The mandate is recalled. The order filed for publication on December 15, 2010 is amended as follows:
First, delete the sentence that reads:
and replace it with:
Second, attach as Appendix A the May 20, 2009 district court Order Denying Plaintiffs' Motion to Compel Arbitration, which is being transmitted together with this order.
The Clerk is directed to re-issue the mandate immediately upon filing of the amended order and appendix. No petitions for rehearing will be entertained.
IT IS SO ORDERED.
As to Appeal No. 09-55835, we affirm for the reasons stated by the district court in its May 20, 2009 Order Denying Plaintiffs' Motion to Compel Arbitration, attached as Appendix A. Appeal No. 09-56394, challenging the district court's award of prevailing party attorneys' fees to Defendant, is therefore moot.
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SHAWN SAMSON and JACK KASHANI, Plaintiffs vs. NAMA HOLDINGS, LLC, Defendant. CASE NO. CV 09-01433 MMM (PJWx) ORDER DENYING PLAINTIFF'S MOTION TO COMPEL ARBITRATION
On March 30, 2009, plaintiffs Shawn Samson and Jack Kashani filed a motion to compel arbitration against defendant NAMA Holdings, LLC ("NAMA"). Samson and Kashani assert that they are parties to agreements with NAMA that include arbitration provisions. Samson and Kashani do not, however, assert that they are parties to the agreements in their individual capacities. Rather, they contend that they signed the agreements in their capacity "as managers" of an entity known as Alliance Network, LLC ("Alliance"). NAMA's claims against Samson and Kashani in their individual capacities are currently pending in New York state court. Samson and Kashani contend that NAMA's claims against them as individuals should be construed as claims against them in their capacity as managers and be subject to arbitration. They also seek to compel arbitration of claims against NAMA that they wish to assert in their capacity as managers.
This dispute arises from the parties' involvement in Alliance, a Nevada limited liability company that was formed to develop a showroom complex for the home furnishings industry in Las Vegas.
Samson and Kashani each signed the operating agreement a second time below their signature on behalf of Prime. This second signature block is preceded by the printed word "MANAGER," followed by a colon.
The word "Manager" first appears in the first paragraph of the operating agreement, which states that the contract "is executed . . . by and among [Prime] and certain other entities or individuals who
The operating agreement contains a broad arbitration provision, which provides, in relevant part:
The operating agreement grants "the Manager" authority, subject to certain conditions, to issue written "Capital Call Notices" requesting that Alliance members to contribute further funds "required for the successful conduct and operation of the purpose of the Company, as determined by the Manager."
The first paragraph of the settlement agreement reflects that the contract was "by and among" Prime; NAMA; Crescent
The parties' differences continued after execution of the settlement agreement.
The first amended demand asserts claims against NAMA for declaratory relief; breach of contract; intentional interference with current and prospective contractual relations; actual or constructive fraud; breach of fiduciary duty; breach of the implied covenant of good faith and fair dealing; intentional interference with prospective contractual relations; and "injunction against claiming any rights obtained via section 11 of the settlement agreement and for rescission of section 11 of the settlement agreement."
After the Alliance parties filed their demand for arbitration, the AAA transferred the matter to its International Center for Dispute Resolution, and a three-member arbitration panel was named.
On November 5, 2007, NAMA filed a statement of defense and counter-demand for arbitration (the "counter-demand") naming as counter-respondents Samson, Kashani, Prime, Crescent, and Fordgate World Market Center, LLC, an entity whose status as a member of Alliance NAMA disputes.
At some point during the arbitration, a dispute emerged as to whether NAMA's claims against Samson and Kashani were asserted against them as individuals or in their "capacity as managers" of Alliance Network.
On NAMA's motion, the panel on November 5, 2008, issued an order confirming that Samson and Kashani were sued in their individual capacities.
Shortly after the panel issued this order, the two filed a motion to dismiss NAMA's claims against them.
Samson and Kashani contented that the arbitration provisions in the operating and settlement agreements confirmed their interpretation of the signature blocks and definition of "Manager" in the operating agreement. They noted that the provision in the operating agreement referred, inter alia, to disputes between "the Company and the Manager or between Evan Realty and the Manager," while the provision in the settlement agreement referred to disputes "between one or more members of the Company and the Manager."
