Arbitration & Mediation

Division of Marital Property Makes Divorced Wife Bound By Ex-Husband's Shareholder Agreement

By Christopher B. Hopkins, Esq.

While the following case is largely fact-specific, it is an interesting blending of two contracts to find the result that a non-signatory is bound by an arbitration provision.

In The Steritech Group, Inc. v. Cassandra Mackenzie, David Mackenzie was party to a shareholder agreement with Steritech where he had some ownership. The shareholder agreement had an arbitration clause. Shortly after signing that document, David and Cassandra got divorced and, while the Division of Marital Property Acknowledgment indicated she could not become owner of the shares, Steritech could repurchase the stock at market value and an involuntary transfer of marital property. Some time passed and a dispute arouse as to market value.

Cassandra sued Steritech claiming that the value of the stock should have been higher and that Steritech retained the difference. Steritech moved for arbitration which was denied, so they appealed.

The court first underwent the three Seifert steps to detemine if this was a valid agreement to arbitrate. On the plain/unambiguous wording of the Acknowledgment, Cassandra "hereby joins as a party to the [shareholder] agreement." Thus, she was bound by the terms, including the arbitration provision. Next, the court determined that any dispute over fair market value was within the scope of the shareholder agreement, even though she sued in tort (conversion). Drawing upon the Fifth District's Beazer Homes v. Bailey case, the panel (Pleus, Griffin, Thompson) held that the tort was sufficiently connected to and growing out of the shareholder agreement. There was no waiver issue.

Full post as published by Florida Arbitration Law on April 10, 2008 (boomark / email).