Shivkov v. Artex Risk Solutions, Inc.
| Decision Date | 09 September 2020 |
| Docket Number | No. 19-16746,19-16746 |
| Citation | 974 F.3d 1051 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | Dimitri SHIVKOV, individually and as a trustee of the Phoenix 2010 Revocable Trust; Vassil Zhivkov; Kristina Tsonev; Spectra Services, Inc.; DVS Holdings LLC; Robert C. Miller; Brenda Mae Miller; Bruce G. Robinson; Sara Van Alstyne Robinson; Symphony Homes LLC; Symphony Development Corporation; Keith Butler ; Rebecca M. Butler; Eric K. Wilke; Julie T. Wilke; John Linder; Nina Linder; Affilion of Cobre Valley LLC; Affilion of Huntsville PLLC; Affilion of Texas PLLC; Taylor-Wilke Holdings LLC; Traditions Emergency Medicine PA; Treadstone Equity Group LLC ; UTA Investments LLC; Boomerang WB LLC; AZ Storage 1 LLC; AZ Storage 2 LLC; Boomerang Sonoran LLC; RV Storage LLC ; Stone Haven Lodge LLC; UTA Holdings LLC ; Wilke Medical Direction PLLC; 5T Capital Fund II LLC; 5T Capital Holdings LLC; 5T Capital LLC; Ingenuity Auto Leasing LLC; Ingenuity Aviation LLC ; Ingenuity Equity Group II LLC; Ingenuity Equity Group III LLC; Ingenuity Equity Group LLC; Ingenuity Leasing Company II LLC; Ingenuity Leasing Company LLC; Ingenuity Matrix, Inc. ; Ingenuity Professional Services PLLC; Bourne Tempe Land LLC, on behalf of themselves and all others similarly situated; Paul M. McHale; Cynthia McHale; Keith E. Pereira, Individually and as a trustee of The Blaser Family Revocable Trust Dated March 10, 2006; Kimberly Blaser, Individually and as a trustee of The Blaser Family Revocable Trust Dated March 10, 2006; Brian R. Tiffany; Ryan P. Frank ; Katherine S. Frank; Cation LLC ; Florida Citrus Holdings LLC ; McHale Capital Management LLC; PS Bailey LLC; Blaser Management LLC; Blue Horizon Holdings LLC ; Butler Medical Group, Inc.; Devotion Homes LLC; Glass House LLC; Maui Luxury Rentals LLC; Silver Meadow Investing LLC; T & G Investments LLC; Treadstone Core3 LLC; TW Management LLC; Kamaole Luxury Rentals LLC; Kannapali Beach Holdings LLC; Our Retirement LLC ; Resiliant LLC; Nadim B. Bikhazi; Karen A. Kostluk-Bikhazi; Bradley S. Bullard ; Cathleen M. Bullard; Blake G. Welling; Stephanie G. Welling; Blake Welling MD PC ; Brian Tiffany MD PC; Utah Spine Care LLC; Western States Medical LLC; Ogden Clinic Professional Corporation; Borsight, Inc., Plaintiffs-Appellants, v. ARTEX RISK SOLUTIONS, INC.; TSA Holdings LLC, FKA Tribeca Strategic Advisors LLC ; TBS LLC, DBA PRS Insurance; Karl Huish ; Jeremy Huish; Jim Tehero; Arthur J. Gallagher & Company; Debbie Inman ; Epsilon Actuarial Solutions LLC ; Julie A. Ekdom; AmeRisk Consulting LLC ; Provincial Insurance PCC; Tribeca Strategic Accountants LLC; Tribeca Strategic Accountants PLC, Defendants-Appellees. |
W. Ralph Canada Jr. (argued), David R. Deary, Jim L. Flegle, Wilson E. Wray, John McKenzie, Donna Lee, and Tyler M. Simpson, Loewinsohn Flegle Deary Simon LLP, Dallas, Texas; Garrett W. Woktyns and James A. Bloom, Schneider Wallace Cottrell Konecky Wotkyns, LLP, Scottsdale, Arizona; for Plaintiffs-Appellants.
Stephen V. D'Amore (argued), Scott P. Glauberman, Michael A. Skokna, and Reid F. Smith, Winston & Strawn LLP, Chicago, Illinois; Barbara J. Dawson, Joseph G. Adams, and Taryn J. Gallup, Snell & Wilmer LLP, Phoenix, Arizona; for Defendants-Appellees Artex Risk Solutions Inc., Arthur J. Gallagher & Company, and Debbie Inman.
Karl M. Tilleman (argued) and Erin E. Bradham, Dentons, Phoenix, Arizona; for Defendants-Appellees TSA Holdings LLC, TBS LLC, Karl Huish, Jeremy Huish, Jim Tehero, Provincial Insurance PCC, and Tribeca Strategic Accountants LLC.
J. Steven Sparks and Vincent Miner, Sanders & Parks, Phoenix, Arizona, for Defendants-Appellees Epsilon Actuarial Solutions LLC and Julie A. Ekdom.
J. Michael Low and Paul Gerding, Jr., Kutak Rock, Scottsdale, Arizona, for Defendant-Appellee AmeRisk Consulting LLC.
Michael J. Plati and Michael S. Rubin, Dickinson Wright PLLC, Phoenix, Arizona, for Defendant-Appellee Tribeca Strategic Accountants PLC.