NAMA disagreed. It cited the provision of the settlement agreement specifying that the parties to the contact included
On November 29, 2008, the panel issued an order dismissing Samson and Kashani as individual parties without prejudice.
After the dismissal of NAMA's claims against Samson and Kashani as individuals, on December 8, 2008, NAMA amended its complaint in an action it had filed against Alliance's counsel in New York state court (the "New York action").
A hearing on the merits of the remaining claims in the arbitration began on January 5, 2009; the proceeding was adjourned during February, but recommenced and concluded on March 19, 2009.
Samson and Kashani continued to attend the hearing, and Samson testified over the course of twelve days.
The Federal Arbitration Act ("FAA") provides that written arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Section 4 of the FAA, which governs petitions to compel arbitration, provides that
Despite this strong policy favoring arbitration, "`arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (explaining that "arbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration"); Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 756 (9th Cir.1989) ("When we are asked to compel arbitration of a dispute, our threshold inquiry is whether the parties agreed to arbitrate"); McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 524 (2d Cir.1980) ("[T]he question whether a person is a party to (an) arbitration agreement. . . is included within the statutory issue of the making of the arbitration agreement" (citation and internal quotation marks omitted)). "While ambiguities in the language of [an] agreement should be resolved in favor of arbitration, [courts] do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated." E.E.O.C. v. Waffle House, 534 U.S. 279, 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (citation omitted); see also Par-Knit Mills, Inc. v. Stockbridge Fabrics Company, Ltd., 636 F.2d 51, 54 (3d Cir. 1980) ("Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocable agreement to that effect").
A district "court's role under the [FAA] is . . . limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with
Because Samson and Kashani have taken a contradictory and potentially confusing array of positions regarding the arbitration provisions at issue, the court will attempt to summarize the positions before proceeding to interpret the arbitration agreement. At some point during the arbitration, Samson and Kashani asserted that they were not parties to the operating and settlement agreements in their individual capacity, but in their separate legal capacity as managers. Samson and Kashani did not define the parameters of this purported capacity during the arbitration proceeding, however, nor have they done so in this court.
Because Samson and Kashani have not clearly described the nature of their purported capacity as managers, the court has attempted to discern the nature of the capacity from their pleadings. At times, Samson and Kashani argue that they "signed the agreements, not as individuals, but as representative of [Alliance]."
When pressed for an explanation of these apparently contradictory assertions at oral argument, Samson's and Kashani's counsel could not provide a satisfactory answer. The court observed that it seemed contradictory for Samson and Kashani to argue that their alleged capacity as manager shielded them from individual liability for breach of fiduciary duty, yet at the same time permitted them to assert claims against NAMA that were separate and distinct from those being
In any event, the argument fails. Counsel noted that one of the claims originally asserted in arbitration by "claimants" sought a declaration that Samson and Kashani did not breach any fiduciary duties.
Furthermore, Samson and Kashani cite no authority for the proposition that they entered into the agreements in this hybrid capacity. In their reply, Samson and Kashani cite a single California decision, Benasra v. Marciano, 92 Cal.App.4th 987, 112 Cal.Rptr.2d 358 (2001), as support for their "capacity as manager" argument.
The Benasra court concluded that the parties to the arbitration agreement were the licensor and licensee corporations. The licensee's president argued that he signed the agreement in his official capacity; he did not argue, as Samson and Kashani do here, that he was a party to the agreement in his "capacity as president." Benasra discussed two capacities in which a corporate officer could sign and arbitration agreement: his capacity as an officer, i.e., on behalf of a company, and his capacity as an individual, i.e., on his own behalf. The case does not acknowledge or discuss the type of hybrid capacity Samson and Kashani posit here. Moreover, the contracts at issue in Benasra were fundamentally different than the agreement at issue here. Nothing in license agreements imposed duties or obligations on the licensee's president. The only logical conclusion, therefore, was that the president had signed the agreements as a corporate officer, on behalf of the corporation. Here, in contrast, the operating and settlement agreements impose specific duties and obligations on Samson and Kashani. Additionally, the men could not logically have signed the operating agreement as representatives of the very entity being created by that agreement. Of the two possibilities contemplated by Benasra, therefore, the facts here compel the conclusion that Samson and Kashani entered into the agreements in their individual capacities, not as corporate officers. Most importantly, nothing in Benasra suggests the existence of the type of hybrid corporate-individual capacity urged by Samson and Kashani.
