J-A10030-17

                             2017 PA Super 398
MARVIN WEINAR                                  IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                        Appellee

                   v.

WILLIAM LEX

                        Appellant                   No. 1467 EDA 2016

               Appeal from the Judgment Entered July 5, 2016
              In the Court of Common Pleas of Chester County
                     Civil Division at No(s): 2015-08168

MARVIN WEINAR                                  IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                        Appellant

                   v.

WILLIAM LEX

                        Appellee                    No. 1615 EDA 2016

               Appeal from the Judgment Entered July 5, 2016
              In the Court of Common Pleas of Chester County
                   Civil Division at No(s): 2015-CV-08168

BEFORE: DUBOW, J., SOLANO, J., and FORD ELLIOTT, P.J.E.

OPINION BY SOLANO, J.:                         FILED DECEMBER 15, 2017

      Before the Court are consolidated cross-appeals filed by William F. Lex

and Dr. Marvin Weinar from the trial court’s April 28, 2016 order (1)

granting Weinar’s petition to confirm an arbitration award, and (2)

sustaining Lex’s preliminary objections and dismissing Weinar’s second

amended complaint. The appeals arise out of Weinar’s efforts to enforce an

arbitration award that was rendered in his favor on February 14, 2013. After

unsuccessfully seeking to enforce the award in New York state and federal

courts and in a federal court in Pennsylvania, Weinar initiated this action in
J-A10030-17


the Chester County Court of Common Pleas, filing both a petition to enforce

the arbitration award under Pennsylvania law and a complaint asserting

numerous claims against Lex relating to Lex’s failure to pay the arbitration

award. The trial court granted Weinar’s petition to enforce the arbitration

award and dismissed his complaint. We affirm the granting of the petition,

vacate the dismissal of the complaint, and remand for further proceedings.

        Lex, while working as a securities broker for McGinn Smith & Co., sold

Weinar approximately $400,000 in notes.          In April of 2010, the Securities

and Exchange Commission filed an action against McGinn Smith, its

principals, and the issuers of all the notes sold to Weinar.1 As a result of this

and other legal actions, the notes became worthless.          On December 14,

2000, Weinar filed a statement of claim against Lex pursuant to the Code of

Arbitration Procedure of the Financial Institution Regulatory Authority

(FINRA).2 Weinar asserted that Lex acted negligently and breached various

____________________________________________
1 The principals of McGinn Smith were accused of diverting money from the
notes to their personal uses. McGinn Smith eventually was placed in
receivership.
2   FINRA Code of Arbitration Procedure Rule 12200 provides:

        Parties must arbitrate a dispute under the Code if:
        • Arbitration under the Code is either:
           (1) Required by a written agreement, or
           (2) Requested by the customer;
        • The dispute is between a customer and a member or
        associated person of a member; and
        • The dispute arises in connection with the business activities of
        the member or the associated person, except disputes involving
        the insurance business activities of a member that is also an
        insurance company.
(Footnote Continued Next Page)
                                           -2-
J-A10030-17


fiduciary and contractual duties by, among other things, recommending

investments that were unsuitable to Weinar’s objectives and not properly

diversified.    On February 14, 2013, after an arbitration proceeding in

Pennsylvania, a panel of arbitrators issued an award in favor of Weinar that

included $270,000 in compensatory damages, plus interest at a rate of 6%,

compounded annually, and fees of $7,862.50.

      That same day, Weinar filed a petition to enforce the arbitration award

in a New York state court under Section 7510 of the New York Civil Practice

Law and Rules.3 Lex removed the action to the U.S. District Court for the

Southern District of New York on the basis of diversity jurisdiction and then

filed a motion to dismiss the case for lack of personal jurisdiction.

      On April 3, 2013, while Lex’s motion to dismiss was pending in the

Southern District of New York, Lex filed a petition in the U.S. District Court

for the Eastern District of Pennsylvania (the “EDPA Action”), in which he

sought to vacate the arbitration award under the Federal Arbitration Act
(Footnote Continued) _______________________

There are references to a customer agreement and multiple subscription
agreements in the reproduced record. See, e.g., Weinar’s Pet. to Confirm
an Arbitration Award at ¶¶ 12, 17, Weinar v. Lex, No. 650495/2013 (N.Y.
Sup. Ct., Feb. 14, 2013). However, we note with disapproval that the
written agreement(s) themselves are not included in the certified record or
the reproduced record. The arbitrability of the parties’ dispute under the
FINRA Code is not an issue in this appeal; the arbitrators’ award finds that
Lex was “required to submit to arbitration pursuant to the Code” and “is
bound by the determination of the Panel on all issues submitted.” Award at
2.
3 That statute provides, “The court shall confirm an award upon application
of a party made within one year after its delivery to him, unless the award is
vacated or modified upon a ground specified in section 7511.” N.Y. C.P.L.R.
§ 7510.


                                          -3-
J-A10030-17


(FAA). The EDPA Action was stayed until January 23, 2014, when the New

York federal district court dismissed the New York action for lack of personal

jurisdiction over Lex. On May 22, 2014, Weinar filed a cross-petition in the

EDPA action to confirm the arbitration award. In the cross-petition, Weinar

urged the court to apply Pennsylvania law, which “does not impose a time

limit on motions to confirm an arbitration award.”     Weinar’s Cross-Pet. to

Confirm Arbitration Award at ¶ 12.

       On March 31, 2015, the Honorable Norma L. Shapiro entered an order

in the EDPA action granting in part and denying in part Lex’s petition to

vacate the arbitration award. See Lex v. Weinar, Civ. A. No. 13-mc-96,

2015 WL 1455810 (E.D. Pa. Mar. 31, 2015).4 Judge Shapiro also denied as

untimely Weinar’s cross-petition to confirm the award. She explained that

even though federal jurisdiction in the case was based on diversity of

citizenship,5 the case was “brought under the FAA,” and she was required to

apply the FAA’s provisions, rather than state law, to an FAA case brought in

federal court because the parties had not contractually opted out of the



____________________________________________
4 Judge Shapiro vacated the award of compound interest to Weinar and held
that he should receive only simple interest. The court otherwise denied
Lex’s petition to vacate the award. See Lex, 2015 WL 1455810, at *6.
5 Lex alleged that the court had jurisdiction both because of the parties’
diverse citizenship, 28 U.S.C. § 1332, and because he presented a federal
claim under the FAA. Judge Shapiro held that “the FAA does not constitute
an independent basis for federal jurisdiction,” but that the parties’ diversity
provided a jurisdictional basis to hear a claim based on the FAA. Lex, 2015
WL 1455810, at *2; see Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 25 n.32 (1983).


                                           -4-
J-A10030-17


FAA’s requirements.        Id. at *2.6         She held that Weinar’s May 22, 2014

cross-petition to confirm the February 14, 2013 arbitration award was

untimely because “[t]he FAA one-year deadline for moving to confirm the

arbitration award” applied. Id. at *3, citing FAA § 9, 9 U.S.C. § 9 (stating

that any party may apply for an order confirming an arbitration award “at

any time within one year after the award is made”).

       Weinar filed a motion for reconsideration of Judge Shapiro’s March 31,

2015 order, requesting that Judge Shapiro confirm the arbitration award as

modified by the March 31, 2015 order or remand the matter to FINRA

Dispute Resolution for issuance of an amended award with recalculated

interest in accordance with the March 31, 2015 order.            On May 20, 2015,

Judge Shapiro denied the motion for reconsideration, reiterating that

Weinar’s petition to confirm was untimely under the FAA and stating that the

March 31, 2015 order left no confusion as to the calculation of interest.

Weinar did not appeal from Judge Shapiro’s March 31, 2015 or May 20, 2015

orders.




