Weinar v. Lex
| Decision Date | 15 December 2017 |
| Docket Number | No. 1467 EDA 2016,No. 1615 EDA 2016,1467 EDA 2016,1615 EDA 2016 |
| Citation | 176 A.3d 907 |
| Parties | Marvin WEINAR, Appellee v. William LEX, Appellant Marvin Weinar, Appellant v. William Lex, Appellee |
| Court | Pennsylvania Superior Court |
Jacob U. Ginsburg, Bala Cynwyd, for Lex.
Ryan J. Durkin, Emmaus, Liam O'Brien, Pro Hac Vice, New York, New York, for Weinar.
Before the Court are consolidated cross-appeals filed by William F. Lex and Dr. Marvin Weinar from the trial court's April 28, 2016 order (1) granting Weinar's petition to confirm an arbitration award, and (2) sustaining Lex's preliminary objections and dismissing Weinar's second amended complaint. The appeals arise out of Weinar's efforts to enforce an arbitration award that was rendered in his favor on February 14, 2013. After unsuccessfully seeking to enforce the award in New York state and federal courts and in a federal court in Pennsylvania, Weinar initiated this action in the Chester County Court of Common Pleas, filing both a petition to enforce the arbitration award under Pennsylvania law and a complaint asserting numerous claims against Lex relating to Lex's failure to pay the arbitration award. The trial court granted Weinar's petition to enforce the arbitration award and dismissed his complaint. We affirm the granting of the petition, vacate the dismissal of the complaint, and remand for further proceedings.
Lex, while working as a securities broker for McGinn Smith & Co., sold Weinar approximately $400,000 in notes. In April of 2010, the Securities and Exchange Commission filed an action against McGinn Smith, its principals, and the issuers of all the notes sold to Weinar.1 As a result of this and other legal actions, the notes became worthless. On December 14, 2000, Weinar filed a statement of claim against Lex pursuant to the Code of Arbitration Procedure of the Financial Institution Regulatory Authority (FINRA).2 Weinar asserted that Lex acted negligently and breached various fiduciary and contractual duties by, among other things, recommending investments that were unsuitable to Weinar's objectives and not properly diversified. On February 14, 2013, after an arbitration proceeding in Pennsylvania, a panel of arbitrators issued an award in favor of Weinar that included $270,000 in compensatory damages, plus interest at a rate of 6%, compounded annually, and fees of $7,862.50.
That same day, Weinar filed a petition to enforce the arbitration award in a New York state court under Section 7510 of the New York Civil Practice Law and Rules.3 Lex removed the action to the U.S. District Court for the Southern District of New York on the basis of diversity jurisdiction and then filed a motion to dismiss the case for lack of personal jurisdiction.
On April 3, 2013, while Lex's motion to dismiss was pending in the Southern District of New York, Lex filed a petition in the U.S. District Court for the Eastern District of Pennsylvania (the "EDPA Action"), in which he sought to vacate the arbitration award under the Federal Arbitration Act (FAA). The EDPA Action was stayed until January 23, 2014, when the New York federal district court dismissed the New York action for lack of personal jurisdiction over Lex. On May 22, 2014, Weinar filed a cross-petition in the EDPA action to confirm the arbitration award. In the cross-petition, Weinar urged the court to apply Pennsylvania law, which "does not impose a time limit on motions to confirm an arbitration award." Weinar's Cross–Pet. to Confirm Arbitration Award at ¶ 12.
On March 31, 2015, the Honorable Norma L. Shapiro entered an order in the EDPA action granting in part and denying in part Lex's petition to vacate the arbitration award. See Lex v. Weinar , Civ. A. No. 13-mc-96, 2015 WL 1455810 (E.D. Pa. Mar. 31, 2015).4 Judge Shapiro also denied as untimely Weinar's cross-petition to confirm the award. She explained that even though federal jurisdiction in the case was based on diversity of citizenship,5 the case was "brought under the FAA," and she was required to apply the FAA's provisions, rather than state law, to an FAA case brought in federal court because the parties had not contractually opted out of the FAA's requirements. Id. at *2.6 She held that Weinar's May 22, 2014 cross-petition to confirm the February 14, 2013 arbitration award was untimely because "[t]he FAA one-year deadline for moving to confirm the arbitration award" applied. Id. at *3, citing FAA § 9, 9 U.S.C. § 9 ().
Weinar filed a motion for reconsideration of Judge Shapiro's March 31, 2015 order, requesting that Judge Shapiro confirm the arbitration award as modified by the March 31, 2015 order or remand the matter to FINRA Dispute Resolution for issuance of an amended award with recalculated interest in accordance with the March 31, 2015 order. On May 20, 2015, Judge Shapiro denied the motion for reconsideration, reiterating that Weinar's petition to confirm was untimely under the FAA and stating that the March 31, 2015 order left no confusion as to the calculation of interest. Weinar did not appeal from Judge Shapiro's March 31, 2015 or May 20, 2015 orders.
