Court Opinion

ID: 3178092
Source: CourtListenerOpinion
Date Created: 2016-02-17 22:25:00.649072+00
Date Added: 2024-06-11T14:36:41.248174
License: Public Domain

J-A34006-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JEFFREY AMSLER, KAREN AMSLER, AND             IN THE SUPERIOR COURT OF
KATHRYN CORRIGAN                                    PENNSYLVANIA

                        Appellees

                   v.

ORCHARD HOUSE PROPERTIES LLC,
FRED R. AMSLER JR., FRED R. AMSLER
JR. LIVING TRUST, DONNA J. AMER, AND
CAMBRIDGE TRAINING PARTNERS L.P.

                        Appellants                 No. 1029 MDA 2015

                    Appeal from the Order May 14, 2015
              In the Court of Common Pleas of Sullivan County
                    Civil Division at No(s): 2013-CV-253

BEFORE: PANELLA, J., OTT, J., and JENKINS, J.

MEMORANDUM BY PANELLA, J.                      FILED FEBRUARY 17, 2016

     Appellants, Orchard House Properties LLC, Fred R. Amsler Jr., Fred R.

Amsler Jr. Living Trust, Donna J. Amer, and Cambridge Training Partners

L.P., appeal from the order entered May 14, 2015, in the Court of Common

Pleas of Sullivan County, which denied their preliminary objection to compel

arbitration. We vacate and remand this case for further proceedings.

      By way of background, Appellant Fred R. Amsler is the father of

Appellees, Jeffrey Amsler and Karen Amsler. In 2010, Fred Amsler divorced

the siblings’ mother, Ilene Amsler, after more than 50 years of marriage.

Appellant Donna J. Amer is the purported paramour of Fred R. Amsler. The

entities at issue, Orchard House Properties, LLC and Cambridge Training
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Partners, L.P., were formed to own and control various assets and income

belonging to Fred R. Amsler. The trial court summarized the relevant details

of this internecine familial dispute as follows.

      A. The  Orchard        House      Properties,   LLC    Operating
         Agreement

            On or about November 21, 2002, Orchard House
      Properties, LLC was organized and established as a Nevada
      limited liability company. An Operating Agreement was prepared
      on November 5, 2002 establishing and delineating the company
      purpose, scope, company interests, management, members,
      applicable law, venue, etc. Said agreement was signed by the
      following members with their signatures witnessed: Karen M.
      Amsler, Kathryn A. Corrigan, Patricia M. Becknell and Jeffrey S.
      Amsler. Exhibit A of the Operating Agreement set forth that
      these four (4) members were listed with a capital percentage of
      twenty five percent (25%) each and capital contributions of Ten
      Dollars ($10.00) each.

             On November 29, 2002[,] Jeffrey S. Amsler signed a
      Certificate of Acknowledgement, wherein he acknowledged and
      accepted his appointment as President of Orchard House
      Properties, LLC and assented to “all provisions and stipulations
      as herein imposed and expressed in the foregoing Limited
      Liability Company Agreement.” Jeffrey S. Amsler’s signature was
      witnessed and notarized. On or about November 29, 2002[,]
      Karen M. Amsler signed a Certificate of Acknowledgement,
      wherein she acknowledged and assented to “all provisions and
      stipulations as herein imposed and expressed in the foregoing
      Limited Liability Company Agreement.” Karen M. Amsler’s
      signature is witnessed and notarized.

             Article one Section 1.10 of the Operating Agreement states
      “[v]enue for any dispute arising under this Operating Agreement
      or any disputes among any members or the Limited Liability
      Company shall be in the county of the Registered Office of the
      Limited Liability Company.” See, Operating Agreement, p.6.
      Article 1.07 states “the registered office of the Limited Liability
      Company is 250 S. Center Street, Suite 500, Reno, Nevada
      89501.”

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           Orchard House Properties, LLC held annual meetings in
     accordance with the Operating Agreement wherein all officers
     were present, the officers attended to the Limited Liability
     Company’s business as delineated in the Operating Agreement
     for approximately eleven (11) years until [Appellees] instituted
     the instant action.

