D'Amelia v. Toll Bros., Inc.

235 A.3d 321

Michael and Michelle D'AMELIA

v.TOLL BROS., INC., Appellant

No. 3709 EDA 2018

Superior Court of Pennsylvania.

Argued June 08, 2020

Filed July 08, 2020

Shane Haselbarth, Philadelphia, for appellant.

Jennifer Maude Horn, Philadelphia, for appellee.

BEFORE: BENDER, P.J.E., LAZARUS, J., and STRASSBURGER, J.^*

OPINION BY BENDER, P.J.E.:

Appellant, Toll Bros., Inc., appeals from the order entered on December 6, 2018, in the Court of Common Pleas of Montgomery County, confirming the March 14, 2018 arbitration award in favor of Appellees, Michael and Michelle D'Amelia. After careful review, we affirm.

The trial court provided the following summary of relevant facts and procedural history in its Pa.R.A.P. 1925(a) opinion:

The instant matter commenced on April 30, 2018[,]¹ when ... [Appellees] filed a "Petition to Confirm Award by Arbitrator" seeking to confirm an award issued in their favor against ... [Appellant]. The underlying facts[,] which resulted in the instant civil action[,] began on or about November 19, 2015, after Appellees placed Appellant on notice of their claim for defective construction of their home.

¹ Appellant filed its timely petition to vacate the arbitration award in the Bucks County Court of Common Pleas on April 13, 2018. Said petition was transferred to the trial court and consolidated with the above-captioned matter on September 27, 2018. The trial court admonishes Appellee[s] for their lack of candor by purposefully failing to address the pending Bucks County petition in their pleading to the trial court. Importantly, the trial court did consider Appellant's petition to vacate the award in issuing its Order.

About a year later, Appellant and ... Appellee[s] entered into a written agreement (the "Repair Agreement") under which, inter alia , Appellant agreed to fully reclad Appellees’ home.^[1] The Repair Agreement contained an arbitration provision.

The Repair Agreement also provided that Appellant would reimburse Appellee[s] for the amount of reasonable attorneys’ fees, expert fees and costs incurred from the date that Appellant received notice of [the] claim through the negotiation and execution of the Repair Agreement within thirty (30) days of the submission of itemized invoices documenting these costs. Appellees submitted their itemized invoices to Appellant as required to reimburse them, but Appellant failed to pay any of the legal fees.^[2]

Due to Appellant's failure to reimburse Appellees’ attorneys’ fees and costs and material breach of the Repair Agreement, Appellees demanded binding arbitration administered by the American Arbitration Association (the "AAA") to resolve the dispute as required by the Repair Agreement. The AAA indexed the arbitration case at Michael and Michelle D'Amelia v[.] Toll Brothers, Inc. , ... Case No. 01-17-0002-6575.

On June 12, 2017, the AAA appointed Harry Mondoil[, Esquire,] to serve as [the a]rbitrator. The notice also indicated that the arbitration would be conducted pursuant to AAA's Construction Industry Arbitration Rules [ ("AAA Rules") ] and would proceed pursuant to Fast Track procedures, which apply to two-party cases where no party's demand for damages exceeds $100,000. Under these Fast Track Procedures, the arbitration normally should not exceed one day[,] and only for good cause shown, may the arbitrator schedule additional time, which shall not exceed the equivalent of one day.

Further, formal discovery is not conducted in Fast Track cases except in "exceptional circumstances." Instead of discovery, the procedures direct that "[a]t least five business days prior to the hearing or no later than the date established by the arbitrator, the parties shall (a) exchange directly between themselves copies of all exhibits, affidavits[,] and any other information they intend to submit at the hearing, and (b) identify all witnesses they intend to call at the hearing."

Appellant requested application of AAA's Standard Track procedures, which permit discovery[,] and made requests for limited discovery in the months prior to the arbitration. Appellant's requests specified the evidence sought and explained how it was necessary to fully explore and defend against Appellees’ claim for attorneys’ fees, which was the central issue in the arbitration. All requests were denied.

The arbitration took place over a three[-]day period before Arbitrator ... Mondoil.... The parties submitted pre[-] and post-hearing submissions, questioned witnesses[,] and entered documents into evidence. Arbitrator Mondoil entered an award in favor of Appellees in the amount of $53,305.03. In addition, Arbitrator Mondoil awarded Appellees an additional $3,213.00 to reimburse them for certain arbitration costs. The total amount awarded to Appellees was $56,518.03.

