PTS Realty, LLC v. Frompovicz, S.

• Court: Superior Court of Pennsylvania
• Decided: April 23, 2019
• Docket: 995 MDA 2018
• Status: Unpublished

Opinion

J-A06036-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

PTS REALTY HOLDING, LLC : IN THE SUPERIOR COURT OF : PENNSYLVANIA : v. : : : STANLEY FROMPOVICZ : : Appellant : No. 995 MDA 2018

Appeal from the Order Entered June 1, 2018 In the Court of Common Pleas of Schuylkill County Civil Division at No(s): S-2113-2016

BEFORE: OTT, J., NICHOLS, J., and PELLEGRINI*, J.

MEMORANDUM BY PELLEGRINI, J.: FILED APRIL 23, 2019

Stanley Frompovicz (Frompovicz) appeals pro se from the order entered

by the Schuylkill County Court of Common Pleas (trial court) confirming an

arbitration award in favor of PTS Realty Holding, LLC (PTS). After careful

review, we affirm.

I.

A.

In 2011, Frompovicz and PTS entered into an agreement obligating

Frompovicz to build a water bottling facility in Schuylkill County. For their

contract, the parties used a standard American Institute of Architects written

agreement that gave several options for dispute resolution. The parties

elected arbitration as the method of dispute resolution and, by doing so, the

parties agreed to submit any contractual claim to the American Arbitration

____________________________________ * Retired Senior Judge assigned to the Superior Court. J-A06036-19

Association (AAA) for arbitration under its Construction Industry Arbitration

Rules. In addition, the agreement stated that the Federal Arbitration Act

(FAA), 9 U.S.C. §§ 1-16, “shall govern” any arbitration, and that any award

would be final and enforceable in any court with jurisdiction.

In August 2015, PTS submitted a statement of claims to the AAA alleging

that Frompovicz negligently built the facility. Frompovicz tried to stay the

arbitration by claiming the parties’ agreement was void due to fraud by PTS.

Despite the agreement stating Philadelphia as the arbitration location,

Frompovicz filed his petition for stay in the Court of Common Pleas of

Schuylkill County. In May 2016, that court denied the petition to stay. The

parties then proceeded to arbitration, which concluded in September 2016

with a final hearing held in Philadelphia before an appointed AAA arbitrator.

On October 26, 2016, the arbitrator issued an award of over $1.4 million

in favor of PTS. Although the agreement designated the FAA as governing,

the arbitrator read the agreement as not specifying whether the parties were

arbitrating under either the Pennsylvania Uniform Arbitration Act (UAA) or any

similar statute such as the FAA. Based on this reading, the arbitrator

presumed the parties intended for their arbitration to be a Pennsylvania

common law arbitration. See 42 Pa.C.S. § 7302(a) (stating arbitration is

presumed to be common law arbitration unless agreement expressly provides

for arbitration pursuant to UAA or any other similar statute, in which case the

arbitration shall be governed by the UAA).

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B.

Frompovicz wished to challenge the award. The time limit for

challenging an arbitration award under Pennsylvania law differs from that of

federal law. Under Pennsylvania law, the time limit for filing a motion to

vacate a common law arbitration award is 30 days; if no motion is filed within

30 days, then the prevailing party can petition to confirm the arbitration

award. See 42 Pa.C.S. § 7342(b).1 Under the FAA, the time limit is 90 days

if the appeal is taken to federal court and then, only if, federal jurisdiction can

be established. See 9 U.S.C. § 12.

Frompovicz did not file a petition to vacate the arbitration award within

30 days of the award.2 After the 30-day time period for taking the appeal had

passed, on December 13, 2016 (48 days after the arbitration award), PTS filed

a petition to confirm the arbitration award in the trial court. The trial court

ordered Frompovicz to show cause why it should not confirm the award. In

response to PTS’s petition, Frompovicz filed an answer and new matter. In

his answer, Frompovicz reasserted the agreement was void. As for his new

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1 The time limit is the same for challenges to statutory arbitrations under the Pennsylvania Uniform Arbitration Act. See 42 Pa.C.S. § 7319(b) (application for vacating an arbitration award must be made within 30 days after delivery of award).