Adopting Samson's and Kashani's "capacity as manager" argument would allow them to secure an unfair advantage over their opponents. In their petition and moving papers, Samson and Kashani did not move to compel arbitration of the claims NAMA has actually asserted against them as individuals in the New York action. They contended, as they did in their earlier motion to dismiss in the arbitration proceeding, that they are not parties to the operating and settlement agreements in their capacity as individuals and thus that NAMA's claims, although alleged against them in their individual capacities, are in reality claims against them in their separate legal capacity as manager of Alliance. Essentially, they ask the court to reject NAMA's characterization of its claims, substitute what they insist is the proper characterization, and compel arbitration of the recharacterized claims.
Samson and Kashani in effect seek to use the arbitration provisions in the operating and settlement agreements as a weapon to prevent NAMA from asserting claims against them in their individual capacities, whether in court or in arbitration. Nothing in the FAA supports such an effort. A section 4 petition is a tool to assist a petitioner who seeks to arbitrate claims within the scope of an arbitration agreement; it is not a tool for avoiding litigation of claims that a petitioner insists fall outside the scope of an arbitration agreement. Cf. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 474, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) ("§ 4 of the FAA does not confer a right to compel arbitration of any dispute at any time; it confers only the right to obtain an order directing that `arbitration proceed in the manner provided for in [the parties'] agreement,'" quoting 9 U.S.C. § 4).
If, as Samson and Kashani insist, they cannot be held individually liable on NAMA's claims, and are liable only in
Accepting Samson's and Kashani's argument that the claims must be recharacterized and compelled to arbitration would mean that NAMA could not obtain resolution in any forum of its claim that Samson and Kashani are liable to it in their individual capacities. During the arbitration, Samson and Kashani insisted, as they insist here, that claims against them in their individual capacities are not subject to arbitration. Now that NAMA has sued them individually in New York state court, they contend that those claims cannot be litigated in that forum because they are not proper individual claims and should be treated as claims against them as managers that are subject to arbitration. As can be seen, Samson and Kashani seek to prevent both the courts and the arbitrators from addressing whether they are liable to NAMA in their individual capacities. They contend that, because they are parties to the arbitration provisions in their capacity as manager, NAMA may not name them as defendants in their individual capacities in the New York action. This argument is contrary to the basic principle that every party is entitled to a "day in court" on its claims, whether that "day in court" is actually in a court or before an arbitrator.
Samson and Kashani expend considerable effort arguing that NAMA's claims "relate to" the operating agreement, and thus, under the terms of the arbitration provision, must be arbitrated.
Before oral argument, the court gave counsel a tentative order that analyzed Samson's and Kashani's capacity as manager argument in this way, and indicated that the court was not inclined to allow
"[W]hen a contract is clear, unambiguous, and complete, its terms must be given their plain meaning and the contract must be enforced as written." Ringle v. Bruton, 120 Nev. 82, 93, 86 P.3d 1032 (2004); see also State, University and Community College System v. Sutton, 120 Nev. 972, 980, 103 P.3d 8 (2004) (where contractual language is unambiguous, it must be interpreted according to its plain meaning).
Further, the settlement agreement also uses the term "the Manager" as a collective term for Samson and Kashani as individuals. This consistent usage indicates that the parties intended for the agreements to bind Samson and Kashani in their individual capacities. See RESTATEMENT 2D, CONTRACTS § 202(5) ("Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade"). The settlement agreement provides, unambiguously, that Samson and Kashani are parties to it as individuals; the first paragraph lists "Shawn Samson. . . an Individual" and "Jack Kashani . . . an Individual" among the parties to the agreement.
In the face of this clear language, Samson's and Kashani's contention that the term "Manager" above their signatures indicates that they signed in a separate legal capacity is unavailing. The heading merely distinguishes their execution of the agreements on their own behalf, i.e., their willingness to undertake the duties, responsibilities and benefits of the position of manager, from their signatures on behalf of Prime.
To the extent Samson and Kashani argue that they signed the agreements as representatives of Alliance, this argument is unpersuasive. The operating agreement is the instrument that created Alliance; it is circular to argue that Samson and Kashani entered into the agreement as representatives of the entity being created by the agreement. Further, the arbitration provision refers to disputes between "the Company and the Manager."
