Filed: August 28, 2017
Opinion by: Judge Nazarian
Holding:
A
business owner’s requests for inspection of financial books and records
relating to the management of a corporation and for the appointment of a
receiver fall within the arbitration provision in a Stockholders Agreement that
set forth comprehensive agreements involving many businesses and 55 investors.
Facts:
Plaintiff and Defendant jointly
owned many retail furniture businesses.
In 2006, the parties executed a Stockholders Agreement, which replaced a
1990 agreement. The Stockholders
Agreement set forth comprehensive agreements regarding the ownership of the
companies, transferability of corporate shares, management of the companies, composition
of the board of directors, division of profits, payment of dividends,
maintenance of life insurance policies on stockholders, as well as providing
for mediation and arbitration “in the event that there is any dispute between
the parties regarding this Agreement.”
As the businesses encountered
setbacks, the parties held different views about the operation and management
of the business, financial decisions, the creation of other entities to which
business assets allegedly were transferred, and decisions to wind down the
original businesses. The disputes between
the parties ultimately led to litigation.
The Court of Special Appeals affirmed the Circuit Court for Anne Arundel
Court’s decision that the Stockholders Agreement’s arbitration clause should be
read broadly to include the requests for a receiver and to inspect the books.
Analysis:
The Maryland Uniform Arbitration
Act “embodies a ‘legislative policy’ in favor of the enforcement of
agreement[s] to arbitrate.” Harris v. Bridgford, 153 Md. App. 193,
201 (2003) (quoting Allstate Ins. Co. v.
Stinebaugh, 374 Md. 631, 641 (2003)).
Although arbitration is favored, the contract language and intent of the
parties must be respected. “Where there
is a broad arbitration clause calling for the arbitration of any and all
disputes arising out of the contract, all issues are arbitrable unless
expressly and specifically excluded.” Gold Coast Mall, Inc. v. Larmar Corp.,
298 Md. 96, 104 (1983).
Combined with the policy to read
arbitration clauses broadly (The
Redemptorists v. Coulthard Servs. Inc., 145 Md. App. 116, 149 (2002)
(citing NSC Contractors, Inc. v. Borders,
317 Md. 394, 403 (1989)), the Court held the arbitration clause’s “regarding
this Agreement” language indicated that the parties intended to require
alternative resolution of everything they disputed.
The Court also held that the
Defendants did not waive their right to compel arbitration of the claims in the
counterclaim merely by filing pleadings in this litigation (their pleadings
requested the court compel arbitration).
This is an unreported
opinion. See Md. Rule 1-104.
The full opinion is available PDF.