After considering the petition, all the replies and responses thereto, and the trial court's independent review of the record (including the Bucks County petition), the trial court granted Appellees’ April 30, 2018 "Petition to Confirm Award by Arbitrator[ on December 6, 2018."]

Trial Court Opinion ("TCO"), 4/9/19, at 1-3 (citations to record omitted).

On December 11, 2018, Appellant filed a timely notice of appeal, followed by a timely, court-ordered Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal on December 31, 2018. Appellant now presents the following issues for our review:

1. Whether the trial court erred in confirming an arbitration award, where the arbitrator denied [Appellant] a fair hearing by refusing to consider evidence of [Appellees’] counsel's dramatic overbilling, which was central to the arbitrator's decision on the reasonableness of fees claimed, the sole claim submitted for decision[?]

2. Whether the trial court erred in confirming the arbitration award, where the arbitrator denied [Appellant] a fair hearing by refusing limited discovery that would have permitted [Appellant] to present a full defense against the claim for attorneys’ fees[?]

3. Whether the trial court erred in confirming the arbitration award, despite the irregularity causing the rendition of an unjust and inequitable award, where the arbitrator abused his power by deciding a claim that was not pending before him[?]

Appellant's Brief at 5 (unnecessary capitalization omitted).

Preliminarily, we note that the arbitration in this case is a matter of common law arbitration, because paragraph 9 of the Repair Agreement provides that disputes arising under the agreement "shall be resolved by binding arbitration administered by the [AAA]...." See Appellees’ Petition to Confirm Arbitration Award, Exhibit A at 3 ¶ 9; 42 Pa.C.S. § 7302(a) ; Runewicz v. Keystone Ins. Co. , 476 Pa. 456, 383 A.2d 189, 191 (1978) (stating that an arbitration clause providing for arbitration pursuant to AAA rules and indicating that the parties are bound by the arbitration decision denotes common law arbitration).

Our standard of review of common law arbitration is very limited:

The award of an arbitrator in a nonjudicial arbitration which is not subject to statutory arbitration or to 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.

Sage v. Greenspan , 765 A.2d 1139, 1142 (Pa. Super. 2000) (citation omitted)^[3]. "The arbitrators are the final judges of both law and fact, and an arbitration award is not subject to reversal for a mistake of either." F.J. Busse Co. v. Sheila Zipporah, L.P. , 879 A.2d 809, 811 (Pa. Super. 2005) (citation omitted). "[A] trial court order confirming a common law arbitration award will be reversed only for an abuse of discretion or an error of law." Prudential Prop. & Cas. Ins. Co. v. Stein , 453 Pa.Super. 227, 683 A.2d 683, 685 (1996) (citation omitted).

U.S. Claims, Inc. v. Dougherty , 914 A.2d 874, 876-77 (Pa. Super. 2006) (internal brackets omitted). Moreover, the appellant "bears the burden to establish both the underlying irregularity and the resulting inequity by ‘clear, precise and indubitable evidence.’ In this context, irregularity refers to the process employed in reaching the result of the arbitration, not the result itself." Gargano v. Terminix Intern. Co., L.P. , 784 A.2d 188, 193 (Pa. Super. 2001) (internal citation omitted).

Here, Appellant claims that the trial court erred in refusing to vacate the arbitration award, because the arbitrator's "failure to consider key evidence on the central issue in the case deprived [Appellant] of a full and fair hearing." Appellant's Brief at 29. This "key evidence" is a compilation of invoices issued by Horn Williamson to Appellees and the other Homeowners, which Appellant avers reveals the "dramatic overbilling" practices of Horn Williamson and demonstrates that Horn Williamson overbilled Appellees. Id. at 22 (citing Andrew v. CUNA Brokerage Servs. , 976 A.2d 496, 502 (Pa. Super. 2009) ("The failure of arbitrators to consider material evidence constitutes the denial of a full and fair hearing.")).

Explaining its denial of Appellant's request for relief, the trial court stated: "The trial court may not reconsider evidence and testimony that the arbitrator already considered in entering his award and rulings that were made within the scope of his authority." TCO at 6. Appellant avers that the trial court's holding constitutes an error of law, as it embodies a mischaracterization of Appellant's argument. Appellant asserts that it never argued that the trial court should "reconsider evidence and testimony that the arbitrator already considered [,]" but that the arbitrator "never considered evidence that was crucial to the issue being arbitrated[.]" Appellant's Brief at 25 (emphasis in original). We deem Appellant's claim to be meritless.⁴

Appellant attempted to admit into evidence at the arbitration hearing the voluminous billing...