Samson's and Kashani's attempt at oral argument to inject ambiguity into the arbitration provisions was unavailing. As noted, the court finds no ambiguity in the operating agreement, and Samson's and Kashani's counsel did not cite any allegedly ambiguous language in it. Rather, counsel cited paragraph 2 of the settlement agreement, which states that "each Party, Kashani and Samson" releases "all other Parties, Kashani and Samson" from specified claims.
Other paragraphs clearly bind Samson and Kashani as well, including paragraph 11(b), which recognizes that "the Manager," i.e., Samson and Kashani as individuals, have fiduciary obligations to Alliance.
The court thus finds that the operating and settlement agreements hind Samson and Kashani as individuals, and that they are not parties to the agreements in a distinct legal capacity "as managers." Whatever meaning the parties intended by separately referencing "Kashani and Samson" and "Parties" in paragraph 2 of the settlement agreement, the arbitration clause is contained in a separate paragraph,
The court's analysis would support compelling arbitration of claims asserted by or against Samson and Kashani in their individual capacity under the operating and settlement agreement.
In Brown v. Dillard's Inc., 430 F.3d 1004 (9th Cir.2005), the Ninth Circuit held that a party who repudiates an arbitration agreement by refusing to arbitrate a dispute within its scope foregoes the right to later enforce the arbitration agreement. Id. at 1010 ("Dillard's breach of its obligations under the arbitration agreement deprives it of the right to enforce that agreement"). The court based its holding on the principle that "[h]e who seeks to enforce a contract must show that he has complied with the conditions and agreements of the contract on his part to be performed." Id. at 1010 (quoting Pry Corp. of Am. v. Leach, 111 Cal.App.2d 632, 639, 2 Cal.Rptr. 425 (1960)) (citing Cameron v. Burnham, 146 Cal. 580, 584, 80 P. 929 (1905)).
In Brown, an employee demanded arbitration of her wrongful discharge claim under an agreement requiring arbitration of such claims. Id. at 1008. Her employer, Dillard's, refused to arbitrate on the ground that it believed her claim to be meritless. Id. at 1009. The employee then filed suit in state court; following removal, Dillard's moved in district court to compel arbitration. Id. This district court denied Dillard's motion, and the Ninth Circuit upheld the denial on the ground that Dillard's had breached the agreement by refusing to arbitrate. Id. at 1010. It concluded: "If Dillard's believed Brown's claim was meritless, its proper course of action was to make that argument in arbitration. Instead, Dillard's refused to participate in the arbitration process at all. Under general principles of California contract law, Dillard's breach of its obligations under the arbitration agreement deprives it of the right to enforce that agreement." Id. The court observed that permitting Dillard's to compel arbitration after breaching the arbitration provision "would set up a perverse incentive scheme. Employers like Dillard's would have an incentive to refuse to arbitrate claims brought by employees in the hope that the frustrated employees would simply abandon them. This tactic would he costless to employers would simply abandon them. This tactic would be costless to employers if they were allowed to compel arbitration whenever a frustrated but persistent employee eventually initiated litigation." Id. at 1012.
Here, the court has found that the arbitration provisions in the operating and settlement agreements unambiguously bind Samson and Kashani as individuals. Despite this fact, after the arbitration panel clarified that NAMA's claims were asserted against Samson and Kashani in their individual capacity, they refused to arbitrate the claims and sought to be dismissed from the arbitration. By doing so, they breached the arbitration provisions and may not seek to enforce them now. As in Brown, permitting Samson and Kashani to compel arbitration would create a "perverse incentive scheme" by rewarding attempts to frustrate contractual arbitration rights. See id. at 1012. This is because, like Dillard's, Samson and Kashani undoubtedly hoped to avoid having to defend claims asserted against them as individuals altogether by refusing to arbitrate. When NAMA persisted and refiled the claims in New York state court, Samson and Kashani moved to recast NAMA's claims as claims against them in their capacity as manager and to compel arbitration. If the court were to compel arbitration, Samson and Kashani would have lost nothing as a result of their refusal to arbitrate claims that were properly subject to arbitration; in fact, they would stand to gain a significant benefit, namely, the chance at a "do-over" of the already-completed merits hearing before the arbitration panel. At a minimum, they would likely be afforded an opportunity to reopen a closed proceeding and present new evidence. Accordingly, the court holds that Samson's and Kashani's breach of the arbitration provisions prevents them from now enforcing a right to arbitrate under the operating and settlement agreements.
