City of Scranton v. Heffler, Radetich & Saitta, LLP

responsibility comply fully of this still had the Appellant, dent. while aware Also, order, on law firm ridiculous claim wrote letters her letter- the order. head, not stating Chung that Ms. for should be the motion sanctions authority 15, 2003, president and that she had no dismissed because December act on Octo- behalf of the Association. On decided not further chal- Appellant had 2, 2003, ber the trial court reiterated that Chung’s purchase Ms. of the build- lenge Yet, Appel- the order remained effect. her acts ing. Appellant was sanctioned bank, lant still sent another letter on for her prior to December letterhead, stating her law firm that Ms. plans. future Chung president was not the the Associ- Lastly, that she Appellant claims ation. took with full Appellant such action her should not sanctioned because acts knowledge prior trial court orders any ultimately Appel did not cause harm. full that her clients knowledge purchase building lant contends enjoined taking any were action Chung. Ms. successfully completed by impede which interfere with or would Appellant present fails 2, 2003, order the prior October order law that harm must be es requiring case Yet, acting of court. while behalf of authorized to award tablished. Courts are clients, her did what she was Appellant of their sanctions for violation orders. such, prohibited doing. Appellant As requirement financial There no of the trial court violated orders harm must result from the violation. the trial court did abuse its discretion by ordering sanctions. trial Accordingly, the order of the is affirmed.

Appellant alleges next she was merely following the directions aof faction ORDER writing the board of directors speech and that she letters free March, NOW, this day AND 29th

right argument so do. This is absurd. 2005, the order of the Court of Common Appellant, attorney, should well Philadelphia is affirmed. Pleas know that cannot she violate court order because her clients direct her to do so.

Also, Appellant provide any does not ease

law give speech which would her a free

right contrary to send letters to an order

of court.

Appellant’s allegation is CITY OF SCRANTON third motion sanctions was moot because argument, at the time oral SAITTA, HEFFLER, RADETICH & 2, 2003, October decision of Manage- LLP and Solutions already court had been dismissed and ment, Inc., Appellants. plans challenge further there were no building. Chung’s purchase Ms. Pennsylvania. Court of Commonwealth court, As noted while the 3, 2005. Argued March 2, 2003, praecipe denied the October 4, 2005. April Decided matter, discontinue the it also reiterated 14, 2003, February re- Therefore, Appellant mained in full effect.

ers, compensation carri- such workers’ carriers, byor insurance or automobile ers This individuals themselves. make to obtain employ- numerous available records, records, personnel including ee Anthony Bolognese, Philadelphia for J. schedules, payment Blue Cross employee appellants. forms, claim schedules information and Greco, Scranton, for appellee. Carl J. and physi- claims compensation workers’ cian records. SMITH-RIBNER, Judge, BEFORE: Appellants The indicated that agreement FRIEDMAN, McCLOSKEY, (P.), Judge, with detailed provide would Judge. Senior they as of amounts identified schedules Judge OPINION BY Senior as charged improperly claims were McCLOSKEY. return, the In Blue Cross medical claims. request repayment obligated to was

