Millinghausen, S. v. Drake, K. ( 2020 )

J-A21009-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SAMUEL W.B. MILLINGHAUSEN, III : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
KAREN DRAKE, ROBERT L. HYSLOP, : No. 477 EDA 2020
JR., THERESA M. HYSLOP, JOY A. :
CAPKA, MARYANN DIRENZO, JOHN :
DOE ONE, JOHN DOE TWO, JOHN :
DOE THREE, AND JOHN DOE FOUR :
Appeal from the Judgment Entered March 9, 2020
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): No. 2012-06050
BEFORE: DUBOW, J., McCAFFERY, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY DUBOW, J.: FILED OCTOBER 13, 2020
Appellant, Samuel W. B. Millinghausen, III, appeals from the Judgment
entered on March 9, 2020, after the lower court denied Appellant’s Motion to
Vacate the Award of the AAA Arbitrator (“Motion to Vacate”).1 Upon review,
we agree with the court’s conclusion that Appellant failed to establish by clear
and precise evidence that he was denied a hearing or that misconduct marred
the underlying arbitration proceedings. Accordingly, the underlying
____________________________________________
1 Initially, Appellant appealed from the January 8, 2020 Order denying his
Motion to Vacate. Because this was not a final, appealable order, we issued a
Rule directing Appellant to praecipe the common pleas court to enter
Judgment. See Dunlap By Hoffman v. State Farm Ins., 546 A.2d 1209
(Pa. Super. 1988). Appellant complied, and the court entered Judgment on
March 9, 2020. Thus, we discharge the Rule and consider Appellant’s appeal.
J-A21009-20
arbitration award is conclusive and binding. We affirm on the basis of the
lower court’s Opinion filed April 16, 2020.
The parties are well versed in the facts and procedural history of this
case. Briefly, in 2006, Appellant contracted with Legal Access Plans, LLC to
provide legal services to its plan subscribers (“Contract”). The Contract
included an arbitration clause.
In 2012, Appellant commenced defamation litigation in common pleas
court against Karen Drake, Robert L. Hyslop, Jr., Theresa Hyslop, Joy A.
Capka, and Maryann Direnzo (collectively, “Clients”).2 Clients filed Preliminary
Objections to Appellant’s Complaint, seeking to compel arbitration. The lower
court overruled their Objections, and Clients appealed. Upon review, this
Court determined that Clients were third-party beneficiaries of the Contract
and that Appellant’s claims were within the scope of the arbitration clause;
accordingly, we reversed the lower court and remanded for arbitration
proceedings. See Millinghausen v. Drake, 102 A.3d 540 (Pa. Super. 2014)
(unpublished memorandum).
Arbitration proceedings commenced, and Appellant was unsuccessful
prosecuting his claims. On January 15, 2019, in accordance with the terms of
____________________________________________
2In addition to Clients, Appellant sued four unnamed defendants. Appellant
never identified these individuals.
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the Contract, the arbitrator imposed the costs of arbitration and Clients’
attorneys’ fees upon Appellant.3
Appellant filed a Motion to Vacate in the court of common pleas,
asserting that the arbitrator lacked jurisdiction to consider Appellant’s claims,
that he had denied Appellant a fair hearing, and that the arbitration award
was unjust. The common pleas court denied the Motion.
Appellant timely appealed and filed a court-ordered Pa.R.A.P. 1925(b)
Statement. The court issued a comprehensive and responsive Opinion.
Appellant raises the following issues:
1. Should the [lower] [c]ourt’s denial of Appellant’s [Motion to
Vacate] be reversed where there was no agreement to
arbitrate[,] and the court failed to give de novo review[;]
Appellees repudiated the alleged agreement to arbitrate[;] . .
. the court improperly applied the standard of 42 Pa.C.S. §
7341 to the jurisdiction question[;] the court found an
agreement by implication[;] the court implied consideration not
in the disavowed document[;] and [the court] improperly relied
on earlier decisions and the arbitrator’s determinations?
2. Should the [lower] [c]ourt’s denial of Appellant’s [Motion to
Vacate] be reversed where the award was not properly
encompassed with[in] [Clients’] counterclaim[;] not filed with
AAA as required by their rules[;] and Appellant was denied a
full and fair hearing on the claim where the arbitrator denied
“All of [Clients’] claims filed and all counterclaim damages
(including punitive, contractual[,] lost wages, pain and
suffering[,] and emotional distress)”, but awarded
$381,292,50 [sic] for claims never raised as required by AAA
____________________________________________
3 Clients’ fees totaled $355,000.00; Administrative fees of the American
Arbitration Association were $10,050.00; and compensation due the arbitrator
was $42,535.00. Motion to Vacate the Award of the AAA Arbitrator, 2/14/19,
Exhibit No. 1 (“Final Award of Arbitrator”, 1/15/19, at 6).
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rules, denying Appellant an opportunity to a full and fair
hearing on the issues?
3. Should the Appellant’s Motion to Vacate . . . have been
sustained where the record contains clear, precise and
indubitable evidence that there was misconduct by [Clients’]
and/or the arbitrator[,] which demonstrated fraud,
misconduct, corruption and irregularities [that] denied
Appellant a full and fair hearing on his claim for defamation?
Appellant’s Br. at 6-7 (suggested answers omitted).
We review a court order confirming a common law arbitration award for
an abuse of discretion or an error of law. Prudential Prop. & Cas. Ins. Co.
v. Stein, 683 A.2d 683, 685 (Pa. Super. 1996).
“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.” U.S. Spaces, Inc. v.
Berkshire Hathaway Home Servs., Fox & Roach, 165 A.3d 931, 934 (Pa.
Super. 2017) (citation omitted).4 An arbitrator is the final judge of both law
and fact, and we shall not reverse a common law arbitration award for a
mistake of either. F.J. Busse Co. v. Sheila Zipporah, L.P., 879 A.2d 809,
811 (Pa. Super. 2005). Thus, neither this Court nor the trial court may review
the tribunal’s disposition of the merits of the case. Id.
