J. A19035/18


NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

ERIE INSURANCE EXCHANGE                  :      IN THE SUPERIOR COURT OF
                                         :            PENNSYLVANIA
                   v.                    :
                                         :
PATRICIA NEISHEL AND                     :
STANLEY NEISHEL, JR.,                    :         No. 1813 MDA 2017
                                         :
                        Appellants       :


               Appeal from the Order Entered October 24, 2017,
               in the Court of Common Pleas of Luzerne County
                        Civil Division at No. 2013-12705


BEFORE: GANTMAN, P.J., NICHOLS, J., AND FORD ELLIOTT, P.J.E.


MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED: JANUARY 29, 2019

     Patricia Neishel and Stanley Neishel, Jr. (“appellants”), appeal from the

October 24, 2017 order entered in the Court of Common Pleas of Luzerne

County that denied their motion for summary judgment against Erie Insurance

Exchange (“Erie”) and granted summary judgment in favor of Erie. We affirm.

     The trial court set forth the following:

           The result of the Court’s ruling was to deny the relief
           sought in [appellants’] earlier Petition in which they
           requested the Court to vacate the underlying
           [underinsured      motorist]     Arbitration    Award
           (hereinafter sometimes referred to as the “Award”)
           entered in the case.

           By way of background, the Award was entered on
           May 15, 2015, following an arbitration which was held
           on May 5, 2015, before Attorney John Kennedy
           ([appellants’]    selected    arbitrator),    Attorney
           Enid Harris ([Erie’s] selected arbitrator), and Judge
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          Joseph Musto (Retired) (the “neutral” arbitrator
          selected by the other arbitrators). The amount of the
          unanimous Award was $35,000.00, which the parties
          agree did not exceed the amount of the available
          third-party coverage.

          On June 15, 2015, [appellants] filed a Petition seeking
          to have the Award vacated on the ground that their
          attorney, Ralph J. Johnston, Jr., Esquire, had,
          sometime following the date of the arbitration (May 5,
          2015), “learned” of a potential undisclosed financial
          relationship between Attorney Harris and [Erie]
          and/or [Erie’s] attorney in this matter, Robert T.
          Panowicz, Esquire. [Appellants] are of the position
          that this undisclosed relationship “disqualified”
          Attorney Harris from serving as an arbitrator in the
          matter and that, accordingly, the Award should be
          vacated.

          Discovery conducted by [appellants] in this matter did
          in fact reveal that there was, historically, a financial
          relationship    between      Attorney    Harris     and
          Attorney Panowicz wherein Attorney Harris worked as
          an independent contractor for Attorney Panowicz’s law
          firm. This work apparently included working on files
          which were referred to Attorney Panowicz by [Erie],
          however, it was limited to files where the clients were
          insureds of [Erie] and there was nothing in the record
          to indicate that Attorney Harris worked on any file in
          which [appellants were] a party. In addition, it
          appears that Attorney Harris was never directly
          compensated by [Erie] but, instead, was paid by
          Attorney Panowicz for the work she performed for his
          firm. Finally, although there was some conflict in the
          record regarding when Attorney Harris last performed
          any work for Attorney Panowicz’s firm, the latest
          possible date appears to have been July 6, 2012.

          [Appellants] argue that since this case was assigned
          by [Erie] to Attorney Panowicz sometime prior to
          July 6, 2012, there existed an ongoing relationship
          between Attorney Panowicz and Attorney Harris that
          precluded her from later serving as an arbitrator.
          There was no evidence, however, that Attorney Harris


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            ever worked on this case, or any case for that matter,
            in which [appellants were] a party. In addition, it is
            undisputed that Attorney Harris was not selected as
            [Erie’s] arbitrator until August of 2013 and that the
            arbitration itself was not conducted until May 5, 2015,
            almost three years after Attorney Harris last
            performed any work for Attorney Panowicz’s firm.

