## Facts

- A seller’s successor entity agreed to sell stock of a construction subsidiary to Michael-Curry Companies, Inc. under a stock purchase agreement containing a broad arbitration clause covering any claim “arising out of, or relating to” the agreement, including its “making.”
- After the seller dissolved, the successor trust and the buyer executed an amendment guaranteeing the buyer a minimum profit on projects and capping the trust’s indemnity exposure, while stating the original agreement otherwise remained in effect.
- The buyer alleged the projects produced losses and sued for breach of the amendment’s profitability guaranty.
- The trust resisted liability, asserting the buyer fraudulently induced the amendment by misrepresenting or concealing project conditions and profitability, and sought rescission.
- The trust also asserted third-party claims against the buyer’s shareholders based on personal guarantees.
- The dispute centered on whether the arbitration clause in the original agreement required arbitration of the fraud-in-the-inducement claim directed at the amendment.

## Issues

1. Whether a broad arbitration clause in an original agreement compels arbitration of a claim that a later amendment to that agreement was fraudulently induced.
2. Whether a challenge alleging fraud in the inducement of the contract (as opposed to the arbitration clause itself) is for the arbitrator under a broadly worded arbitration provision.

## Decision

- The Minnesota Supreme Court affirmed the order compelling arbitration.
- The court held the arbitration clause was sufficiently broad to cover the fraud-in-the-inducement claim concerning the amendment.
- The court reasoned the amendment was part of the same contractual relationship because it preserved the original agreement “in full force and effect,” and the dispute related to the “making” of the parties’ contract arrangements.
- Applying Minnesota’s pro-arbitration policy, the court resolved any reasonable doubts about scope in favor of arbitrability and found no contractual exclusion for fraud claims.

## Legal Principles

- An arbitration clause applies when it expressly covers the dispute type or is broad enough that the dispute fairly “arises out of” or “relates to” the contract and the matters the clause identifies.
- Broad “arising out of or relating to” language, especially including disputes about the contract’s “making,” can encompass fraud-in-the-inducement claims.
- Minnesota law presumes arbitrability where a clause is reasonably susceptible to an interpretation that covers the dispute; doubts are resolved in favor of arbitration absent a clear exclusion.
- A challenge directed to the contract’s validity generally does not defeat arbitration under a broad clause unless the challenge is specifically to the arbitration provision itself.

## Conclusion

The court compelled arbitration because the parties’ broad arbitration clause, read in light of the amendment’s incorporation of the original agreement and Minnesota’s presumption favoring arbitration, encompassed a claim that the amendment was fraudulently induced.


Michael-Curry Cos., Inc. v. Knutson S'holders Liquidating Tr., 449 N.W.2d 139 (Minn. 1989)