Haviland v. Kline & Specter, P.C.

J-A05018-18
2018 Pa. Super. 67
DONALD E. HAVILAND, JR. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
KLINE & SPECTER, P.C. : No. 1791 EDA 2017
Appeal from the Order Entered May 12, 2017
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 080900336
BEFORE: MURRAY, J., McLAUGHLIN, J., and STEVENS*, P.J.E.
OPINION BY MURRAY, J.: FILED MARCH 22, 2018
Appellant, Donald E. Haviland, Jr. (Haviland), appeals from the order
denying his petition for a preliminary or special injunction to disqualify retired
Judge Mark Bernstein (Bernstein) as the court-appointed neutral arbitrator in
this matter. For the reasons that follow, we quash this appeal.
Haviland and the law firm Kline & Specter (K&S) have been involved in
a long and acrimonious series of disputes. In November 2001, K&S hired
Haviland, who is an attorney, to manage its newly-formed Class Action
Department. The employment agreement between Haviland and K&S
(Employment Agreement) set forth the terms that would control the allocation
of client fees and costs in the event Haviland were to leave K&S. Specifically,
Paragraph 5 of the Employment Agreement stated that Haviland would have
to pay K&S a “referral fee” in the amount of one-third of the total fees he
received for any non-class action matter in which he continued to act as
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* Former Justice specially assigned to the Superior Court.
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counsel after leaving K&S. Employment Agreement, ¶ 5. During his
employment with K&S, Haviland represented the Commonwealth of
Pennsylvania (Commonwealth) in several lawsuits involving major brand-
name prescription drug companies known as the PA-AWP and Lupron Blues
litigation.
In September 2006, Haviland left K&S because the law firm had decided
to close its Class Action Department. Upon leaving, Haviland continued to act
as counsel for the Commonwealth in the PA-AWP and Lupron Blues litigation.
Approximately six months later, Haviland obtained the Commonwealth’s first
favorable settlement with a defendant in those cases.
On July 13, 2007, K&S filed a Petition for the Appointment of an
Arbitrator to adjudicate its dispute with Haviland regarding the apportionment
of costs and fees that Haviland and K&S would receive under the Employment
Agreement stemming from the PA-AWP and Lupron Blues litigation. K&S
contended that Paragraph 5 of the Employment Agreement required Haviland
to pay K&S one-third of the total fees he received from the settlements in the
PA-AWP and Lupron Blues cases. This petition was the genesis of the series
lawsuits and arbitration proceedings and awards that Haviland and K&S
continue to litigate to this day.1
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1 K&S prevailed against Haviland in the arbitration proceedings that began in
July 2007. On October 3, 2011, Haviland was ordered to pay K&S
$5,739,490.15, representing one-third of the fees that he had received in the
PA-AWP and Lupron Blues litigation (plus 6% interest).
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On September 3, 2008, Haviland commenced this action by filing a
praecipe to issue a writ of summons. On November 13, 2008, the trial court
stayed the action pending the outcome of the arbitration proceedings in the
aforementioned related dispute between the parties. On January 22, 2016,
following the arbitration award in the related dispute, Haviland filed a
complaint in the instant action in which he alleged that K&S breached
Paragraph 6 of the Employment Agreement, which governs the allocation of
costs and fees in class-action lawsuits in which Haviland continued to act as
counsel after leaving K&S. Haviland alleged that he was entitled to fees
stemming from several class-action lawsuits (unrelated to the PA-AWP and
Lupron Blues cases) that he handled while working for K&S that he never
received.
On February 2, 2016, K&S filed preliminary objections in which it asked
the trial court to compel Haviland to submit his claims to arbitration pursuant
to Paragraph 10 of Employment Agreement. Paragraph 10 of the Employment
Agreement provides that the parties agreed to enforce the Employment
Agreement “by either binding arbitration under [Pennsylvania’s] Arbitration
Act of 1927 or through court action, at the option of K&S[.]” Employment
Agreement, ¶ 10. On March 17, 2016, the trial court sustained in part and
overruled in part the preliminary objections, remanding the matter to
arbitration pursuant to Paragraph 10 of the Employment Agreement.
