Court Opinion

ID: 4108138
Source: CourtListenerOpinion
Date Created: 2016-12-16 20:11:22.977283+00
Date Added: 2024-06-11T14:37:33.665174
License: Public Domain

J-A28021-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

RITTENHOUSE 1603, LLC,                                IN THE SUPERIOR COURT OF
                                                            PENNSYLVANIA
                            Appellee

                       v.

EUGENE BARBERA,

                            Appellant                     No. 2068 EDA 2015

                  Appeal from the Order Entered June 19, 2015
              In the Court of Common Pleas of Philadelphia County
              Civil Division at No(s): 00080 December Term, 2014

BEFORE: PANELLA, SHOGAN, and PLATT,* JJ.

MEMORANDUM BY SHOGAN, J.:                             FILED DECEMBER 16, 2016

       Eugene Barbera, Appellant, appeals from the order denying his motion

to transfer the underlying litigation to arbitration. We affirm.

       Appellant     and     Lewis     Katz    created   Rittenhouse   1603,   LLC

(“Rittenhouse”) in order to purchase a condominium at 202-10 Rittenhouse

Square, Unit 1603, in Philadelphia.            Lewis Katz contributed $235,000 for

four, Class A voting units and the role of manager; Appellant contributed $1

for one Class B non-voting unit. Pursuant to section 10.02 of Rittenhouse’s

Operating Agreement, any dispute among the parties or between a member

and the manager, whether arising under the Operating Agreement or

____________________________________________

*
    Retired Senior Judge assigned to the Superior Court.
J-A28021-16

otherwise, had to be settled by Judicial Arbitration and Mediation Services,

Inc. (“JAMS”). Operating Agreement, 3/13/13, at § 10.02.

      On December 12, 2013, Appellant assigned his Class B non-voting unit

in Rittenhouse to Lewis Katz.    That same day, Rittenhouse and Appellant

entered into an Occupancy Agreement, whereby Rittenhouse granted

Appellant the right to live in Unit 1603 from December 23, 2013, until thirty

days after written notice of termination. The occupancy was “at will” and did

not create a landlord-tenant relationship.

      Lewis Katz died on May 31, 2014.          His son, Drew Katz, became

manager of Rittenhouse.     In a letter dated August 19, 2014, Drew Katz

informed Appellant    that Rittenhouse       was terminating   the   Occupancy

Agreement and, pursuant to its provisions, directed Appellant to vacate Unit

1603 within thirty days. Appellant failed to vacate Unit 1603 and remains in

possession.

      Rittenhouse filed an action against Appellant for possession of Unit

1603 in Philadelphia Municipal Court and prevailed.     Judgment, 11/21/14.

Appellant filed an appeal to the Philadelphia Court of Common Pleas and a

praecipe for Rittenhouse to file a complaint. Rittenhouse filed a five-count

complaint on December 15, 2014, seeking damages and possession of Unit

1603 based on Appellant’s breach of the Occupancy Agreement, ejectment,

trespass, and unjust enrichment.       Rittenhouse also filed a motion for

preliminary injunctive relief on December 15, 2014. Appellant responded on

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December 23, 2014, with a brief in opposition.              Following a hearing on

January 15, 2015, the trial court denied injunctive relief and granted

Appellant a supersedeas that allowed him to remain in Unit 1603 while

paying money into escrow and providing insurance documents.                      Order,

2/3/15.

      Beginning on January 30, 2015, a volley of preliminary objections

ensued.     Eventually, the trial court sustained Appellant’s preliminary

objection to Rittenhouse’s trespass count.           Order, 4/20/15.         As for the

remaining counts, Appellant argued that the Occupancy Agreement attached

as an exhibit to Rittenhouse’s complaint did not contain valid signatures.

The trial court overruled the objection, noting that Appellant’s argument

could be raised as new matter. Id.

      Appellant filed an answer and new matter on May 7, 2015, raising

standard defenses. Rittenhouse filed a reply to the new matter on May 22,

2015, and a motion to quash Appellant’s notice to attend the upcoming trial.

Less than one hour before trial on May 28, 2015, Appellant filed a response

to Rittenhouse’s motion to quash and a motion to transfer the matter,

raising   the   arbitration   provision   in    section   10.02   of   the    Operating

Agreement. After hearing from one witness presented by Rittenhouse, the

trial court continued the trial to address the arbitration issue, allowing

Rittenhouse to file a response to the motion to transfer, which it did on June

16, 2015. The trial court denied the motion to transfer on June 19, 2015,

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finding the issue waived and, alternatively, the arbitration provision

inapplicable.

       Appellant filed the instant appeal on July 7, 2015.1         He raises one

question for our review:        “Did the trial court err by failing to transfer the

matter to JAMS arbitration pursuant to the Parties’ agreement?” Appellant’s

Brief at 4.

       Whether a dispute falls within the purview of a contractual arbitration

provision is a question of law.         McNulty v. H&R Block, Inc., 843 A.2e

1267, 1272 (Pa. Super. 2004). In answering this question, courts engage in

a two-step inquiry: (1) does a valid agreement to arbitrate exist; (2) is the

dispute within the scope of the agreement.          Id.   “[A]bsent an agreement

between the parties to arbitrate an issue, they cannot be compelled to

arbitration.”   PBS Coal, Inc. v. Hardhat Min., Inc., 632 A.2d 903, 905

(Pa. Super. 1993).

