Carr, P. v. First Commonwealth Bank ( 2023 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
PATRICK J. CARR, PATRICK K. CARR, : IN THE SUPERIOR COURT OF
AND DANIEL K. CARR : PENNSYLVANIA
:
:
v. :
:
:
FIRST COMMONWEALTH BANK :
: No. 1130 WDA 2021
Appellant :
Appeal from the Order Entered August 25, 2021
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD-19-13839
PATRICK J. CARR, PATRICK K. CARR, : IN THE SUPERIOR COURT OF
AND DANIEL K. CARR : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 1180 WDA 2021
FIRST COMMONWEALTH BANK :
Appeal from the Order Entered August 25, 2021
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): GD-19-013839
BEFORE: KUNSELMAN, J., NICHOLS, J., and McCAFFERY, J.
MEMORANDUM BY NICHOLS, J.: FILED: FEBRUARY 7, 2023
In these cross-appeals,1 Patrick J. Carr, Patrick K. Carr, and Daniel K.
Carr (the Carrs) and First Commonwealth Bank (FCB) appeal from the order
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1 This Court sua sponte consolidated these appeals as cross-appeals. See
Order, 10/14/21. This Court subsequently designated the Carrs’ appeal at
1180 WDA 2021 as the lead appeal, the Carrs as the appellants/cross-
appellees, and FCB as the appellee/cross-appellant. See Order, 10/28/21.
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confirming in part and vacating in part an arbitration award in favor of FCB.
In the appeal at 1180 WDA 2021, the Carrs challenge the trial court’s denial
of their motion to vacate the arbitration award, and in the cross-appeal at
1130 WDA 2021, FCB contends that the trial court erred by vacating the
attorney’s fees and costs portion of the arbitration award. We vacate and
remand for further proceedings.
The underlying facts of this matter are well known to the parties. See
Trial Ct. Op., 11/24/21, at 1-6. Briefly, on January 22, 2019, Patrick K. Carr
and Daniel K. Carr (Sons) opened an account at the FCB in McKeesport,
Pennsylvania naming their father, Patrick J. Carr (Father) as the beneficiary.
The Carrs deposited a settlement check made out to Father into that account.
Sons executed an account agreement at the time they opened the account.
The account agreement refers to additional documents, which FCB provided
to the Carrs in a folder. Subsequently, a civil judgment was entered against
Daniel K. Carr in an unrelated matter. The judgment creditor garnished
$38,046.97 from the Carrs’ account to satisfy the judgment against Daniel K.
Carr.
The Carrs filed a complaint against FCB alleging breach of contract,
breach of fiduciary duty, and a violation of the Unfair Trade Practices and
Consumer Protection Law. FCB filed preliminary objections in the nature of a
petition to compel arbitration, asserting that the account agreement
incorporated an agreement to arbitrate. In support of its preliminary
objections, FCB filed the affidavit of Brittany Andreoli, a branch manager for
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FCB in McKeesport. Andreoli Aff. at 1, R.R. at 110a.2 In the affidavit, Andreoli
stated that she provided the Carrs with a copy of the arbitration agreement
with other account documents before they signed the account agreement.
R.R. at 110a-11a. Andreoli also indicated that she specifically showed the
arbitration agreement to the Carrs and explained that the account agreement
stated that the account holders acknowledged receipt of the other documents.
R.R. at 112. After Sons signed the account agreement, Andreoli placed the
arbitration agreement and other documents related to the account in a red
folder and handed it to one of the Sons. R.R. at 112a-13a.
The Carrs subsequently filed a response to FCB’s first set of requests for
admission and first set of interrogatories. Therein, the Carrs asserted that no
one at the FCB branch provided them with a copy of the arbitration agreement
or the folder containing the additional documents until after Sons had already
signed the account agreement. Carrs’ Resp. to Interrog. at 8 (unpaginated),
R.R. at 169a. The Carrs further claimed that none of FCB’s employees
informed them that the documents folder contained an arbitration agreement.
Id.
On February 4, 2020, the trial court sustained FCB’s preliminary
objections, ordered that this matter be transferred to arbitration, and stayed
civil proceedings. The arbitrator ultimately found in favor of FCB and awarded
FCB $10,245.32 in attorney’s fees and costs. FCB then filed a petition to
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2 We may cite to the reproduced record for the parties’ convenience.
