Sunday, December 1, 2013

Michael-Curry Co. v. Knutson Shareholders case brief

Michael-Curry Co. v. Knutson Shareholders case brief summary
449 N.W.2d 139 (1989)


CASE SYNOPSIS
Appellants, trust and trustees, petitioned for review by the court of a judgment from the Court of Appeals (Minnesota) that was granted in favor of respondent companies that reversed the trial court judgment that the arbitration clause in the parties' stock purchase agreement (agreement) did not compel, pursuant to Minn. Stat. § 572.09(a) (1988), arbitration of the issue of whether the amendment to that the agreement was fraudulently induced.

CASE FACTS
The companies brought a lawsuit against the trust in the district court claiming breach of contract after the trust refused to arbitrate the companies' claim and also requested, under § 572.09(a), an order compelling arbitration of all claims. The trust answered with a general denial of liability, counterclaimed with the defense of fraud in the inducement, and sought, pursuant to § 572.09, a stay of arbitration pending judicial disposition of the fraud claim. The trust contested the court of appeals judgment reversing the trial court order that the arbitration clause in the agreement did not apply to the include the claim of fraud in the inducement of the amendment.

DISCUSSION

  • The court granted the petition for review brought by the trust and affirmed the judgment of the court of appeals. 
  • The court held that this arbitration clause that provided for arbitration of any controversy or claim arising out of or relating to the making of the amendment compelled arbitration of the issue of whether the amendment was fraudulently induced. 
  • The court of appeals correctly decided that the clause was sufficiently broad to include the submission of the fraud claim to arbitration.

CONCLUSION
The court affirmed the judgment of the court of appeals challenged by the trust and the trustees, which was entered for the companies and that reversed the trial court judgment that the arbitration clause in the parties' agreement did not require arbitration of the issue of if the modification of that agreement resulted from inducement by fraud.

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