Court Opinion

ID: 3178688
Source: CourtListenerOpinion
Date Created: 2016-02-18 22:24:47.256591+00
Date Added: 2024-06-11T14:18:57.858529
License: Public Domain

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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37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.
J-A33022-15

           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.

                                  -2-
J-A33022-15

           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’

                                    -3-
J-A33022-15

     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.

                                     -4-
J-A33022-15

      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.

                                    -5-
J-A33022-15

     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-

                                    -6-
J-A33022-15

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.

                                      -7-
J-A33022-15

      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.

                                        -8-
J-A33022-15

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/18/2016

                          -9-