     B. The Cambridge Trading Partners Limited Partnership

            On or about October 15, 1991[, an] Agreement of Limited
     Partnership [for] Cambridge Trading Partners was executed
     among Fred. R. Amsler as General Partner and Fred R. Amsler
     and Ilene A. Amsler each as a Limited Partner. On or about
     November 5, 2002, an Amendment and Restatement was
     executed in accordance with the Nevada Limited Partnership Act
     “for purpose of forming and continuing a limited partnership (the
     “Partnership”) in accordance with the provisions of the Nevada
     Limited Partnership Act (the “Act”) and set forth by Fred R.
     Amsler, as the General Partner and, the Fred R. Amsler Trust
     and the Ilene A. Amsler Trust as Limited Partners.[”] (P.1 of
     Cambridge Trading Partners Amendment and Restatement). The
     Amended Restatement Agreement of Limited partnership (the
     “Agreement”) consists of twenty[-]nine (29) provisions related to
     the formation, scope, objective, partnership duties and
     responsibilities. (See Paragraph 23, Misc. C). The Arbitration of
     Disputes [provision] states “[a]ny dispute arising out of or in
     connection with this Agreement, if not settled by mediation, shall
     be settled by arbitration in accordance with the Commercial
     Arbitration Rules of the American Arbitration Association, and
     any decision rendered in such arbitration shall have the same
     effect as if made by a court having proper jurisdiction.” (P. 55 of
     the Agreement).

           On or about October 18, 2010[,] an Assignment of fifty
     percent (50%) of limited partnership interests held by the Ilene
     A. Amsler Trust were assigned to the Fred R. Amsler Trust. The
     Trustees of the Fred R. Amsler Trust then desired to assign five
     percent (5%) of the limited partnership interests to Jeffrey S.
     Amsler. On or about November 9, 2009[,] at the Annual Meeting
     of the Members of the Cambridge Training Partners, LP, the
     limited partners desired to transfer interests in Cambridge
     Trading Partners, LP to reflect the above assignments. Members
     Fred R. Amsler, Jeffrey S. Amsler and Ilene A. Amsler were
     present at said meeting. At this Annual Meeting of the members
     of the Cambridge Trading Partners, LLC the resolution was

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     adopted which confirmed “that on May 29, 2010, Ilene A. Amsler
     transferred her 50% (fifty percent) Limited Partnership interest
     to Fred R. Amsler, Jr. Following the transfer on the same date,
     Fred R. Amsler, Jr. transferred 41% (forty[-]one percent) of his
     Limited Partnership interest to the Fred R. Amsler, Jr. Trust and
     5% (five percent) of his Limited Partnership [interest] to Jeffrey
     S. Amsler.” See, Minutes of the 2010 Meeting of the Members.
     Members Fred R. Amsler, Jr. and Jeffrey S. Amsler were present
     at the meeting.

     C. [Appellees’] Complaint

            On or about October 16, 2013, [Appellees] filed a civil
     action against Fred R. Amsler, Jr. and Orchard House Properties,
     LLC. Thereafter on or about July 23, 2014, [Appellees] filed a
     Complaint and Praecipe to Join Additional Defendants, namely
     Cambridge Trading Partners, LP, Fred R. Amsler Revocable Living
     Trust and Donna Amer. In their Complaint, [Appellees] assert
     that Fred R. Amsler, Jr. was a fiduciary that dominated the
     affairs of Cambridge Trading Partners, LP, in which Jeffrey
     Amsler was the only limited partner, in comp[l]ete secrecy and
     in breach of his confidential and fiduciary relationships between
     he and the sibling Amsler. More specifically, the Complaint sets
     forth the following causes of action:

       Count I:        Breach of the Operating Agreement
                       Plaintiffs against the Defendant LLC parties
       Count II:       Unjust Enrichment
                       Plaintiffs against the Defendant LLC parties
       Count III:      Conversion
                       Plaintiffs against the Defendant LLC parties
       Count IV:       Breaches of Fiduciary Duty
                       Plaintiffs against Fred Amsler
       Count V:        Breaches of the Partnership Agreement
                       Jeff Amsler against Fred Amsler and the
                       Defendant Partnership
       Count VI:       Unjust Enrichment
                       Jeffrey Amsler against the Defendant
                       Partnership Parties
       Count VII:      Conversion
                       Jeffrey Amsler against the Defendant
                       Partnership Parties
       Count VIII:     Breaches of Fiduciary Duty
                       Jeffrey Amsler against Fred Amsler

