J-A15010-15

                                2015 PA Super 246

JENNIFER COLLIER, ON BEHALF OF                   IN THE SUPERIOR COURT OF
HERSELF AND ALL OTHERS SIMILARLY                       PENNSYLVANIA
SITUATED,

                           Appellee

                     v.

NATIONAL PENN BANK, NATIONAL PENN
BANCSHARES, INC. AND KNBT
BANCORP, INC.,

                           Appellant                  No. 976 EDA 2014


               Appeal from the Order Entered February 18, 2014
             In the Court of Common Pleas of Philadelphia County
              Civil Division at No(s): June Term, 2012 No. 01036


BEFORE: BOWES, MUNDY, AND FITZGERALD* JJ.

OPINION BY BOWES, J.:                           FILED NOVEMBER 24, 2015

       National Penn Bank, National Penn Bancshares, Inc., and KNBT

Bancorp, Inc. (collectively “National Penn”) appeal from the February 18,

2014 order overruling their preliminary objections in the nature of a petition

to compel arbitration and a demurrer.       After careful review, we affirm in

part, and quash in part.

       Jennifer Collier commenced this class action in the Court of Common

Pleas of Philadelphia against National Penn on behalf of herself and others

similarly situated. The gist of her complaint is that National Penn, in breach

of a 2010 Account Agreement, improperly assessed overdraft fees when her

account, and the accounts of those similarly situated, were not overdrawn.

*
    Former Justice specially assigned to the Superior Court.
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National Penn countered that Ms. Collier’s overdraft fees were assessed on a

checking account governed by a 2008 Agreement that used “available

balance” rather than “ledger balance” when determining whether such fees

should be assessed. It further averred that, since that Agreement contains

an agreement to arbitrate disputes, this controversy should be referred to

arbitration.

      National Penn removed the action to the United States District Court

for the Eastern District of Pennsylvania, but that court granted Ms. Collier’s

motion for remand.     National Penn then filed preliminary objections in the

nature of a petition to compel arbitration and a demurrer premised on

preemption of all claims by federal banking law. All preliminary objections

were overruled by order dated February 18, 2014.              In denying the

preliminary objections seeking to compel arbitration, the trial court found

there was no agreement to arbitrate. In overruling the demurrer, the court

rejected preemption.

      National Penn appealed. In its Pa.R.A.P. 1925(b) statement, it alleged

error in the court’s refusal to enforce the arbitration agreement and in

finding that Ms. Collins’ state law breach of contract, conversion, unjust

enrichment, and Pa. Unfair Trade Practices and Consumer Protection Law

claims were not pre-empted by the National Bank Act, 12 U.S.C. § 21 et seq.

In its Rule 1925(a) opinion, the trial court noted that only that portion of its

order denying the preliminary objections in the nature of a petition to

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compel arbitration was appealable.     Taylor Shadduck v. Christopher J.

Kaclik, Inc., 713 A.2d 635, 636 (Pa.Super. 1998); see also Pa.R.A.P.

311(a)(8) and 42 Pa.C.S. § 7320 et seq. The court opined further that its

order overruling the demurrer based on preemption was neither an

appealable interlocutory order nor a collateral order, and thus, not subject to

appellate review.

      On appeal, National Penn presents two issues for our review:

      1. Whether the trial court erred in denying National Penn’s
         preliminary objection in the nature of a motion to compel
         arbitration and for a stay of the litigation pursuant to the
         Pennsylvania Arbitration Act and/or Federal Arbitration Act
         because the written account agreement applicable to Ms.
         Collier’s bank account referenced in the Complaint contains an
         enforceable arbitration agreement and all of the claims in the
         Complaint fall with the scope of the arbitration agreement?

      2. Whether the trial court erred in denying National Penn’s
         preliminary objection in the nature of a demurrer to all claims
         in the Complaint based on federal preemption because all of
         Ms. Collier’s claims are preempted by the National Bank Act,
         12 U.S.C. § 21 et seq., and federal regulations promulgated
         by the Office of the Comptroller of the Currency?

Appellant’s brief at 6-7.