The award of an arbitrator is binding. Sage v. Greenspan, 765 A.2d
1139, 1142 (Pa. Super. 2000) (citation omitted). We may not vacate or
modify an award “unless it is clearly shown that a party was denied a hearing
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4This matter proceeded in common law arbitration because the Contract did
not reference the Uniform Arbitration Act. See Fastuca v. L.W. Molnar &
Assocs., 950 A.2d 980, 988 (Pa. Super. 2008).
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or that fraud, misconduct, corruption or other irregularity caused the rendition
of an unjust, inequitable or unconscionable award.” 42 Pa.C.S. § 7341. Thus,
to challenge an arbitration award successfully, the appellant must establish
by “clear, precise, and indubitable evidence” both the underlying irregularity
and the resulting inequity. Gargano v. Terminix Int’l Co., L.P., 784 A.2d
188, 193 (Pa. Super. 2001) (internal citation omitted).
Appellant raises three broad issues on appeal. First, Appellant maintains
that there was no agreement to arbitrate and that the arbitrator lacked
jurisdiction to consider Appellant’s claims. See Appellant’s Br. at 25-55.
Second, Appellant contends that we must vacate the arbitration award
because Clients never filed a claim for fees and expenses and because the
arbitrator had denied Clients’ several counterclaims during the arbitration
proceedings. See Appellant’s Br. at 55-63. Third, Appellant alleges several
instances of misconduct by the arbitrator such that he denied Appellant a full
and fair hearing on his claims for defamation. See Appellant’s Br. at 63-77.5
The Honorable Garrett D. Page has authored a comprehensive,
thorough, and well-reasoned Opinion addressing each of Appellant’s claims.
After a careful review of Appellant’s arguments and the certified record, we
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5 In his Statement of Questions for the appeal, Appellant asserted that Clients
also engaged in misconduct. See Appellant’s Br. at 7. However, Appellant
fails to develop any argument in support of this assertion. See Appellant’s
Br. at 63-77. Thus, we find it waived. See Sephakis v. Pa. State Police
Bureau of Records and Id., 214 A.3d 680, 686-87 (Pa. Super. 2019);
Pa.R.A.P. 2119(a).
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adopt the Opinion as our own and affirm the lower court’s decision to deny
Appellant’s Motion to Vacate. See Trial Ct. Op, 4/16/20, at 1-2, 9-10, 14-20
(discussing this Court’s dispositive ruling that Appellant’s defamation claims
were subject to arbitration pursuant to the Contract and that Appellant’s
claims to the contrary are without merit);6 12-14 (concluding that (a) the
Contract’s arbitration clause granted the arbitrator authority to award costs
and fees, (b) the award was supported by evidence, (c) Appellant was given
an opportunity to challenge the evidence, and (d) the size of the award reflects
Appellant’s “dilatory and obdurate conduct”, which needlessly prolonged the
proceedings); and 6-9, 10-12 ((a) examining relevant portions of the
proceedings, (b) finding that Appellant’s assertions of misconduct were
unfounded and often misleading, and (c) concluding that Appellant failed to
demonstrate with clear and precise evidence that he was denied a hearing or
that misconduct led to an unjust or inequitable award).
We direct the parties to annex the lower court’s April 16, 2020 Opinion
to any future filings.
Rule discharged. Judgment affirmed.
____________________________________________
6The lower court also cites to a related appeal by Appellant, involving Legal
Access Plans, LLC, in which a panel of this Court similarly determined that the
Contract included a valid agreement to arbitrate. Millinghausen v. Legal
Access Plans, LLC, 60 A.3d 846 (Pa. Super. 2012) (unpublished
memorandum), allocatur denied, 64 A.3d 632 (Pa. 2013).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/13/2020
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Circulated 09/18/2020
2012-06050-0237 02:39 Page
Opinion, PM 1
IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY,
PENNSYLVANIA
CIVIL DIVISION
SAMUEL W.B. MILLINGHAUSEN, III Lower Court Docket:
No. 2012-06050
Plaintiff
v.
KAREN M. DRAKE, ET AL. 477EDA2020
Defendants
OPINION
Page, J. April 15, 2020
Plaintiff appeals from this Court's Order of January 8, 2020. For the reasons set forth
below, Plaintiff's appeal is without merit. Therefore, any claim of error on the part of this Court
should be dismissed, and the ruling should be affirmed.
FACTS AND PROCEDURAL HISTORY
The instant appeal arises from Plaintiff Samuel W.B. Millinghausen, Ill's challenge to an
arbitration award issued by Arbitrator Beitch ("the Arbitrator") on January 15, 2019. See Docket
Entry 168. In the underlying action, Plaintiff alleges that Defendants Karen Drake, Joy Capka,
Maryann DiRenzo, Robert Hyslop, Jr., and Theresa Hyslop-all clients of Plaintiff referred by
Legal Access Plans, LLC-made defamatory statements that led to the termination of his
relationship with Legal Access Plans, L.L.C. See Docket Entry 22. Plaintiff also brought suit
against the Legal Access Defendants in a separate action in Montgomery County under Docket
Number 2011-13446.
In the separate matter at Docket Number 2011-13446, the Legal Access Defendants
requested that the case be remanded to arbitration pursuant to an arbitration clause contained in
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2012-06050-0237 Opinion, Page 2
2006 and 2008 agreements between the parties. Upon the trial court declining to remand the
matter to arbitration, the Legal Access Defendants filed an appeal. During the pendency of the
appeal in the matter at Docket Number 2011-13446, Defendants under this docket similarly
demanded that the instant matter be remanded to arbitration pursuant to the same arbitration
clause in the 2006 and 2008 agreements, appealing the trial court's denial of their Motion to
Compel Arbitration. Both Pennsylvania Superior Court panels for the matter under Docket
Number 2011-13446 and the matter under Docket Number 2012-06050 issued opinions
remanding Plaintiffs cases-based on the same agreements and same underlying facts-to
arbitration. Plaintiffs Petition for Allowance of Appeal to the Pennsylvania Supreme Court was
denied for the matter at Docket Number 2011-13446 and denied as having been improvidently
granted for the matter at Docket Number 2012-06050.
