Does My Arbitration Agreement Cover All Disputes?

Court applies standard analysis to determine coverage of agreement

Raspet v. Buck, 2001 N.C. App. LEXIS 1055 (N.C. App., 11/6/01): Pre-existing agreement to arbitrate does not convert disputes over all future dealings between the parties into arbitrable controversies.

Operating individually as investment representatives, plaintiff and defendant created Plan First, LLC, in order to cover their planned joint handling of certain customer accounts. In connection with Plan First, they signed an Operating Agreement, containing an arbitration clause. Later, both became registered with Select Capital, where plaintiff acted as defendant’s supervisor. They handled some accounts jointly for a time, but when defendant was dismissed by Select, the joint accounts “were changed to reflect that plaintiff had become the sole representative for those accounts.”

Defendant filed an arbitration, in reliance on the Plan First Operating Agreement, alleging an oral buy-out agreement relating to the accounts the parties had managed jointly. Plaintiff turned to state court, where she opposed arbitration and filed her own claims against Mr. Buck.

In this Opinion, the Court applies a two-pronged test for arbitrability, in affirming the stay of arbitration below: (1) that the parties have a valid arbitration agreement; and, (2) that the dispute is within the scope of the agreement to arbitrate.

Defendant failed to satisfy the second prong. He failed to show that the dispute concerned the “affairs, conduct, operation or management” of the LLC, as provided in the arbitration clause. Moreover, the LLC had never commenced operations, had never become licensed to sell securities, had no customers, revenues or income.(SLC Ref. No. 2001-49-03)

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Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.


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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.