2 However, within 30 days of the award, on November 24, 2016, Frompovicz filed a notice of appeal from the trial court’s May 2016 denial of his petition to stay. This Court later quashed the appeal at docket number 1954 MDA 2016.

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matter, Frompovicz claimed: (1) the trial court did not have jurisdiction

because the arbitration agreement was governed by the FAA; and (2) even if

jurisdiction was proper in state court, the proper venue was Philadelphia

County because that is where the arbitration was held.

C.

Before the trial court could address his claims, Frompovicz removed the

case to the United States District Court for the Eastern District of Pennsylvania

(district court). In his removal notice, Frompovicz asserted that the district

court had both diversity and subject matter jurisdiction. A day after filing the

notice, on January 24, 2017, which was the 90th day after the award,

Frompovicz filed a motion to vacate the arbitration award in the district court

under the same docket of his removal.

The district court denied removal, finding three reasons for why removal

was improper. First, even if there was complete diversity between the parties,

removal was improper under the “forum defendant” rule, 28 U.S.C. §

1441(b)(2), since PTS filed its petition in Pennsylvania, the state of

Frompovicz’s residence. Second, the FAA does not confer federal question

jurisdiction. Last, Frompovicz’s removal notice was untimely under 28 U.S.C.

§ 1446(b)(1) for not being filed within 30 days of his receipt of PTS’s petition.

Frompovicz then filed a motion for reconsideration, acknowledging that

he should have filed his motion to vacate in the first instance with the district

court rather than removing PTS’s petition to confirm the arbitration award.

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The district court denied reconsideration.3 Frompovicz then appealed to the

Third Circuit Court of Appeals which dismissed the appeal in January 2018.

D.

Once Frompovicz had removed the case, the state court proceedings

were automatically stayed. When it was returned to the trial court, PTS

responded to Frompovicz’s venue claim, asserting venue was proper in

Schuylkill County and not in Philadelphia because Frompovicz filed his initial

petition to stay in Schuylkill County, and the UAA states “all subsequent

applications to a court shall be made to the court hearing the initial application

unless that court otherwise directs.” 42 Pa.C.S. § 7319(3).4

PTS then filed a praecipe for determination and the trial court directed

the parties to complete discovery on any material factual issues. Frompovicz

sought discovery related to his fraud claims. PTS refused production because

it contended that Frompovicz had waived any challenge to the arbitration

award by failing to file a petition to vacate in state court within 30 days of the

award. In response, Frompovicz contended the FAA’s 90-day time limit was

applicable based on the parties’ agreement, and that he timely filed a petition

to vacate, albeit in federal court.

3 See PTS Realty Holding, LLC v. Frompovicz, CV 17-0319, 2017 WL 5515960 (E.D. Pa. March 1, 2017).

4 Section 7319 of the Pennsylvania Uniform Arbitration Act is applicable to common law arbitrations as well. See 42 Pa.C.S. § 7342(a).

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On June 1, 2018, noting that Frompovicz never filed a timely motion to

vacate in the trial court, the trial court confirmed the arbitration award. It

also found venue was proper in the trial court because Frompovicz filed his

initial petition to stay arbitration with the court. Frompovicz timely appealed

to this Court.5

II.

Frompovicz contends that the trial court erred in confirming the

arbitration award because his challenge was untimely. He argues that the

trial court should have applied the FAA’s 90-day time limit rather than the

common law arbitration 30-day time limit for taking an appeal. However, in

Moscatiello v. Hillard, 939 A.2d 325 (Pa. 2007), our Supreme Court held

5 Our standard of review of a common law arbitration award is limited:

The award of an arbitrator in a nonjudicial arbitration which is not subject to statutory arbitration or to 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. The arbitrators are the final judges of both law and fact, and an arbitration award is not subject to reversal for a mistake of either. A trial court order confirming a common law arbitration award will be reversed only for an abuse of discretion or an error of law.

Toll Naval Associates v. Chun-Fang Shu, 85 A.3d 521, 525 (Pa. Super. 2014).