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confirm the arbitrator’s award and enter judgment against the Carrs. The
Carrs filed a motion to vacate arbitration award arguing that they had not
agreed to arbitrate, that the award should be set aside as unjust, inequitable,
and unconscionable, and that the award of attorney’s fees should be vacated.
On August 25, 2021,3 the trial court entered an order confirming the
arbitration award in part and vacating the award of attorney’s fees and costs
to FCB.
FCB and the Carrs timely filed separate notices of appeal. Both FCB and
the Carrs filed timely court-ordered Pa.R.A.P. 1925(b) statements. The trial
court issued a Rule 1925(a) opinion addressing the parties’ issues.
Jurisdiction
Before we address the merits of the parties’ claims, we first consider
whether we have jurisdiction over this appeal. See Massaro v. Tincher
Contracting LLC, 204 A.3d 932, 933 (Pa. Super. 2019) (explaining that “[w]e
may raise whether this Court has jurisdiction sua sponte” (citation omitted)).
“[T]he appealability of an order directly implicates the jurisdiction of the court
asked to review the order.” Knopick v. Boyle, 189 A.3d 432, 436 (Pa. Super.
2018) (citation omitted).
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3 The trial court’s order is dated August 24, 2021. However, according to the
trial court docket entries, the trial court served the parties with notice of the
order on the following day. See Pa.R.A.P. 108(a)(1) (providing that the date
of entry of an order is the day the clerk of court mails or delivers copies of the
order to the parties); see also Pa.R.C.P. 236. We have amended the captions
accordingly.
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Generally, “[f]or an order to be appealable, it must be (1) a final order,
Pa.R.A.P. 341-342; (2) an interlocutory order appealable by right or
permission, 42 Pa.C.S. § 702(a)-(b); Pa.R.A.P. 311-312; or (3) a collateral
order, Pa.R.A.P. 313.” Ashdale v. Guidi Homes, Inc., 248 A.3d 521, 525
(Pa. Super. 2021).
Rule of Appellate Procedure 311 provides, in relevant part:
(a) General rule.—An appeal may be taken as of right and
without reference to Pa.R.A.P. 341(c) from:
* * *
(8) Other cases.—An 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.
Pa.R.A.P. 311(a)(8); see also Civan v. Windermere Farms, Inc., 180 A.3d
489, 492 (Pa. Super. 2018) (explaining that an order vacating an arbitration
award and an order denying a petition to confirm an arbitration award were
both appealable under Pa.R.A.P. 311(a)(8)).
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42 Pa.C.S. § 7342,4 which governs common law arbitration,5 provides
that Section 7320 (except for subsection (a)(4)) of the UAA, 42 Pa.C.S. §
7320, is applicable to common law arbitration proceedings. 42 Pa.C.S. §
7342(a). Section 7320 states, in relevant part, that “[a]n appeal may be
taken from . . . a court order confirming or denying confirmation of an
[arbitration] award” and “[t]he appeal shall be taken in the manner, within
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4 Subsequent to the Sons signing the account agreement with FCB, Section
7342 was amended. See 42 Pa.C.S. § 7342 (am. eff. July 1, 2019). We apply
the prior version of Section 7342 which was in effect on the date the parties
entered into the account agreement. See 42 Pa.C.S. § 7342 (eff. from Feb.
18, 1983 to June 30, 2019). Nevertheless, the prior version of Section 7342
is substantially similar to the current version. Because the revised sections
do not affect our disposition of the instant case, we need not discuss the
revisions here.
5 At the time the Carrs entered into the account agreement with FCB,
Pennsylvania law provided “two statutory schemes for arbitration of cases not
filed in court. One, the Uniform Arbitration Act [(UAA)], 42 Pa.C.S. §§ 7301-
7320, governs arbitrations under agreements that expressly provide that they
are subject to that Act or any other similar statute.” Weinar v. Lex, 176 A.3d
907, 913-14 (Pa. Super. 2017) (citation omitted and formatting altered). “All
other arbitration agreements are conclusively presumed to be governed by
what the Judicial Code calls “common law arbitration” under 42 Pa.C.S. §§
7341-7342.” Id. at 914 (citation omitted and formatting altered). Here, none
of the parties contend that the arbitration agreement falls under the UAA, and
nothing in the arbitration agreement indicates that it is subject to the UAA.
