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Bee v. RAH Equity Holdings, LLC
ERIK BEE v. RAH EQUITY
HOLDINGS, LLC, ET AL.
(AC 48275)
Cradle, C. J., and Elgo and Westbrook, Js.
Syllabus
The defendants, R Co. and P Co., both Delaware limited liability companies, appealed from the trial court’s interlocutory ruling on the plaintiff’s motion to determine whether the parties’ dispute regarding a contractual noncompete clause in the parties’ agreement was arbitrable and from the court’s subsequent declaratory judgment that the defendants’ claims raised in a contemporaneously filed arbitration action were not arbitrable. The defendants claimed, inter alia, that the court improperly concluded that disputes over arbitrability should be decided by the court because the parties had not clearly expressed an intent to arbitrate issues of arbitrability. Held:
The trial court properly determined that it had the authority to decide the parties’ dispute over arbitrability, as, pursuant to the controlling law in Delaware, James & Jackson, LLC v. Willie Gary, LLC (906 A.2d 76), although it was not in dispute that the arbitration provision in the parties’ agreement incorporated by reference the American Arbitration Association’s (AAA) commercial arbitration rules providing arbitrators with the authority to decide issues of arbitrability, it was otherwise silent as to whether disputes over arbitrability must be arbitrated or decided by a court, and the arbitration clause, when read as a whole, did not generally provide for the arbitration of any and all disputes between the parties, including claims seeking declaratory relief, and, therefore, to clearly and unmistakably establish the parties’ intent to arbitrate arbitrability, the defendants needed to establish something in addition to the reference to the AAA rules, which they failed to do.
The trial court properly determined that the arbitration clause of the parties’ agreement did not authorize the defendants to arbitrate claims for declaratory relief, as the arbitration clause did not broadly state that the parties agreed to arbitrate any and all disputes, rather, it imposed express limitations on what may be arbitrated and, because there was no provision authorizing arbitration of claims for declaratory judgment or empowering an arbitrator to award declaratory relief, it was reasonable to infer that the defendants’ claims raised in the arbitration action fell outside the agreement and, thus, were not arbitrable.
Argued January 5—officially released August 11, 2026
Procedural History
Action seeking, inter alia, a judgment declaring that a
certain provision of the parties’ agreement was not subject to the defendants’ demand for arbitration, and for
other relief, brought to the Superior Court in the judicial
Bee v. RAH Equity Holdings, LLC
district of Hartford, where the court, Smith, J., granted
the plaintiff’s motion to determine arbitrability, and the
defendants appealed to this court; thereafter, the court,
Smith, J., granted the defendants’ motion for judgment,
and the defendants filed an amended appeal. Affirmed.
Scott T. Garosshen, with whom, were Sandra Marin
Lautier and, on the brief, Tyler G. Haas and Robert W.
Horton, pro hac vice, for the appellants (defendants).
Ian E. Bjorkman, for the appellee (plaintiff).
Opinion
WESTBROOK, J. In this declaratory judgment action,
the defendants, RAH Equity Holdings, LLC (RAH
Equity), and Premier Imaging Holdings, LLC (Premier),
appeal from the trial court’s interlocutory ruling on a
motion filed by the plaintiff, Erik Bee, that asked the
court to decide whether the parties’ dispute regarding a
contractual noncompete clause was arbitrable, and from
the trial court’s subsequent declaratory judgment that
the claims raised by the defendants in a contemporaneously filed arbitration action were not arbitrable.1 The
defendants claim on appeal that the court improperly
(1) concluded that the parties had not delegated to an
arbitrator the authority to resolve questions of arbitrability and, thus, any such issue was properly before and
decided by the court, and (2) determined that the arbitration clause in the parties’ contract did not authorize the
defendants to arbitrate a claim for a declaratory ruling
that the plaintiff had breached the noncompete clause.
For the reasons that follow, we affirm the judgment of
the court.