____________________________________________
6  Judge Shapiro based this conclusion on Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 405 (1967), in which the Supreme Court
held that the FAA establishes binding federal rules and procedures with
which federal courts are obligated to comply. In a portion of her opinion
titled “Choice of Law,” Judge Shapiro summarized: “The FAA establishes a
uniform federal law over contracts falling within its scope. Although a
federal court sitting in diversity would normally be bound by state law under
Erie Railroad Co. v. Tomkins, 304 U.S. 64, 78 (1938), federal courts must
apply the provisions of the FAA in a diversity case where no federal question
is otherwise involved.” 2015 WL 1455810, at *2 (some citations omitted).


                                           -5-
J-A10030-17


     On September 9, 2015, Weinar instituted the current action by filing a

complaint against Lex in the Court of Common Pleas of Chester County,

based on Lex’s failure to pay the arbitration award. In his second amended

complaint, Weinar asserted the following claims: (1) breach of contract, by

failing to “abide by and perform” the arbitration award; (2) conversion, by

retaining money out of which Weinar’s demand for payment of the

arbitration award could be satisfied; (3) unjust enrichment; (4) confirmation

of the arbitration award; and (5) a request for a declaratory judgment

regarding the amount of the arbitration award and any judgment to be

entered upon it. In addition to declaratory relief, Weinar sought damages of

$270,000, plus interest, fees, and “such further relief as [the trial court]

deems just and proper.” Second Am. Compl. at 5, 6, 8.

     Lex   filed   preliminary   objections   to   Weinar’s   second   amended

complaint, arguing that, because of the EDPA ruling, the requested relief

was barred in its entirety by the doctrine of res judicata. In addition, Lex

contended that Weinar failed to state a claim for breach of contract;

Weinar’s conversion claim was barred by the gist of the action doctrine and

failed to state a claim upon which relief could be granted; Weinar’s unjust

enrichment claim was barred by res judicata and/or collateral estoppel;

Weinar’s claim for confirmation of the award should be dismissed because an

application for confirmation of an arbitration award must be made by

petition; and Weinar could not obtain a declaratory judgment on an

uncontroverted and finally litigated issue.        Weinar responded by filing

preliminary objections to Lex’s preliminary objections, arguing that (1)
                                     -6-
J-A10030-17


Pennsylvania law does not permit preliminary objections based on res

judicata or collateral estoppel; (2) Pennsylvania law does not permit

preliminary objections based on matters outside the complaint; (3) Weinar’s

complaint was not barred by res judicata; (4) Lex’s objections to Weinar’s

breach of contract and conversion claims were impermissible “speaking

demurrers”; and (5) Lex’s objection to Weinar’s claim for confirmation of the

award was moot in light of Weinar’s filing of a petition to confirm the award.7

       Meanwhile, on December 15, 2015, Weinar filed a petition to confirm

the arbitration award under Section 7342(b) of the Judicial Code, which

provides that “the court shall enter an order confirming the award and shall

enter a judgment or decree in conformity with the order” if a party applies

for such relief “more than 30 days after an award is made.” See 42 Pa. C.S.

§ 7342(b).     Lex opposed that petition, arguing that it was barred by res

judicata and that the FAA’s one-year statute of limitations for confirming an

arbitration award preempted Section 7342(b), which contains no statute of

limitations.

       The trial court held a hearing on April 15, 2016,8 and both parties

submitted post-hearing letters to the court.     On April 28, 2016, the trial

court issued an opinion and order (1) granting Weinar’s petition to confirm

the arbitration award, and (2) sustaining Lex’s preliminary objections and

____________________________________________
7 Weinar listed eight separate arguments. We have consolidated them here
for simplicity.
8 There are no notes of testimony from the April 15, 2016 hearing in the
certified or reproduced record.


                                           -7-
J-A10030-17


dismissing Weinar’s second amended complaint. The trial court did not rule

on Weinar’s preliminary objections to Lex’s preliminary objections.

      The trial court held that “the FAA does not preempt the Pennsylvania

Arbitration Statutes regarding the time limit within which a party must

petition to confirm an arbitration award.” Trial Ct. Op., 4/28/16, at 7. The

court reasoned that the lack of a one-year time limit for confirming an

arbitration award under 42 Pa. C.S. § 7342(b) was a mere procedural matter

that did not interfere with the federal policy of ensuring enforceability of

arbitration agreements. Id. at 10-12. The trial court further explained that

it sustained Lex’s preliminary objections because Weinar’s second amended

complaint “merely seeks to re-litigate the arbitration.” Id. at 13.

      On May 12, 2016 Lex filed a notice of appeal from the trial court’s

confirmation of the arbitration award.     On May 26, 2016, Weinar filed a

notice of cross-appeal from the order sustaining Lex’s preliminary objections

to Weinar’s second amended complaint.

      In a June 22, 2016 opinion issued in response to Lex’s appeal from the

confirmation ruling, the trial court explained that it rejected Lex’s res

judicata argument because there was no identity of the two causes of action

(the EDPA action and the present action) and it rejected Lex’s collateral

estoppel argument because the EDPA court “never evaluated whether the

petition to confirm would have been granted under Pennsylvania law.” Trial

Ct. Op., 6/22/16, at 13-14.     In an opinion issued on July 13, 2016, in

response to Weinar’s appeal from the dismissal of his complaint, the court

reasoned that Weinar’s breach of contract claim was barred by res judicata,
                                     -8-
J-A10030-17


his unjust enrichment claim was barred by collateral estoppel, and his

conversion claim was barred by the “gist of the action” doctrine. Trial Ct.

Op., 7/13/16, at 7-9.

      The trial court entered judgment on July 5, 2016.         Under Pa.R.A.P.

905(a)(5), the previously filed notices of appeal are treated as if filed

following the entry of judgment.        The cross-appeals therefore are now

properly before this Court.

                          NO. 1467 EDA 2016
    (LEX’S APPEAL FROM THE CONFIRMATION OF THE ARBITRATION AWARD)

      In his appeal, Lex raises the following issues:

      1. In light of the 2011 U.S. Supreme Court case AT&T Mobility
      LLC v. Concepcion, 563 U.S. 333 (2011)[,] which holds that
      states cannot enforce laws or “procedures inconsistent with the
      FAA,” did the [t]rial [c]ourt err by applying Pennsylvania’s
      unlimited statute of limitations to enforce an arbitration award
      when this statute of limitations is inconsistent with the one-year
      time period prescribed by the FAA?

      2. Did the [t]rial court err in its finding that the unlimited statute
      of limitations provided by 42 Pa.C.S. § 7342(b) does not conflict
      with the policies and goals of the FAA, even though the FAA has
      an identified goal of facilitating expeditious resolution of
      disputes?

      3. In determining whether Pennsylvania’s statute of limitations
      to confirm an arbitration was preempted by the FAA, was it an
      error for the [t]rial [c]ourt to reject preemption based upon a
      purported distinction as to whether the issue was “procedural” as
      opposed to “substantive[”]?

      4. Was it error for the [t]rial [c]ourt to rely upon pre-
      Concepcion decisions to reach its conclusion that the FAA did
      not preempt 42 Pa.C.S. § 7342(b)?

      5. Does the doctrine of res judicata bar a court from considering
      the timeliness of the filing of a petition where that same issue
      has already been finally adjudicated by a court of competent
      jurisdiction?
                                      -9-
J-A10030-17



Lex’s Brief at 2.

      Lex’s issues challenge the trial court’s confirmation of the arbitration

award in favor of Weinar.   Arbitration is a non-judicial means of resolving

disputes.    Although parties may voluntarily agree to comply with an

arbitration award, enforcement of the award cannot be compelled unless the

prevailing party has the award “confirmed” in a judicial proceeding that then

gives the arbitrators’ ruling the effect of a court judgment. See Thomas H.

Oehmke, COMMERCIAL ARBITRATION § 133:1 (3d ed. 2017).

      Both federal and Pennsylvania law provide means by which an

arbitration award may be confirmed. The relevant federal statute is the FAA,

which applies to “a written agreement to arbitrate ‘in any maritime

transaction or a contract evidencing a transaction involving commerce.’”

Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983) (quoting FAA, 9 U.S.C. § 2). Neither Lex nor Weinar disputes that

their agreement to arbitrate under the FINRA Code is subject to the FAA.

See Moscatiello v. Hilliard, 939 A.2d 325, 326 (Pa. 2007) (noting that FAA

governs arbitration under rules of the National Association of Securities

Dealers (FINRA’s predecessor)).     The FAA “create[s] a body of federal

substantive law of arbitrability, applicable to any arbitration agreement

within the coverage of the Act.” Moses H. Cone, 460 U.S. at 24. One of its

provisions, Section 9, authorizes “any party to the arbitration” to apply to a

state or federal court for an order confirming an arbitration award. 9 U.S.C.

§ 9. Section 13 provides:


                                    - 10 -
J-A10030-17


      The judgment so entered shall have the same force and effect, in
      all respects, as, and be subject to all the provisions of law
      relating to, a judgment in an action; and it may be enforced as if
      it had been rendered in an action in the court in which it is
      entered.

9 U.S.C. § 13.

      Although, as discussed below, the FAA robustly preempts any state

law that interferes with the enforceability of an agreement to arbitrate, it

creates “no federal policy favoring arbitration under a certain set of

procedural rules,” Volt Info. Sci. v. Bd. of Trs. of Leland Stanford Junior

Univ., 489 U.S. 468, 476 (1989), and leaves the parties free to seek

enforcement of their arbitration award under state law, rather than the FAA.

Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 590 (2008).

Pennsylvania makes available two statutory schemes for arbitration of cases

not filed in court.   One, the Uniform Arbitration Act, 42 Pa. C.S. §§ 7301-

7320, governs arbitrations under agreements that “expressly provide[]” that

they are subject to that Act “or any other similar statute.”     42 Pa. C.S.

§ 7302(a). All other arbitration agreements are “conclusively presumed” to

be governed by what the Judicial Code calls “common law arbitration” under

42 Pa. C.S. §§ 7341-7342. See Moscatiello, 939 A.2d at 327. No party to

this case contends that the arbitration agreement at issue here falls under

the Uniform Act; accordingly, the Judicial Code’s “common law” provisions

apply to this case. Among the “common law” provisions is Section 7342(b),

which states that if a party makes an appropriate application, “the court

shall enter an order confirming the award and shall enter a judgment or

decree in conformity with the order.” 42 Pa. C.S. § 7342(b).
                                    - 11 -
J-A10030-17


       After unsuccessfully seeking confirmation of the award in federal court

under the FAA, Weinar successfully applied for confirmation in the Chester

County Court of Common Pleas under Section 7342(b). Lex now contends

that the trial court erred in confirming the award because the federal order

declining confirmation precluded confirmation by the court in Chester County

and, alternatively, because confirmation is barred by the FAA’s one-year

statute of limitations, which preempts the longer period for filing a

confirmation application under Pennsylvania law.

       “A trial court order confirming a common law arbitration award will be

reversed only for an abuse of discretion or an error of law.”        Sage v.

Greenspan, 765 A.2d 1139, 1142 (Pa. Super. 2000), appeal denied, 784

A.2d 119 (Pa. 2001).          As we discuss below, each of Lex’s contentions

presents a question of law as to which our standard of review is de novo.

                                     Res Judicata
                                     (Lex’s issue 5)

       Because a court should avoid constitutional issues if possible, see

Commonwealth v. Karetny, 880 A.2d 505, 519 (Pa. 2005), and because

Lex’s preemption issues ultimately are grounded in the U.S. Constitution’s

Supremacy Clause, Art. VI cl. 2, we begin our analysis with Lex’s fifth issue,

in which Lex contends that confirmation of the arbitration award under

Pennsylvania law is barred by res judicata (claim preclusion) as a result of

Judge Shapiro’s decision in the EDPA action.9 The trial court held that res

____________________________________________
9 Although Lex also raised collateral estoppel (issue preclusion) in the trial
court, in his appeal he argues only that res judicata applies.


                                          - 12 -
J-A10030-17


judicata did not apply because there was no identity of the two causes of

action (the cause of action in the EDPA case and the cause of action in the

instant case). Trial Ct. Op., 6/22/16, at 13.

       We have explained the res judicata doctrine as follows:

       The doctrine of res judicata prevents a party from instituting
       litigation that has been the subject of a lawsuit. We explained
       the concept in Stoeckinger v. Presidential Financial Corp. of
       Delaware Valley, 948 A.2d 828, 832 n.2 (Pa. Super. 2008)
       (footnote omitted):

          “Res judicata” means “a thing adjudged” or a matter
          settled by judgment. Traditionally, American courts have
          used the term res judicata to indicate claim preclusion,
          i.e., the rule that a final judgment rendered by a court of
          competent jurisdiction on the merits is conclusive as to the
          rights of the parties and constitutes for them an absolute
          bar to a subsequent action involving the same claim,
          demand or cause of action.

Robinson Coal Co. v. Goodall, 72 A.3d 685, 689 (Pa. Super. 2013).10

Preclusion is a question of law, and our review is de novo. See Rickard v.



____________________________________________
10 In Robinson, we continued by outlining the requirements for application
of res judicata under Pennsylvania law:

       Application of the doctrine of res judicata as an absolute bar to a
       subsequent action requires that the two actions possess the
       following common elements: (1) identity of the thing sued upon;
       (2) identity of the cause of action; (3) identity of the parties; (4)
       identity of the capacity of the parties. Additionally, res judicata
       will bar subsequent claims that could have been litigated in the
       prior action, but which actually were not[.]

72 A.3d at 689 (quotation marks and citations omitted). We have observed
that, “[t]he dominant inquiry” under these elements “is whether the
controlling issues have been decided in a prior action, in which the parties
had a full opportunity to assert their rights.” In re N.A., 116 A.3d 1144,
1148 (Pa. Super.), appeal denied, 117 A.3d 298 (Pa. 2015).


                                          - 13 -
J-A10030-17


Am. Nat'l Prop. & Cas. Co., ___ A.3d ___, 2017 WL 4803951, at * 3 (Pa.

Super., Oct. 25, 2017) (en banc).

      In the EDPA action, Judge Shapiro declined to confirm the FINRA

arbitration award because Weinar did not seek confirmation until May 22,

2014, more than one year after the February 14, 2013 date of the award.

Noting that Section 9 of the FAA requires that a request for confirmation be

made “within one year after the award is made,” 9 U.S.C. § 9, she held that

Weinar’s request for confirmation was time-barred. Although Weinar asked

Judge Shapiro to confirm the award pursuant to Pennsylvania law, which

does not require a confirmation request to be made within one year, Judge

Shapiro held that she was required to apply the FAA’s one-year deadline in a

case brought under the FAA. Lex contends that Judge Shapiro’s statute of

limitations decision bars Weinar’s state-law confirmation request in the

Chester County court, but we disagree.

      The preclusive effect of a federal judgment is a question of federal law.

Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 507 (2001);

In re Stevenson, 40 A.3d 1212, 1223 (Pa. 2012). However, federal law

permits a state court to accord a judgment in a federal diversity case the

same preclusive effect as it would have if it were a judgment of a state court

in that state, unless the state preclusion rule would be incompatible with

federal interests. Semtek, 531 U.S. at 507-09. We have been made aware

of no incompatibility here.

      Under both federal and Pennsylvania law, a central hallmark of the

preclusion doctrine is that a prior judgment may bar relitigation only of a
                                    - 14 -
J-A10030-17


claim that has been decided “on the merits.”       Parklane Hosiery Co. v.