See R.R. at 69a-71a. Therefore, the Judicial Code’s common law arbitration
provisions apply to the instant agreement. See Weinar, 176 A.3d at 913-
14; see also Moscatiello v. Hilliard, 939 A.2d 325, 330 (Pa. 2007) (stating
that “[b]ecause the agreements do not expressly provide for statutory
arbitration, the agreements are conclusively presumed to be pursuant to the
procedural rules of common law arbitration”).
Additionally, although not applicable here, we note that after the parties
signed the account agreement, a third statutory scheme for arbitration, the
Revised Statutory Arbitration Act, 42 Pa.C.S. §§ 7321.1-7321.31, became
effective, July 1, 2019.
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the time and to the same extent as an appeal from a final order of court in a
civil action.” 42 Pa.C.S. § 7320(a)(3), (b). Additionally, Section 7342
provides that “[o]n application of a party made more than 30 days after an
award is made by an arbitrator under section 7341 (relating to common law
arbitration), the court shall enter an order confirming the award and shall
enter a judgment or decree in conformity with the order.” 42 Pa.C.S.
§ 7342(b) (emphases added).
Generally, “the entry of judgment is a prerequisite to our exercise of
jurisdiction.” Mackall v. Fleegle, 801 A.2d 577, 580 (Pa. Super. 2002)
(citations omitted). However, this Court has also acknowledged that “there
are some instances wherein a party has failed to enter judgment and our
appellate courts may regard as done that which ought to have been done[,]”
and consider the merits of an appeal instead of quashing. Id. (citations
omitted). As stated above, after confirming a common law arbitration award,
the trial court, not the parties, has the responsibility to enter judgment. See
42 Pa.C.S. § 7342(b).
Here, FCB filed a petition to confirm the arbitrator’s award and enter
judgment against the Carrs, and the Carrs filed a motion to vacate the
arbitration award. The trial court entered an order confirming in part and
vacating in part the arbitration award, but the trial court failed to enter
judgment on its order. See id. Therefore, although the trial court failed to
enter judgment as required by Section 7342, we will regard as done that which
ought to have been done and address the parties’ issues instead of remanding
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for the entry of judgment or quashing these cross appeals. See Mackall, 801
A.2d at 580.
The Carrs’ Appeal
On appeal, the Carrs present the following issues:
1. Whether the trial court committed an error of law when it
found, as a matter of fact, based on the pleadings and briefs
alone and without ordering discovery, that [the Carrs] had
entered into a valid arbitration agreement despite the fact that
the agreement in question was a separate document which was
not signed nor initialed by either party and where the [Carrs’]
pleadings denied knowledge of such agreement and denied
that [FCB] had provided a copy of it to either account owner.
2. Whether the trial court committed an error of law when it
sustained the private arbitrator’s conclusion that a bank does
not have a fiduciary duty to notify all holders of a joint account
when there is a garnishment action against only one of the
account holders.
3. Whether the trial court committed an abuse of discretion when
it ruled that it was a legislative matter, and not a matter for
the courts, to determine whether private arbitration in
consumer cases should be disqualified due to the appearance
of a conflict of interest where the arbitration service is a
private, for-profit enterprise, the vendor/merchant paid
substantially all of the arbitration fees and costs, and where
the arbitrator and arbitration service can anticipate repeat
business in the future from the vendor/merchant but not from
the consumer.
The Carrs’ First Step Brief at 4-5.
Existence of Arbitration Agreement
In their first issue, the Carrs argue that the trial court erred in concluding
that the parties had entered into an agreement to arbitrate. Id. at 16-26.
Specifically, the Carrs contend that there was no meeting of the minds
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between the parties regarding an agreement to arbitrate. Id. at 16-17. The
Carrs claim that FCB did not provide them with a copy of the arbitration
agreement, they did not sign an arbitration agreement, FCB’s terms and
conditions do not refer to an arbitration agreement, and that the executed
account agreement did not properly incorporate the arbitration agreement by
reference. Id. at 22-24. The Carrs argue that an account agreement cannot
incorporate an arbitration agreement by reference when the bank fails to
deliver a copy of the arbitration agreement to the customer. Id. at 19. The
Carrs further contend that some of the terms in the account agreement are
not enforceable because they are not sufficiently conspicuous. Id. at 20-21,
23. Specifically, the Carrs refer to a provision stating that “[t]he undersigned
personally and as, or on behalf of, the account owner(s) agree to the terms
of, and acknowledge receipt of copy(ies) of, th[is] document and the
following” and argue that it is the only language in the agreement that
incorporates by reference other documents, such as the terms and conditions
and the arbitration agreement, and was printed in small font. Id. at 23.
