Civan, E. v. Windermere Farms, Inc. , 180 A.3d 489 ( 2018 )

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2018 PA Super 42ETHAN CIVAN AND ELANA CIVAN, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellants :
:
v. :
:
WINDERMERE FARMS, INC. AND :
GAMBONE BROTHERS DEVELOPMENT :
COMPANY, :
:
Appellees : No. 1559 EDA 2017
Appeal from the Order Dated April 12, 2017
in the Court of Common Pleas of Montgomery County
Civil Division at No(s): 2006-26794
ETHAN CIVAN AND ELANA CIVAN, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellants :
:
v. :
:
WINDERMERE FARMS, INC. AND :
GAMBONE BROTHERS DEVELOPMENT :
COMPANY, :
:
Appellees : No. 1560 EDA 2017
Appeal from the Order Dated April 11, 2017
in the Court of Common Pleas of Montgomery County
Civil Division at No(s): 2006-26794
BEFORE: LAZARUS, PLATT,* and STRASSBURGER,* JJ.
OPINION BY STRASSBURGER, J.: FILED FEBRUARY 27, 2018
Ethan Civan and Elana Civan (the Civans) appeal from orders entered
April 11, 2017, and April 12, 2017, wherein the trial court granted the
petition of Gambone Brothers Development Company (Gambone) to vacate
*Retired Senior Judge assigned to the Superior Court.
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the arbitration award of July 29, 2008, and denied the Civans’ petition to
confirm the July 29, 2008 arbitration award as to Gambone. We affirm both
orders.
On December 5, 2006, the Civans filed a complaint against
Windermere Farms, Inc. (Windermere) and Gambone related to alleged
faulty construction of a new home sold by Windermere to the Civans
pursuant to an agreement of sale. Gambone is not a party to the agreement
of sale, but the Civans averred that Gambone designed and constructed the
home. Complaint, 12/5/2006, at ¶ 9. The counts asserted against
Gambone included negligence, breach of implied warranties, fraud,
conspiracy, and violations of the Unfair Trade Practices and Consumer
Protection Law (UTPCPL), 73 P.S. §§ 201-1–201-9.3.
Windermere and Gambone filed joint preliminary objections to the
complaint, asserting, inter alia, that the court must dismiss the action
against Windermere with prejudice in favor of arbitration due to the
existence of an agreement between the Civans and Windermere that
required the Civans to submit to binding arbitration all claims related to the
agreement of sale and construction of the home. Preliminary Objections,
12/22/2006, at ¶ 13.
While the preliminary objections were still pending, the Civans filed a
motion seeking to compel arbitration against both Gambone and
Windermere. The Civans argued that although Gambone was not a party to
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the agreement of sale, it was a third-party beneficiary subject to the
arbitration clause. Motion to Compel Arbitration, 2/7/2007, at 2.
Windermere and Gambone did not file responses to the motion to compel
arbitration.
On April 26, 2007, the trial court granted the motion to compel
arbitration, stating, “the parties shall enter private arbitration in accordance
with the parties’ agreement.” Order, 4/26/2007, at 1. The order did not
specify which parties must enter arbitration.
The Civans and Windermere proceeded to arbitration, but Gambone
refused to participate. Via a letter and subsequent memoranda of law,
Gambone advised the arbitrators that, based upon lack of jurisdiction,
Gambone objected to being included in any arbitration proceeding or award.
Gambone argued it was not subject to any agreement to arbitrate with the
Civans, and jurisdiction over the dispute between the Civans and Gambone
was exclusive to the court of common pleas.
Nevertheless, the Civans persisted in seeking an arbitration award
against Gambone. On July 29, 2008, after finding the panel had jurisdiction
over Gambone, the arbitrators entered an award in favor of the Civans and
against Windermere and Gambone, jointly and severally, for $142,250.
Gambone timely filed a petition to vacate the arbitration award, to which the
Civans responded. Because a praecipe for argument was not filed in
accordance with a local rule of civil procedure, neither the petition nor the
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response was forwarded to a judge for disposition. The case sat stagnant
for eight years until a case management conference on September 28, 2016.
