PREMIER HOSPITALITY GROUP - NEW STANTON II v. PATEL
Filing
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MEMORANDUM OPINION on the 25 AMENDED MOTION to Compel Arbitration filed by PREMIER HOSPITALITY GROUP - NEW STANTON II. Signed by Magistrate Judge Lisa Pupo Lenihan on 02/20/2018. (jmb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PREMIER HOSPITALITY GROUP –
NEW STANTON II,
Plaintiff/Petitioner,
v.
NAINESH PATEL,
Defendant/Respondent.
NAINESH PATEL,
Plaintiff,
v.
GARRISON INVESTMENT GROUP,
LP. And PREMIER HOSPITALITY
GROUP – NEW STANTON II,
Defendants.
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Civil Action No. 2:17-cv-00645
Magistrate Judge Lisa Pupo Lenihan
ECF No. 25
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Civil Action No. 2:17-cv-01431
Magistrate Judge Lisa Pupo Lenihan
ECF No. 35
MEMORANDUM OPINION ON
MOTIONS TO COMPEL ARBITRATION
I. SUMMATION
For the reasons set forth below, the October 12, 2017 Motion to Compel
Arbitration filed by Plaintiff Premier Hospitality Group (“Premier”) in Action 17-645 at
ECF No. 25, and the November 29, 2017 Motion to Compel Arbitration filed by
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Defendant Garrison Investment Group (“Garrison”) in Action 17-1431 at ECF No. 35
will be granted. As noted in this Court’s August 15, 2017 Memorandum Opinion
denying Defendant Nainesh Patel’s Motion to Dismiss or Transfer (Action 17-645, ECF
No. 15):1
The August 10, 2016 Agreement of Purchase and Sale and Joint Escrow
Instructions entered into by the parties (the “Agreement”) includes
“Governing Law and Venue” provisions which clearly grant this Court
exclusive federal jurisdiction “for any legal controversy between [them]
arising in connection with [said] Agreement.” ECF No. 13, Declaration Ex.
B, Section 19. The Agreement also contains facially broad “Arbitration of
Disputes” provisions requiring the binding arbitration, in the County in
which the relevant real property lies (i.e., Westmoreland County,
Pennsylvania) of disputes (including disputes/claims as to the
Agreement’s “interpretation, enforceability, and the arbitrability of
disputes”). Id. at Section 11. As the relevant underlying Agreement
provisions are not rendered a nullity by Plaintiff’s allegations, however
colorable, this Court retains specific personal jurisdiction over Plaintiff
and is the exclusive federal court forum for claims arising in connection
with the Agreement.
ECF No. 15 at 1-2. The arbitration provisions of the Agreement executed and entered
into by Nainesh Patel (“Patel”) and Premier are unambigous and encompassing, and
the parties’ subsequent disputes do not supplant, but are subject to, their terms. See
ECF No. 25-1, Declaration of Charles Pomerantz, Ex. B (Agreement).
Unless otherwise designated, all ECF No. references hereafter refer to documents filed
in Action 17-645.
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II. FACTUAL AND PROCEDURAL HISTORY OF RELATED ACTIONS
As previously summarized2 this action concerns a commercial real estate
transaction in which Premier auctioned a hotel located in Westmoreland County,
Pennsylvania. When the original high bid was withdrawn, Patel became the high
bidder and executed the Agreement, but failed to deposit the “Earnest Money”. The
parties exchanged communications detailed in their pleadings, including executed and
initialed copies of the Agreement, a Subject to Confirmation Addendum, and an
Amendment extending the closing date,3 and the money was deposited to escrow on
September 8, 2016. The parties’ differences were not resolved, Plaintiff declared
Defendant in breach on October 24, 2016, and the hotel was sold to another purchaser.
On October 28, 2016, Patel filed a lawsuit in the District Court for the Central
District of California which noted the arbitration provisions of the parties’ Agreement,
dismissed his claims against Premier for lack of personal jurisdiction, and stayed his
claims against Garrison pending arbitration under the Agreement. Patel then
voluntarily dismissed the California action.
On November 8, 2016, Premier filed a demand for arbitration with Judicial
Arbitration and Mediation Services (“JAMS”), one of two arbitration entities designated
in the Agreement. Patel disputes an obligation to arbitrate.
In early March, 2017 Defendant filed a second lawsuit in the District Court for
the Middle District of Georgia, seeking a declaration that the Agreement was never
2
See ECF No. 15 at 2-4.
3
See ECF No. 25 at 2-3; ECF No. 25-1, Ex. B, G.
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effectively entered into or rescission on the basis of fraud or mutual mistake, and
damages against Garrison for fraudulent inducement. That action was initially stayed
pending unsuccessful mediation, and was ultimately transferred to this Court in
November, 2017. That litigation is now Civil Action 17-1431. See Action 17-1431, ECF
No. 35.