The Carrs additionally argue that the trial court erred in concluding that
a valid and binding agreement to arbitrate existed without taking any
evidence, either by holding an evidentiary hearing or issuing a rule to show
cause and reviewing depositions. Id. at 16, 20, 24-26; see also the Carrs’
Third Step Brief at 9-11. The Carrs also assert that the Andreoli affidavit that
FCB submitted in support of its preliminary objections was not credible. The
Carrs’ First Step Brief at 24-25. Therefore, the Carrs conclude that the trial
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court erred in sustaining FCB’s preliminary objections and transferring this
matter to arbitration without first resolving the factual dispute as to whether
the parties agreed to arbitration.
“[O]ur standard of review of an order deciding a petition to compel
[arbitration] is limited to determining whether the trial court’s findings are
supported by substantial evidence and whether it abused its discretion.” Del
Ciotto v. Pennsylvania Hosp. of the Univ. of Penn Health Sys., 177 A.3d
335, 348 (Pa. Super. 2017). To the extent that we review the language of
the arbitration agreement, that is a question of law, therefore “our review of
the trial court’s decision is de novo and our scope is plenary.” Bair v. Manor
Care of Elizabethtown, PA, LLC, 108 A.3d 94, 96 (Pa. Super. 2015)
(citation omitted).
Arbitration cannot be compelled in the absence of an express
agreement to arbitrate. The touchstone of any valid contract is
mutual assent and consideration. The issue of whether parties
agreed to arbitrate is generally one for the court, not the
arbitrators. When addressing that issue, courts generally apply
ordinary state law contract principles, but in doing so, must give
due regard to the federal policy favoring arbitration. If the court
determines there is a valid agreement, it must then determine if
the dispute in question is within the scope of the agreement.
Id. (citations omitted and formatting altered). In other words, this Court
employs “a two-part test to determine whether the trial court should have
compelled arbitration: 1) whether a valid agreement to arbitrate exists, and
2) whether the dispute is within the scope of the agreement.” Washburn v.
Northern Health Facilities, Inc., 121 A.3d 1008, 1012 (Pa. Super. 2015).
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This Court has explained:
Contracting parties are normally bound by their agreements,
without regard to whether the terms thereof were read and fully
understood and irrespective of whether the agreements embodied
reasonable or good bargains. Once a person enters into a written
agreement, he builds around himself a stone wall, from which he
cannot escape by merely asserting he had not understood what
he was signing. It should not be assumed that the parties were
ignorant of the meaning of the language employed.
Nicholas v. Hofmann, 158 A.3d 675, 693 (Pa. Super. 2017) (citations
omitted and formatting altered).
The party seeking to compel arbitration bears the burden to
demonstrate that a valid agreement to arbitrate exists and the dispute is
within the scope of that agreement. Bair, 108 A.3d at 96 (applying the UAA);
see also Johnston the Florist, Inc. v. TEDCO Const. Corp., 657 A.2d 511,
516 (Pa. Super. 1995) (explaining that the party seeking to enforce a contract
has the burden to prove the existence of the contract).
This Court has explained that Pennsylvania Rule of Civil Procedure
1028(c)(2)
states that the trial court “shall determine promptly all preliminary
objections. If an issue of fact is raised, the court shall consider
evidence by depositions or otherwise.” Pa.R.C.P. 1028(c)(2).
Furthermore, preliminary objections in the nature of a petition to
compel arbitration filed pursuant to Pa.R.C.P. 1028(a)(6) cannot
be determined from facts of record. In other words, a dispute
raising an issue under Rule 1028(a)[(6)] cannot be resolved by
reference to facts pled in the complaint. Additional evidence is
required.
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Davis v. Ctr. Mgmt. Group, LLC, 192 A.3d 173, 183 (Pa. Super. 2018)
(some citations omitted and formatting altered).
In Quiles v. Financial Exchange Co., 879 A.2d 281 (Pa. Super. 2005),
the trial court conducted an evidentiary hearing6 after which it concluded that
there was no agreement to arbitrate between the employer and the employee
because the employer never gave the employee a copy of the employee
handbook which explained the employer’s dispute resolution program (DRP)
and arbitration provisions. Quiles, 879 A.2d at 283-84. In that case, the
employee had signed a form acknowledging that she had received and read
the employee handbook and agreed to be bound by its terms, which included
“the dispute resolution program and [the] provision related to arbitration.”