On January 15, 2019, the Arbitrator issued an arbitration award in favor of Defendants
and against Plaintiff on his claims for defamation, false light, invasion of privacy, and unpaid
bills and ordered that Plaintiff pay Defendants' counsel fees. See Docket Entry 181 at Ex. 5. On
February 14, 2019, Plaintiff filed a Motion to Vacate the Award of the AAA Arbitrator. See
Docket Entry 168. In said motion, Plaintiff alleges that fraud, misconduct, corruption, and other
irregularities on the part of both the Arbitrator and defense counsel denied him a fair hearing and
rendered an unjust, inequitable, and unconscionable award. Plaintiff also contends the arbitration
award should be vacated based on the allegation that the 2006 and 2008 documents were not
enforceable contracts, thus the Arbitrator lacked jurisdiction in the absence of an enforceable
arbitration provision.
On March 22, 2019, Plaintiff filed an Emergency Motion to Retain Jurisdiction and
Strike Defendants' Petition to Confirm Arbitration Award, which the Court granted. See Docket
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Entries 171; 177. Defendants filed a response in opposition to Plaintiff's Motion to Vacate the
Award of the AAA Arbitrator on March 22, 2019. See Docket Entry 181. Plaintiff filed a Brief in
Support of his Motion to Vacate the Award of the AAA Arbitrator on October 3, 2019, and
Defendants filed their own Brief in Support of their earlier opposition on November 4, 2019. See
Docket Entries 217; 219. Plaintiff filed a Reply Brief in Support of his Motion to Vacate the
Award on November 25, 2019. See Docket Entry 220. Plaintiff filed an Argument Praecipe, and
this Court held oral argument on Plaintiff's Motion to Vacate the Award of the AAA Arbitrator
on January 7, 2020. See Docket Entries 222-23. Following argument, the Court denied Plaintiff's
Motion on January 8, 2020. See Docket Entry 224. Plaintiff filed a Motion for Reconsideration,
which this Court denied on January 23, 2020. See Docket Entries 225-26.
Plaintiff filed a timely Notice of Appeal on January 30, 2020.
ISSUES
Plaintiff's Concise Statement is reproduced verbatim below:
1. The Trial Court erred as a matter of law and/or fact or committed an abuse of discretion
when it failed to fmd arbitrator denied Appellant a full and fair hearing where the arbitrator
denied Appellant discovery which identified or included information related to the parties
who made the defamatory [sic] to Legal Access and/or Robert L. Heston, Jr.
2. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when it failed to fmd arbitrator denied Appellant a full and fair hearing where the arbitrator
denied Appellant discovery which included Legal Access Plans complete file on Appellant.
3. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when the arbitrator denied Appellant a full and fair hearing when Appellees failed to move
any exhibit into evidence, ignoring the arbitrator's order to move exhibits, and denying
Appellant any meaningful opportunity to object to exhibits.
4. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator denied Appellant a full and fair
hearing when the arbitrator required Appellant to participate in oral argument conducted in
Florida over the objections of Appellant.
5. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator engaged in ex parte discussions of
the case with Appellees' counsel following the close of oral argument.
6. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator's award was unjust, inequitable or
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2012-06050-0237 Opinion, Page 4
unconscionable where it exceeded Appellant's Schedule C income for his practice and his
IRS Adjusted Gross Income for ten years and Appellant was denied a full and fair hearing.
7. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator denied Appellant a full and fair
hearing when no claim was made based on the falsely alleged arbitration clause of the
renounced documents before the close of hearings.
8. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator denied Appellant a full and fair
hearing when the arbitrator allowed Appellees to exhaust Appellant economically by refusing
to dismiss their frivolous Dragonetti claim for five days of testimony at great financial
benefit to Appellees and to the arbitrator.
9. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity where the arbitrator denied Appellant a full and fair
hearing when the arbitrator demonstrated bad faith, ignorance of the law and indifference to
the justice of the result in reaching an unjust, inequitable and unconscionable award when he
stated "I can rule, I believe, that I have jurisdiction of a claim before it's filed."
10. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when he failed to find an irregularity when the arbitrator denied Appellant a full and fair
hearing when the arbitrator stated he, [sic] stopped reviewing Appellant's filings midstream.
11. The Trial Court erred as a matter of law and/or fact or committed an abuse of discretion
when where [sic] the Trial Court applied an incorrect standard when it refused to find the
arbitrator lacked any jurisdiction to rule in this case.
12. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when the Trial Court failed to properly consider after acquired evidence to determine there
was no jurisdiction for the arbitrator to rule in this case.
13. The Trial Court erred as a matter oflaw and/or fact or committed an abuse of discretion
when where [sic] the arbitrator denied Appellant a full and fair hearing on the claim for
counsel fees, costs and expenses, where the arbitrator made the award based on a claim never
raised at any time during the AAA proceedings.
ANALYSIS
"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." US. Spaces, Inc. v. Berkshire Hathaway Home Servs., Fox & Roach, 165
A.3d 931, 934 (Pa. Super. Ct. 2017) ( citation omitted). "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." McKenna v. Sosso, 745 A.2d 1, 4 (Pa. Super. Ct. 1999) (citation omitted). "Neither [the
appellate court] nor the trial court may retry the issues addressed in arbitration or review the
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tribunal's disposition of the merits of the case." Id. There exists a "high burden upon the party
who excepts to an arbitration award," with "every presumption [being] in favor of [the
arbitration award's] validity." Reinhart v. State Auto. Ins. Ass 'n, 363 A.2d 1138, 1142 (Pa.
