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The Pennsylvania Superior Court ordered a pro se litigant to reimburse the opposing party for fees and costs incurred in opposing a frivolous challenge to a valid arbitration award. In challenging the award, the pro se litigant argued that a legitimate arbitration agreement was illegal and that he was deprived of a hearing when in fact he voluntarily refused to attend.
In U.S. Claims, Inc. v. Dougherty, No. 958-EDA-2006, 2006 WL 3396651 (Pa. Super. Ct. Nov. 27, 2006), U.S. Claims filed a demand for arbitration against Dougherty after he refused to pay a fee to U.S. Claims for advancing him money on his impending uninsured motorist claim. Despite the existence of a written arbitration agreement, Dougherty refused to arbitrate the claim and failed to appear at the arbitration hearing. The arbitrator entered an award in favor of U.S. Claims, and the trial court confirmed the award.
Dougherty did not file a motion to vacate the award within thirty days as required under Pennsylvania law. It was only when U.S. Claims moved to confirm the award two months later that Dougherty challenged the award. His challenge was denied for being untimely.
On appeal, Dougherty alleged a lack of jurisdiction by the arbitrator and several errors of law. The Court held that Dougherty waived those objections based on Pennsylvania’s rule that a petition to vacate or modify an arbitration award is required to preserve the issue on appeal. Challenging the arbitration award for the first time in opposition to a motion to confirm is “procedurally inadequate to preserve claims for judicial review.” Accordingly, the Court held that the trial court properly confirmed the award, as it was required to do.
Turning to the issue of sanctions, the Court found that Dougherty’s appeal presented no colorable basis for finding that the lower court erred by confirming the award. His only two arguments, offered with no support, were that he was denied a hearing and that the arbitration agreement was illegal. The Court reviewed the agreement and found no illegality. Likewise, Dougherty’s voluntary failure to show up for an arbitration hearing did not mean he was denied a hearing. Since Dougherty’s own actions brought about the ex parte hearing, the Court found that his appeal was frivolous and intended to delay payment. The Court remanded the case to the trial court with instructions to award fees and costs to U.S. Claims.
Earlier in the year, several courts, guided by the Eleventh Circuit’s decision in B.L. Harbert International, LLC v. Hercules Steel Co., 441 F.3d 905 (11th Cir. 2006), cracked down on the flood of frivolous arbitration appeals. The Dougherty case should further buttress the finality of arbitration awards by deterring litigants from bringing frivolous arbitration appeals.
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