      Our jurisdiction to review the propriety of the trial court’s order

overruling preliminary objections in the nature of a motion to compel

arbitration is conferred by Pa.R.A.P. 311(a)(8), which provides that an

interlocutory appeal may be taken as of right from any order made

appealable by statute, and by 42 Pa.C.S. § 7320(a)(1) of the Uniform

Arbitration Act, which authorizes an appeal from "[a] court order denying an

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application to compel arbitration.” We review such a claim “for an abuse of

discretion and to determine whether the trial court's findings are supported

by substantial evidence.” Taylor v. Extendicare Health Facilities, Inc.,

113 A.3d 317, 320 (Pa.Super. 2015).               We employ a two-part test to

determine whether arbitration was proper.           First, we ascertain whether a

valid agreement to arbitrate exists. If so, we examine whether the dispute

is within the scope of the agreement.            Pisano v. Extendicare Homes,

Inc., 77 A.3d 651, 654 (Pa.Super. 2013); see also Elwyn v. DeLuca, 48

A.3d 457, 461 (Pa.Super. 2012).

       National Penn contends that the trial court’s denial of its petition to

compel arbitration was based on an incorrect finding that the 2010 Account

Agreement, rather than the 2008 Account Agreement, controlled. It argues

that the finding was unsupported by the evidence and that the court failed to

credit the unrefuted affidavit of Carol Franklin.1 Ms. Franklin stated therein

that the 2008 account agreement containing the arbitration clause was sent

to Ms. Collier in 2008 after National Penn acquired KNBT where Ms. Collier

had previously maintained an account. The 2010 Agreement, according to

Ms. Franklin, was sent to Ms. Collier in connection with a second account

____________________________________________


1
  The trial court characterized the affidavit as “bald statements” and
“nothing more than self-serving declarations” which were “in direct
contravention of the plain and unambiguous language” of the deposit
agreements.



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that she opened in 2010, and Ms. Franklin maintained that it did not apply to

or supersede the 2008 Agreement that governed the first checking account

which incurred the overdraft fees.             National Penn contends that since the

2010 Agreement contains no language suggesting that it was intended to

supersede the 2008 Agreement, the court should have accepted the

unrefuted affidavit as true.        Id.    Additionally, National Penn relies upon

language in both Agreements referring to the operation of “this account” as

indicating that there were separate agreements for Ms. Collier’s two

accounts and contends that the trial court incorrectly assumed that there is

only one account agreement per customer.

       Ms. Collier based her claims on National Penn’s 2010 Personal Business

Deposit and Electronic Banking Services Agreement and Disclosure, effective

March of 2010.        It is her position that the 2010 Agreement expressly

superseded the earlier 2008 Agreement, and the trial court properly found

no valid agreement to arbitrate as the 2010 Agreement did not contain an

arbitration clause.2 She relies upon two federal decisions holding that a later

account agreement superseded an earlier one, and that, by continuing to

use the account, she indicated her intention to be bound by the later

____________________________________________


2
   Ms. Collier also offered additional bases to affirm the trial court’s finding
that there is no valid agreement to arbitrate based on the 2008 agreement,
among them, that the sole arbitrator designated in the agreement is
unavailable and that the arbitration clause is unconscionable and illusory.



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agreement.    In Dottore v. Huntingdon, 2010 WL 3861010 (N.D. Ohio

2010), affirmed 480 Fed Appx. 351 (6th Cir. 2012), the customer and the

bank operated for two years under a 2003 agreement that contained an

arbitration clause.   The bank provided a new agreement in 2005, entitled

“Your Deposit Account Terms and Conditions,” which did not contain an

arbitration clause. Following a dispute, the customer filed suit and the bank

moved to compel arbitration pursuant to the earlier 2003 agreement. The

court denied the motion, concluding that the later agreement was a new

account agreement and did not include an agreement to arbitrate. The court

of appeals affirmed, agreeing that the 2005 agreement controlled. It noted

that the 2005 agreement was comprehensive and did not incorporate any

other documents by reference. Since it did not require arbitration, the court

found no agreement to arbitrate.

      The Eleventh Circuit Court of Appeals reached a similar result in

Dasher v. RBC Bank(USA), 745 F.3d 1111 (11th Cir. 2014), finding that a

later version of a deposit agreement, which was expressly contemplated

under a former agreement, superseded all prior versions. The effect of that

holding was to render the prior agreement’s arbitration clause ineffective,

“even if the superseding agreement is silent on arbitration.” Id. at 1122.