Heffler, Saitta, LLP and Radetich & $1,000.00 and in excess of for these claims (hereafter Management, Solutions legal steps collect appropriate take all Appellants) appeal from an order of the responsible these amounts. Court of Common Pleas Lackawanna attorney for all costs and fees associated (trial court), denying them motion City was its collection efforts. The with summary and judgment providing obligated Appellants further forward (the Appellants and Scranton offset the amounts collected or 33.3% of City) shall not with arbitration Blue existing invoices from from future before the American Arbitration Associa- Cross, carriers or individu- other insurance tion. now affirm. We re- also als. were entitled 4, 2001, James P. September On Con- from the ceive reimbursement nors, Mayor City, signed an then travel, out-of-pock- lodging and reasonable Appellants, with them agreement engaging provision expenses.2 Finally, last et analysis/audit perform insur- both provided that agreement paid by City through its ance claims binding lieu of agreed to arbitration Cross, carrier, medical insurance Blue remedy. legal other past years. agreement over the five This ad- January Mayor Connors’ “City entitled Term Sheet Scranton new- replaced by that of had ministration was Engagement” Insurance been Doherty. Appel- Chris Ap- ly-elected Mayor executed officials previously apparently met representatives lants’ respective pur- pellants’ businesses.1 new and members his any Mayor Doherty agreement identify of this was to pose January At 2002. through administration paid processed medical claims Appellants presented the meeting, that should this coverage Blue Cross Mayor report as preliminary with a paid by other insurance carri- have been all, not to seek signed by that the chose 2. In the event 1. In been reimbursement, Connors, provided (a George part- then-Mayor A. Saitta Saitta, Heffler, LLP) Appellants would be entitled 20% Radetich & ner in paid (an improperly Hoinsky amounts identified J. officer with Solu- Alexander expenses. Inc.). along aforementioned Management, tions for ongoing analysis audit as well as an alleged enforceability also that the paid insurance claims improperly by an should be decided arbi- City through Blue Cross 1999 to trator and court. Nevertheless, subsequent to this Appellants included new matter reiterat- meeting, Appellants allege Mayor ing allegations the dispute representatives began his to cancel and/or should be decided an arbitrator and meetings phone and failed to return calls. approved, ratified April On in accordance with the officials, all required City endorsed last agreement, agents Further, representatives. Ap- filed a demand for pellants alleged Administra- American Arbitration Association alleging parties’ tive not agree- Code did cover the a breach of contract on the part the City ment to and the arbitrate that was City. ratification, by barred the judi- doctrine of 2002, 9, On May the filed a City petition equitable cial estoppel, estoppel and laches for rule to show cause with the trial court asserting Mayor’s lack of authori- alleging agreement signed that by ty to City agreement bind the or that the then-Mayor Connors was invalid and unen- was not Appellants enforceable. later filed forceable as it was not in approved accor- a motion summary judgment, for seeking 14(C) (D) dance with Sections and 6— an directing proceed the City to City’s Administrative Code. These Sections them to arbitration before American require professional that all service con- Arbitration Association. Appellants filed a Council, approved by tracts be City re- exhibits, brief with including numerous nu- approved by City viewed and Solicitor n representatives merous letters between signed and by Mayor and Control- Appellant representatives of and ler by City attested Clerk. The thereafter filed an answer and exception indicated with the brief opposition Appellants’ motion. Mayor’s signature, procedural no other requirements were followed. As Ultimately, the trial court issued an agreement unenforceable, was invalid and opinion July and order dated alleged that it not required was Appellants’ summary motion submit to Appellants. arbitration with judgment providing Appellants and and shall not with arbi-

The trial court issued an order dated tration before the American Arbitration May City’s granting petition opinion, Association. its the trial court and issuing a rule upon to show cause specific cited to procedures required Appellants. The trial court directed Ap- contract, to enter valid into a pellants to file answer to the which not admit were followed petition days within ten and directed both in this case. The trial court noted that complete discovery forty- within procedures these “protect exist to the citi- days. five Appellants filed an answer to zens taxpayers admitting Scranton petition contracts, only pre- ill-considered and to signed repre- collusion, vent Mayor favoritism and fraud.” sentatives and Connors. 8). Appellants alleged (Opinion of Trial Court at had subsequently been court also it approved, ratified and noted because was a City officials, endorsed all required responsibility court’s to determine whether agents representatives. Appellants existed, it, valid to arbitrate

879 legislation if this arbitrator, validity. Even whether not the should decide court indicated that required, the contract itself was valid. City’s officials in limited actions of concerning Appellants’ arguments As to Mayor admin- Connors’ waning months trial court estoppel, ratification and constitute ratification istration did not with a first noted that those who contract court noted Finally, the trial contract. municipality peril do so at own quan- entitled munic inquire powers must into the per- for services tum meruit fee con agents and its enter into ipality any resulting benefits retained formed Parking Corporation Alco tracts. See filed thereafter City. Appellants Authority Pittsburgh, Parking Public trial court. appeal notice petitions A.2d 343 (Pa.Super.1998), 706 denied, appeal allowance of Court,3 Appellants to this On (1998) Pa. 725 argue the trial court erred first (1998). The trial court also noted scope validity of failing to hold that the municipality’s if a that even actions co is to be an arbitration clause decided of an incide with the terms unenforceable We dis- instance arbitrator. first executed, properly agree. ratify such actions cannot be deemed and make it enforceable. Admittedly, Commonwealth “[t]he Davis, v. Murphy, See Niemiec Smith disputes by arbi of favors the settlement McNett, (Pa.Cmwlth.1995), 665 A.2d 1322 orderly the swift and promote tration to denied, petition appeal allowance of for McCarl’s, of those claims.” disposition 718, (1996). 543 Pa. 672 A.2d 310 For the Authority, Municipal Inc. v. Beaver Falls reasons, the trial court indicated that same (Pa.CmwIth.2004). 180, In A.2d 184 847 promissory estoppel generally ap does not fact, increasing crowding and due to the municipali a ply illegal agreements with dockets, of our settlement congestion ty. factually court proceeded The trial encouraged and by arbitration are disputes distinguish upon by Appel relied cases contrary to public longer no deemed are present lants from the case. McCarl’s, Nevertheless, as policy. indicated, “the ex Superior has

