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Stanley M. Schwarz v. Wells Fargo Advisors

December 6, 2012


Appeal from the Order entered January 18, 2012, Court of Common Pleas, Philadelphia County, Civil Division at No. 002252 October Term, 2009

The opinion of the court was delivered by: Donohue, J.




Appellants, Wells Fargo Advisors, LLC f/k/a Wachovia Securities LLC ("Wells Fargo") and Drew D. Barlow ("Barlow" and collectively with Wells Fargo "Appellants"), appeal from the trial court's January 18, 2012 order vacating an arbitration award and directing the parties to proceed in the Court of Common Pleas of Philadelphia County. Also before us is the motion to quash of Appellee, Stanley Schwarz ("Schwarz"). We deny Schwarz's motion to quash, as an order vacating an arbitration award without directing a rehearing is immediately appealable pursuant to 42 Pa.C.S.A. § 7320(a)(5). Upon review, we vacate the trial court's order and remand.

The trial court recited the following pertinent facts and procedural history:

Schwarz filed a civil complaint against [Appellants] asserting claims of professional negligence, breach of contract, conversion and breach of the Pennsylvania Unfair Trade Practices and Consumer Protection Law [('UTPCPL')]. The complaint alleged that Schwarz was a client of [Wells Fargo] and maintained several accounts - including an IRA - with [Appellants]. [Barlow] served as Schwarz's financial advisor. According to the complaint, Schwarz suffered substantial financial losses due to [Appellants'] failure to carry out his instructions for the handling of his financial accounts beginning on January 22, 2008 and thereafter. More specifically, on or about January 22, 2008, Schwarz alleged, he had instructed [Barlow] to sell 50% of his holdings in his IRA account at [Wells Fargo] if they decreased in value by 5% and to sell the remaining 50% of his holdings if they decreased in value by 10%. According to the complaint, [Appellants] failed to carry out these instructions, which caused losses in excess of $200,000 for Schwarz. It also asserted that [Appellants] failed to carry out Schwarz's instruction in October 2008 regarding the purchase of a bank certificate of deposit, resulting in a loss of $3,536.82 in interest.

On January 11, 2010, [Appellants] responded to the complaint by filing an Answer with New Matter, asserting, inter alia, that the claims were subject to arbitration. A few weeks later, [Appellants] filed a Motion to Compel Arbitration on January 27, 2010. According to Schwarz, the request for arbitration was premised on two documents: (1) an 'IRA Holder's Acceptance' from Prudential Securities whose date is illegible but was executed sometime prior to a merger between Prudential Securities and Wachovia Securities in 2003 and (2) an undated and 'even more illegible' document from WFS Clearing Services prior to a 2001 merger of Wheat First Securities with other entities to form Wachovia Securities.

Schwarz opposed this petition to arbitrate on various grounds. First, he never signed any agreement to arbitrate with [Appellants], and the documents attached to the petition to compel arbitration predated his relationship with [Appellants]. Second, the claims set forth in the complaint did not arise from any relationship between Schwarz and Prudential or with 'WFS Clearing Services.' In fact, [Schwarz] asserts he never had any professional brokerage relationship with WFS Clearing Services. Third, Schwarz had twice been requested to sign an arbitration agreement with [Appellants] and both times he refused to do so. In an effort to resist arbitration, Schwarz filed a motion to compel [Appellants] to produce a corporate designee for deposition concerning the illegible documents that were the basis of defendants' arbitration claim. Without any hearing on the issues of facts raised by Schwarz, the Honorable William Manfredi by decrees dated March 23, 2010 denied Schwarz's discovery petition and granted the petition to compel arbitration.

Trial Court Opinion, 1/27/12, at 1-3.

Schwarz received a nominal award from the arbitration panel on October 12, 2011. Subsequently, he filed a petition in the Court of Common Pleas asking the court to either vacate the arbitration award or confirm it so that Schwarz could proceed with an appeal to this Court. The trial court conducted a hearing on Schwarz's petition on December 15, 2011. After that hearing, the trial court entered the instant order vacating the arbitration award and directing the parties to proceed in common pleas court.

Appellants raise two issues on appeal:

1. Did the trial court err in vacating the arbitration award where [Schwarz] failed to show that he was denied a hearing or that fraud, misconduct, corruption or other irregularity caused the rendition of an unjust, inequitable or unconscionable award, but instead vacated the award because it believed the earlier ruling of another judge compelling arbitration was incorrect?

2. Did the judge who vacated the arbitration award on the grounds that the parties did not agree to arbitrate the dispute violated [sic] the coordinate jurisdiction rule where another judge of coordinate jurisdiction had earlier ruled that the parties agreed to arbitrate the dispute?

Appellants' Brief at 2.

The trial court vacated the award pursuant to section 7314 of the Uniform Arbitration Act. That section provides in relevant part as follows: ...

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