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Importantly, the trial court’s March 17, 2016 order required Haviland
and K&S to each appoint an arbitrator and provide notice to all parties of the
individual selected within 20 days of the date of the order. The order further
provided that the named arbitrators for each party were to confer and select
a third, neutral arbitrator within 45 days of the date of the order. The order
stated that if the named arbitrators were unable to agree upon a neutral
arbitrator, the trial court would appoint one.
After both parties selected their arbitrators, the arbitrators convened,
but were unable to agree on a third, neutral arbitrator. Over the course of
the next several months, the trial court successively appointed three neutral
arbitrators, each of whom recused themselves from the case. Two of the
arbitrators left the case after Haviland sought their recusal, and the other
arbitrator recused on his own accord. Thereafter, the trial court appointed
Bernstein.
On January 13 and 19, 2017, in response to Bernstein’s request for
information relating to the dispute, Haviland asked Bernstein to disclose any
conflicts of interest prior to taking any action in this matter. On January 20,
2017, Bernstein responded by email that he was a retired judge from the
Court of Common Pleas of Philadelphia County, that he had presided over
cases involving Haviland’s counsel and other cases involving K&S, and that
since his retirement he had not arbitrated any disputes involving either of the
parties. Haviland’s Petition to Disqualify/Enjoin Bernstein, 4/20/17, Exhibit 5
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(Bernstein Email, 1/20/17). Thus, Bernstein stated that he did not believe
that any conflict existed that would preclude him from serving as a neutral
arbitrator in this case. Id.
On February 18, 2017, however, Bernstein sent Haviland another email
in which he discussed a potential conflict relating to his employment as an
adjunct professor at the Thomas R. Kline School of Law at Drexel University.
Thomas Kline (Kline), one of the named partners at K&S, made a large
donation to the law school, which was renamed in his honor. In the February
18, 2017 email to Haviland’s counsel, Bernstein stated:
By email dated January 20, 2017, a copy of which is
below, I advised that there are no conflicts that would
prohibit my participation in this matter. I can only
imagine that your client is concerned because I am
[sic] adjunct professor at the Thomas R. Kline
[S]chool of [L]aw. I believe that fact is commonly
known and is contained on my C.V. which can be
publicly found on my website
www.judgebernstein.org. What may not be common
knowledge is I have been teaching at Drexel [S]chool
of Law before its name was changed and when it was
known as the Earle Mack [S]chool of [L]aw. Please
advise your clients that there are no conflicts that
would prohibit my participation as an arbitrator in this
matter.
Id. at Exhibit 6 (Bernstein Email, 2/18/2017).
On March 9, 2017, in a letter to Bernstein, Haviland formally motioned
for Bernstein’s recusal based on his employment at the Thomas R. Kline School
of Law at Drexel University. Id. at Exhibit 7 (Letter, 3/9/17). Haviland
asserted that Bernstein was “consciously or subconsciously” predisposed to
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ruling against him because Kline had made a substantial gift to Bernstein’s
employer, was the Chairman of the Board of the law school, and because
Bernstein was under the supervision of Gwen Roseman Stern, the Director of
Trial Advocacy at the law school and the wife of an attorney at K&S. Id.
On April 3, 2017, by email, Bernstein denied Haviland’s motion for
disqualification and recusal. Bernstein explained: “I have no doubt of my
ability to participate as a neutral arbitrator on this panel of arbitrators to
decide the issues presented solely on the basis of the law and evidence.” Id.
at Exhibit 9 (Bernstein Email, 4/3/17). Bernstein maintained that he has
taught at the law school since long before it was renamed the Thomas R. Kline
School of Law and that Kline has no involvement with his teaching at the
school.
