SIMBABEAR, LLC, LIBOW & SHAHEEN, LLP F/K/A LIBOW & MUSKAT, LLP, ALLEN H. LIBOW AND WILLIAM M. SHAHEEN, APPELLANTS,
v.
JACLYN G. MUSKAT, APPELLEE
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In a dispute arising from the termination of a law partner and subsequent redemption of her membership interest in a limited liability company, the court reversed a trial court order that compelled arbitration of all claims and stayed proceedings. The court found that the law firm was not a party to the arbitration agreement and that a civil conspiracy claim fell outside the arbitration clause's scope.
The court reversed the order compelling arbitration. The law firm, Libow & Shaheen, LLP, could not be compelled to participate in binding arbitration because it was neither a party to nor a third-party beneficiary of the membership agreement containing the arbitration clause. Additionally, the civil conspiracy claim (Count II) fell outside the scope of the arbitration provision, which was limited to disputes concerning members' respective rights and obligations under the agreement. Only Count I concerning the valuation and redemption of the membership interest was properly subject to arbitration.
[1] A party to an agreement containing an arbitration provision cannot be compelled to arbitrate a claim that falls outside the scope of that provision.
[2] A law firm that is neither a party to nor a third-party beneficiary of an agreement containing an arbitration provision cannot be compelled to participate in arbitration…
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Join FLexlaw to unlock all legal intelligence“all disputes, claims, and grievances as to the members' respective rights and obligations under the agreement would be subject to arbitration”
The express language of the arbitration provision in the membership agreement, which limits arbitration to disputes concerning members' contractual rights and obligations
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Join FLexlaw to unlock all legal intelligenceMuskat, Libow, and Shaheen formed Simbabear, LLC to acquire an office building in Boca Raton. Muskat was a partner in the law firm Libow & Muskat, LLP…
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TAYLOR, J.
We reverse the non-final order of the circuit court compelling arbitration and staying further proceedings in this civil action.
Appellee, Jaclyn G. Muskat, and appellants, Allen H. Libow and William M. Sha-heen, formed a limited liability company, Simbabear, LLC, for the sole purpose of acquiring and owning an office building in Boca Raton, Florida. At the time, Muskat was a partner in the law firm of Libow & Muskat, LLP, n/k/a Libow & Shaheen, LLP. The members of Simbabear executed a membership agreement which, in pertinent part, provided for the redemption and liquidation at fair market value of the membership interest of any member who left the law firm. The agreement also provided that “all disputes, claims, and grievances” as to the members’ respective rights and obligations under the agreement would be subject to arbitration.
Libow and Shaheen later terminated Muskat’s relationship with the law firm. Simbabear then sought to redeem Mus-kat’s membership interest in Simbabear and obtain an appraisal of its fair market value.
Muskat filed a complaint against Simba-bear, LLC, Libow & Shaheen, LLP, Allen H. Libow, and William M. Shaheen, requesting in Count I that the court appoint a receiver and select a licensed appraiser to value her membership interest in Sim-babear. In Count II, Muskat asserted a claim for civil conspiracy, alleging that the “true purpose” of her termination by Li-bow and Shaheen was “to implement a scheme whereby they, as the sole remaining members of the LLC and partners of the law firm, would acquire at no cost to themselves, the value of her membership interest.” Muskat demanded a jury trial.
The defendants moved to dismiss Mus-kat’s complaint or, in the alternative, to compel arbitration. Thereafter, Muskat served a demand on the defendants for arbitration. Following a hearing, the trial court granted the defendants’ alternative motion to compel arbitration and stay proceedings, and further determined that Muskat’s request to arbitrate complied with the membership agreement. Accordingly, the court ordered that all claims asserted by Muskat in her complaint, including her claim of civil conspiracy, be arbitrated.
Muskat concedes that the law firm of Libow & Muskat, LLP, n/k/a Li-bow & Shaheen, LLP, should not have been compelled to participate in binding arbitration with her because the law firm is neither a party to, nor a third-party beneficiary of, the agreement containing the arbitration provision upon which the order is based. Appellee also concedes that the court erred in directing the parties to arbitrate Count II, the civil conspiracy claim, because this claim is beyond the scope of the arbitration provision of the agreement.
We therefore reverse the order compelling the law firm to participate in arbitration and directing the parties to arbitrate the civil conspiracy claim. We remand this cause for purposes of arbitrating Count I of the complaint. Appellants, who moved to compel arbitration during the course of the proceedings below, are judicially estopped from now demanding trial by jury on this count.
Reversed and Remanded.
STEVENSON, C.J., and WARNER, J., concur.