No arbitration of dispute, according to agreement

vacating a trial court decision to compel arbitration, the 6th U.S. Circuit Court of Appeals on July 31 said that while the lower court rightly ruled that the parties had agreed to arbitrate certain claims, it erred when it applied that provision to the parties' entire dispute. Bratt Enterprises Inc. v. Noble Int'l Ltd., No. 01-4244.

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Young’s e-mail address is gyoungnlj.com vacating a trial court decision to compel arbitration, the 6th U.S. Circuit Court of Appeals on July 31 said that while the lower court rightly ruled that the parties had agreed to arbitrate certain claims, it erred when it applied that provision to the parties’ entire dispute. Bratt Enterprises Inc. v. Noble Int’l Ltd., No. 01-4244. When Bratt sold its steel business to Noble, the parties signed an agreement that contained an arbitration clause covering disagreements “with any of the amounts included in the Closing Balance Sheet.” Noble had agreed to assume liability for accounts payable, subject to a provision capping its liability at $1.2 million. When a dispute arose over a $600,000 difference between the amount of accounts payable on the balance sheet and the liability limit, Bratt filed suit in an Ohio federal court seeking reformation. Noble countersued for the difference between the sums. On Bratt’s motion, the trial court submitted the claim to an arbitrator who ruled in Noble’s favor. Finding the lower court’s arbitration mandate was overbroad, the 6th Circuit said that while the parties had expressly agreed to arbitrate the balance sheet issue, the other issues reached by the arbitrator involved the validity of the liability limitation provision and were outside the arbitration agreement.

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