            While in hindsight it is clear that [Erie’s] choice of
            Attorney Harris as its arbitrator without, minimally,
            disclosing the nature of her prior professional
            relationship with [appellants’] counsel was less than
            ideal, the Court was not persuaded that the law
            required that the Award be vacated under the
            circumstances of this case, especially where, as here,
            the Award was unanimous and there was no evidence
            whatsoever to indicate that Attorney Harris exerted
            any influence over the other two arbitrators, one of
            whom is a well-seasoned plaintiff’s attorney and the
            other a retired judge.

Trial court opinion, 1/22/18 at 1-3.

      The record reflects that following entry of its October 24, 2017 order

entering summary judgment in favor of Erie, appellants filed a timely notice

of appeal. The trial court did not order appellants to file a Pa.R.A.P. 1925(b)

statement of errors complained of on appeal. The trial court did, however, file

an opinion “furnished pursuant to the requirements of Pa.[R.A.P.] 1925(a).”

(Trial court opinion, 1/22/18 at 1.)

      Appellants raise the following issue for our review:

            Did the trial court err in entering summary judgment
            in favor of Erie thereby denying the Petition to Vacate
            the Arbitration Award where the Arbitration Hearing
            was fundamentally flawed and failed to comport with
            the requirements of procedural due process since the
            defense arbitrator was not impartial, having worked in
            the office of defense counsel over an extended period,


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            specifically, on files assigned to defense counsel by
            [Erie] in the arbitration proceedings?

Appellants’ brief at 3-4.

      We begin our analysis with our standard of review:

            When reviewing a trial court’s decision to grant a
            motion for summary judgment, we adhere to the
            following standard and scope of review.

                  We view the record in the light most
                  favorable to the nonmoving party, and all
                  doubts as to the existence of a genuine
                  issue of material fact must be resolved
                  against the moving party. Only where
                  there is no genuine issue as to any
                  material fact and it is clear that the
                  moving party is entitled to a judgment as
                  a matter of law will summary judgment be
                  entered. Our scope of review of a trial
                  court’s order granting or denying
                  summary judgment is plenary, and our
                  standard of review is clear the trial court’s
                  order will be reversed only where it is
                  established that the court committed an
                  error of law or abused its discretion.

Shipp v. Phoenix Ins. Co., 51 A.3d 219, 221 (Pa.Super. 2012).

      At the outset, we note that the parties expressly agreed to statutory

arbitration to resolve any dispute regarding underinsured motorist coverage

pursuant to the Arbitration Act of 1927.

            Although the Act of 1927 was repealed and replaced
            by the Act of 1980, the current statute contains
            provisions that govern agreements to arbitrate under
            the prior Act. Section 501(b) of the Act of 1980
            provides that 42 Pa.C.S.A. § 7302(d)(2) shall apply to
            agreements “which expressly provide for arbitration
            pursuant to the former provisions of the Act of
            April 25, 1927.” See Act of 1980, Oct. 5, P.L. 693,


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          No. 142 (codified as the Historical Note to
          42 Pa.C.S.A. § 7302(d)(2)). Thus, a court asked to
          review an arbitration award made under the
          provisions of the Act of 1927 may modify or correct
          the award where it is “contrary to law and is such that
          had it been a verdict of a jury the court would have
          entered a different judgment or a judgment
          notwithstanding the verdict.”           42 Pa.C.S.A.
          § 7302(d)(2); Meerzon v. Erie Insurance, 380 Pa.
          Super. 386, 551 A.2d 1106 (Pa. Super. 1988).

Krakower v. Nationwide Mut. Ins. Co., 790 A.2d 1039, 1040 (Pa.Super

2001).