Following the conference, the Civans filed a praecipe for argument of
Gambone’s petition to vacate, rendering the petition ripe for disposition.
The Civans also filed a petition to confirm and enter judgment on the July
29, 2008 arbitration award. After argument regarding both petitions, the
trial court entered two orders: one on April 11, 2017, granting Gambone’s
petition to vacate and vacating the arbitration award as to Gambone (Vacate
Order), and one on April 12, 2017, denying the Civans’ petition to confirm
the arbitration award against Gambone (Denial of Confirmation Order). The
Civans timely filed notices of appeal for each order, and the Civans and the
trial court complied with Pa.R.A.P. 1925.
Before we reach the merits of these appeals, we must consider the
appealability of the Vacate Order and the Denial of Confirmation Order. The
Civans argue that both orders are final orders pursuant to Pa.R.A.P. 341.
The Civans’ Briefs1 at 1. Windermere and Gambone, on the other hand,
urge this Court to quash these appeals for lack of jurisdiction. Windermere
and Gambone contend that both orders are interlocutory orders that do not
1 The Civans’ briefs in both appeals are identical except for the cover page.
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dispose of all claims and all parties and therefore are not final appealable
orders pursuant to Pa.R.A.P. 341.2 Brief of Windermere and Gambone at 1.
Neither party is correct. Notwithstanding that the claims set forth in
the December 5, 2006 complaint against Gambone are still pending in the
court of common pleas by virtue of the vacation of the arbitration award as
to Gambone, this Court has jurisdiction to hear these appeals pursuant to
Pa.R.A.P. 311(a)(8) and 42 Pa.C.S. §§ 7320(a)(3) and (a)(5). See
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 … even though the order does not dispose of all claims
and of all parties.”); 42 Pa.C.S. § 7320(a)(3),(5) (“An appeal may be taken
from … [a] court order confirming or denying confirmation of an award … [or
a] court order vacating an award without directing a rehearing.”).
Thus, we turn our attention to the merits. The Civans ask this Court
to resolve the following questions.
(1) Did the [trial] court, in vacating the arbitration award
against Gambone, exceed the scope of review applicable to
common law arbitration awards?
(2) Did the [trial] court err in finding that [Gambone]
presented clear evidence that Gambone was denied a hearing
or that fraud, misconduct, corruption[,] or other irregularity
caused the rendition of an unjust, inequitable or
2
Windermere and Gambone did not file a brief in No. 1560 EDA 2017, but
argued in its brief submitted in No. 1559 EDA 2017 that neither the Vacate
Order nor the Denial of Confirmation Order was final.
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unconscionable award, the burden of proof required by 42 Pa.
C.S.[] § 7341[?]
(3) Did the [trial] court err in denying [the Civans’] petition to
confirm the common law arbitration award?
The Civans’ Briefs at 6 (suggested answers and unnecessary articles,
quotation marks, and party designations omitted).
We will address the Civans’ first two issues together. Generally, we
use the following standard to review a trial court’s ruling on a petition to
vacate a common law arbitration award.
Judicial review of a common law arbitration award is severely
limited as otherwise arbitration would be an unnecessary stage
of litigation, causing only delay and expense without settling the
dispute. 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.
U.S. Spaces, Inc. v. Berkshire Hathaway Home Servs., Fox & Roach,
165 A.3d 931, 934 (Pa. Super. 2017) (internal citations omitted).
This standard is derived in part from the Uniform Arbitration Act (the
Act), which provides:
[t]he award of an arbitrator in a nonjudicial arbitration which is
not subject to Subchapter A (relating to statutory arbitration) or
a similar statute regulating nonjudicial arbitration proceedings is
binding and may not be vacated or modified unless it is clearly
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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. § 7341.
Here, the Civans and Windermere are parties to an agreement of sale,
whereby the Civans, the “Buyer,” agreed to purchase a lot and a new home
to be constructed by Windermere, the “Seller.” Agreement of Sale,
12/30/1999, at 1. The Agreement of Sale contains an arbitration clause in
paragraph 23, providing that
[a]ny and all disputes arising out of or relating to the sale of the
premises or construction of a house thereon or otherwise arising
out of this Agreement shall be decided by binding arbitration as
the exclusive forum for determination pursuant to Subchapter B
of the Pennsylvania Uniform Arbitration Act (42 Pa. Cons. Stat.