      The trial court herein reviewed the        agreements at issue and

determined that the parties expressly intended that the March 2010

Agreement control.     For the reasons that follow, we agree.      The 2008

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Agreement is entitled KNTB Deposit and Electronic Banking Services

Agreement and Disclosure Booklet and purports to cover National Penn

affiliates, including KNBT, and subsidiaries, all of which are listed in the

agreement.    Id. at 5.   The Agreement does not reference any particular

account and speaks generally about many types of accounts, including but

not limited to, joint accounts, and power of attorney, custodial, fiduciary,

and corporate accounts. The 2008 Agreement provides that

            This account is subject to charges, interest rates, and
      minimum balance requirements established from time to time by
      us. We may change such applicable charges interest rates, and
      minimum balance requirements, and any other account terms,
      features, or conditions, at any time after such notice, if any, as
      is required by law.

2008 Agreement at 9.          Additionally, the 2008 Agreement contains an

agreement to arbitrate all disputes under the Code of Procedure of the

National Arbitration Forum (NAF), and provides that it is governed by the

Federal Arbitration Act, 9 U.S.C. §§ 1-16. Id. at 12.

      Similarly, the 2010 Agreement is a form that is not account-specific.

It purports to be a National Penn agreement but identifies KNBT as an

affiliate of National Penn.   2010 Agreement at 6.      It addresses the same

subject matter as the 2008 Agreement and is similarly comprehensive in its

terms. The 2010 Agreement provides that the account

      is subject to charges, interest rates, and minimum balance
      requirements established from time to time by us. We reserve
      the right to change the terms of this Agreement or change
      the terms of your account at any time. . . . . where

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J-A15010-15



      applicable law permits, we can notify you of the changes by
      posting a new version of this Agreement, or a Notice of Change
      to Accounts, in our offices.    Your continued use of the
      account following the effective date of any such change
      indicates your intention to be bound by this Agreement,
      as amended.

2010 Agreement at 9 (emphases added). The 2010 Agreement, however,

does not contain an arbitration provision. It provides that disputes “shall be

resolved by the Bank or by litigation through a court and have a judge or

jury decide the dispute.” 2010 Agreement at 13.

      National Penn concedes that “[i]f the 2010 Agreement stated that it

applied to all of Ms. Collier’s accounts, the result might be different.”

Appellant’s brief at 14. We believe the following provision does just that. In

the “Agreement to Settle Disputes” provision of the 2010 Agreement, the

parties agree that

     all claims, disputes or controversies. . . . arising from or
     related to your account, the account agreement, the
     transactions on the account or any other account you
     previously, now or may later have with us, . . . .shall be
     resolved by the Bank or through litigation through a court . . .”

Id. at 12-13 (emphases added). We conclude that the plain language of the

2010 Agreement clearly indicates that it was intended to supersede the 2008

Agreement, certainly with regard to judicial resolution of disputes in lieu of

arbitration, which is the issue before us. Hence, there is no agreement to

arbitrate.




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      Prior to reaching National Penn’s second issue, we must first determine

whether the issue is properly before us. As Ms. Collier correctly points out,

the statutory authority authorizing an interlocutory appeal of the denial of

arbitration is limited to that issue. She also correctly maintains that in order

to appeal the overruling of the demurrer premised on preemption, there

must be an independent basis for this Court’s jurisdiction.       See Rae v.

Pennsylvania Funeral Directors Ass'n, 977 A.2d 1121, 1130 (Pa. 2009)

(noting the collateral order test must be applied independently to each

distinct legal issue over which an appellate court is asked to assert

jurisdiction pursuant to Rule 313). The trial court implicitly agreed with that

analysis as it urged us to quash the appeal from the overruling of

preliminary objections in the nature of a demurrer as interlocutory.       See

F.D.P. v. Ferrara, 804 A.2d 1221 (Pa.Super. 2002). Since National Penn

did not seek trial court certification for an interlocutory appeal by

permission, Ms. Collier echoes the trial court’s position that the only possible

basis for our jurisdiction is the collateral order doctrine and that the federal

preemption issue did not meet the requirements for collateral order review

pursuant to Pa.R.A.P. 313(b).