1
We do not decide whether the court’s ruling on the motion to determine arbitrability was an immediately appealable final judgment because, even if this court were to determine that it lacked jurisdiction over the original appeal taken from that ruling, the defendants filed an amended appeal from the court’s February 25, 2025 final declaratory judgment that incorporated the earlier ruling, and that amended appeal is properly before us. See Practice Book § 61-9; Michaud v. Travelers Indemnity Co., 232 Conn. App. 459, 481 n.21, 336 A.3d 470 (2025).
Bee v. RAH Equity Holdings, LLC
The following facts, as found by the trial court or
undisputed in the record, and procedural background are
relevant to our consideration of the defendants’ claims.
The plaintiff, Erik Bee, is a radiologist who is licensed
to practice medicine in Connecticut. The defendants
are both Delaware limited liability companies. In March
2022, the plaintiff, who at that time was employed by
and had ownership interests in Radiology Associates of
Hartford, PLLC (Radiology Associates),2 executed, along
with the other members of Radiology Associates, a number of legal documents, including the Limited Liability
Company Agreement of RAH Equity Holdings, LLC
(agreement). The agreement and other documents were
part of a larger purchase and sale transaction whereby,
inter alia, the plaintiff became a member of RAH Equity
and sold his interests in certain nonclinical assets of Radiology Associates to Premier. The agreement contained a
clause whereby the plaintiff agreed that, if he left RAH
Equity, he could not compete with RAH Equity or its
affiliates within a specified geographic area for a period
of two years (noncompete clause).3 The agreement also
2
The trial court found that Radiology Associates is “related to the defendants” but did not elaborate regarding the nature of that relationship.
3
The noncompete clause is § 14.21 of the agreement and is titled “Restrictive Covenants.” It provides in relevant part: “(a) Other than on behalf of the Company or its Affiliates, no Member shall, either directly or indirectly, individually or by or through any Covered Entity or in collaboration with an Affiliate, whether for pay or otherwise, for such Member’s applicable Restricted Period:
“(i) form or assist others in forming, own any interest in, manage, be employed by, perform services for, become an employee, officer, director or consultant for, invest in (whether through debt or equity securities), otherwise assist (financially or otherwise), or lend such person’s name, counsel or assistance to any Competitor . . . .”
Article I of the agreement defines “Restricted Period” to include the time someone is a member “and for two (2) years thereafter . . . .” A “Competitor” is defined in the agreement as “any person or entity that engages in Restricted Activities within the Territory.” “Restricted Activities” are defined as, inter alia, “providing, supervising, managing or arranging for radiology services . . . .” The “Territory” is defined as Saint Francis Hospital, Johnson Memorial Hospital, Mount Sinai Rehabilitation Hospital, Avon Imaging Center, Bloomfield Imaging Center, Enfield Imaging Center, Glastonbury Imaging Center, Rocky Hill Imaging Center, and any other facilities at which RAH Equity
Bee v. RAH Equity Holdings, LLC
contained an arbitration clause that incorporated by reference the commercial arbitration rules of the American
Arbitration Association (AAA).4
On April 21, 2023, the plaintiff gave notice to Radiology Associates that he intended to resign effective April
21, 2024. The plaintiff resigned as planned and, as of
April 22, 2024, became employed by another medical
practice, Radiologic Associates of Middletown.
On or about March 27, 2024, the defendants initiated
arbitration proceedings with the AAA against the plaintiff in which they sought “a declaration that [the noncompete clause] is enforceable and that [the plaintiff’s]
employment with Radiologic Associates of Middletown”
was in breach of the agreement’s noncompete clause. The
defendants, on April 2, 2024, served the plaintiff with
a statement of claim and a demand that the plaintiff
submit to arbitration.
In response to the demand for arbitration, on April 27,
2024, the plaintiff commenced the underlying declaratory judgment action in which he challenged the validity of the defendants’ demand for arbitration and the
arbitrability of the defendants’ claims. By way of relief,
or its affiliates had rendered services during a member’s last year of employment or at which they had signed or been awarded a contract, plus a twenty-five mile radius from all such facilities.
