J-A02006-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MONONGAHELA VALLEY COUNTRY : IN THE SUPERIOR COURT OF CLUB, MONONGAHELA CEMETERY, : PENNSYLVANIA GARY FRITCH, FRED RAMSDEN AND : TWILA RAMSDEN, HUSBAND AND : WIFE, RICHARD BUCHIANERI AND : ROSEMARY BUCHIANERI, HUSBAND : AND WIFE, MICHAEL VUGRINOVICH : AND DARLENE VUGRINOVICH, : HUSBAND AND WIFE, PATRICIA : No. 421 WDA 2021 KOZON, LEONARD ALEXANDER AND : LISA ALEXANDER, HUSBAND AND : WIFE, JOHN BELLECINI AND : MARGARET BELLECINI, HUSBAND : AND WIFE, SCOTT BOORD AND : ADELLA BOORD, HUSBAND AND : WIFE, KEVIN BRUSNAHAN AND : RENEE BRUSNAHAN, HUSBAND AND : WIFE, RENEE BRUSNAHAN AND : GREGORY DOM PASCARELLA, AS : TENANTS IN COMMON, ROY : COWDEN AND RANDEE COWDEN, : HUSBAND AND WIFE, BRIAN DAVIS, : MARTHA MUNIZ, MARY BETH : GREGORINI, ODY DICKEY AND : LINDA DICKEY, HUSBAND AND : WIFE, ANTHONY DIMATTEO, : NORMAN DIMATTEO AND NANCY : DIMATTEO, HUSBAND AND WIFE, : RICHARD SCHUSTER AND MELISSA : SCHUSTER, HUSBAND AND WIFE, : JOANNA SCHUSTER, DENNIS : PELLEGRINI AND CAROL : PELLEGRINI, HUSBAND AND WIFE, : DONALD PELLEGRINI AND BERNICE : PELLEGRINI, HUSBAND AND WIFE, : MARK LEACH AND DORETTA LEACH, : HUSBAND AND WIFE, THE : PELLEGRINI FAMILY REVOCABLE : TRUST, ESTATE OF JOSEPH POPP, : LINDA FIDANZATO, ROBERT : SICKLES, AMY LEAVOR AND VICKI : SUTHERLAND : J-A02006-22
: : v. : : : EQT PRODUCTION COMPANY : : Appellant
Appeal from the Order Entered March 10, 2021 In the Court of Common Pleas of Washington County Civil Division at No(s): C-63-CV-2019-5165
MONONGAHELA VALLEY COUNTRY : IN THE SUPERIOR COURT OF CLUB, MONONGAHELA CEMETERY, : PENNSYLVANIA GARY FRITCH, FRED RAMSDEN AND : TWILA RAMSDEN, HUSBAND AND : WIFE, RICHARD BUCHIANERI AND : ROSEMARY BUCHIANERI, HUSBAND : AND WIFE, MICHAEL VUGRINOVICH : AND DARLENE VUGRINOVICH, : HUSBAND AND WIFE, PATRICIA : No. 511 WDA 2021 KOZON, LEONARD ALEXANDER AND : LISA ALEXANDER, HUSBAND AND : WIFE, JOHN BELLECINI AND : MARGARET BELLECINI, HUSBAND : AND WIFE, SCOTT BOORD AND : ADELLA BOORD, HUSBAND AND : WIFE, KEVIN BRUSNAHAN AND : RENEE BRUSNAHAN, HUSBAND AND : WIFE, RENEE BRUSNAHAN AND : GREGORY DOM PASCARELLA, AS : TENANTS IN COMMON, ROY : COWDEN AND RANDEE COWDEN, : HUSBAND AND WIFE, BRIAN DAVIS, : MARTHA MUNIZ, MARY BETH : GREGORINI, ODY DICKEY AND : LINDA DICKEY, HUSBAND AND : WIFE, ANTHONY DIMATTEO, : NORMAN DIMATTEO AND NANCY : DIMATTEO, HUSBAND AND WIFE, : RICHARD SCHUSTER AND MELISSA : SCHUSTER, HUSBAND AND WIFE, : JOANNA SCHUSTER, DENNIS : PELLEGRINI AND CAROL :
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PELLEGRINI, HUSBAND AND WIFE, : DONALD PELLEGRINI AND BERNICE : PELLEGRINI, HUSBAND AND WIFE, : MARK LEACH AND DORETTA LEACH, : HUSBAND AND WIFE, THE : PELLEGRINI FAMILY REVOCABLE : TRUST, ESTATE OF JOSEPH POPP, : LINDA FIDANZATO, ROBERT : SICKLES, AMY LEAVOR AND VICKI : SUTHERLAND : : : v. : : : EQT PRODUCTION COMPANY : : Appellant
Appeal from the Order Entered March 31, 2021 In the Court of Common Pleas of Washington County Civil Division at No(s): 2019-5165
BEFORE: OLSON, J., MURRAY, J., and PELLEGRINI, J.*
MEMORANDUM BY OLSON, J.: FILED: FEBRUARY 25, 2022
In this consolidated appeal, Appellant, EQT Production Company,
appeals the March 10, 2021 order overruling, in part, its preliminary
objections to the third-amended complaint filed by Monongahela Valley
Country Club, Monongahela Cemetery, Gary Fritch, Fred and Twila Ramsden,
Richard and Rosemary Buchianeri, Michael and Darlene Vugrinovich, Patricia
Kozon, Leonard and Lisa Alexander, John and Margaret Bellecini, Scott and
Adella Boord, Kevin and Renee Brusnahan, as husband and wife, Renee
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
