DOWTON v. ACEVEDO et al
MEMORANDUM (Order to follow as separate docket entry) re 36 MOTION to Stay and to Compel Arbitration filed by Equity Lifestyle Properties, Inc. Signed by Magistrate Judge Karoline Mehalchick on 6/28/2017. (cw)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
DONNA SUE DOWTON,
CIVIL ACTION NO. 3:16-CV-659
EQUITY LIFESTYLE PROPERTIES,
INC., et al.,
Before the Court is the motion of Defendant, Equity LifeStyle Properties, Inc., to stay
proceedings and to compel arbitration of the contractual defense and indemnity provisions that
arise under the contractual agreements between the parties, pursuant to 9 U.S.C. § 1, et seq.
(Doc. 36). This matter having been fully briefed, it is ripe for disposition. For the following
reasons, the Court will GRANT IN PART and DENY IN PART Defendant’s motion.
BACKGROUND AND PROCEDURAL HISTORY
This diversity action was initiated on or about February 8, 2016 by Plaintiff, Donna Sue
Dowton (“Dowton”), for injuries she allegedly suffered when she was involved in a physical
altercation with another camper, Defendant, Yeandy Acevedo (“Acevedo”), at a campground
(“Timothy Lake Resort”) located at 2043 Allegheny Lane, East Stroudsburg, PA. (Doc. 1).
Defendant Equity LifeStyle Properties, Inc. (“ELP”) is a holding company that does not
directly own or manage property. ELP owns a majority interest in MHC Operating Limited
Partnership that manages the Timothy Lake Resort and is the sole member of MHC Timothy
Lake North GP, L.L.C., the general partner of MHC Timothy Lake North Limited Partnership
that owns the Timothy Lake Resort. Timothy Lake Resort is a mountain resort and
campground that provides members the right to use campsites on its property pursuant to a
written contractual agreement and membership rules.
On or about March 29, 2014, Scott and Donna Dowton executed an Agreement for Use
of RV Site, specifically site no. 247, at the Timothy Lake resort for $1,979.00 for a term from
May 1, 2014 to April 30, 2015. (Doc. 36-4). In accordance with the 2014 Contract, on or about
March 29, 2014 the Dowtons paid the $1,979.00 annual fee. (Doc. 36-5). After the 2014-2015
season, ELP purports that the Dowtons elected to renew their annual membership, but has only
produced a copy of a contract unsigned by the Dowtons. (Doc. 36-6). However, ELP has
produced evidence of payment for the 2014-2015 season. (Doc. 36-7).
The 2014 and 2015 Agreements for Use of RV Site contain identical provisions
regarding arbitration and indemnification. Specifically, those provisions are as follows:
Arbitration. Any dispute or claim arising out of this Agreement shall be settled
by binding arbitration in accordance with the provisions of the Federal
Arbitration Act (99 U.S.C. Section 1 et seq.) and the rules of the American
Arbitration Association. Arbitration proceedings shall be commenced by the
delivery by either party to the other of written notice demanding arbitration ...
Any award rendered by arbitration shall be shall be final and binding on the
parties and judgment thereon may be entered by any court of competent
(Doc. 36-4, at 10; 36-6, at 10).
Indemnification. The Company is not liable for injury to any person, or for loss
or damage to any property (including Members’ property) occurring in or about
the Site from any cause whatsoever. Members agree to jointly and severally
indemnity the Company against and hold the Company harmless for any and all
loss, damage, liability and expense (including reasonable attorney fees and other
costs incurred in connection with defending any claim) resulting from any actual
or alleged injury to any person ... arising out of the use of the Site by Members,
or caused by or resulting from any act or omission of any third party (including
criminal acts) or any act or omission of the Company occurring in or about the
Site, unless due to the Company' gross negligence or willful misconduct. The
indemnification provided for in this Section 19 shall survive the expiration or
sooner termination of this Agreement.
(Doc. 36-4, at 9; 36-6, at 9).
Dowton does not dispute the existence of these clauses, and admits that the
Indemnification clause pertains to “injury to any person, or for loss or damage to any
property ... occurring in or about the Site from any cause whatsoever.” (Doc. 38-2, at 2).
