Opinion ID: 721487
Heading Depth: 2
Heading Rank: 2

Heading: Defense of Fraud

Text: 20 Defendants contend that DAI fraudulently induced the franchise agreements, in general, and the arbitration clause, in particular. Specifically, they claim that DAI falsely represented that arbitration was a condition precedent to the institution of legal action by either party to the franchise agreement; and yet DAI, through its affiliated leasing companies, reserved the right to bring summary eviction proceedings against its franchisees for breaches of the franchise agreement. 21 The district court declined to reach this issue, finding that [t]he claim that the franchise agreement, and the arbitration clause, are void as procured by fraud can be arbitrated. Jabush, No. 3:95CV00695 (PCD), slip op. at 4. 22 As the parties concede, however, we subsequently decided in Distajo that it is the district court's responsibility--not the arbitrators'--to determine the issue of fraud in the inducement of the arbitration clause. See Distajo, 66 F.3d at 457. Thus, the issue of fraudulent inducement, as it relates to all Defendants in this action, is remanded to the district court for further consideration in light of Distajo. See id.