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Brusnahan and Gregory Dom Pascarella, as tenants in common, Roy and
Randee Cowden, Brian Davis, Martha Muniz, Mary Beth Gregorini, Ody and
Linda Dickey, Anthony Dimatteo, Norman and Nancy Dimatteo, Richard and
Melissa Schuster, Joanna Schuster, Dennis and Carol Pellegrini, Donald and
Bernice Pellegrini, Mark and Doretta Leach, The Pellegrini Family Revocable
Trust, the Estate of Joseph Popp, Linda Fidanzato, Robert Sickles, Amy Leavor,
and Vicki Sutherland (collectively “Appellees”).1 Appellant also appeals from
the March 31, 2021 order denying its motion to reconsider the March 10, 2021
order overruling its preliminary objections. We vacate the March 10, 2021
order, in part, and remand this case for further proceedings in accordance
with this memorandum.2
A review of the record demonstrates that Appellees are a group of 29
property owners with land-holdings located in either the City of Monongahela
1 The March 10, 2021 order (1) overruled Appellant’s motion to strike the third-amended complaint on the ground Appellees failed to comply with the trial court’s protective order; (2) overruled Appellant’s preliminary objection asserting an agreement to arbitrate; (3) sustained, in part, and overruled, in part, Appellant’s demurrer to Count I of the third-amended complaint, striking claims for unpaid “delay in marketing” and “shut-in royalty” payments; (4) overruled Appellant’s demurrer to Counts II, III, and IV; and (5) overruled Appellant’s misjoinder objection. Trial Court Memorandum and Order, 3/10/21, at 22. On appeal, Appellant challenges the portion of the March 10, 2021 order that overruled the preliminary objection asserting an agreement to arbitrate.
2In light of our disposition of the appeal docketed with this Court at 421 WDA 2021, as explained more fully herein, Appellant’s appeal of the March 31, 2021 order, docketed with this Court at 511 WDA 2021, is moot.
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or Carroll Township, both of which are located in Washington County,
Pennsylvania. On various dates, 27 property owners entered into individual
oil and gas leases with Chesapeake Appalachia, LLC, and two property owners
entered into individual oil and gas leases with KIS Oil & Gas Company, Inc.
Thereafter, Appellant succeeded to the interests of Chesapeake Appalachia,
LLC and KIS Oil & Gas Company, Inc. with regard to these lease agreements.
On August 27, 2020, Appellees, collectively, filed a third-amended
complaint – action for declaratory judgment asserting claims for: breach of
contract (Counts I and II), negligent misrepresentation (Count III), and
fraudulent misrepresentation (Count IV) arising out of the 29 oil and gas lease
agreements. On September 17, 2020, Appellant filed preliminary objections
to Appellees’ third-amended complaint asserting, inter alia, that the trial court
lacked jurisdiction over the matter because the lease agreements contained
arbitration clauses requiring Appellees to submit their claims to arbitration.3
See Appellant’s Preliminary Objections to Third-Amended Complaint, 9/17/20,
at 6. Appellant filed a brief in support of its preliminary objections. On
October 2, 2020, Appellees filed a response to Appellant’s preliminary
objections, and, on October 30, 2020, Appellees filed a brief in opposition to
Appellant’s preliminary objections. The trial court entertained argument on
3Appellant concedes that the lease agreement involving Monongahela Valley Country Club is not at issue in this appeal because that lease agreement does not contain an agreement to arbitrate. Appellant’s Brief at 7 n.2., 32 n.7; see also Second-Amended Complaint, 7/22/20, at Exhibit 1z.