The trial then concluded that be- our Court provision and a an arbitration legislation cause from Council istence of favoring does not policy this could liberal before disputes all stamping of valid, require the rubber ap- become Council never Hv. subject McNulty leg- or this arbitration.” proved enacted Block, Inc., 1271 islation, & R 843 A.2d could not be rati- allowance (Pa.Super.2004), petition actions of other officials and fied denied, A.2d 362 578 Pa. 853 appeal is estopped (Pa.Cmwlth.1997), Wagner, A.2d 593 scope granting or 702 3. Our of review of an order af- (1998). denying summary judgment to de- A.2d 742 firmed, is limited 719 553 Pa. Moreover, termining only appro- the trial court committed summary judgment whether is discretion. Sal- of law or abused its when, error examining record in the priate after LaBarr, 632 A.2d erno v. 159 Pa.Cmwlth. parly, non-moving light most favorable to petition allowance 1002 fact, genuine material issue of there is no denied, (1994). 740 An he is moving clearly establishes that parly judgment abuse of discretion exists where Sal- judgment a of law. as matter entitled to manifestly exercised the lower court erno. Borough Downingtown v. unreasonable. 880 —

(2004) denied, U.S.-, and cert. Mayor 125 and the desig- Controller or their 667, 160 (2004). S.Ct. L.Ed.2d 497 nated substitutes and attested to City Clerk.” Id. Commonwealth,

In this the issue arguing In that nothing a particular dispute whether falls within Code prohibits Administrative a contractual arbitration provision is a Mayor into entering agreements matter of law to decide. City, arbitrate on behalf of the McNulty; see also Shadduck v. Christo single focus on agree Kaclik, Inc., (Pa.Su pher J. 713 A.2d 635 Mayor. ment with the former per.1998). determine whether present agreement consisted of more subject arbitration, or not a claim is single provision. than agreement, court must in a engage two-prong analysis. valid, if would a professional constitute A court must first determine whether a service contract between valid agreement exists and then it must The aforementioned Sections determine whether the is within forth Administrative Code set scope See McNul specific procedures that must be followed ty; Hazleton Area School District Bo in order to execute such contracts. sak, (Pa.Cmwlth.1996). Moreover, we previously have indicated upon law, Based this established case we statutory that the requirements for execu- say cannot the trial court erred in tion municipal mandatory. contracts are failing hold scope See v. City Acchione Philadelphia, an arbitration clause to be decided in the (1979). Ap- Pa.Cmwlth. 397 A.2d 37 first instance the arbitrator. pellants procedures do Next, Appellants argue that 6-14(C) (D) outlined in Sections of the court in failing erred to hold the City’s Administrative Code were not fol- to arbitrate properly was such, lowed in this say case. As we cannot validly nothing entered in the City’s where that the in trial court erred to hold failing prohibits Administrative the Mayor Code proper the to arbitrate was entering agreements into to arbitrate and valid. on behalf of Again, disagree. we Next, Appellants argue that 6-14(C) Section City’s of the Adminis- in failing erred rule that provides trative Code as follows: between and the Personal, engineering and pro- all other valid ap- was and enforceable and fessional service contracts shall be ex- proved by everyone approval whose was empt from bidding requirements required Again, under law. we applicable by established the Administrative Code. disagree. All personal, engineering profes- and all sional service contracts must first be municipality “Where a must exe approved by legislation prior proper particular cute a contract a manner issuing of a letter and/or legislative pronouncement, under failure to any signing agree- contract or comply pronouncement renders ment. the contract unenforceable.” Park Alco (R.R. 9a). 6-14(D) ing at Section of the Corporation; Pittsburgh see also Baseball, provides Administrative Code “all Inc. v. Authority Stadium approved City contracts must be reviewed Pittsburgh, 157 Pa.Cmwlth. by by dismissed, signed (1993), Solicitor and 630 A.2d 505 (1994).4 However, required along is troller, signature there whose 641 A.2d 313 6-14(D) Section exceptions mayor this rule. In Eckert v. under

