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CAPROC Manager4/18/2005
shares and with special provisions relating to the composition of the Board of Directors of CAPROC Manager. CAPROC contends this structure was specifically designed to protect minority shareholders and that removal of CAPROC Manager other than by amendment of the LLC Agreement would frustrate that purpose.
The Court does not find the absence of a removal provision in the LLC Agreement to be strong evidence that the parties intended to exclude issues regarding an attempted removal of CAPROC Manager from arbitration. As discussed above, a determination that the parties intended CAPROC Manager to be the permanent Managing Shareholder, not subject to removal and not subject to arbitration on those issues, would necessitate a determination of aspects of the merits of this case. In addition, even if the parties had expressly prohibited CAPROC Manager's removal, which they did not, that would not necessarily exclude such removal from the scope of a broad arbitration clause.
In United Engineers, the contract in question included a broad arbitration provision and a limitation of liability clause that specifically excluded consequential damages. A defendant demanded arbitration of a claim that arguably sought consequential damages. Plaintiff subsequently brought suit requesting a declaratory judgment that, among other things, liquidated damages were the exclusive remedy available under the contract. The court held that even though the contract arguably precluded defendants' consequential damages claim, the exclusion did not restrict the arbitrator's authority to decide all claims, disputes and other matters arising out of the contract. The court held that plaintiff's argument that consequential damages were excluded from the contract and thus not arbitrable, "goes to the merits of its dispute with . . . defendants and this Court is expressly prohibited by statute from entertaining such an argument in the face of a valid agreement to arbitrate." The court therefore dismissed plaintiff's claims in favor of arbitration.
CAPROC's argument is even weaker than plaintiff's unsuccessful argument in United Engineers. There, the court held that even an express exclusion from the contract did not show a purpose to exclude from arbitration. A fortiori, CAPROC's reliance on an implied prohibition of removal as providing forceful evidence of an intent to exclude must fail.
I therefore find that the LLC Agreement does not exhibit "forceful evidence of a purpose to exclude" from arbitration disputes regarding the purported removal of a Managing Shareholder. Thus, in the circumstances of this case, CAPROC has failed to rebut the strong presumption in favor of arbitration.
II. CONCLUSION
For the foregoing reasons, I conclude that CAPROC's claims are arbitrable and that arbitration offers CAPROC an adequate and complete remedy at law. I therefore grant Defendants' Motion to Dismiss. The Status Quo Order will remain in effect until further order of this Court or the arbitrator.
IT IS SO ORDERED.
Sincerely, Donald F. Parsons, Jr. Vice Chancellor
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