Deutsch v. G&D Furniture Holdings (Ct. of Special Appeals, Unreported)

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.