      Whether an order is appealable as a collateral order is a question of

law; as such, our standard of review is de novo and our scope of review is

plenary. Rae, supra at 1126 n.8. Moreover, where the issue presented is a

question of law as opposed to a question of fact, an appellant is entitled to

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review under the collateral order doctrine; however, if a question of fact is

presented, appellate jurisdiction does not exist.     Aubrey v. Precision

Airmotive LLC, 7 A.3d 256, 262 (Pa.Super. 2010).

     Pa.R.A.P. 313(b) provides that a collateral order is one (1) separable

from, and collateral to the main cause of action; (2) that involves a right

that is too important to be denied review; and (3) presents a question such

that if review were postponed until final judgment in the case, the claim

would be irreparably lost.   See Vaccone v. Syken, 899 A.2d 1103, 1106

(Pa. 2006).   National Penn argues that under Hassett v. Defoe, 74 A.3d

202 (Pa.Super. 2013), Pridgen v. Parker Hannifin Corp., 905 A.2d 422

(Pa. 2006) (summary judgment), and Yorty v PJM Interconnection,

L.L.C., 79 A.3d 655 (Pa.Super. 2013) (summary judgment), collateral order

review here is proper.

     In Hassett, the manufacturers of the generic version of Reglan,

metoclopramide, maintained that all state negligence claims were essentially

failure to warn claims pre-empted by the United States Supreme Court’s

decision in PLIVA, Inc. v. Mensing, 131 S.Ct. 2567 (2011).        The Court

held therein that, under federal law, generic drug manufacturers no longer

had the ability to unilaterally change their products’ labels.   Hence, the

generic manufacturers argued that, to the extent that state law required

them to provide stronger or different warnings to avoid liability, state law

conflicted with federal law and was pre-empted. The effect of preemption

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was to render generic manufacturers essentially immune from liability under

state law for failure to warn.

        This Court found that the nature of the allegations of the complaint

controlled and no examination of the merits of the underlying claims or

resolution of factual disputes was necessary. Thus, the preemption issue as

phrased was sufficiently separable.         Furthermore, we found the issue

implicated the Hatch-Waxman Act’s policy of promoting access to low-cost

generic drug alternatives and state tort law concerns, rights too important to

deny review. Moreover, more than two thousand cases involving the issue

were pending at the time in Philadelphia County and we were cognizant of

the defense costs that generic drug manufacturers would incur. Thus, the

test was satisfied for application of the collateral order jurisdiction.

        Pridgen involved an appeal from the denial of summary judgment in a

products liability action.    The defense maintained that the eighteen-year

statute of repose in the General Aviation Revitalization Act of 1994, 49

U.S.C. § 40101, barred the action. The parties had engaged in discovery,

the relevant facts were agreed upon, and the legal issue was determinative

of whether the defendant was immune from suit. The Supreme Court found

initially that the central question, as framed, was consistent with application

of the collateral order doctrine to a summary judgment order based on a

legal   rather   than   factual   determination.    Pridgen,     supra     at   432.

Furthermore, it met the three-pronged test for application of the collateral

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order doctrine. The application of the statutory provision to manufacturers

like the defendant was “conceptually and factually distinct from the merits”

of the underlying products claim. Id. at 433. Our High Court conceded that

while the claim was not “fully on par with immunities and constitutional

entitlements,”   the   federal   interests    underpinning   the    statute   were

“sufficiently important to justify the intervention of appellate courts in

product liability cases in furtherance of the policy of cost control.” Id. With

regard to the irreparable loss prong, the Court found that the substantial

cost of defending the complex litigation at trial was sufficient.

      In Yorty, we found no factual dispute.        The issue was a legal one:

whether a federal tariff operated to provide immunity from negligence. We

found the issue, which involved a preemption analysis, to be factually

distinct from the proof of the elements of negligence in the underlying

action, as was the statute of repose in Pridgen. The immunity claim was of

paramount importance in the regulation and cost of electricity. Finally, the

cost of defending such complex litigation at a trial was the type of

irreparable loss recognized in Pridgen.