Ann. §73.41 et seq.) being common law arbitration. The dispute
shall be determined by a panel of three arbitrators: one selected
and paid for by the Seller; one selected and paid for by the
Buyer: and the third selected by the Seller’s and the Buyer’s
arbitrators and the cost split equally by the parties. A majority
decision of the arbitrators shall be controlling. … This paragraph
shall survive settlement.
Id. at 3.
The Civans acknowledge that Gambone is not a party to the
Agreement of Sale. The Civans’ Briefs at 8. Nonetheless, the Civans argue
that the trial court’s April 26, 2007 order subjected Gambone to the
jurisdiction of the arbitration panel. Id. at 14. Even if it did not, based
upon the trial court’s narrow standard of review, the Civans argue that since
the arbitration panel ruled that it had jurisdiction over Gambone, the trial
court did not have the authority to substitute its judgment to the contrary.
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Id. at 15. Finally, the Civans argue that Gambone failed to demonstrate
that “fraud, misconduct, corruption, or other irregularity caused the
rendition of an unjust, inequitable or unconscionable arbitration award,” and
stress that Gambone had the opportunity to participate in the arbitration
hearing, but declined to do so. Id. at 18-19.
The April 26, 2007 order, which granted the Civans’ motion to compel
arbitration, stated, “the parties shall enter private arbitration in accordance
with the parties’ agreement.” Order, 4/26/2007, at 1 (emphasis added).
In its Pa.R.A.P. 1925(a) opinion, the trial court offered the following
analysis: “[l]ogic and grammar dictate that ‘the parties’ refers to the same
individuals or entities in both instances. Therefore, the order applied only to
those individuals or entities entering into the agreement. This is consistent
with the general rule that ‘only parties to an arbitration agreement are
subject to arbitration.’” Trial Court Opinion, 7/20/2017, at 11 (citing Elwyn
v. DeLuca, 48 A.3d 457, 461 (Pa. Super. 2012)).
We agree with the trial court that the April 26, 2007 order does not
clearly mandate that Gambone, a non-party to the Agreement of Sale,
submit to arbitration. A court has the power to order the parties to proceed
with arbitration upon an application to compel arbitration. 42 Pa.C.S. §§
7304, 7342(a). However, in order to obtain an order to compel arbitration,
the moving party must show the existence of a valid written agreement to
arbitrate. 42 Pa.C.S. §§ 7303, 7304, 7342(a).
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Arbitration is a matter of contract, and parties to a contract
cannot be compelled to arbitrate a given issue absent an
agreement between them to arbitrate that issue. Even though it
is now the policy of the law to favor settlement of disputes by
arbitration and to promote the swift and orderly disposition of
claims, arbitration agreements are to be strictly construed and
such agreements should not be extended by implication. In
general, only parties to an arbitration agreement are subject to
arbitration. However, a nonparty, such as a third-party
beneficiary, may fall within the scope of an arbitration
agreement if that is the parties’ intent.[3]
Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 661 (Pa. Super. 2013)
(citing Elwyn, 48 A.3d at 461, and Schoellhammer's Hatboro Manor,
Inc. v. Local Joint Executive Board of Philadelphia, 231 A.2d 160, 164
(Pa. 1967) (declining to compel non-signatory of agreement to submit to
arbitration because “arbitration, a matter of contract, should not be
compelled of a party unless such party, by contract, has agreed to such
arbitration”)).
3
In its motion to compel arbitration, the Civans contended that Gambone
was subject to the arbitration clause because it was a third-party beneficiary
to the Agreement of Sale. Motion to Compel Arbitration, 3/23/2007, at 2.
