Opinion ID: 610915
Heading Depth: 2
Heading Rank: 1

Heading: Applicability of Landlord Tenant-Law and the Federal

Text: Arbitration Act 37 We now turn to the primary issue on the merits--whether the district court erred in granting the writ of assistance which led to Bared's eviction from the Bolero Building. Bared argues that because it was not a party to the arbitration proceedings between Sharp and ARI which the District Court confirmed and which formed the basis for the District Court's decision to issue the writ of assistance, the writ was improperly issued under Virgin Islands law. More specifically, Bared contends that V.I.Stat.Ann. tit. 28, § 281, which requires actions to recover possession of property to be brought against the party in actual possession, prohibits the eviction of Bared based on an arbitration proceeding to which it was not a party. 38 Sharp responds that § 281 does not apply to arbitration proceedings. Sharp submits that because § 281 is not controlling, under fundamental common law principles, once ARI, the head tenant, lost its legal interest in the property in question as a result of the arbitration award, Bared, the sublessee, no longer had a right to continued possession of the property. 39 We agree with Sharp that Bared's argument is inconsistent with basic principles of landlord-tenant law. As a general matter, it is well-established that a subtenant's interest in real property cannot exceed that of the head tenant because the subtenant's interest in the real property is strictly derivative of that of the head tenant. Normally, then, if a head tenant loses its rights to continued possession of the property in question, so does the subtenant: 40 Since the subtenancy is carved out of the head leasehold, an early termination of the head tenancy should cause the subtenancy to fall in. Anyone taking a subtenancy should be aware of his vulnerability in this respect.... If the landlord exercised a power to terminate an account of the head tenant's breach, this will bring down the subtenancy, too. 41 Roger A. Cunningham, William B. Stoebuck & Dale A. Whitman, The Law of Property § 6.68, at 385 (1984). Thus, to the extent that common law principles of the rights of subtenants inform our analysis here, Bared cannot complain when its rights to continued possession of the Bolero Building ended upon an adverse adjudication of the rights of its sublessor, ARI. 42 These principles might be deemed inapplicable if, for example, there had been a sweetheart deal between ARI and Sharp such that ARI in effect voluntarily surrendered its interests in the property to undermine Bared's portion. However, Bared conceded at oral argument that we are not confronted with such a situation here. 43 In addition, there is nothing in the Federal Arbitration Act, 9 U.S.C. § 1 et seq., which precludes the enforcement of an arbitration clause between a landlord and a head tenant to which the subtenant is not a party. 10 The Federal Arbitration Act states: 44 A written provision in any ... contract evidencing [an intent in] a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 45 9 U.S.C. § 2. 11 There is no provision of the Federal Arbitration Act that suggests that this general policy favoring the enforcement of agreements to arbitrate should be suspended in a situation such as the one before us. 46 In Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), the Supreme Court was faced with a similar situation. In Moses H. Cone there was a dispute between a hospital, a building contractor, and an architect over the construction of additions to the hospital. Although the hospital and the building contractor had entered into a binding agreement to arbitrate, no such agreement existed between the hospital and the architect. The Court rejected the hospital's argument that the arbitration clause should not be enforced because the hospital's related disputes with the architect would have to be resolved through a judicial forum. The Court explained that [u]nder the Federal Arbitration Act, an arbitration agreement must be enforced notwithstanding the presence of other persons who are parties to the underlying dispute but not to the arbitration agreement. Id. at 20, 103 S.Ct. at 939. 47 Similarly, in Barrowclough v. Kidder, Peabody & Co., 752 F.2d 923 (3d Cir.1985), we upheld the enforcement of an arbitration clause between a plaintiff and his former employer, Kidder, Peabody, even though the outcome of the arbitration would affect the tangible interests of other parties to the lawsuit who were not parties to the arbitration agreement. In Barrowclough, the plaintiff, along with his beneficiaries, brought claims under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., against Kidder, Peabody and several of its employees as well as other related defendants, in a dispute concerning payment of a deferred compensation plan for highly compensated employees. We rejected the plaintiffs' argument that the arbitration clause between the former employee and Kidder, Peabody should not be enforced because the other plaintiffs and defendants in the litigation were not parties to the arbitration agreement. See id. at 938. We explained that [s]ince the non-parties to this arbitration agreement have related and congruent interests with the principals to the litigation, we would uphold the district court's decision to enforce the arbitration clause. Id. See also Cecil's Inc. v. Morris Mechanical Enters., Inc., 735 F.2d 437, 439 (11th Cir.1984) (enforcing indemnification agreement between general contractor and subcontractor even though the underlying liability was determined by arbitration to which subcontractor not a party); In re Oil Spill by the Amoco Cadiz, 659 F.2d 789, 795-96 (7th Cir.1981) (binding plaintiff to outcome of arbitration between its principal and the defendant even though plaintiff would be a non-party to arbitration proceedings). 48 Applying Barrowclough's logic here, because Bared's and ARI's interests are directly related, if not in fact congruent, it can fairly be assumed that within the arbitration proceedings ARI advanced arguments protective of Bared's interests. There is, therefore, no reason to conclude that the Federal Arbitration Act's overarching policy favoring the enforcement of arbitration awards does not apply to this case.