4
The arbitration clause provides in relevant part: “Any unresolved controversy or claim arising from or relating to this Agreement or breach thereof shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, then in effect. The decision of arbitration shall be final and conclusive upon the parties and judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitration proceedings shall be held in Hartford Connecticut . . . . The arbitrator shall have authority to award only (a) money damages, (b) attorneys’ fees, costs and expert witness fees to the prevailing party, and (c) sanctions for abuse or frustration of the arbitration process. The arbitrator’s compensation, and the administrative costs of the arbitration, shall be borne by the parties in the manner set forth in the arbitration award, as determined by the arbitrator. Notwithstanding the foregoing provisions . . . the parties are not required to arbitrate any issue for which injunctive relief is sought by any party hereto and any party may seek injunctive relief in any federal or state court having competent jurisdiction.”
Bee v. RAH Equity Holdings, LLC
the plaintiff sought a judicial determination that he
was not subject to the defendants’ arbitration action
because the arbitrators lacked the authority to issue
the requested declaratory relief, an order staying the
defendants’ arbitration action, and an order enjoining
the defendants from proceeding with the arbitration
action against the plaintiff.
On May 14, 2024, the plaintiff, citing General Statutes
§ 52-407gg (b),5 filed a motion asking the court to determine arbitrability. He subsequently filed a supporting
memorandum of law.6 The plaintiff argued that the court,
and not an arbitrator, should decide the threshold issue
of whether the claims raised by the defendants in their
arbitration action, which only sought declaratory relief,7
were arbitrable. The defendants filed an opposition to the
plaintiff’s motion on May 23, 2024, in which they argued
that the parties had agreed to arbitrate any issue of arbitrability and, even if the court were to decide arbitrability, their claims before the AAA arbitrators were arbitrable
under the parties’ agreement. The plaintiff thereafter
filed a reply memorandum. The court, Smith, J., heard
oral argument on the plaintiff’s motion on July 29, 2024.
5
General Statutes § 52-407gg (b) provides: “On motion of a person alleging that an arbitration proceeding has been initiated or threatened but that there is no agreement to arbitrate, the court shall proceed summarily to decide the issue. If the court finds that there is an enforceable agreement to arbitrate, it shall order the parties to arbitrate.”
6
In his memorandum of law, the plaintiff states that the noncompete clause is invalid and unenforceable. In support of that position, the plaintiff relies on General Statutes § 20-14p (b) (2), which prohibits covenants not to compete involving physicians that restrict activities for more than one year or cover a territory exceeding a fifteen mile radius. The plaintiff also references rules previously adopted by the Federal Trade Commission that, with some exceptions, would have barred noncompete clauses nationwide as unfair methods of competition. See 16 C.F.R. § 910 (2024). We note that those rules never took effect because they were set aside by court order; see Ryan, LLC v. Federal Trade Commission, 746 F. Supp. 3d 369, 390 (N.D. Tex. 2024); and eventually rescinded by the agency. See 91 Fed. Reg. 6510 (February 12, 2026). The validity of the noncompete clause is not before us in the present appeal.
7
In their statement of claim filed with the AAA, the defendants did not seek an award of compensatory damages or any other form of relief other than a declaratory judgment.
Bee v. RAH Equity Holdings, LLC
The court issued a memorandum of decision on the
motion to determine arbitrability on November 20, 2024.
The court first determined that, in accordance with an
express provision in the agreement,8 it would apply Delaware substantive law with respect to whether the court
or an arbitrator should decide the question of arbitrability and whether the defendants’ arbitration claims
were arbitrable. The court concluded, however, that
Connecticut law governed any procedural issues, which
included whether the court should compel or stay the
arbitration proceedings commenced by the defendants.
