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Michelle Bergman, Jeffrey D. Bergman, David v. Spruce Peak Realty

December 13, 2012

MICHELLE BERGMAN, JEFFREY D. BERGMAN, DAVID FRIEND, STEPS AWAY AT STOWE MOUNTAIN LLC, PATRICK SULLIVAN, SHELAGH SULLIVAN, KAREN HESSE FLATOW, TALL PINES LLC, AND GEORGE WILSON, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED PERSONS, PLAINTIFFS,
v.
SPRUCE PEAK REALTY, LLC AND STOWE MOUNTAIN LODGE, LLC, DEFENDANTS.



The opinion of the court was delivered by: William K. Sessions III District Court Judge

MEMORANDUM OPINION and ORDER

In this pair of class action complaints both parties have moved to consolidate the actions pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. The Plaintiffs seek to amend their complaint in Docket No. 2:11-cv-127 ("the '127 action" or "the Declaration lawsuit") pursuant to Rule 15(a)(2) of the Federal Rules of Civil Procedure, which the Defendants do not oppose. The Plaintiffs have moved to lift the stay pending arbitration imposed on November 14, 2011 in the '127 action. The Defendants oppose lifting the stay in the '127 action. In Docket No. 2:11-cv-128 ("the '128 action" or "the SAS Covenant lawsuit"), the Defendants seek to compel arbitration and to stay the action pending the outcome of arbitration, which the Plaintiffs oppose. The Plaintiffs' Motion to Lift the Stay, Amend Complaint and Consolidate Actions in the '127 action, ECF No. 39, is granted. The Defendants' Motion to (A) Consolidate Civil Action Nos. 2:11-cv-127 and 2:11-cv-128; (B) Compel Arbitration of the '128 Action; and (C) Stay the Consolidated Action Pending the Outcome of Arbitration, ECF NO. 57, is granted. The Plaintiffs are given leave to file their amended complaint in the '127 action. The cases are consolidated. The stay in the '127 action is lifted. The Defendants' motions to compel and to stay the consolidated action are granted.

I. Background

On May 13, 2011, Plaintiffs, owners of interests in residential units in the Stowe Mountain Lodge Condominium ("Condominium"), filed two class action lawsuits in this Court against the developers of the Condominium, the Declaration lawsuit and the SAS Covenant lawsuit. In the Declaration lawsuit Plaintiffs sought reformation of the Declaration, as well as damages under the Vermont Common Interest Ownership Act ("VCIOA"), under the Vermont Consumer Fraud Act ("VCFA"), and for common law fraud. See Class Action Compl., '127 action, ECF No.

1. In the SAS Covenant lawsuit Plaintiffs seek to void or reform the SAS Covenant or rescind their Condominium purchases, as well as to obtain damages under the VCIOA, the VCFA, the Interstate Land Sales Full Disclosure Act of 1968 ("ILSA"), and for breaches of the SAS Covenant. See Second Am. Class Action Compl., '128 action, ECF No. 41. Plaintiffs also commenced an arbitration action on May 23, 2011, with respect to the '127 action claims, and sought to stay the '127 action pending the outcome of arbitration.

This Court granted the stay on November 14, 2011, finding that under the arbitration clause in the Stowe Mountain Lodge Condominium ("SML") Declaration, issues of arbitrability were for the arbitrator to resolve. Mem. Op. & Order 7, '127 action, ECF No. 33. On July 10, 2012, the Arbitrator issued Procedural Order ("P.O.") No. 3, in which he ruled that claims for declaratory relief and for breach of contract are arbitrable, and that statutory and common law fraud and misrepresentation claims are not. See P.O. No. 3 at 14, '127 action, ECF No. 39-2. On the same day, the Arbitrator issued a Partial Final Clause Construction Award ("PFCCA"), ruling that the claims for declaratory relief and for breach of contract are not arbitrable on a class basis. See PFCCA 23, '127 action, ECF No. 39-1. The PFCCA was confirmed by this Court on August 23, 2012.

The Arbitrator's rulings substantially limited the number of claimants and claims in the arbitration proceeding.

Following the Arbitrator's rulings, the Defendants moved to compel arbitration of the '128 action, consolidate it with the '127 action and stay the consolidated action pending the outcome of arbitration. The Plaintiffs moved in the '127 action to lift the stay, amend their complaint and consolidate it with the '128 action. Their proposed amended class action complaint deleted the claims over which the Arbitrator assumed jurisdiction, and consists of a request for declaratory relief to prohibit Defendants from collecting charge-back assessments and to require them to install individual electric meters for each residential unit; and a statutory consumer protection claim for failure to disclose charge-backs to the residential unit owners and for misrepresentation concerning sub-metering of electricity consumption.

II. Discussion

A. Motion to Amend & Motions for Consolidation*fn1

Rule 15(a)(2) permits a party to amend its pleading by leave of court or with the opposing party's written consent. Fed. R. Civ. P. 15(a)(2). The Defendants have consented to the amendment, and the Court grants leave to Plaintiffs to file an amended complaint in the '127 action.

Rule 42(a) of the Federal Rules of Civil Procedure permits consolidation of actions that involve common questions of law or fact. Fed. R. Civ. P. 42(a)(2). The parties acknowledge and the Court finds that the two actions involve common questions of law and common facts. The '127 action and the '128 action are hereby consolidated.

B. The Motion to Compel Arbitration

"'Under the [Federal Arbitration Act ("FAA")], the role of courts is limited to determining two issues: I) whether a valid agreement or obligation to arbitrate exists, and ii) whether one party to the agreement has failed, neglected or refused to arbitrate.'" LAIF X SPRL v. Axtel, S.A. de C.V., 390 F.3d 194, 198 (2d ...


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