Asbury Automotive Used Car Center, L.L.C. v. Brosh

220 S.W.3d 637, 364 Ark. 386, 23 I.E.R. Cas. (BNA) 1518, 2005 Ark. LEXIS 767
CourtSupreme Court of Arkansas
DecidedDecember 15, 2005
Docket05-290
StatusPublished
Cited by14 cases

This text of 220 S.W.3d 637 (Asbury Automotive Used Car Center, L.L.C. v. Brosh) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Asbury Automotive Used Car Center, L.L.C. v. Brosh, 220 S.W.3d 637, 364 Ark. 386, 23 I.E.R. Cas. (BNA) 1518, 2005 Ark. LEXIS 767 (Ark. 2005).

Opinion

Tom Glaze, Justice.

This is an interlocutory appeal from an order of the trial court denying a motion filed by appellant Asbury Automotive Used Car Center (“Asbury”) to compel arbitration. In the mid-1990s, appellees Patrie Brosh, Mark Lunsford, and Mel Anderson developed a concept of selling used cars from WalMart parking lots. Brosh, Lunsford, and Anderson’s company, appellee New Century Auto Sales Corporation (“New Century”), entered into a lease agreement with Wal-Mart whereby New Century leased property on Wal-Mart parking lots from which to sell used cars. New Century eventually developed a business plan or model for this leasing and selling arrangement. Subsequently, New Century decided to market that business plan to used car dealers. Brosh approached Asbury with the business plan, and Asbury responded favorably.

In early 2002, New Century and Asbury executed a series of agreements. Under the “Purchase Agreement,” Asbury agreed to purchase the business model from New Century, 1 and to enter into a new lease with Wal-Mart in order to begin selling used cars from Wal-Mart parking lots. In addition to the Purchase Agreement, Brosh, Lunsford, and Anderson each entered into “Employment Agreements” with Asbury; under the Employment Agreements, Asbury was to pay Brosh, Lunsford, and Anderson an annual base salary of $300,000.00. The Employment Agreements also contained a termination provision, under which Asbury would be obligated, in the event it terminated its leases with Wal-Mart, to provide additional compensation to Brosh and the others.

The parties’ business relationship eventually soured, and Asbury terminated its leases with Wal-Mart, and also terminated Brosh, Lunsford, and Anderson in August of 2003. As a result, plaintiffs Brosh, Lunsford, Anderson, and New Century filed a complaint in Washington County Circuit Court on February 17, 2004, alleging that Asbury had breached both the Purchase Agreement and the Employment Agreement, and sought damages in excess of $23,000,000.00.

On March 25, 2004, defendant Asbury answered and filed a motion for stay of proceedings and to compel arbitration. In this motion, Asbury noted that both the Purchase Agreement and Employment Agreements contained a clause under which any disputes arising from the agreements “shall be submitted to arbitrationf.]” In accordance with Ark. Code Ann. § 16-108-202(a) (1987), 2 Asbury asked the circuit court to order the parties to proceed with arbitration. The plaintiffs responded, asserting that the arbitration clauses lacked mutuality of obligation and were therefore unenforceable. The trial court held a hearing on the matter on June 1, 2004, and subsequently determined that the arbitration agreement lacked mutuality of obligation. Accordingly, the trial court denied Asbury’s motion to compel arbitration on November 30, 2004.

A trial court’s order denying a motion to compel arbitration is immediately appealable under Ark. R. App. P. - Civ. 2(a)(12). This court reviews such an order de novo on the record. See Tyson Foods, Inc. v. Archer, 356 Ark. 136, 157 S.W.3d 681 (2004); The Money Place, LLC v. Barnes, 349 Ark 411, 78 S.W.3d 714 (2002). The construction and legal effect of an agreement to arbitrate are to be determined by this court as a matter of law. Tyson Foods, 349 Ark. at 141; see also E-Z Cash Advance, Inc. v. Harris, 347 Ark. 132, 60 S.W.3d 436 (2001).

The arbitration clauses at issue in this case are found in the parties’ Purchase Agreement and in their Employment Agreement. The arbitration clause in the Purchase Agreement reads as follows:

12. ALTERNATIVE DISPUTE RESOLUTION. In the event of any controversy arising out of or relating to this Agreement or any breach thereof, the parties shall first use their diligent and good faith efforts to resolve the dispute by exchanging relevant information and negotiating in good faith. If such dispute resolution efforts are unsuccessful after 30 days, the parties to this Agreement agree to participate in non-binding mediation in accordance with the Commercial Mediation Rules of the American Arbitration Association____ If the mediation is unsuccessful after 45 days from the date the mediation proceedings are commenced, the dispute shall be submitted to binding arbitration in accordance with the rules of the Commercial Arbitration Rules of the American Arbitration Association. . . . Notwithstanding the foregoing language, the parties acknowledge and agree that neither party shall be bound by the terms of this Paragraph 12 if such party seeks any relief against any other party pursuant to Paragraph 9(f)(2) above.

In turn, Paragraph 9(f)(2) provides, in relevant part, as follows:

(f) Non-Competition; Non-Solicitation
(2) Each of [NCAS], [New Century], and [Brosh, Lunsford, and Anderson] acknowledge that the restrictions contained in Paragraphs 9(c) and 9(f)(1), 3 including the geographical restriction set forth in Paragraph 9(f)(1)(A) above, are reasonable and necessary to protect the legitimate interests of [Asbury], and that any violation of Paragraphs 9(c) and 9(f)(1) will result in irreparable injury to [Asbury] for which money damages would not provide an adequate remedy. Therefore, [Asbury] shall (notwithstanding any arbitration or mediation provision set forth in this Agreement) be entitled to preliminary and permanent injunctive relief in any court of competent jurisdiction and to an equitable accounting of all earnings, profits, and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies to which [Asbury] may be entitled. ... In addition to any other remedies which [Asbury] may have at law, in equity, or under this Agreement, in the event of a breach of the restrictions set forth in Paragraphs 9(c) or 9(f), [Asbury] shall be entitled to withhold any amounts due or owing to [NCAS], [New Century], or [Brosh, Lunsford, and Anderson], as applicable, hereunder or otherwise, and the withholding of such amounts shall not constitute liquidated damages for any such breach.

The Employment Agreements contain similar language. Paragraph 10, governing settlement of disputes, provides the following:

Except as provided in Paragraph 9(d) above, any dispute regarding the interpretation of this Agreement or relating to the Executive^’ 4 ] employment shall be resolved by binding arbitration ... in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect.

Paragraph 9(d), in turn, reads as follows:

9. Non-solicitation; Non-competition;Trade Secrets, Etc.
(d) Executive[s] acknowledge[ ] that the restrictions contained in Paragraphs 8,9(a), 9(b), and 9(c) ...

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Bluebook (online)
220 S.W.3d 637, 364 Ark. 386, 23 I.E.R. Cas. (BNA) 1518, 2005 Ark. LEXIS 767, Counsel Stack Legal Research, https://law.counselstack.com/opinion/asbury-automotive-used-car-center-llc-v-brosh-ark-2005.