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50 Plus Pharmacy v. Choice Pharmacy Sys., LLC -- Plaintiff-friendly Arbitration Case Relating to Sale of a Business

Buyers moved to compel arbitration in underlying litigation filed by 50 Plus Pharmacy, Inc./Sellers.  Motion to compel denied by trial court.  Sellers allege that the opposing parties breached their respective obligations under the governing agreement and that Buyers engaged in tortious conduct unrelated to any attempt of any party to collect escrowed funds.  Thus, narrow arbitration provision (relating exclusively to an escrow agreement) found not to compel the parties to arbitrate claims in underlying litigation.

Court summary:

Choice Pharmacy Systems, LLC; Choice Pharmacy Services, LLC d/b/a Partners Pharmacy; and Kathy Kopp appeal the ruling of the Circuit Court of Jackson County, Missouri, denying their motion to compel arbitration in the underlying litigation against them filed by 50 Plus Pharmacy, Inc. and Kathy Browne. On appeal, appellant buyers of a pharmacy business claim that the circuit court erred in ruling that the dispute between them and the selling parties was not required to be submitted to arbitration and that the issue of arbitrability of the dispute should have been, in the first instance, decided by the arbitrator and not by the court.

AFFIRMED.

Division I holds: While parties may agree to submit matters to arbitration, including the gateway issue of who will decide whether a dispute is arbitrable, delegation of gateway arbitrability questions must be clear and unmistakable in order to remove consideration of the matter from the courts. In this case, a clause providing for arbitration of a narrow class of disputes governed by an agreement subordinate to the asset purchase agreement between the parties, which stated that any arbitration of such issues would be in accordance with the rules of the American Arbitration Association, did not sufficiently clearly and unmistakably establish the parties’ intent to submit questions of arbitrability to an arbitrator instead of to the courts, whose jurisdiction was broadly asserted in the asset purchase agreement. Moreover, the court properly concluded that the narrow arbitration clause did not compel arbitration of the parties’ disputes where there was no evidence in the record that the buyers of the business had completed actions triggering the parties’ obligation to arbitrate and where at least some of the sellers’ claims clearly fell outside of the arbitration provision.

© Copyright 2022 Armstrong Teasdale LLP. All rights reserved National Law Review, Volume V, Number 90
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About this Author

John F. Cowling, Litigation Attorney, Armstrong Teasdale, Law firm
Partner

An accomplished litigator, John Cowling counsels organizations through a range of strategic business decisions. He practices primarily in the areas of general litigation, environmental litigation and information technology law.

314-621-5070
Jeffery T. McPherson, Trial attorney, Armstrong Teasdale Law Firm
Partner

Jeff McPherson is a trial and appellate lawyer handling all phases of commercial, tort, real estate, municipal and governmental litigation. He is AV® peer review rated, Martindale-Hubbell’s highest rating for legal ability and ethical standards. 

314-552-6610
Laura A. Bentele, Litigation Attorney, Armstrong Teasdale, Law firm
Associate

Laura Bentele is an associate attorney in the Litigation group practicing in the areas of complex commercial litigation and white collar criminal defense. To achieve optimal outcomes, Laura anticipates clients’ strategic and practical business considerations. Committed to effective case management, she is versed in all phases of discovery, trial preparation and negotiation of settlements with opposing counsel. Laura strives to maintain open avenues of communication to ensure that clients receive representation that meets their business needs.

314-342-4133
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