Civan v. Windermere Farms, Inc.

• Decision Date: 27 February 2018
• Docket Number: No. 1560 EDA 2017,No. 1559 EDA 2017,1559 EDA 2017,1560 EDA 2017
• Citation: 180 A.3d 489
• Parties: Ethan CIVAN and Elana Civan, Appellants v. WINDERMERE FARMS, INC. and Gambone Brothers Development Company, Appellees Ethan Civan and Elana Civan, Appellants v. Windermere Farms, Inc. and Gambone Brothers Development Company, Appellees
• Court: Pennsylvania Superior Court

180 A.3d 489

Ethan CIVAN and Elana Civan, Appellants

v.WINDERMERE FARMS, INC. and Gambone Brothers Development Company, Appellees

Ethan Civan and Elana Civan, Appellants

v.Windermere Farms, Inc. and Gambone Brothers Development Company, Appellees

No. 1559 EDA 2017

No. 1560 EDA 2017

Superior Court of Pennsylvania.

Argued November 15, 2017

Filed February 27, 2018

Neil A. Stein, Blue Bell, for appellant.

George E. Saba, Jr., Lansdale, for Windermere Farms, Inc., appellees.

BEFORE: LAZARUS, PLATT,^* and STRASSBURGER,^* JJ.

OPINION BY STRASSBURGER, J.:

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 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 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 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 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 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 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. Id....