Cayla Kubiak v. Canon McMillan School, et al

Filing

NOT PRECEDENTIAL OPINION Coram: GREENAWAY JR., SHWARTZ and GREENBERG, Circuit Judges. Total Pages: 13. Judge: GREENBERG Authoring.

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Date Filed: 06/06/2017

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 16-3273
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CAYLA KUBIAK
v.
CANON MCMILLAN SCHOOL DISTRICT;
DR. NICK BAYAT, in his individual and official capacity
as Superintendent of the Canon McMillan School District;
STEVE MOSKAL, in his individual and official capacity
as varsity softball coach of Canon McMillan School District;
MICHELE MOELLER, in her individual and official capacity
as softball coach of Canon McMillan High School Varsity Team;
LINDA NICHOLS, in her capacity of Principal of Canon McMillan High School
Canon McMillan School District; Dr. Nick Bayat, In his
individual and official capacity as Superintendent of the Canon
McMillan School District; Michele Moeller, in her individual
and official capacity as softball coach of Canon McMillan High
School Varsity Team; Linda Nichols, in her capacity of Principal
of Canon McMillan High School,
Appellants
______________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civ. No. 2-14-cv-00322)
Honorable Arthur J. Schwab, District Judge
______________
Argued March 15, 2017
BEFORE: GREENAWAY, JR., SHWARTZ, and GREENBERG, Circuit Judges
(Filed: June 6, 2017)

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Susan T. Roberts (Argued)
Peacock Keller & Ecker
70 East Beau Street
Washington, PA 15301
Attorneys for Appellants
James R. Jeffries (Argued)
30 South Main Street
Suite 102
Washington, PA 15301
Attorney for Appellee
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OPINION*
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GREENBERG, Circuit Judge.
I. INTRODUCTION
Defendants-appellants Canon McMillan School District, Dr. Nick Bayat, Michele
Moeller, and Linda Nichols appeal from a District Court order enforcing an arbitration
agreement entered into by defendants and plaintiff Cayla Kubiak. The dispute centers on
a purported “high-low” provision that Kubiak claims but defendants deny was included in
the arbitration agreement. Inasmuch as the parties tentatively agreed at a case
management conference in the District Court to submit the dispute between them to
arbitration, the Court prepared, though it did not file, an order dated May 7, 2014, for that
___________________
*This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.

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purpose. Subsequently the parties exchanged correspondence indicating that they would
agree on the parameters of a high-low provision for the arbitration at a mediation session
to be held on June 12, 2014, prior to the arbitration. Yet there is no suggestion in the
record that the parties ever executed an agreement setting forth the parameters of a highlow agreement. The mediation was conducted but was not successful as the parties did
not settle the case at that session.
The case proceeded to arbitration after the mediation failed. The parties moved
for summary judgment in the arbitration proceedings and the arbitrator found in
defendants’ favor on liability in a written opinion dated June 5, 2016. The arbitrator
therefore did not make a monetary or other award to Kubiak. Kubiak then filed a motion
in the District Court to enforce the arbitration agreement which she contended included a
high-low provision. She argued that she was entitled to $50,000, the “low” amount in the
high-low agreement to which she claims that the parties had agreed at the mediation
proceedings. The District Court granted her motion by order dated July 5, 2016, as it
held that the parties had agreed on a $1 million/$50,000 high-low provision and that
Kubiak therefore was entitled to the $50,000. Defendants appeal as they claim that the
parties never entered into an enforceable high-low agreement and the Court erred in
requiring them to pay $50,000 to Kubiak in the face of the arbitrator’s determination that
they were not liable to her.
For the reasons that follow, we will reverse the District Court’s July 5, 2016 order
and will remand the case to that Court to conduct an evidentiary hearing following which
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the Court should determine whether the parties entered into an enforceable high-low
agreement with specific parameters at the mediation session and, if they did, whether
Kubiak is entitled to recover the low amount even though the arbitrator found in
defendants’ favor on the liability issue.

