First World Limited v. MIBC Holdings Ltd

• Court: District Court, D. Nevada
• Decided: August 10, 2020
• Docket: 2:18-cv-01997
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 FIRST WORLD LIMITED, a United Kingdom Case No. 2:18-cv-1997-KJD-VCF registered company, et al., 8 ORDER Plaintiffs, 9 v. 10 MIBC HOLDINGS, LTD, a Nevada 11 Corporation, et al.,

12 Defendants.

13 There are two motions pending before the Court. The first is a motion to compel 14 arbitration (ECF No. 17) filed by defendant, MIBC Holdings, LTD. Plaintiff, First World 15 Limited responded (ECF No. 18), and MIBC Holdings replied (ECF No. 20). Next is a motion 16 for summary judgment (ECF No. 19) filed by plaintiff First World Limited, to which MIBC 17 Holdings responded (ECF No. 22), and First World replied (ECF No. 23). Having reviewed the 18 parties’ filings, the Court finds that they agreed to arbitrate any dispute arising out of their 19 agreements in a March 2018 Memorandum of Understanding. Because the parties agreed to 20 arbitrate and that agreement applies to First World’s pending causes of action, the Court compels 21 this case to arbitration and denies First World’s competing motion for summary judgment (ECF 22 No. 19) as moot. 23 I. Background 24 In this breach of contract case, First World Limited and its sister company, Rincon Blue 25 Water, LLC, seek accounting and recovery of $450,000 that it loaned to MIBC Holdings. First 26 World intended the loan to start the early financing on a world-class resort and casino in Puerto 27 Rico. Compl. 5, ECF No. 1. The parties memorialized their agreement in a memorandum of 28 1 understanding shortly thereafter. Id. at 6. The loan was to mature on September 23, 2018,1 and 2 MIBC Holdings executed a promissory note to that effect. Id. It also executed a Security 3 Agreement and assigned 34,723,935 shares of co-defendant Global Payout Inc.’s stock as 4 collateral. Id. First World claims that MIBC Holdings has breached the parties’ agreements and 5 has converted its $450,000. This suit followed. 6 Relevant here, the memorandum of understanding included an arbitration provision that 7 covered “dispute[s] concerning any aspect” of the parties’ agreement. Memo. of Understanding 8 5, ECF No. 1-1 (“MOU”). The arbitration provision identified the International Chamber of 9 Commerce as forum for any potential arbitration and elected to apply Nevada law. The 10 arbitration agreement provided,

11 In the event of a dispute concerning any aspect of this Agreement, 12 including breach of the Agreement or claim of breach thereof, the Parties agree to have the matter arbitrated under the International 13 Chamber of Commerce (ICC) rules of conciliation and arbitration. The Jurisdiction and governing law will be Nevada. 14 Id. Each of the parties signed the memorandum of understanding, and there is no indication from 15 the document itself that any party objected to the arbitration provision. 16 Shortly after First World filed its complaint, MIBC Holdings moved to enforce the 17 arbitration agreement. First World opposes the arbitration agreement and has moved for 18 summary judgment on each of its claims. 19 II. Legal Standard 20 The Federal Arbitration Act (FAA) created a clear federal policy favoring arbitration. See 21 9 U.S.C. §§ 1–16; Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). It ensures that a written 22 agreement to arbitrate is “valid, irrevocable, and enforceable” subject to normal contract 23 principles of revocability. 9 U.S.C. § 2. Any doubts concerning the scope of arbitral issues 24 should be resolved in favor of arbitration. Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 25 460 U.S. 1, 24–25 (1983). And once a court determines there exists a valid arbitration agreement 26