are Moreover, Pierotti, Administrative Code.7 Pa.Cmwlth. principle this Court addressed the the trial court that agree we ratification, stating well part “[i]t of the mem- inaction action or may municipal corporation settled that administration its outgoing bers of corpo ratify contracts which are within ‘ratifi- months did “constitute waning powers and made its officers with rate of Trial (Opinion contract.” cation’ of the authority, out or in excess of their authori 8). Thus, say that the cannot Court at we Eckert, ty.” 553 A.2d at 118.5 other failing rule that the erred words, ir may municipality waive Appellants and the agreement between municipal rati regularity of contract and valid and enforceable. fy Id. This ratification that contract. argue that the trial Finally, Appellants be made the affirmative action of by holding non-applicable court erred proper by any officials or action or inaction prevent finding concerns public policy which, circumstances, under the amounts es- ratified is therefore Pittsburgh approval to an of the contract. topped Baseball, Inc.; Eckert. more, disagree. agreement. Once we case, contrary In the present Court has Pennsylvania Supreme Our argument Appellants’ “1) estoppel as everyone described the elements approved by approval whose words, conduct, law, or silence misleading evi applicable under estoppel whom the party against dence record fails to reveal 2) asserted; of reason- unambiguous proof agreement, even Council was aware misrepresentation upon the they approved let alone that of and able reliance 3) estoppel; party asserting appropriate enacted relative legislation duty inquire party on the of a agreement.6 Nor does the evidence lack Extended City asserting estoppel.” Chester approval record reveal Department Public Wel- knowledge Con- Care Center Solicitor or Baseball, contrary, township in Ec- Pittsburgh To the of Inc. is fac- Eckert. the The case formally approved and ratified the tually present kert the case. In Pitts- similar to Baseball, Inc., Baseball, Pittsburgh at in that case. burgh contract issue alleged attempting oral to enforce an mayor city the Pitts- promise suggestion from the of in the 6. We note that there $25,000,000.00 burgh City to contribute towards Council member record one Pittsburgh purchase operation agreement. the the of the have been aware Ultimately, this Pirates baseball franchise. with alleged oral contract Court held the of record does that the evidence 7. We note city mayor binding on where was not the the Sara page of a fax from include the cover required city Healthcare, code all contracts the relevant Picard, president of Millennium signed city writing firm, to be in and to to Lee City's consultant healthcare department mayor appropriate by Reedman, City’s Solicitor’s Of- Esquire of city's Home Rule Charter and where the prior head confer- regarding a "claims audit fice regarding city required af- that all contracts obtaining of records ence call” and city (R.R. 61a). coun- be authorized resolution fairs this at Blue Cross. identify as the cil. Reedman Mr. evidence fails Solicitor, verify City City Solici- let alone agree- however, approval of note, knowledge procedural prob- tor’s 5. We present in present were not ment. case lems in 355, fare, 526 Pa. City Scranton, 586 A.2d directing (1991). Appellee, arbitration dispute before the American Arbitration element, As to the third both this provi- Association. The issue involves Court and our Superior reject Court have parties’ agreement sion in the that re- ed claims similar to the ones at issue quires disputes contract them submit present case on the basis that those who arbitration, binding pursuing instead of municipal contract with a corporation do so legal remedy, some other and whether the at peril inquire their own and must into question arbitrability of the the powers municipal corporation should be decided in the first instance agents and its any to enter into contracts. arbitrator trial court where Baseball, Inc.; Pittsburgh See Alco Park claims that the itself is Likewise, ing reject Corporation. we void and unenforceable. such claim present in the arose out of the breach agree- case. dealt at ment requiring Appellant perform cer- peril their own it responsi and was their tain audit services connection with bility to knowledgeable become of the for health paid by insurance claims Mayor’s powers mer authority. through Blue Cross. provides Administrative Code spe procedures cific relating to the execution on Pennsylvania Superior Based Court of contracts with Block, Inc., Appellants do H R McNulty decisions v. & not dispute procedures denied, that those were (Pa.Super.), not 843 — Thus, denied, followed this case. cannot say we cert. trial failing U.S.-, court erred in to find 125 S.Ct. 160 L.Ed.2d 497 estopped v. Christopher Shadduck J. validity Inc., Kaclik, 713 A.2d 635 (Pa.Super.1998), majority issue concludes “the Accordingly, the order of particular dispute whether a within a falls is affirmed.8 contractual is a mat ter of for a Op. law decide.” at ORDER majority 880. The therefore has ruled that NOW, day April, AND 4th the trial court did err when decided the order the Court of Common Pleas of it first must determine hereby Lackawanna affirmed. the agreement and then held that agreement was not valid because the Judge DISSENTING OPINION BY did specific procedures not follow SMITH-RIBNER. were before could enter I respectfully dissent because the dis- into an The agreement. majority further pute in this case should be submitted to that Appellants may concludes not in arbitration accordance with the arbitra- or estoppel theories ratification to parties’ agreement. tion validate their majority The affirms the order of the Court of Common Pleas of I disagree majority’s position Lackawanna with the Appellants’ that denied motion that should be submitted to summary judgment they in which sought agreement’s the arbitrator under bind- note, Baseball, 8. Pittsburgh expenses quantum We as we did in er their to date on a meruit Inc., Appellants may that be entitled recov- basis.

