HITORQ LLC v. TCC Veterinary Services
HITORQ LLC v. TCC Veterinary Services, 2020 UT App 123 (Pohlman, J.)
The plaintiff business partner sued two other defendant business partners for breach of contract, breaching the duty of good faith and fair dealing, and seeking dissolution of the company. The defendants sought to compel arbitration of the plaintiff’s claims under the terms of an operating agreement. The operating agreement’s arbitration clause reads: “Any Member involved in a dispute regarding the enforcement or interpretation of this Agreement may elect to have such dispute referred to . . . binding arbitration.” The district court granted the motion to compel and denied the plaintiff’s motion to stay arbitration. The Utah Court of Appeals affirmed, holding:
- The district court did not err in ordering the contract claim and good faith claim into arbitration. On the face of the complaint, the plaintiff’s allegations involve a dispute about the enforcement or interpretation of the operating agreement. Because many of the factual underpinnings of the contract claim and the good faith claim referenced the operating agreement, resolving the two claims could require ascertaining or explaining the meaning of the operating agreement’s provisions, thus the two claims are arbitrable.
- The district court did not err in ordering the dissolution claim to arbitration. The allegations in the complaint and their factual underpinnings were that the defendants denied the plaintiff’s rights under the operating agreement. Thus, this claim constitutes a dispute over the enforcement or the interpretation of the operating agreement and thus is arbitrable.
- The district court did not err in staying the arbitration for a hearing on the valuation of the company that tied directly to the dissolution claim. Because the dissolution claim is arbitrable, the valuation proceeding is also subject to arbitration.