On September 9, 2015, Weinar instituted the current action by filing a complaint against Lex in the Court of Common Pleas of Chester County, based on Lex's failure to pay the arbitration award. In his second amended complaint, Weinar asserted the following claims: (1) breach of contract, by failing to "abide by and perform" the arbitration award; (2) conversion, by retaining money out of which Weinar's demand for payment of the arbitration award could be satisfied; (3) unjust enrichment; (4) confirmation of the arbitration award; and (5) a request for a declaratory judgment regarding the amount of the arbitration award and any judgment to be entered upon it. In addition to declaratory relief, Weinar sought damages of $270,000, plus interest, fees, and "such further relief as [the trial court] deems just and proper." Second Am. Compl. at 5, 6, 8.
Lex filed preliminary objections to Weinar's second amended complaint, arguing that, because of the EDPA ruling, the requested relief was barred in its entirety by the doctrine of res judicata . In addition, Lex contended that Weinar failed to state a claim for breach of contract; Weinar's conversion claim was barred by the gist of the action doctrine and failed to state a claim upon which relief could be granted; Weinar's unjust enrichment claim was barred by res judicata and/or collateral estoppel; Weinar's claim for confirmation of the award should be dismissed because an application for confirmation of an arbitration award must be made by petition; and Weinar could not obtain a declaratory judgment on an uncontroverted and finally litigated issue. Weinar responded by filing preliminary objections to Lex's preliminary objections, arguing that (1) Pennsylvania law does not permit preliminary objections based on res judicata or collateral estoppel; (2) Pennsylvania law does not permit preliminary objections based on matters outside the complaint; (3) Weinar's complaint was not barred by res judicata ; (4) Lex's objections to Weinar's breach of contract and conversion claims were impermissible "speaking demurrers"; and (5) Lex's objection to Weinar's claim for confirmation of the award was moot in light of Weinar's filing of a petition to confirm the award.7
Meanwhile, on December 15, 2015, Weinar filed a petition to confirm the arbitration award under Section 7342(b) of the Judicial Code, which provides that "the court shall enter an order confirming the award and shall enter a judgment or decree in conformity with the order" if a party applies for such relief "more than 30 days after an award is made." See 42 Pa. C.S. § 7342(b). Lex opposed that petition, arguing that it was barred by res judicataand that the FAA's one-year statute of limitations for confirming an arbitration award preempted Section 7342(b), which contains no statute of limitations.
The trial court held a hearing on April 15, 2016,8 and both parties submitted post-hearing letters to the court. On April 28, 2016, the trial court issued an opinion and order (1) granting Weinar's petition to confirm the arbitration award, and (2) sustaining Lex's preliminary objections and dismissing Weinar's second amended complaint. The trial court did not rule on Weinar's preliminary objections to Lex's preliminary objections.
The trial court held that "the FAA does not preempt the Pennsylvania Arbitration Statutes regarding the time limit within which a party must petition to confirm an arbitration award." Trial Ct. Op., 4/28/16, at 7. The court reasoned that the lack of a one-year time limit for confirming an arbitration award under 42 Pa. C.S. § 7342(b) was a mere procedural matter that did not interfere with the federal policy of ensuring enforceability of arbitration agreements. Id. at 10–12. The trial court further explained that it sustained Lex's preliminary objections because Weinar's second amended complaint "merely seeks to re-litigate the arbitration." Id. at 13.
On May 12, 2016 Lex filed a notice of appeal from the trial court's confirmation of the arbitration award. On May 26, 2016, Weinar filed a notice of cross-appeal from the order sustaining Lex's preliminary objections to Weinar's second amended complaint.
In a June 22, 2016 opinion issued in response to Lex's appeal from the confirmation ruling, the trial court explained that it rejected Lex's res judicata argument because there was no identity of the two causes of action (the EDPA action and the present action) and it rejected Lex's collateral estoppel argument because the EDPA court "never evaluated whether the petition to confirm would have been granted under Pennsylvania law." Trial Ct. Op., 6/22/16, at 13–14. In an opinion issued on ...
To continue reading
Request your trial
-
LaRace v. Wells Fargo Bank, N.A.
...have come to the opposite conclusion. See Boyd v. Freeman, 18 Cal. App. 5th 847, 856, 227 Cal.Rptr.3d 164 (2017) ; Weinar v. Lex, 176 A.3d 907, 916 (Pa. Super. Ct. 2017). See also Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 499, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001) (to deter ......
-
Liberty Towers Philly, LP v. Am. Tower Corp., CIVIL ACTION NO. 18-CV-4357
...sounding in tort is, in actuality, a claim against the party for breach of its contractual obligations." Weinar v. Lex, 2017 PA Super. 398, 176 A.3d 907, 926 (Pa. Super. Ct. 2017). In determining whether an action is barred by the gist of the action doctrine, the court is charged with exami......
-
Garland v. Knorr
...[res judicata] is that a prior judgment may bar relitigation only of a claim that has been decided 'on the merits.'" Weinar v. Lex, 176 A.3d 907, 915 (Pa. Super. Ct. 2017). Consequently, the first question the Court addresses is whether the 2018 dismissal of Garland's state court lawsuit co......
-
K.D. v. E.D.
...res judicata and collateral estoppel is a question of law requiring de novo review and the scope of review is plenary. Weinar v. Lex , 176 A.3d 907, 915 (Pa.Super. 2017). The trial court addressed these aspects of Mother's arguments collectively in its Rule 1925(a) opinion, reasoning that c......