On appeal, the Civans baldly state that because Gambone marketed itself as
the builder, constructed the home as the general contractor, accepted
payments for optional modifications to the home, and generally directed all
matters pertinent to the sale transaction, “it was appropriate for Gambone to
be subject to the arbitration clause.” The Civans’ Briefs at 8. Other than
citing to addenda to the Agreement of Sale wherein the Civans indicated that
they would issue a payment to Gambone for optional modifications to the
house, the Civans neither point to places in the record nor legal authority
supporting these contentions. Therefore, the Civans, by failing to develop
the claim in their briefs, have waived any contention that Gambone, a non-
signatory, is bound by the Agreement of Sale as a third-party beneficiary or
through some other legal theory. See Brown v. Greyhound Lines, Inc.,
142 A.3d 1, 13 (Pa. Super. 2016) (stating that failure to develop an
argument waives issue).
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While Gambone is a party to the Civans’ lawsuit, the Agreement of
Sale does not name Gambone as a party. See Agreement of Sale,
12/30/1999, at 1. There is no question that the April 26, 2007 order to
arbitrate applied to Windermere – a party to the lawsuit and a party to the
Agreement of Sale – but because Gambone is not a party to the Agreement
of Sale, the Civans fail to convince us that the order to compel arbitration
applied to Gambone.
Turning next to the Civans’ argument that the trial court
impermissibly substituted its judgment for that of the arbitration panel
regarding whether the panel had jurisdiction over Gambone, we observe that
it is well settled that arbitrators do not have the power to decide
jurisdictional issues such as whether a party has agreed to arbitrate a
dispute. “Our decisional law has made clear that the issue of whether a
party agreed to arbitrate a dispute is a threshold, jurisdictional question that
must be decided by the court.” Pisano, 77 A.3d at 654 (internal citations
omitted). See also Flightways Corp. v. Keystone Helicopter Corp., 331
A.2d 184, 185 (Pa. 1975) (holding that “whether an agreement to arbitrate
was entered into” is a question for the court); Ross Dev. Co. v. Advanced
Bldg. Dev., Inc., 803 A.2d 194, 199 (Pa. Super. 2002) (holding that courts,
not arbitrators, must decide questions of substantive arbitrability such as
whether there is a valid agreement to arbitrate and whether disputed claim
is within scope of agreement); Smith v. Cumberland Group, Ltd., 687
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A.2d 1167, 1171 (Pa. Super. 1997) (“Arbitration is a matter of contract and,
as such, it is for the court to determine whether an express agreement
between the parties to arbitrate [exists].”).
Most cases addressing jurisdictional disputes arise prior to arbitration,
such as in the context of a motion to stay or petition to enjoin arbitration.
While petitioning the trial court to enjoin the arbitration is the preferred
procedure, this Court has entertained a jurisdictionally-based challenge to an
award after its entry, holding that a petition to enjoin is not the exclusive
method whereby a party may attack an arbitrator’s jurisdiction. Gaslin,
Inc. v. L.G.C. Exports, Inc., 482 A.2d 1117, 1122-23 (Pa. Super. 1984),
superseded by statute on other grounds as stated in Beriker v.
Permagrain Products, Inc., 500 A.2d 178 (Pa. Super. 1985).
In Gaslin, appellees purchased an exclusive license to operate a
restaurant through a franchise agreement containing an arbitration clause.
Id. at 1119. Jorge Figueroa signed the franchise agreement on behalf of
one of the licensors. Id. A dispute arose stemming from the franchise
agreement, and one of the licensees filed a demand for arbitration. Id.
Figueroa objected to the jurisdiction of the arbitrators, alleging that he was
not a party to the franchise agreement in his individual capacity, and did not
participate in the arbitration. Id. The arbitrator entered an award against
Figeuroa and the licensors, and the licensee subsequently filed a motion to
confirm the award. Id. Figueroa filed an answer opposing the motion to
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confirm, again asserting that he was not a party to the franchise agreement.
Id. The trial court confirmed the award, and Figueroa appealed. Id.
