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Atlantic City Electric Company, Inc. v. Riccardo

February 4, 2010

ATLANTIC CITY ELECTRIC COMPANY, INC., PLAINTIFF,
v.
THE ESTATE OF JERRY RICCARDO ET AL. DEFENDANTS.



The opinion of the court was delivered by: Eduardo C. Robreno, J.

MEMORANDUM

I. Introduction

Plaintiff, Atlantic City Electric Company ("ACE"), brings this action against Defendants Denise Riccardo and the Estate of Jerry Riccardo ("Riccardos"), seeking to set aside an arbitration award that was allegedly procured by fraud.*fn1 The Riccardos move to dismiss this action, arguing that ACE's claims are time barred. For the following reasons, the Riccardos' motion to dismiss is granted in part and denied in part. The motion is granted as to Counts I, II, and III and denied as to Count IV of the Amended Complaint.

II. Background

In 2005, the Riccardos initiated suit in the United States District Court for the District of New Jersey (the "New Jersey Federal Court") against ACE seeking money damages for an accident in which Jerry Ricardo received an electric shock resulting in personal injuries. The parties engaged in extensive discovery, especially regarding Mr. Riccardo's health. By stipulation of the parties, the case was dismissed by the New Jersey Federal Court with prejudice and referred to binding arbitration. On August 26, 27, and 28, 2008, the arbitration hearing was held in Philadelphia, Pennsylvania. The arbitrator found for the Riccardos, and on October 13, 2008, ACE paid the Riccardos $750,000.

On October 21, 2008, counsel for ACE learned that Mr. Riccardo was suffering from terminal cancer. Mr. Riccardo died on October 25, 2008, less than two months after the arbitration hearing. ACE believes that Jerry Riccardo knew he was suffering from terminal brain cancer during the arbitration hearing but failed to disclose it. On January 29, 2009, ACE moved in the New Jersey Federal Court to vacate the arbitration award based on allegations of fraud that the Defendants had not disclosed Mr. Riccardo's illness. On May 1, 2009, the Honorable Joseph Irenas denied ACE's motion and held that the New Jersey Federal Court lacked jurisdiction to vacate the award because the parties had dismissed the case with prejudice. See Jerry Riccardo et. al. v. Pepco Holdings Inc. & Atlantic City Electric Co., No. 05-3200, Order Dismissing Motion to Vacate Arbitration Award (D.N.J. May 1, 2009) (Irenas, J.); see also id., Transcript of Hearing on Motion to Vacate Arbitration award, at 29-31.

On April 29, 2009, ACE filed the instant action in the New Jersey Federal Court. Judge Irenas transferred the case, pursuant to 28 U.S.C. § 1404(a), to this Court, the ("Pennsylvania Federal Court"), where it is now pending.

In Count I of the Amended Complaint, ACE maintains that the New Jersey Arbitration Act, N.J.S.A. 2A:23B-3, governs the arbitration process of the underlying action and seeks damages for alleged fraud. Count II alternatively maintains that the arbitration process is governed by common law arbitration. Count III alleges a violation of discovery rules, claiming that the Riccardos failed to disclose Mr. Riccardo's true medical condition. ACE seeks, under Fed. R. Civ. P. 60(b) to vacate the arbitration award. Count IV seeks damages for the Riccardos' alleged fraud and/or misrepresentation at the August 2008 arbitration hearing. ACE claims fraud and/or misrepresentation, based upon a certification from a medical doctor that, in his opinion, the decedent at the arbitration hearing looked older likely due to the effects of systemic cancer and the effects of chemotherapy or radiation. Because ACE believes Mr. Riccardo's cancer was probably present long before the arbitration and Mr. Riccardo knew of the cancer but failed to disclose it, ACE requests reimbursement of the arbitration award.

On September 2, 2009, ACE filed an Amended Complaint to include a claim for common law fraud and misrepresentation (Amended Complaint, doc. no. 6 at Count IV). On September 14, 2009, the Riccardos filed a motion to dismiss claiming that this action should be dismissed in total as asserting claims beyond the statute of limitations (doc. no. 8).

III. Standard of Review

In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the Court must "accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non-moving party." DeBenedictis v. Merrill Lynch & Co., Inc., 492 F.3d 209, 216 (3d Cir. 2007) (quotation omitted). The Court need not, however, "credit either bald assertions or legal conclusions in a complaint when deciding a motion to dismiss." Id. (quotation omitted). Viewing the complaint in this manner, the Court must dismiss the complaint if it fails to state a claim upon which relief can be granted.

The statute of limitations may be raised by a Rule 12(b)(6) motion. When a statute of limitations begins to run is ordinarily a question of fact. When the facts are established, the inquiry becomes a question of law. Dole v. Local 427, 894 F.2d 607, 609 (3d Cir. 1990).

IV. Analysis

A. The Riccardos' Motion to Dismiss

The Riccardos move to dismiss this action, arguing that, upon the facts of record, ACE's claims are time barred. The Riccardos allege that the parties stipulated that JAMS Streamlined Arbitration Rules and Procedures would apply to the arbitration. JAMS, the arbitration organization used in this case, has adopted rules which provide that "[p]roceedings to enforce, confirm, modify or vacate an Award will be controlled by and conducted in conformity with the Federal Arbitration Act, 9 U.S.C. Sec 1 et. seq. [FAA] or applicable state law." (See Defs.' Ex. C, JAMS Streamlined Arbitration Rules and Procedures (revised Mar. 26, 2007) at 18.) The Riccardos argue that ACE's counsel had notice of Mr. Riccardo's cancer on October 21, 2008,*fn2 but did not move to vacate the arbitration until January 29, 2009, one hundred (100) days after October 21, 2008.

Under the FAA, 9 U.S.C. § 12, a notice of a motion to vacate must be served within three months (90 days) after the award is delivered. The arbitration award was delivered in this case on September 3, 2008, but ACE only filed a motion to vacate on January 29, 2009, more than 90 days after the entry of the arbitration award.*fn3

Under Pennsylvania law, 42 Pa. C.S.A. § 7314(b), the limitation for a proceeding to vacate an award is "30 days after delivery of a copy of the award to the applicant, except that, if predicated upon corruption, fraud, or misconduct or other improper means, it shall be made within 30 days after such grounds are known or should have been known to the applicant." 42 Pa. C.S.A. § 7314(b).*fn4 The Riccardos argue that the instant civil action was filed on April 29, 2009, more than 30 days after ACE's counsel acknowledged ACE was aware of Mr. Riccardo's cancer.

Under New Jersey law, N.J.S.A. 2A:23B-23, a summary action must be filed within 120 days after the aggrieved (Plaintiff in this case) receives notice of the award or 120 days after fraud or corruption is known. See N.J.S.A. 2A:23B-23(b). The Riccardos argue that the instant ...


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