Valiant Consultants, Inc. Steven Mayer Justin Preer And Mike Fisher v. Courtney Lewis
680 S.W.3d 474
Ark. Ct. App.2023Background
- Courtney Lewis entered into a contract with Valiant Consultants, Inc. in 2020 for management of a fully automated Amazon store, after being reassured verbally about refund policies by CEO Steven Mayer.
- Lewis alleged that her contract was induced by fraudulent misrepresentations, including false testimonials and refund guarantees not put in writing.
- Upon dissatisfaction and failing to obtain a refund, Lewis filed suit for fraud, constructive fraud, and violation of the Arkansas Deceptive Trade Practices Act against Valiant and its key individuals (Mayer, Preer, Fisher).
- The defendants moved to compel arbitration per the contract’s arbitration clause; Lewis opposed, arguing the entire contract (including the arbitration provision) was fraudulently induced.
- The circuit court denied the motion to compel arbitration, prompting this interlocutory appeal.
- The court needed to decide who was entitled to enforce arbitration: Valiant or its individual officers who were not signatories in their personal capacities.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Whether Lewis’s fraud claim is subject to arbitration | Fraud invalidates entire contract including arbitration clause | Challenge is to contract as a whole, not specifically to arbitration clause | Arbitration clause must be enforced; arbitrator decides contract’s validity |
| Can nonsignatory officers compel arbitration | No agreement to arbitrate with individuals | Officers should be covered by the arbitration clause | Motion to compel denied as to nonsignatories; individuals not entitled to compel |
Key Cases Cited
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (arbitrator, not the courts, decides issues of invalidity based on fraud in inducement of the whole contract)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitration clause is severable; unless the clause itself is challenged, validity of contract is for arbitrator)
- Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17 (2012) (federal arbitration law applies in state courts and enforces arbitrability principles)
- BDO Seidman, LLP v. SSW Holding Co., Inc., 2012 Ark. 1 (standard for referring contract validity issues due to fraud to arbitration)