In its review of the order confirming the award against Figueroa, this
Court noted that Figueroa did not participate in the arbitration hearing and
objected to the lack of jurisdiction at every stage of the proceeding. 4 Id. at
1123 n.7. After deciding that common-law arbitration principles governed
the case, this Court stated, “although the arbitrator is the final judge of law
and fact, his power has not been extended to the degree that he may
determine his own jurisdiction, that is, whether the arbitration tribunal has
the requisite power to hear the particular case brought before it.” Id. at
1121. The Court acknowledged that ordinarily a court may set aside an
award only upon a showing of denial of a hearing or fraud, misconduct,
corruption, or similar irregularity leading to an unjust, inequitable, or
unconscionable award. Id. at 1124 n. 8. Nevertheless, the Court concluded
that
the central inquiry is not whether the award was just, but
whether Figueroa was bound to arbitrate this dispute in the first
place. If Figueroa was not a party to the franchise agreement
4
In Beriker, this Court noted that subsequent to its decision in Gaslin, the
legislature amended the Act to require courts to confirm arbitration awards
upon application of either party if thirty days have passed without either
party taking action to modify or vacate the award. Beriker, 500 A.2d at
179 (citing 42 Pa.C.S. § 7342(b)). After the amendment, to lodge an
objection to an award, parties must file a petition to vacate instead of simply
opposing a motion to confirm as the appellant did in Gaslin. Id. In the
instant case, Gambone notified the arbitrators of its objection, did not
participate in the arbitration, and timely filed a petition to vacate.
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that contained the arbitration provision, then he did not consent
to arbitrate this dispute and the award against him was
improper.
Id. Accordingly, the Court reversed the judgment, vacated the order
confirming the award as to Figueroa, and remanded to the trial court so that
the court could hold an evidentiary hearing to determine whether Figueroa
signed the franchise agreement in his individual capacity. Id. at 1124.
After Gaslin, this Court has examined whether a trial court possessed
the authority to vacate an arbitration award based on its conclusion that an
agreement to arbitrate did not exist on two occasions. See Schwartz v.
Wells Fargo Advisors, LLC, 58 A.3d 1270 (Pa. Super. 2012); Gwin
Engineers, Inc. v. Cricket Club Estates Dev. Group, 555 A.2d 1328 (Pa.
Super. 1989).
In Schwartz, the appellant filed a civil complaint against a financial
firm and his former financial advisor. Schwartz, 58 A.3d at 1270. The firm
and advisor filed a petition to compel arbitration pursuant to subsection
7304(a) of the Act, which Schwartz opposed, contending that he could not
be compelled to arbitrate because no agreement to arbitrate between the
parties existed. Id. at 1272. The trial court granted the motion to compel
and Schwartz did not appeal. Id. After receiving a nominal award through
arbitration, Schwartz filed a petition to vacate the award, which the trial
court granted. Id.
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On appeal, this Court held that section 7314 of the Act expressly
forbids courts from vacating awards based upon the lack of an agreement to
arbitrate if a court had determined previously pursuant to section 7304 that
an agreement exists.5 Id. at 1274. No such prior determination exists here.
In dictum in a footnote, the Court observed that the parties disputed
whether the underlying procedure was a statutory arbitration subject to
subchapter A of the Act or a common law arbitration subject to subchapter B
of the Act. Id. at 1275 n.3. The Court explained that it analyzed the appeal
as if the proceedings were subject to section 7314, which is applicable only
to statutory arbitration, because the trial court based its order on that
section. Id. After noting the narrow standard for vacating a common law
arbitration award pursuant to section 7341, and without analyzing any
authority other than that section’s language, the Court stated, “[s]ince the
5
Section 7314 states in relevant part that a court shall vacate an award if
there was no agreement to arbitrate and the issue of the
existence of an agreement to arbitrate was not adversely
determined in proceedings under section 7304 (relating to court
proceedings to compel or stay arbitration) and the applicant-
party raised the issue of the existence of an agreement to
arbitrate at the hearing….
42 Pa.C.S. § 7314(a)(1)(v). Section 7314 applies to statutory arbitrations
only, not to common law arbitrations like the arbitration at issue here. 42
Pa.C.S. § 7342(a). As explained supra, in general, section 7341 applies to
petitions to vacate a common law arbitration award. 42 Pa.C.S. § 7341
(“The award of an arbitrator … 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.”).
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absence of an agreement to arbitrate is not a basis for vacating an award
under [section] 7341, the disposition of this appeal would be the same
regardless of whether the parties engaged in statutory or common law
arbitration.” Id. However, because Schwartz is contrary to Gaslin, which
has never been overruled, relating to a party’s general ability to challenge
an award on jurisdictional grounds after its entry, we decline to find the
dictum in Schwartz to be controlling in this matter.