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        Count IX:      Aiding and Abetting Breaches of Fiduciary
                       Duty
                       Plaintiffs against Donna Amer
        Count X:       Civil Conspiracy
                       Plaintiffs against Defendants
        County XI:     Equitable Accounting
                       Plaintiffs against Fred Amsler and the
                       Defendant Entities
        Count XII:     Declaratory Judgment
                       Plaintiffs against Defendants
        Count XIII:    Preliminary and Permanent Injunctive Relief
                       Plaintiffs against Fred Amsler and Donna
                       Amer

     D. [Appellants’] Preliminary Objections

           On or about September 8, 2014[,] [Appellants] filed
     Preliminary Objections to [Appellees’] Complaint. …

            [Appellants’] Preliminary Objections [maintain, inter alia,]
     that [the trial court] lacked subject jurisdiction and that venue in
     the Court of Common pleas of Sullivan County was improper.
     Specifically, [Appellants] claimed that [the trial court] could not
     properly assert subject matter jurisdiction over Counts V, VI,
     VII, VIII, X, XI, and XII which related to [Appellee], Jeffrey S.
     Amsler[’s] claims over [Appellants,] Fred A. Amsler, Jr. and
     Cambridge Trading Partners, LP, since a valid arbitration
     agreement existed. [Appellants] asserted that Jeffrey S. Amsler
     accepted and agreed to the terms and conditions within the
     Partnership Agreement which included the agreement to
     arbitrate “[a]ny dispute arising out of or in connection with [the
     Partnership]     Agreement.”     Furthermore,      the   Partnership
     Agreement of Cambridge Trading Partners, LP (hereinafter
     “Partnership Agreement”) required mediation and if the dispute
     could not be settled, then arbitration. As such, [Appellants]
     argued that counts V, VI, VII, VIII, X, XI, and XII must be
     resolved under and in accordance with the commercial
     arbitration rules of the American Arbitration Association since
     that was specifically agreed to by the parties in the Partnership
     Agreement and [the trial court] lacked subject matter
     jurisdiction as a result.

Trial Court Opinion, 12/2/15 at 2-7.

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       After hearing argument on the Appellants’ preliminary objections, the

trial court issued an order on May 14, 2015, which summarily overruled the

preliminary objections to Appellees’ complaint in their entirety.

       Appellants filed a timely appeal from the May 14, 2014, order denying

preliminary objections.1 Subsequent thereto, Appellees filed a motion to

quash the appeal as having been taken from an order that is interlocutory

and not appealable. Appellants filed an answer to that motion, asserting that

the subject order denied a request to compel arbitration. This Court issued

an order denying the application to quash to the extent the May 14 order

denied Appellants’ preliminary objection invoking the parties’ arbitration

agreement. To the extent that the May 14 order denied Appellants’

preliminary objections that raised issues unrelated to arbitration, we granted

the application to quash. This matter is now ripe for our review.

       Appellants frame the limited issue on appeal as follows.

____________________________________________

1
  On May 27, 2015, Appellants filed a motion for reconsideration of the trial
court’s May 14 order denying the preliminary objections to Appellees’
complaint. Argument was held on the motion on September 16, 2015, after
which, the trial court granted Appellants’ motion for reconsideration. In their
appellate brief, Appellees argue that the trial court’s order granting the
motion for reconsideration, issued after the thirty-day appeal period under
Pa.R.A.P. 903(a) expired, is void ab initio. See Appellees’ Brief at 3 n.4.
However, we note that our review in the instant appeal is limited solely to
the propriety of the trial court’s May 14 order denying the preliminary
objections invoking the parties’ arbitration agreement. As such, we do not
reach a determination as to the validity of the order granting
reconsideration.

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      Whether the trial court committed an error of law and/or an
      abuse of discretion in denying Appellants’ Preliminary Objections
      to compel arbitration since a valid arbitration clause was
      contained in the Partnership Agreement and the dispute was
      within the scope of the arbitration clause.