Shore, 439 U.S. 322, 326 n.5 (1979) (“[u]nder the doctrine of res judicata,

a judgment on the merits in a prior suit bars a second suit . . .”); Mariner

Chestnut Partners, L.P. v. Lenfest, 152 A.3d 265, 286 (Pa. Super. 2016)

(“[u]nder the doctrine of res judicata, or claim preclusion, a final judgment

on the merits by a court of competent jurisdiction will bar any future action

on the same cause of action . . .”) (quotation marks omitted).        For res

judicata purposes, a judgment on the merits “is one that actually ‘pass[es]

directly on the substance of [a particular] claim’ before the court.” Semtek,

531 U.S. at 501-02 (interpolation in original; quoted citation omitted).11

This has been the law of Pennsylvania for more than a century.           See

Weigley v. Coffman, 22 A. 919, 921 (Pa. 1891).         Accordingly, we have

emphasized that res judicata “cannot be applied” to any judgment that does

not render a final substantive decision on a claim. See Consolidation Coal

Co. v. District 5, United Mine Workers, 485 A.2d 1118, 1122 (Pa. Super.

1984) (because preliminary injunction is a temporary remedy, it is not a

final judgment on the merits and cannot serve as a basis for res judicata).

       The “substance” of Weinar’s confirmation claim in the EDPA action was

that he had obtained a favorable arbitration award that the court should

confirm so that he could then enforce it. Judge Shapiro did not rule on the
____________________________________________
11 The Court in Semtek contrasted this meaning of a judgment “on the
merits” with the broader meaning of the term in procedural rules such as
Rule 41(b) of the Federal Rules of Civil Procedure (dealing with involuntary
dismissals). 531 U.S. at 501-06. The procedural meaning of a judgment
“on the merits” is not relevant here.


                                          - 15 -
J-A10030-17


merits of that claim because she held that it was time-barred under the FAA.

A holding that a claim is time-barred is not a holding on the substantive

merits of the claim. As the U.S. Supreme Court explained in Semtek: “the

traditional rule is that expiration of the applicable statute of limitations

merely bars the remedy and does not extinguish the substantive right, so

that dismissal on that ground does not have claim-preclusive effect in other

jurisdictions with longer, unexpired limitations periods.”   531 U.S. at 504.

Although the parties have not cited to any Pennsylvania state appellate

decision addressing the res judicata effects of a dismissal based on the

statute of limitations, we note that Pennsylvania jurisprudence is in accord

with the view discussed in Semtek that a statute of limitations dismissal

only forecloses a remedy and does not substantively dispose of a claim.

See, e.g., Abrams v. Pneumo Abex Corp., 981 A.2d 198, 211 (Pa. 2009)

(“a statute of limitations merely bars a party’s right to a remedy”). 12 The

Court of Appeals for the Third Circuit, predicting Pennsylvania law, has held

that a judgment “based on a legal defense unrelated to the merits” — in that

case, governmental immunity — was not a judgment on the merits of the

claim and therefore did not bar subsequent relitigation in a forum where the

defense did not apply. Wade v. City of Pittsburgh, 765 F.2d 405, 410 (3d


____________________________________________
12 Accord, Goldstein v. Stadler, 208 A.2d 850, 852 n.1 (Pa. 1965) (“in
personal actions the statute of limitations constitutes only a procedural bar
to the remedy and not to the cause of action itself”); Priester v. Milleman,
55 A.2d 540, 542 (Pa. Super. 1947) (“[t]he general principle is that statutes
of limitations relating to personal actions merely bar the remedy and do not
discharge the right”).


                                          - 16 -
J-A10030-17


Cir. 1985). We conclude that a dismissal based on the statute of limitations

would be treated similarly in Pennsylvania and, because it is not a dismissal

on the merits, would not give rise to a res judicata bar.

      In what bears a greater resemblance to a collateral estoppel argument

than to res judicata, Lex argues that Judge Shapiro’s unappealed application

of the FAA’s statute of limitations to foreclose Weinar’s confirmation claim in

federal court at least should mean that the statute of limitations also bars

Weinar’s confirmation claim in the Chester County trial court — in other

words, that the EDPA ruling is preclusive on the issue of whether the

confirmation claim is time-barred. We disagree. Judge Shapiro ruled only

on whether Weinar’s confirmation claim under the FAA was barred by the

FAA’s statute of limitations. Weinar’s Chester County petition did not seek

confirmation of the arbitration award under the FAA; rather, he sought

confirmation under Pennsylvania law, which (so long as it is not preempted

by the FAA) has a longer limitations period than that in the FAA.            A

judgment that the FAA’s limitation period precludes recovery under the FAA

is not a judgment that a similar claim under Pennsylvania law is time-barred

under the applicable Pennsylvania limitations period. That was the point of

the Supreme Court’s statement in Semtek that a statute-of-limitations

dismissal “does not have claim-preclusive effect in other jurisdictions with

longer, unexpired limitations periods.” 531 U.S. at 504.

      Lex responds that Weinar’s confirmation claim based on Pennsylvania

law is barred because Weinar asked Judge Shapiro to apply the Pennsylvania

limitations period in the EDPA action, Judge Shapiro applied the FAA’s one-
                                    - 17 -
J-A10030-17


year period instead, and Weinar did not appeal that decision.      Again, we

disagree. Judge Shapiro did not apply the Pennsylvania limitations period to

Weinar’s claim in the EDPA action because she held that she was not

permitted to do so.    Judge Shapiro construed federal law to mean that

because the case before her was brought in federal court under the FAA, she

was required to apply the FAA’s limitations period and could not instead

apply a different limitations period under state law. Lex, 2015 WL 1455810,

at *2. She therefore did not decide “the merits” of the Pennsylvania statute

of limitations issue, and her non-ruling on that issue does not present any

basis for precluding Weinar from seeking to apply the Pennsylvania statute

to his claim in Chester County.

      In this respect, this case is similar to McArdle v. Tronetti, 627 A.2d

1219 (Pa. Super. 1993), appeal denied, 641 A.2d 587 (Pa. 1994). McArdle

sued Tronetti in federal court for federal civil rights violations and various

torts under Pennsylvania law in connection with Tronetti’s performance of

psychiatric services while McArdle was in prison. The federal court dismissed

the civil rights claims on immunity grounds and declined to exercise

jurisdiction over the tort claims.    McArdle then sued again in state court,

asserting only the tort claims.      Tronetti argued that the second case was

barred on res judicata grounds, but we disagreed. Relying on the Second

Restatement of Judgments, we observed:

         A given claim may find support in theories or grounds
         arising from both state and federal law. When the plaintiff
         brings an action on the claim in a court, either state or
         federal, in which there is no jurisdictional obstacle to his
         advancing both theories or grounds, but he presents only
                                       - 18 -
J-A10030-17


         one of them, and judgment is entered with respect to it,
         he may not maintain a second action in which he tenders
         the other theory or ground. If, however, the court in the
         first action would clearly not have had jurisdiction to
         entertain the omitted theory or ground (or, having
         jurisdiction, would clearly have declined to exercise it as a
         matter of discretion), then a second action in a competent
         court presenting the omitted theory or ground should not
         be held precluded.

      Restatement (Second) of Judgments § 25, Comment e.
      Although the comment specifically refers to theories not raised in
      an initial action, we fail to discern any logical difference between
      that factual scenario and a situation where the theory of relief
      actually is raised and the court, despite possessing jurisdiction,
      declines to exercise it as a matter of discretion.

627 A.2d at 1223. Here, unlike in McArdle, Judge Shapiro did not decline

to exercise jurisdiction over Weinar’s claim and statute-of-limitations

defense based on Pennsylvania law; rather, she held that because the case

was brought before her under the FAA, she could not apply Pennsylvania law

and instead had to apply the FAA. The results in the two cases were similar,

however: in both cases, the federal court decided the federal claim

presented under federal law and then did not decide the state-law claim. In

this situation, the teaching of the Second Restatement of Judgments applies

— that is, “a second action in a competent court presenting the omitted

theory or ground should not be held precluded.”

      For these reasons, we agree with the trial court that res judicata did

not bar Weinar’s state law petition to confirm the arbitration award.

                                Preemption
                              (Lex’s Issues 1-4)

      Lex argues that the trial court erred in confirming the arbitration

award under Pennsylvania law because the FAA’s one-year statute of
                                     - 19 -
J-A10030-17


limitations for confirming arbitration awards, 9 U.S.C. § 9, preempts the

Pennsylvania confirmation provision, 42 Pa. C.S. § 7342(b), which does not

set forth a limitations period.

