U.S. Spaces, Inc. v. Berkshire Hathaway Home Services, Fox & Roach

J-A06003-17
2017 PA Super 174US SPACES, INC. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
BERKSHIRE HATHAWAY HOMESERVICES,
FOX & ROACH
No. 2354 EDA 2016
Appeal from the Order Entered July 7, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): XX-XXXXXXX
BEFORE: PANELLA, J., SHOGAN, J., and RANSOM, J.
OPINION BY PANELLA, J. FILED JUNE 05, 2017
Rules 206.1 – 207.7 of the Rules of Civil Procedure govern civil petition
practice in Pennsylvania. These rules provide that petition practice will
proceed through the issuance, to the respondent, of a rule to show cause
why the relief requested should not be granted. See Pa.R.C.P. 206.4. As a
default, the decision to issue such a rule is discretionary with the trial court.
See id. However, the Courts of Common Pleas are permitted to adopt a local
rule that modifies the default and instead provides for issuance of the rule to
show cause “as of course.” Pa.R.C.P. 206.4(a)(1).
In this appeal, we are asked to determine whether a trial court can
decide to refuse to issue a rule to show cause where a local rule provides for
issuance “as of course.” We conclude that the adoption of such a local rule
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acts to constrain the discretion of the trial court in all but the most egregious
cases. We therefore reverse and remand for further proceedings.
On June 24, 2016, Appellant U.S. Spaces, Inc., filed a petition to
vacate an arbitration award in the Philadelphia Court of Common Pleas. In
its petition, U.S. Spaces asserted that a dispute over its entitlement to
realtor fees between itself and Appellee, Berkshire Hathaway Home Services,
Fox & Roach, had been submitted to arbitration in accordance with the
professional association that both parties are affiliated with. The arbitration
panel was scheduled to hear the matter on April 25, 2016. However, the
panel declined to hold a hearing due to the absence of U.S. Spaces’s broker
of record, who was not scheduled to be a witness at the proceeding.
Implicit in the petition’s allegations is that the panel entered a final
decision against U.S. Spaces. U.S. Spaces appealed the panel’s decision to a
procedural review tribunal pursuant to the association’s arbitration rules.
That tribunal affirmed the original panel’s decision on June 10, 2016. U.S.
Spaces subsequently requested that the Court of Common Pleas vacate the
arbitration award under 42 Pa.C.S.A. 7341, common law arbitration, on the
basis that it was denied a full and fair hearing of its claims.
The Court of Common Pleas reviewed U.S. Spaces’s petition and did
not issue a rule to show cause. Rather, it entered an order denying the
petition on July 7, 2016. U.S. Spaces then filed this timely appeal.
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As noted previously, Pa.R.C.P. 206.4 provides the Courts of Common
Pleas two options in responding to the filing of a petition. The default option,
codified in Pa.R.C.P. 206.5, provides the court discretion in whether to issue
a rule to show cause when presented with a petition. The alternative,
codified in Pa.R.C.P. 206.6, must be chosen by the adoption of a local rule
and provides for the issuance of a rule to show cause “as of course.”
The purpose of Rules 206.5 through 206.7 is to create a record
from which the court may determine disputed issues of fact
raised by the petition and answer. If the answer does not raise
disputed issues of fact, then the petition and answer are ready
for decision by the court without the fact-finding process and
new Rule 206.7(b) so states.
Pa.R.C.P. 206.4, Comment.
If a respondent does not file an answer to a rule to show cause, “all
averments of fact in the petition may be deemed admitted[.]” Pa.R.C.P.
206.7(a). “The rule provides some flexibility by giving the court discretion to
consider an answer not timely filed. If an answer is never filed, there would
be little basis upon which the court might exercise its discretion and the
averments of fact in the petition would be deemed admitted.” Pa.R.C.P.
206.7, Comment. If the respondent files an answer that does not raise
issues of material fact, the petitioner may request that the court decide the
matter as a matter of law. See Pa.R.C.P. 206.7(b).
Where a respondent files an answer raising issues of material fact,
both parties are entitled to proceed with discovery as permitted by the court.
