PITTSBURGH — A federal magistrate judge has ordered the failed high-bidder for a hotel in Westmoreland County into arbitration earlier to resolve differences over that failed bid.
Nainesh Patel had 45 days from the date of the nine-page memorandum opinion issued Feb. 20 by U.S. District Court Magistrate Judge Lisa Pupo Lenihan, on the bench in U.S. District Court for the Western District of Pennsylvania, to proceed to arbitration.
The order followed Lenihan's decision to grant motions to compel arbitration filed by Premier Hospitality Group - New Stanton II and Garrison Investment Group.
The court "will retain jurisdiction pending the outcome," Judge Lenihan said in her memorandum opinion.
Separate actions against Patel by Premier Hospitality Group and Garrison Investment Group stem from Premier's auction of a hotel Westmoreland County, according to the background portion of Lenihan's memorandum opinion. Patel, as the high bidder, executed the agreement in the case but then didn't immediately deposit earnest money, and differences arose that resulted with Premier Hospitality Group declaring Patel in breach in October 2016. The hotel was sold to another bidder.
Shortly after, Patel filed suit in California federal court, where it was dismissed on jurisdiction grounds.
The following November, Premier Hospitality Group filed a demand for arbitration, which Patel disputed and then filed suit in Georgia's Middle District, which ultimately transferred the matter to the Pennsylvania district court. Meanwhile, Premier Hospitality Group had filed a petition for a rule to show cause regarding arbitration in Westmoreland County Court of Common Pleas.
"Thereafter, the parties unsuccessfully attempted mediation and Premier filed its amended motion to compel arbitration," Lenihan's memorandum opinion.
In August, Lenihan denied Patel's motion for dismissal or transfer, saying the August 2016 agreement of purchase and sale and joint escrow into which the parties entered Instructions entered into by the parties " are not rendered a nullity by [Premier Hospitality Group]'s allegations, however colorable."
The agreement includes "facially broad" requirements for binding arbitration in the county where the real property in dispute is located, in this case in Westmoreland County, Lenihan said in her August ruling.
In her memorandum opinion this past February, Lenihan addressed Patel's assertion that he was not bound by the agreement's arbitration provisions because the agreement was terminated when Premier Hospitality Group failed to timely approve the transaction.
"As this Court has 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," Lenihan said.
"Any effect of the parties' subsequent conduct on their contractual obligations under the Agreement was committed to arbitration by clear mutual intent and consent. 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 arbitral, and challenges to a contract’s formation, which generally are not.' 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."