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Anthony L. Gatta v. Joseph L. Gatta

October 26, 2012

ANTHONY L. GATTA, PLAINTIFF-RESPONDENT,
v.
JOSEPH L. GATTA, AND JOSEPH GATTA & SONS, INC., DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. C-126-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 24, 2012 -

Before Judges Graves, Espinosa, and Guadagno.

Defendants Joseph L. Gatta and Joseph Gatta & Sons, Inc. (JG&S), appeal from an order of the Chancery Division entered January 20, 2012, denying their motion to compel arbitration. For the reasons that follow, we reverse.

JG&S is a closely-held, family-owned company, incorporated and headquartered in Pennsylvania. Joseph Gatta is president of JG&S and his brother, Anthony; his father, Kenneth; and Katherine DeBellis are shareholders.

In February 1996, the four shareholders*fn1 entered into a Shareholders' Agreement (Agreement) with the primary purpose of ensuring that the family would remain in control of the corporation. The Agreement set terms restricting the shareholders' right to sell their shares of the corporation. If a shareholder received a bona fide offer to purchase his shares, the corporation and the other shareholders would have the first option to purchase those shares at the price of the bona fide offer.

The Agreement also provided that certain actions by a shareholder would be considered an offer to sell their shares. This "deemed offer" provision was designed to address the shareholders' concern that "the interests of the Corporation and its Shareholders would be seriously affected by any voluntary or involuntary sale or disposition of a Shareholder's Shares by any legal or equitable proceedings against or concerning such Shareholder, or attempted transfer of Shares by a Shareholder without compliance with the terms of this Agreement." If a shareholder triggered the deemed offer provision, the corporation had the right to repurchase that shareholder's shares at seventy percent of book value.

Two of the "trigger provisions" are relevant to this appeal. Section C(1)(h) of the Agreement provides that the following will be considered a deemed offer event:

Any Shareholder voluntarily or involuntarily attempts to sell, assign, transfer, give, bequeath, devise, donate or otherwise dispose of by operation of law or otherwise, any or all of the Shares that may now or hereafter be held or owned by that Shareholder except as expressly permitted by this Agreement[.]

Section C(1)(g) provides another event that will be considered a deemed offer:

There is instituted by or against a Shareholder any other form of legal proceeding or process by which any of the Shares of such Shareholder may be sold either voluntarily or involuntarily, by operation of law or otherwise[.]

Also of significance to this appeal, the Agreement contains an arbitration clause which provides:

All claims, demands, disputes, controversies, differences or misunderstandings between or among the parties hereto or any other persons bound hereby arising out of or by virtue of this Agreement ...


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