HARRISBURG – The Superior Court of Pennsylvania recently upheld the denial of a petition on behalf of a muffler and brake company to vacate an arbitrator’s award in excess of $9.000.

Judge Patricia H. Jenkins said Oct. 28 that an arbitration award finalized just over one year ago for $9,266.37 against R & F International Muffler & Brake in the Lackawanna County Court of Common Pleas would remain intact.

The complaint alleges that on or about Aug. 2, 2013, Tee Feinberg (on behalf of R & F International Muffler & Brake, LLC) entered a Rental Service Agreement with Dempsey Uniform & Linen Supply, Inc. for a term of 260 weeks, or from Aug. 1, 2013 through Aug. 1, 2018. On or about Jan. 2, 2015, R&F paid Dempsey with a check that was later returned for insufficient funds, and Dempsey advised R & F it would have to pay by either certified check or cash.

The complaint said R & F failed to reimburse Dempsey, and also failed to pay invoices totaling $437.45. The complaint further alleges by Jan. 30, 2015, R & F began accepting commercial textile and linen services from a competitor of Dempsey’s. The complaint further alleged R & F breached the terms of the Rental Service Agreement, and requested that the parties submit to binding arbitration as required by paragraph 11 of the contract.

“On Aug. 17, 2015, R & F filed preliminary objections and a brief in support thereof, arguing that Dempsey did not fulfill the conditions precedent to seeking judicial intervention in an arbitration clause. Following discussion between the parties, on Aug. 18, 2015, the parties agreed to submit to Thomas Helbig, Esq. for arbitration,” Jenkins said.

“On Oct. 27, 2015, Helbig found that a contract existed between the parties and entered an award in favor of Dempsey in the amount of $9,266.37. On Nov. 30, 2015, R & F filed a petition to vacate that same arbitration award. On Dec. 4, 2015, Dempsey filed its answer and brief in opposition to R & F’s petition to vacate. On Jan. 12, 2016, R & F filed its brief in support of its petition to vacate the Oct. 27, 2015 arbitration award,” Jenkins added.

On Feb. 10, 2016, subsequent to oral argument, the Lackawanna County Court of Common Pleas denied R & F’s petition to vacate Helbig’s arbitration award. Then, on Feb. 22, 2016, R & F filed a notice of appeal to the Superior Court of Pennsylvania, regarding the aforementioned Feb. 10, 2016 order.

In its appeal to the Superior Court, the defendant said it was not a signatory to the original underlying contract, and thus, the arbitration award could not be valid.

“Here, R & F claims it is not bound by the arbitration clause of the underlying contract because it was not an actual signatory to the contract. The gist of R & F’s argument is that International Muffler & Brake, LLC, not R & F International Muffler & Brake, LLC (International) entered the contract with plaintiff,” Jenkins said.

“However, R & F, which itself describes International as its ‘predecessor’, abided by the terms of the contract up until the payment dispute. Additionally, when its dishonored check began this dispute, R & F did not disavow the contract, but instead simply argued that the contract did not require it to provide secured payment,” Jenkins added.

Jenkins explained the record “further belies R & F’s claim that it did not intend to be bound by the arbitration clause in that (1) R & F’s preliminary objections to Dempsey’s complaint sought the enforcement of the contract’s arbitration provision that required the parties to submit to arbitration prior to seeking judicial intervention, and (2) the parties actually agreed to, and participated in, arbitration pursuant to the contract.”

Jenkins stated the trial court “convincingly” explained its denial of R & F’s motion to vacate the arbitrator’s award and found the defendant “was not denied a hearing, nor that fraud, misconduct, corruption, or other irregularity caused an inequitable award.”

“The record reflects that the parties agreed to submit to Arbitrator Helbig on Aug. 18, 2015. Not only did plaintiff’s complaint include a demand for arbitration based upon the underlying contract, but defendant subsequently filed preliminary objections alleging that plaintiff failed to submit to arbitration as required by the purported agreement,” Jenkins said, referencing the trial court decision.

“Arbitration was conducted in the office of Arbitrator Helbig on Oct. 26, 2015. On Oct. 27, 2015, following the arbitration, Arbitrator Helbig issued his decision in favor of plaintiff in the amount of $9,266.37,” Jenkins stated. “In reviewing the record, there is not fraud, misconduct, corruption or apparent irregularity that occurred in the arbitration process which would allow this court to vacate the award. Accordingly, failed to meet its burden of proof establishing its entitlement to relief by clear, precise and indubitable evidence,” read the original trial court decision.

“The record supports the trial court’s assessment of the facts and determination of the petition to vacate the arbitrator’s award in this matter. Order affirmed,” Jenkins said.

Superior Court of Pennsylvania case 338 MDA 2016

Lackawanna County Court of Common Pleas case 15-CV-4162

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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