Super. Ct. 1976). The following standard applies in reviewing an arbitration award in a common
law arbitration:
The 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
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; see also PG Metals Co. v. Hojldn, 218 A.2d 238, 239-40 (Pa. 1966)
( citations omitted) ("[ A]n award of arbitrators in a common law arbitration is conclusive and
binding and cannot be attacked unless it can be shown by clear, precise and convincing evidence
that the parties were denied a hearing, or there was fraud, misconduct, corruption, or some other
irregularity which caused the rendition of an unjust, inequitable or unconscionable award.").
"To prevail on these grounds, actual fraud must be shown, involving collusion with one
of the parties, or misconduct intended to create a fraudulent result." Gwin Engineers, Inc. v.
Cricket Club Estates Dev. Grp., 555 A.2d 1328, 1329 (Pa. Super. Ct. 1989) (citing Mellon v.
Travelers Ins. Co., 406 A.2d 759, 761 (Pa. Super. Ct. 1979)). "An argument that the arbitrators
were prejudiced or partial, or that they reached an award so unjust that it constitutes constructive
fraud, will not be heeded." Mellon, 406 A.2d at 761. "Similarly, an 'irregularity' will not be
found simply upon a showing that an incorrect result was reached." Id. "In an arbitration
proceeding, an irregularity refers to the process employed in reaching the result of the arbitration,
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2012-06050-0237 Opinion, Page 6
not to the result itself." Chervenak, Keane & Co., Inc. v. Hotel Rittenhouse Assoc., Inc., 477
A.2d 482 (Pa. Super. Ct. 1984).
I. DISCOVERY/EVIDENTIARY ISSUES
Plaintiffs first three issues generally boil down into a single overarching error-that this
Court erred in not finding the Arbitrator denied Plaintiff a hearing with regard to several
discovery issues. Preliminarily, the Court notes that none of Plaintiffs allegations of error
related to discovery amount to denial of a hearing or "fraud, misconduct, corruption or other
irregularity" as required to vacate the award-particularly where Plaintiff was afforded the
opportunity for extensive discovery. In his first two issues, Plaintiff alleges that the Arbitrator
denied him discovery related to the identities of those who made defamatory statements and
Legal Access Plans' complete file on himself. Here, it is factually untrue that the Arbitrator
denied Plaintiff discovery on the identities of the individuals who allegedly made defamatory
statements. The Arbitrator ordered that Defendants disclose the identities of said individuals by
providing Plaintiff with responsive documents. See Docket Entry 219 at Ex. 21. When Plaintiff
expressed dissatisfaction with Defendants' lack of production of mailing addresses for said
individuals, the Arbitrator and Defendants offered to conference this issue, to which Plaintiff
declined the need to further pursue this discovery in the following email:
I [Plaintiff] do not wish to discuss the issue further. Ms. Wynkoop
[defense counsel] has stated LAP [Legal Access Plans] does not
have information on the individuals they have offered as making
the statements they provided. I do not wish to spend time or
resources listening to their assertions. I believe there is no issue for
Mr. Beitch [the Arbitrator] to address and request you do not
schedule any conference.
See id. at Ex. 23.
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2012-06050-0237 Opinion, Page 7
Similarly, the Arbitrator addressed Plaintiffs concerns related to production of a
"complete file" on Plaintiff, finding that such a file likely does not exist and would nevertheless
be unnecessary to prove his case in light of Plaintiff being afforded extensive discovery:
Claimant continues to object to a non-existing refusal to grant him
discovery. I ordered that he be supplied with all germane requested
documents and this was done. He continues to want "his file" as if
this will contain additional pejorative statements about him
proving his case. I believe that there is not a general file labeled
and maintained as such. There were multiple days of Hearings
including testimony of the Individual Respondents and employees
under oath. Claimant had ample opportunity to develop and prove
his case during the Course of Arbitration).
See Docket Entry 181 at Ex. 5, ,r C.
Ultimately, the Arbitrator determined in his Final Award that Defendants sufficiently
complied with his order compelling discovery. Id. The Court is bound by 42 Pa. C.S. §7341 and
cannot disturb the Arbitrator's findings of law and fact-particularly here, where Plaintiffs
allegations of being denied a hearing by way of denial of discovery are especially unavailing.
Plaintiffs third issue alleges the Court erred in not finding Plaintiff was denied a hearing
due to the alleged failure of Defendants to move exhibits into evidence-denying Plaintiff the
opportunity to object to exhibits. The Court finds this claim without merit. Here, the Arbitrator
noted in his Final Award that both parties-not just Defendants-were "not diligent in moving
their exhibits into evidence." See Docket Entry 181 at Ex. 5, ,r M. In fact, Defendants allege in
their opposition that Plaintiff submitted new testimony and documentary evidence after the close
of the hearings. Despite Plaintiffs own failure to diligently move exhibits into evidence, the
Arbitrator nevertheless allowed Plaintiff to submit the evidence he felt necessary to support his
case. The Arbitrator also noted in his Final Award that in rendering his decision, he "accept[ed]
all the proffered exhibits for the consideration they deserve, noting that some of these lack
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2012-06050-0237 Opinion, Page 8
foundation and some are of limited probative value." Id. In this case, Defendants submitted
exhibits that were marked throughout the evidentiary hearing and referenced with detailed
citations in corresponding motions and briefs. See Docket Entry 219. As such, Plaintiff was
afforded the opportunity to object to exhibits through replies to Defendants' briefs and
throughout the five days of hearings, and the Arbitrator cannot be said to have denied Plaintiff a
hearing as required to vacate the award.
II. ORAL ARGUMENT
In issues four and five, Plaintiff alleges this Court erred in not finding irregularities in the
oral argument conducted at the close of arbitration. First, Plaintiff argues that that the scheduling
of closing arguments in Florida over his objections denied him a hearing or resulted in an
irregularity in the proceedings. This claim lacks merit. Plaintiff cannot be said to have been
denied a full and fair hearing after being given the benefit of five days of evidentiary hearings
over the course of two years and the opportunity to attend closing arguments in-person or
telephonically. See Docket Entry 181 at Ex. 9. The Court notes that at the close of the hearings,
the parties agreed they preferred in-person closing arguments, with Plaintiff making the
following on-the-record statement when Florida was raised as a potential location:
MR. MILLINGHAUSEN: I have a suggestion. If you're going to
Florida, I think Mr. Wagner [defense counsel] will fly me and the
family down.
