referencing Mr. Matter’s … accounts
over forty (40) times. Each crossclaim alleges that Edward
Jones—as the “account holder for [Mr. Matter’s] investments”—
owed the … Estate several duties of care. [] Appellants allegedly
breached those duties when they: communicated with [Mr.
Carvell] … without authorization from [the] Estate regarding Mr.
Matter’s … [a]ccounts; intentionally withheld information it had
which the … Estate needed to properly evaluate whether there was
a beneficiary for any of Mr. Matter’s accounts; failed to disclose to
[the] Estate or legal counsel conversations it allegedly had with
Mr. Matter which would call into question whether there would be
a beneficiary to Mr. Matter’s accounts; and caus[ed Mr. Carvell]
to believe he was entitled to [the funds in] Mr. Matter’s …
accounts….
The crossclaims both “arise out of” and “relate to” Mr. Matter’s
accounts[] and[, thus,] there … can be no doubt that they fall
squarely within the scope of the [A]rbitration [A]greement.
Id. at 17-19 (citations to record, some paragraph breaks, and some internal
brackets omitted).
The Estate counters that the trial court was correct in denying
Appellants’ request to compel arbitration, as “even broad arbitration clauses
will not encompass every possible dispute between the parties.” Estate’s Brief
at 15. The Estate insists that its crossclaims “do not relate to the accounts
themselves[] but[,] rather[,] to misrepresentations, omissions[,] or errors
made by [Edward Jones’s] employees[,]” and that these “are not the type of
claims the parties intended to submit to arbitration when they executed their
agreements.” Id. at 18. Alternatively, the Estate argues that its claims fall
outside the scope of the Arbitration Agreement because they consist of tort
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claims which are independent of the underlying contract terms agreed upon
by the parties. Id. at 19. For the following reasons, we agree with Appellants.
Giving paramount importance to the intent of the parties, we look to the
language of the Arbitration Agreement, which states, in relevant part:
Any controversy arising out of or relating to any of [Mr.
Matter’s] account(s) from its inception, business,
transactions or relationships [Mr. Matter has] now, had in
the past or may in the future have with [Edward Jones], its
current and/or future officers, directors, partners, agents,
affiliates and/or employees, this Agreement, or to the
breach thereof, or transactions or accounts maintained by [Mr.
Matter] with any of [Edward Jones’s] predecessor or successor
firms by merger, acquisition or other business combinations shall
be settled by arbitration in accordance with the FINRA Code of
Arbitration Procedure rules then in effect.
Preliminary Objections at Exhibit 4 (Account Agreement at 6 ¶17(a))
(emphases added).
Based on the plain language of the Arbitration Agreement, we believe
the parties intended to include not only any controversy arising out of or
relating to the Account Agreement and/or the breach thereof, but also any
dispute arising from or relating to Mr. Matter’s and/or the Estate’s accounts,
business dealings, and relationships with Edward Jones and its employees. No
limitations have been imposed by the parties to exclude certain types of
disputes from arbitration, nor have the parties imposed any temporal
restrictions. See id. (including all accounts, business, transactions, and
relationships that Mr. Matter “[has] now, had in the past or may in the future
have with [Edward Jones]”). We cannot imagine any broader language. See
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Provenzano v. Ohio Valley General Hosp., 121 A.3d 1085, 1096 (Pa.
Super. 2015) (“A ‘broad’ arbitration clause in a contract is one that is
unrestricted, contains language that encompasses all disputes which relate to
contractual obligations, and generally includes ‘all claims arising from the
contract regardless of whether the claim sounds in tort or contract.’”).
In fact, we deem the language contained in the Arbitration Agreement
to be “unlimited,” as it is just as broad — if not more expansive — than general
arbitration provisions requiring “any controversy arising out of or relating to”
a contractual agreement or the breach thereof to be settled by arbitration,
which have long been viewed by our courts as unlimited arbitration clauses.
See Borough of Ambridge Water Authority v. Columbia, 328 A.2d 498,
501 (Pa. 1974) (declaring that a provision stating “any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled by arbitration” consists of “the broadest conceiving language from
which it must be concluded that the parties intended the scope of the
submission to be unlimited”); Smay, 864 A.2d at 1274 (concluding that an
arbitration clause, which provides “[a]ny controversy or [c]laim arising out of
or related to the [c]ontract, or the breach thereof, shall be settled by
arbitration[,]” is “unlimited” and “encompasses all disputes that relate to a
contractual obligation”). “Where … there is an unlimited arbitration clause,
any dispute which may arise between the parties concerning the principal
contract is to be settled pursuant to its terms.” Ambridge, 328 A.2d at 501
(emphasis added). See also Callan, 858 A.2d at 1233 (“Where a contract
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dispute arises between parties to a contract containing an unlimited arbitration
clause, the parties must resolve their dispute through arbitration.”)