          Apart from instances where the Commonwealth or a
          political subdivision submits a controversy to
          arbitration, the historical footnote accompanying
          Section 7302 provides only two occasions where this
          standard of review is applicable.     The relevant
          footnote states:

                The provisions of 42 Pa. C.S.[A.]
                § 7302(d)(2)      (relating   to    special
                application) shall be applicable to any
                nonjudicial arbitration pursuant to:

                (1)   An agreement made prior to
                      the effective date of this act
                      which expressly provides that
                      it   shall   be     interpreted
                      pursuant to the law of this
                      Commonwealth and which
                      expressly      provides      for
                      statutory arbitration.

                (2)   An agreement heretofore or
                      hereafter     made       which
                      expressly     provides      for
                      arbitration pursuant to the
                      former provisions of the Act of
                      April 25, 1927 (P.L. 381,
                      No. 248), relating to statutory
                      arbitration.


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             42 Pa. C.S.A. § 7302 (historical footnote[ n.2).] See
             also Cigna v. Squires, 628 A.2d 899, 901 (Pa.
             1993), appeal denied, 644 A.2d 161 (Pa. 1994);
             Martin v. PMA Group, 617 A.2d 361, 363 (1992)
             (holding that the historical note accompanying § 7302
             provides for the applicability of the standard of review
             set forth under § 7302(d)(2)).

Younkin v. Nationwide Ins. Co., 807 A.2d 275, 279 (Pa.Super. 2012).

      Here, appellants argue that because the agreement contained a

provision to arbitrate under the Act of 1927, all repealed provisions of the Act

of 1927 govern their dispute. Appellants are mistaken. The Act of 1980 and

relevant case law make it clear that only where a court is asked to review an

arbitration award made under the provisions of the Act of 1927 may the court

modify or correct the award under the less stringent “contrary to law” standard

set forth in the Act of 1927 and preserved in Section 7302(d)(2) of the Act of

1980. See 42 Pa.C.S.A. § 7302(d)(2); see also Heintz, 804 A.2d 1209,

1214-1215 (Pa.Super. 2002), citing Krakower, 790 A.2d 1039.

      Appellants did not, however, seek correction or modification of the

award alleging that it was contrary to law; rather, appellants moved to vacate

the award.     Therefore, Section 7314 of the Act of 1980 applies.       Under

Section 7314, a trial court may vacate an award of a board of arbitrators only

in a very limited set of circumstances. Section 7314 states, in pertinent part:

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

                   ....



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                   (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[.]

Racicot v. Erie Ins. Exch., 837 A.2d 496, 500 (Pa.Super. 2003) (emphasis

added); see also 42 Pa.C.S.A. § 7314(1).

      In their petition to vacate the arbitration award, appellants alleged that

“they received information suggesting that the arbitrator selected [by Erie]

may have a financial relationship with the office of [Erie’s counsel],

Robert T. Panowicz, Esquire.”     (Appellants’ petition to confirm arbitration

award for the purpose of jurisdiction and to vacate the arbitration award at

2-3, ¶ 11).    Appellants further alleged that “the suggested relationship

between [the arbitrator selected by Erie] and Robert T. Panowicz, Esquire, if

accurate, prohibited a fair and impartial hearing” that requires vacation of the

arbitration award. (Id. at 3-4, ¶ 15.)

      Appellants, however, neither alleged nor demonstrated that their rights

were prejudiced by any evident corruption or misconduct on the part of

Attorney Harris.   Rather, appellants merely alleged and demonstrated that

Attorney Harris worked on some of Attorney Panowicz’s cases as a legal

subcontractor and that it was possible that appellants’ case was assigned to

Attorney   Panowicz       when   Attorney    Harris   rendered     services   to

Attorney Panowicz three years prior to the arbitration.          This allegation,

however, is not a statutorily valid ground to vacate the arbitration award. See


                                      -7-
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42 Pa.C.S.A. § 7314(1)(ii).   Therefore, the trial court properly entered

summary judgment in favor of Erie.

     Order affirmed.



     Nichols, J. joins this Memorandum.

     Gantman, P.J. concurs in the result.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date:01/29/2019




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