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A dispute resolution provision encompassing “any” dispute will not be subjected to a contrary interpretation that would bring certain related disputes outside the scope of the provision, according to a federal district court in Washington.
In Vertner v. TAC Americas, Inc., No. C07-0385RSL, 2007 WL 2495559 (W.D. Wash. Aug. 30, 2007), Vertner and Williamson, shareholders of Abacus, entered into a merger agreement with TAC. According to the merger agreement, TAC would temporarily retain a portion of the Abacus purchase price for post-closing adjustments to the value of the sale, and would notify Vertner of the amount of the retained amount that was to be returned to Vertner at a later date.
TAC later notified Vertner of the amount to be retained, which Vertner disputed. Vertner sued TAC, and TAC moved to compel arbitration in accordance with a provision requiring that “any” dispute over the information provided in the notice would ultimately be resolved by a binding arbitral report prepared by an independent accounting firm. Vertner opposed the motion to compel, claiming that the dispute resolution procedure was not intended to resolve disputes arising out of TAC’s alleged failure to execute contracts in a commercially reasonable manner.
The Court granted the motion to compel. It held that the dispute was within the scope of the provision, finding that the “plain language” of the provision explicitly stated that disputes over “any” of the information in the notice, regardless of its character, was to be resolved in accordance with the contractual procedures. The Court refused to distinguish between “operation” or “conduct” issues (e.g., the execution of contracts) and “calculation” or “accounting” disputes. “Put simply,” said the Court, the provision “does not indicate that disputes should be subdivided” as suggested by Vertner.
Vertner also claimed that the dispute resolution provision could not have been contemplated to encompass operational disputes, because the provision only allowed the accountants access to certain financial statements in rendering a decision, and did not allow access to evidence of operational practices. The Court held that to adopt such a narrow reading of the agreement would render the provision meaningless. Instead, the Court held that applying the same process to both types of disputes was the “more reasonable interpretation” of the provision.
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