(emphasis added).
Here, the Estate’s crossclaims are premised on Appellants’ alleged
breach of duties it claims Appellants owed to the Estate. These alleged duties
stem from the Account Agreements signed by the parties and from Edward
Jones’s role as the holder of the accounts for Mr. Matter and the Estate. We
fail to see how claims regarding the breach of duties arising from the Account
Agreements themselves, the mishandling of confidential information
pertaining to the accounts, and/or the failure to disclose pertinent information
regarding a potential beneficiary to the accounts can be viewed as falling
“outside the scope” of the Arbitration Agreement. See TCO at 2 ¶1. See also
Saltzman v. Thomas Jefferson University Hospitals, Inc., 166 A.3d 465,
477 (Pa. Super. 2017) (quoting Provenzano v. Ohio Valley General Hosp.,
121 A.3d 1085, 1096 (Pa. Super. 2015) (“[W]here the arbitration provision is
a broad one, and ‘[i]n the absence of any express provision excluding a
particular grievance from arbitration, … only the most forceful evidence of a
purpose to exclude the claim from arbitration can prevail.’”)). Thus, we
conclude that the trial court erred in finding that the Estate’s crossclaims are
not encompassed by the broad language of the Arbitration Agreement.
Moreover, we reject the Estate’s argument that its crossclaims fall
outside the scope of the Arbitration Agreement to the extent that they consist
of tort claims. See Estate’s Brief at 19. It is well-settled:
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An agreement to arbitrate disputes arising from a contract
encompasses tort claims where the facts which support a tort
action also support a breach of contract action. A claim’s
substance, not its styling, controls whether the complaining party
must proceed to arbitration or may file in the court of common
pleas.
Callan, 858 A.2d at 1233 (internal citations omitted).
As we have previously explained,
[t]his Court has consistently compelled the arbitration of tort
claims arising from a contractual relationship where the language
of the arbitration clause is broad and unlimited. See, e.g.,
Callan, 858 A.2d at 1234 (holding that tort claim arising from real
estate sales contract was subject to arbitration); Warwick Twp.
Water and Sewer Auth. v. Boucher & Jaines, Inc., 851 A.2d
953, 958 (Pa. Super. 2004) (“[G]iven the broad scope of the
arbitration language which provides that arbitration is to be the
preferred means to resolve all claims arising out of or relating to
the contract documents, it was improper for the trial court to rule
that the arbitration provision does not apply to the negligence
claim.”); Pittsburgh Logistics Sys., Inc. v. Prof’l Transp. and
Logistics, Inc., 803 A.2d 776, 779 (Pa. Super. 2002) (holding
that tort action for misappropriation of trade secrets, breach of
common law fiduciary duties, and interference with contractual
relationship was within the scope of parties’ broad arbitration
agreement).
Saltzman, 166 A.3d at 478-79. See also Pittsburgh Logistics Sys., Inc.,
803 A.2d at 780 (citing Shadduck v. Christopher J. Kaclik, Inc., 713 A.2d
635, 638-39 (Pa. Super. 1998) (explaining that the Shadduck Court
concluded all claims were covered by unlimited arbitration agreement after
determining the factual averments of the tort claims underlie the breach of
contract claims and therefore are not temporally or factually distinct)).
In the instant matter, the Arbitration Agreement is broadly worded and
there is no evidence demonstrating the parties’ intent to exclude tort claims
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arising from or relating to the Account Agreements or from the Estate’s
business, transactions, or relationships with Appellants. Additionally, we
conclude that the facts averred in the Estate’s tort claims also support a
breach of contract action; neither is temporally or factually distinct. See
Callan, supra; Pittsburgh Logistics Sys., Inc., supra. We are convinced
that the parties intended to submit all of their grievances to arbitration,
regardless of whether they sounded in tort or contract.
Accordingly, we reverse the portion of the trial court’s April 12, 2022
order denying Appellants’ preliminary objections in the nature of a petition to
compel arbitration of the Estate’s crossclaims and direct the trial court to
compel arbitration of said claims.
Order reversed in part. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 02/10/2023
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