Mahoney Realty Group v. Lamm, D.

• Court: Superior Court of Pennsylvania
• Decided: September 30, 2016
• Docket: 2098 EDA 2015
• Status: Unpublished

Opinion

J-S60045-16

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

MAHONEY REALTY GROUP, INC., : IN THE SUPERIOR COURT OF : PENNSYLVANIA v. : : DAVIN S. LAMM, INDIVIDUALLY AND : D/B/A DEEP SEA ASSOCIATES, LP, : FERRY DEVELOPMENT, LP, INSITE : REALTY ADVISORS, LLC, PARLIAMENT : CONSULTING AND LAMM REALTY : GROUP, EDWARD ALAN WEBBER, : INDIVIDUALLY AND D/B/A DEEP SEA : ASSOCIATES, LP, FERRY : DEVELOPMENT, LLC, INSITE REALTY : ADVISORS, LLC, PARLIAMENT : CONSULTING, AND LAMM REALTY : GROUP, LLC AND DEEP SEA-GP, LLC : D/B/A DEEP SEA ASSOCIATES, LP : AND FERRY DEVELOPMENT GENERAL, : LLC, D/B/A FERRY DEVELOPMENT, LP, : INSITE REALTY ADVISORS, LLC, : PARLIAMENT CONSULTING, LAMM : REALTY GROUP, LLC AND HARVEY : LAMM : : APPEAL OF: EDWARD ALAN WEBBER : No. 2098 EDA 2015

Appeal from the Order Entered June 23, 2015, in the Court of Common Pleas of Philadelphia County, Civil Division at No(s): August Term, 2010, No. 1551

BEFORE: SHOGAN, OTT, and STRASSBURGER,* JJ.

MEMORANDUM BY STRASSBURGER, J.: FILED SEPTEMBER 30, 2016

*Retired Senior Judge assigned to the Superior Court. J-S60045-16

Edward Alan Webber (Webber) appeals from the order of June 23,

2015, which denied his petition to compel arbitration and stay proceedings in

the trial court.1 We affirm.

The long and tortuous factual and procedural history of this dispute

can be summarized as follows. Mahoney Realty Group, Inc. (MRG) hired

Davin S. Lamm (Lamm) on June 16, 1999, as a real estate sales agent.

MRG and Lamm entered into an independent contractor agreement

(Agreement). The Agreement contained a provision that required the parties

to submit to arbitration in the event of a dispute.

Webber began working for MRG in September 2007 as an unpaid

intern. After his college graduation, Webber obtained a real estate license,

and he continued his work for MRG. Although Webber and MRG did not

enter into a written independent contractor agreement, the terms of

Webber’s relationship were those found in MRG’s agreement with Lamm.

See Mahoney Realty Group, Inc. v. Lamm, 96 A.3d 1094 (Pa. Super.

2014) (unpublished memorandum at 3) (“[T]he parties do not dispute that

the terms of Webber’s relationship with MRG were the same as those found

in the Agreement between Lamm and MRG.”) (citing Webber’s Brief at 12

1 42 Pa.C.S. § 7320(a)(1) provides that an appeal may be taken from a “court order denying an application to compel arbitration.” Moreover, “[f]ailure to file an appeal from an interlocutory order refusing to compel arbitration, appealable under 42 Pa.C.S. § 7320(a)(1) and subparagraph (a)(8) of this rule, shall constitute a waiver of all objections to such an order.” Pa.R.A.P. 311(g)(1)(iv).

-2- J-S60045-16

(“[MRG] admits that [MRG] and Webber never executed a written

independent contractor agreement. Nevertheless, [MRG] made clear during

[its] deposition that [MRG] and Webber had entered into an oral

independent contractor agreement which contained the same terms as the

written Independent Contractor Agreement between [MRG] and Lamm.”)

(quotation marks omitted)).

Over the course of time, both Lamm and Webber formed other real

estate businesses, and they also continued their work for MRG. In May

2009, MRG discovered that both Lamm and Webber were using MRG

supplies, facilities, and equipment to conduct their other businesses. These

activities form the genesis of the dispute between MRG, Lamm, and Webber.

Upon learning this information, MRG terminated its relationship with both

Lamm and Webber.

Prior to MRG’s filing a civil complaint against either Lamm or Webber,

Lamm filed a demand for arbitration pursuant to the Agreement. MRG

accepted the demand, and arbitration proceedings commenced. In August

2010, MRG initiated the instant civil action against Webber and businesses

owned by Webber individually and Webber and Lamm jointly. Soon

thereafter, MRG and Lamm agreed to terminate their arbitration proceedings

and continue litigation in civil court. Thus, on January 31, 2011, MRG filed

an amended complaint adding Lamm and additional entities as defendants.