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Appellant’s preliminary objections, and, on March 10, 2021, the trial court,
inter alia, overruled Appellant’s preliminary objection asserting a lack of
jurisdiction in the trial court on the ground Appellees agreed to arbitrate the
matter. See Trial Court Memorandum and Order, 3/10/21, at 22.
On March 25, 2021, Appellant filed a motion for partial reconsideration
of the March 10, 2021 order overruling its preliminary objection as to the
agreement to arbitrate.4 On March 30, 2021, Appellant filed a notice of appeal
of the March 10, 2021 order that, inter alia, overruled its preliminary objection
pertaining to arbitration.5 On March 31, 2021, the trial court denied
Appellant’s motion for partial reconsideration on the ground that the
underlying order had been appealed. See Trial Court Order, 3/31/21 (stating,
“[a]s this matter has been appealed, this action shall be stayed pending
determination by [this Court]”).
On April 1, 2021, the trial court ordered Appellant to file a concise
statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b)
pertaining to the notice of appeal filed March 30, 2021. On April 21, 2021,
Appellant filed a notice of appeal of the March 31, 2021 order denying its
4Although Appellant filed its motion for partial reconsideration on March 25, 2021, the motion was not presented to the trial court until March 31, 2021. See Appellant’s Second-Amended Certificate of Presentation, 3/31/2021. Appellant also filed a brief in support of its motion for partial reconsideration on March 31, 2021.
5 The March 30, 2021 notice of appeal was docketed by this Court at 421 WDA 2021.
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motion for partial reconsideration.6 On April 22, 2021, the trial court ordered
Appellant to file a concise statement of errors complained of on appeal
pursuant to Rule 1925(b) pertaining to Appellant’s notice of appeal filed April
21, 2021. On April 23, 2021, Appellant filed a Rule 1925(b) statement
pertaining to the notice of appeal filed March 30, 2021. On May 17, 2021,
Appellant filed a Rule 1925(b) statement pertaining to the notice of appeal
filed April 21, 2021. On July 6, 2021, the trial court filed its Rule 1925(a)
opinion, relying, in part, on its March 10, 2021 memorandum and order that,
inter alia, overruled Appellant’s preliminary objection to compel arbitration.
Appellant raises the following issues for our review:
1. Did the trial court err in failing to consider the lease [agreement] with Monongahela Cemetery that [Appellant] attached to its preliminary objections and[,] instead[,] conclude[ed] that [Appellant] and Monongahela Cemetery were not bound by a valid arbitration agreement pursuant to the incorrect lease [agreement Appellees] attached to their [third-]amended complaint[, by incorporation from their second-amended complaint]?
2. Did the trial court err in failing to compel the parties to participate in individual, bilateral arbitrations where the 28 individual oil and gas lease[ agreements] at issue between the parties all contain unequivocal language requiring such arbitration?
6 The notice of appeal filed on April 21, 2021, was docketed by this Court at 511 WDA 2021. In a May 20, 2021 per curiam order, this Court ordered Appellant to show cause why the appeal of the order denying its motion for partial reconsideration should not be quashed. Appellant filed a response to the rule to show cause on June 2, 2021, and requested this Court consolidate the two appeals. In a June 25, 2021 per curiam order, this Court granted Appellant’s request and consolidated the two appeals.
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Appellant’s Brief at 6-7 (extraneous capitalization omitted).7
Preliminarily, we address Appellant’s appeal docketed by this Court at
511 WDA 2021, and whether the March 31, 2021 order denying Appellant’s
motion for partial reconsideration is an appealable order, since the
appealability of that order implicates this Court’s jurisdiction. See In re
Estate of Atkinson, 231 A.3d 891, 897 (Pa. Super. 2020) (reiterating that,
the appealability of an order implicates this Court’s jurisdiction to decide the
appeal).
Although an order overruling preliminary objections is an interlocutory
order and, generally, is not appealable, Pennsylvania Rule of Appellate
Procedure 311(a)(8) provides that, “[a]n order that is made final or
appealable by statute or general rule, even though the order does not dispose
of all claims and of all parties[,]” is appealable as of right without reference to
Pennsylvania Rule of Appellate Procedure 341(c). See Pa.R.A.P. 311(a)(8);
see also Pa.R.A.P. 341(c) (stating that, “[i]n the absence of [] a
determination [that an immediate appeal of an order entered as to one or
more but fewer than all of the claims and parties would facilitate resolution of
the entire case] and entry of [that order as] a final order, any order or other
form of decision that adjudicates fewer than all the claims and parties shall
not constitute a final order”). Section 7320(a)(1) of the Pennsylvania Uniform
Arbitration Act authorizes an appeal of right from an order “denying an ____________________________________________
7 For ease of disposition, Appellant’s issues have been renumbered.
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application to compel arbitration made under [42 Pa.C.S.A. § 7304] (relating
to proceedings to compel or stay arbitration).” 42 Pa.C.S.A. § 7320(a)(1). As
such, the March 10, 2021 order that overruled Appellant’s preliminary
objection asserting an agreement to arbitrate is an appealable order. See
Atkinson, 231 A.3d at 897; see also 42 Pa.C.S.A. § 7320(a)(1); Pa.R.A.P.
