Arbitration & Mediation

Marital Settlement Agreement and Shareholder Agreement: One Has Arbitration Clause, the Other Does Not...

By Christopher B. Hopkins, Esq.

What happens when parties simultaneously sign two agreements regarding different subject matters where one contract has an arbitration clause and the other does not?

We've seen this issue come up twice involving business transactions (in both cases, shareholder agreements) and a divorce. In the prior case, Steritech Group v. Cassandra MacKenzie, a divorced spouse was claiming fair market value ownership of shares which were obtained during the marriage.

In the present case, Karen Lippman v. Steven Lippman, the couple were married and had a business together. The shareholder agreement had a clause calling for arbitration of business-related disputes. The marital settlement agreement incorporated the shareholder agreement.

The Panel (Warner, Farmer, and Levine) held that "the marital settlement agreement does not provide for the arbitration of family law issues. The shareholders' agreement... was limited to.. claims arising out of or relating to the shareholders agreement. The incorporation... does not expand the agreement to arbitrate."

Interestingly, we note the Lippman opinion cites a rule on jurisdiction and a case regarding the standard of review but no other authority. Candidly, none was probably needed in this fact investigation but its worth noting if the case arises as precedent or authority in a future matter.

Full post as published by Florida Arbitration Law on November 25, 2009 (boomark / email).