Samson and Kashani contend that their conduct is distinguishable from that of the employer in Dillard's because they were among the parties that initiated the arbitration. Given this fact, they contend, they did not "thumb their noses" at the arbitration process the way Dillard's did. This ignores the fact that when NAMA
Samson and Kashani argue that they did not repudiate the arbitration agreements because they reasonably believed they were parties to the arbitration clauses only in their capacity as manager. As noted, Samson and Kashani provide no legal authority for the proposition that such a capacity exists, and nothing in the agreements evinces any intent to create such a novel capacity. It is understandable that Samson and Kashani wish to interpret the arbitration provisions in a manner that permits them to assert affirmative claims in arbitration while shielding them from the arbitration of claims that might result in the imposition of liability against them. The fact that it is advantageous to them, however, does not make their position reasonable. While an erroneous interpretation of a contract, asserted in good faith, does not constitute a repudiation, see Richard A. Lord, 23 WILLISTON ON CONTRACTS § 63:48 (4th ed.), the court cannot conclude that Samson and Kashani acted in good faith in asserting that they signed the agreements in a capacity whose contours shift to suit their needs. Thus, the court
The Ninth Circuit has held that a party arguing waiver of an arbitration provision "bears a heavy burden of proof," since waiver "is not favored" and "[a]ny examination of whether the right to compel arbitration has been waived must be conducted in light of the strong federal policy favoring enforcement of arbitration agreements." Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir.1986). A party seeking to prove waiver of the right to arbitrate must show: "(1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration from such inconsistent acts." Id.
Here, the first two elements are easily satisfied. Samson and Kashani were aware of the arbitration provisions in the agreements. Despite their contention that the provisions bound them only in their capacity as manager, the court has found that the provisions unambiguously apply to them as individuals. Thus, they should have been aware of the right to arbitrate claims asserted against them in their individual capacity. Their refusal to arbitrate NAMA's claims was clearly inconsistent with this right.
NAMA was also significantly prejudiced by Samson's and Kashani's actions. The two men participated in the arbitration for twenty months and did not seek dismissal of NAMA's claims against them until two months before a hearing on the merits.
Samson and Kashani contend that they did not waive the arbitration provisions because they initiated arbitration and did not seek to litigate any claims against NAMA in court. What matters, however, is that they consistently refused to arbitrate claims against them in their individual capacity, while simultaneously insisting that they had the right to assert affirmative claims against NAMA in the arbitration. This compels the conclusion that Samson and Kashani acted in bad faith in an attempt to frustrate NAMA's right to arbitrate claims against them as individuals. As a consequence, they waived the right to arbitrate claims against them in their individual capacity and cannot now enforce such a right. St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187, 1195, 8 Cal.Rptr.3d 517, 82 P.3d 727 (2003) ("Both state and federal law emphasize that no single test delineates the nature of the conduct that will constitute a waiver of arbitration. . . . The decisions likewise hold that the `bad faith' or `wilful misconduct' of a party may constitute a waiver and thus justify a refusal to compel arbitration").
Judicial estoppel "`generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.'" New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (citations omitted). "[F]ederal law governs the application of judicial estoppel in federal court." Rissetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 603 (9th Cir.1996). The doctrine applies to positions taken in the same action or in different actions. See id. at 605 ("We now make it explicit that the doctrine of judicial estoppel is not confined to inconsistent positions taken in the same litigation"). It also "applies to a party's stated position whether it is an expression of intention, a statement of fact, or a legal assertion." Wagner v. Professional Engineers in California Government, 354 F.3d 1036,1044 (9th Cir.2004) (citing Helfand v. Gerson, 105 F.3d 530, 535 (9th Cir.1997)).
Factors relevant in deciding whether to apply the doctrine include: (1) whether the party's later position is "clearly inconsistent" with its earlier position; (2) whether the party has successfully advanced the earlier position, such that judicial acceptance of an inconsistent position in the later proceeding would create a perception that either the first or the second court had been misled; and (3) "whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped." New Hampshire, 532 U.S. at 751, 121 S.Ct. 1808 (citations omitted).