311(a)(8). Appellant perfected its appeal of the March 10, 2021 order by filing
a timely notice of appeal on March 30, 2021, thereby, invoking this Court’s
jurisdiction. Cardinal V. Kindred Healthcare, Inc., 155 A.3d 46, 49 n.1
(Pa. Super. 2017), appeal denied, 170 A.3d 1063 (Pa. 2017).
As to Appellant’s appeal of the March 31, 2021 order denying its motion
for partial reconsideration,8 “Pennsylvania case law is absolutely clear that the
8 Although Appellant appealed the March 10, 2021 order prior to filing its motion for reconsideration, Appellant was still permitted to file its motion for partial reconsideration because said motion was filed within the 30-day period following the entry of the March 10, 2021 order. See Valley Forge Ctr. Assocs. v. Rib-It/K.P., Inc., 693 A.2d 242 (Pa. Super. 1997) (stating that, Pennsylvania Rule of Appellate Procedure 1701 “allows the trial court to view its order for up to thirty days, even after an appeal has been filed, if a party files a petition for reconsideration within the 30-day appeal period and the trial court files an order ‘expressly granting’ reconsideration within the same period”); see also Pa.R.A.P. 1701(b)(3) (stating that, after an appeal is taken a trial court may grant reconsideration of the order that is the subject of appeal if a timely motion for reconsideration has been filed and the trial court files an order expressly granting reconsideration within the 30-day period following the entry of the order that it the subject of appeal); Gardner v. Consolidated Rail Corp., 100 A.3d 280, 283 (Pa. Super. 2014) (stating that, “[i]f a trial court fails to grant reconsideration expressly within the prescribed 30 days, it loses the power to act upon both the petition for reconsideration and the original order” (citation, brackets, and original quotation marks omitted)).
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refusal of a trial court to reconsider, rehear, or permit reargument of a final
decree is not reviewable on appeal.” Huntington Nat. Bank v. K-Cor, Inc.,
107 A.3d 783, 787 (Pa. Super. 2014), appeal denied, 117 A.3d 1281 (Pa.
2015). Nonetheless, this Court has declined to quash the appeal of a motion
to reconsider an order overruling a preliminary objection to compel arbitration
in light of its consolidation with the appeal of the underlying order overruling
said preliminary objection. See Highmark Inc. v. Hosp. Serv. Assoc. of
Northeastern Pennsylvania, 785 A.2d 93, 95 (Pa. Super. 2001), appeal
denied, 797 A.2d 914 (Pa. 2002). Therefore, we decline to quash Appellant’s
appeal of the order denying the motion for partial reconsideration as the issues
raised therein are properly before this Court as part of the appeal of the
underlying order overruling the preliminary objection to compel arbitration
and the two appeals have been consolidated. Highmark, 785 A.2d at 95.
Turning to the merits of Appellant’s appeal, Appellant’s issues challenge
an order overruling a preliminary objection to compel arbitration. In such
cases, our standard of review is as follows:
Our review of a claim that the trial court improperly denied preliminary objections in the nature of a petition to compel arbitration is limited to determining whether the trial court's findings are supported by substantial evidence and whether the trial court abused its discretion in denying the petition. 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.
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Davis v. Ctr. Mgmt. Group, LLC, 192 A.3d 173, 180, 182 (Pa. Super. 2018)
(citations, quotation marks, and brackets omitted) (stating that, “the issue of
whether a party agreed to arbitrate a dispute is a threshold, jurisdictional
question that must be decided by the [trial] court”). “Whether a written
contract includes an arbitration agreement and whether the parties’ dispute is
within the scope of the arbitration agreement are questions of law subject to
this Court's plenary review.” Atkinson, 231 A.3d at 898 (citations omitted).
Both Pennsylvania and federal law impose a strong public policy in favor of enforcing arbitration agreements. Accordingly, if a valid agreement to arbitrate exists and the dispute falls within the scope of the arbitration agreement, the dispute must be submitted to arbitration and the [trial] court's denial of arbitration must be reversed.