      Ms. Collier relies upon our decisions in In re Reglan Litigation, 72

A.3d 696 (Pa.Super. 2013), and Goldstein v. Depository Trust Co., 717

A.2d 1063 (Pa.Super. 1998), in support of her position that the preemption

issue is not separable from and collateral to the underlying case. Goldstein

was a class action by shareholders against a securities depository for breach

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of fiduciary duty, negligence, contractual liability for third party beneficiaries,

and related claims.       When the trial court overruled the defendant’s

preliminary objections and denied its petition for arbitration, the defendant

appealed.    On appeal, the defendant challenged not only the arbitration

ruling but sought to litigate whether the claims were preempted by federal

securities law and regulations, a defense it had subsequently asserted in

new matter.     We held that the arbitration decision was an appealable

interlocutory order under Pa.R.A.P. 311 and the Uniform Arbitration Act, but

that the preemption defense, pled as new matter four months after the

petition to compel arbitration had been denied, was not properly before us.

Goldstein, however, did not address the question before us, i.e., whether

the preemption issue is reviewable as a collateral order.

      In In re Reglan Litigation, 72 A.3d 696 (Pa.Super. 2013), Wyeth

filed preliminary objections seeking dismissal of all claims against it arising

after 2001 on preemption grounds. It maintained that, since it transferred

its rights as the name-brand manufacturer of Reglan to another entity in

2001, it was not liable for post-2001 claims under PLIVA, Inc. v. Mensing,

131 S.Ct. 2567 (2011) (federal law precluded generic drug manufacturers

from unilaterally changing their labels to strengthen a warning, which was

the duty imposed in state failure-to-warn cases). It premised jurisdiction of

its interlocutory appeal on the collateral order doctrine. This Court declined

to exercise collateral order jurisdiction under Pa.R.A.P. 313(b) and quashed

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Wyeth’s appeal. We found that since Wyeth retained some control over the

name-brand drug after 2001, the nature and extent of which was disputed,

this was not a case involving the application of clearly established law to a

given set of facts.   Additionally, Wyeth did not meet the irreparable harm

prong of the collateral order test because it acknowledged that, regardless of

our decision, it would remain a party in the ongoing litigation due to its pre-

2001 status as a name-brand manufacturer.

      Here, as in In re Reglan Litigation, there are unresolved factual

issues.   Furthermore, we do not view Ms. Collier’s claim as a challenge to

National Penn’s power to regulate and control its deposits, but rather as a

contractual issue.     In asserting collateral order jurisdiction over its

preemption claim, National Penn relies upon cases involving immunity

defenses or instances when federal preemption would render a defendant

essentially immune from liability. Glaringly absent herein is any suggestion

that application of federal law would render National Penn immune from

liability premised on violations of state contract and tort law.    Quite the

contrary, National Penn’s contention that it is “subject to state law only

insofar as the NBA [National Bank Act] and OCC [Office of the Comptroller of

the Currency] regulations expressly direct that result,” Appellant’s Reply

Brief at 22, implies that the NBA and OCC were not intended to pre-empt the

entire field. Thus, preemption would necessarily have to be based on some

type of conflict between federal and state law.         See Hassett, supra

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(involving impossibility preemption, the type of implied conflict preemption

that arises when it is impossible to comply with both federal and state law) .

Since the case is only at the preliminary objection stage, the record is not

sufficiently developed to permit us to discern whether there is any conflict

between federal and state law. See Rae, supra (recognizing that piecemeal

review undermines judicial accuracy as courts are more likely to correctly

decide a question on a fully developed record).

      While the preemption issue is arguably separable from the underlying

merits, National Penn has not satisfied the second two prongs of the

collateral order test. This case does not involve state regulation of federal

banks or a challenge to federal banking regulations. The fundamental issue

is one of contract interpretation, and we see no compelling public policy

concerns that that are too important to be denied review at this preliminary

stage of the proceedings. Nor do we find that the prospect of defending a

class action alone constitutes the type of irreparable loss required for the

third prong. Presumably, National Penn could revisit the preemption issue at

the summary judgment stage and certainly following final judgment.

      The order overruling preliminary objections in the nature of a petition

to compel arbitration is affirmed.     Having concluded that we have no

jurisdiction to review the trial court’s order overruling the demurrer based on

federal preemption, the appeal from that portion of the trial court’s order is

quashed.

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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 11/24/2015




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