Before: MICHAEL DALY HAWKINS, D. MICHAEL FISHER,* and MILAN D. SMITH, JR., Circuit Judges.
Plaintiffs1 , some eighty-one individuals and related business entities, variously entered into agreements (the Agreements) with Defendants Artex Risk Solutions, Inc. (Artex) and TSA Holdings, LLC, formerly Tribeca Strategic Advisors, LLC (Tribeca). Pursuant to these Agreements, Artex and Tribeca formed and managed captive insurance companies that Plaintiffs owned, and to which Plaintiffs paid insurance premiums. Plaintiffs claimed the payments as tax-deductible business expenses without recognizing them as taxable income. Although this arrangement offered the prospect of tax benefits, that prospect proved fleeting. The IRS audited Plaintiffs, issued delinquency notices, and sought to impose penalties.
After settling with the IRS, Plaintiffs brought this putative class action suit against Defendants.2 Plaintiffs allege that the captives were illegal and abusive tax shelters, about which Defendants failed to inform or advise Plaintiffs. Plaintiffs’ pursuit of this suit, however, faced a roadblock: the Agreements contain an arbitration clause (the Arbitration Clause or Clause). The district court granted Defendants’ motion to compel arbitration and dismissed the operative complaint without prejudice. Plaintiffs appeal.
We resolve several issues here. First , we hold that the Agreements are not unenforceable on the grounds Plaintiffs raise. Although Plaintiffs assert that Artex and Tribeca breached a fiduciary duty to point out and fully explain an arbitration clause, they identify no state law authority recognizing such a duty. Addressing an issue of first impression in our circuit concerning the survival of arbitration obligations following contract termination, we hold that the Agreements do not expressly negate the presumption in favor of post-termination arbitration or clearly imply that the parties did not intend for their arbitration obligations to survive termination. Second , we hold that the Arbitration Clause encompasses all Plaintiffs’ claims. Third , we join seven of our sister circuits in holding that the availability of class arbitration is a gateway issue that a court must presumptively decide. The Agreements here do not clearly and unmistakably delegate that issue to the arbitrator. Because the Agreements are silent on class arbitration, they do not permit class arbitration. Finally , we conclude that all non-signatory Defendants may compel arbitration pursuant to the Agreements. Thus, we affirm.
Between 2009 and 2012, the various groups of Plaintiffs retained Artex and Tribeca, both insurance management companies, to provide services concerning the formation and management of captive insurance companies for Plaintiffs.3 Pursuant to the Agreements, Artex and Tribeca, with support from the other Defendants, conducted feasibility studies concerning the creation of the respective captives, created and managed the captives, calculated the captives’ estimated federal tax payments, caused annual federal tax returns for the captives to be prepared and filed, maintained the captives’ accounting records, and reinsured the captives.
As is relevant here, the Agreements contain an Arbitration Clause:
You and we agree that in the event of any dispute that cannot be resolved between the parties, that we will agree to seek to resolve such disputes through mediation in Mesa, Arizona, and if that fails, that all disputes will be subject to binding arbitration in Mesa, Arizona, with arbitrators to be agreed upon by the parties, and if no agreement is reached, then arbitrated by the American Arbitration Association (AAA). Each party shall bear its own costs in such mediation and arbitration. To reduce time and expenses, we each waive our right to litigate against one another regarding the services provided and obligations pursuant to this Agreement, and instead you and we have chosen binding arbitration. All claims or disputes will be governed by Arizona law.
Several Agreements also contain a Termination and Withdrawal section, which includes a clause concerning the survival of the terms of that section following termination of the Agreement.4
After settling with the IRS for tax liability issues arising from deductions that they claimed for the premiums that they paid to the captives, Plaintiffs filed a putative class action complaint in the District of Arizona. In the operative one hundred seventy-page First Amended Complaint (FAC), Plaintiffs raised claims against all Defendants for breach of fiduciary duty, negligence, negligent misrepresentation, disgorgement, rescission, breach of contract and the duty of good faith and fair dealing, fraud, civil conspiracy, aiding and abetting breach of fiduciary duty and fraud, violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1961 et seq ., and violations of the Arizona RICO statute, Ariz. Rev. Stat. § 13-2301 et seq . Defendants moved to compel arbitration, and separately moved to dismiss. The district court granted the motion to compel, ordered Plaintiffs to arbitrate their claims on an individual basis, and dismissed the FAC without prejudice. Plaintiffs timely appealed.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and 9 U.S.C. § 16(a)(3). Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79, 89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) ; Johnmohammadi v. Bloomingdale's, Inc ., 755 F.3d 1072, 1074 (9th Cir. 2014). "We review a district judge's order to compel arbitration de novo ." Casa del Caffe Vergnano S.P.A. v. ItalFlavors, LLC , 816 F.3d 1208, 1211 (9th Cir. 2016). We review factual findings for clear error, and the interpretation and meaning of contract provisions de novo. Nguyen v. Barnes & Noble Inc ., 763 F.3d 1171, 1175 (9th Cir. 2014).
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