48 Pa. D. & C.5th 305
Pennsylvania Court of Common P...2015Background
- Sigman sued B&L (and individual defendants) asserting breach of an employment termination agreement, unjust enrichment, and accounting for unpaid referral fees; the agreement contained a broad arbitration clause.
- Court ordered claims against B&L to arbitration; claims against individual defendants were stayed.
- In arbitration, B&L counterclaimed seeking $132,259.70 in attorneys’ fees incurred in investigating and responding to disciplinary complaints against Sigman ("disciplinary attorneys’ fees").
- The arbitrator denied recovery of the disciplinary attorneys’ fees as "outside the scope of the Termination Agreement," awarded other relief, and that award became final and was reduced to judgment.
- After unsuccessful attempts to vacate the arbitration award, B&L filed the same indemnity counterclaims in this court seeking the disciplinary attorneys’ fees.
- Sigman moved for judgment on the pleadings, arguing B&L’s counterclaims are barred by res judicata (and collateral estoppel); court granted the motion and dismissed the counterclaims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether B&L’s counterclaim for disciplinary attorneys’ fees is barred by res judicata | The claim was fully litigated in arbitration; the arbitrator decided the issue and the decision is final, so res judicata bars relitigation | The arbitrator found the fees were "outside the scope of the Termination Agreement," so no final judgment on the merits precludes suit here; also argued waiver of arbitration defenses | Court held res judicata bars the counterclaim—elements (identity of parties, thing sued on, cause of action, capacity) satisfied; claim was fully litigated and decided in arbitration |
| Whether collateral estoppel prevents relitigation of the disciplinary-fee issue | Issue actually litigated and essential to the arbitrator’s judgment; claim precluded | Argued arbitrator’s phrasing means issue was not finally adjudicated on the merits | Court treated the arbitrator’s denial as a final adjudication of the fee claim and applied preclusive effect (res judicata dispositive) |
| Whether the counterclaim should be sent to arbitration | Plaintiff: arbitration already resolved the dispute; relitigation is barred | Defendant: asserted waiver or that dispute was beyond arbitration’s scope | Court found arbitration already adjudicated the issue; dismissal warranted rather than transfer |
| Whether equitable indemnification survives arbitration | Plaintiff: mirrors contractual indemnity and was decided in arbitration | Defendant: contended equitable claim survived | Court held equitable claim references the Termination Agreement and was fully adjudicated, so barred |
Key Cases Cited
- Stoeckinger v. Presidential Fin. Corp. of Delaware Valley, 948 A.2d 828 (Pa. Super. 2008) (res judicata principles)
- Dempsey v. Cessna Aircraft Co., 653 A.2d 679 (Pa. Super. 1995) (elements of res judicata)
- Hopewell Estates, Inc. v. Kent, 646 A.2d 1192 (Pa. Super. 1994) (res judicata bars matters that could have been raised)
- Midmo Co., Inc. v. Presbyterian Hous. Dev. Co., 739 A.2d 180 (Pa. Super. 1999) (considerations for applying preclusion)