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A broadly worded arbitration clause requiring arbitration of “any dispute” is not rendered ambiguous by another clause allowing a party to seek a legal remedy in the event that arbitration procedures are not followed, a federal district court in Ohio held.
In GeoVantage of Ohio, LLC v. GeoVantage, Inc., No. 2:05-CV-1145, 2006 WL 2583379 (S.D. Ohio Sept. 6, 2006), GeoVantage of Ohio (Plaintiff) brought suit alleging various causes of action against GeoVantage, Inc. (Defendant). Plaintiff’s claims arose out of a franchise agreement between Plaintiff and Defendant.
Defendant moved to compel arbitration pursuant to an arbitration clause in the franchise agreement. In opposing the motion, Plaintiff argued that the arbitration clause was ambiguous.
The franchise agreement provided for the application of Massachusetts law, which calls for the court to decide the question of whether a contract is ambiguous. Accordingly, the Court examined the arbitration clause to determine whether it was ambiguous.
Section 21.1 of the franchise agreement provided that “[a]ny dispute between the parties in regard to the interpretation of this agreement, the effect of this agreement, the carrying out of the agreement and any other matter arising directly or indirectly out of this agreement, shall be submitted to and decided by Binding Arbitration.”
Section 21.5 stated that “[i]f the parties do not agree to an arbitration process or are unable to resolve the dispute through arbitration, either party shall then have the right to pursue any legal remedy.”
The Court held that Section 21.5 did not provide that arbitration would be voluntary but simply allowed the parties to seek a legal remedy if arbitration procedures were not followed. Therefore, Plaintiff’s claims fell within the broad arbitration clause of Section 21.1, and by virtue of the parol evidence rule, Plaintiff could not introduce evidence to contradict the terms of the contract.
Additionally, the Court noted that the Federal Arbitration Act mandates a presumption of arbitrability when an arbitration agreement exists and there is no clause excluding any specific disputes from arbitration. Since the broad arbitration clause covered Plaintiff’s claims and did not exclude any disputes, the Court ordered arbitration.
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