871 S.E.2d 226
Va.2022Background
- Strother R. Anderson created an inter vivos irrevocable trust dividing assets into three shares for his children/descendants.
- Strother died; Sarah Boyle became successor trustee and is also a beneficiary; the trust contains an unambiguous mandatory arbitration clause for disputes.
- Linda D. Anderson, ancillary administrator of her late husband John’s estate, sued Boyle for breach of trustee duties (seeking removal or compliance with the trust).
- Boyle moved to compel arbitration; the Fairfax circuit court denied the motion; Boyle appealed interlocutorily under the VUAA.
- The Supreme Court of Virginia was asked whether the Virginia Uniform Arbitration Act (VUAA) or the Federal Arbitration Act (FAA) requires enforcement of the trust’s arbitration clause.
Issues
| Issue | Plaintiff's Argument (Linda) | Defendant's Argument (Boyle) | Held |
|---|---|---|---|
| Does the VUAA compel arbitration of a trust clause? | Trust is not a contract or mutual agreement; beneficiary did not agree to arbitrate, so VUAA inapplicable. | Trust language is a written agreement/provision to arbitrate and thus falls within VUAA. | Trust is not a "contract" and beneficiary is not party to a written agreement to arbitrate; VUAA does not compel arbitration. |
| Does the FAA compel arbitration of a trust clause? | FAA applies to contracts only; a trust is not a contract, so FAA does not apply. | FAA preempts and enforces arbitration clauses in written instruments involving commerce, so it should apply. | FAA applies to arbitration clauses in contracts; a trust is not a contract under the FAA, so FAA does not compel arbitration. |
Key Cases Cited
- Mission Residential, L.L.C. v. Triple Net Properties, L.L.C., 275 Va. 157 (2008) (recognizing public policy favoring arbitration)
- Doyle & Russell, Inc. v. Roanoke Hosp. Ass’n, 213 Va. 489 (1973) (party cannot be compelled to arbitrate absent agreement)
- Buchanan v. Doe, 246 Va. 67 (1993) (definition of "contract")
- Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928) (articulation of strict fiduciary duties)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (FAA does not alter state contract-law background principles)
- Waffle House, Inc. v. [EEOC], 534 U.S. 279 (2002) (arbitration under FAA is based on consent, not coercion)
- Volt Info. Scis., Inc. v. Board of Trustees, 489 U.S. 468 (1989) (arbitration is a matter of contract/consent)
- NC Financial Solutions of Utah, LLC v. Commonwealth ex rel. Herring, 299 Va. 452 (2021) (recent Virginia interpretation of FAA principles)