Weinar, M. v. Lex, W.
176 A.3d 907
| Pa. Super. Ct. | 2017Background
- Plaintiff Dr. Marvin Weinar obtained a FINRA arbitration award (Feb. 14, 2013) awarding compensatory damages, interest (initially compounded but later modified), and fees against his former broker William Lex for sale of worthless notes.
- Weinar first sought confirmation in New York state court (same day as award); Lex removed to federal court and challenged personal jurisdiction. While that was pending Lex filed in EDPA to vacate the award under the FAA; Judge Shapiro denied vacatur (except modifying interest) but held Weinar’s FAA-based cross-petition to confirm untimely under the FAA one-year rule.
- After the EDPA decision (which applied the FAA limitations), Weinar filed a Pennsylvania state-court petition to confirm under 42 Pa. C.S. § 7342(b) and also filed a separate second amended complaint asserting breach of contract, conversion, unjust enrichment, and declaratory relief related to Lex’s refusal to pay the award.
- The Chester County trial court granted Weinar’s state-law petition to confirm the award and sustained Lex’s preliminary objections, dismissing Weinar’s second amended complaint.
- Both parties appealed. The Superior Court affirmed confirmation under Pennsylvania law, held FAA § 9 did not preempt § 7342(b), rejected res judicata preclusion from the EDPA statute-of-limitations dismissal, but vacated dismissal of Weinar’s post-arbitration common-law claims and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Weinar) | Defendant's Argument (Lex) | Held |
|---|---|---|---|
| 1. Whether res judicata (claim preclusion) from EDPA bars state confirmation | Weinar: EDPA dismissal on FAA statute of limitations did not decide the substantive merits of a state-law confirmation claim, so res judicata does not bar state petition | Lex: Judge Shapiro’s EDPA ruling that confirmation was time-barred under the FAA precludes relitigation in state court | Held: Res judicata does not apply; a limitations dismissal under the FAA was not a merits decision and does not bar a state-law confirmation claim (federal preclusion rules permit different preclusive effect in state court) |
| 2. Whether FAA § 9 one-year limitation preempts Pennsylvania § 7342(b) (no fixed deadline) | Weinar: Pennsylvania law governs confirmation in state court; § 7342(b) is procedural and not preempted | Lex: FAA’s one-year limit and federal policy favoring expeditious arbitration preempt state law allowing a longer or unlimited period | Held: FAA § 9 does not preempt § 7342(b); state confirmation is a valid alternative remedy and § 7342(b) does not frustrate FAA purposes |
| 3. Whether the trial court erred in confirming the award under Pennsylvania law after EDPA ruling | Weinar: State confirmation is timely under Pennsylvania law and consistent with FAA policy allowing state remedies | Lex: EDPA’s application of FAA controls and precludes state confirmation | Held: Trial court correctly confirmed the award under § 7342(b); EDPA’s FAA-based time-bar did not preclude state-court confirmation |
| 4. Whether dismissal of Weinar’s second amended complaint on preliminary objections was proper | Weinar: Claims (breach, conversion, unjust enrichment) arise from Lex’s post-arbitration refusal to pay and are viable; procedural errors occurred because his preliminary objections were not decided first | Lex: The complaint is duplicative of the arbitration and precluded by res judicata / gist-of-the-action doctrine | Held: Trial court abused discretion in dismissing complaint on preliminary objections; vacated dismissal and remanded for consideration of Weinar’s preliminary objections and further proceedings |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preemption principles; states cannot enforce procedures inconsistent with the FAA)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (FAA creates federal substantive law of arbitrability)
- Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (2008) (FAA is not the exclusive route for post-arbitration judicial review)
- Volt Info. Scis., Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) (parties may choose state procedures; FAA does not create federal procedural scheme for all arbitration matters)
- Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) (statute-of-limitations dismissal bars remedy but not substantive right; preclusive effect of federal judgments governed by federal law)
- Moscatiello v. Hilliard, 939 A.2d 325 (Pa. 2007) (Pennsylvania Supreme Court held FAA did not preempt state arbitration timing provision for post-arbitration challenges)
- Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490 (Pa. 2016) (Pennsylvania Supreme Court on FAA preemption; enforcement of arbitration agreements trumps efficiency concerns)