Id. (citations omitted); see also Davis, 192 A.3d at 183 (stating that, “[o]ur
Supreme Court [in Taylor v. Extendicare Health Facilities, Inc., 147 A.3d
490 (Pa. 2016)] has instructed courts to ‘consider questions of arbitrability
with a healthy regard for the federal policy favoring arbitration’”).
Initially, we consider Appellant’s claim that the trial court erred in relying
on the lease agreement between Appellant and Monongahela Cemetery that
was attached to Appellee’s second-amended complaint, and incorporated into
its third-amended complaint by reference, when it overruled Appellant’s
preliminary objection to compel arbitration.
Pennsylvania Rule of Civil Procedure 1028(c)(2) states that if an issue
of fact is raised by the party filing the preliminary objections, the trial court
“shall consider evidence by depositions or otherwise.” Pa.R.Civ.P. 1028(c)(2).
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The official Note to Rule 1028(c)(2) explains that when preliminary objections
assert an agreement to arbitrate that “cannot be determined from the facts of
record,” the trial court must consider evidence by deposition or otherwise in
order to resolve the factual issue. Id. at Note; see also Davis, 192 A.3d at
183 (stating that, an issue raised in a preliminary objection to compel
arbitration cannot be resolved by reference to facts pleaded in the complaint
alone but, rather, additional evidence is required for the trial court’s
consideration).
Here, Appellant, in its preliminary objection to compel arbitration, raised
an issue of fact pertaining to its lease agreement with Monongahela Cemetery.
See Appellant’s Preliminary Objections to Third-Amended Complaint, 9/17/20,
at ¶1 n.1. Specifically, Appellant averred that Appellees relied on an incorrect
lease agreement between Monongahela Cemetery and KIS Oil & Gas
Company, Inc., which Appellees identified as exhibit 1aa and incorporated by
reference into their third-amended complaint. Id. Appellant asserted that
the correct lease agreement between itself and Monongahela Cemetery was
attached to Appellant’s preliminary objections to the second-amended
complaint as exhibit 1 and incorporated by reference into Appellant’s
preliminary objections to the third-amended complaint. Id. Although
Appellant did not include a notice to plead in its preliminary objections to the
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third-amended complaint,9 Appellees, nonetheless filed a response to the
preliminary objections in which Appellees denied Appellant’s averments.10
In addressing the factual issue raised by Appellant in its preliminary
objection pertaining to the lease agreement, the trial court stated,
In [Appellant’s] preliminary objections and its brief, [Appellant] included footnote 1, in which [Appellant] stated that [Appellees] attached an incorrect lease [agreement to their third-amended complaint, via incorporation. Appellant] then referred [the trial] court to review a different lease [agreement] attached to [Appellant’s] preliminary objections to [Appellees’] second[-]amended complaint. However, [the trial] court will not give consideration to the lease [agreement] attached to [Appellant’s] prior preliminary objections. The lease [agreement Appellant] referred to was not incorporated into [Appellees’] third[-]amended complaint. Further, [Appellant’s] footnote was specifically denied by [Appellees].
Trial Court Memorandum and Order, 3/10/21, at 4-5 n.3.
We concur with the trial court that Appellant raised an issue of fact
pertaining to the lease agreement with Monongahela Cemetery in its
9 A preliminary objection to compel arbitration that raises an issue of fact must include a notice to plead or no response will be required under Pa.R.Civ.P. 1929(d). See Pa.R.Civ.P. 1028(c)(2) at Note; see also Davis, 192 A.3d at 183.
10 Although Appellees did not specifically deny the averments contained in footnote 1 of Appellant’s preliminary objections, such a denial may be inferred by Appellees’ general statement of denial – “[t]he allegations are specifically denied [in paragraph 1 of the preliminary objections] to the extent that the [lease agreements] speak for themselves.” See Appellees’ Answer to Preliminary Objections, 9/22/20, at ¶1. Moreover, “[a]verments in a pleading to which no responsive pleading is required shall be deemed to be denied.” Pa.R.Civ.P. 1029(d).
