The Court Of Appeal Construes The Arbitration Provision As "Narrow" Rather Than "Broad."
The Court of Appeal reverses confirmation of an arbitration award in Thomas Ahern et al. v. Asset Management Consultants, Inc., et al., B309935 (2/7 2/1/22) (Perluss, Segal, Feuer).
The underlying dispute was between a co-tenant, Ahern, who purchased a co-tenant interest in an office building from Asset Management Consultants, who acquired the building from iStar. Asset Management Consultants compelled arbitration against Ahern based on an arbitration provision in the co-tenancy agreement. This was reversed on appeal, because Ahern's dispute with Asset Management Consultants did not "arise under" the co-tenancy agreement. The dispute related to representations made during the acquisition of the building, not to the management and operation of the building under the co-tenancy agreement.
Arbitration clauses requiring a dispute to "arise under" an agreement are interpreted to be narrower in scope than clauses providing for arbitration of "any dispute" or clauses providing for disputes "arising from or related to" an agreement. The clause at issue here was construed to be a narrow one.
COMMENT: It seems that Ahern will get another bite out of the apple. But we don't know whether a judge will rule differently on the merits of the underlying dispute, or whether the reversal of fortune will lead to a settlement.
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