Giant Markets, Inc. v. Sigma Marketing Systems, Inc.

459 A.2d 765, 313 Pa. Super. 115, 1983 Pa. Super. LEXIS 2905
CourtSuperior Court of Pennsylvania
DecidedApril 15, 1983
Docket1080
StatusPublished
Cited by39 cases

This text of 459 A.2d 765 (Giant Markets, Inc. v. Sigma Marketing Systems, Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Giant Markets, Inc. v. Sigma Marketing Systems, Inc., 459 A.2d 765, 313 Pa. Super. 115, 1983 Pa. Super. LEXIS 2905 (Pa. Ct. App. 1983).

Opinions

JOHNSON, Judge:

This is an appeal from the order of a trial court en banc vacating the award of an arbitrator rendered as a result of a common law arbitration of a contract dispute between Sigma Marketing, Inc. (appellant) and Giant Markets, Inc. (appellee). The trial court en banc concluded that appellant breached the terms of a stipulation entered into by both parties on January 22, 1980. Since we conclude that the stipulation was not breached, and more fundamentally, we [119]*119believe that the trial court en banc erroneously exceeded the limited scope of review applicable to common law arbitration, we reverse.

On August 2, 1977, in settlement of prior litigation, not relevant here, the parties concluded an agreement which included the following arbitration clause:

“In the event of any dispute between the parties under this Agreement, the same may be submitted to arbitration by either party in accordance with the rules of the American Arbitration Association.”

The clause was later supplemented on January 22, 1980 by the following written stipulation entered into by the parties:

“MR. DEVINE: This will be for the benefit of the Arbitrator. We had extensive settlement discussions during the depositions here today. We both agreed as counsel and the parties agreed that no mention of settlement was to be made to the Arbitrator; and in the event that one of the parties broach the subject to the Arbitrator without the knowledge of the other party, we are in agreement that the Arbitrator shall immediately discontinue the hearing, remove himself as an Arbitrator, and ask that the matter be reassigned to someone else; is that what we agreed to?
“MR. KENNEDY: Yes.”

Subsequently, the parties commenced an arbitration proceeding pursuant to the above-quoted arbitration provision as modified by the stipulation. Several days of testimony had been taken when the incident that precipitated this appeal occurred. During a break from the hearing, a Mr. Roth, an officer of appellant corporation, who knew of the stipulation between the parties, made mention of the subject of settlement in response to a question from the arbitrator. More specifically, it is alleged that Mr. Roth stated to the arbitrator that “no reasonable cash settlement had been offered.” Since this occurred during the break, it occurred off the record and we have relied upon the recollections of the parties and the arbitrator for an account of what happened.

[120]*120Three issues are presented for consideration. The first issue is: whether or not appellee waived any objection it had to the continuation of the arbitration proceedings after a dispute arose regarding the stipulation. The second issue is framed differently by both parties. Appellant frames the issue as whether or not the trial court en banc erred by substituting its own factual finding when there was no evidence that the award was induced by any fraud, misconduct, corruption, or other irregularity causing it to be unjust, inequitable, or unconscionable. Appellee frames the' issue as a question of whether the arbitrator exceeded the scope of submission. The third issue is: whether or not appellant breached the terms of the stipulation.

For reasons set forth in more detail below, we agree with the trial court en banc that appellee did not waive its objection to the continuation of the arbitration hearing.

Put simply, appellant’s waiver argument is that appellee cannot preserve the dispute regarding the stipulation for appellate review by merely entering an objection upon the record. Appellant asserts that appellee had to adjourn the hearing and seek immediate judicial determination of his objection. Otherwise, appellee’s continued participation in the hearing operated to waive its objection. Appellant relies on a line of cases, representative of which are Christman v. Moran, 9 Barr 487 (1848), Capecci v. Joseph Capecci, 392 Pa. 32, 139 A.2d 563 (1958) and Rosenbaum v. Drucker, 346 Pa. 434, 31 A.2d 117 (1943). Christman holds that a party’s objection is waived by proceeding with the arbitration protestando. Capecci and Drucker hold that a party waives an objection by submitting the dispute to arbitration and participating in the hearing in spite of having an objection to the proceeding. We are not persuaded by appellant’s argument that these cases control the instant situation.

On similar facts, our supreme court distinguished the cases of Capecci and Drucker in Abramovich v. Pennsylvania Liquor Control Board, 490 Pa. 290, 294 n. 3, 416 A.2d 474, 476 n. 3 (1980) (a statutory arbitration case). [121]*121Abramovich involved the submission to arbitration of a contract dispute between Felix Abramovich and the Pennsylvania Liquor Control Board (PLCB). Unbeknownst to Abramovich, the arbitrator appointed to hear the dispute had a past and continuing relationship with the PLCB. Upon learning of the arbitrator’s affiliation with the PLCB, Abramovich challenged the arbitrator’s appointment. This challenge occurred after the beginning of the hearing but before the rendering of the award. The arbitrator denied the challenge and rendered an award in favor of the PLCB. In a footnote, the supreme court concluded that where the ground for objection was not apparent prior to the arbitration hearing and it was raised at the earliest opportunity after learning of it, the issue was properly preserved for review.

Unlike Christman, Drucker and Capecci, in the instant case no ground for challenge to the proceeding existed prior to the hearing. When grounds for objection became apparent, appellee raised the issue of violation of the stipulation at the earliest opportunity after it occurred. We are persuaded that Abramovich controls this case. Therefore, appellee has sufficiently preserved the issue for review by noting its objection in a timely fashion.

In reviewing a common law arbitration award, the first task of a court is to determine whether the parties have agreed to arbitrate, then once it is determined that the parties have agreed to arbitrate, the issue becomes whether the dispute in question falls within the purview of the submission. Borough of Ambridge Water Authority v. Columbia, 458 Pa. 546, 328 A.2d 498 (1974). See also Flightways Corporation v. Keystone Helicopter Corporation, 459 Pa. 660, 331 A.2d 184 (1975). The arbitrability of the contract dispute underlying this matter is uncontroverted by the parties.

The questions presented by this appeal address the authority of an arbitrator once a matter is properly in arbitration. In Sley Systems Garages v. Transport Workers Union of America, 406 Pa. 370, 178 A.2d 560 (1962), the [122]*122supreme court made the following pertinent remarks regarding the authority of an arbitrator:

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Bluebook (online)
459 A.2d 765, 313 Pa. Super. 115, 1983 Pa. Super. LEXIS 2905, Counsel Stack Legal Research, https://law.counselstack.com/opinion/giant-markets-inc-v-sigma-marketing-systems-inc-pasuperct-1983.