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When a Pennsylvania state court compels arbitration and one of the parties later returns to the same court seeking modification of the arbitration award, the second party cannot then remove the dispute to federal court, since the petition to modify does not qualify as an “initial pleading” under the federal removal statute. In West v. Zurich American Insurance Co., Senior U.S. District Judge Clifford Scott Green of the Eastern District of Pennsylvania predicted that the Pennsylvania Supreme Court would hold that the Pennsylvania Uniform Arbitration Act was designed as a “unitary framework” so that, when invoked by a party, jurisdiction “rests continually, throughout the controversy, with the court that first substantively deals with any aspect of the controversy.” With that result, Green remanded the suit to the Montgomery County, Pa., Court of Common Pleas. According to court papers, in April 1993, plaintiff Timothy West was involved in a motor vehicle accident. After collecting the policy limits from and settling with the tortfeasor, West requested underinsured motorist benefits under his employer’s policy with Zurich. In February 1997, West demanded arbitration of the UIM claim and appointed an arbitrator. Zurich responded by appointing an arbitrator and, in April 1998, filed a petition to compel arbitration in Montgomery County. In September 2000, the state court appointed the third arbitrator. The arbitration was held in October 2001, and West was awarded $130,000 in UIM benefits. West returned to Montgomery County Court in January 2002 and filed a petition to vacate or modify the arbitration award. In response, Zurich removed the suit to the U.S. District Court for the Eastern District of Pennsylvania. West’s lawyer, Charles J. Weiss of Timony, Knox, Hasson & Weand in Fort Washington, Pa., moved to have the case remanded to Montgomery County, arguing that Zurich’s removal motion was filed far beyond the 30-day limit. Weiss argued that West’s petition to vacate the arbitration award cannot form the basis of removal because it was not the “initial” pleading in the action. Instead, he said, the initial pleading was Zurich’s petition to compel arbitration filed in state court in April 1998. By filing a petition to compel, he argued, Zurich initiated a legal proceeding that could only terminate when the dispute between the parties ended, and was not terminated when the state court granted Zurich’s petition. Weiss argued that his client’s petition to vacate was directly related to, and part of, a continuing controversy which was initiated when Zurich filed its petition to compel arbitration in state court. He also argued that Zurich could not remove the suit since Zurich itself should be considered the “plaintiff” in this continuing controversy as the party that first availed itself of court intervention by filing the petition to compel arbitration in state court. Under the federal removal statute, Weiss said, only a defendant may remove an action. But Zurich’s lawyers — James C. Haggerty and Susanne Tighe of Swartz, Campbell & Detweiler in Philadelphia — argued that West’s petition to vacate qualified as an “initial pleading” because it was based on different legal grounds and sought different relief than Zurich’s original petition to compel arbitration. Since the only relief Zurich sought was to have the state court appoint a neutral arbitrator to participate in the panel, Haggerty and Tighe insisted that Zurich’s petition was “fully adjudicated” once the court did so. Green found that the case presented a question that had not yet been squarely addressed by any court — whether the filing of a petition to vacate an arbitration award should be considered an “initial pleading” under the federal removal statute where the subject arbitration had taken place after a state court compelled arbitration. Green looked to the wording of Pennsylvania’s Uniform Arbitration Act and found that it was “constructed with the understanding that the controversy would continue in a single fashion.” The law, Green found, states that all “subsequent applications to a court shall be made to the court hearing the initial application unless the court otherwise directs.” That language, Green said, “exemplifies the legislature’s contemplation of the unitary nature of the controversy, in that the legislature anticipated that the same court which first considered the controversy should remain in control if the controversy resurfaces further down the line.” Green rejected Zurich’s arguments because “the intention of the act was to cohere the litigation of a controversy, and to treat each arbitration as a single, unitary proceeding.” Instead, Green sided with West and held that his petition to vacate the arbitration award was not the “initial pleading.” “When Zurich filed its petition to compel arbitration in the state court, it freely and independently decided to avail itself of the state court’s jurisdiction and control of the entire arbitration proceedings,” Green wrote. “Zurich could have filed its petition to compel arbitration in federal court. Also, if West had filed the petition to compel arbitration in state court, Zurich could have removed it. But, Zurich cannot at one stage in the arbitration proceedings invoke the jurisdiction of a state court, and then, at a later stage, and for presumably strategic purposes, decide to have the proceedings resolved in federal court,” Green wrote. Allowing such a practice, Green said, “would unfairly benefit such a litigant, who could unilaterally select a forum, then, if the forum seems unfavorable, decide to remove the litigation from that forum. Such a result should not be allowed.” But Green also rejected West’s motion for attorney fees for the cost of seeking remand. “I conclude that Zurich’s removal of this action was in good faith, as it was not in contravention of a settled area of the law, and was not based on a lack of diligence. Although bad faith is not a requisite for assessing fees and costs … I believe that, given the unique facts of this case, such an assessment is inappropriate,” Green wrote.

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