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See Pa.R.C.P. 206.7(c), (d). The burden, however, rests with the petitioner
to establish its right to relief. See Pa.R.C.P. 206.7(c).
The scheme set forth by Rules 206.1 – 206.7 provides flexibility for
courts to handle petitions in a manner consistent with the need for
consistent docket management. In counties that do not adopt a local rule,
the default provides that the court will act as a “gatekeeper,” reviewing
petitions for their merit. The level of proof that the rule requires to be
appended to such petitions is an issue not currently before us. At the very
least, however, it is clear that, under the default rule, the court has the
discretion to deny the issuance of a rule to show cause on a wide variety of
grounds.
In contrast, those counties that adopt a local rule providing for the
issuance of a rule to show cause “as of course” do so to limit not only the
time spent by the court in reviewing petitions initially, but also to limit the
necessity of appending volumes of evidence to the petition. If the local rule
requires the issuance of a rule to show cause “as of course,” the only valid
reason to deny the issuance of a rule to show cause is if the allegations in
the petition, taken as true, do not provide for a legal remedy. It is left to the
parties to narrow down the relevant issues at stake through the filing of the
petition and any subsequent answers. A petitioner need not append any
evidence to its petition, as any allegation in the petition may be admitted to
by the respondent, thereby obviating the need for proof.
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Here, it is undisputed that the Court of Common Pleas of Philadelphia
County has adopted a local rule pursuant to Pa.R.C.P. 206.4. The local rule
provides for the issuance of a rule to show cause “as of course” for any
petition, as set forth in Pa.R.C.P. 206.6. See Phila.Civ.R. 206.4(c). The local
rules also provide that a “Petition to Set Aside Arbitration Award” is a
petition subject to the mandates of Pa.R.C.P. 206.1 – 206.7. See
Phila.Civ.R. 206.1(a).
It is furthermore undisputed that Berkshire Hathaway Home Services,
Fox & Roach did not file an answer in the Court of Common Pleas, as the
court did not issue a rule to show cause. Thus, the only valid basis for the
court’s decision is that the allegations in U.S. Spaces’s petition, taken as
true, do not provide a legal basis for relief.
U.S. Spaces conceded in the court below that this matter was
governed by the rules for common law arbitration. See Petitioner’s Brief in
Support of Petition to Vacate Arbitration Award, 6/24/16, at *3 (pages
unnumbered in document). The Judicial Code provides that 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.” 42 Pa.C.S.A. § 7341.
Judicial review of a common law arbitration award is severely limited
as otherwise arbitration would be an unnecessary stage of litigation, causing
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only delay and expense without settling the dispute. See Cargill v.
Northwestern Nat’l Ins. Co., 462 A.2d 833, 834 (Pa. Super. 1983).
The arbitrators are the final judges of both law and fact, and an
arbitration award is not subject to a reversal for a mistake of
either. Neither we nor the trial court may retry the issues
addressed in arbitration or review the tribunal's disposition of the
merits of the case. Rather, we must confine our review to
whether the appellant was deprived of a hearing or whether
fraud, misconduct, corruption or other irregularity tainted the
award. The appellant bears the burden to establish both the
underlying irregularity and the resulting inequity by clear,
precise, and indubitable evidence. In this context, irregularity
refers to the process employed in reaching the result of the
arbitration, not to the result itself.
McKenna v. Sosso, 745 A.2d 1, 4 (Pa. Super. 1999) (internal citations and
quotation marks omitted). “[T]he right to a fair hearing comprises the right
to notice and the right to an opportunity to be heard.” Id. (citation omitted).
Here, U.S. Spaces has alleged that it was denied its right to an
opportunity to be heard when the arbitration panel decided the matter
without a hearing. It asserts that the arbitration panel’s decision that the
broker of record was required to be present was contrary to the rules agreed
upon by the parties for arbitration of disputes. We cannot conclude that
these allegations are insufficient as a matter of law. Under § 7341, these
allegations, if proved, are sufficient to vacate the arbitration award. We
therefore reverse and remand for further proceedings.
Order reversed. Case remanded for proceedings consistent with this
opinion. Jurisdiction relinquished.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/5/2017
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