II. FACTUAL AND PROCEDURAL BACKGROUND
Kubiak initiated this action in a state court but defendants removed the case to the
District Court. In her complaint, Kubiak alleged that she was entitled to damages
because she was the victim of an act of sexual contact while a student at the Canon
McMillan Middle School.1 At the District Court case management conference on April
28, 2014, the parties discussed the possibility of referring the case to binding arbitration
for resolution. Consequently, the Court prepared the draft preliminary order to which we
have made reference sending the case to arbitration.
In their negotiations prior to the mediation session the parties discussed the
possibility of entering into a “high-low” agreement confining the scope of any arbitration
award to an amount between the outside limits on which the parties would agree. See

We have no need to describe the details of Kubiak’s claim. We note that originally
there was an additional defendant but he was dismissed from the case before the case was
removed to the District Court. Though the name of the school district suggests that it
may be an ecclesiastical institution, in her complaint Kubiak pleaded that Canon
McMillan School District is “a political subdivision” in Pennsylvania and the Canon
McMillan Middle School is “a public educational institution.”
1

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app’x at 22-26.2 On May 14, 2014, defendant’s attorney sent an email to Kubiak’s
attorney informing him that the $1 million high damages amount identified as Kubiak’s
demand in her initial disclosures was a “non-starter for the District.” Id. at 22. The email
then recited that the “School District cannot agree to binding arbitration unless the
damages phase of the arbitration is done as a high/low award and the high/low range can
be agreed upon at the mediation.” Id.
Defendants’ counsel next proposed updating the language of the previously
drafted May 7, 2014 preliminary order referring the case to arbitration by adding a
provision reciting that there would be a high-low agreement but without including its
parameters. Id. at 23. The parties through counsel stipulated to the order which they
submitted to the District Court. The Court subsequently submitted the case to binding
arbitration by an order dated May 16, 2014, which supplemented its May 7, 2014 order
with the following provision:
The parties agree that the case will be submitted to the arbitrator as a highlow arbitration and the details of the high-low maximum and minimum
amounts will be discussed and agreed upon at the June 12, 2014 mediation .
. . . The parties further agree that the [d]efendants retain the right to
contest liability at the arbitration.
Id. at 29-30. In what has proven to be a crucial aspect of this case, the May 16, 2014
order did not specify the high-low parameters.
The parties engaged in the mediation on June 12, 2014, but they did not agree on a
Kubiak objects to the inclusion of the parties’ communications such as their emails as
part of the appellate record. See appellee’s br. at 13. But, as defendants note, the parties’
communications were exhibits appended to the motion papers in the District Court and
therefore are part of the record on appeal. See Fed. R. App. P. 10(a)(1).
2

