Opinion ID: 4563969
Heading Depth: 4
Heading Rank: 2

Heading: The Application of the Litton Presumption

Text: Here We do not doubt that the dispute here has “its real source in the contract,” Litton, 501 U.S. at 205, because Plaintiffs raised no argument on this issue in their opening brief and thus waived the issue. Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments not raised by a party in its opening brief are deemed waived.”). Plaintiffs argue, however, that the parties expressly negated the presumption, or clearly implied that their arbitration obligations under the Agreements at issue would not survive termination. Plaintiffs point to the following text in the “Termination and Withdrawal” section: The terms of this section shall survive the termination of this Agreement and/or the dissolution or other effective termination of the business of [Artex or Tribeca] or the insurance company. SHIVKOV V. ARTEX RISK SOLUTIONS 17 Invoking the doctrine of expressio unius est exclusio alterius, Plaintiffs contend that the survival clause contains an exclusive list of the provisions that survive termination which excludes the Arbitration Clause and thus expressly negates the presumption or clearly implies that the parties did not intend for their arbitration obligations to survive termination. See Herman Chanen Constr. Co. v. Guy Apple Masonry Contractors Inc., 453 P.2d 541, 543 (Ariz. Ct. App. 1969) (“[T]he expression in a contract of one or more things of a class, implies the exclusion of all things not expressed. . . .”). The Sixth Circuit has already addressed the impact of a survival clause on post-termination arbitration obligations. See Huffman, 747 F.3d at 394–98. In Huffman, the Sixth Circuit determined that the freestanding survival clause there—which included half the agreement’s provisions but not the arbitration clause—was insufficient to overcome the presumption in favor of post-termination arbitration. Id. Acknowledging that the expressio unius doctrine “present[ed] a trick[y] question,” the Sixth Circuit determined that “considering the contract as a whole—the survival clause and its relationship to the other clauses in the agreement—is the correct way to determine whether the parties unambiguously intended for the arbitration clause to expire with the contract.” Id. at 397 (emphasis added). The Sixth Circuit adopted this mode of analysis due to “the strong federal policy in favor of arbitration,” id. at 394, pursuant to which a court “resolv[es] any doubts as to the parties’ intentions in favor of arbitration,” id. at 395 (quoting Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d 498, 503 (6th Cir. 2007)). The Sixth Circuit also noted that the presumption of arbitrability should not be denied for “broadly-worded arbitration clauses” unless it may be said with positive assurance that the arbitration clause is not 18 SHIVKOV V. ARTEX RISK SOLUTIONS susceptible of an interpretation that covers the asserted dispute. Id. We are persuaded that looking to the Agreements as a whole is the proper mode of analysis here. The FAA “establishes ‘a liberal federal policy favoring arbitration agreements.’” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U. S. 1, 24 (1983)); see also Kramer, 705 F.3d at 1126 (recognizing strong federal policy in favor of arbitration). Although Plaintiffs contend that the Arbitration Clause is not as broadly worded as the clause in Huffman, we reject that argument in Part II and thus the scope of the Clause also lends support to looking to the contract as a whole. Finally, Arizona law also looks to the contract as a whole to ascertain the parties’ intent. Elm Ret. Ctr., LP v. Callaway, 246 P.3d 938, 941–42 (Ariz. Ct. App. 2010) (“To determine the parties’ intent, we ‘look to the plain meaning of the words as viewed in the context of the contract as a whole.’” (quoting United Cal. Bank v. Prudential Ins. Co., 681 P.2d 390, 411 (Ariz. Ct. App. 1983))). Looking to the Agreements as a whole, the survival clause is insufficient to expressly negate the presumption in favor of post-termination arbitration or clearly imply that the parties intended for their arbitration obligations to terminate with the Agreements. The Agreements lack an exhaustive survival clause. Instead, the clause here appears in and concerns only the insular terms established by the “Termination and Withdrawal” section. We doubt that the parties intended for an insular survival clause tucked into a section establishing unique obligations and duties upon the termination of the Agreement to comprehensively identify SHIVKOV V. ARTEX RISK SOLUTIONS 19 the Agreement terms that would survive termination. 8 That doubt grows here because, as in Huffman, the Agreements contain severability and integration clauses outside the section with the survival clause. 747 F.3d at 397. “[I]t is illogical to conclude that upon expiration of the contract, the parties no longer intended” for these provisions to apply. See id. Other provisions of the Agreements also suggest ambiguity about the survival clause on which Plaintiffs rely. The Agreements contain sections that disclaim liability for any underwriting losses and impose general limitations on liability, whether direct or indirect, arising out of, in connection with, or related in any way to an Agreement or services provided pursuant to it. The latter provision expressly precludes certain types of damages that may be recovered, including, in relevant part, punitive damages, taxes and interest due to any taxing authority or government agency, penalties payable to any taxing authority or government agency, and attorneys’ fees. These are limitations that the parties are unlikely to have intended to terminate with the Agreements, particularly given the broad scope of the limitations on liability and the fact that the limitations plainly concern events that are likely to occur post-termination. Considering the Agreements as a whole, we cannot find that the parties expressly negated the presumption in favor of post-termination arbitration, or clearly implied that their 8 Although Plaintiffs argue that reading the contract as a whole renders the survival clause mere surplusage, that