Appellants’ Brief at 4.

      As a prefatory matter, we must address Appellees’ assertion that this

court is without jurisdiction to entertain the instant appeal. We note that

      [o]ur jurisdiction to review the propriety of the trial court’s order
      overruling preliminary objections in the nature of a motion to
      compel arbitration is conferred by Pa.R.A.P. 311(a)(8), which
      provides that an interlocutory appeal may be taken as of right
      from any order made appealable by statute, and by 42 Pa.C.S. §
      7320(a)(1) of the Uniform Arbitration Act, which authorizes an
      appeal from [a] court order denying an application to compel
      arbitration.

Collier v. National Penn Bank, --- A.3d ---, ---, 2015 WL 7444713 at *2

(Pa. Super, filed Nov. 24, 2015) (internal quotation marks and a citation

omitted).

      A party may appeal directly from the order denying a preliminary

objection invoking an arbitration agreement; a separate petition to compel

arbitration is not required. See Stewart v. GGNSC-Canonsburg, L.P., 9

A.3d 215, 218 (Pa. Super. 2010). As the current appeal is properly before

us, we deny Appellees’ request to quash the appeal. We proceed to the

merits.

      Our review of a claim that the trial court improperly denied the

Appellants’ preliminary objection in the nature of a petition to compel

arbitration is limited to determining whether the trial court’s findings are

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supported by substantial evidence and whether the trial court abused its

discretion in denying the petition. See Walton v. Johnson, 66 A.3d 782,

787 (Pa. Super. 2013).

      “We employ a two-part test to determine whether the trial court

should have compelled arbitration: 1) whether a valid agreement to arbitrate

exists, and 2) whether the dispute is within the scope of the agreement.”

Washburn v. Northern Health Facilities, Inc., 121 A.3d 1008, 1012 (Pa.

Super. 2015) (citation omitted). “Whether a claim is within the scope of an

arbitration provision is a matter of contract, and as with all questions of law,

our review of the trial court's conclusion is plenary.”       MacPherson v.

Magee Memorial Hospital for Convalescence, --- A.3d ---, ---, 2015 WL

7571937 at *7 (Pa. Super., filed Nov. 25, 2015) (citation omitted) (en

banc).

      The arbitration clause at issue provides as follows.

      23. Miscellaneous

                                         ...

             C. Arbitration of Disputes. Any disputes arising out of or in
      connection with this Agreement, if not settled by mediation, shall
      be settled by arbitration in accordance with the Commercial
      Arbitration Rules of the American Arbitration Association, and
      any decision rendered in such arbitration shall have the same
      effect as if made by a court having proper jurisdiction.

Amendment and Restatement to Agreement of the Cambridge Trading

Partners, 11/5/02 at 55.

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      There appears to be no disagreement that the claims at issue, namely,

Counts V, VI, VII, VIII, X, XI and XII of the Complaint averring breach of the

partnership agreement, are within the scope of the agreement to arbitrate.

Therefore, we must determine whether a valid arbitration agreement exists.

      In its opinion, the trial court revisited its earlier decision overruling

Appellants’ preliminary objection to enforce the arbitration agreement and

concluded that the arbitration provision should, in fact, be enforced. In so

finding, the court determined that all parties agreed to the terms of the

partnership agreement and that the arbitration clause was valid and

enforceable. See Trial Court Opinion, 12/2/15 at 10. The court further stated

that both parties had relied upon the terms of the Partnership Agreement

and “[t]o now ignore the … arbitration terms of the Partnership Agreement

would require this [c]ourt to enforce certain terms of the … Partnership

Agreement while ignoring others. To do so would be inconsistent with the

laws of the Commonwealth.” Id. at 10-11.

      Appellees counter that the arbitration agreement is unenforceable for

numerous reasons. First and foremost, Appellees aver that a confidential

relationship existed between Appellant, Fred Amsler and his son, Jeffrey

Amsler, and that the arbitration agreement was not knowingly entered into.

See Appellees’ Brief at 10-11.

      “A confidential relationship is marked by such a disparity in position

that the inferior party places complete trust in the superior party’s advice

and seeks no other counsel, so as to give rise to a potential abuse of power.”

