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U.S. Small Business Administration v. Chimicles

May 10, 2006

THE U.S. SMALL BUSINESS ADMINISTRATION, AS RECEIVER FOR ACORN TECHNOLOGY FUND, L.P.
v.
PETER E. CHIMICLES, APPELLANT
THE U.S. SMALL BUSINESS ADMINISTRATION, AS RECEIVER FOR ACORN TECHNOLOGY FUND, L.P.
v.
LEONARD BARRACK; LYNNE BARRACK, APPELLANTS



On Appeal from the United States District Court for the Eastern District of Pennsylvania District Judge: Hon. James T. Giles. D.C. Civil Nos. 03-cv-05987 & 03-cv-05992).

The opinion of the court was delivered by: Michel, Circuit Judge

PRECEDENTIAL

Argued April 18, 2006

Before: SLOVITER, AMBRO and MICHEL*fn1, Circuit Judges

OPINION OF THE COURT

In these consolidated cases, Peter E. Chimicles appeals from an order of the United States District Court for the Eastern District of Pennsylvania, denying his motion to stay proceedings pending mandatory arbitration; Leonard and Lynn Barrack appeal a similar order. Because we agree that these contractual disputes, each concerning an agreement without an arbitration provision, were not subject to an arbitration provision contained in a separate (but related) agreement, we affirm the district court's orders in both cases.

I. Background

This appeal concerns only two of the myriad of cases that revolve around Acorn Technology Fund, LP ("Acorn"), a New Jersey limited partnership founded in 1997. Acorn's general partner was Acorn Technology Partners, LLC, a New Jersey limited liability corporation run by John B. Torkelsen.

Appellants Chimicles and the Barracks were private limited partners in this venture. They both executed (1) a partnership agreement with Torkelsen acting on behalf of the general partner and (2) a subscription agreement with Acorn. In the latter, each agreed to make capital contributions to the partnership in exchange for a limited partnership interest.

Acorn was licensed by the United States Small Business Administration ("SBA") as a Small Business Investment Company ("SBIC") pursuant to the Small Business Investment Act of 1958 ("SBIA"), 15 U.S.C. §§ 661-697g. Once licensed, an SBIC can receive as much as $2 in federal matching funds for each private dollar it invests in qualified small businesses. 15 U.S.C. § 683. It must, however, conduct its activities according to the SBIA and its accompanying regulations. 13 C.F.R. § 107.500.

On January 7, 2003, the United States filed an action against Acorn, alleging various violations of the SBIA and seeking appointment of a receiver. On January 17, 2003, the SBA was appointed as receiver and, as such, was authorized to defend and pursue all "claims and causes of action available to Acorn, as warranted." The district court also stayed all civil litigation "involving Acorn, the Receiver, or any of Acorn's past or present officers, directors, managers, agents or general or limited partners," unless specifically permitted by the court. Order for Operating Receivership, United States v. Acorn Technology Fund, L.P., No. 03-cv-0070 (E.D. Pa. Jan. 17, 2003). The instant cases, which were allowed to proceed despite the stay, involve the SBA's attempts to marshal Acorn's assets by making demands upon the limited partners for outstanding amounts owed on their investor subscription agreements.

A. Chimicles

Pursuant to an earlier agreement not relevant to this dispute, Chimicles subscribed to a $250,000 commitment as a private limited partner. On September 15, 2000, he agreed to an additional $65,000, bringing his total commitment to $315,000. It is undisputed that Chimicles fulfilled his $250,000 obligation but did not pay the additional $65,000, although he asserts that Torkelsen released him from this latter commitment.

By letter dated June 12, 2003, the SBA made a written demand upon Chimicles for the unpaid balance. When he refused to honor his subscription commitment, the SBA filed a complaint against him, alleging breach of his subscription agreement with Acorn. On January16, 2004, Chimicles filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, to stay the case pending mandatory ...


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