Shannon v. Steinberg
2017 Ark. App. 231
| Ark. Ct. App. | 2017Background
- Parties (Shannon v. Steinberg & Maclin Fox) were members of M3 Enterprises, LLC governed by a written LLC agreement; appellees asserted a contractual right to buy out Shannon’s membership interest.
- Circuit Court held appellees’ copy was the “Actual Agreement,” found they had majority and could remove Shannon, and directed valuation disputes to arbitration (final judgment June 14, 2012).
- Both sides submitted expert valuations to the arbitrator; appellees’ CPA (Dethloff) valued Shannon’s interest at $107,116.22 using the LLC books per §9.5(a)-(b); Shannon’s CPA (Minor) submitted much higher valuations based on broader valuation methods.
- Arbitrator concluded Dethloff’s valuation complied with the LLC agreement and that Minor’s work did not follow the contract’s valuation formula; the arbitrator granted respondents summary judgment in the arbitration and awarded $107,116.22 plus $12,500 in attorney fees charged against Shannon’s interest.
- Shannon moved in circuit court to vacate the arbitration award, arguing the arbitrator refused to consider material evidence and denied him a fair hearing; the trial court denied the motion (June 21, 2016), and Shannon appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated for refusing to hear material evidence / denying a fair hearing | Shannon: Arbitrator ignored/failed to consider his CPA’s valuation and excluded material evidence, prejudicing his rights | Respondents: Both valuations were considered; only respondents’ valuation complied with the LLC agreement’s valuation method, so no refusal to hear material evidence occurred | Court affirmed: Shannon failed to show a statutory ground to vacate; arbitrator acted within jurisdiction and followed the contract’s valuation terms |
| Whether arbitrator improperly granted summary judgment in favor of respondents | Shannon: Summary judgment in arbitration deprived him of a fair evidentiary hearing on valuation | Respondents: The arbitrator properly found no genuine issue of material fact because Shannon’s valuation did not conform to contractual valuation formula | Held: Arbitrator’s legal interpretation and factual findings are not reviewable as errors of law or fact absent statutory vacatur grounds; award stands |
Key Cases Cited
- Hart v. McChristian, 344 Ark. 656, 42 S.W.3d 552 (Ark. 2001) (arbitration awards afforded strong deference; courts only review statutorily enumerated vacatur grounds)
- Dean Witter Reynolds, Inc. v. Deislinger, 289 Ark. 248, 711 S.W.2d 771 (Ark. 1986) (arbitrator’s decisions on questions of law and fact are conclusive absent vacatur grounds)