       Section 9 of the FAA states:

       If the parties in their agreement have agreed that a judgment of
       the court shall be entered upon the award made pursuant to the
       arbitration, and shall specify the court, then at any time within
       one year after the award is made any party to the
       arbitration may apply to the court so specified for an
       order confirming the award, and thereupon the court must
       grant such an order unless the award is vacated, modified, or
       corrected as prescribed in sections 10 and 11 of this title. If no
       court is specified in the agreement of the parties, then such
       application may be made to the United States court in and for
       the district within which such award was made. . . .

9 U.S.C. § 9 (emphasis added).13 Section 7342(b) states:

       On application of a party made more than 30 days after an
       award is made by an arbitrator under section 7341 (relating
       to common law arbitration), the court shall enter an order
       confirming the award and shall enter a judgment or decree in
       conformity with the order. . . .

42 Pa. C.S. § 7342(b) (emphasis added).            In contrast to Section 9’s

statement that the application may be made “within one year after the


____________________________________________
13  Because Section 9 uses the words “may apply,” some courts have
interpreted it not to impose a mandatory time limit for FAA confirmation
proceedings. See William M. Howard, J.D., Ph.D., Annotation, Statute of
Limitations Under Federal Arbitration Act on Filing of Motion to Confirm
Award, 3 A.L.R. Fed. 2d 419 (2005) (discussing cases). The U.S. Supreme
Court has not decided this issue. Judge Shapiro held that the one-year limit
is mandatory in FAA actions, and we have no occasion to revisit that
question here. We therefore assume for purposes of this appeal, without
deciding, that Section 9 provides a mandatory one-year statute of limitations
if an action is brought under the FAA. The only question here is whether
that one-year provision preempts a longer limitations period (or the lack of
such a period) when an action for confirmation is brought outside of the FAA.


                                          - 20 -
J-A10030-17


award,” Section 7342(b) says only that the application must be made “more

than 30 days after an award”; it states no time after which the application

may not be filed.

       Lex interprets Section 7342(b)’s silence regarding a limitations period

to mean that no statute of limitations applies to actions to confirm

arbitration awards.14 He argues that “the unlimited time period to confirm

an arbitration award provided by 42 Pa.C.S. § 7342 is in direct conflict with

the one-year statute of limitations provided by 9 U.S.C. § 9 of the FAA,” and

that “an unlimited time-period to confirm an arbitration award is directly at

odds with the FAA’s defined goal of promoting the expedient resolution of

disputes.” Lex’s Brief at 11. Lex contends that this conflict required the trial



____________________________________________
14 Weinar took a similar position in the trial court, but now contends that in
the absence of a contrary provision, the catch-all six-year statute of
limitations set forth at 42 Pa. C.S. § 5527(b) applies to confirmation
applications. See Weinar’s Brief at 9-10 n.3. Section 5527(b) provides:

       Any civil action or proceeding which is neither subject to another
       limitation specified in this subchapter nor excluded from the
       application of a period of limitation by section 5531 (relating to
       no limitation) must be commenced within six years.

Section 5531 does not exclude arbitration confirmations from the six-year
period. See 42 Pa. C.S. § 5531 (only types of civil actions not subject to a
limitations period are a client’s action against an attorney to enforce an
implied or resulting trust as to real property and an action by the
Commonwealth or specified other government bodies to recover against
property for the cost of maintenance and support of persons who were public
charges). We need not decide whether arbitration confirmations are subject
to a six-year limitations period because Weinar’s confirmation petition would
have been timely under either a six-year statute of limitations or, of course,
a scheme having no limitations period, and because application of a six-year
period would make no change to our preemption analysis.


                                          - 21 -
J-A10030-17


court to hold that application of Pennsylvania law to Weinar’s confirmation

claim is preempted by federal law. See id. at 9-11, 13-15.

     The trial court concluded that the FAA did not preempt 42 Pa. C.S.

§ 7342(b) because (1) Section 7342(b) is a procedural rule that has no

effect on the enforcement of the arbitration agreement between the parties;

and (2) “there is no conflict between the Commonwealth’s laws regarding

the confirmation of arbitration awards and the goals and objectives of the

FAA.” Trial Ct. Op., 6/22/16, at 9-12.

     Whether a state law is preempted by the FAA is a question of law.

Therefore, our standard of review is de novo and our scope of review is

plenary. See Moscatiello, 939 A.2d at 327.

     The Supreme Court of Pennsylvania has provided the following

summary of the law of preemption:

     Simply stated, federal law is paramount.      More specifically,
     Article VI, cl. 2, of the United States Constitution, the
     Supremacy Clause, provides that the laws of the United States
     “shall be the supreme Law of the Land; . . . any Thing in the
     Constitution or Laws of any State to the Contrary
     notwithstanding.” Thus, according to the United States Supreme
     Court, laws that are in conflict with federal law are without
     effect. Questions concerning the span of this constitutional
     matter of preemption, however, are not always easily answered.

     In determining the breadth of a federal statute’s preemptive
     effect on state law, we are guided by the tenet that the purpose
     of Congress is the ultimate touchstone in every pre-emption
     case. Congress may demonstrate its intention in various ways.
     It may do so through express language in the statute (express
     preemption). Yet, even if a federal law contains an express
     preemption clause, the inquiry continues as to the substance and
     the scope of Congress’ displacement of the state law.

     In the absence of express preemptive language, Congress’ intent
     to preempt all state law in a particular area may be inferred.
                                    - 22 -
J-A10030-17


        This is the case where the scheme of federal regulation is
        sufficiently comprehensive to make reasonable the inference that
        Congress left no room for supplementary state regulation. That
        is to say, Congress intended federal law to occupy the entire
        legislative field (field preemption), blocking state efforts to
        regulate within that field.

        Finally, even where Congress has not completely displaced state
        regulation in a specific area, state law is nullified if there is a
        conflict between state and federal law (conflict preemption).
        Such a conflict may arise in two contexts. First, there may be
        conflict preemption where compliance with state and federal law
        is an impossibility. Furthermore, conflict preemption may also
        be found when state law stands as an obstacle to the
        accomplishment[] and execution of the full purposes and
        objectives of Congress.

        Additionally, concepts of federalism and state sovereignty make
        clear that in discerning whether Congress intended to preempt
        state law, there is a presumption against preemption.
        Specifically, the United States Supreme Court has stated that it
        will not be presumed that a federal statute was intended to
        supersede the exercise of the power of the state unless there is
        a clear manifestation of intention to do so. Stated another way,
        a cornerstone of the United States Supreme Court’s preemption
        jurisprudence is that, [i]n all pre-emption cases, and particularly
        in those in which Congress has legislated . . . in a field which the
        States have traditionally occupied, . . . we start with the
        assumption that the historic police powers of the States were not
        to be superseded by the Federal Act unless that was the clear
        and manifest purpose of Congress.

Dooner v. DiDonato, 971 A.2d 1187, 1193-94 (Pa. 2009) (some quotation

marks and citations omitted).

        The U.S. Supreme Court has held that “[t]he FAA contains no express

pre-emptive provision, nor does it reflect a congressional intent to occupy

the entire field of arbitration.”   Volt, 489 U.S. at 477.      Lex’s argument is

based on conflict preemption.        Because Lex does not contend that it is

impossible to comply with both state and federal law, the issue before this

Court    is   whether   Section   7342(b)   “stands   as   an   obstacle   to   the
                                       - 23 -
J-A10030-17


accomplishment[] and execution of the full purposes and objectives of

Congress.” Dooner, 971 A.2d at 1194.