Next, applying what the court determined was governing Delaware law; see, e.g., James & Jackson, LLC
v. Willie Gary, LLC, 906 A.2d 76 (Del. 2006); the court
agreed with the argument of the plaintiff that, although
the agreement’s arbitration provision incorporated by
reference AAA commercial arbitration rules, which
generally authorized an arbitrator to resolve issues of
arbitrability, the agreement otherwise was silent as
to who should decide issues of arbitrability. Further,
because the arbitration provision did not contain broad
language that all disputes were subject to arbitration
but, to the contrary, expressly exempted certain matters from arbitration, the language of the agreement
did not clearly and unmistakably establish the parties’
intent to arbitrate the question of arbitrability, which
standard, the court concluded, must be met to overcome
the presumption that a court ordinarily decides issues
of arbitrability.
Having decided that the issue of arbitrability properly was before it, the court then turned to whether the
parties had agreed to arbitrate the particular claim the
defendants had raised in their arbitration action before
the AAA. The court concluded that they did not. First,
the court noted that the defendants’ demand for arbitration only sought declaratory relief from the arbitrators,
8
Section 14.8 of the agreement, titled “Applicable Law” provides: “All questions concerning the construction, validity and interpretation of this Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Delaware.”
Bee v. RAH Equity Holdings, LLC
but the agreement’s arbitration provision contained
no reference to declaratory judgments or declaratory
relief, and specifically limited the arbitrators’ authority to awards of “(a) money damages, (b) attorneys’ fees,
costs and expert witness fees to the prevailing party, and
(c) sanctions for abuse or frustration of the arbitration
process.” Because the court concluded that the AAA
arbitrators were not empowered to award the declaratory
relief sought by the defendants, it further concluded
that “any attempt by the arbitrator to render such an
award would be an abuse of the arbitrator’s authority”
and would render the award subject to vacatur under
General Statutes § 52-407ww (a) (4).9 On the basis of the
trial court’s review of “the plain language of the parties’ agreement,” it concluded that “the defendants’ claim for
declaratory relief in the related arbitration proceeding is not arbitrable.” The defendants filed the present appeal
challenging the court’s ruling on the plaintiff’s motion.
See footnote 1 of this opinion.
On December 20, 2024, the defendants filed a motion
for articulation in which they asked the trial court
whether its November 20, 2024 decision had either
stayed or enjoined the parties’ AAA arbitration proceedings, whether its decision “fully and finally resolve[d]
the dispute between the parties in this lawsuit as to
arbitrability,” and whether any claims in the underlying declaratory judgment action remained “live.” The
plaintiff opposed the motion for articulation, arguing
that there was no reason the court needed to clarify or
articulate its decision. The court denied the motion for
articulation on January 16, 2025.10
On January 30, 2025, the defendants filed with the trial
court a motion for judgment in which they moved the
9
General Statutes § 52-407ww (a) provides in relevant part: “Upon motion to the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if . . . (4) An arbitrator exceeded the arbitrator’s powers . . . .”
10
The court explained as follows: “The court issued a memorandum of decision on November 20, 2024 . . . deciding the two specific issues presented by the plaintiff’s motion brought under . . . § 52-407gg (b);
Bee v. RAH Equity Holdings, LLC
court “to issue judgment, formally, consistent with its
November 20, 2024 decision,” noting that “[t]he court’s
November 20 decision granted the precise declaratory
relief that [the plaintiff] sought in his single count complaint” and that, “[b]ecause the single count complaint
raises no other claims to adjudicate, [the trial court]
should issue judgment formally (1) granting [the plaintiff’s] claim for declaratory relief, and (2) clarifying
that no other claims remain.” On February 25, 2025,
the court issued the following order: “The court, being
satisfied that the requirements of General Statutes §
52-29 and Practice Book § 17-54 et seq. have been met,
hereby grants the defendants’ motion for judgment . . . .
