Thomas D. Horne, Chief Judge
Michael D. Sawyer, Esquire
23 North King Street
Leesburg, Virginia 20176 Mr. Lester A. Fettig
8016 West Point Drive
Springfield, Virginia 22153-3024 William B. Atwill, Jr., Esquire
101 North King Street
Leesburg, Virginia 20176 Gentlemen:
Abagail and David Roberts commenced this action at law on May 10, 2001. Named, as defendants were the Touchstone Development Corporation and Lester E. and Lisa A. Fettig. Mr. and Mrs. Roberts have since obtained a judgment against the corporate defendant in the amount of $42,527.59. At his request, Lester A. Fettig, Trustee for Touchstone Development was permitted to intervene and made a party to these proceedings. Lester A. Fettig, trustee, filed cross and third party claims against Lester E. Fettig and Lisa A. Fettig that are presently subject to review by the Court. Mr. and Mrs. Roberts have settled their individual claims against Lisa A. Fettig and Lester E. Fettig.
The Court was earlier asked to review its decision permitting intervention by the Trustee for the corporation. In a letter opinion dated January 2, 2002, the Court clarified its ruling with respect to intervention. It is not necessary for the Court to restate the matters contained in that opinion, the provisions of which are incorporated herein and should be read herewith.
As noted in the earlier letter opinion, Lester A. Fettig, Lester E. Fettig, and Lisa A. Fettig entered into a Memorandum of Understanding with respect to the past and future management of Touchstone Development Corporation. Pursuant to their understanding, Lester A. Fettig would take charge of winding up the affairs of the corporation as sole shareholder. He subsequently acted to appoint himself as Trustee for that purpose and proceeds in that capacity to intervene in this case.
The parties to the Memorandum have agreed that the corporation, with the cooperation of Lester A. Fettig would indemnify Lester E. Fettig and Lisa A. Fettig against third party claims. In addition, the Memorandum provided, inter alia, that,
1. Lester A. Fettig would "?take over and manage the affairs and debts of (Touchstone Development Corporation) to dissolution".
2. Lester E. and Lisa A. Fettig would cooperate, and Lester A. Fettig would use his best efforts to protect Lester E. and Lisa A. Fettig from third party claims.
3. Lester A. Fettig would take responsibility for collecting and protecting all assets from the Receiver or elsewhere, and that Lester E. and Lisa A. Fettig agree to cooperate in reasonable fashion with prior notice and coordination.
4. Lester E. and Lisa A. Fettig would cooperate fully with all third party actions, provided they are not named as parties and that they can refer to arbitration any request for cooperation they would think unreasonable.
5. Disagreements over the implementation of the Memorandum of
Understanding or in deciding "reasonable cooperation" would arbitrated, with the provision that the party losing the arbitration would be paying the costs.
Lester A. Fettig, trustee, has suggested in his papers that Lester E. and Lisa A. Fettig have not cooperated in the defense of this action.
Lester A. Fettig, trustee, has, in response to the letter opinion, filed a pleading styled "Trustee's Revised Pleadings". No request was made or leave granted to Lester A. Fettig to intervene other than in his official capacity as Trustee of the corporate defendant. In that pleading, the Trustee, asserts, inter alia, that Lester E. Fettig and Lisa A. Fettig failed to cooperate in the defense of the Roberts action and conspired with others to damage the business interests of the corporation. Under the terms of the Memorandum of Understanding, it was intended that Lester A. Fettig would take over management responsibility of the Corporation. Though not a signatory in his official capacity to the memorandum of understanding, Lester A. Fettig, as trustee, was the intended beneficiary of those signing the agreement. His trusteeship has become a vehicle through which the parties intended the management of the affairs and debts of the Corporation are accomplished.
Lisa A. and Lester E. Fettig have filed a responsive pleading to the pleadings offered by Lester A. Fettig, Trustee, styled "Motion to Strike Trustee's Revised Pleadings or in the Alternative, Response to Trustee's Revised Pleadings and Counter Cross Claim (or Third Party Counterclaim) and Third Party Bill of Complaint." This responsive pleading suggests that Lester A. Fettig, individually and as Trustee, exceeded the scope of the pleadings permitted by the Court's earlier letter opinion and that the Memorandum of Understanding would require that the issues between the Trustee and Lisa A. and Lester E. Fettig be submitted to arbitration. In addition, they claim that the Trustee was negligent and breached his fiduciary obligation to the Corporation and its shareholders by permitting a default judgment to be entered against the Corporation by the Roberts.
The Trustee has responded to the "Motion to Strike, etc." with a "Motion for Summary Judgment and Motion to Strike 'Defendant/Cross Claimant or the Third Party Defendants, as the Case May Be, Counter Cross Claim (or Third Party Counterclaim) and Third Party Bill of Complaint' (sic)'". The trustee correctly observes that Lester A. Fettig, in his individual capacity, has not been made a party to this action and that the pleading filed in response to the letter opinion of the Court was filed in his capacity as Trustee for the corporation. Accordingly, the motion for summary judgment as to Lester A. Fettig, individually, will be granted without prejudice.
However, the issue of cooperation, or the lack thereof, is expressly reserved to arbitration. Under the terms of the Memorandum, the Trustee as third party beneficiary and Lisa A. and Lester E. Fettig are required to submit the issue of cooperation to arbitration.
Lest this matter return from the Charybdis, to which it has devolved without complete relief in sight, it would seem expedient that any individual claims subject to arbitration be identified and brought forth before arbitration begins. Accordingly, the Court will stay further proceedings between the defendants/cross claimants in this case pending arbitration. However, this is not a bar to any proceeding that the plaintiffs may initiate to collect upon the judgment previously obtained against the corporation. Mr. and Mrs. Roberts are not parties to the Memorandum of Understanding and are not bound by its contents. Furthermore, the Court has permitted intervention in order that only those claims arising out of the Memorandum of Understanding would be litigated.
Mr. Fettig may draw and Order consistent with this opinion to which the parties may note their exception.
Very truly yours,
Thomas D. Horne, Chief Judge