H&M Holdings v. Patrono, J.

Superior Court of Pennsylvania·Decided May 15, 2025·No. 518 MDA 2024·Unpublished

Opinion

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

H&M HOLDINGS GROUP, LLC, : IN THE SUPERIOR COURT OF ASSIGNEES OF MEMBERS FIRST : PENNSYLVANIA FEDERAL CREDIT UNION :

:

:

v. :

:

:

JANE H. PATRONO : No. 518 MDA 2024 :

Appellant :

Appeal from the Order Entered April 4, 2024 In the Court of Common Pleas of Adams County Civil Division at No(s): 2018-SU-1293

H&M HOLDINGS GROUP, LLC : IN THE SUPERIOR COURT OF : PENNSYLVANIA

:

v. :

:

:

ALAN KIM PATRONO :

:

Appellant : No. 519 MDA 2024

Appeal from the Order Entered April 4, 2024 In the Court of Common Pleas of Adams County Civil Division at No(s): 2018-SU-1293

H&M HOLDINGS GROUP, LLC, : IN THE SUPERIOR COURT OF ASSIGNEE OF MEMBERS FIRST : PENNSYLVANIA FEDERAL CREDIT UNION :

:

:

v. :

:

:

JONATHAN PATRONO : No. 520 MDA 2024 :

Appellant :

Appeal from the Order Entered April 4, 2024 In the Court of Common Pleas of Adams County Civil Division at No(s): 2018-SU-1293

BEFORE: LAZARUS, P.J., NICHOLS, J., and SULLIVAN, J. MEMORANDUM BY SULLIVAN, J.: FILED: MAY 15, 2025 Jane H. Patrono (“Jane”), Alan Kim Patrono (“Alan”), and Jonathan Patrono (“Jonathan”) (collectively, “the Patronos”) appeal from the order denying their petitions to compel arbitration.1 We affirm.

This appeal arises out of a family dispute over the management and debts of a now-bankrupt winery and hard cider producer, known as “Hauser Estate.” Jane is the daughter of Helen Hauser (“Helen”). Jane is married to Alan, and they have two adult children, Jonathan and Polly Patrono Carlson (“Polly”). Alan and Jonathan are attorneys. Hannah M. Hauser (“Hannah”) and Melinda H. Davis (“Melinda”) are Jane’s sisters.

Helen had owned several properties in Adams County and used her land for her family’s apple orchard business. In 2006, at Jonathan’s suggestion, the family converted their orchard business into a wine and hard cider business under Hauser Estate. Jonathan held a majority of the voting shares of Hauser Estate and the position of president. Hannah and Melinda held

1 These interlocutory appeals involving the refusal to compel arbitration are

properly before this Court. See Pa.R.A.P. 311(a)(8); see also 42 Pa.C.S.A. §§ 7320(a)(1), 7321.29(a)(1), 7342(a) (discussing right to appeal order denying motions to compel arbitration). We have consolidated these appeals sua sponte as they involve the same facts, procedures, and legal issues, and the Patronos have filed identical briefs in all three appeals.

minorities of the voting shares. In 2007, the family also created Hauser Family Farms (“HFF”), a limited liability corporation (“LLC”), to which Helen transferred the real property on which Hauser Estate was operating. Helen died in 2012.

Hauser Estate obtained loans from Members First Federal Credit Union (“Members First”), which Hannah, Melinda, Jane, Alan, and Jonathan each secured with personal guaranties (“the guaranties”). The guaranties

contained arbitration clauses and confession of judgment provisions.2 Alan

2 The arbitration clauses stated:

Borrower and Guarantor and Lender agree that all disputes, claims and controversies between them whether individual, joint, or class in nature, arising from this Guaranty or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the Rules of the American Arbitration Association in effect at the time the claim is filed, upon request of either party.

No act to take or dispose of any Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any Collateral, including any claim to rescind, reform, or otherwise modify any agreement relating to the Collateral, shall also be arbitrated, provided however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. Judgment upon any award rendered by any arbitrator may be entered in any court having (Footnote Continued Next Page)

also drafted a contribution agreement among the three sisters, Melinda, Hannah, and Jane, that provided each sister would be one-third liable for future loans made by any one of the sisters, or Alan, to benefit Hauser Estate (“contribution agreement”).3 Hauser Estate began to fail, and it defaulted on the Members First loans.

The family discussed a sale of Hauser Estate but could not agree on a buyer. As the disputes among the family members increased, Alan drafted a corporate governance agreement for Hauser Estate (“governance

agreement”).4 Still, Hannah and Melinda believed Jane, Alan, and Jonathan

jurisdiction. Nothing in this Guaranty shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision.

Compl., Cumberland County, 2019-12302, 11/27/19, Exs. B & D. 3 While the Patronos asserted the contribution agreement bound Hannah and

Melinda, Hannah and Melinda disputed whether the contribution agreement was enforceable as it did not contain all terms they requested. See Answer to Third Am. Compl. with Am. New Matter and Counterclaims, 4/5/22, at 60- 61, 74-75; Answer to Am. New Matter and Counterclaims and New Matter, 9/12/22, at 12.

4 The Patronos asserted the governance agreement created in Hauser Estate

an executive committee to resolve family disputes. See Answer to Third Am. (Footnote Continued Next Page)

were mismanaging Hauser Estate for their own personal gains, while Jane, Alan, and Jonathan questioned whether Hannah and Melinda were acting in Hauser Estate’s best interests.

Events surrounding the family disputes accelerated in July 2018.

Hannah and Melinda formed H&M Holdings Group, LLC (“H&M”), which purchased the notes and guaranties on the Members First loans. Around that time, the Patronos engaged in numerous transfers of their interests in real property to Polly, Jane and Alan’s daughter/Jonathan’s sister (“the 2018 transfers”). By the end of July 2018, H&M filed complaints in Adams County for confession of judgment against the Patronos based on the notes and guaranties H&M acquired from Members First (“the first confessed judgments”). A court granted the Patronos’ motions to strike off the first confessed judgments after unsuccessful attempts at mediation.5 Meanwhile, Hannah, Melinda, H&M, and others (collectively, “the H&M

parties”) commenced a series of actions in various counties, which included

Compl. with Am. New Matter and Counterclaims, 4/5/22, at 67-68. They also claimed that the governance agreement had the goal of preserving the Members First loans and preventing defaults on the loans. See e.g., Jane’s Pet. to Strike or Open, Cumberland County, 2019-12302, 12/26/19, at 9. Hannah and Melinda admitted there was a governance agreement but denied that it created an executive committee. See Answer to Am. New Matter and Counterclaims and New Matter, 9/12/22, at 12.

5 The Adams County court struck the first confessed judgments because H&M

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