J-E03001-14

                               2015 PA Super 6

STATE FARM MUTUAL AUTOMOBILE              :     IN THE SUPERIOR COURT OF
INSURANCE COMPANY,                        :          PENNSYLVANIA
                                          :
                        Appellee          :
                                          :
            v.                            :
                                          :
BARISHA DILL,                             :
                                          :
                        Appellant         :     No. 3120 EDA 2012


          Appeal from the Judgment Entered December 19, 2012,
           In the Court of Common Pleas of Philadelphia County,
               Civil Division, at No. 1370, March Term, 2012.


BEFORE: BENDER, P.J.E., BOWES, PANELLA, DONOHUE, SHOGAN, ALLEN,
LAZARUS, WECHT, AND STABILE, JJ.

CONCURRING AND DISSENTING OPINION BY SHOGAN, J.:FILED JANUARY 13, 2015

      Although I appreciate the Majority’s concern that objections to the

appointment of an arbitrator should be timely raised, I cannot agree that

waiver is appropriate under the facts of this case. The record contains no

indication that Appellant participated in the arbitration hearing after learning

that Attorney McNulty and his law partner had previously served as counsel

for the tortfeasor in the related third party litigation. The record does

indicate that Appellant’s previous counsel had been disbarred and that the

status of his records was uncertain. To impose upon a party, especially the

Appellant under these facts, a duty to investigate the prior involvement of all

attorneys and their partners or associates is, in my view, inconsistent with
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the impartiality and transparency we all should expect in judicial and quasi-

judicial proceedings.   To the contrary, I would impose upon any attorney

who serves as an arbitrator the duty to conduct a conflicts check of all prior

and current representations and to disclose any conflicts regarding related

representations prior to the commencement of the arbitration proceeding.

Indeed, I am of the opinion that the current state of the law requires no

less. Accordingly, I respectfully dissent.

      As the record reflects, this matter stems from a 2003 automobile

accident in which Appellant, then only eleven years old, was a passenger

and suffered injuries. In 2005, Appellant filed suit against the driver of the

other vehicle.    The insurance carrier of the driver of the other vehicle

referred the case to Attorney McNulty.       It is undisputed that Attorney

McNulty entered his appearance in the case and filed an answer and new

matter on behalf of the driver of the other vehicle. Subsequently, Attorney

McNulty withdrew his appearance and another attorney from Mr. McNulty’s

law firm defended the matter.1     The case ultimately settled for the policy

limits in 2008.

      Thereafter, Appellant, represented by a different attorney who was not

involved in the previous litigation, filed an underinsured motorist (“UIM”)


1
  The record reflects that Attorney McNulty transferred the case to Attorney
Daniel Lewbart, his partner. The trial court’s statement that Attorney
McNulty transferred the case to another law firm after approximately one
month is thus incorrect. See Trial Court Opinion, 3/7/13, at 1.


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claim against Appellee State Farm, the insurance carrier for the vehicle in

which she was a passenger. Under the terms of the State Farm insurance

policy, the UIM claim proceeded to arbitration. State Farm chose Attorney

McNulty as its arbitrator.   After an arbitration hearing, the three-person

arbitration panel rendered a decision in favor of State Farm. Appellant then

filed the instant motion to strike and/or set aside the arbitration award.

There is no direct evidence in the record that Appellant knew of Attorney

McNulty’s prior involvement in this matter up until this time.        In fact,

Appellant’s motion to strike and/or set aside the arbitration award contains

the following averment:

      5. Elliott Tolan, [Appellant’s] present counsel, was not involved
      in the litigation involving the tortfeasors and so was not aware of
      Mr. McNulty’s, or members of his firm’s, involvement in that
      case.

Motion to Strike and/or Set Aside Arbitration Award, 7/16/12, at 2. 2       It is

further undisputed that Appellant’s counsel in the previous litigation had

been disbarred.     Motion to Strike and/or Set Aside Arbitration Award

Memorandum of Law, 7/16/12, at 5. The trial court denied Appellant’s

motion.