      “In determining the breadth of a federal statute’s preemptive effect on

state law, we are guided by the tenet that ‘the purpose of Congress is the

ultimate touchstone in every pre-emption case.’” Dooner, 971 A.2d at 1193

(quoting Wyeth v. Levine, 555 U.S. 555, 565 (2009)). The United States

Supreme Court has explained that “[t]he principal purpose of the FAA is to

ensure that private arbitration agreements are enforced according to their

terms.”   Concepcion, 563 U.S. at 344 (internal quotation marks and

brackets omitted).      Another purpose is “to promote the expeditious

resolution of claims.” Id. The Supreme Court has cautioned, however, that

—

      We are . . . not persuaded by the argument that [where there is
      a] conflict between these two goals of the Arbitration Act –
      enforcement of private agreements and encouragement of
      efficient and speedy dispute resolution – [that conflict] must be
      resolved in favor of the latter in order to realize the intent of the
      drafters.

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985).

      Most recently, the Supreme Court of Pennsylvania reviewed the FAA’s

preemptive effect in Taylor v. Extendicare Health Facilities, Inc., 147

A.3d 490 (Pa. 2016), cert. denied, 137 S.Ct. 1375 (2017). At issue was

whether Rule 213(e) of the Pennsylvania Rules of Civil Procedure, which

requires the consolidation of survival and wrongful death actions for trial, is

preempted by the FAA when the survival action is subject to an arbitration

agreement. In answering that question affirmatively, the Court pointed out


                                     - 24 -
J-A10030-17


that Rule 213(a) promotes judicial efficiency by precluding duplicative

determinations of survival and wrongful death liability.            147 A.3d at 500,

510. After surveying recent U.S. Supreme Court interpretations of the FAA,

the Court determined that “the ‘overarching purpose’ of the FAA [is] twofold:

to ensure ‘the enforcement of arbitration agreements according to their

terms,’ and ‘to facilitate streamlined proceedings,’” id. at 505 (quoting

Concepcion, 563 U.S. at 344), and that “when these two purposes conflict,

. . . enforcement trumps efficiency.” 147 A.3d at 506. The fact that Rule

213(e) is merely “a procedural mechanism to control case flow, and does not

substantively     target    arbitration”       would   not   make   it   immune   from

preemption.       Id. at 510.15          Thus, because Rule 213(e) prevented

enforcement of the agreement to arbitrate the survival action, it was

preempted. Id.

       Neither the United States nor the Pennsylvania Supreme Court has

addressed whether the one-year statute of limitations in 9 U.S.C. § 9

preempts state laws for confirmation of arbitration awards that have longer

statutes of limitations or no statute of limitations.           Lex cites no decision

holding that the one-year provision preempts a longer state limitations

period, and our own research has uncovered no such decision. At least one

state supreme court has rejected Lex’s argument. In Thompson v. Lithia


____________________________________________
15To the extent that the trial court based its rejection of Lex’s preemption
argument on a distinction between procedural and substantive rules, we
agree with Lex that the distinction has less force in light of the decisions in
Concepcion and Taylor.


                                           - 25 -
J-A10030-17


ND Acquisition Corp. #1, 896 N.W.2d 230 (N.D. 2017), a North Dakota

court entered judgment on an arbitration award rendered under the North

Dakota arbitration statute.   In contesting the judgment, the arbitration

respondent argued, among other things, that the order confirming the

arbitration award was entered more than one year after the award was

made and that the FAA’s one-year statute preempted North Dakota’s law on

confirmation, which contained no limitations period. The Supreme Court of

North Dakota disagreed, explaining:

        Sections 9 through 11 of the FAA provide for expedited
     judicial review to confirm, vacate, or modify arbitration awards.
     Hall St. Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576, 578 . . .
     (2008). The FAA provides a shortcut to confirm, vacate, or
     modify an award, but it is not the exclusive means to enforce an
     award. Id. at 582-83 . . . . The Supreme Court said, “The FAA
     is not the only way into court for parties wanting review of
     arbitration awards: they may contemplate enforcement under
     state statutory or common law, for example, where judicial
     review of different scope is arguable.” Id. at 590 . . . .

     [The North Dakota statute] requires the court to confirm the
     award if it denies the motion to vacate and a motion to modify or
     correct the award is not pending. A motion to modify or correct
     the award was not pending. The district court was required to
     confirm the award after it denied Thompson’s motion to vacate.
     Section 9 of the FAA did not preclude confirmation of the award
     under state statutory law. The court did not err in confirming the
     award.

Thompson, 896 N.W.2d at 240.

     The Supreme Court of Pennsylvania provided significant guidance on

how to resolve the issue before us when it addressed a question related to

this one in Moscatiello: whether Section 12 of the FAA, which requires that

a motion to vacate, modify, or correct an arbitration award be served on the

adverse party within three months of the filing or delivery of an arbitration
                                   - 26 -
J-A10030-17


award, preempts the portion of 42 Pa. C.S. § 7342(b) that requires that

such motions be filed within 30 days after the award is made. 16 The Court

held that there was no preemption. Moscatiello, 939 A.2d at 329.

        In Moscatiello, the arbitration was conducted pursuant to rules of the

National Association of Securities Dealers, a predecessor to FINRA, and was

subject to the FAA.       The Moscatiellos argued that they had “contracted to

arbitrate their claims under the FAA” and therefore “should be permitted to

rely on the entire FAA in asserting their post-arbitration rights,” including its

three-month time limit for challenging an award. 939 A.2d at 327-28. They

contended that Pennsylvania’s 30-day limit “provides less protection” than

the FAA’s three months and therefore should be preempted. Id. at 328. In

rejecting that argument, the Supreme Court stated: “Because Pennsylvania’s

arbitration acts provide for the enforcement of arbitration of contract and

other    disputes,    they    foster    the    federal   policy   favoring   arbitration

enforcement. The 30-day time limit found in both Pennsylvania arbitration

acts does not undermine this policy or the FAA’s goal.”              Id. at 329.    The

Court continued:

              The federal policy favoring arbitration, set forth in the FAA,
        is limited to Congress’s intent to make arbitration agreements
        enforceable. The FAA does not preempt the procedural rules
        governing arbitration in state courts, as that is beyond its reach.
        Thus, we hold there is no preemption.
____________________________________________
16 Section 7342(b) does not explicitly state that the deadline for seeking to
vacate or modify an award is 30 days, but its provision permitting
confirmation to occur after 30 days has been interpreted to mean that there
is a 30-day time limit for challenging the award.           See Beriker v.
Permagrain Prods., Inc., 500 A.2d 178, 179 (Pa. Super. 1985).


                                          - 27 -
J-A10030-17


Id. Moscatiello points toward the correct resolution of this case.

     As the U.S. Supreme Court stated in Hall Street, “[t]he FAA is not the

only way into court for parties wanting review of arbitration awards: they

may contemplate enforcement under state statutory or common law, for

example.” 552 U.S. at 590. The Court recognized that state laws provide

different procedures and rights than does the FAA — expanded judicial

review of the arbitration award, for example. See id. Nevertheless, the FAA

does not preempt their use. Nothing in the FAA requires federal and state

arbitration rules and procedures to be identical. Thus, as one federal court

has summarized: “Since § 9 was meant to supplement and not preclude

other remedies, confirmation under § 9 is not mandatory and as such a

party is not prevented from using either state law or common law

procedures to confirm the award.” In re Consolidated Rail Corp., 867 F.

Supp. 25, 32 (D.D.C. 1994); see also Photopaint Techs., LLC v.

Smartlens Corp., 335 F.3d 152, 159 (2d Cir. 2003) (noting that “an action

at law offers an alternative remedy [to § 9] to enforce an arbitral award”);

Sverdrup Corp. v. WHC Constructors, Inc., 989 F.2d 148, 155 (4th Cir.

1993) (same); Kentucky River Mills v. Jackson, 206 F.2d 111, 120 (6th

Cir.) (holding Section 9 of the FAA does not preclude a prevailing party from

seeking enforcement of an arbitration award in an action at law), cert.

denied, 346 U.S. 887 (1953); FIA Card Servs., N.A. v. Gachiengu, 571

F. Supp. 2d 799, 805 (S.D. Tex. 2008) (“the FAA does not preempt state

common-law actions to confirm arbitration awards”).