       Appellant argues that the Operating Agreement and its arbitration

provision control the outcome of this case.           Appellant’s Brief at 14–21.

Notably, Appellant makes no argument regarding the Occupancy Agreement,

which does not have an arbitration provision.

       In contrast, the trial court concluded that the Occupancy Agreement

controls the outcome of this dispute:

____________________________________________

1
    Appellant and the trial court have complied with Pa.R.A.P. 1925.

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     No relief sought by [Rittenhouse] is based on a breach of the
     Operating Agreement. Rather, the five count complaint seeks
     damages and possession of Unit 1603 based on the alleged
     breach of the Occupancy Agreement, as well as the common law
     legal theories of ejectment, trespass and unjust enrichment.

                                   * * *

     Section 10.02 of the Operating Agreement is inapplicable.
     [Appellant] was a Class B Nonvoting Member of [Rittenhouse]
     from March 13, 2013, the effective date of the Operating
     Agreement, until December 12, 2013, when [Appellant]
     absolutely and irrevocably assigned, transferred and set over his
     membership interest in [Rittenhouse] to Lewis Katz. [Appellant]
     argues that the absolute assignment of his member interest to
     [Rittenhouse] was not effective because Lewis Katz “never
     issued prior consent to the Purported Assignment.”           See
     Paragraph 4 of [Appellant’s] motion to transfer. In support of
     his argument, [Appellant] relies on Section 7.02 of the Operating
     Agreement which provides that “with the prior written consent of
     the manager, any Class B Nonvoting Member may, at any time
     or times, transfer Class B Nonvoting Units (a) to any other
     member, (b) to any Affiliate of a member, or (c) to the
     Company.”

            The court appreciates the need for Lewis Katz to provide
     written consent if [Appellant] wanted to transfer his Class B
     Nonvoting Unit to someone other than Lewis Katz. There is no
     logical or legal basis to hold that the transfer from [Appellant] to
     Lewis Katz was not effective because Lewis Katz did not issue his
     prior written consent to the transfer. Additionally, section 7.08
     of the Operating Agreement provides that Lewis Katz, as “the
     Initial Class A Member shall have the right, but not the
     obligation, to repurchase all of the Class B Nonvoting Units from
     any Class B Nonvoting Member at anytime for one Dollar.”
     Section 7.08 does not require any prior written consent. The
     December 12, 2013 Absolute Assignment of Membership Interest
     refers to Section 7.08 and Lewis Katz obtained [Appellant’s]
     Class B Nonvoting Unit from [Appellant] for one dollar.

           Therefore, after December 12, 2013, [Appellant] no longer
     was a member of [Rittenhouse]. As of December 12, 2013, the
     only member of [Rittenhouse] was Lewis Katz. Section 10.02 of
     the Operating Agreement requires negotiation and arbitration

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      “(1) in the event of any dispute among the parties hereto arising
      under this Agreement or (2) in the event of any dispute between
      a member and the Manager whether arising under this
      Agreement or otherwise.” Since [Appellant] ceased being a
      party or member as of December 12, 2013, Section 10.02 is
      inapplicable.

              The Occupancy Agreement is the central and controlling
      agreement in this case. Unlike the Operating Agreement, the
      Occupancy Agreement does not contain any negotiation and
      arbitration clause. Even if [Appellant] remained a member of
      [Rittenhouse] or a party to the Operating Agreement after Lewis
      Katz and he entered into the December 12, 2013 Absolute
      Assignment of Membership Interest, the current dispute is not
      one “arising under this Operating Agreement.” As noted above,
      it is a dispute arising under the Occupancy Agreement.

            Section 10.02 of the Operating Agreement also provides
      for negotiation and arbitration in the event of a dispute between
      a member and the manager “whether arising under this
      Operating Agreement or otherwise.” While the inclusion of “or
      otherwise” makes the scope of the covered dispute broader, it
      does not include the present dispute. Even if the court assumes
      that [Appellant] continues to be a member, the present dispute
      is not with the manager.           Rather, the dispute is with
      [Rittenhouse] over whether or not [Appellant] has any lawful
      right to occupy Unit 1603 under the terms of the Occupancy
      Agreement. [Rittenhouse] and not its manager is the owner of
      Unit 1603.

Trial Court Opinion, 3/9/16, at 3, 5–6.

      Upon review, we agree with the trial court that Appellant’s refusal to

vacate Unit 1603 falls squarely under the Occupancy Agreement.            In

compliance therewith, Rittenhouse sent Appellant a thirty-day notice of

termination.   Appellant refused to vacate Unit 1603, which constitutes a

breach of the Occupancy Agreement. Contrary to Appellant’s arguments, his

status under the Operating Agreement does not control the outcome of this

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matter. Therefore, we discern no error in the trial court’s refusal to transfer

the underlying litigation to JAMS.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/16/2016

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