See Docket Entry 219 at Ex. 17 (N.T. Hearing 5/14/18, pp. 410-11).
Consistent with Plaintiffs comment, Defendants assert both in their brief in support of
their opposition and during oral argument on Plaintiffs Motion to Vacate the Arbitration Award
that defense counsel did in fact offer to pay for Plaintiffs travel to closing argument in Florida.
See id.; see also N.T. Hearing 1/7/20, pp. 48; 50-51. The record before the Court indicates the
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2012-06050-0237 Opinion, Page 9
Arbitrator offered to make similar accommodations to Plaintiff's objections to Florida, offering
that the parties could forego closing arguments or conduct them telephonically. See Docket Entry
219 at Ex. 17 (N.T. Hearing 5/14/18, pp. 410-11); see also id. at Ex. 9; 18. That Plaintiff is now
unhappy with his decision to not make an in-person appearance at closing arguments does not
rise to the level of "fraud, misconduct, corruption or other irregularity" or denial of a hearing
required for the Court to vacate the award.
Second, Plaintiff contends that alleged ex parte discussions overheard on the
teleconference at the end of closing arguments constitute an irregularity providing justification to
vacate the award. Plaintiff alleges that after closing arguments were finished, he could overhear
"banter" and defense counsel answering the Arbitrator's question about where to find the
language concerning "access to clients" in the 2006 agreement. Defendants contend that defense
counsel merely answered a question of the Arbitrator's during closing arguments. Even taking
Plaintiff's version of events to be true, the Court finds that Plaintiff has not established that the
alleged conduct constitutes an irregularity or denial of a hearing, where the question of whether
"access to clients" was a form of consideration was already belabored at length over the course
of five days of evidentiary hearings. Thus, Plaintiff's fourth and fifth issues must fail.
III.OTHER IRREGULARITIES WITH ARBITRATOR
Plaintiff also raises a number of other errors associated with the Court declining to find
irregularities in the conduct of the Arbitrator in issues seven, eight, and ten. In issue seven,
Plaintiff alleges an irregularity in the proceedings and denial of a hearing by way of the fact that
"no claim was made based on the falsely alleged arbitration clause[.]" In other words, Plaintiff
contends the matter should not have been remanded to arbitration where Plaintiff's claim was for
defamation and not breach of contract. Here, the Superior Court already soundly rejected
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2012-06050-0237 Opinion, Page 10
Plaintiffs position on this exact issue in his earlier appeal, finding Defendants are third party
beneficiaries of the contract and that the broad language of the arbitration clause covers claims
"premised upon defamation and slander"-allowing the defamation claim to go to arbitration
over Plaintiffs objections. See Millinghausen v. Legal Access Plans, LLC, 60 A.3d 846 (Pa.
Super. Ct. 2012) (unpublished memorandum). Specifically, the Superior Court provided its
reasomng for the agreement to arbitrate extending to Defendants in a defamation claim as
follows:
We now tum to whether Millinghausen's tort claims against
Appellants are within the scope of the arbitration agreement. The
trial court determined that Millinghausen's defamation claims
against Appellants were outside the scope of the arbitration
clause. See Trial Court Opinion, 8/15/03, at 8. We disagree with
the trial court based on our prior conclusion that the arbitration
clause was broad, and applied to Millinghausen's breach of
contract claim against Legal Access, which was premised in part
on Appellants' alleged defamatory statements. Millinghausen,
supra, at 10. We are not persuaded that the current action is
outside the scope of the broad arbitration clause by which
Millinghausen is bound. Therefore, based on our prior
determinations in Elwyn, Callan, Pisano, Schoel/hammer's
Hatboro Manor, and Millinghausen's action against Legal Access,
we reverse the trial court's refusal to compel this action to
arbitration.
See Millinghausen v. Drake, No. 1205 EDA 2013 (Pa. Super. Ct. 2014) (emphasis added).
Thus, the Superior Court already reversed the trial court and determined arbitration is
appropriate-despite the claim being one of defamation and not breach of contract-and
Plaintiffs issue seven must be dismissed.
Plaintiff also alleges the Court erred in not finding an irregularity or denial of a hearing
where the Arbitrator allowed Defendants to present their Dragonetti claim during the hearings. In
this case, both Plaintiff and Defendants raised Dragonetti claims, which the Arbitrator ultimately
dismissed in his Final Award. That the Arbitrator permitted both parties to assert counterclaims
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2012-06050-0237 Opinion, Page 11
can hardly be said to constitute "clear, precise and convincing evidence" of denial of a hearing or
"fraud, misconduct, corruption, or some other irregularity" as required by the standard set forth
in 42 Pa. C.S.A. § 7341. Insofar as Plaintiff finds the Arbitrator misapplied the law or
misinterpreted facts in not dismissing Defendants' Dragonetti claim sooner, a mistake oflaw or
fact is not subject to judicial review for common law arbitration. To the extent that Plaintiff
alleges error in Defendants' Dragonetti claim contributing to additional costs for Plaintiff, the
Court notes that the Arbitrator identified Plaintiffs own legal maneuvers as increasing the time
and money spent on the proceedings, as will be discussed in Section IV infra.
In issue ten, Plaintiff alleges an irregularity and denial of a hearing where the Arbitrator
stated he stopped reviewing Plaintiff's filings "midstream." Initially, the Court notes that the
Arbitrator never proclaimed to refuse to review Plaintiffs filings altogether, but rather, stated the
following:
MR. MILLINGHAUSEN: Well, we're not necessarily agreeing
to that. We do not necessarily agree to an arbitration. We agreed to
allow the opportunity for a fair hearing. That's why we are here.
