Trombetta v. Raymond James Financial Services Inc.

71 Pa. D. & C.4th 12, 2005 Pa. Dist. & Cnty. Dec. LEXIS 170
CourtPennsylvania Court of Common Pleas, Alleghany County
DecidedMarch 2, 2005
Docketno. GD04-015418
StatusPublished

This text of 71 Pa. D. & C.4th 12 (Trombetta v. Raymond James Financial Services Inc.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Alleghany County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Trombetta v. Raymond James Financial Services Inc., 71 Pa. D. & C.4th 12, 2005 Pa. Dist. & Cnty. Dec. LEXIS 170 (Pa. Super. Ct. 2005).

Opinion

WETTICK JR., A.J,

The subjects of this opinion and order of court are the petition of James Trombetta, Tara Trombetta Witover, and Julie Trombetta Gray for a rule to show cause why a de novo review of an arbitration award should not be granted or, in the alternative, why the arbitration award should not be vacated; and the amended cross-petition of Raymond James Financial Services Inc., Raymond James & Associates [14]*14Inc., and Edward Lewis (Financial Services), for a rule to show cause why the NASD arbitration award should not be confirmed as to all parties.

According to the Award/NASD dispute resolution that is the subject of this litigation (Trombetta pet. exhibit A), in the arbitration proceedings, the Trombettas raised causes of action for breach of fiduciary duty, fraud, misrepresentation, negligence, gross negligence, and failure to supervise in which they sought $2 million in compensatory damages and an additional $2 million in punitive damages. These causes of action related to the purchase and sale of various stocks, investments on margin and option trading. Financial Services denied the allegations and asserted claims against Dr. Neil M. Niren for contribution and indemnification. Dr. Niren denied the allegations made in the joinder statement of claim and raised a cause of action for abuse of process against Financial Services and a cause of action against Peter Gialames and Edward Lewis for contribution and indemnification.

In June 2004, the arbitration panel entered an award denying all claims, third-party claims, and counterclaims in their entirety. The Trombettas and Financial Services have timely filed the petition and amended cross-petition that are the subject of this litigation.

The issue that I address in this opinion and order of court is the scope of the standard of review that I should apply in determining whether to confirm, modify, or vacate the June 2004 arbitration award.

Under Pennsylvania state law, the grounds for vacating a common-law arbitration award are set forth in 42 Pa.C.S. §7341, which reads as follows:

[15]*15 “Section 7341. Common-law arbitration

“The award of an arbitrator in a nonjudicial arbitration which is not subject to subchapter A (relating to statutory arbitration) or 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 grounds for vacating an award entered in statutory arbitration proceedings under Pennsylvania state law are set forth in 42 Pa.C.S. §7314 which reads as follows:

“Section 7314. Vacating award by court

“(a) General rule.—

“(1) On application of a party, the court shall vacate an award where:

“(i) the court would vacate the award under section 7341 (relating to common-law arbitration) if this sub-chapter were not applicable;

“(ii) there was evident partiality by an arbitrator appointed as a neutral, or corruption or misconduct in any of the arbitrators prejudicing the rights of any party;

“(iii) the arbitrators exceeded their powers;

“(iv) the arbitrators refused to postpone the hearing upon good cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of section 7307 (relating to hearing before arbitrators), as to prejudice substantially the rights of a party; or

“(v) there was no agreement to arbitrate and the issue of the existence of an agreement to arbitrate was not ad[16]*16versely determined in proceedings under section 7304 (relating to court proceedings to compel or stay arbitration) and the applicant-party raised the issue of the existence of an agreement to arbitrate at the hearing.

“(2) The fact that the relief awarded by the arbitrators was such that it could not or would not be granted by a court of law or equity is not a ground for vacating or refusing to confirm the award.

“(b) Time limitation. — An application under this section shall be made within 30 days after delivery of a copy of the award to the applicant, except that, if predicated upon corruption, fraud, misconduct or other improper means, it shall be made within 30 days after such grounds are known or should have been known to the applicant.

“(c) Further hearing. — If the court vacates the award on grounds other than stated in subsection (a)(l)(v), the court may order a rehearing before new arbitrators chosen as prescribed in the agreement to arbitrate. Absent a method prescribed in the agreement to arbitrate, the court shall choose new arbitrators in accordance with section 7305 (relating to appointment of arbitrators by court). If the award is vacated on grounds not affecting the competency of the arbitrators under subsection (a)(l)(i) through (iv), the court may order a rehearing before the arbitrators who made the award or their successors appointed in accordance with section 7305. The time period within which the agreement requires the original award to be made is applicable to the rehearing and commences from the date of the court order directing a rehearing.

“(d) Confirmation of award. — If an application to vacate the award is denied and no application to modify or [17]*17correct the award is pending, the court shall confirm the award.”

The grounds for vacating an arbitration award governed by the Federal Arbitration Act, at least in proceedings pending in the federal courts, are set forth in section 10(a) of the Act, 9 U.S.C. § 10(a), which reads as follows:

“(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—

“(1) where the award was procured by corruption, fraud, or undue means;

“(2) where there was evident partiality or corruption in the arbitrators, or either of them;

“(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

“(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. §10(a)(l)-(4).

Federal case law also recognizes an additional ground for vacating an arbitration award governed by the Federal Arbitration Act: A manifest disregard for the law. In GMS Group LLC v. Benderson, 326 F.3d 75, 77-78 (2d Cir. 2003), the court summarized the case law as to what the manifest disregard test requires as follows:

[18]

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71 Pa. D. & C.4th 12, 2005 Pa. Dist. & Cnty. Dec. LEXIS 170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/trombetta-v-raymond-james-financial-services-inc-pactcomplallegh-2005.