883 to arbitrate between Pennsyl no ing arbitration clause where ap- Citing held expressly has and Prudential. Supreme appellant vania Court contract parties Borough should be bound in prior its decision proval requiring the provisions Authority, Supreme arbitration Ambridge Water they should not be disputes Borgia in that the issue Court stated consequences thereof allowed to avoid the claim of “covered appellant’s whether question validity by challenges that de- and his entitlement status person” Am Borough the contract itself. was itself arbitrable mand arbitration Columbia, 458 v. bridge Authority Water held that Supreme The Court issue. (1974), Supreme Pa. 328 A.2d 498 policy in Prudential’s arbitration clause in authority clarified that the water Court whereby broadly must construed be challenge had made no that case by the was to be determined issue involved employment to enter into the capacity ob- by the court.1 It arbitrator and law arbi agreement providing common interpreting the arbitration served disputes, noted tration of comported with in that manner agree parties operated under public policy fa- principle the settled years. It ulti ment for more than 1/2 vors arbitration. mately pro that the arbitration concluded McCarl’s, in Inc. v. Beaver Falls Finally, in in the contract was framed broad vision (Pa. Authority, 847 Municipal language, meaning that the intend Cmwlth.2004), this reversed a trial Court of their scope ed the of the submission summary judgment granting court’s order The court re disputes to unlimited. payment of who claimed contractor authority frus fused allow water un- performed for certain work sums due parties’ trate intention arbitrate authority. Once making upon attacks der contract belated suit, authority filed contract. That is the situa filed precisely contractor dismissal of objections seeking preliminary tion here. requesting complaint Supreme approval cited with Court arbi- arbitration under the require Borough of Ambridge in its decision Water original contract. tration clause of the Co., Borgia in Authority Prudential Ins. principle This reiterated Court Pa. 750 A.2d 843 which out- disputes settlement in of a interpretation involved the clause favored. Be- system the court side of policy that in the providing an insurance McCarl’s, clause cause the arbitration policy coverage of a as to event nulli- or otherwise never canceled might make payable party amounts either agreements between by subsequent fied demand for arbitration. a written arbi- by the parties they were bound Supreme Superior Court reversed clause, remaining disputes tration injured Borgia decision Court’s arbitrator to the had to be submitted un person” not a “covered appellant was result, that clause. that, accordance with as there policy der the Employe arising Rela- Bowling, putes under the Public Compare Township Sugarloaf v. (2000) Act, (holding July P.L. 759 A.2d 913 Act of tions 1101.101-1101.2301, amended, au- and not the courts had §§ that arbitrators 43 P.S. arbi- thority instance to determine in the first folly” permit reiterating that "it was arising Act trability dispute under the over is- in the courts preliminary bouts full 24, 1968, P.L. Act of June known as Act jurisdiction). of an arbitrator’s sues 217.1-217.10, dis- just §§ as in P.S. In the present controversy, there is no

legal beyond basis looking the clear

language the arbitration

parties’ agreement. They are to arbitrate

any disputes that out auditing arise

contract. At that time the chal- validity itself,

lenge the of the contract

based presented evidence the arbi- can

trator issue ruling party either

may appeal aggrieved. if It is not incon-

ceivable that once parties submit their arbitration,

dispute as required under contract, can be settled Otherwise,

without court intervention.

majority’s effectively decision will frustrate

the whole of dispute notion resolution via a

mechanism chosen to an

agreement.2 WIECZORKOWSKI,

Norbert Petitioner

WORKERS’ COMPENSATION (LTV

APPEAL BOARD

STEEL), Respondent. of Pennsylvania.

Commonwealth Court

Argued Feb. 2005. April

Decided 2005. majority upholds during also the trial court’s when if disagree decision that the was not ratified I raises the issues. estopped and that the under facts of this case that the agreement. did actions not amount to a ratification of the These are issues for the arbitrator to decide

Case Details

Case Name: City of Scranton v. Heffler, Radetich & Saitta, LLP

Court Name: Commonwealth Court of Pennsylvania

Date Published: Apr 4, 2005

Citation: 871 A.2d 875

Court Abbreviation: Pa. Commw. Ct.