Morse v. Fisher Asset Management, LLC
Posted on Categories Court Decisions, Securities Arbitration

By David C. Franceski, Jr.

*The filing of an action later dismissed on preliminary objections in favor of arbitration does not toll applicable statutes of limitation beyond the date of dismissal. **JAMS Rule 18 empowers an arbitrator to dismiss on statute of limitations grounds. ***In the absence of disputed issues of fact on timeliness, an arbitrator does not exceed powers or engage in irregular conduct by dismissing without a hearing on limitations grounds.

Morse vs. Fisher Asset Management, LLC, No. 1104 WDA 2018, 2019 Pa. Super. 78 (Pa. Super. Ct., 3/15/19).

Appellant, investment advisory customer of defendants/appellees in the JAMS arbitration and court proceedings below, appealed the denial of her motion to vacate the JAMS award. Though Appellant had commenced the action in Pa. state court, on defendants’ preliminary objection that the matter was, by agreement of the parties, arbitrable, almost 6 years later Appellant refiled her claims with JAMS. Without a hearing, the JAMS arbitrator dismissed with prejudice each of her Pa. common law and statutory UTPCPL claims as untimely under all applicable statutes of limitation. Arguing that the dismissal on limitations grounds and without a hearing exceeded the arbitrator’s power and constituted an “unjust, inequitable or unconscionable award,” Appellant returned to court to challenge the award. Appellant claimed that because her original court action was timely when filed, and because the court’s order dismissing the action in favor of arbitration stayed the proceedings and tolled all applicable and unexpired statutes of limitation at that time, her arbitration action was timely. Finding no error in the Arbitrator’s limitations dismissal, the trial court denied the motion to vacate and entered judgment in Appellees’ favor. On appeal, the Pennsylvania Superior Court, the Commonwealth’s intermediate appellate court, affirms the lower court’s judgment denying the motion to vacate. As an initial matter, the Court explains that under Pennsylvania procedure, an action subject to common law arbitration can be challenged in court under 42 Pa.C.S.A. §§7304 and 7342 either by a motion to compel arbitration, in which case the matter “shall be stayed,” or by preliminary objection pursuant to Pennsylvania Rule of Civil Procedure 1028, in which event the matter may, instead, be dismissed. Because Appellees here sought arbitration by preliminary objection, the trial court sustained the objection, and the action was dismissed, the action as commenced in court did not toll the statute of limitations. Turning to the arbitration phase of the case and Appellant’s argument that the Arbitrator lacked the power to adjudicate the matter on limitations grounds because (1) JAMS rules do not expressly include limitations periods and (2) the Arbitrator did not conduct a hearing on the issue, the Appellate Court concludes, as did the Arbitrator, that JAMS, indeed, recognizes untimeliness as a defense, that the parties’ agreement broadly provided for arbitration of any dispute that JAMS, and that JAMS Rule 18 allows for motions to dismiss on that ground. Finally, because the parties did not dispute the timeline at issue, the dismissal without a hearing “reveals no ‘irregularity’.”

(D. Franceski: Among the Court’s procedural tips relating to enforcement and review of arbitration awards: (1) an order denying a motion to vacate is not appealable; (2) in order to make it so the Court (or the prevailing party) should see that judgment is entered confirming the award; and (3) a passing comment that might be read to suggest that dismissal (as opposed to stay) of an action in favor of arbitration might be immediately appealable.)

(SOLA Ref. No. 2019-16-03)

NOTICE: The court decision synopsis published above represents an abbreviated description of the actual decision and is re-printed here for its educational value. The author's effort is to report concisely the substance of the decision or a selected portion of the decision; commentary or analysis is generally reserved for the italicized section at the bottom of the summary. Subscribers to SAC's Online Litigation Alert (SOLA), from which this synopsis is excerpted, have immediate access to the full decision, in addition to the synopsis. 

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