Phoenix-Tucson v. Deetz
1 CA-CV 14-0780
| Ariz. Ct. App. | Jan 19, 2017Background
- PTR, HVRI, HVRII, and PEDCO are Arizona LLCs that invested in unimproved land; five investor members (the Five Members) collectively invested about $1.4 million.
- The Five Members requested inspection of LLC business records; appellants produced some records but refused others.
- The Five Members filed an AAA demand for arbitration seeking access to records under the operating agreements and A.R.S. § 29-607; PTR, HVRI, and HVRII filed declaratory actions in superior court seeking to limit access; PEDCO attempted to amend its operating agreement to exempt declaratory actions from arbitration.
- Superior court compelled arbitration of the declaratory actions; a single arbitrator conducted a consolidated arbitration, issued an interim award (ordering document production and finding PEDCO’s amendment void) and later a final award (including fees).
- Superior court confirmed the arbitration awards and awarded fees; appellants appealed the orders compelling arbitration and the confirmation; the Court of Appeals affirmed and awarded appellate fees to the Five Members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether superior court properly compelled arbitration of declaratory actions | PTR/HVRI argued no arbitrable "dispute" existed when they filed declaratory actions seeking guidance | Five Members argued conflicting interpretations and correspondence created an actual dispute subject to broad arbitration clauses | Court affirmed: record showed actual dispute and arbitration clauses were broad; arbitration compelled |
| Whether PEDCO’s post‑hoc amendment excluding declaratory relief prevented arbitration | PEDCO asserted its amended operating agreement removed declaratory claims from arbitration | Five Members argued amendment was void and unenforceable; arbitrator found amendment null | Court affirmed confirmation of arbitrator’s finding that amendment was void (appellate challenge not shown to exceed arbitrator’s powers) |
| Whether pleading errors (misnaming trustees as individuals) defeated arbitration | Appellants contended improperly captioned pleadings meant no arbitration agreement with those parties | Five Members amended pleadings before the interim award; appellants did not substantively object | Court held issue moot: pleadings corrected and arbitrator found competent evidence supported award |
| Whether arbitrator exceeded powers by ordering production without confidentiality protections | Appellants argued the arbitrator erred in ordering production and breached powers | Five Members relied on operating agreements and arbitrator’s discretion; appellants essentially disputed correctness, not arbitrator authority | Court affirmed: appellate review will not second-guess arbitrator’s factual/legal rulings absent evidence arbitrator exceeded powers |
Key Cases Cited
- Nat’l Bank of Ariz. v. Schwartz, 230 Ariz. 310 (discusses trial court’s limited role in deciding existence of arbitration agreement)
- Schoneberger v. Oelze, 208 Ariz. 591 (sets forth that arbitration requires an actual agreement to arbitrate)
- Sun Valley Ranch 308 Ltd. P’ship ex rel. Englewood Props., Inc. v. Robson, 231 Ariz. 287 (arbitrability doubts resolved in favor of arbitration)
- Atreus Cmties. Grp. of Ariz. v. Stardust Dev., Inc., 229 Ariz. 503 (arbitrator’s decisions on fact and law are final and binding)
- RS Indus., Inc. v. Candrian, 240 Ariz. 132 (standard of review for confirming arbitration awards: view facts to uphold unless abuse of discretion)
- Smitty’s Super‑Valu, Inc. v. Pasqualetti, 22 Ariz. App. 178 (burden on party attacking award to show arbitrator exceeded powers)