27 1 The complaint states that the loan would mature on September 23, 2013. Given that the parties did not 28 meet until March of 2018, the Court assumes for the purposes of this order that the maturity date of the loan was September 23, 2018. 1 that agreement should be rigorously enforced. See Dean Witter Reynolds v. Byrd, 470 U.S. 213, 2 218, 221 (1985). 3 The Court resolves any doubt regarding the arbitrability of a case in favor of compelling 4 arbitration. That is not to say that the Court may unilaterally compel parties to arbitrate their 5 dispute. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (despite the “liberal 6 federal policy favoring arbitration,” there is a clear exception to the policy when parties have not 7 submitted a particular dispute to arbitration). To the contrary, the parties must present a valid 8 agreement to arbitrate their dispute, and the arbitration provision must encompass the parties’ 9 claims. Id. at 84; Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1120–21 (9th Cir. 2008). If a 10 party meets both of those prongs, the Court will compel the case to arbitration. 11 III. Discussion 12 Arbitration is appropriate here as First World and MIBC Holdings’ memorandum of 13 understanding contemplated submitting these very claims to arbitration. However, First World 14 argues that the memorandum of understanding is not enforceable because it was not a contract, 15 but merely an agreement to agree on a future contract. Alternatively, First World argues that 16 even if the memorandum of understanding was an enforceable agreement, the language of the 17 arbitration agreement was too ambiguous to enforce. 18 The memorandum of understanding is an enforceable agreement. The entire point of the 19 parties’ memorandum of understanding was to govern their conduct throughout their transaction. 20 As such, the agreement set out several vital aspects of the parties’ future course of dealing apart 21 from the arbitration agreement, including the proper use of the First World’s $450,000 loan 22 (MOU at 1–2), the ownership percentages of the different entities (id. at 2–3), the acceptable 23 investments upon receipt of a letter of credit (id. at 3), and monthly distributions between the 24 entities (id. at 4). Ironically, these are the very clauses of the parties’ agreement that First World 25 asks the Court to enforce in its complaint and motion for summary judgment. First World cannot 26 simultaneously ask the Court to enforce portions of the memorandum of understanding it likes 27 and omit the parts it does not. Either the memorandum of understanding is enforceable, or it is 28 not. Elsewhere, First World asks the Court to find that it is enforceable. First World cannot have 1 it both ways. Accordingly, the memorandum of understanding is a valid and enforceable 2 agreement between the parties. 3 Next, First World claims that the language in the arbitration provision is too vague to 4 enforce. First World takes issue with one sentence of the arbitration provision, which states, 5 “[t]he parties hereto agree herewith without further protest to settle, any claim or dispute arising 6 out of this Agreement in a friendly cooperative manner by discussion.” MOU at 5. First World 7 claims the sentence is too ambiguous to determine whether MIBC Holdings has complied. If the 8 clause is not too ambiguous, First World argues, MIBC Holdings has not attempted to settle in a 9 cooperative manner. Although not a model of clarity, that sentence does not muddle the clear and 10 unambiguous arbitration provision that follows. There is nothing vague about two parties 11 agreeing to “have [their] dispute arbitrated under the International Chamber of Commerce.” 12 Therefore, the arbitration clause is not too ambiguous to enforce. 13 First World also argues that the arbitration provision is unenforceable because its election 14 of the ICC for arbitration is inconsistent with its election of Nevada law as governing law. See 15 MOU at 5 (agreeing to arbitration under the ICC’s rules while applying Nevada law). According 16 to First World, the parties could not agree to ICC rules while also agreeing to apply Nevada law 17 because the two are mutually exclusive. Not so. Parties often agree to arbitrate disputes using a 18 preselected state’s substantive law, and arbitrators are well suited to apply that law. Indeed, 19 arbitrators frequently apply state substantive law while applying the arbitral forum’s procedural 20 rules. See Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1269–70 (9th Cir. 2002) (“we will 21 interpret the choice-of-law clause as simply supplying state substantive, decisional law, and not 22 state law rules for arbitration”). Therefore, the parties’ choice of arbitral forum and selection of 23 Nevada substantive law does not render this arbitration provision ambiguous or impossible to 24 enforce. 25 In sum, the parties’ memorandum of understanding—including the arbitration 26 provision—is an enforceable agreement. The language of the provision does not render the 27 agreement ambiguous or impossible to enforce. Therefore, given the presumption in favor of 28 arbitration agreements (see AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986)), the Court will enforce the arbitration agreement in the parties’ memorandum of 2 | understanding. 3 IV. Conclusion 4 Accordingly, IT IS HEREBY ORDERED that MIBC Holdings, LTD.’s motion to compel 5 | arbitration (ECF No. 17) is GRANTED. 6 IT IS FURTHER ORDERED that this case shall be STAYED pending the results of the 7 | parties’ arbitration. 8 All other motions are denied as moot. 9 | Dated this 10th day of August, 2020. 10 | CN ul LEN Kent J. Dawson 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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