On April 20, 2017, Haviland filed with the trial court a petition for a
preliminary or special injunction to enjoin and disqualify Bernstein from acting
as the neutral arbitrator. In addition to the aforementioned alleged potential
conflicts, Haviland argued that Bernstein must recuse for failing to make
complete and timely disclosures of the alleged disqualifying conflicts of
interest. On May 12, 2017, the trial court denied Haviland’s petition to
disqualify Bernstein. The trial court concluded that “a reasonable person
would not question Bernstein’s ability to be impartial[.]” Trial Ct. Op.,
7/17/17, at 8. The court explained:
Bernstein is recently retired from sitting on the bench
for the Court of Common Pleas of Philadelphia and is
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familiar and aware of his duty to be impartial. He was
appointed by this court for his experience and
reputation for integrity and fairness. Bernstein is an
adjunct professor and does teach two courses at the
Thomas R. Kline School of Law, Advanced Evidence
and Pennsylvania Practice. The courses were
designed by Bernstein at the request of the then Dean
Roger Denis. These courses are the same two courses
he taught when the law school was known as [the]
Earle Macke School of Law. Kline had nothing to do
with Bernstein’s position at the law school and
continues to have no involvement in Bernstein’s
teaching of these courses. Similarly, as for the
allegations that Bernstein is supervised by the wife of
an attorney employed by [K&S], there is no evidence
that Bernstein and Ms. Stern have any contact with
one another at the law school. Based on the
foregoing, one may not reasonably conclude that
Bernstein will be influenced in favor of defendant.
Id. at 7-8.
On May 23, 2017, Haviland filed a timely notice of appeal. 2 On August
3, 2017, K&S responded by filing an application to dismiss on the basis that
Haviland had filed an appeal from a non-appealable order. On September 14,
2017, this Court, by per curiam order, denied the application without prejudice
to K&S’s right to raise the issue before the merits panel.
On appeal, Haviland presents the following issue for our review:
Whether the trial court erred in improperly and
reflexively denying [Haviland]’s Petition for Injunctive
Relief, without a hearing or argument, where ample
evidence demonstrated the need to enjoin this
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2 The trial court did not order Haviland to file a concise statement of errors
complained of on appeal pursuant to Rule 1925(b) of the Pennsylvania Rules
of Appellate Procedure. The trial court, however, did author an opinion in
support of its decision.
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arbitration from proceeding with [Bernstein] as the
purported “neutral arbitrator,” because of his
significant conflicts of interest, which he repeatedly
resisted even disclosing.
Haviland’s Brief at 2.
Before discussing the issue raised by Haviland, we address K&S’s
application to dismiss this appeal, as it implicates our jurisdiction. K&S argues
that we should quash Haviland’s appeal as interlocutory.
In support of this argument, K&S first asserts that the trial court’s order
denying Haviland’s petition to disqualify Bernstein from acting as the neutral
arbitrator is an interlocutory order that is not appealable as of right or as a
collateral order. In his answer, Haviland responds by arguing that because he
is appealing from an order denying a petition to enjoin Bernstein from acting
as the neutral arbitrator, the order is appealable as of right under Rule
311(a)(4) of the Pennsylvania Rules of Appellate Procedure as an order
denying an injunction.
This Court may address the merits of an appeal taken from “(a) a final
order or an order certified as a final order; (2) an interlocutory order
[appealable] as of right; (3) an interlocutory order [appealable] by
permission; or (4) a collateral order.” Commerce Bank v. Kessler, 46 A.3d
724, 728 (Pa. Super. 2012), quoting Stahl v. Redcay, 897 A.2d 478, 485
(Pa. Super. 2006) (citations omitted); see also Pa.R.A.P. 341(b). “As a
general rule, only final orders are appealable, and final orders are defined as
orders disposing of all claims and all parties.” Am. Indep. Ins. Co. v. E.S.,
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809 A.2d 388, 391 (Pa. Super. 2002); see also Pa.R.A.P. 341(a) (“[A]n
appeal may be taken as of right from any final order of a government unit or
trial court.”).
The May 12, 2017 order denying Haviland’s petition to disqualify does
not constitute a final order as defined by Rule 341(b). The order plainly does
not dispose of all claims and all parties, as Haviland sought the recusal of
Bernstein prior to the arbitration award in this case. Haviland does not dispute
this assessment. Rather, Haviland asserts that the order is appealable under
Rule 311(a), which governs appeals as of right from interlocutory orders, as
an order denying an injunction. Rule 311(a)(4) permits an interlocutory
appeal as of right taken from an order “granting, continuing, modifying,
refusing or dissolving injunctions or refusing to dissolve or modify injunctions.”
Pa.R.A.P. 311(a)(4).
Haviland titled his motion seeking the recusal of Bernstein as follows:
“Plaintiff Haviland’s Petition For A Preliminary Or Special Injunction To Enjoin
And Disqualify Mark I. Bernstein From Acting As The ‘Neutral’ Arbitrator.”
