Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-00074/USCOURTS-azd-2_14-cv-00074-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:2201 Declaratory Judgment

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA

Russell E. Brandt, et al., 

Plaintiffs, 

v. 

Bighorn Investments LLC, et al., 

Defendants.

No. CV-14-00074-PHX-NVW

ORDER 

 Before the Court are Plaintiffs’ Motion to Enforce Arbitration Provision (Doc. 45) 

and Defendants’ Response (Doc. 46). 

 Plaintiffs and Defendants, who together comprise the membership of Mystic 

Moon Ranchettes, LLC, agreed in Mystic Moon’s operating agreement (“Operating 

Agreement”) that “[a]ny dispute or discomfort arising out of or in connection with this 

agreement, including disputes between or among the members, shall be settled by the 

negotiation, mediation and arbitration provisions of that certain LawForms Integrity 

Agreement (Uniform Agreement Establishing Procedures for Settling Disputes) entered 

into by the parties prior to or concurrently with the adoption of this agreement.” Doc. 45-

1 at 19. The parties now find themselves embroiled in a bitter dispute, dating back to at 

least 2004, regarding the development and sale of a 40-acre parcel of land outside 

Florence, Arizona. Unfortunately, the parties cannot locate the LawForms Integrity 

Agreement referenced in the Operating Agreement. Plaintiffs previously objected to 

submitting the dispute to arbitration, but their Motion now withdraws that objection and 

identifies five conditions that they request the Court impose if it orders arbitration: that 

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(1) arbitration is conducted by a single arbitrator, (2) the decision of the arbitrator is 

binding upon the parties to the arbitration, (3) Defendants will pay half of the arbitrator’s 

total fees and costs, (4) arbitration will be conducted pursuant to Arizona’s Revised 

Uniform Arbitration Act, and (5) arbitration will be completed before October 28, 2014. 

Doc. 45 at 1-2. Defendants are also willing to proceed with arbitration, but they object to 

conditions two, three, four and five; in addition, they “agree to a single arbitrator so long 

as the arbitrator is appointed by the Court under the rules of the [Federal Arbitration 

Act].” Doc. 46 at 6-7. 

 “A written provision in any ... contract evidencing a transaction involving 

commerce to settle by arbitration a controversy thereafter arising out of such contract or 

transaction, or the refusal to perform the whole or any part thereof, or an agreement in 

writing to submit to arbitration an existing controversy arising out of such a contract, 

transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such 

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. If 

the agreement to arbitrate provides “a method of naming or appointing an arbitrator” but 

“for any ... reason there [is] a lapse in the naming of an arbitrator,” then “upon the 

application of either party to the controversy the court shall designate and appoint an 

arbitrator ... who shall act under the said agreement with the same force and effect as if 

he ... had been specifically named therein; and unless otherwise provided in the 

agreement the arbitration shall be by a single arbitrator.” Id. § 5. Although there do not 

appear to be any cases directly on point, the Ninth Circuit has fallen back on § 5 in cases 

in which the organization ostensibly designated as the arbitrator of choice refused to take 

jurisdiction over the dispute. Reddam v. KPMG LLP, 457 F.3d 1054, 1057 (9th Cir. 

2006), abrogated on other grounds as recognized by Atl. Nat’l Trust LLC v. Mt. Hawley 

Ins. Co., 621 F.3d 931 (9th Cir. 2010). 

 When the chosen arbitrator is unavailable, the district court must answer two 

questions: “First, did the agreement amount to a choice of forum clause? Second, if it did, 

did the refusal of that forum to conduct the arbitration mean that no arbitration at all 

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could go forward--that is, was the choice of forum clause integral?” Id. at 1059. “When 

a court asks whether a choice of forum is integral, it asks whether the whole arbitration 

agreement becomes unenforceable if the chosen arbitrator cannot or will not act.” Id. at 

1060. “Only if the choice of forum is an integral part of the agreement to arbitrate, rather 

than an ‘ancillary logistical concern’ will the failure of the chosen forum preclude 

arbitration.” Id. (internal quotation marks omitted) (citing Brown v. ITT Consumer Fin. 

Corp., 211 F.3d 1217, 1222 (11th Cir. 2000)). In answering these questions of 

interpretation, it is unnecessary to decide whether state or federal contract law should 

apply, since “[w]hichever body of law is applied, it is [the court’s] task to determine and 

effectuate the intent of the parties and ... that means [the court] must do so by reference 

to the terms of the agreement itself.” See id. at 1059. 

 Here, given the vague wording of the Operating Agreement and the unavailability 

of the LawForms Integrity Agreement, it is difficult to determine whether the arbitration 

provision constituted a choice of forum clause. But deciding that question is 

unnecessary, because even if the provision was a choice of forum clause, it was not 

“integral” to the arbitration agreement. See id. at 1060 (passing over first question 

because second question was dispositive). “There is no evidence that naming of [the 

supposedly designated arbitrator] was so central to the arbitration agreement that the 

unavailability of that arbitrator brought the agreement to an end.” Id. at 1061 (citations 

omitted). Indeed, the Operating Agreement expressly provides, in the paragraph 

immediately preceding the arbitration agreement, that if “[a]ny provision of this 

agreement is held to be invalid or unenforceable, all the remaining provisions shall 

nevertheless continue in full force and effect.” Doc. 45-1 at 19. The unavailability of the 

precise arbitration mechanism specified in the Operating Agreement therefore does not 

nullify the parties’ consent to arbitrate. See Selby v. Deutsche Bank Trust Co. Ams., No. 

12cv01562 AJB (BGS), 2013 U.S. Dist. LEXIS 46101, at *38-39 (S.D. Cal. Mar. 28, 

2013) (relying in part on severance clause to find “the arbitration provisions survive [the 

designated arbitrator’s] unavailability”). 

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 Construing Plaintiffs’ Motion and Defendants’ Response as an “application” by 

the parties, 9 U.S.C. § 5, the Court has the authority and obligation to appoint an 

arbitrator. Because the parties’ dispute relates to the sale of land, the matter is one of 

great urgency that requires quick resolution. 

 IT IS THEREFORE ORDERED that retired Maricopa County Superior Court 

Judge Barry C. Schneider shall be appointed to arbitrate the dispute between Plaintiffs 

and Defendants, unless by October 22, 2014, the parties file with the Court a stipulation 

agreeing to submit the dispute to a different arbitrator. 

 IT IS FURTHER ORDERED that the terms of process for the arbitration shall be 

decided by the arbitrator, whether Judge Schneider or the parties’ chosen arbitrator, 

unless by October 22, 2014, the parties file with the Court a stipulation agreeing to 

different terms. 

 IT IS FURTHER ORDERED that the parties shall share the fees and expenses of 

arbitration equally, with each party to pay its half of costs by November 1, 2014, in a 

manner determined by the arbitrator, subject to the arbitrator’s authority to assess fees at 

the completion of arbitration. If any party does not pay its half of the costs by November 

1, 2014, that party’s pleadings shall be stricken and a dismissal or default judgment 

entered in favor of the opposing party. 

 IT IS FURTHER ORDERED that the arbitrator is requested to process this matter 

with great speed, but the schedule for arbitration shall be set by the arbitrator. 

 Dated this 8th day of October, 2014. 

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