ARBITRATOR BEITCH: Okay. I take exception to that. We
already had the issue early on in the proceedings. You objected to
arbitration. And everybody knows, there is a whole case history
here where the Pennsylvania Court system dealt with whether
arbitration was required in this case. And I believe the ultimate
ruling was, and you filed an objection, stating, I believe correctly,
that the ultimate decision is mine as to whether I have jurisdiction.
And in midstream, you made a filing in which you, I believe,
agreed to waive your argument against the arbitration and proceed.
Said a nice thing or two about me in that, and I accepted it
verbatim. [ ... ]
ARBITRATOR BEITCH: Let me cut you short a moment. I
don't want us to get on sidetracks. What I am trying to determine
right now is whether you have agreed to arbitration, or I
misunderstood what your pleading was. And [if] you are not
agreeing or renewing your objection. In which case, I will hear
further argument on it. I stopped reviewing your filings in
midstream based on your representation that you find arbitration
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2012-06050-0237 Opinion, Page 12
acceptable, so I don't want us to spend our precious time now
debating the issue. You both briefed it for me.
See Docket Entry 219 at Ex. 22 (N.T. Hearing 10/2/17, pp. 8:7-9:2; 11:2-13).
As seen by the excerpted language, the Arbitrator's statement about stopping review of
Plaintiffs filings is couched in the context of the parties having to continuously revisit the issue
of the Arbitrator's jurisdiction throughout the proceedings due to Plaintiffs repeated objections.
In essence, Plaintiff takes a single out-of-context statement from the Arbitrator and attempts to
frame it as the Arbitrator having completely neglected to perform his duties-despite ample
record evidence suggesting the Arbitrator considered the parties' briefs and arguments in making
a reasoned determination of his jurisdiction. Accordingly, the Court finds that Plaintiff has not
identified with "clear, precise and convincing evidence" either denial of a hearing or "fraud,
misconduct, corruption, or some other irregularity" as required by the standard set forth in 42 Pa.
C.S.A. § 7341. Thus, there was no error in this Court's denial of the Motion to Vacate the
Arbitration Award.
IV. ARBITRATION AWARD
Plaintiffs sixth and thirteenth issues both allege error in the Court having not found
irregularity associated with the amount and makeup of the arbitration award itself. Specifically,
Plaintiff alleges that the award is unjust, inequitable, or unconscionable as excessive in relation
to his income and that the Arbitrator had no basis for awarding counsel fees, costs, and expenses
as a component of the award. With regard to Plaintiffs claim that his personal financial situation
merits vacating the award, Plaintiff provides no legal or factual support to establish that the size
of the arbitration award in this case constitutes "clear, precise and convincing evidence" of
"fraud, misconduct, corruption, or some other irregularity" as required by the standard set forth
in 42 Pa. C.S.A. § 7341; PG Metals Co., 218 A.2d at 239-40. Of note, Plaintiff makes no
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2012-06050-0237 Opinion, Page 13
allegation in his Motion to Vacate or corresponding brief that the amount awarded by the
Arbitrator exceeded the actual fees and costs in Defendants' fee petitions.
Here, the Arbitrator identified Plaintiff's "multiple motions and other expensive and time
consuming actions," "continual[] resist[ ance ]" of arbitration, "obdurate insistence on presenting
and renewing multiple unfounded positions," and ''unfocused and slow-paced presentation of the
evidence" as reasons meriting the allocation of counsel fees, costs, and expenses in his Final
Award. See Docket Entry 181 at Ex. 5, ,r K. Given that the Arbitrator identified Plaintiff's own
dilatory and obdurate conduct as a primary factor in contributing to the "expensive" and "time
consuming" nature of the arbitration, this Court notes that Plaintiff need look no further than his
own conduct with respect to raising a complaint over the size of the arbitration award. Plaintiff
also cannot claim to have been denied a full and fair opportunity to challenge Defendants'
counsel fees and costs, where Plaintiff was given the opportunity to submit objections to
Defendants' fee requests and additional time to supplement said objections. See Docket Entry
181 at Ex. 11. That the Arbitrator did not agree with Plaintiff's objections does not indicate that
his conduct rose to the level of "fraud, misconduct, corruption, or some other irregularity"
necessary for the Court to justify vacating his award, thus issue six must fail.
As for Plaintiff's contention that the Arbitrator had no basis to award counsel fees, costs,
and expenses due to Defendants' allegedly not claiming said items, this claim lacks merit. Here,
the arbitration clause of the underlying agreement at issue specifically granted the Arbitrator the
authority to require Plaintiff to pay counsel fees and costs, providing that "Each party shall bear
the costs of its own attorneys' fees in connection with an arbitration unless such costs are
otherwise allocated by the arbitrator." See Docket Entry 181 at Ex. 1, § 11 (emphasis added).
Accordingly, the Arbitrator abided by the arbitration clause in § 11 of underlying agreement in
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2012-06050-0237 Opinion, Page 14
allocating counsel fees, costs, and expenses to Plaintiff in his Final Award. See id. at Ex. 5, ,r K.
Therefore, to the extent that Plaintiff argues there was no "claim" for counsel fees, costs, and
expenses, the Arbitrator did in fact have full authority to award such allocations, and Plaintiffs
thirteenth issue must be dismissed.
V. ARBITRATOR'S JURISDICTION
Plaintiff raises similar allegations of error in issues nine, eleven, and twelve, all of which
relate to the claim that the Arbitrator lacked jurisdiction to rule in this case. Essentially, Plaintiff
argues that the two agreements underlying the action were not enforceable contracts, making the
arbitration clause unenforceable. Preliminarily, the Court will note that the issue of the
Arbitrator's jurisdiction came before the Superior Court twice before, with the Superior Court
twice finding that there was an enforceable contract requiring each of Plaintiffs lawsuits be
remanded to arbitration. Specifically, the Superior Court opined the following on the issue of the
contract's enforceability:
Accordingly, we found in Millinghausen that Millinghausen and
Legal Access entered into a valid agreement to arbitrate, a
conclusion with which the trial court agreed after conducting its
own analysis. Trial Court Opinion, 8/15/13, at 4-7 ("It is clear to
this Court, following a review of the Agreement [between
Millinghausen and Legal Access], that a valid arbitration
agreement exists."). We agree with both the Millinghausen
panel from our Court and with the trial court.