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settlement of the case or provide for the preparation of a document setting forth high-low
parameters. Nevertheless, Kubiak claims that they reached an agreement on the high-low
parameters at the mediation. Defendants have a different view of what happened at the
mediation. They claim that during the mediation, Kubiak’s counsel proposed several
settlement amounts, but never proposed a settlement figure of $1 million. On the other
hand they assert that they offered to settle the case for $50,000, but that Kubiak rejected
the offer. Appellants’ br. at 11. Defendants also assert that the parties did not agree on
the parameters of a high-low agreement so that the parties decided to submit the case to
the arbitrator without high-low parameters. Id. at 11-12. Defendants further claim that
the parties agreed that the arbitrator would have to find defendants liable before the
arbitrator could award any damages against them to Kubiak. Id. at 12. Kubiak rejects
this assertion and, as we have indicated, contends that the parties agreed to a high-low
agreement with specified parameters so that even if there was a finding on liability
against her, she would be entitled to $50,000. Defendants maintain that “[b]ecause the
case was administratively closed, it did not occur to anyone, including . . . the mediator
and counsel for the parties, that they would need to return to [the District Court] to
request permission to proceed without a high-low.” Id.
Following the unsuccessful mediation, the parties communicated with the
arbitrator prior to the arbitration date because the arbitration had not been canceled. In
particular, defense counsel sent a letter to the arbitrator on June 20, 2014, with a copy to
Kubiak’s counsel, indicating that the mediation had failed and that the parties were
proceeding toward arbitration. See app’x at 33-34. Defense counsel included the
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following provision in the June 20, 2014 letter:
We have now agreed that the case will not be submitted as a high-low since
the parties were significantly far apart in their settlement positions at the
close of the mediation. Instead, the case is to be submitted to you without a
high-low parameter, and [d]efendants have retained the right to contest
liability. In addition, both parties have agreed that each may file a Motion
for Summary Judgment if deemed necessary.
Id. at 33. Defendants claim that Kubiak’s counsel did not reject defendants’ version of
the parties’ positions with respect to the high-low agreement after defendants’ counsel
sent the June 20, 2014 letter to the arbitrator. Moreover, defendants contend that the
parties did not discuss reaching a high-low agreement after their counsel sent the June 20,
2014 letter. Appellants’ br. at 14. Defendants apparently want us to draw an inference
from this contention that the parties had abandoned the possibility of reaching a high-low
agreement.
The arbitration then was conducted. In the proceedings the parties moved for
summary judgment and on June 5, 2016, the arbitrator found in favor of defendants
because he concluded that they were not liable on any of Kubiak’s claims. App’x at 4151. On June 14, 2016, after Kubiak requested that the arbitrator clarify his decision, he
explained that he had granted summary judgment to defendants on all of Kubiak’s claims,
including those against defendants sued in their individual capacities. Id. at 59-60. The
arbitrator’s decision did not mention any high-low parameters or indicate that Kubiak
was entitled to a damages award despite the negative liability finding that he had made.
Id. at 41-51, 59-60.
Though the result of the arbitration was against her, Kubiak filed a motion with
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the District Court seeking an order enforcing the Court’s May 16, 2014 order, in
particular relying on the language in the order referring to a high-low agreement. In her
motion, Kubiak claimed that she was entitled to $50,000 because that was the “low”
amount on which the parties had agreed at the mediation prior to the arbitration. Id. at
52-58. On July 5, 2016, the Court granted the motion without holding an evidentiary
hearing as it held that the arbitration agreement was enforceable as a high-low agreement
notwithstanding the arbitrator’s negative liability determination. The Court also held that
the high-low parameters were $1 million and $50,000 and thus defendants were liable to
Kubiak for $50,000. Id. at 5-8.
In its opinion, the District Court stated that defendants never moved to “modify or
alter the terms of the [May 16, 2014] Order of the Court setting forth the terms of the
arbitration with a high-low agreement.” Id. at 6. In these circumstances, the Court
concluded that defendants had “waived the right to . . . argue” that the terms of the
agreement into which the Court believed that they had entered had changed. Id. The
Court then concluded that its May 16, 2014 order was enforceable as a high-low
agreement. Id. at 7.
In addressing the high-low agreement’s terms, the District Court explained that
Kubiak’s position was that the high-low parameters were $50,000 on the low end and $1
million on the high end. Id. at 7-8. But Kubiak does not point to any place in the record
at which defendants whether orally or in writing explicitly agreed to $1 million/$50,000
high-low arbitration parameters. Moreover, the Court, well aware of the June 20, 2014
letter that defendants had sent to the arbitrator before the arbitration, acknowledged that
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defendants’ position was that the parties had not agreed to submit the case to the
arbitrator on a high-low basis because the parties were too far apart in their numbers. Id.
at 7.
But the District Court concluded that defendants’ counsel’s June 20, 2014 letter to
the arbitrator was not conclusive, even though defendants had sent a copy of that letter to
Kubiak’s counsel, because Kubiak’s counsel had not signed the copy. Therefore, the
Court believed that the letter did not show that the parties had modified what the Court
was satisfied was their earlier agreement on the terms of a high-low arbitration. Id. The
Court found that “if Defendants sought a different arrangement, Defendants were
required to Petition the Court to modify” the May 16, 2014 order. Id. Thus, the Court
relied on Kubiak’s specification of the high-low amounts to find that defendants were
liable to her for $50,000 because it found that $50,000 was the agreed-upon “low”
amount. Id. at 7-8.

III. STATEMENT OF JURISDICTION AND STANDARD OF REVIEW
The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1367, and 1446.
In this regard, we point out that Kubiak asserted a claim under 42 U.S.C. § 1983, thus
advancing a federal issue. We have jurisdiction under 28 U.S.C. § 1291 because the
Court’s July 5, 2016 decision constituted a final order.
We are exercising plenary review over the District Court’s decision regarding the
enforcement of the parties’ purported high-low arbitration agreement. See Edwards v.
HOVENSA, LLC, 497 F.3d 355, 357 (3d Cir. 2007). But we review the Court’s
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underlying factual findings for clear error. Id.