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that even if the arbitration is conducted under the FAA, when an appeal is

taken in state court, there is no additional time beyond that afforded by

Pennsylvania law for filing a motion to vacate an arbitration award in state

court. See also Joseph v. Advest, 906 A.2d 1205, 1210 (Pa. Super. 2006).

Frompovicz argues though that Moscatiello and Joseph do not apply

because, unlike the appellants in those cases, he filed his motion to vacate in

federal district court rather than state court. But this Court has explained:

The FAA does not create independent grounds for federal subject matter jurisdiction. Without complete diversity between the parties under 28 U.S.C. § 1332 … parties to an arbitration agreement created under the FAA are required to submit an appeal from an arbitration award to state trial courts in the first instance.

Trombetta v. Raymond James Financial Services, Inc., 907 A.2d 550,

563 (Pa. Super. 2006) (internal citations omitted). Because he was unable to

establish federal jurisdiction,6 the FAA’s 90-day time for filing a petition to

vacate the arbitration award does not apply. Frompovicz needed to file his

petition to vacate in the first instance within 30 days of the arbitrator’s award.

We also note that Frompovicz has never filed a petition to vacate the

arbitration award in state court, only in federal court. This Court has held that

6 In his brief, Frompovicz maintains that the district court would have had diversity jurisdiction if not for PTS’s lack of candor about the residency of its partners. But Frompovicz overlooks that the district court did not need to determine diversity because Frompovicz was a resident of the same state in which PTS filed its petition.

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when no petition to vacate or modify an arbitrator’s award is filed, then a trial

court is required to confirm an arbitrator’s award. See U.S. Claims v.

Dougherty, 914 A.2d 874 (Pa. Super. 2006). To challenge a common law

arbitration, we have explained:

This Court has consistently interpreted [42 Pa.C.S. § 7342(b)] to require that any challenge to the arbitration award be made in an appeal to the Court of Common Pleas, by filing a petition to vacate or modify the arbitration award within 30 days of the date of the award. A party must raise alleged errors in the arbitration process in a timely petition to vacate or modify the arbitration award or the claims are forever waived.

Id. at 877.

Here, the award was issued on October 26, 2016. Under Pennsylvania

law, Frompovicz had 30 days to file a petition to vacate the arbitration award.

After Frompovicz failed to file a petition within 30 days, PTS filed its petition

to confirm the award in accordance with not only 42 Pa.C.S. § 7342(b), but

also the written agreement, which provided that the arbitrator’s award was

enforceable in any court with jurisdiction. Under these circumstances, the

trial court did not abuse its discretion in confirming the arbitration award.

Next, Frompovicz claims PTS did not attach the parties’ agreement and

the arbitrator’s award to its petition to confirm award. Frompovicz did not

raise this claim in his answer and new matter that he filed to PTS’s petition to

confirm the award. As a result, the claim is waived. See Pa.R.A.P. 302(a)

(“Issues not raised in the lower court are waived and cannot be raised for the

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first time on appeal.”). In any event, Frompovicz’s claim is belied by our

review of the certified record. PTS attached both the arbitrator’s award and

the relevant portions of the parties’ written agreement to its December 13,

2016 petition to confirm the arbitration award.

In his third issue, Frompovicz seeks to re-raise his claim that PTS filed

its petition in the wrong venue, arguing it should have filed in the Court of

Common Pleas of Philadelphia County since that is where the arbitration was

held. PTS counters that Frompovicz has waived this claim by failing to include

it in his Pa.R.A.P. 1925(b) statement of errors complained of on appeal. We

agree, as Frompovicz neither included the issue in his statement nor is it

reasonably subsumed in any other issues. Accordingly, the issue is waived.

See Pa.R.A.P. 1925(b)(4)(vii) (“Issues not included in the [s]tatement ... are

waived.”).

