MICHAEL-CURRY CO. V. KNUTSON SHAREHOLDERS
449 N.W. 2d 139 (1989)
NATURE OF THE CASE: This was a dispute over the application of an arbitration provision in a contract. Knutson (D) petitioned for review of a judgment that was granted in favor of Michael (P) that reversed the trial court judgment that the arbitration clause in the parties' stock purchase agreement (agreement) did not compel, pursuant to Minn. Stat. 572.09(a) (1988), arbitration of the issue of whether the amendment to that the agreement was fraudulently induced.
FACTS: D shareholders agreed to sell the stock of D & L Building, Inc. ('D & L'), to P. P and D then entered into an amendment, which guaranteed that P would have a minimum of $125,000 profit on ongoing D & L construction projects. It also contained a provision limiting indemnity by D to P to $250,000. After the amendment was executed, P claimed the projects experienced serious losses and demanded reimbursement under the guaranty of profitability. D refused to reimburse, claiming that the losses on the projects were largely attributable to problems which arose after P purchased D & L but before the parties executed the amendment. D maintains that P knew before execution of the amendment that D & L's business was deteriorating, but failed to disclose these facts to D. D alleges that P was therefore guilty of fraud in the inducement of the amendment. The trial court issued an order on June 14, 1988 which stayed the arbitration. The court of appeals reversed the trial court, holding that the arbitration clause was broad enough to comprehend arbitration of fraud in the inducement of the amendment.
ISSUE:
RULE OF LAW:
HOLDING AND
DECISION:
LEGAL ANALYSIS:
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