Members are to indemnify Defendant and hold it harmless for “any and all loss, damage,
liability and expense.” (Doc. 38-2, at 2). The Indemnification clause is stated to even extend
to acts and omissions by third parties, criminal acts, and even acts of Defendant occurring in
or about the Site. (Doc. 38-2, at 2). The Arbitration clause pertains to “[a]ny dispute or claim
arising out of this Agreement.” (Doc. 38-2, at 2).
In accordance with the Arbitration clauses, on June 29, 2016, written demand was made
upon Dowton and Acevedo for defense and indemnification pursuant to the contract language,
and in the alternative, if the contractual dispute could not be resolved, for arbitration of the
dispute with the American Arbitration Association. (Doc. 36-9; Doc. 36-10). Nothing before the
Court indicates that either Dowton or Acevedo ever responded to the demand for
indemnification and arbitration.
On September 15, 2016, ELP filed a Motion to Stay and to Compel Arbitration (Doc.
36), and filed its brief in support on September 16, 2016. (Doc. 37). Dowton filed a brief in
opposition to the motion on September 29, 2016. (Doc. 38). 1 ELP filed a reply brief on October
6, 2016. (Doc. 39). In opposing the motion to compel arbitration, Dowton submits that the
motion should be denied because (1) the arbitration clause pertains to contractual disputes and
Defendant Acevedo has not responded to the motion.
not claims pertain to personal injuries resulting from ELP’s negligence and carelessness, and the
indemnification clause discussing such injuries violates public policy and is an unconscionable
and unenforceable exculpatory clause; and (2) the subject 2015 agreement was unsigned by
Plaintiff, and therefore cannot be said to demonstrate Plaintiff’s intent to be subject to the
arbitration and indemnification clauses.
The initial question of arbitrability—i.e., whether or not the parties validly agreed to
arbitrate—is presumed to be a question for the court unless the parties clearly and unmistakably
indicate otherwise. Briggs v. Macy's Inc., No. CV 3:16-0902, 2017 WL 590274, at *2–3 (M.D. Pa.
Feb. 14, 2017); Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 773 (3d Cir. 2013).
In Guidotti, the Third Circuit Court of Appeals clarified the appropriate standard of review to be
applied to a motion to compel arbitration filed before the completion of discovery. This
clarification was needed due to conflicting precedent using the standard under Federal Rule of
Civil Procedure 12(b)(6) applied to motions to dismiss as compared to precedent using the
standard under Federal Rule of Civil Procedure 56 applied to motions for summary judgment.
Guidotti, 716 F.3d at 771. The Third Circuit determined that this conflict was premised on the
competing purposes of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., governing
arbitration versus the values underlying contract interpretation more generally. Id. at 773. While
the FAA “calls for a summary and speedy resolution of motions or petitions to enforce
arbitration clauses,” enforcement of the private agreement between the parties is also an
important consideration. Id. (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S.
1, 29 (1983)). “Accordingly, ‘[b]efore a party to a lawsuit can be ordered to arbitrate and thus be
deprived of a day in court, there should be express, unequivocal agreement to that effect.’ “ Id.
at 773 (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980))
(alteration in original).
The Third Circuit in Guidotti held that where the affirmative defense of arbitrability is
apparent on the face of the complaint or those documents relied upon in the complaint, the
standard under Rule 12(b)(6) should be applied. Id. at 773–74. In those cases, the FAA would
favor speedy resolution without the delay of discovery. Id. “[A] more deliberate pace is
required” when either (1) the complaint and documents referenced therein do not establish with
“requisite clarity” that the parties agreed to arbitrate or (2) “the opposing party has come forth
with reliable evidence that is more than a ‘naked assertion ... that it did not intend to be bound,’
even though on the face of the pleadings it appears that it did.” Id. at 774 (quoting Somerset
Consulting, LLC v. United Capital Lenders, LLC, 832 F. Supp.2d 474, 479 (E.D. Pa. 2011) and ParKnit Mills, 636 F.2d at 55).
When the issue of arbitrability is not apparent on the fact of the complaint, “the motion
to compel arbitration must be denied pending further development of the factual record.” Id.
