J-A33022-15
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37
BOULEVARD AUTO GROUP, LLC D/B/A : IN THE SUPERIOR COURT OF
BARBERA’S AUTOLAND, THOMAS J. : PENNSYLVANIA
HESSERT, JR., AND INTERTRUST GCA, :
LLC, :
:
Appellees :
:
v. :
:
EUGENE BARBERA, GARY BARBERA :
ENTERPRISES, INC., AND GARY :
BARBERA, :
:
Appellants : No. 175 EDA 2015
Appeal from the Order Entered December 3, 2014
in the Court of Common Pleas of Philadelphia County
Civil Division at No(s): July Term, 2014, No. 713
BEFORE: FORD ELLIOTT, P.J.E., STABILE, and STRASSBURGER,* JJ.
MEMORANDUM BY STRASSBURGER, J.: FILED FEBRUARY 18, 2016
Eugene Barbera (Eugene), Gary Barbera (Gary), and Gary Barbera
Enterprises, Inc. (the Barbera parties, collectively) appeal from the
December 3, 2014 order that denied in part their petition to compel
arbitration in this case filed against them by Boulevard Auto Group, LLC
d/b/a Barbera’s Autoland, Thomas J. Hessert, Jr., and Intertrust GCA, LLC
(the Boulevard parties, collectively). We reverse that portion of the order
that denied the petition and remand for further proceedings consistent with
this memorandum.
The trial court summarized the background of this case as follows.
* Retired Senior Judge assigned to the Superior Court.
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The parties to the instant appeal are involved in two
related lawsuits, one of which forms the basis for the instant
appeal. On January 19, 2011, Thomas Hessert and Eugene []
formed Boulevard Auto Group. Under Boulevard’s Operating
Agreement, Hessert ow[n]ed 95% of Boulevard and Eugene []
owned 5%. Boulevard was formed to operate the car dealership
that Hessert bought from Gary Barbera Enterprises via an Asset
Purchase Agreement entered into on January 29, 2011.
In conjunction with the Asset Purchase Agreement,
Hessert, Eugene and Gary [] entered into integrated agreements
for Hessert’s purchase of the assets of Gary Barbera Enterprises
and assumption of its liabilities, an Employment Agreement
between Boulevard and Gary [], an Employment and Asset
Repurchase Agreement between Boulevard and Eugene [], and a
Non-competition Covenant between Boulevard and the Barberas
and Gary Barbera Enterprises.
On December 27, 2011, Hessert entered into a Limited
Liability Purchase Agreement with Intertrust GCA, by which
Intertrust OCA acquired a 47.5% interest in Boulevard, leaving
Hessert with a 47.5% interest and Eugene [] with a 5% interest.
On February 16, 2012, Eugene [] attempted to exercise his
option to buy Boulevard Auto under the Employment and Asset
Repurchase Agreement. Boulevard turned down the offer
claiming that [Eugene]’s exercise was made one year too early
under the terms of the contract they entered into in 2011.
Boulevard fired Gary [] on May 8, 2012 for misconduct in
the workplace and allegedly devising a fraudulent scheme to pay
his criminal defense attorney from Boulevard Auto assets.
Hessert also charged that Gary [] improperly used trademarked
material on billboards, and stole inventory. On November 28,
2012, Boulevard notified Eugene [] that his employment contract
would not be renewed but that he could continue on an “at will"
basis. Eugene [] worked as an at will employee until he was
fired on October 9, 2013.
On May 27, 2014 [the Barbera parties] filed a lawsuit
against Hessert alleging that Hessert had breached his
obligations to them under the January 29, 2011 Employment and
Repurchase Agreement.
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The Employment and Repurchase Agreement provides that
“[any] dispute, controversy or claim arising out of or relating to
this agreement ... shall be finally resolved by arbitration.”
[Accordingly, by stipulation of the parties, the case proceeded to
arbitration.]