2
  Appellant’s counsel specifically avers that he became involved in the UIM
arbitration “many years after the collision and the third party liability case
was over and most of the file and the entire underlying action was not
provided to me.” Verification of Elliott Tolan, 9/21/12, at ¶ 7. He further
asserts that the Answer and New Matter filed by Attorney McNulty in the
third party liability case “was obtained and reviewed for the first time from
the old records at City Hall last Friday, September 21, 2012.” Id. at ¶ 9.


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      Chapter 73 of the Pennsylvania Judicial Code sets forth three types of

arbitration: statutory arbitration (subchapter A - the Uniform Arbitration Act

(“UAA”)); common law arbitration (subchapter B); and judicial arbitration,

which includes both compulsory arbitration and voluntary arbitration

(subchapter C). 42 Pa.C.S. §§ 7301-7362.

      The insurance policy at issue provides for arbitration under the

Pennsylvania Arbitration Act of 1927. As noted by Appellee, the Act of 1927

was repealed and replaced by the Act of 1980, the UAA. However, parties

may still agree to arbitrate disputes under the Act of 1927.     Nationwide

Mutual Ins. Co. v. Heintz, 804 A.2d 1209, 1214 (Pa. Super. 2002). For

purposes of our discussion on vacating awards, the differences between the

acts are immaterial.

      Section 7314 of the UAA addresses the vacating of an arbitration

award by the court, in pertinent part, as follows:

      § 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 subchapter were not applicable[.]

42 Pa.C.S. § 7314(a)(1).




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      Section 7341 of the Judicial Code addresses common law arbitration as

follows:

      § 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.

42 Pa.C.S. § 7341 (emphasis added).

      In interpreting this language in a case involving uninsured motorist

coverage, our Court emphasized that the hearing to which a party is entitled

must be a “full and fair” hearing. Donegal Insurance Company v. Longo,

610 A.2d 466, 468 (Pa. Super. 1992) (citing Abramovich v. Pennsylvania

Liquor Control Board, 416 A.2d 474, 476 (Pa. 1980)).            Furthermore, a

hearing that comports with procedural due process “must be held before

impartial and disinterested arbitrators.” Longo, 610 A.2d at 468.

      If parties are to be encouraged to arbitrate, arbitration
      proceedings must be conducted with the same degree of
      impartiality as the courts afford.       Public policy requires,
      therefore, that arbitrators not only be completely impartial but
      also that they have no connection with the parties or the dispute
      involved which might give the appearance of their being
      otherwise. . . .

Id. (quoting 5 Am.Jur.2d Arbitration and Award, § 99).




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      Also, we have explained that “an irregularity refers to the process

employed in reaching the result of the arbitration, not to the result itself.”

Chervenak, Keane & Company, Inc. v. Hotel Rittenhouse Associates,

477 A.2d 482, 485 (Pa. Super. 1984) (citing Press v. Maryland Casualty

Company, 324 A.2d 403, 404 (Pa. Super. 1974)).

      Section 7362(d) similarly addresses appeals in matters of judicial

arbitration, as follows:

            (d) Appeal.--Any party to a matter referred under this
      section shall have such rights of appeal, if any, as shall be
      prescribed by general rules.      Where no right to appeal is
      prescribed by general rule, all parties shall be deemed to have
      waived any right to appeal which they might otherwise enjoy
      under the Constitution of Pennsylvania or otherwise in mutual
      consideration of an expeditious final disposition of the matter,
      but no such waiver shall apply if 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.

42 Pa.C.S. § 7362(d).

      Also relevant to our discussion is Pennsylvania Rule of Civil Procedure

1302, which addresses the appointment of the board of arbitrators in actions

submitted to compulsory arbitration. Specifically, Rule 1302(e) provides as

follows:

      (e) A member of a board who would be disqualified for any
      reason that would disqualify a judge under the Code of Judicial
      Conduct shall immediately withdraw as an arbitrator.