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preliminary objection to compel arbitration, but we find the trial court abused
its discretion when it did not consider the lease agreement attached to
Appellant’s preliminary objections to the second-amended complaint, which
was incorporated by reference into Appellant’s preliminary objections to the
third-amended complaint. See Appellant’s Preliminary Objections to
Third-Amended Complaint, 9/17/20, at 1 n.1 (stating, Appellant “attached
what it believes to be the correct [lease agreement] to [its] preliminary
objections to the second[-]amended complaint at exhibit 1” (extraneous
capitalization omitted)). Because Appellant raised an issue of fact pertaining
to which lease agreement - the lease agreement identified by Appellees as
Exhibit 1aa and incorporated into their Third-Amended Complaint or the lease
agreement attached to Appellant’s Preliminary Objections to the
Third-Amended Complaint - was the correct lease agreement with
Monongahela Cemetery, the trial court was required to consider additional
evidence pursuant to Rule 1028(c)(2), and its official Note, or to order the
parties to conduct additional discovery necessary to resolve the issue.11
A review of Appellees’ third-amended complaint reveals that Appellees
incorporated by reference the lease agreements that were attached to their
second-amended complaint. Third-Amended Complaint, 8/27/20, at ¶1 ____________________________________________
11 If a trial court requires additional evidence beyond that which is provided to resolve the issue and to rule on the preliminary objection to compel arbitration, the trial court can order the parties to conduct additional discovery. See Davis, 192 A.3d at 183 (stating that, the trial court may permit the parties to conduct discovery after receiving preliminary objections).
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(stating, the lease agreements, “being Exhibits 1(a) through 1(cc), are
attached to the [s]econd[-a]mended [c]omplaint and incorporated by
reference for judicial economy” (emphasis added)). It is clear from Appellees’
statement regarding incorporation of the lease agreements that the lease
agreement with Monongahela Cemetery, which was identified as Exhibit 1aa
in the second-amended complaint, was incorporated into the third-amended
complaint. Moreover, Appellees listed the lease agreement, and identified it
as Exhibit 1aa, in paragraph 1 of their third-amended complaint. Id.
Appellees averred that the lease agreement between Appellant and
Monongahela Cemetery had a “primary term” of December 27, 2011, to
December 27, 2016. Id. The lease agreement Appellees attached to their
third-amended complaint, via incorporation, and marked as Exhibit 1aa,
however, was dated September 27, 2006. See Second-Amended Complaint,
7/22/20, at Exhibit 1aa. The lease agreement marked as Exhibit 1aa stated
that it was for a term of 5 years, which meant that the lease agreement
expired on September 27, 2011.
The lease agreement that Appellant attached to its preliminary
objections to the third-amended complaint, vis-à-vis incorporation of the
exhibit attached to its preliminary objections to the second-amended
complaint, reveals that the lease agreement’s primary term was from
December 27, 2011, to December 27, 2016, which aligns with the averment
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made by Appellees in their third-amended complaint.12 Thus, when Appellees’
averments contained in their third-amended complaint are considered in
conjunction with the evidence submitted by Appellant, we find the trial court
abused its discretion and erred by considering the terms of the lease
agreement identified as exhibit 1aa, and attached to Appellees’
second-amended complaint, when it overruled Appellant’s preliminary
objection to compel arbitration. The lease agreement between Appellant and
Monongahela Cemetery pertinent to the case sub judice is the lease
agreement attached to Appellant’s preliminary objections to the
second-amended complaint, and we shall consider the same in addressing
Appellant’s remaining issue. We note that the significant difference between
the two lease agreements pertinent to the instant appeal is that the lease
agreement provided by Appellant as part of its preliminary objections to the
third-amended complaint contains an agreement to arbitrate clause, as more
fully discussed infra.
In its remaining issue, Appellant challenges a trial court order overruling
its preliminary objection to compel arbitration. To reiterate, our scope of
review is plenary, and we review the order overruling a preliminary objection
12 Specifically, the primary term of the lease agreement between Appellant and Monongahela Cemetery was from 12:00 a.m. on December 27, 2011, to 11:59 p.m. on December 26, 2016. See Appellant’s Preliminary Objections to Second-Amended Complaint, 8/10/20, at Exhibit 1.
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to compel arbitration for abuse of discretion. See Davis, 192 A.3d at 182;
see also Atkinson, 231 A.3d at 898.
Here, Appellant asserts that, “this case is not a class action, and
therefore, there is no impetus to send the parties to class arbitration.”
Appellant’s Brief at 19 (emphasis omitted). Appellant contends that the trial
court “simply assumed that if there could be no class arbitration[,] there could
be no arbitration at all, and forced the parties further down the litigation path,
even though that is not what [the parties] agreed to.” Id. at 18. Appellant
argues that the trial court “misinterpreted Stolt-Nielsen [S.A. v.