On May 8, 2017 Premier filed, in the Court of Common Pleas of Westmoreland
County, its Petition for Rule to Show Cause regarding arbitration. Patel removed that
State Court action on May 17, 2017 and filed a Motion to Dismiss or Transfer in the
Action designated in this Court as 17-645, which Motion was denied on August 15,
2017. See ECF No. 15. Thereafter, the parties unsuccessfully attempted mediation and
Premier filed its Amended Motion to Compel Arbitration. See ECF No. 23 (Minute
Entry for proceedings of October 5, 2017); ECF No. 25; ECF No. 27 (Report of
Mediation).
III. ANALYSIS
Premier and Garrison contend that Patel is required to arbitrate in accordance
with the provisions of Section 11 of the Agreement. In accordance with the provisions
below, both parties indicated their intent to agree to binding arbitration under
Paragraph B by initialing the Agreement in the places designated:
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DISPUTE RESOLUTION.
A. MEDIATION. AT THE REQUEST OF EITHER PARTY, ANY
DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE FIRST
SUBMITTED TO MEDIATION BEFORE RESORTING TO OR
INITIATING ARBITRATION OR COURT ACTION. MEDIATION
FEES SHALL BE DIVIDED EQUALLY AND EACH PARTY SHALL
BEAR ITS OWN ATTORNEY’S FEES AND COSTS. NEITHER
PARTY MAY REQUIRE BINDING ARBITRATION PRIOR TO
COMMENCEMENT OF COURT ACTION, ALTHOUGH THE
PARTIES MAY VOLUNTARILY MUTUALLY AGREE TO SUCH
ARBITRATION BY INITIALING THIS SECTION AS SET FORTH
HEREIN.
B. ARBITRATION OF DISPUTES. BUYER AND SELLER AGREE
THAT ANY DISPUTE OR CLAIM IN LAW OR EQUITY ARISING
BETWEEN THEM OUT OF THIS AGREEMENT SHALL BE
DECIDED BY NEUTRAL, BINDING ARBITRATION HELD IN
THE COUNTY IN WHICH THE PROPERTY LIES WITH AND
UNDER THE COMMERCIAL DISPUTE RESOLUTION RULES OF
JUDICIAL ARBITRATION AND MEDIATION SERVICES (JAMS)
OR THE AMERICAN ARBITRATION ASSOCIATION (AAA). IN
ADDITION, ANY DISPUTE ARISING OUT OF THIS
AGREEMENT, INCLUDING ITS INTERPRETATION,
ENFORCEABILITY, AND THE ARBITRABILITY OF DISPUTES
BETWEEN THE PARTIES WILL BE DECIDED BY THE
ARBITRATOR. JUDGMENT UPON THE AWARD RENDERED BY
THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF.
SUBJECT TO SECTION 11.A ABOVE, BY INITIALING IN THE SPACE
BELOW, BUYER AND SELLER ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS
“ARBITRATION OF DISPUTES” PROVISION DECIDED BY
NEUTRAL BINDING ARBITRATION AS PROVIDED BY THE LAWS
OF THE STATE IN WHICH THE PROPERTY LIES AND ARE GIVING
UP ANY RIGHTS BUYER AND SELLER MIGHT POSSESS TO HAVE
THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW, BUYER AND SELLER ARE
GIVING UP THEIR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED
IN THIS “ARBITRATION OF DISPUTES” PROVISION. IF EITHER
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PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, THAT PARTY MAY BE
COMPELLED TO ARBITRATE. BUYER’S AND SELLER’S
AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY.
ECF No. 25-1, Pomerantz Decl., Exhibit B, § 11.
His present assertions to the contrary notwithstanding, Patel is obliged to
arbitrate his transaction-related disagreements with Premier by his express contractual
consent to the provisions of the executed Agreement. Compare Patel’s Opposition to
Motion to Compel Arbitration, ECF No. 28 at 1 (“Premier’s motion to compel arbitration
should be denied because there was never any agreement accepted by both parties.”).
The parties’ transactional dealings subsequent to execution of the Agreement arose
from it. As noted in this Court’s previous Memorandum Opinion:
[Patel’s] assertions of fraud in transaction-related representations, the
consequences of the parties’ conduct on enforceability of the Agreement
or entitlement to escrowed funds, and other allegations/claims - however
colorable on the face of the initial pleadings and exhibits filed in this and
other proceedings – do not render the Agreement’s provisions regarding
jurisdiction, venue and arbitration a nullity . . . . To the contrary, the
broad arbitration provisions of this Agreement delegate “disputes or
claims” regarding its “enforceability”, as well as those regarding
“interpretation” and “arbitrability”, to arbitration. And as [Patel] himself
observes, the “Subject to Confirmation Addendum” (the “Addendum”)
requiring the seller’s approval within fifteen (15) days – and as to which
Defendant asserts non-compliance – “made the transaction ‘subject to and
contingent upon’ [compliance with its terms].” . . . ECF No. 13-2 at 10
(Addendum, stating that it “amends and supplements” the Agreement
and specifying that “the transaction [was] subject to, and contingent upon
Seller[‘s timely approval]”).