-3- J-S60045-16

That complaint included counts for breach of contract, fraud, conversion,

civil conspiracy, unjust enrichment, and usurpation of business opportunity.

The parties engaged in extensive discovery, and on October 15, 2012,

both Webber and Lamm filed motions for summary judgment. MRG

responded, and on January 18, 2013, the trial court granted summary

judgment in favor of Webber, Lamm, and their respective companies, and

against MRG on all counts. MRG filed a notice of appeal to this Court, and

on January 28, 2014, a panel of this Court filed a memorandum reversing, in

part, the grant of summary judgment. Mahoney Realty Group, Inc.,

supra. Specifically, this Court vacated the order granting summary

judgment on MRG’s breach of contract claims.

After remand, the trial court permitted both Lamm and Webber to file

new motions for summary judgment. On January 19, 2015, the trial court

granted partial summary judgment to each party and scheduled the case for

trial. The trial was then continued by agreement of the parties to give them

time to settle the dispute. When negotiations proved unsuccessful, the

parties appeared for a pre-trial conference on May 28, 2015. At that point,

“Webber informed the [trial] court that he intended to file a petition to stay

the case and compel arbitration[.]” Trial Court Opinion, 3/28/2016, at 5.

Webber filed his motion the next day, and Lamm joined in the motion. On

June 23, 2015, the trial court denied the motion to stay and compel

arbitration. The trial court concluded that based upon the conduct of the

-4- J-S60045-16

parties, including Webber’s five-year participation in this litigation, Webber

waived the opportunity to exercise a right to arbitrate this dispute by making

this request “too late” in the judicial process. Trial Court Opinion, 3/28/2016,

at 7.

Webber filed timely the instant notice of appeal.2 The trial court did

not order Webber to file a concise statement of errors complained of on

appeal pursuant to Pa.R.A.P. 1925, but the trial court filed an opinion on

March 28, 2016.

On appeal, Webber argues, inter alia, that the trial court erred in

concluding he had waived his right to pursue arbitration of these claims. “In

reviewing a decision of a trial court [refusing a decision to stay or compel

arbitration], our scope of review is limited to determining whether the trial

judge’s findings are supported by substantial evidence or whether the trial

court abused its discretion.” Samuel J. Marranca Gen. Contracting Co. v.

Amerimar Cherry Hill Associates Ltd. P’ship, 610 A.2d 499, 500 (Pa.

Super. 1992).

It is well-settled that [a]s a matter of public policy, our courts favor the settlement of disputes by arbitration. Nevertheless, the right to enforce an arbitration clause can be waived. Waiver may be established by a party’s express declaration or by a party’s undisputed acts or language so inconsistent with a purpose to stand on the contract provisions as to leave no opportunity for a reasonable inference to the contrary. A party’s acceptance of the regular channels of the

2 Lamm also filed a notice of appeal which was docketed at 2098 EDA 2015. On May 10, 2016, Lamm filed a praecipe to discontinue the appeal, which was completed on May 11, 2016.

-5- J-S60045-16

judicial process can demonstrate its waiver of arbitration. However, a waiver of a right to proceed to arbitration pursuant to the term of a contract providing for binding arbitration should not be lightly inferred and unless one’s conduct has gained him an undue advantage or resulted in prejudice to another he should not be held to have relinquished the right.

Stanley-Laman Grp., Ltd. v. Hyldahl, 939 A.2d 378, 382–83 (Pa. Super.

2007) (citations and quotation marks omitted).

Among the factors to look at in determining whether a party has accepted the judicial process are whether the party (1) fail[ed] to raise the issue of arbitration promptly, (2) engage[d] in discovery, (3) file[d] pretrial motions which do not raise the issue of arbitration, (4) wait[ed] for adverse rulings on pretrial motions before asserting arbitration, or (5) wait[ed] until the case is ready for trial before asserting arbitration.

O’Donnell v. Hovnanian Enterprises, Inc., 29 A.3d 1183, 1187 (Pa.

Super. 2011) (quotation marks omitted).

Instantly, there is no dispute that Webber has been litigating this case

in the trial court since its inception in 2010. Webber has been an active

participant in the case, and has availed himself of both the trial and

appellate processes while securing numerous favorable rulings. In fact, it

was not until it was clear that the remaining claims against him would come

to trial that Webber invoked the arbitration provision of the Agreement.

Based on this conduct, we agree with the trial court that Webber’s actions

conclusively demonstrated as a matter of law that he has waived his right to

arbitrate. Thus, we agree with the trial court that Webber is not entitled to

relief.