See Millinghausen v. Drake, No. 1205 EDA 2013 (Pa. Super. Ct. 2014) (emphasis added).
The Superior Court in Plaintiffs lawsuit against the Legal Access Defendants also found
that the same 2006 document underlying the instant action was an enforceable contract, in
addition to fmding that Plaintiff already admitted as much:
In this case, the parties entered a Network Provide agreement on
January 27, 2006 ... In the present case, Appellee [Plaintiff] does
not contest the validity of the agreement to arbitrate; rather, he
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2012-06050-0237 Opinion, Page 15
maintains that his present action is outside its scope because it
pertains to slander and defamation and Appellant's re-publication
of slander and defamation.
See Millinghausen v. Legal Access Plans, LLC, 60 A.3d 846 (Pa. Super. Ct. 2012) (emphasis
added).
Further, the Arbitrator made his own independent evaluation as to the issue of his
jurisdiction after multiple rounds of briefing and argument during the evidentiary hearings:
Claimant continued/continues to object to AAA jurisdiction
despite his written concession in the course of initial argument on
the issue. He asserts that the Agreement of the Parties was not
supported by legal consideration.
The Agreement offers possible consideration of Claimant for
client referrals in exchange for his agreement to terms
governing the resulting relationships. Referrals ensued and
Claimant valued the resultant benefits conferred upon him. He also
objects that he strike the provision dealing with indemnity and that
the Heston Respondents did not sign his amended version. This
objection is moot given my finding that the indemnity clause is not
applicable to this litigation, even if not stricken.
The parties to the writing, acted as if the Agreement was valid
and in force, and Claimant cited to it multiple times before
deciding to contest it. The Agreement was terminable without
cause by either party and Claimant chose to accept its benefits in
the course of dealings and not to terminate it despite his (one)
objection to the language.
Thus, the Agreement which provides for AAA iurisdiction and
the applicability of its rules is valid and enforceable.
See Docket Entry 181 at Ex. 5, ,r A (emphasis added).
Plaintiff himself even offered contradictory statements as to whether he was conceding to
or objecting to the Arbitrator's jurisdiction during the evidentiary hearings:
MR. MILLINGHAUSEN: That's why I want to proceed. At least
if you give me a fair hearing [sic] and I end up with a reasonable
and appropriate judgment, then the arbitrability is not an issue.
ARBITRATOR BEITCH: Well, I think that puts you as the
ultimate determiner in this case rather than me a the rules and
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2012-06050-0237 Opinion, Page 16
customs would apply. And I can't proceed with arbitration with
you having a right to pull a veto out of your pocket. [ ... ]
ARBITRATOR BEITCH: I am not putting you to a choice other
than whether you are continuing to pursue your objection to my
jurisdiction.
MR. MILLINGHAUSEN: I'm not.
ARBITRATOR BEITCH: But you reserve the right, I thought I
heard you say.
MR. MILLINGHAUSEN: No. No. What I'm saying is I never
agreed to it. There is a difference.
ARBITRATOR BEITCH: Yes, there is.
MR. MILLINGHAUSEN: I'm not agreeing to it but - I'm not
agreeing you have authority. I am agreeing to be here and
participate and you will make a ruling. And any objection to that
ruling, any appeal from that ruling will be based on other
issues, not on whether you have iurisdiction because the
Superior Court already decided that.
See Docket Entry 219 at Ex. 3 (N.T. Hearing 10/2/17, pp. 15:1-10; 17:4-21) (emphasis added).
Although Plaintiff later revoked his consent to jurisdiction in the same day of hearings,
the point remains that the Arbitrator addressed the basis for his finding that he had jurisdiction at
multiple points in the proceedings and in his Final Award, after having engaged with the briefs
and arguments of the parties. Thus, Plaintiffs attempt to cherry-pick the Arbitrator's statement
"I can rule, I believe, that I have jurisdiction of a claim before it's filed" to allege the Arbitrator
demonstrated "bad faith, ignorance of the law and indifference to the justice of the result" in
issue nine is unavailing. A close reading of the hearing transcripts reveals that the Arbitrator's
full statement was as follows: "I can rule, I believe, that I have jurisdiction of a claim before it's
filed. I can look at the language of the agreement to arbitrate and say that any particular claim
whether or not filed with AAA is before me." See Docket Entry 219 at Ex. 3 (N.T. Hearing
1/11/18, pp. 51 :22-52:3) ( emphasis added). The Arbitrator proceeded to explain that his authority
to rule on Plaintiffs claims derives from the arbitration agreement, to which Plaintiff again
insisted "there is no agreement to arbitrate, there is no contract"-an issue already conclusively
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2012-06050-0237 Opinion, Page 17
ruled on by the Superior Court. See id. (N.T. Hearing 1/11/18, pp. 51:22-52:23). Thus, while the
crux of Plaintiffs objection to jurisdiction is that the Arbitrator wrongly found there was an
enforceable contract, such an argument is unpersuasive in the face of two Superior Court
decisions finding a binding arbitration agreement and the Arbitrator's sound explanation for
finding an enforceable contract as detailed in his Final Award. Consequently, Plaintiffs
allegation that the Arbitrator demonstrated "bad faith, ignorance of the law and indifference to
the justice of the result" in asserting he had jurisdiction is without merit.