Id. at 284 (formatting altered). On appeal, this Court held that although the
employee signed that form, the employee “could not validly agree to arbitrate
her claims without first having been given a copy of the [h]andbook, the only
document that detailed and explained DRP and the company’s proposed
arbitration process. In essence, the terms of the process were never fully
communicated to her.” Id. at 288. Therefore, the Quiles Court affirmed the
trial court’s conclusion that the employee had never accepted the terms of the
agreement to arbitrate. Id.; cf. Nicholas, 158 A.3d at 693.
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6 The trial court found the employee’s testimony credible and the manager’s
testimony not credible. Quiles, 879 A.2d at 284 & n.6.
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In Stern v. Prudential Fin., Inc., 836 A.2d 953 (Pa. Super. 2003), this
Court considered an appeal from an order sustaining preliminary objections
and compelling the parties to arbitrate. Stern, 836 A.2d at 953. In Stern,
the plaintiff filed an affidavit in which he stated that he and the defendant
broker had agreed to waive the arbitration clause of his client agreement. Id.
at 954. The defendant broker submitted two affidavits from its employees
disputing the plaintiff’s version of events. Id. However, the statements in
the two employee affidavits also partially contradicted each other. Id. The
trial court concluded that based on these three affidavits, there was no
evidence that the broker agreed to waive the arbitration clause. Id. On
appeal, the Stern Court explained that
the resolution of preliminary objections . . . through an affidavit
alone, rather than through depositions or interrogatories, while
not recommended, [is] not error where the facts attested to in the
affidavit were clear and specific. Here, however, while each
affidavit is clear, each person tells a different version of what
happened. There are no undisputed facts or language. . . .
While we have found no cases where the effect of a waiver of an
arbitration clause was determined on preliminary objections based
merely on affidavits, cases involving summary judgment are
instructive here. Our Court has said that the general rule that
flows from Nanty-Glo Borough v. American Surety Co., [163
A. 523 (Pa. 1932)], is that summary judgment may not be had
where the moving party relies exclusively upon oral testimony,
either through testimonial affidavits or deposition testimony, to
establish the absence of a genuine issue of material fact. . . .
Although the Nanty-Glo rule primarily has been applied in the
context of summary judgment, there is no logical reason not to
apply it to preliminary objections where there are disputed
questions of fact as in this case. Once the facts were disputed in
conflicting affidavits, [the trial court] should have ordered the
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parties to present additional evidence by depositions, written
interrogatories, or other discovery.
Id. at 955 (citations and quotation marks omitted, emphasis in original).
Therefore, the Stern Court reversed the order compelling arbitration and
remanded for resolution of the factual issue “at a hearing or [through]
depositions.” Id. (footnote omitted).
This Court employs “[w]ell-settled principles of contract interpretation”
in construing an arbitration agreement. Neuhard v. Travelers Ins. Co., 831
A.2d 602, 604 (Pa. Super. 2003). In Provenzano v. Ohio Valley Gen.
Hosp., 121 A.3d 1085 (Pa. Super. 2015), this Court explained that
arbitration agreements are to be strictly construed and not
extended by implication; and . . . 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.
. . . [C]ourts should apply the rules of contractual construction[],
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.
The court may take into consideration the surrounding
circumstances, the situation of the parties, the objects they
apparently have in view, and the nature of the subject-matter of
the agreement. The court will adopt an interpretation that is most
reasonable and probable bearing in mind the objects which the
parties intended to accomplish through the agreement.
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Provenzano, 121 A.3d at 1095 (citations omitted and formatting altered).
As the Neuhard Court noted, the “scope or the application of the arbitration
clause itself may be an arbitrable issue, which the arbitrators are to decide.”
Neuhard, 831 A.2d at 605 (citation omitted); see also Provenzano, 121
A.3d at 1095 (stating that “[i]f it appears that a dispute relates to a contract’s
subject matter and the parties agreed to arbitrate, all issues of interpretation
and procedure are for the arbitrators to resolve” (citation omitted)).
“The terms of a contract include terms in documents that a signed
contract document specifically and clearly identifies and expressly
incorporates by reference.” In re Est. of Atkinson, 231 A.3d 891, 899 (Pa.
