All Star Building v. Schmidt, E.

J. A12031/19
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
ALL STAR BUILDING, INC. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
EDWARD THOMAS SCHMIDT, : No. 1639 WDA 2018
:
Appellant :
Appeal from the Order Entered October 18, 2018,
in the Court of Common Pleas of Westmoreland County
Civil Division at No. 4187 of 2018
BEFORE: BENDER, P.J.E., DUBOW, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED JULY 11, 2019
Edward Thomas Schmidt appeals from the October 18, 20181 order
entered in the Court of Common Pleas of Westmoreland County denying his
motion to vacate the arbitration award and granting All Star Building, Inc.’s
petition to confirm the arbitration award in the amount of $49,124.79. We
affirm.
The trial court set forth the following factual and procedural history:
The above-captioned case began as a breach of
contract action instituted by All Star Building, Inc.
(hereinafter referred to as “ASB”) against [appellant].
The contract at issue was entered into between the
parties on March 31, 2015 and addressed the
construction of a residence in Jeannette,
1 We note that appellant’s notice of appeal states that this is an appeal of the
order entered October 15, 2018. The order, while dated October 15, 2018,
was not entered until October 18, 2018. The caption has been amended to
reflect the date the order was entered.
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Pennsylvania. According to the claim raised by ASB,
[appellant] breached the contract because he moved
into the constructed residence prior to substantial
completion, but failed to pay the remaining balance
immediately upon doing so, as required under the
contract. As a result of the alleged breach, ASB
sought $88,031 in damages. [Appellant] counter-
claimed, arguing that ASB’s failure to obtain a building
permit before beginning construction was a breach of
the contract that occurred prior to any potential
breach on his part, which then relieved him of any
obligation to perform on the contract. As a result of
the alleged breach, [appellant] sought damages in an
amount exceeding $120,000.
In accordance with the terms of the contract, the
parties’ claims were submitted to binding arbitration
pursuant to the American Arbitration Association
under the Construction Industry Arbitration Rules.
Arbitration hearings were held January 22, 2018 to
January 25, 2018 and on January 30, 2018. On
August 16, 2018, the Arbitrator rendered a decision
granting ASB $88,031 on its contract claim plus
interest and granting [appellant] $45,067.17 on his
counterclaim.
The matter first came before this Court on
[appellant’s] Motion to Vacate Arbitration Award
Pursuant to 42 Pa.C.S.A. §7342(b), which was filed on
September 17, 2018. [Appellant] argued that this
Court should vacate the Arbitrator’s decision because
it was based on an irregularity that led to an unjust,
inequitable and unconscionable result. According to
[appellant], the irregularity existed because the
Arbitrator ignored ASB’s illegal construction, which
preceded any breach that may be attributed to
[appellant], and as a result the Arbitrator’s award
enforced the illegal performance of a contract, which
is unjust, inequitable and unconscionable. In
response to said motion, ASB filed a Petition to
Confirm Arbitration Award, arguing that [appellant]
failed to establish an irregularity in the Arbitrator’s
process itself to justify this Court in vacating the
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award, and asking this Court to enter judgment in its
favor.
Counsel for both parties appeared for oral argument
on the matter, and this Court entered an Order on
October 15, 2018 denying [appellant’s] Motion to
Vacate Arbitration Award pursuant to 42 Pa.C.S.A
§7342(b) and granting ASB’s Petition to Confirm
Arbitration Award.
In accordance with the Rules of Appellate Procedure,
[appellant] then filed a Notice of Appeal on
November 14, 2018. The Court immediately
requested a Concise Statement of Errors Complained
of on Appeal in accordance with Pa.R.A.P. 1925(b).
On December 19, 2018, [appellant] served this Court
with said statement, alleging seven errors of this
Court in reaching its October 15, 2018 Order,
including that this Court erred by determining that the
record provided was insufficient to make a
determination as to whether the process employed by
the arbitrator contained an irregularity and in
determining that [appellant] failed to meet his burden
to show that the process employed by the Arbitrator
contained an irregularity. The following is this Court’s
[Rule 1925(a)] Opinion in support of the October 15,
2018 Order of Court.
Trial court opinion, 1/3/19 at 1-3.
Appellant raises the following issues for our review:
(1) Whether the Court erred by confirming and
refusing to vacate the Arbitrator’s Award by
determining that the record was insufficient to
make a determination as to whether the process
employed by the Arbitrator contained an
irregularity[?]
(2) Whether the Court erred by determining the
evidence submitted by Appellant suggested at
most [an] error of law occurred, thus not
subjecting the arbitration award to reversal[?]
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(3) Whether the Court erred by granting [ASB’s]
Petition to Confirm Arbitration Award, which was
a violation of public policy as it enforced the
illegal performance of a contract[?]