IV. DISCUSSION
Defendants argue that the District Court erred in enforcing the purported high-low
provision of the parties’ agreement to submit the dispute to binding arbitration because
what they contend was the lack of explicit high-low monetary parameters is a fatal
omission to its enforcement inasmuch as those terms were “material” to the terms of the
high-low agreement. Defendants argue that at most the high-low portion of the order
summarized an agreement to come to an agreement for high-low arbitration parameters at
the mediation. But Kubiak rejects this position and maintains that the Court properly
found that the parties reached an agreement to include $1 million/$50,000 high-low
parameters to be applicable at the arbitration.
Kubiak did not challenge the arbitrator’s finding on liability in the District Court
nor does she do so here. Furthermore, she does not claim that the case should not have
been submitted to arbitration. Accordingly, the only question before us is whether the
District Court erred in finding that the parties’ agreement to submit the case to arbitration
for resolution included a high-low agreement with specific parameters.
The parties concur that their agreement to arbitrate was a settlement agreement.
Accordingly, the enforceability of their agreement is dependent on basic contract
principles. See AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648,
106 S.Ct. 1415, 1418 (1986) (“[A]rbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed so to submit.”)
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(internal quotation marks omitted). Under Pennsylvania law,3 “[a]s with any contract,” in
a settlement agreement “the minds of the parties should meet upon all the terms” of the
contract. Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999) (internal quotation marks
omitted).
Defendants point out that “it is axiomatic that in order for a binding contract to
exist, the parties must have reached an agreement on the material terms.” Appellants’ br.
at 25. They characterize the language in the District Court’s May 16, 2014 order as “a
record of the parties’ tentative agreement” to proceed with a high-low provision that
nevertheless lacked “the specific terms in order to give it legal effect.” Id. at 26.
Defendants argue that to be enforceable, the high-low provision must have included the
high-low parameters but the purported agreement is not enforceable because it does not
reflect that the parties came to a “meeting of the minds” on the parameters of a high-low
provision. Id. at 27. Kubiak rejects this contention and maintains that the Court properly
determined the scope of the parties’ agreement.
The only legal authority that the District Court cited for its conclusion that the
parties agreed to be bound by $1 million/$50,000 high-low parameters, regardless of the
outcome of the arbitration on liability, was a district court opinion indicating that an
agreement to submit to binding high-low arbitration is generally a form of settlement
agreement. See app’x at 7 n.2. Here, the Court predicated its enforcement of the
purported high-low provision on what it believed was defendants’ “waiver” of the

3

The parties have relied on Pennsylvania contract law in this case and thus we will as
well. See appellants’ reply br. at 12, appellee’s br. at 8, 19.
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argument that there was not an enforceable agreement because defendants did not file any
document with the Court indicating that the parties’ understanding of the high-low
provision had changed after May 16, 2014, when the Court submitted the case to
arbitration. Id. at 6-7.
The District Court reached its result even though its May 16, 2014 order did not
include the key material terms of a high-low agreement. We come to the inescapable
conclusion that the parties did not agree on the parameters of a high-low agreement by
the time that the Court issued its May 16, 2014 order because the order specified that “the
details of the high-low maximum and minimum amounts will be discussed and agreed
upon at the June 12, 2014 mediation.” Id. at 29-30. Therefore, the May 16, 2014 order
could not have reflected the parties’ “meeting of the minds” on the parameters of a highlow agreement.
It is clear that, contrary to what the District Court thought, defendants did not
“waive” their lack of enforceability argument by not filing any follow-up documentation
with the District Court after the Court entered its May 16, 2014 order inasmuch as the
high-low provision in that order did not include its essential terms and the parties merely
had agreed to proceed to binding arbitration. We cannot enforce a provision missing
essential terms and the District Court should not have done so either. Therefore, the
Court should not have attempted to enforce the purported high-low provision in its May
16, 2014 order because there was no agreement to enforce.
Notwithstanding our foregoing analysis there is another aspect of this case.
Kubiak claims that the parties reached an agreement at the June 12, 2014 mediation
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session for high-low arbitration with $1 million and $50,000 parameters. On the other
hand, defendants deny that the parties reached a high-low agreement at that session. We
are satisfied that this dispute of fact cannot be resolved on the record that was before the
District Court and now is before us. In this regard we point out that we have held in the
context of settlement enforcement that “[w]hen relief from a judgment hinges upon a
factual issue and credibility determinations are involved, a hearing should be held to
determine entitlement to relief.” Tiernan v. Devoe, 923 F.2d 1024, 1031 (3d Cir. 1991)
(quoting Garabedian v. Allstates Eng’g Co., Div. of Allstates Design & Dev. Co., 811
F.2d 802, 803 (3d Cir. 1987) (internal quotation marks omitted)). Accordingly, the
District Court should hold an evidentiary hearing to resolve the question of whether the
parties reached an enforceable high-low agreement at the mediation session. Therefore,
we will remand the case to the District Court to hold that hearing and if it concludes that
the parties reached an agreement with respect to the parameters of a high-low agreement
at the mediation session to determine the agreed upon parameters of a high-low
agreement and, if they agreed on such parameters, whether Kubiak is entitled to the low
end recovery even though the arbitrator found that defendants were not liable.

V. CONCLUSION
For the foregoing reasons, we will reverse the District Court’s July 5, 2016 order
granting plaintiff’s motion to enforce a purported high-low provision in the parties’
stipulated agreement to arbitrate and will remand this case to the District Court to
conduct an evidentiary hearing for the purposes we set forth above.
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