Super. 2020) (citations omitted) (concluding that an arbitration agreement
was binding on the account holder trust because the account application
expressly incorporated by reference the arbitration agreement, the account
application stated the signer acknowledged receipt of a copy of the arbitration
agreement, the trustee signed the application, and the trustee testified that
he could not recall which documents he reviewed and received before signing
the account application); see also Nicholas, 158 A.3d at 693.
Here, the trial court explained:
[T]he [Carrs] continue to maintain that they never “willingly
engaged”, “agreed to”, nor even considered entering an
alternative dispute with FCB. As posed as this trial court’s first
decision, the Superior Court must first determine whether the
parties present a binding arbitration agreement.
* * *
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FCB presents as evidence of same, a signed document, entitled
account agreement[.] (Exhibit 3, complaint). At the name
request for “Owner/Signor Information 1” of the account, the
name listed is as, “Patrick Kenneth Carr” and indicated at the
relationship query as “primary”. (Complaint, Ex. 3, p. 1). The
ownership of the account is designated as “joint with survivorship
(not as tenants in common).” (Id.). When questioned as to the
beneficiary designation on this account agreement, the agreement
is selected and determined to be a “revocable trust”. (Id.). As to
the account title and address, the account displays “Daniel K. Carr,
Patrick Kenneth Carr ITF Patrick J. Carr”.
FCB maintains that the “owners of the account are two [] of the
plaintiffs, both Patrick Kenneth Carr and Daniel K. Carr (account
agreement); distinguished on the agreement as ‘owner/signer
information 1’ and ‘owner/signer information 2’”; and that there
are “no other owners of the account on the account agreement.”
Further, “the beneficiary of the account on the account agreement
is the additional plaintiff, Patrick J. Carr, who is the father of the
other two plaintiffs.” And further, “[t]here are no other named
beneficiaries of the account on the account agreement.”
On page 1 of the account [agreement], a paragraph is entitled
“signatures” and states:
[t]he undersigned authorize the financial institution to
investigate credit and employment history and obtain
reports from consumer reporting agency(ies) also on them
as individuals. Except as otherwise provided by law or other
documents, each of the undersigned is authorized to make
withdrawals from the account(s), provided the required
number of signatures indicated above is satisfied. The
undersigned personally and as, or on behalf of, the
account owner(s) agree[s] to the terms of, and
acknowledge receipt of copy(ies) of, this document
and the following:
Terms and Conditions
Truth in Savings
Funds Availability
Electronic Fund transfer
Privacy
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Arbitration Agreement
(Complaint, Exhibit 3, p.1, emphasis added)[.]
The documents included in this particular Account Agreement are
indicated by the use of an X in each corresponding box with the
exception of “Arbitration Agreement.” The words “Arbitration
Agreement” are underlined and in larger font and found to be
conspicuous by this writer in relation to all other terms of this
agreement. The account agreement contains the purported
signatures of “Daniel K. Carr”, and “Patrick Kenneth Carr” as well
as their respective birth dates.
Page 2 of the account agreement indicates as owner/signor
information 2 as “Patrick Kenneth Carr” and further indicates the
relationship as “joint”. (Id. at [1-2]). The account is further
described as a “Hometown Money Market with an initial deposit
totaling $83,526.75.” [Id. at 2.]
Further, paragraph 1 of the “Arbitration Provision” is entitled “Your
Right to Reject Arbitration:”; and states:
If you don’t want this Arbitration Provision to apply to your
account, you may reject arbitration by mailing us a written
rejection notice which gives your name(s) and account
number and contains a statement that you (both or all of
you[, if more than one]) reject arbitration of disputes
concerning your account[.]
[Arbitration Provision, ¶ 1, R.R. at 69a.]
The [Carrs] never objected to receipt of just one (1) copy of
“paperwork” associated with this one (1) account; this was a
signed agreement, to be treated “in law” as a contract. Because
a party may choose either a lack of interest or indifference to the
obligations assumed; a court cannot just choose to alleviate a
party of those contracted obligations. Any other holding would
promote lawlessness and chaos. Any argument as to the “lack of
numbers of copies provided . . .” should be rejected for the
[Carrs’] failure to object to same at the time of receipt of the “sole
copy” or any time prior to the garnishment.
