Linden v. Griffin, 2014 Ky. LEXIS 151

Background

Gryphon Environmental, LLC developed a sewage filtration system and was formed in 2007 by Linden and Griffin as co-founders with equal ownership and an Original Operating Agreement.
Gryphon sought capital and amended its agreement and private placement memorandum with Greenebaum, Doll and McDonald; Linden contends the amendments would not alter his material rights under the Original Operating Agreement.
The Amended Agreement, signed by all members in 2008, added material provisions including an involuntary purchase price provision (§ 17.4(a)) and an arbitration clause (§ 21.7); Linden disputes awareness of these additions.
Disputes over Gryphon’s management emerged in 2008-2009; in January 2009, members voted to remove Linden as officer/director and as authorized Gryphon bank signatory.
Linden allegedly reimbursed himself from Gryphon funds, leading to a criminal complaint and a freezing of his personal accounts; the record is unclear on who filed the complaint or charges.
Linden sued in Jefferson Circuit Court in April 2009 alleging multiple torts and related relief; Defendants moved to compel arbitration under § 21.7, and the trial court compelled arbitration on most counts.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the order to compel arbitration is appealable	Linden contends interlocutory status; however, Defendants appeal under KRS 417.220(1)(a).	Order denied arbitration on all counts except defamation/abuse; appeal proper under statute.	Court has jurisdiction to review Defendants' appeal.
Whether Linden's defamation and abuse of process claims fall within the arbitration agreement	Arbitration clause covers disputes under the Amended Agreement; Linden argues these torts are business-related.	Defamation and abuse of process are outside the rights and liabilities controlled by the Amended Agreement.	Defamation and abuse of process claims are not within the scope of arbitration.
Whether the Amended Agreement's arbitration clause governs disputes about Linden's rights and liabilities as a Gryphon member	Arbitration should cover disputes arising from Amended Agreement rights and liabilities.	Only disputes tied to the Amended Agreement are arbitrable; other tort claims fall outside.	Arbitration applies only to matters within the Amended Agreement; non-business tort claims not arbitrable.
Whether Linden appropriately appealed an interlocutory arbitration order and the court's jurisdiction to modify	Trial court purported to amend order during appeal; Linden argues jurisdiction remained.	Amendment void due to appellate jurisdiction limits; CR 54.02 cannot render interlocutory order final.	Linden's attempted appeal from the amended order was jurisdictionally improper; no finality.
Whether this Court should remand or dismiss Linden's appeal	Appeal seeks review of merits within arbitration scope; jurisdictional issues unresolved.	Remand with dismissal of Linden's appeal to CR 73.02 authorities is proper.	Affirm Court of Appeals and remand to dismiss Linden's appeal for want of jurisdiction.

Key Cases Cited

First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitration is a matter of contract; doubts resolved in favor of arbitration)
Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky. 2004) (scope of arbitrable issues favors arbitration)
Ally Cat, LLC v. Chauvin, 274 S.W.3d 451 (Ky.2009) (an order compelling arbitration is ordinarily not appealable)
American Gen. Home Equity, Inc. v. Kestel, 253 S.W.3d 543 (Ky.2008) (narrowly addresses appealability of arbitration orders and related issues)
Watson v. Best Fin. Serv., Inc., 245 S.W.3d 722 (Ky.2008) (certificate of finality; interlocutory arbitration orders not certifiable)
JPMorgan Chase Bank, N.A. v. Bluegrass Powerboats, 424 S.W.3d 902 (Ky.2014) (arbitration-formation issue is a separate, reviewable legal question)
Commonwealth ex rel. Stumbo v. Philip Morris, USA, 244 S.W.3d 116 (Ky.App.2007) (interlocutory arbitration orders not certifiable under CR 54.02)