ECF No. 15 at 5-6.
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Although Patel now further asserts that he is not bound by the arbitration
provisions of the August 10, 2016 Agreement because the Agreement was itself
terminated by Premier’s failure to timely approve the transaction,4 this is a question of
subsequent conduct and enforceability within the broad arbitration clause of the
contract created between the parties. As this Court as previously noted, even if Patel is
ultimately upheld in his assertions regarding Premier’s failure to ratify the transaction
(e.g., if it is determined that Premier’s subsequent communications did not constitute
the transactional-acceptance required under the Addendum), the Agreement clearly
contains provisions intended to have effect, including Section 11. See ECF No. 15 at 7.
Any effect of the parties’ subsequent conduct on their contractual obligations under the
Agreement was committed to arbitration by clear mutual intent and consent. See id. at
7-8 (citing cases). And there is no genuine issue of fact regarding the arbitration
agreement’s existence. As Patel himself observes, the cases distinguish between
“challenges to a contract’s validity, which are arbitrable, and challenges to a contract’s
The Addendum provides that if Seller fails to approve the transaction within fifteen
(15) days of August 10, 2016, the Agreement shall be deemed terminated without
further action, and Buyer and Seller shall be relieved of any further liability and/or
obligation to each other under the Agreement (other than those obligations which
expressly survive the termination of the Agreement). See ECF No. 25-1, Ex. B. The
Court notes Premier’s August 16, 2016 and August 24, 2016 communications of its
willingness to proceed with the transaction on Patel’s deposit of the Earnest Money,
which in fact Patel made shortly thereafter. ECF No. 25-1, Ex. D, E. It further notes the
parties’ subsequent execution of an Amendment extending the closing date beyond the
September 13, 2016 date specified in the Addendum. ECF No. 25-1, Ex. G. More
importantly, the Court observes that Patel’s efforts to recast the question of Premier’s
compliance with the terms of the Addendum which “supplemented” the Agreement as
a “failure to accept the [Agreement]” itself, such that the arbitration clause never took
effect, are entirely misplaced. Compare ECF No. 28 at 1-2.
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formation, which generally are not.” ECF No. 28 at 3 (citing SBRMCOA, LLC v. Bayside
Resort, Inc., 707 F.3d 267, 274 (3d Cir. 2013)). The only genuine issues of fact in this
action go to the Agreement’s validity and are subject to arbitration by the parties’
manifest consent.5
IV. CONCLUSION
Accordingly, the October 12, 2017 Motion to Compel Arbitration filed by Plaintiff
Premier Hospitality Group (“Premier”) in Action 17-645 at ECF No. 25, and the
November 29, 2017 Motion to Compel Arbitration filed by Defendant Garrison
Investment Group (“Garrison”) in Action 17-1431 at ECF No. 35 will be granted by
Order of even date herewith and, by the same Order, Defendant will be ordered to
proceed to arbitration of his claim under the Commercial Dispute Resolution Rules of
the Judicial Arbitration and Mediation Services (“JAMS”) or the American Arbitration
Patel’s extensive citation to cases regarding the absence of a binding contract, without
more, under an agreement containing an “acceptance clause”, i.e., language expressly
requiring further approval/acceptance of the agreement itself, is inapposite. See ECF
No. 28 at 4-6. See also ECF No. 28 at 11-13 (asserting that “Premier itself never consent
to the [Agreement], so the [Agreement] never became binding between the parties”).
Patel conflates the Addendum’s supplemental conditions to closing the transaction with
a “fail[ure] to comply with . . . conditions precedent to contract formation”. ECF No. 28
at 12 (quoting InfoComp, Inc. v. Electra Products, Inc., 109 F.3d 902, 905-06 (3d Cir. 1997)
(“[W]hen an offeror fails to comply with its own conditions precedent to contract
formation, that party may not claim the benefits of the proposed contract.”)). Premier
did not “propose[ ] a contract”, it executed one. Compare ECF No. 28 at 12.
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Association (“AAA”) within forty-five (45) days, and this Court will retain jurisdiction
pending the outcome.
Dated: February 20, 2018
BY THE COURT:
____________________________
LISA PUPO LENIHAN
United States Magistrate Judge
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