The Plaintiffs in the [instant] Declaratory Judgment action
are [the Boulevard parties]. The Defendants are [the Barbera
parties]. The Plaintiffs in the Declaratory Judgment action filed a
complaint seeking a declaration that [] Eugene and Gary
Barbera’s firing was justified, that they had failed to disclose all
pending law suits and tax liens to Hessert, that Gary [] had
infringed on Boulevard’s trademark rights with billboards he
erected, and that the Barberas’ use of the Internet domain name
GaryBarberaCares constituted cybersquatting under 15 U.S.C.
1125(d).
The Defendants in the Declaratory Judgment action filed a
motion for a stay and to compel arbitration on August 7, 2014.
After reviewing the parties’ legal briefs and entertaining oral
argument, the lower court denied the motion by order dated
December 2, 2014. This appeal followed.
Trial Court Opinion, 3/19/2015, at 1-3 (citation and footnotes omitted).
Both the Barbera parties and the trial court complied with Pa.R.A.P. 1925.
The Barbera parties present two questions to this Court:
1. Whether the trial court committed an error of law in
finding, in paragraphs 3 and 4 of the court’s December [3], 2014
order, that Counts III-V of the complaint are not within the
broad scope of the arbitration clause in Eugene[’s] employment
and repurchase agreement, because the merits of Counts III-V
of the complaint cannot be reached without resolution of the
arbitrable issue of whether Eugene [] properly exercised his
repurchase option, and this arbitrable issue constitutes a defense
of the Barbera[ parties] to [the Boulevard parties’] claims[.]
2. Whether the trial court committed an error of law in
finding, in Paragraphs 3 and 4 of the court’s December [3], 2014
order, that Counts III-V of the complaint are not within the
broad scope of the arbitration clauses in the Barberas’
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employment agreements, because the Hessert purchase
transaction [] constitutes one single unified transaction, and all
documents evidencing that transaction, including the
employment agreements containing the broad “unlimited”
arbitration clauses, were incorporated into, inter alia, the parties’
asset purchase agreement, such that the arbitration clauses
apply to all claims reaching any aspect of the Hessert purchase
transaction, including Counts III-V of the complaint, which
plainly “relate to” the asset purchase agreement because the
rights asserted are created by and grounded in the asset
purchase agreement.
Barbera Parties’ Brief at 4-5 (unnecessary capitalization and trial court
answers omitted).
Our review of an order refusing to compel arbitration is
[l]imited to determining whether the trial court’s
findings are supported by substantial evidence and
whether the trial court abused its discretion in
denying the petition. Where a party to a civil action
seeks to compel arbitration, a two-part test is
employed. First, the trial court must establish if a
valid agreement to arbitrate exists between the
parties. Second, if the trial court determines such an
agreement exists, it must then ascertain if the
dispute involved is within the scope of the arbitration
provision. If a valid arbitration agreement exists
between the parties, and the plaintiff’s claim is
within the scope of the agreement, the controversy
must be submitted to arbitration.
In making these determinations, courts must bear in mind:
(1) arbitration agreements are to be strictly
construed and not extended by implication; and (2)
when parties have agreed to arbitrate in a clear and
unmistakable manner, every reasonable effort should
be made to favor the agreement unless it may be
said with positive assurance that the arbitration
clause involved is not susceptible to an interpretation
that covers the asserted dispute.
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To resolve this tension, courts should apply the rules of
contractual constructions, adopting an interpretation that gives
paramount importance to the intent of the parties and ascribes
the most reasonable, probable, and natural conduct to the
parties. In interpreting a contract, the ultimate goal is to
ascertain and give effect to the intent of the parties as
reasonably manifested by the language of their written
agreement.
Provenzano v. Ohio Valley Gen. Hosp., 121 A.3d 1085, 1094-95 (Pa.
Super. 2015) (citations and quotation marks omitted).
We first consider whether there is a valid agreement to arbitrate
among these parties. The Boulevard parties attached five agreements to
their complaint: (1) the Boulevard operating agreement; (2) the asset
purchase agreement; (3) Gary’s employment agreement; (4) Eugene’s
employment agreement, which contained the option to re-purchase; and (5)
the covenant not to compete signed by Gary and Eugene. Complaint,
7/9/2014, at Exhibits 1-5.