Appellant’s brief at 4.
Preliminarily, we note that this case involves a matter of common law
arbitration because the agreement between the parties does not expressly
provide for statutory arbitration. See 42 Pa.C.S.A. § 7302(a) (stating, “[a]n
agreement to arbitrate a controversy on a nonjudicial basis shall be
conclusively presumed to be an agreement to arbitrate pursuant to
Subchapter B (relating to common law arbitration) unless the agreement to
arbitrate is in writing and expressly provides for arbitration pursuant to this
subchapter [(Subchapter A – Statutory Arbitration)] or any other similar
statute . . . .”).
Our standard of review of common law arbitration is
very limited:
The award of an arbitrator in a nonjudicial
arbitration which is not subject to
statutory arbitration or to a similar statute
regulating nonjudicial arbitration
proceedings is binding and may not be
vacated or modified unless it is clearly
shown that a party was denied a hearing
or that fraud, misconduct, corruption or
other irregularity caused the rendition of
an unjust, inequitable or unconscionable
award.
The arbitrators are the final judges of both law and
fact, and an arbitration award is not subject to
reversal for a mistake of either. A trial court order
confirming a common law arbitration award will be
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reversed only for an abuse of discretion or an error of
law.
U.S. Claims, Inc. v. Dougherty, 914 A.2d 874, 876-877 (Pa.Super. 2006)
(citations, internal quotation marks, parentheses, and brackets omitted),
appeal denied, 928 A.2d 1291 (Pa. 2007). See also 42 Pa.C.S.A. § 7341
(stating that, an award in a common law, nonjudicial arbitration “is binding
and may not be vacated or modified unless it is clearly shown that a party was
denied a hearing or that fraud, misconduct, corruption or other irregularity
caused the rendition of an unjust, inequitable or unconscionable award.”).
“The appellant bears the burden to establish both the underlying irregularity
and the resulting inequity by clear, precise, and indubitable evidence.”
Toll Naval Associates v. Chun-Fang Hsu, 85 A.3d 521, 525 (Pa.Super.
2014) (citations and internal quotation marks omitted).
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.
Id. at 529, citing Allstate Ins. Co. v. Fioravanti, 299 A.2d 585, 589 (Pa.
1973).
Here, appellant first claims the trial court erred when it concluded that
there was insufficient evidence to find that an irregularity in the process
employed by the arbitrator had occurred and that the trial court, therefore,
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had no legal basis to vacate the arbitration award. (Appellant’s brief at 9, 11.)
Appellant argues that the deposition transcript of Michael Stack, the chief
building inspector for Penn Township, was sufficient evidence of the “the
enforcement of illegal performance of a contract” which, appellant claims, was
the irregularity in the process employed by the arbitrator. (Id.)
The trial court explained that:
[t]he hearings held before the Arbitrator were not
transcribed. In addition, the decision of the Arbitrator
did not include an Opinion supporting the award of
damages, and no explanation was provided by the
Arbitrator as to how the decision made was reached.
. . . . [T]he record provided to this Court did nothing
to show the process employed by the Arbitrator in
reaching her result. Without a transcript of the
hearings, this Court could not compare the deposition
testimony of Michael Stack to witnesses heard by the
Arbitrator at the hearing. Without a reasoned decision
from the Arbitrator, this Court had no knowledge of
how the Arbitrator weighed the credibility of Michael
Stack in comparison to other witnesses, no knowledge
of how the Arbitrator made her findings of fact and
conclusions of law, and no knowledge as to how the
testimony and evidence presented before her affected
her determination as to whether or not the contract
was performed illegally in contravention of public
policy. Instead, the evidence provided merely showed
the Arbitrator’s break down of how the damages were
awarded to each party.
Trial court opinion, 1/3/19 at 4 (footnote omitted).
The trial court did not abuse its discretion in concluding that without a
written opinion or a hearing transcript, there was insufficient evidence to
determine whether an irregularity in the process had occurred. Appellant has
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failed to meet his burden of presenting clear, precise, and indubitable evidence
that an irregularity occurred in the process employed by the arbitrator.
Consequently, appellant’s claim fails.
In his second and third issues, appellant claims that the trial court’s
refusal to vacate the arbitration award resulted in the enforcement of an illegal
contract and a violation of public policy. (Appellant’s brief at 12-22.) We
agree with the trial court’s conclusion that without a reasoned decision by the
arbitrator or a transcript of the hearing, there is “no knowledge of how the
testimony and evidence presented before [the arbitrator] affected her
determination as to whether or not the contract was performed illegally in
contravention of public policy.” (Trial court opinion, 1/3/19 at 4.) Appellant’s
claims, therefore, lack merit.
Consequently, we discern no error of law or abuse of discretion in the
trial court’s confirmation of the arbitrator’s award.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/11/2019
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