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Language in an arbitration clause requiring arbitration of "any dispute or other disagreement" is sufficiently broad to encompass tort claims, ruled a California appellate court.
In Efund Capital Partners v. Pless, No. B193575, 2007 WL1461952 (Cal. Ct. App. May 21, 2007), Efund Capital Partners signed an investment agreement with RAP Technologies (RAP). The agreement specified that Efund would provide RAP with capital and restructuring services in exchange for Efund receiving an equity interest in RAP.
Efund learned that RAP's CEO, Pless, had misappropriated funds from RAP. Efund then filed a shareholder's derivative suit against Pless alleging, among other things, that Pless either fraudulently or negligently induced Efund to invest in RAP. Pless moved to compel arbitration pursuant to the arbitration clause contained in the parties' contract. The trial court denied the motion and Pless appealed.
The Court held that the arbitration agreement's language, requiring arbitration of "any dispute or other disagreement," was broad enough to encompass the claims in Efund's action. The Court found that "the clear language of the agreement governs" when it rejected admission of extrinsic evidence that suggested the parties did not intend for the arbitration agreement to include tort claims.
Further, California courts have consistently held similar language in arbitration clauses to require the parties to arbitrate extracontractual disputes, including tort claims. The Court then ordered the trial court to compel arbitration.
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