Of these five contracts, only the employment agreements contain
arbitration provisions. The clauses therein state in relevant part as follows:
“Any dispute, controversy, or claim arising out of or relating to this
Agreement or a breach hereof or thereof, (a ‘Dispute’) shall be finally
resolved by arbitration in accordance with the then-current rules of the
American Arbitration Association.” Id. at Exhibit 3, ¶ 11 and Exhibit 4 at ¶
11.
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The parties to the agreements which contained arbitration provisions
are Gary and Eugene on the one hand, and Boulevard on the other. The
complaint at issue is filed by Boulevard and its two owners, Hessert and
Intertrust, against the Barberas. Thus, the trial court concluded that these
parties have a valid agreement to arbitrate, and we agree.
The real question is whether the claims at issue fall within the scope of
that agreement. The complaint contains five counts. Count I seeks
declaratory judgment that, inter alia, Eugene never validly exercised his
option to repurchase the dealership and that Eugene and Gary were properly
terminated. Complaint 7/9/2014, at 24-25. Count II states that Eugene
and Gary breached the asset purchase agreement by failing to make several
disclosures. Id. at 26. The trial court held that these two claims fell within
the scope of the employment agreements’ arbitration clauses, as being
“substantially related to, intertwined with, and indivisible from one another
and from the claims raised in the pending arbitration proceedings[.]” Order,
12/3/2014, at 1.
Count III avers that Eugene and Gary infringed upon the Boulevard
parties’ ownership interest in registered trademarks such as “Is Barbera the
best? Boy I guess!” and “Barbera Cares” and violated their covenants not to
compete by operating and advertising the website GaryBarberaCares.org.
Complaint, 7/9/2014, at 26-28. Similarly, Count IV is a claim for
cybersquatting based upon Boulevard’s alleged ownership of the above-
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referenced trademarks and the Barbera parties’ use of the
GaryBarberaCares.org domain name. Id. at 29. Count V, stating a claim
under the Unfair Trade Practices and Consumer Protection Law (UTCPCL),
also is based upon the Barbera parties’ use of marks and designations
allegedly owned by Boulevard.
The trial court declined to send Counts III, IV, and V to arbitration.
The trial court’s reasoning for this decision, as expressed in its opinion, is as
follows in its entirety:
In the instant case, Counts III, IV and V of the Declaratory
Judgment action are statutory claims not related to Eugene
Barbera’s Employment and Repurchase Agreement or the
question of whether he properly exercised his option to
repurchase. Therefore, the lower court correctly determined
that the Motion to Stay Proceedings and Compel Arbitration
should be denied.
Trial Court Opinion, 3/19/2015, at 4.
We fail to see how Counts III through V of the complaint are any less
“related to, intertwined with, and indivisible from”1 the issues raised in the
pending arbitration than are the issues raised in Counts I and II. To the
contrary, the Boulevard parties’ claims in these counts are entirely
dependent upon their ownership of the dealership. If Eugene properly
exercised his option to repurchase, then it appears that Eugene, and not
Boulevard, would and should have owned the marks and domain names at
issue in Counts III, IV, and V.
1
Order, 12/3/2014, at 1.
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The arbitration clause in Eugene’s employment contract and
repurchase agreement mandates arbitration of “[a]ny dispute, controversy,
or claim arising out of or relating to this Agreement[.]” Complaint,
7/9/2014, at Exhibit 4 at ¶ 11. Resolution of the claims and controversy
surrounding the ownership of the dealership’s trademarks and internet
domain names relates to Eugene’s purported exercise of his repurchase
option. Accordingly, we hold that the trial court erred in denying in part the
Barbera parties’ motion to stay and to compel arbitration.2 All counts of the
complaint must be arbitrated, and court proceedings with respect to all
counts must be stayed.
Order reversed in part. Case remanded for further proceedings
consistent with this memorandum. Jurisdiction relinquished.
P.J.E. Ford Elliott joined in the memorandum.
Judge Stabile did not participate in the decision of this case.
2
Because we hold that the claims at issue relate to Eugene’s employment
and repurchase agreement, we need not address the Barbera parties’ second
argument on appeal that the arbitration clauses in the employment
agreements were incorporated into the other agreements by virtue of their
constituting a single unified transaction.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/18/2016
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