                                   - 28 -
J-A10030-17


       As the Pennsylvania Supreme Court held in Moscatiello, Section

7342(b), along with Pennsylvania’s other arbitration laws, “provide for the

enforcement of arbitration of contract and other disputes” and thereby

“foster the federal policy favoring arbitration enforcement.”        939 A.2d at

329.   The Pennsylvania statute therefore does not conflict with the FAA’s

“overarching purpose”         of “ensur[ing] ‘the     enforcement of arbitration

agreements according to their terms.’”             See Taylor, 147 A.3d at 505

(quoted citation omitted).17

       Lex insists that the longer limitation period conflicts with the FAA’s

other purpose of “promot[ing] the expeditious resolution of claims,” see

Concepcion, 563 U.S. at 345, but this argument distorts the FAA’s focus on

efficiency. The Court in Concepcion “defined the ‘fundamental attributes of

arbitration’ as ‘lower costs, greater efficiency and speed, and the ability to

choose expert adjudicators to resolve specialized disputes.’”        Taylor, 147

A.3d at 505 (quoting Concepcion, 563 U.S. at 348).              Efficiency thus is
____________________________________________
17 Lex’s argument that Concepcion, Taylor, and other recent decisions
have rendered older decisions such as Moscatiello less authoritative on the
preemption issue is incorrect. Those decisions are both persuasive and
binding here. We agree with the trial court that the other federal cases upon
which Lex relies are distinguishable from this one. Most of them deal with
enforcement of arbitration agreements, not post-arbitration enforcement of
an award. See Trial Ct. Op., 6/22/16, at 5-8 (distinguishing Preston v.
Ferrer, 552 U.S. 346 (2008); Quilloin v. Tenet HealthSystem
Philadelphia, Inc., 673 F.3d 221 (3d Cir. 2012); and Litman v. Cellco
P’ship, 655 F.3d 225 (3d Cir. 2011), cert. denied, 565 U.S. 1115 (2012)).
Renard v. Ameriprise Fin. Servs., Inc., 778 F.3d 563, 566 (7th Cir.
2015), is inapposite because the parties’ agreement in that case stated that
the arbitration clause was “governed by and enforceable under the terms of
the Federal Arbitration Act,” and Lex does not contend that his agreement
with Weinar contained similar language. See Trial Ct. Op., 6/22/16, at 9.


                                          - 29 -
J-A10030-17


viewed as one of the salutary characteristics of arbitration that the FAA is

designed to foster.    But that does not mean that any state procedural

mechanism that makes an arbitration longer than it would be under the

comparable FAA procedure is preempted and invalid.             Nothing in the FAA

says that an arbitration must be conducted or an arbitration award must be

confirmed in the fastest way possible.

      The preemption question under the FAA is whether a state law impairs

the efficiency that an arbitration system provides. The Pennsylvania statute

does not do that.      Section 7342(b) enables a successful party to an

arbitration to obtain confirmation of an award 30 days after the award is

made and at any time thereafter.           It provides that confirmation may be

obtained only upon “application of a party,” and states that “the court shall

enter an order confirming the award” upon receiving such an application —

thus providing a procedure that is streamlined, swift, and efficient. Applying

“state rules governing the conduct of arbitration — rules which are

manifestly designed to encourage resort to the arbitral process — simply

does not offend the rule of liberal construction [in favor of arbitration], nor

does it offend any other policy embodied in the FAA.” Volt, 489 U.S. at 476.

      In fact, by affording successful arbitration parties additional time to

confirm an award, the Pennsylvania statute both fosters arbitration and

enhances   the   efficiency   of   the     arbitration   process   by   reducing   or

ameliorating an obstacle to an award’s successful enforcement.                     If

confirmation were barred by a short statute of limitations, an injured party

might be forced to resort to other means of redress for his injury, probably
                                         - 30 -
J-A10030-17


by duplicating his successful arbitration with litigation to recover on the

same claim. A federal court of appeals made this point in Derwin v. Gen.

Dynamics Corp., 719 F.2d 484 (1st Cir. 1983), when it rejected an effort to

have the one-year FAA limitations period apply in place of an unlimited

Massachusetts limitations period in an action to confirm an arbitration award

under the federal Labor Management Relations Act. The court explained that

if the shorter FAA statute applied and “[i]f the prevailing party failed to

obtain a confirmatory decree within the limitations period, . . . [that party

would be forced] to undergo the expense and delay of suing to confirm the

award, even where the other party had agreed in good faith that the award

was final and binding.”         719 F.2d at 489-90.   A shorter statute thus may

promote, rather than reduce, inefficiencies.      In fact, that is precisely what

has happened in this case: because of his difficulties confirming the

arbitration award, Weinar has filed a complaint in Chester County to recover

damages that overlap with those he was awarded by the arbitrators. That

result is highly inefficient.

      Seen in this context, much of Lex’s argument about inefficiencies is

disingenuous.     Rule 12904(j) of the FINRA Code of Arbitration Procedure

provides that “[a]ll monetary awards shall be paid within 30 days of receipt

unless a motion to vacate has been filed with a court of competent

jurisdiction.”   After Judge Shapiro considered Lex’s motion to vacate and

modified the award in the EDPA action, Lex could have paid the modified

award pursuant to Rule 12904(j).           Instead, Lex has refused to pay the

award, even though it was determined through an arbitration procedure to
                                        - 31 -
J-A10030-17


which he agreed and after he fully availed himself of proceedings in the

EDPA action to contest it.        It is that refusal by Lex that has impaired the

efficiency of the arbitration process in this case — not the fact that

Pennsylvania’s statute of limitations is longer than that in the FAA.18

        For all of these reasons, we agree with the trial court that the one-year

time limit for confirming arbitration awards set forth in Section 9 of the FAA

does not preempt 42 Pa. C.S. § 7342(b). The trial court’s confirmation of

the award therefore was proper.

                            NO. 1615 EDA 2016
        (WEINAR’S APPEAL FROM THE DISMISSAL OF HIS STATE LAW CLAIMS)

        In his cross-appeal, Weinar raises the following issues:

        1. Did the trial court abuse its discretion and commit an error of
        law in dismissing with prejudice Dr. Weinar’s breach of contract
        and alternative quasi-contract and tort claims . . . on the basis
        [that] they had already been decided in an underlying arbitration
        and did not constitute a separate cause of action?

        2. Did the trial court abuse its discretion and commit an error of
        law in dismissing with prejudice Dr. Weinar’s contract and
        alternative quasi-contract and tort claims upon preliminary
        objections of Mr. Lex while Dr. Weinar’s preliminary objections to
        Mr. Lex’s preliminary objections were still pending?

Weinar’s Brief in Opp. to Lex’s Appeal and in Support of Cross Appeal at

33.19


____________________________________________
18 We note that Weinar sought confirmation of the arbitration award on the
same day the award was made, by reasonably filing an application to
confirm in a court in New York, the state where McGinn Smith did business
and the state whose law governed under the arbitration contract’s choice-of-
law clause. This is not a case where Weinar slept on his rights.
19In his appeal, Weinar does not challenge the dismissal of his Counts IV
(Confirmation of Award) and V (Declaratory Judgment).

                                          - 32 -
J-A10030-17


         We consider Weinar’s appeal under the following standard:

         Our standard of review of an order of the trial court overruling or
         granting preliminary objections is to determine whether the trial
         court committed an error of law. When considering the
         appropriateness of a ruling on preliminary objections, the
         appellate court must apply the same standard as the trial court.

         Preliminary objections in the nature of a demurrer test the legal
         sufficiency of the complaint. When considering preliminary
         objections, all material facts set forth in the challenged pleadings
         are admitted as true, as well as all inferences reasonably
         deducible therefrom. Preliminary objections which seek the
         dismissal of a cause of action should be sustained only in cases
         in which it is clear and free from doubt that the pleader will be
         unable to prove facts legally sufficient to establish the right to
         relief. If any doubt exists as to whether a demurrer should be
         sustained, it should be resolved in favor of overruling the
         preliminary objections.