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Lenau v. Co-eXprise Inc., 102 A.3d 423, 443 (Pa. Super. 2014) (citation

omitted), appeal denied, 113 A.3d 280 (Pa. 2015). “[T]he existence of a

confidential relationship requires a fact-sensitive inquiry not to be disposed

rigidly as a matter of law.” Yenchi v. Ameriprise Financial Inc., 123 A.3d

1071, 1079 (Pa. Super. 2015).

      A contract that is the product of a confidential relationship is
      presumptively voidable “unless the party seeking to sustain the
      validity of the transaction affirmatively demonstrates that it was
      fair under all of the circumstances and beyond the reach of
      suspicion.” Frowen v. Blank, 493 Pa. 137, 145, 425 A.2d 412,
      416 (1981). More precisely, “the proponent of the contract must
      prove by clear and convincing evidence ‘that the contract was
      free, voluntary and an independent act of the other party,
      entered into with an understanding and knowledge of its nature,
      terms and consequences.’” Biddle v. Johnsonbaugh, 444
      Pa.Super. 450, 456, 664 A.2d 159, 162 (1995) (quoting Kees v.
      Green, 365 Pa. 368, 375, 75 A.2d 602, 605 (1950)). In
      Frowen, the Supreme Court explained the basis for this
      presumption:

         When the relationship between the parties to an
         agreement is one of trust and confidence, the normal
         arm’s length bargaining is not assumed, and overreaching
         by the dominant party for his benefit permits the
         aggrieved party to rescind the transaction. This is so
         because the presence of a confidential relationship negates
         the assumption that each party is acting in his own best
         interest. Frowen, 493 Pa. at 144, 425 A.2d at 416
         (citations   omitted).   Thus,   “[o]nce    a   confidential
         relationship is shown to have existed, it then becomes the
         obligation of the party attempting to enforce the terms of
         the agreement to establish that there has not been a
         breach of that trust.” Id. at 144, 425 A.2d at 416; Iron
         Worker's Sav. and Loan Ass'n v. IWS, Inc., 424
         Pa.Super. 255, 270, 622 A.2d 367, 375 (1993) (citing
         Frowen, 493 Pa. at 144, 425 A.2d at 416).

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Paone v. Dean Witter Reynolds, Inc., 789 A.2d 221, 226 (Pa. Super.

2001).

       Here, although Appellees alleged in response to Appellants’ preliminary

objections that a confidential relationship existed between Fred Amsler and

Jeffrey Amsler and that the arbitration agreement was a product of that

relationship, the trial court failed to conduct an inquiry into the existence of

the confidential relationship prior to ruling on the merits of the preliminary

objections.2 As previously noted, our judicial inquiry when determining the

validity of an arbitration agreement is limited to 1) whether a valid

agreement to arbitrate exists, and 2) whether the dispute is within the scope

of the agreement. See Washburn, supra. The fact-sensitive inquiry into

the existence of a confidential relationship clearly falls outside of this limited

scope of review.

       Accordingly, we are constrained to vacate the trial court’s order

overruling Appellant’s preliminary objection to enforce the arbitration

agreement and remand this case for a hearing wherein the trial court must

determine whether the evidence supports the existence of a confidential

relationship. “If so, the trial court must determine whether the proponent of

the arbitration provision (presumably the stronger party) has met its burden
____________________________________________

2
  Appellees raise the existence of a confidential relationship in Count VIII of
their Complaint. At this stage in the proceedings, we offer no opinion as to
the sufficiency with which Appellees allege the existence of the a confidential
relationship.

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of showing that the provision is fair under all the circumstances, Frown, 493

Pa. at 145, 425 A.2d at 416, that it was entered into with knowledge of its

nature and consequences, Biddle, 664 A.2d at 162, and thus that the

provision was not itself a result of a violation of the trust reposed in the

confidential relationship.” Paone, 789 A.2d at 227. Where the evidence

suggests that a confidential relationship did not exist, then the arbitration

agreement is enforceable.

     Order vacated. Motion to quash appeal denied. Case remanded for

proceedings consistent with this memorandum. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/17/2016

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