(emphasis added). When the issue of arbitrability is apparent on the face of the complaint but
the non-moving party has come forward with evidence to place the question in issue, the
motion should be resolved according to the standard provided in Rule 56. Id. “Under either of
those scenarios, a restricted inquiry into the factual issues will be necessary to properly evaluate
whether there was a meeting of the minds on the agreement to arbitrate, and the non-movant
must be given the opportunity to conduct limited discovery on the narrow issue concerning the
validity of the arbitration agreement.” Id. (emphasis added) (internal citations and quotations
omitted). “After limited discovery, the court may entertain a renewed motion to compel
arbitration, this time judging the motion under a summary judgment standard.” Id. at 776.
Several courts within this district have denied motions to compel arbitration and ordered
limited discovery where the issue of arbitrability was not apparent on the face of the complaint,
properly applying Guidotti. See, e.g., Reaser v. Credit One Financial, No. 3:15-CV-1765, 2016 WL
245541, at *3 (M.D. Pa. Jan. 21, 2016) (Caputo, J.); Potts v. Credit One Financial, No. 3:15-CV1119, 2016 WL 225678, at *5 (M.D. Pa. Jan. 19, 2016) (Nealon, J.) (allowing sixty (60) day
limited discovery on the issue of arbitrability); Rajput v. Credit One Financial, No. 1:15-cv-00807,
2015 WL 8012938, at *3 (M.D. Pa. Dec. 12, 2015) (Kane, J.).
As stated above, Dowton submits that this Court should not compel arbitration in this
dispute, averring that the injuries claimed in this case do not fall within the scope of the
agreement, and that the only clause discussing personal injury is violative of public policy and is
unconscionable and unenforceable, and further that there is a dispute as to Dowton’s intent to
be subject to the 2015 arbitration and indemnification clauses. The Court addresses these
A. THE ARBITRATION AND INDEMNIFICATION CLAUSES ARE VALID AND BINDING, AND
APPLICABLE TO THE INJURIES CLAIMED IN THIS MATTER.
Dowtown submits that the parties’ dispute does not fall within the substantive scope of
the agreement, as her allegations sound in tort and there are no provisions regarding injury,
tort, or liability except for the indemnification provision. She further submits that extending the
arbitration clause to tort claims would be unconscionable. (Doc. 38-2). Finally, Dowton
submits that the agreement is an adhesion contract, and therefore, absent specific language that
the arbitration agreement would extend to injuries sustained on the camp site, it would be a
miscarriage of justice to extend the agreement by implication and require that this matter be
arbitrated. (Doc. 38-2, at 8).
In asking this Court to find that the Agreement’s arbitration clause does not apply to the
injuries claimed in this case, Dowton is asking the Court to consider the Agreement in
piecemeal. 2 The Agreement’s arbitration clause does not preclude arbitration of personal
injuries; rather, it specifically states that it applies to “[a]ny dispute or claim arising out of this
Agreement” which the Court construes, based on the plain language of the contract, as
including any claims arising in tort, and addressed by the indemnification clause. A court must
consider the entirety of a contract in ascertaining the parties' mutual intentions. See Restatement
(Second) of Contracts § 202(2). In this regard, “an interpretation which gives a reasonable,
lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a
part unreasonable, unlawful, or of no effect.” Friedlander v. Veneman, No. 3CV-04-1649, 2007
WL 1120528, at *8 (M.D. Pa. Apr. 13, 2007); citing Restatement (Second) of Contracts § 203(a).
Dowton further submits that the indemnification clause (Doc. 36-4, at 9; 36-6, at 9) is an
exculpatory clause that is unreasonable and unconscionable and therefore unenforceable. The
Court disagrees. An exculpatory clause is valid if the following conditions are met: 1) the clause
does not contravene public policy; 2) the contract is between parties relating entirely to their
own private affairs; and 3) the contract is not one of adhesion. Evans v. Fitness & Sports Clubs,
LLC, No. CV 15-4095, 2016 WL 5404464, at *3 (E.D. Pa. Sept. 28, 2016); Topp Copy Prods., Inc.