Khawaja v. RE/MAX Cent., 151 A.3d 626, 630 (Pa. Super. 2016) (citation

omitted). Applying this standard, we conclude that the trial court abused its

discretion in granting Lex’s preliminary objections to Weinar’s second

amended complaint, and we vacate that portion of the trial court’s order.

         When Lex filed preliminary objections seeking to dismiss Weinar’s

second amended complaint, Weinar responded with preliminary objections to

Lex’s filing. But the trial court ignored Weinar’s preliminary objections and

instead dismissed Weinar’s case on the basis of the preliminary objections

filed by Lex. We agree with the trial court’s later recognition that this was

error.    See Trial Ct. Op., 7/13/16, at 10. The Pennsylvania Rules of Civil

Procedure provide, “The court shall determine promptly all preliminary

objections,” Pa.R.Civ.P. 1028(c)(2) (emphasis added), and we have held

that “[t]he presence of preliminary objections which have not been disposed

of is a fatal defect . . . .” Advance Bldg. Servs. Co. v. F & M Schaefer
                                        - 33 -
J-A10030-17


Brewing Co., 384 A.2d 931, 932 (Pa. Super. 1977) (affirming the striking

of a default judgment where a fatal defect of unresolved preliminary

objections was apparent on the face of the record).             Pennsylvania’s

procedural rules required the court to address Weinar’s preliminary

objections before ruling on the preliminary objections filed by Lex.

      The trial court concluded that its procedural error was harmless

because ultimately, on the merits, Lex was entitled to have his preliminary

objections sustained and to have Weinar’s complaint dismissed.         Trial Ct.

Op., 7/13/16, at 10.      We disagree.       Preliminary objections should be

sustained only when “it is clear and free from doubt that the pleader will be

unable to prove facts legally sufficient to establish the right to relief.”

Khawaja, 151 A.3d at 630. An examination of the trial court’s grounds for

dismissal shows that there is no such clarity here.

      First, the trial court held that Weinar’s claims could not proceed

because they were barred by res judicata and collateral estoppel as a result

of the arbitration.   Trial Ct. Op., 7/13/16, at 7-8.    But res judicata and

collateral estoppel are affirmative defenses that must be raised in New

Matter, not in preliminary objections, Pa.R.Civ.P. 1030(a), unless the

complaint “sets forth in detail, either directly or by reference, the facts and

issues pleaded by the prior suit.” Kiely v. J. A. Cunningham Equip., Inc.,

128 A.2d 759, 760 (Pa. 1957). While Weinar’s second amended complaint

described the underlying arbitration, it did not do so in a manner that made

it “clear and free from doubt” that the arbitration award barred Weinar’s

claims. Rather, it suggested that the claims are not barred.
                                    - 34 -
J-A10030-17


      Weinar’s breach of contract claim alleges that Lex was contractually

obligated “to abide by and perform any [arbitration] award(s)” and “has

refused to perform any portion of the Arbitration Award” made in this case.

Second Amended Compl. ¶¶ 23-24. His conversion claim asserts that after

the award was made, Lex wrongfully retained the money that should have

been used to satisfy the award and thereby “deprived Weinar of a right of

property” in that money.” Id. ¶ 29. His unjust enrichment claim avers that

by failing to pay the award, Lex is wrongfully retaining benefits of “the now

worthless Notes” that his company sold to Weinar and is being unjustly

enriched as a result. Id. ¶¶ 33-34. All of those allegations relate to Lex’s

refusal to pay the arbitration award after the arbitration was completed.

Because the claims are based on events that occurred after the arbitration, it

is difficult to see how the claims could be precluded by the award, which, of

course, was based on misconduct that occurred before the award was made.

      The trial court also sustained Lex’s preliminary objection to Weinar’s

conversion claim on the basis of the “gist of the action” doctrine, reasoning

that the conversion claim arose “solely out of Lex’s failure to pay the

arbitration award, an obligation which was created by contract.”      Trial Ct.

Op., 7/13/16, at 9. The gist-of-the-action doctrine bars a tort action “when

the gist or gravamen of the cause of action stated in the complaint, although

sounding in tort, is, in actuality, a claim against the party for breach of its

contractual obligations.”   Bruno v. Erie Ins. Co., 106 A.3d 48, 53 (Pa.

2014) (footnotes omitted).     But we have cautioned against prematurely

dismissing a tort action on the basis of this doctrine, because our rules
                                    - 35 -
J-A10030-17


permit the pleading of tort and contract claims in the alternative.        See

Telwell, Inc. v. Grandbridge Real Estate Capital, LLC, 143 A.3d 421,

429 (Pa. Super. 2016) (citing Pa.R.Civ.P. 1020(c)).      Although Weinar has

alleged that Lex breached a contractual obligation to pay the arbitration

award, Lex has pointed out that Weinar has not identified the specific

contract or its terms. See Lex’s Prelim. Objs. at ¶ 42. At this stage of the

proceedings, it is not clear and free from doubt whether the gist of Weinar’s

action sounds in contract or tort.    See Telwell, 143 A.3d at 429.        The

court’s dismissal on gist-of-the-action grounds therefore was premature.

      The trial court also opined that Weinar’s entire second amended

complaint was “merely another effort to confirm the arbitration award,

superficially disguised as common law claims.” Trial Ct. Op., 7/13/16, at 10.

The court therefore concluded that the complaint should be dismissed as an

effort to obtain a duplicative recovery.      See Foflygen v. R. Zemel, M.D.

(PC), 615 A.2d 1345, 1350 (Pa. Super. 1992) (precluding duplicative

recovery on alternate theories), appeal denied, 629 A.2d 1380 (Pa. 1993).

But if, as Weinar contends, his cause of action is for events that occurred

after the arbitration, the misconduct (and, therefore, the potential recovery)

would not necessarily be duplicative of that in the arbitration. See id. (while

“alternative theories of recovery are different means for obtaining the same

relief for the same harm caused by the same party, . . . separate causes of

action request different relief for different harm”).    There appears to be

considerable overlap between the damages Weinar was awarded in the

arbitration and those he seeks to recover under his second amended
                                     - 36 -
J-A10030-17


complaint.    See Second Am. Compl. at 5, 6, 8 (seeking compensatory

damages of $270,000, interest, and fees of $7,862.50). But it is premature

to hold, as a matter of law, that Weinar cannot recover any additional

damages based on Lex’s post-arbitration conduct. That question will require

further factual development, particularly in light of the fact that, under this

decision, Weinar now can have the arbitration award enforced and thereby

remove the arbitration damages from what he seeks to recover under his

complaint.

      For all of these reasons, it was not “clear and free from doubt” that

Lex was entitled to dismissal of Weinar’s second amended complaint, and we

therefore vacate the trial court’s order sustaining Lex’s objections and

dismissing the complaint. If it ultimately becomes clear that Weinar’s claims

are no more than alternative assertions of the claims he won in the

arbitration, or that, even if the claims are somewhat different, there are no

more damages that Weinar may recover, the defenses based on claim

preclusion or the rule against duplicative recovery under Foflygen may

apply. But the trial court acted prematurely in making those determinations

on the basis of Lex’s preliminary objections to Weinar’s pleading.

      On remand, the trial court should consider Weinar’s preliminary

objections to Lex’s objections. If those objections are overruled, it should

afford Weinar an opportunity either to answer Lex’s objections or to amend

his complaint pursuant to Civil Rule 1028(c)(1).

      In summary, we affirm the portion of the trial court’s order confirming

the arbitration award under Pennsylvania law, we vacate the portion of the
                                    - 37 -
J-A10030-17


trial court’s order sustaining Lex’s preliminary objections to Weinar’s second

amended complaint, and we remand this case for further proceedings,

including consideration of Weinar’s preliminary objections.    Jurisdiction is

relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 12/15/17




                                    - 38 -