Pursuant to the parties’ arbitration agreement, “arbitration is
elected by giving a written demand for arbitration to the other
party, by filing a motion to compel arbitration in court or by
initiating an arbitration against the other party.” (Arbitration
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Agreement, [¶ 4, R.R. at 69a]). In accordance with that same
agreement, “[i]f a party files a lawsuit in court asserting claim(s)
that are subject to arbitration and if a court grants the other
party’s motion to compel arbitration of such claim(s), it will be the
responsibility of the party prosecuting the claim(s) to commence
the arbitration proceeding.” [Id.]
Despite this provision, the [Carrs] sued . . . FCB, in the Court of
Common Pleas [alleging breach of contract, breach of fiduciary
duty, and a violation of the Unfair Trade Practices and Consumer
Protection Law]. Prior to the filing of preliminary objections,
counsel for the [Carrs] was notified by letter on October 29, 2019,
entitled “written demand for arbitration” that any claim regarding
the beneficiary of the account was to subject to an arbitration
agreement. ([FCB’s] Preliminary Objections, 11/4/19, Exhibit 1).
Trial Ct. Op. at 11-14 (footnotes and some citations omitted and formatting
altered).
Here, the trial court based its conclusion that there was a valid
agreement to arbitrate solely on the terms of the account agreement, which
incorporates by reference several other documents including the arbitration
agreement. See id. While parties to a contract may agree to incorporate by
reference multiple documents into a single contract, a party cannot accept
terms contained in other documents if that party did not receive them when
he or she signed the contract. Compare Est. of Atkinson, 231 A.3d at 899
(trustee agreed to incorporate by reference the terms of an arbitration
agreement into an account application that the trustee signed) with Quiles,
879 A.2d at 287-88 (employee did not agree to the terms of the arbitration
provision even though employee signed a form acknowledging receipt of, and
agreeing to the contents of, the employee handbook with an arbitration
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provision because the trial court found that because the employer did not
provide the employee with a copy of the handbook).
The record before this Court establishes a factual dispute as to whether
the Carrs received a copy of the arbitration agreement prior to signing the
account agreement. Compare R.R. at 110a-13a (Andreoli affidavit) with R.R.
at 169a (Carrs’ responses to FCB’s interrogatories7). Specifically, Andreoli
attested that she provided Sons with a copy of the arbitration agreement,
among other documents, before they signed the account agreement and
specifically informed them that the arbitration agreement affected their rights
in the event of a dispute. See R.R. at 111a-12a. In their responses to FCB’s
interrogatories, the Carrs stated that FCB employees did not provide them
with any other documents until after Sons had signed the account agreement,
and that none of FCB’s employees specifically mentioned an arbitration
agreement. See id. at 169a. Based on our review of the record, we conclude
there is a factual dispute as to whether the Carrs accepted the terms of the
arbitration agreement. See Quiles, 879 A.2d at 283-88.
The trial court cannot rely solely on the Andreoli affidavit to resolve that
factual dispute. See Stern, 836 A.2d at 955 (holding that a trial court may
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7 We note that answers to interrogatories must be verified. See Pa.R.C.P.
4006(a)(1). Verification means that a written statement is supported by oath
or affirmation or is made subject to the penalties of 18 Pa.C.S. § 4904 relating
to unsworn falsification to authorities. See Pa.R.C.P. 76 (defining “verified”).
Here, each of the Carrs signed a verification page indicating that their
responses to the interrogatories were subject to the penalties of 18 Pa.C.S. §
4904. See R.R. at 199a-201a.
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resolve a factual issue raised in preliminary objections through affidavits alone
only when the facts set forth in the affidavits are clear, specific and
undisputed; and applying the Nanty-Glo rule to the resolution of preliminary
objections that raise factual issues). Therefore, the trial court abused its
discretion in granting FCB’s preliminary objections without receiving additional
evidence to resolve the factual dispute regarding the existence of a valid
agreement to arbitrate. See Del Ciotto, 177 A.3d at 348; Stern, 836 A.2d
at 955.
For these reasons, we vacate the trial court’s order confirming in part
and vacating in part an arbitration award in favor of FCB and remand for
further proceedings. On remand, the trial court is directed to conduct further
proceedings to resolve the factual dispute as to whether a valid agreement to
arbitrate exists.8 See Davis, 192 A.3d at 183; Stern, 836 A.2d at 955.
Order vacated. Case remanded for further proceedings consistent with
this memorandum. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/7/2023
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8 Because of our disposition, we need not address the Carrs’ second and third
issues and the issue FCB raises in its cross-appeal.
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