v. Singletary, 626 A.2d 98, 99 (Pa. 1993). A valid exculpatory clause is only enforceable if “the
language of the parties is clear that a person is being relieved of liability for his own acts of
negligence.” Id. A waiver of liability violates public policy only if it involves “a matter of
Dowton admits that “[i]f there was a disagreement about proper use of the campsite,
payment of fees, sale of members RVs, or improvements to the camp site, provisions clearly
discussed under the agreement … the arbitration provision would apply.” (Doc. 38-2, at 5).
interest to the public or the state. Such matters of interest to the public or the state include the
employer-employee relationship, public service, public utilities, common carriers, and
hospitals.” Seaton v. E. Windsor Speedway, Inc., 582 A.2d 1380, 1382 (Pa. Super. Ct. 1990); see
also Kotovsky v. Ski Liberty Operating Corp., 603 A.2d 663, 665 (Pa. Super. Ct. 1992). The
exculpatory clause at issue in this case does not contravene public policy because it does not
affect a matter of interest to the public or the state. See Kotovsky, 603 A.2d at 665-66 (holding
that releases did not violate public policy because “[t]hey were [in] contracts between private
parties and pertained only to the parties' private rights. They did not in any way affect the rights
of the public.”). Thus, the exculpatory clause meets the first two prongs of the Topp Copy
standard for validity.
The contract meets the third prong of the Topp Copy validity standard because it is not a
contract of adhesion. Agreements to participate in “voluntary sporting or recreational activities”
are not contracts of adhesion because “[t]he signer is a free agent who can simply walk away
without signing the release and participating in the activity, and thus the contract signed under
such circumstances is not unconscionable.” Chepkevich v. Hidden Valley Resort, L.P., 2 A.3d 1174,
1190-91 (Pa. 2010). “The signer is under no compulsion, economic or otherwise, to participate,
much less to sign the exculpatory agreement, because it does not relate to essential services, but
merely governs a voluntary recreational activity.” Id. The Agreement at issue here is not a
contract of adhesion because it is a contract to participate in voluntary recreational activities.
The Agreement does not relate to an essential service, and Dowton was free to engage in the
activity, or not, as she wished. She was under no compulsion to do so. See Chepkevich, supra; see
also Hinkal v. Pardoe, 133 A.3d 738, 741-2 (Pa. Super. Ct. 2016) (en banc), appeal denied, 141
A.3d 481 (Pa. 2016) (citing the “thorough and well-reasoned opinion” of the trial court, which
held that the plaintiff's gym membership agreement was not a contract of adhesion because
exercising at a gym is a voluntary recreational activity and the plaintiff was under no
compulsion to join the gym). The Agreement meets all three prongs of the Topp Copy standard
for validity, and thus the exculpatory clause is facially valid.
Even if an exculpatory clause is facially valid, it is enforceable only if it clearly relieves a
party of liability for its own negligence. Evans v. Fitness & Sports Clubs, LLC, No. CV 15-4095,
2016 WL 5404464, at *5 (E.D. Pa. Sept. 28, 2016). The following standards guide a court's
determination of the enforceability of an exculpatory clause:
1) the contract language must be construed strictly, since exculpatory language is
not favored by the law; 2) the contract must state the intention of the parties with
the greatest particularity, beyond doubt by express stipulation, and no inference
from words of general import can establish the intent of the parties; 3) the
language of the contract must be construed, in cases of ambiguity, against the
party seeking immunity from liability; and 4) the burden of establishing the
immunity is upon the party invoking protection under the clause.
Topp Copy, 626 A.2d at 99.
While a contract must clearly convey a waiver of liability for negligence, “Pennsylvania courts
have consistently held that exculpatory clauses may bar suits based on negligence even where
the language of the clause does not specifically mention negligence at all.” Chepkevich, 2 A.3d at
1193. The Agreement unambiguously establishes ELP’s intent to relieve itself of liability for
negligence, despite not specifically mentioning negligence. In pertinent part, the Agreement
states that the parties agree to jointly and severally indemnify ELP against and hold ELP
harmless for “any and all loss, damage, liability and expense… resulting from any actual or
alleged injury to any person… arising out of the use of the Site by Members, or caused by or
resulting from any act or omission of [ELP] occurring in or about the Site…” (Doc. 36-4, at 9;
36-6, at 9).
