Opinion ID: 779436
Heading Depth: 2
Heading Rank: 3

Heading: Whether ACE's Contract Termination Claim Is Arbitrable

Text: 34 The district court, while noting that ACE and CUL dispute the validity of the Proposal and its purported termination of the Agreement, did not address whether ACE's termination claim is subject to the arbitration clause in the Agreement. ACE Capital, 2001 WL 1415080, at  1. ACE argues that claims relating to the Proposal cannot be arbitrated, because (1) the Proposal does not expressly provide for arbitration, and (2) the arbitration clause in the Agreement, which the district court found to be not ... broad, cannot encompass a dispute relating to the Proposal—a separate, collateral document. 35 It is true that [w]here the arbitration clause is narrow, a collateral matter will generally be ruled beyond its purview. Louis Dreyfus Negoce, 252 F.3d at 224. But we have already concluded that the arbitration clause in this case is a broad one. With that determination, `there arises a presumption of arbitrability' and arbitration of even a collateral matter will be ordered if the claim alleged `implicates issues of contract construction or the parties' rights and obligations under it.' Id. (quoting Collins & Aikman, 58 F.3d at 23). Moreover, [w]hen parties use expansive language in drafting an arbitration clause, presumably they intend all issues that `touch matters' within the main agreement to be arbitrated, while the intended scope of a narrow arbitration clause is obviously more limited. Id. at 225 (internal citation omitted); cf. Rochdale Vill., Inc. v. Pub. Serv. Employees Union, Local No. 80, 605 F.2d 1290, 1295 (2d Cir.1979) (If a court finds that the parties have agreed to submit to arbitration disputes `of any nature or character,' or simply `any and all disputes,' all questions, including those regarding termination, will be properly consigned to the arbitrator....). 36 Given the presumption of arbitrability created by the broad arbitration clause here, we conclude that issues presented by the Proposal—for example, whether the Proposal terminates, modifies, or otherwise affects the Agreement, and whether it incorporates any of the terms of the Agreement—`touch matters' within the main agreement to be arbitrated.... Louis Dreyfus Negoce, 252 F.3d at 225. Moreover, the claim alleged—termination or modification of the Agreement— implicates issues of contract construction or the parties' rights and obligations under [the Agreement]. Id. at 224 (quoting Collins & Aikman, 58 F.3d at 23). This conclusion is especially compelled because the arbitration clause at issue expressly contemplates arbitration of any dispute... between the parties hereto with reference to the interpretation of this Agreement or their rights with respect to any transaction involved, whether such dispute arises before or after termination of this Agreement. Here, we have a dispute over the parties' rights with respect to [a] transaction involved—the Proposal purportedly intended to affect the parties' rights and duties under the Agreement— that allegedly arose after termination of this Agreement, and that also concerns interpretation of this Agreement, to the extent that the Agreement contains clauses specifically relating to the required manner of termination or modification of the Agreement. For example, the Agreement provides that [t]his Agreement may not be altered or changed except by a writing executed by the Ceding Company and the Assuming Company. Whether these and other requirements of the Agreement were properly complied with in the Proposal will require interpretation of the Agreement-a matter specifically commended to arbitration by the clause here. 11 37 The cases cited by ACE concerning collateral matters or documents, most of which involve collective bargaining agreements (CBAs), are not to the contrary. In Rochdale, for example, this Court found that a slightly narrow arbitration clause, containing the limiting phrase any and all disputes hereunder, 605 F.2d at 1296, would not encompass issues relating to a separate document purporting to terminate the CBA: 38 If there was such an agreement it was collateral to the collective bargaining agreement. The latter agreement made no provision for alteration of the duration provision. The collective bargaining agreement was silent on the subject of any amendments to its terms; it contained nothing prohibiting or restricting amendment or requiring amendments to be in writing. Thus questions as to whether the parties entered into a side agreement or as to what the terms of such a side agreement were, do not arise under the collective bargaining agreement. This issue was therefore beyond the scope of the arbitration clause and should have been determined by the court. 39 Id. at 1297; see also Peerless Imps., Inc. v. Wine, Liquor & Distillery Workers Union Local One, 903 F.2d 924, 929 (2d Cir.1990) (same); In re Prudential Lines, Inc., 704 F.2d 59, 64 (2d Cir.1983) (same). The reasoning of Rochdale —upon which ACE relies heavily—is inapplicable to the present case for two reasons: (1) the arbitration clause here is a broad provision not limited by arising under language, and so requires arbitration of a collateral agreement proposing to terminate or amend the Agreement; and (2) the Agreement contains provisions for termination and amendment, which the arbitration clause therefore requires to be interpreted in connection with a document purporting to affect those terms. Moreover, [t]he burden is on the party resisting arbitration to demonstrate that the disputed issue is collateral. Prudential Lines, 704 F.2d at 64. Given the foregoing analysis, ACE has not carried that burden. We conclude that the dispute over the validity of the Proposal, and its impact on the rights and duties of the parties under the Agreement, touches matters that fall within the scope of the arbitration clause in this case and therefore must be arbitrated.