argument circularly justifies not looking to the entire contract by presupposing that the clause has the meaning Plaintiffs ascribe it. The point of the analysis here is to ascertain whether the clause plainly bears that meaning or not. 20 SHIVKOV V. ARTEX RISK SOLUTIONS arbitration obligations would not survive termination. We might have arrived at a different conclusion if the survival clause stated that only the terms of that section and no other terms in the Agreement would survive termination, if the Agreement included a comprehensive survival clause, or even if the Arbitration Clause explicitly stated that it does not survive termination. Of course, the Agreements contain no such language. Because “we cannot say with certainty that the parties did not intend for the arbitration clause to survive expiration of the contract,” the parties’ arbitration obligations remain intact. See id. at 398. II. The Arbitration Clause Encompasses Plaintiffs’ Claims We turn next to whether the Arbitration Clause encompasses all of Plaintiffs’ claims here. “[A] party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 945 (1995). “When deciding whether the parties agreed to arbitrate a certain matter . . . courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.” Id. at 944. Under Arizona law, a contract is ambiguous when it “can be reasonably construed in more than one manner.” Leo Eisenberg & Co., Inc. v. Payson, 785 P.2d 49, 52 (Ariz. 1989). “[A]s with any other contract, the parties’ intentions control, but those intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). In the face of any ambiguity, “under the federal presumption in favor of arbitration, an arbitrator would have jurisdiction to arbitrate claims.” Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1285 (9th Cir. 2009). SHIVKOV V. ARTEX RISK SOLUTIONS 21 The Clause provides in the first instance (with emphasis added) that: “You and we agree that in the event of any dispute that cannot be resolved between the parties, that we will agree to seek to resolve such disputes through mediation . . . and if that fails, that all disputes will be subject to binding arbitration.” Defendants understandably rely on this sweeping language to conclude that the Clause includes all Plaintiffs’ claims. Plaintiffs, however, draw our attention to other language in the Clause which they argue narrows its scope. Plaintiffs focus on the Clause’s third sentence: “[t]o reduce time and expenses, we each waive our right to litigate against one another regarding the services provided and obligations pursuant to this Agreement, and instead you and we have chosen binding arbitration.” It is a “standard rule of contract interpretation” that “specific terms control over general ones.” United States ex rel. Welch v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791, 797 (9th Cir. 2017) (quoting S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 891 (9th Cir. 2003)); see also Elm Ret. Ctr., LP, 246 P.3d at 942 (“[B]ecause specific contract provisions express the parties’ intent more precisely than general provisions, specific provisions qualify the meaning of general provisions.”). 9 Treating the Clause’s third sentence as a more specific term concerning scope, we discern that the parties intended to arbitrate “any” and “all disputes” 9 We will assume that Plaintiffs meant to rely on this standard and directly applicable contract rule because Plaintiffs’ reliance on Mesquite Lake Assocs. v. Lurgi Corp., 754 F. Supp. 161 (N.D. Cal. 1991), is unpersuasive. Unlike in Mesquite, the Clause does not limit its scope through a provision that “any controversy or dispute between the Parties concerning this Agreement and specifically subject to resolution pursuant to this Article shall be subject to arbitration . . . .” Id. at 162 (emphasis added). 22 SHIVKOV V. ARTEX RISK SOLUTIONS “regarding the services provided and obligations pursuant to this Agreement.” So understood, the Clause still remains broad. See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 720 (9th Cir. 1999) (concluding that a clause encompassing “[a]ll disputes arising in connection with this Agreement” should be construed and applied liberally); Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 479 (9th Cir. 1991) (similar). The district court methodically explained why all of the claims here are subject to arbitration on this reading. Plaintiffs nonetheless tell us that the district court erred in sending their various non-breach of contract claims to arbitration by pointing to a disclaimer in the Agreements, pursuant to which Artex and Tribeca explained that they “do[] not provide any legal, tax, or accounting advice.” Plaintiffs aver that “tax or legal advice” was not among the services and obligations under the Agreements, and thus their claims concerning such advice are excluded from arbitration. This argument hinges entirely on the meaning of “tax or legal advice.” Curiously, Plaintiffs do not offer any interpretation of those terms. Repeating a bare assertion that this phrase excludes their non-contract claims without supporting argument does not make it so. 10 See Navajo Nation v. U.S. Forest Serv., 535 F.3d 1058, 1079 n.26 (9th Cir. 2008) (en banc) (“It is well-established that a bare assertion in an appellate brief, with no supporting argument, is insufficient to preserve a claim on appeal.”). Because the 10 Although Plaintiffs rely on Khan v. BDO Seidman, LLP, 935 N.E.2d 1174 (Ill. App. Ct. 2010), that case says nothing about the issue here, namely the meaning of the phrase “tax or legal advice” for the Agreements at issue. Thus, apart from the fact that we are not bound by that decision, Plaintiffs’ list of factual comparisons with that case does nothing to overcome their failure to offer any meaning of these terms in the Agreements here. SHIVKOV V. ARTEX RISK SOLUTIONS 23 Agreements provide that Artex and Tribeca would prepare federal tax returns and calculate estimated tax payments for the captives, Plaintiffs’ argument, at best, points to ambiguity that we must resolve in favor of arbitration. See Comedy Club, 553 F.3d at 1286. Thus, we still conclude that the Clause encompasses all Plaintiffs’ claims.