Based on the foregoing, the Court finds that the arbitration and indemnification
agreements are valid and enforceable.
B. THE SUBJECT 2015 AGREEMENT WAS UNSIGNED BY PLAINTIFF, AND THEREFORE
CANNOT BE SAID TO DEMONSTRATE PLAINTIFF’S INTENT TO BE SUBJECT TO THE
ARBITRATION AND INDEMNIFICATION CLAUSES.
Even though the Court finds, however, that the arbitration and indemnification clauses
are enforceable, Dowton still submits that she is not bound by the Agreement, as the only copy
of the Agreement before this Court does not contain her signature. Dowton does not dispute
that she paid the fees due under the Agreement, but avers that without a signature, she should
not be bound by the arbitration agreement, which requires specific intent of all parties to
arbitrate. (Doc. 38-2, at 5). In turn, ELP submits that Dowton’s payment for the new term are
evidence of her intent to continue the agreement, and further, that her failure to surrender her
site at the end of the previous agreement’s term makes her a hold-over tenant under §15 of the
Agreement, and therefore still bound by the terms of the 2014 Agreement, including the
arbitration clause. (Doc. 39, at 3).
“Accordingly, ‘[b]efore a party to a lawsuit can be ordered to arbitrate and thus be
deprived of a day in court, there should be express, unequivocal agreement to that effect.’ “ Id.
at 773 (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980))
(alteration in original).
As stated above, when the issue of arbitrability is apparent on the face of the complaint
but the non-moving party has come forward with evidence to place the question in issue, the
motion should be resolved according to the standard provided in Rule 56. Guidotti v. Legal
Helpers Debt Resolution, L.L.C., 716 F.3d 764, 774 (3d Cir. 2013). A restricted inquiry into the
factual issues is necessary to properly evaluate whether there was a meeting of the minds on the
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agreement to arbitrate, and the non-movant must be given the opportunity to conduct limited
discovery on the narrow issue concerning the validity of the arbitration agreement. Id.
(emphasis added) (internal citations and quotations omitted). “After limited discovery, the court
may entertain a renewed motion to compel arbitration, this time judging the motion under a
summary judgment standard.” Id. at 776.
Although the issue of arbitrability is apparent on the face of the complaint here, Dowton
has asserted that she did not intend to be bound by the arbitration provision of the 2015
Agreement, and as evidence at this juncture submits that she did not sign the 2015 Agreement.
Despite evidence of intent by the parties, including the full payment of the fees due under the
2015 Agreement, and the use of the campground by Plaintiff, the Court is compelled by Guidotti
to allow limited discovery on this narrow issue. 3 As such, the Court will grant thirty (30) days to
allow the parties to conduct limited discovery on the narrow issue of whether Dowton intended
to be bound by the arbitration clause. At the close of that thirty days, or before if discovery is
complete, ELP may file a renewed motion to compel arbitration, which will be promptly
reviewed by this Court under a motion for summary judgment standard. All other discovery is
stayed for that period of time, and until such time as the Court decides the issue of arbitrability.
The Court notes, however, that in ascertaining the intent of the parties to a contract, it
is their outward and objective manifestations of assent, as opposed to their undisclosed and
subjective intentions, that matter. Ingrassia Constr. Co., Inc. v. Walsh, 337 Pa.Super. 58, 486 A.2d
478, 483 (1984). Further, signatures are not dispositive evidence of contractual intent. Am. Eagle
Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 584 (3d Cir. 2009); see Commerce Bank/Pennsylvania v.
First Union Nat'l Bank, 911 A.2d 133, 145–46 (Pa.Super.Ct.2006).
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For the foregoing reasons, the motion (Doc. 36) of Defendant, Equity Lifestyle
Properties, Inc., is GRANTED IN PART and DENIED IN PART. This matter shall be stayed
pending the outcome of a decision on the issue of arbitrability. The motion to compel
arbitration is denied, without prejudice to the filing of a renewed motion to compel arbitration
following a brief period of time in which the parties should conduct limited discovery on the
issue of the parties’ intent to be bound by the arbitration clause in the 2015 Agreement.
An appropriate Order will follow.
s/ Karoline Mehalchick
Dated: June 28, 2017
United States Magistrate Judge
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