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Court Dissolves Lis Pendens After Discovering Arbitration Clause

In a recent decision, Bliss Realty Trust v. Roos Company, LLC et al., Civil Action 2014-7562, Superior Court Judge Dennis Curran dissolved a lis pendens he had granted only months earlier after he learned that the party seeking the lis pendens failed to notify the Court that the contract at issue contained a binding arbitration provision.

The dispute arose after Bliss Realty Trust agreed to buy two commercial properties in Everett, Massachusetts, and Bliss and the seller, Roos Company, LLC, executed a Purchase and Sale Agreement.  The Court concluded that the parties were represented by counsel in an arms-length negotiation of the Purchase and Sale Agreement. After the Purchase & Sale Agreement was executed but before the transaction closed, Bliss filed suit against Roos, claiming that Roos and the agent that marketed the property, Summit Solutions, Inc., had made misrepresentations concerning the rent rolls and expenses of the properties' tenants. Bliss maintained that it would not have agreed to purchase the properties had it been aware of the alleged misrepresentations. Bliss filed a motion seeking a Memorandum of Lis Pendens, which the Court granted after an ex parte hearing.

Roos thereafter moved for dismissal of the lis pendens and to stay the proceedings pending arbitration of the matter.  In support of its motion, Roos relied on the "Alternative Dispute Resolution" clause in the Purchase & Sale Agreement, which provided that - if the parties were unable to reach an informal resolution of a dispute that arose from the Purchase & Sale Agreement after having made a good faith effort to do so - their "sole and exclusive means" for resolving disputes that arose from the Agreement was "final and binding arbitration."

The Court noted that Bliss's attorney had not disclosed the existence of the arbitration clause during the ex parte hearing on Bliss's motion for lis pendens. Bliss's papers similarly failed to mention the arbitration clause (though the contract was attached to the complaint).  As a result, the Court concluded that it was obligated to reconsider the motion for lis pendens.  Doing so, it decided that the arbitration clause was a material fact that should have been disclosed to the Court, and it dissolved the lis pendens and stayed the litigation pending the parties' submission of the matter to arbitration.

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