Does an arbitration clause in a one but not the other of two contracts executed by the same parties at the same time apply to a dispute regarding the contract that does not contain the arbitration clause? The Eleventh Circuit has determined that it can and, under Georgia law and the particular circumstances of this case, it does.
The dispute arose out of Theodore Wood's resignation from his employment with Parks IP Law, LLC and creation of his own firm—Wood IP, LLC. As part of this separation, the parties entered into two agreements: a Separation Agreement, which included an agreement to arbitrate any disputes in Atlanta, Georgia, and a Promissory Note, which did not include an arbitration provision but did include a venue provision stating that "[a]ny action or proceeding" between the parties "must be brought in the State of Georgia, Fulton County . . . ." When Parks IP brought suit alleging a breach of the Promissory Note, Wood moved to compel arbitration, but the trial court denied his motion.
On appeal, Parks IP argued that the arbitration provision in the Separation Agreement did not apply to the Promissory Note, because the Promissory Note did not reference the Separation Agreement. The Eleventh Circuit disagreed. Noting that documents executed at the same time in the course of the same transaction are construed together under Georgia law, the court found that this applied to the Separation Agreement and the Promissory Note. While the Promissory Note did not reference the Separation Agreement, the Separation Agreement did reference the Promissory Note, as the Promissory Noted spelled out the terms by which debts discussed in the Separation Agreement were to be paid.
Parks IP further argued that the Promissory Note's venue provision was in direct conflict with the arbitration provision, but the court found that the phrase "any action or proceeding" in the venue provision was not limited to actions in court, and was broad enough to include an arbitration proceeding. Further, the court found no conflict between the Promissory Note's specification of venue in Fulton County and the Separation Agreement's specification of arbitration in Atlanta, as the two could reasonably be construed together to mean that arbitration should occur in the part of Atlanta that is within Fulton County.
Parks IP Law, LLC v. Wood et al. , No. 18-11178 (11th Cir. Nov. 8, 2018)
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