Petition to Enjoin and Disqualify, 4/20/17. Although Haviland asks this Court
to interpret his petition to enjoin and disqualify as a request for injunctive
relief, our review of the petition reveals that Haviland sought nothing more
than for the trial court to order the disqualification or recusal of Bernstein as
arbitrator. See id. This Court has held that “[f]or purposes of considering
timeliness of appeals we must look beyond the title to the contents and
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substance of the motion in order to characterize it.” Maliszewski v. Rendon,
542 A.2d 170 n.1 (Pa. Super. 1988); see also Bucks Orthopaedic Surgery
Assocs., P.C. v. Ruth, 925 A.2d 868, 871 (Pa. Super. 2007); Walt Med. v.
Electro-Nucleonics, 583 A.2d 492, 494 n.2 (Pa. Super. 1990);
Fortune/Forsythe v. Fortune, 508 A.2d 1205, 1208 (Pa. Super. 1986).
Accordingly, we characterize Haviland’s petition to enjoin and disqualify as a
motion for the recusal of Bernstein as the neutral arbitrator in this matter.
The question of whether we have jurisdiction to review the merits of
Haviland’s appeal turns on whether an order denying a pre-award petition to
disqualify an arbitrator is an appealable non-final order. Although we have
been unable to locate a case directly on point, we conclude that the case law
addressing the interlocutory nature of pre-trial recusals of trial judges is
persuasive and instructive. See Sheehan v. Nationwide Ins. Co., 779 A.2d
582, 584-85 (Pa. Super. 2001) (analogizing the recusal of arbitrator to the
recusal of a trial judge); see also 231 Pa. Code § 1302(e) (stating that any
arbitrator “who would be disqualified for any reason that would disqualify a
judge under the Code of Judicial Conduct shall immediately withdraw as an
arbitrator”).
In support of its position that we should dismiss Haviland’s appeal as
interlocutory, K&S relies on this Court’s decision in In re Bridgeport Fire
Litigation, 51 A.3d 224 (Pa. Super. 2012). In Bridgeport Fire, the
appellants filed a motion seeking the recusal of the trial judge presiding over
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their class action litigation, which the trial court denied after its approval of
the settlement agreements. Id. at 227-28. On appeal from that order, this
Court issued a rule to show cause as to why the appellants’ appeal should not
be quashed as interlocutory. Id. at 229. This Court noted that the trial court’s
“order denying [Certain Class Plaintiffs’] motion for recusal appears to be
premature since an order on a motion for recusal is an interlocutory order for
purposes of an appeal.” Id. The appellants asserted that if the appeal from
the order denying their motion for recusal was not ripe for review, it would
never be reviewable because all of the issues in the case had been resolved.
Id.
This Court initially agreed with the appellants that the case represented
“a ‘somewhat anomalous situation’ in that the trial court’s order denying the
motion to recuse was not filed until after final judgment was entered in this
case and the appeals from the final judgment and all prior interlocutory orders
were decided.” Id. The panel observed, however, that there were still several
motions relating to the settlement of the class action lawsuit awaiting the trial
court’s determination. Id. at 230. Thus, this Court held that the appropriate
time for review of the order denying the appellants’ motion for recusal was
after the resolution of those motions and quashed the appeal. Id. at 230-31.3
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3 Haviland asserts that Bridgeport Fire was an appeal from an order denying
an injunction, and as such, this Court concluded that it was immediately
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Indeed, this Court has routinely held that a pre-trial motion seeking to
recuse a judge from further proceedings is not a final order. See In re
Bridgeport Fire Litig., 51 A.3d at 229 (“an order on a motion for recusal is
an interlocutory order for purposes of an appeal”); see also Rohm and Haas
Co. v. Lin, 992 A.2d 132, 149 (Pa. Super. 2010); Krieg v. Krieg, 743 A.2d
509, 511 (Pa. Super. 1999); Hahalyak v. Integra Fin. Corp., 678 A.2d 819
(Pa. Super. 1996); Kenis v. Perini Corp., 682 A.2d 845 (Pa. Super. 1996).