Even if Frompovicz had included this issue in his Pa.R.A.P. 1925(b)

statement, we would find no error in PTS filing its petition in the trial court.7

Frompovicz filed his initial petition to stay the arbitration in the Court of

7 “Generally, a trial court’s ruling on venue will not be disturbed unless the trial court abused its discretion. An abuse of discretion occurs when the trial judge overrides or misapplies the law, or exercises judgment in a manifestly unreasonable manner, or renders a decision based on partiality, prejudice, bias or ill-will.” Cid v. Erie Ins. Group, 63 A.3d 787, 789 (Pa. Super. 2013) (quotation and internal citations omitted).

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Common Pleas of Schuylkill County. As PTS noted in the trial court, under 42

Pa.C.S. § 7319(3), which governs venue for court proceedings involving

arbitrations, if there has already been an initial application filed by a party,

any application after that “shall be made to the court hearing the initial

application unless that court otherwise directs.” Because the trial court had

not otherwise directed that venue should be in Court of Common Pleas of

Philadelphia County, PTS properly filed its petition to confirm the arbitration

award in the Court of Common Pleas of Schuylkill County. Thus, the trial court

did not abuse it discretion in finding venue was proper.8

Last, Frompovicz faults the trial court for entering its order before

allowing him to conduct discovery. By doing so, he argues that the trial court

failed to comply with its own rule to show cause order under Pa.R.C.P. 206.7.9

8 In his argument, Frompovicz also asserts that the parties entered into a joint stipulation to change venue to Philadelphia County. The joint stipulation was never filed and is not part of the certified record and cannot, therefore, be considered on appeal. See Commonwealth v. Preston, 904 A.2d 1, 7 (Pa. Super. 2006) (en banc) (“[I]f a document is not in the certified record, the Superior Court may not consider it.”).

9 In his statement of questions involved, Frompovicz frames this issue as the trial court erring in confirming the arbitration award. “A trial court order confirming a common law arbitration award will be reversed only for an abuse of discretion or an error of law.” Weinar v. Lex, 176 A.3d 907, 914 (Pa. Super. 2017) (quotation omitted).

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After the issuance of a rule to show cause order, Pennsylvania Rule of

Civil Procedure 206.7 provides that if the respondent’s answer does not raise

any disputed issues of material fact, then the court shall decide the petition

based on the petition and answer. See Pa.R.C.P. 206.7(c). Here,

Frompovicz’s answer focused on his claims of fraud as to the underlying

agreement. In its June 1, 2018 order, the trial court determined that

Frompovicz did not raise any factual averments to excuse not filing a motion

to vacate within 30 days of the arbitration award. By failing to do so, we

agree with the trial court that there was no material issues of fact requiring

discovery so as to delay confirming the arbitrator’s award as required by 42

Pa.C.S. § 7342(b). We, therefore, find no abuse of discretion.10

III.

Finally, PTS requests that we award damages, attorney’s fees and

interest under Pa.R.A.P. 2744, alleging that this appeal is frivolous and was

filed for the purpose of delaying enforcement of the arbitrator’s award.

Under Pa. R.A.P. 2744, an appellate court may award counsel fees and other damages when it determines that an appeal is frivolous or taken solely for delay or that the conduct of the participant against whom costs are to be imposed is dilatory, obdurate or vexatious. An appeal is “frivolous” if the appellate court determines that the appeal lacks any basis in law or in fact.

10 PTS moves to strike certain parts of Frompovicz’s reproduced record and brief for not complying with our Rules of Appellate Procedure. Because we have found none of Frompovicz’s issues as warranting relief, the motion is denied as moot.

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Lundy v. Manchel, 865 A.2d 850, 857 (Pa. Super. 2004) (internal citations

and quotations omitted). While we find none of Frompovicz’s issues merit

relief, we decline to find that this appeal may be deemed frivolous under

Pa.R.A.P. 2744 or was taken solely for the purpose of delay. See Menna v.

St. Agnes Medical Center, 690 A.2d 299, 310 (Pa. Super. 1997) (“In

determining the propriety of [an award of counsel fees], we are ever guided

by the principle that an appeal is not frivolous simply because it lacks

merit.”).11

Order affirmed. Motion to strike denied. Request for attorney’s fees

and damages denied.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 4/23/2019

11 We also decline PTS’s request that this Court issue an injunction against Frompovicz requiring approval before filing further actions.

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