In Gwin, this Court was asked to review an order confirming an
arbitration award after an individual declined to participate and objected to
the arbitration, contending that he was not a party to the arbitration
agreement in his individual capacity and had disassociated from the
partnership subject to the agreement. Gwin, 555 A.2d at 1330. Without
addressing Gaslin, the Court determined that it would be improper to reach
the appellant’s arguments because his claim did not fall into any of the
statutory grounds for vacating or modifying the award. Id. at 1330. The
Court stated that the appellant should have brought his claim to the
attention of the arbitrator because the claim “would be appropriate for the
arbitrator’s resolution but it is not a claim upon which we can grant review.”
Id.
Not only did the Court fail to cite to authority to support this
statement, the statement is contrary to a long line of cases holding that the
determination of whether there is a valid agreement to arbitrate is for the
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courts, not the arbitrator. Flightways Corp., 331 A.2d at 185; Smith, 687
A.2d at 1171; Ross Dev. Co., 803 A.2d at 199; Pisano, 77 A.3d at 654.
Furthermore, without legally relevant distinctions of fact or intervening
authority by our Supreme Court calling into question a previous decision of
this Court, it was beyond the power of the Court in Gwin to overrule Gaslin,
a fortiori to do it sub silentio. See Commonwealth v. Hull, 705 A.2d 911,
912 (Pa. Super. 1998) (holding prior decisions of the Superior Court are
binding precedent on a subsequent three-judge panel of this Court).
Neither this Court nor our Supreme Court has addressed directly the
tension between the holdings in Gaslin and Gwin. The cases citing Gwin
do not rely upon it for its specific holding that the validity of an agreement is
an issue for the arbitrator and that the limited standard of review in section
7341 prohibits a court from reviewing a challenge to an award based upon
the lack of a valid agreement. Furthermore, this Court cited Gaslin
approvingly shortly after its decision in Gwin in a case holding that a trial
court erred in confirming an arbitration award because the arbitrators
exceeded the power and authority given to them. Shapiro v. Keystone,
558 A.2d 891 (Pa. Super. 1989).
In Shapiro, an insured filed a petition to compel arbitration in
Philadelphia County. Id. at 892. After the petition was granted, the
insurance company filed a petition for reconsideration and a petition to stay
the arbitration, arguing that the parties had agreed by their contract to
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arbitrate in Camden County, New Jersey. Id. The trial court denied both
petitions, and arbitration commenced. Id. The insurance company did not
participate in the arbitration except to object to holding the arbitration
anywhere besides Camden County. Id. at 893. The arbitrators issued an
award in the insured’s favor. The insured filed a petition to confirm, which
was granted, and the insurance company filed a petition to vacate, which
was denied. Id.
On appeal, this Court summarized the narrow standard of review
applicable to common-law arbitration awards, but also stated the following:
An arbitration award can be challenged if the arbitrators, in
conducting hearings and making an award, exceed the power
and authority given to them. This power and authority of the
arbitrators is wholly dependent upon the terms of the agreement
of the parties, who may place restrictions on their submission to
arbitration. The arbitrators cannot validly determine a dispute if
they violate or act inconsistently with the terms of the
submission. Sley System Garages v. Transport Workers
Union of America, AFL-CIO, Local 700, [] 178 A.2d 560, 561
([Pa.] 1962); Giant Markets, Inc. v. Sigma Marketing
Systems, Inc., [] 459 A.2d 765, 768 ([Pa. Super.] 1983). See
also[ Gaslin, 482 A.2d at 1121] (“although the arbitrator is the
final judge of law and fact, his power has not been extended to
the degree that he may determine his own jurisdiction, that is,
whether the arbitration tribunal has the requisite power to hear
the particular case brought before it.”).
Id. at 893-94. The Court concluded that “[t]he court could enforce
arbitration … only in accordance with the terms of the parties’ agreement.”
Id. Therefore, the Court held that the trial court erred by confirming the
award and declining to enforce the parties’ agreement. Id.