-6- J-S60045-16

Webber devotes a significant portion of his brief to this Court arguing

that the decision about whether Webber and MRG should be required to

arbitrate should be up to the arbitrators, rather than the trial court. He

states that this “Court has consistently reaffirmed that it is the arbitrator,

not the trial court, that must evaluate the timeliness of a petition to compel

arbitration[.]” Webber’s Brief at 19 (citing Theodore C. Willis Co., Inc. v.

Sch. Dist. Of Boyertown Area, 837 A.2d 1186 (Pa. Super. 2003)).

Based upon a review of the case law, under all circumstances akin to

those in the instant matter, the trial court was permitted to and did address

properly the threshold question of whether a party waived its contractual

right to arbitrate. See, e.g., Samuel J. Marranca Gen. Contracting Co.,

610 A.2d at 501 (holding defendant’s conduct amounted to waiver where it

“waited until it had received an adverse ruling on pretrial motions before

invoking and seeking to enforce the arbitration provision of the contract”);

Goral v. Fox Ridge, Inc., 683 A.2d 931, 934 (Pa. Super. 1996) (holding

that the trial court properly denied defendants’ motion to compel arbitration

where they “sought relief in the first instance from the trial court; failing

success in that forum, and only then, they sought to proceed to the

alternative forum of arbitration”); GE Lancaster Investments, LLC v. Am.

Exp. Tax & Bus. Servs., Inc., 920 A.2d 850 (Pa. Super. 2007); cf.

Keystone Tech. Grp., Inc. v. Kerr Grp., Inc., 824 A.2d 1223 (Pa. Super.

2003) (finding no waiver of right to arbitration where the docket only

-7- J-S60045-16

showed plaintiff’s filing of the complaint, the sheriff’s proof of service, and

the defendant’s filing of preliminary objections, before plaintiff’s motion to

compel arbitration); Kwalick v. Bosacco, 478 A.2d 50, 52 (Pa. Super.

1984) (holding that “the mere filing of a complaint or an answer without

resulting prejudice to the objecting party will not justify a finding of waiver

of the right to arbitration”).

Moreover, Willis, supra, and the other cases relied upon by Webber,

are inapposite. In Willis, a contractor and school district entered into a

contract for the contractor to install an HVAC system in a school in the

school district. A dispute arose, and the contractor filed a demand for

arbitration. The matter was settled in an agreement before the arbitrator,

and the arbitrator retained jurisdiction to resolve subsequent disputes.

Another dispute arose and the parties continued litigation in arbitration. The

arbitrator entered a ruling in favor of the school district.

The contractor then filed a complaint for declaratory judgment in the

Court of Common Pleas of Berks County. The school district filed preliminary

objections arguing, in part, that the matter should be decided in arbitration.

The contractor argued that the issues subsumed within its complaint fell

outside the scope of the original arbitration agreement. The trial court

dismissed the complaint and sent the matter to arbitration. The contractor

appealed.

-8- J-S60045-16

In affirming the order, this Court stated that “[s]ince 1980, there has

been a long line of cases that hold that if it appears that a dispute relates to

a contract’s subject matter and the parties agreed to arbitrate, all issues

of interpretation and procedure, including requirements preliminary to the

presentation of any claims, are for the arbitrators to resolve.” Theodore C.

Wills Co., 837 A.2d at 1189 (Pa. Super. 2003) (citing Ross Dev. Co. v.

Advanced Bldg. Dev., Inc., 803 A.2d 194, 198 (Pa. Super. 2002)

(emphasis added)). In other words, the reason this Court agreed with the

trial court that the issues raised by the contractor should be decided in

arbitration was because the parties had reached an agreement to arbitrate.

In the instant matter, even though there was a contract provision

regarding arbitration, Webber acquiesced for five years to litigating the

matter in the trial court. In fact, at no time during the course of the dispute

did an arbitrator rule on any issue. Based on the foregoing, we conclude

that the trial court properly considered the question of whether Webber

waived his right to arbitration. Moreover, we hold that the trial court

reached the correct conclusion. Accordingly, we affirm the order of the trial

court.3

3 Webber also argues that “it appears the [t]rial [c]ourt may have determined that [] Webber expressly waived his right to arbitrate through agreement of counsel.” Webber’s Brief at 25. Webber argues that Lamm initially participated in arbitration proceedings, but Webber did not. We agree with Webber that he did not participate in the initial arbitration; nevertheless, whether the trial court believed that Webber also participated in that arbitration it does not change the outcome of this case. Webber’s

-9- J-S60045-16

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 9/30/2016

actions in participating in this litigation over the course of five years result in his having waived his right to arbitrate.

- 10 -