AnimalFeeds Int'l Corp., 559 U.S. 662, 684 (2010),] and its progeny[,] as
standing for the proposition that neither class nor individual arbitration is
permitted in cases involving claims by multiple plaintiffs who agreed to
separate arbitration provisions in separate leases that are silent about class
arbitration.” Id. at 19. Appellant asserts that 28 of the lease agreements
contained “a valid arbitration agreement that compelled individual
arbitrations” and that the trial court erred in failing to compel individual,
bilateral arbitration. Id. at 29.
Appellees assert that “[j]udicial economy requires that the parties
participate in one group or class litigation [] rather than 28 separate and
distinct arbitration proceedings.”13 Appellees’ Brief at 10. Appellees ____________________________________________
13Appellee, by reference to 28 lease agreements, concedes that the lease agreement between Appellant and Monongahela Valley Country Club is not part of the instant appeal.
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acknowledge that their third-amended complaint was filed as a group cause
of action involving 29 individual party-plaintiffs but assert that they anticipate
that their group cause of action will become a class action in the future.14 Id.
at 9. ____________________________________________
14 We cannot agree with Appellees’ assertion that the instant cause of action will become a class action in the future. Pennsylvania Rule of Civil Procedure 1704 requires, at the outset, that the complaint include in its caption the designation “Class Action.” Pa.R.Civ.P. 1704(a). Rule 1704(b) requires, inter alia, that “[t]he complaint shall contain under a separate heading, styled “Class Action Allegations,” averments of fact in support of the prerequisites of Rule 1702[.]” Pa.R.Civ.P. 1704(b). The averments of fact in support of the prerequisites of Rule 1702 include averments that,
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; (4) the representative parties will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709; and (5) a class action provides a fair and efficient method for adjudication of the controversy under the criteria set forth in Rule 1708.
Pa.R.Civ.P. 1702.
A review of Appellees’ third-amended complaint demonstrates that, while they may “anticipate” that their group cause of action will become a class action in the future, they failed to include the necessary requirements for that designation in their current complaint. As such, the current cause of action is unable to become a class action and, instead, is, and will remain, simply a cause of action with multiple plaintiffs.
In their brief, Appellees further contend that “prior to filing [its] motion for partial reconsideration, Appellant asserted that the [trial] court should compel Appellees to participate in a group or class arbitration proceeding.” Appellees’
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Brief at 8 (extraneous capitalization omitted). Appellees fail to cite to the record where we may find support for this assertion.
Rather, a review of Appellant’s preliminary objections to the third-amended complaint demonstrates that Appellant sought to compel arbitration, and did not specifically state that it was seeking class action arbitration. Appellant’s averments in support of its request to compel arbitration are as follows:
23. The [trial] court lacks jurisdiction because [Appellees] agreed to arbitrate their claims under the [lease agreements]. 24. There is a strong public policy favoring arbitration in [the] Commonwealth [of Pennsylvania]. 25. The [lease agreements] contain a valid arbitration agreement. 26. [Appellees’] claims fall within the arbitration clause of the [lease agreements.]
Appellant’s Preliminary Objections to Third-Amended Complaint, 9/17/20, at ¶¶23-26 (extraneous capitalization omitted). Moreover, in its brief in support of its preliminary objections to the third-amended complaint, Appellant argues,
[Appellees] have misjoined what are in effect [116] separate causes of action, i.e., two [] breach of contract claims, a negligent misrepresentation claim, and an intentional misrepresentation claim for [29] separate [lease agreements] because they do not arise out of the same transaction or occurrence and do not involve common questions of fact or law. Whether [Appellant] breached and made misrepresentations related to [29 lease agreements,] in multiple different ways for each [lease agreement], and if so, each [Appellee’s] measure of damages requires individualized inquiry into specific facts and precludes resolving all of [Appellees’] claims in one action.
Appellant’s Brief in Support of Preliminary Objections to Third-Amended Complaint, 9/17/20, at 2. To reiterate, “the ship has sailed” on Appellees’ ability to bring a class action lawsuit in the instant case, and it is apparent from Appellant’s averments and argument that they were not seeking class action arbitration.
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The trial court found that Appellant’s lease agreements with
Monongahela Valley Country Club (exhibit 1z) and Monongahela Cemetery
(exhibit 1aa) did not contain agreements to arbitrate. Trial Court
Memorandum and Order, 3/10/21, at 5-6. Regarding the 27 remaining leases
(Exhibits 1a-1y and 1bb-1cc), the trial court found that each lease agreement
contained an agreement to arbitrate with 21 of the lease agreements having
the same arbitration clause and 6 lease agreements having a modified
arbitration clause. Id. at 4-6. In overruling Appellant’s preliminary objection
to compel arbitration, the trial court explained,
With regard to these 27 [] lease[ agreements, Appellees] argue that the arbitration provision is not enforceable because this is class action litigation.
