Michael-Curry Co. v. Knutson Shareholders,

449 N.W. 2d 139 (1989)

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Nature of the Case

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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.