Apex Holdings LLC v. FairBridge Hotels International Incorporated
2:24-cv-03035
D. Ariz.Apr 14, 2025Background
- Apex Holdings LLC sued FairBridge Hotels International Inc. and related Defendants for breach of contract, alleging default on a loan exceeding $1 million.
- The dispute centers around multiple interrelated agreements: a Convertible Note Agreement (CNA), a Promissory Note, and a Guaranty, all executed contemporaneously.
- Defendants moved to compel arbitration and stay proceedings based on an arbitration clause in the CNA.
- Plaintiff does not dispute the validity of the CNA’s arbitration clause but argues it does not govern the present dispute involving the Note and Guaranty.
- Multiple versions of the contracts were presented, but parties agreed to use Plaintiff’s proffered final version.
- The Court analyzed the integration and cross-referencing between the CNA, Note, and Guaranty to determine the scope of the arbitration clause.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Whether arbitration clause covers dispute | Arbitration clause in CNA doesn’t apply to Note/Guaranty | Note/Guaranty executed pursuant to CNA; all integrated | Arbitration provision in CNA covers Note and Guaranty disputes |
| Effect of use of contract drafts | Defendant relied on outdated contract version | Agrees to use final version identified by Plaintiff | Issue is moot; Court uses final version of CNA |
| Incorporation of CNA provisions by reference | Reference in recitals isn’t enough to extend CNA terms to other contracts | Note/Guaranty are fully integrated with CNA | Enough cross-referencing to show full integration |
| Conflict/inconsistency among contract terms | Conflicting terms mean CNA does not control over Note/Guaranty | Any inconsistencies should be resolved in favor of arbitration | Any doubt is resolved in favor of arbitration |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Supreme Court recognized federal policy favoring arbitration and that arbitration is a matter of contract.)
- Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (Ninth Circuit set standard for motions to compel arbitration, focusing on contract validity and scope.)