...
[T]he 27 [lease agreements], in this case, make no express mention of "arbitration for a wider group." The two [] lease[ agreements, those being the lease agreements involving Monongahela Valley Country Club and Monongahela Cemetery,] contain no provision requiring arbitration. Therefore, [Appellees’] lease[ agreements] do not include an enforceable provision to arbitrate wider group claims such as those they are advancing in this action.
Id. at 6-7. In other words, the trial court held that because Appellees
represented that this case was, or would become, a class action, and the lease
agreements either did not contain an agreement to arbitrate or contained an
agreement to arbitrate but not in a class action, the trial court could not
enforce a class action arbitration. See id. at 6 (stating, “[i]ndeed, a party
may not be compelled to submit to class arbitration unless there is a
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contractual basis for concluding that the party agreed to do so”), relying on,
Stolt-Nielsen, supra.
A review of the record demonstrates that the various lease agreements
contain the following arbitration clauses:
In the event of a disagreement between Lessor and Lessee concerning this Lease, performance thereunder, or damages caused by Lessee’s operations, the resolution of all such disputes shall be determined by arbitration in accordance with the rules of the American Arbitration Association. All fees and costs associated with the arbitration shall be borne equally by Lessor and Lessee.
See Second-Amended Complaint, 7/22/20, at Exhibits 1a, 1b, 1c,15 1d, 1e,
1f, 1g, 1h,16 1i, 1k, 1l, 1m (as to parcel 420-011-00-02-0003-00), 1o,17 1p,
1q, 1r, 1s, 1t, 1v, 1x, 1y, and 1bb.
In the event of a disagreement between Lessor and Lessee concerning this Lease or the associated Order of Payment, performance thereunder, or damages caused by Lessee’s operations, the resolution of all such disputes shall be determined
15The exhibits attached to the second-amended complaint contain three lease agreements marked “1c,” each pertaining to a different parcel of land but having the same Lessors. All three lease agreements contain the same arbitration clause, as depicted supra.
16 The exhibits attached to the second-amended complaint contain two lease agreements marked “1h,” each pertaining to a different parcel of land but having the same Lessors. Both lease agreements contain the same arbitration clause, as depicted supra.
17 The exhibits attached to the second-amended complaint contain two lease agreements marked “1o,” each pertaining to a different parcel of land but having the same Lessors. Both lease agreements contain the same arbitration clause, as depicted supra.
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by arbitration in accordance with the rules of the American Arbitration Association. Arbitration shall be the exclusive remedy and cover all disputes, including but not limited to, the formation, execution, validity and performance of the Lease and Order of Payment. All fees and costs associated with the arbitration shall be borne equally by Lessor and Lessee.
See Second-Amended Complaint, 7/22/20, at Exhibits 1j, 1m (as to parcel
420-011-00-02-0002-00), 1n, 1u, 1w, and 1cc; see also Appellant’s
Preliminary Objections to Second-Amended Complaint, 8/10/20, at Exhibit 1.
A review of the lease agreements pertinent to 28 of the party-plaintiffs,
excluding only the lease agreement involving Monongahela Valley Country
Club, demonstrates that each party-plaintiff and Appellant had a valid
agreement to arbitrate. Moreover, the arbitration clauses, by including the
statement “In the event of a disagreement between Lessor and Lessee
concerning this Lease,” required Appellees to submit all disputes involving the
lease agreements to arbitration. Therefore, Appellees causes of action for
breach of contract arising from a failure to pay “delay rental” payments and
“additional bonus money/rent”, negligent misrepresentation of the continuing
existence of a valid lease agreement, and fraudulent misrepresentation of the
continuing existence of a valid lease agreement fall within the scope of the
arbitration agreement. Consequently, Appellees, excluding Monongahela
Valley Country Club, are required to submit their claims to arbitration and are
not permitted to bring them before the Court of Common Pleas of Washington
County at this time. As such, we find the trial court abused its discretion and
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erroneously applied the law in overruling Appellant’s preliminary objection to
compel arbitration as to 28 of the party-plaintiffs.
We vacate, in part, the trial court’s March 10, 2021 order as it pertains
to the overruling of Appellant’s preliminary objection to compel arbitration as
to the 28 party-plaintiffs. We remand this case to the trial court with the
instruction to enter an order sustaining the preliminary objection to compel
arbitration in accordance with this memorandum. The 28 party-plaintiffs are
required to submit their causes of action to arbitration.
Order vacated, in part. Case remanded with instructions. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 02/25/2022
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