Fastuca v. L.W. Molnar & Associates

10 A.3d 1230, 608 Pa. 187, 2011 Pa. LEXIS 97
Supreme Court of Pennsylvania·Decided January 18, 2011·No. 7 WAP 2009·Published·Cited by 30 cases

Opinions

OPINION

Justice TODD.

In this case, we review a trial court’s termination of a common law arbitration proceeding after the arbitrator has entered “findings” which do not resolve all outstanding issues between the parties. Following our review, we conclude the [192] arbitrator’s interim “findings” in this case do not constitute an award within the meaning of Section 7341 of our Commonwealth’s Uniform Arbitration Act,1 and, thus, that the trial court had no authority under that section to review such findings. Moreover, we determine that the trial court did not possess inherent equitable authority to end the arbitration proceedings before the arbitrator made a final award. Consequently, we affirm the order of the Superior Court.

This case arises out of a contentious dissolution of a familial partnership. The following sequence of events gave rise to the present appeal, as aptly described by the Superior Court in its opinion,2 and further gleaned from the record in this matter. In. 1972, Appellant, Diane L. Fastuca, in conjunction with her siblings, Louis W. Molnar, Jr. and Mary Lou Molnar, formed L.W. Molnar and Associates (collectively “Appellees”). The partnership managed real estate investment properties, and it endured for nearly 26 years with no major disputes among the partners until 1998 when Appellant became disenchanted with the way partnership revenues were being divided. Although Appellant tried, with the aid of counsel, to work out her dispute with the other partners for nearly five years thereafter, no amicable resolution could be reached. Accordingly, she sent Appellees a letter on September 20, 2003, notifying them of her intent to dissolve the partnership under Section 8353 of our Commonwealth’s Uniform Partnership Act,315 Pa.C.S.A. § 8353, and requesting that her partnership share be distributed to her.

On November 17, 2003, Appellant filed a complaint in equity in the Court of Common Pleas of Allegheny County which requested the dissolution and winding up of the partnership, and also the issuance of a preliminary injunction to prevent any dissipation of partnership assets. In response, Appellees filed a motion to compel arbitration pursuant to the partnership agreement, which provides in relevant part:

[193]*19314. Arbitration. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the rules then obtaining of the American Arbitration Association, and judgment upon an award rendered may be entered in any court having jurisdiction thereof.

Partnership Agreement, 9/11/72, at ¶ 14 (R.R. at 189a).

On February 4, 2004, the presiding motions judge of Allegheny County, then-judge, now former-justice, Cynthia Baldwin, heard argument on Appellant’s motion and, thereafter, entered an order denying Appellant’s request for a preliminary injunction and dismissing her complaint in equity, without prejudice. The order also directed the parties to proceed to arbitration on “all issues raised in [Appellant’s] Motion for Preliminary Injunction and [Appellant’s] Complaint in Equity, in accordance with the terms of the partnership agreement among the parties.” Trial Court Order, 2/4/04 (R.R. at 64a).

The parties mutually selected David B. Fawcett, Esquire (“arbitrator”) to conduct the arbitration under the rules of the American Arbitration Association. By agreement of the parties, on September 15, 2004, the arbitrator entertained arguments and received written submissions from them outlining their respective positions as to the legal issues surrounding the dissolution of the partnership.4 On September 17, 2004, the arbitrator issued a document entitled “Findings of Arbitrator” in which he made the following determinations relevant to this appeal. The arbitrator found that Appellant had validly exercised her right to dissolve the partnership under Section 8353(2)5 of the Uniform Partnership Act, which allows [194] a partner to dissolve a partnership even if done in violation of the partnership agreement. Findings of Arbitrator, 9/17/04, ¶ 3 (R.R. at 346a). However, the arbitrator also found that, because this dissolution had contravened the terms of the ■written partnership agreement, which the arbitrator had determined to be the law of the partnership between the parties, he concluded Appellees had a right to continue the business and, also, to receive damages from Appellant for breach of contract. Id. at ¶ 7 (R.R. at 347a). Therefore, the arbitrator required Appellees to pay Appellant the value of her interest in the partnership at the time of dissolution, less any damages Appellees suffered on account of the wrongful dissolution. Id. The arbitrator further decreed that the purchase price for Appellant’s partnership interest was to be computed according to either ¶ 12(d) of the partnership agreement, which provided the purchase price of the partners’ share was to be its fair market value for the latest fiscal year preceding the sale as determined by general accounting principles,6 or under Section 8360(b)(2) of the Uniform Partnership Act.7 Findings of Arbitrator at ¶ 9. The arbitrator also directed Appellees to grant Appellant prompt access “to all the Partnership books, records and accounts and any other relevant information” which would establish its value. Id. at ¶ 11. Additionally, the arbitrator specified he retained jurisdiction “to resolve any controversy or claim regarding the purchase price and/or the value of the interest that [Appellant] is entitled to, or any further dispute [195] between the parties pertaining to the dissolution of [the partnership].” Id. at ¶ 14.

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Fastuca v. L.W. Molnar & Associates, 10 A.3d 1230, 608 Pa. 187, 2011 Pa. LEXIS 97 (Pa. 2011).

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