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Gaslin is also in accord with settled law that only “parties of equal
bargaining power [who] consent in an agreement to settle all future
disputes as to its interpretation by utilizing common law arbitration … []are
bound by that provision, and the function of the courts is limited to enforcing
this contractual provision according to its terms as established by the
parties.”6 Fastuca v. L.W. Molnar & Assocs., 10 A.3d 1230, 1245 (Pa.
2011) (emphasis added). Indeed, subchapter B of the Act relating to
common law arbitration applies specifically to “agreement[s] to arbitrate a
controversy on a nonjudicial basis.” 42 Pa.C.S. § 7302(a).
In other words, in order to invoke the limited judicial standard of
review of an arbitration award, the parties have to agree to arbitrate the
6 Although it is not controlling authority, we also find the rationale used in
Bank One Delaware N.A. v. Mitchell, 70 Pa. D. & C. 4th 353 (Pa. Com. Pl.
(Allegheny County) 2005), aff’d 897 A.2d 512 (Pa. Super. 2006) (per
curiam), to be persuasive. In Bank One, the Honorable R. Stanton Wettick,
Jr. declined to confirm an arbitration award and enter judgment in favor of a
credit card company and against a cardholder who had not participated in
the proceedings despite notice to the cardholder. Citing the cases
establishing that an arbitrator does not have authority to decide questions of
jurisdiction, including Gaslin, Judge Wettick determined that the cardholder
was not required to arbitrate the credit card company’s claim until the
company established in court that its claim was governed by a valid
agreement to arbitrate pursuant to section 7304. Id. at 360-61. Otherwise,
by seeking to obtain a judgment through a motion to confirm an award
against a party who did not participate in the arbitration proceedings, the
credit card company “is attempting to create … another method for obtaining
default judgments that does not provide the same safeguards as those
provided by the Pennsylvania Rules of Civil Procedure....” Id. at 363. In
short, Judge Wettick determined that arbitration cannot be “a method for
obtaining a judgment against a party who was never ordered to arbitrate
and who did not participate in the arbitration proceedings.” Id. at 368.
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dispute in the first place. Therefore, we hold that the narrow standard of
review derived from section 7341 is not applicable when reviewing a petition
to vacate based upon a claim that the parties do not have a valid agreement
to arbitrate.
Turning to the instant case, as discussed supra, Gambone is not a
party to the Agreement of Sale. Therefore, Gambone never agreed to
arbitrate disputes arising out of the Agreement of Sale. As also discussed
supra, the Civans failed to obtain an order compelling Gambone to arbitrate
pursuant to subsection 7304(a). Gambone notified the arbitrators of its
objections and declined to participate in the arbitration proceeding based on
its contention that the arbitration panel lacked jurisdiction. Therefore,
because Gambone is not a party to the Agreement and there was no court
order specifically mandating Gambone’s submission to arbitration, the
arbitration panel exceeded its power by determining that the panel had
jurisdiction over Gambone. Further, because there is no valid agreement to
arbitrate between Gambone and the Civans, the trial court did not err by
vacating the arbitration award against Gambone.
Nor did the trial court err by refusing to confirm the award against
Gambone. The Civans argue that because more than thirty days have
passed, the trial court was required to confirm the award pursuant to 42
Pa.C.S. § 7342(b). The Civans’ Brief at 20. Section 7342 states in pertinent
part:
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(b) Confirmation and Judgment. On application of a party made
more than thirty (30) days after an award is made by an
arbitration under Section 7341 (relating to common law
arbitration), the Court shall enter the award confirming the
award and shall enter a judgment or decree in conformity with
the order….
42 Pa.C.S. § 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. Lowther v. Roxborough Mem’l Hosp., 738 A.2d 480 (Pa. Super.
1999); Beriker, 500 A.2d at 179. Here, Gambone filed a petition to vacate
the award within thirty days of the date of the award. For the reasons
stated supra, the trial court properly vacated the award. Therefore, the
court was not required to confirm the award in accordance with subsection
7342(b).
Accordingly, we affirm the trial court’s April 11, 2017 and April 12,
2017 orders.
Orders affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/27/18
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