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Pa.R.C.P. 1302(e) (emphasis added). In addition, Canon 3 of the Code of

Judicial Conduct expressly states, in pertinent part, the following:

      C.     Disqualification.

            (1) Judges should disqualify themselves in a proceeding
      in which their impartiality might reasonably be questioned,
      including but not limited to instances where:

                   (a) they have a personal bias or prejudice
             concerning a party, or personal knowledge of
             disputed    evidentiary facts  concerning    the
             proceeding;

                   (b) they served as a lawyer in the matter in
             controversy, or a lawyer with whom they previously
             practiced law served during such association as a
             lawyer concerning the matter, or the judge or such
             lawyer has been a material witness concerning it[.]

Pennsylvania Code of Judicial Conduct, Canon 3(C)(1)(a) and (b). I cannot

accept the trial court’s position that a distinction should be made between

compulsory     and   voluntary     arbitration   in   the   application   of   this

disqualification standard.   Trial Court Opinion, 3/7/13, at 4.      Due process

concerns are equally applicable.

      Interestingly, the Majority of this panel insinuates that Appellant

waived her ability to object to the composition of the arbitration panel by

failing to object to Attorney McNulty’s participation as an arbitrator prior to

the arbitration hearing.     The Majority contends that to find in favor of

Appellant would require this Court to overrule the longstanding principles

enunciated in Longo, supra. However, the following language from Longo



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illustrates that the prerequisite to waiver, in a similar circumstance, is

participation in the arbitration hearing after learning of the grounds for

objection:

            A party may waive objection to the composition of the
      arbitration panel if after learning of the grounds for
      objection that party nevertheless participates in the
      hearing and withholds objection until the panel renders a
      decision.      Here, however, Donegal did not learn of [the
      arbitrator’s] relationship with the Longos until after the hearings
      had been concluded. When the relationship became known,
      Donegal objected immediately and in the only practical manner
      available to it.     Having made its objection unsuccessfully,
      Donegal could properly await the panel’s decision before
      proceeding in the Court of Common Pleas to vacate the award.
      The issue of [the arbitrator’s] competency to serve as an
      arbitrator, therefore, has not been waived and is properly before
      this Court for appellate review.

Longo, 610 A.2d at 468 (emphasis added).

      Here, the record contains no indication that Appellant participated in

the arbitration hearing after learning of the grounds for objection. Indeed,

the record is devoid of any evidence that Appellant became aware of the

grounds for objecting to Attorney McNulty’s participation as a member of the

arbitration panel prior to the hearing, or that Appellant purposely withheld

her objection until the arbitration panel rendered its decision. Rather, it is

my conclusion that the facts of the instant case are similar to those in

Longo.       Therefore, I believe that Longo does not require a different

determination, nor is this Court required to overrule Longo in order to

reverse the decision of the trial court in this matter.



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      Upon review of the record once again in this case, I remain firm in my

conclusion that the selection of Attorney McNulty, who failed to disclose that

he and his partner had represented the tortfeasor in the related third party

litigation, as an arbitrator in this proceeding, affects the fairness of the

hearing and is an irregularity requiring that the award be vacated.           It

matters not that Attorney McNulty alleges that he had no specific recollection

of the prior matter.     Attorney McNulty had taken a position adverse to

Appellant and was privy to confidential information regarding the accident.

      Additionally, the Majority appears to impose upon Appellant the duty

to investigate the prior involvement of all attorneys and their law firm

associations. I strongly disagree that the duty fell upon Appellant. To the

contrary, I am of the opinion that the duty to conduct a conflicts review and

disclose his prior involvement in the matter was upon Attorney McNulty as

an arbitrator.   Conflicts checks are part of the practice of law and should

likewise be expected of any attorney who assumes the quasi-judicial role of

arbitrator.   For this reason, I would reverse the decision of the trial court

and vacate the arbitration award. Accordingly, I must dissent.3

      Judges Allen and Lazarus join this Concurring and Dissenting Opinion.




3
  In all other respects, I agree with the Majority. My review of the record
reveals that Appellant failed to preserve her second issue on appeal.


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