Next, Plaintiff claims in issue eleven that the Court improperly failed to consider "after
acquired evidence" when deciding the question of the Arbitrator's jurisdiction. Plaintiff contends
that testimony from Robert Heston and Charlie Jacquo, President and Director of Network
Management of Legal Access Plans respectively, establishes that the underlying 2006 and 2008
documents were not contracts. Unfortunately for Plaintiff, this "after acquired evidence" in no
way establishes the absence of an enforceable arbitration agreement. For one, the Heston
testimony cited by Plaintiff in his brief and Motion for Reconsideration refers to the 2008
document. Here, the Superior Court found that the 2006 document was an enforceable arbitration
agreement, making said testimony of no moment in the Superior Court's finding that an
arbitration agreement existed. Second, Plaintiff cites Charlie Jacquo' s testimony that Plaintiff
was "not officially" a network provider pursuant to the 2006 document as proof of said
document not being a contract---conveniently omitting that she also testified that Legal Access
Plans would not have continued giving Plaintiff client referrals unless a contract existed:
Q. Okay. You don't do business with people you don't have
contract with; do you?
A.No.
See Docket Entry 219 at Ex. 17 (N.T. Hearing 5/14/18, pp. 386:13-16).
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2012-06050-0237 Opinion, Page 18
Plaintiff also cites testimony from Defendants' expert to argue there was no consideration
between Plaintiff and Legal Access Plans and by extension, no enforceable arbitration
agreement. Tellingly, Plaintiff cherry-picks the defense expert's statement that Legal Access
Plans had no obligation to give Plaintiff business to suggest a lack of consideration but ignores
key portions of the testimony-including the defense expert's next words specifically testifying
to the fact that there was consideration:
Q. Now, you said in your testimony that Legal Access Plans had
no obligation to give me [Plaintiff] business. Is that correct?
A. Yes.
Q. They had no obligation?
A. No obligation.
Q. They had not [sic] obligation at all?
A. Correct.
Q. Okay. And you've seen the document offered as a contract?
Correct?
A. I've seen the contract.
Q. Okay. Now what in the agreement provides consideration to
me? What is the benefit of the contract, the alleged contract,
that I received?
A. Access.
Q. Access?
A. Access to putative clients.
See Docket Entry 168 at Ex. 25 (N.T. 1/12/18, pp. 196:12-197:1-7) (emphasis added).
In the absence of any new evidence supporting either absence of a valid arbitration
agreement or the conclusion that the Superior Court would have ruled differently had the new
testimony been before it, Plaintiffs allegation of error in issue eleven fails. The Court notes that
the same 2006 and 2008 documents were before the Superior Court when it ordered arbitration
and that that the new testimony cited by Plaintiff was before the Arbitrator when he issued his
Final Award. What Plaintiff establishes now is not that the Superior Court was tricked into
relying on the prior Superior Court Opinion of Millinghausen v. Legal Access Plans, LLC and
incomplete information when it found an enforceable contract in the instant matter, but rather,
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2012-06050-0237 Opinion, Page 19
that continued discovery and arbitration hearings further confirmed the existence of an offer,
consideration, and acceptance. Thus, Plaintiffs claim that "after acquired evidence" establishes
the Arbitrator's lack of jurisdiction must be dismissed.
Finally, Plaintiffs claim that the Court applied an incorrect standard when considering
whether the Arbitrator lacked jurisdiction lacks merit. In making this argument, Plaintiff relies
on the Civan case, which is inapposite to the matter before the Court. In Civan, the Superior
Court found 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." Civan v. Windemere Farms, Inc., 180 A.3d 489, 499 (Pa. Super. Ct.
2018). Of significance, however, is a key difference between the facts in Civan and here. In the
instant case-unlike in Civan-the Superior Court already made a determination as to the
Arbitrator's jurisdiction to rule and Defendants' status as third-party beneficiaries, ordering the
matter remanded to arbitration. By contrast, the Civan Court made no determination as to
whether there was an enforceable arbitration agreement as it related to a particular non-party,
necessitating the need for the trial court to look beyond the standard of 42 Pa. C.S.A. § 7341 and
determine whether the award should be vacated for lack of jurisdiction as to this non-party:
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.
Civan, 180 A.3d at 499 (Pa. Super. Ct. 2018) (emphasis added).
Civan clearly provides that the arbitration panel exceeded its power only because it
assumed jurisdiction despite there being "no court order specifically mandating ... submission to
arbitration." Id. The inapplicability of Civan could not be more clear here, where the Superior
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2012-06050-0237 Opinion, Page 20
Court in this case specifically ordered the matter be submitted to arbitration. The Arbitrator
cannot be said to have exceeded his power in exercising jurisdiction over Plaintiff where such a
court order mandating arbitration existed, and the Court need not have applied a standard other
than 42 Pa. C.S.A. § 7341. Thus, Plaintiffs twelfth issue lacks merit.
Even if Civan were to govern in this case and the Court considers whether Plaintiff "was
bound to arbitrate this dispute in the first place" rather than limit review pursuant to 42 Pa.
C.S.A. § 7341, Plaintiffs claim for lack of jurisdiction still fails. As discussed supra, none of
Plaintiffs "after acquired evidence" meaningfully changes the record that was before the
Superior Court when it examined the same two documents and found an enforceable agreement
to arbitrate. Further, the proffered new testimony was before the Arbitrator at the time he made a
determination as to his jurisdiction and rendered his Final Award. As for Plaintiffs allegation of
lack of consideration, a full reading of the defense expert's testimony plainly provides that
consideration was in the form of access to clients. Essentially, Plaintiff requests that this Court
find no contract exists where a different trial court Judge, two Superior court panels, and the
Arbitrator all found otherwise. After careful review of the extensive record before it and having
heard oral argument, the Court finds insufficient support to do so. Whether analyzing Plaintiffs
claims through the lens of 42 Pa. C.S.A. § 7341 or considering jurisdiction under a separate
standard as requested, Plaintiff has failed to establish he is entitled to relief.
CONCLUSION
For all of the aforementioned reasons, this Court's decision and order should be
AFFIRMED.
This Order has been E- filed on BY THE COURT:
Served via e-filing to the parties ofrecord
Interoffice mail to: _js/ Garrett D. Page _
Court Administration, Civil Division GARRETT D. PAGE, J.
Isl Wanda L. Barbee------
Secretary
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