Additionally, this Court has stated that an appeal from the denial of a pre-trial
motion to recuse does not fall within any of the categories listed in Rules 311
(Interlocutory Appeals as of Right) or 313 (Collateral Orders)4 of the
Pennsylvania Rules of Appellate Procedure and that consequently, appeals
from such orders are premature. Krieg, 743 A.2d at 511.
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appealable as of right. Answer to Application to Dismiss, 8/21/17, at 11.
Clearly, as discussed above, this is not what occurred in Bridgeport Fire.
4 Rule 313 provides:
(a) General rule. An appeal may be taken as of right
from a collateral order of an administrative agency or
lower court.
(b) Definition. A collateral order is an order
separable from and collateral to the main cause of
action where the right involved is too important to be
denied review and the question presented is such that
if review is postponed until final judgment in the case,
the claim will be irreparably lost.
Pa.R.A.P. 313.
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Therefore, we hold that an order denying a motion seeking the recusal
or disqualification of an arbitrator, as with an order denying the recusal of a
trial judge, is not a final order or an interlocutory order appealable as of right
or a collateral order. This conclusion comports with Section 7320 of the
Uniform Arbitration Act, which governs appeals from court orders in arbitration
matters. Section 7320 provides as follows:
(a) General rule.--An appeal may be taken from:
(1) A court order denying an application to compel
arbitration made under section 7304 (relating to
proceedings to compel or stay arbitration).
(2) A court order granting an application to stay
arbitration made under section 7304(b).
(3) A court order confirming or denying
confirmation of an award.
(4) A court order modifying or correcting an award.
(5) A court order vacating an award without
directing a rehearing.
(6) A final judgment or decree of a court entered
pursuant to the provisions of this subchapter.
(b) Procedure.--The appeal shall be taken in the
manner, within the time and to the same extent as an
appeal from a final order of court in a civil action.
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42 Pa.C.S.A. § 7320. Nowhere does Section 7320 state that, under the
Uniform Arbitration Act, an appellant may appeal an order denying a motion
or petition seeking the recusal or disqualification of an arbitrator.5
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5 As mentioned above, the Employment Agreement provides that any issue
relating to the enforcement of the agreement is to be governed by the
Arbitration Act of 1927, 5 P.S. § 161 et seq. The Arbitration Act of 1927 was
repealed and replaced by the Pennsylvania Uniform Arbitration Act of 1980,
42 Pa.C.S.A. §§ 7301-7320. Despite the repeal of the 1927 Act, “parties
remain free to agree to proceed according to the 1927 Act.” See Pantellis
v. Erie Ins. Exch., 890 A.2d 1063, 1065 (Pa. Super. 2006).
Nevertheless, this Court has held that the 1980 ACT controls the manner
and time for taking arbitration appeals. We explained:
[E]ven if the parties are in agreement that this matter
was to be resolved under the 1927 Act, that
agreement does not, and cannot, dictate which act
governs the taking of an appeal. Section 175 of the
1927 Act has been repealed, and Section 7320 of the
1980 Act now controls the manner and time for the
taking of statutory arbitration appeals. Cf. Seay v.
Prudential Prop[.] and Cas[.] Ins. Co., [] 543 A.2d
1166 ([Pa. Super.] 1988) (where terms of insurance
contract called for arbitration in accordance with
provisions of 1927 Act, 42 Pa.C.S.[A.] § 7320 still
governed appealability of order confirming arbitration
award).
Moreover, a review of 5 P.S. § 175 of the 1927 Act
reveals that it closely tracks the language of 42
Pa.C.S.[A.] § 7320. Hence, were we to find that the
provisions of the 1927 Act govern the taking of this
appeal, we would nonetheless reach the same result
infra.
Dunlap by Hoffman v. State Farm Ins. Co., 546 A.2d 1209, 1210 (Pa.
Super. 1988)
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Accordingly, because the trial court’s May 12, 2017 denying Haviland’s
petition to disqualify Bernstein is not a final order or an interlocutory order
appealable as of right or a collateral order,6 we do not have jurisdiction to
review the merits, and therefore quash the appeal.
Appeal quashed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/22/18
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6 We also note that Haviland did not seek an appeal pursuant to Pennsylvania
Rule of Appellate Procedure 312, which governs interlocutory appeals by
permission. See Pa.R.A.P. 312.
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