In addition to these factors, the Ninth Circuit examines "whether the party to be estopped acted inadvertently or with any degree of intent." EaglePicher Inc. v. Federal Ins. Co., CV 04-870 PHX MHM, 2007 WL 2265659, *3 (D.Ariz. Aug. 6,2007) (citing Johnson v. Oregon Dep't of Human Resources Rehab. Div., 141 F.3d 1361, 1369 (9th Cir.1998)). "Judicial estoppel applies when a party's position is `tantamount to a knowing misrepresentation to or even fraud on the court.'" Johnson, 141 F.3d at 1369 (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 362-63 (3d Cir.1996)). "If incompatible positions are based not on chicanery, but only on inadvertence or mistake, judicial estoppel does not apply." Id. (citing In re Corey, 892 F.2d 829, 836 (9th Cir.1989)); see also Wyler Summit Partnership v. Turner Broadcasting Sys., Inc., 235 F.3d 1184, 1190 (9th Cir.2000) ("The doctrine of judicial estoppel requires, inter alia, a knowing antecedent misrepresentation by the person or party alleged to be estopped and prevents the party from tendering a contradictory assertion to a court," citing Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir.1990)). It is when "a claimant's particular representations are so inconsistent that they amount to an affront to the court [that] judicial estoppel may apply." Johnson, 141 F.3d at 1369.
Samson and Kashani also successfully advanced their earlier position. They persuaded the arbitrators that there were "serious questions" as to whether they signed the arbitration agreement In their capacity as manager. As a result, they achieved the end they desired—they caused the arbitrators to dismiss claims asserted against them as individuals and to treat those claims differently than the balance of the claims in arbitration mid-stream. The fact that the dismissal was without prejudice does not alter this fact. Samson and Kashani convinced the panel that their assertion of a separate legal capacity as manager was meritorious.
Turning to the third factor, there is no doubt that permitting Samson and Kashani to switch positions at this point would unfairly benefit them. By insisting that they were not parties to the arbitration agreements as individuals, Samson and Kashani were able to remove claims asserted against them from the arbitration. The arbitration is now complete, and compelling arbitration of those claims at this point would, at a minimum, give Samson and Kashani the opportunity to reopen the arbitration and present additional evidence. This is significant, since the claims NAMA asserted against them are inextricably intertwined with the claims asserted by Alliance that have already been arbitrated.
Finally, the court has concluded that Samson and Kashani acted with bad faith intent to Frustrate NAMA's right to arbitrate its claims against them, and in fact attempted to prevent resolution of those claims in any forum. This causes the court to conclude that their adoption of an inconsistent position now smack more of "chicanery," Johnson, 141 F.3d at 1369, than of an innocent mistake. Thus, all factors weigh in favor of invoking judicial estoppel at this point in the case. Consequently, the court concludes that Samson and Kashani are estopped from now asserting that claims against them in their individual capacity should be arbitrated.
For the foregoing reasons, the court denies Samson and Kashani's motion to compel arbitration.
The only evidence to which Samson and Kashani point in arguing that NAMA "admitted" that they signed the agreements in their capacity as managers is a footnote in NAMA's counter-demand, which is taken out of context. The footnote states that "NAMA and purported respondents Nigel and Mousa Alliance contend that the only parties properly subject to arbitration under the relevant arbitration provisions are Alliance Network and its subsidiaries, Alliance Network's constituent members (NAMA, Prime and Crescent), persons or entities claiming to be a Member of Alliance Network (Fordgate), and Samson and Kashani in their role as `Manager' of Alliance Network." (Samson Decl., Exh. 6 at 179 n. 1.) The footnote employs the phrase "in their role as `Manager,'" however, only to indicate that Samson and Kashani are not named as counter-respondents in their capacity as members of Prime. This distinction was necessary because the Alliance parties had sued Nigel and Mousa Alliance in their capacity as members of NAMA. The language quoted by Samson and Kashani appears in the context of the Alliance brothers' argument that "the individual members (direct or indirect) of the constituent members of Alliance Network" were not parties to the operating agreement; this supported their pending motion to be dismissed as individual parties to the arbitration.