Accordingly, the court declares that the claims brought
by the defendants in the arbitration [before the AAA],
are not arbitrable for the reasons set forth in the court’s memorandum of decision . . . on the plaintiff’s motion
to determine arbitrability . . . . Further, having been
apprised by all parties that the [AAA] has dismissed
the arbitration, the court hereby denies the plaintiff’s
requests for a stay and injunctive relief as moot. The
plaintiff’s request for an award of attorney’s fees is
hereby denied.” (Citations omitted.) The defendants
filed an amended appeal from the court’s February 25,
2025 judgment.
I
The defendants first claim that the court improperly
concluded that disputes over arbitrability should be
decided by the court because the parties had not clearly
expressed an intent to arbitrate issues of arbitrability.
namely: (1) whether the court or an arbitrator decides the question of arbitrability in this case, and (2) if the court decides, whether the substance of the parties’ dispute in this case is subject to mandatory arbitration. These two specific issues were extensively briefed by the parties in their related filings . . . and addressed by the parties at oral argument. The court issued a memorandum of decision, which sets forth the court’s reasoning. There are no other motions pending before this court at the present time.” (Citations omitted.)
The defendant filed a motion for review with this court pursuant to Practice Book § 66-7 but later withdrew that motion.
Bee v. RAH Equity Holdings, LLC
The plaintiff argues, to the contrary, that the court
properly concluded that it was empowered to determine
arbitrability. We agree with the plaintiff.
As a preliminary matter, we note that the trial court
applied Delaware law with respect to whether the court or
an arbitrator should decide arbitrability, and the parties
agree that Delaware law controls the resolution of that
issue. Because no claim of error regarding the court’s
choice of law decision is raised on appeal, and application of Delaware law comports with the parties’ agreement; see footnote 8 of this opinion; we apply Delaware
substantive law regarding this claim. Procedural issues,
however, which include the applicable standard of review,
are governed by Connecticut law. See Reclaimant Corp.
v. Deutsch, 332 Conn. 590, 603, 211 A.3d 976 (2019).
“Arbitrability refers to whether the parties have agreed
to arbitrate or whether their agreement covers a particular controversy. . . . Two distinct issues arise when
addressing the question of arbitrability: (1) whether
the parties agreed to arbitrate the underlying merits
of the case, i.e., whether the matter is arbitrable; [and]
(2) who has the primary authority to decide that question—the arbitrator or the court . . . . Generally, the
second question—who is to decide whether a dispute
is arbitrable—must be examined prior to the question
of whether the dispute is arbitrable.” (Citations omitted; emphasis omitted; internal quotation marks omitted.) Brownstone Exploration & Discovery Park, LLC v.
Borodkin, 220 Conn. App. 806, 813–14, 299 A.3d 1189
(2023).11 “[W]hether the court correctly concluded that
11
Our Supreme Court has described two procedural routes that a party may take to obtain a judicial determination regarding the arbitrability of a particular dispute. “First, a party may refuse to submit to arbitration at the outset and instead compel a judicial determination of the issue of arbitrability. . . . Alternatively, threshold questions of arbitrability may properly be committed to the arbitrators themselves for determination under the terms of the contract, along with the merits of the underlying dispute.” (Internal quotation marks omitted.) Bacon Construction Co. v. Dept. of Public Works, 294 Conn. 695, 709, 987 A.2d 348 (2010).
Although we apply Delaware law in this appeal, we note that applicable Connecticut law would not mandate a different result. “[T]he general
Bee v. RAH Equity Holdings, LLC
it was up to it, not the arbitrators, to decide arbitrability is a question of law [over which] our standard of
review is de novo.” Id., 813. To the extent that a court
must determine whether parties to an arbitration clause
agreed to submit the issue of arbitrability to arbitrators
rather than the court, this raises an issue of contract
interpretation. See Office of Labor Relations v. New
England Health Care Employees Union, District 1199,
AFL-CIO, 288 Conn. 223, 231, 951 A.2d 1249 (2008)
(principles of contract interpretation apply to construction of arbitration agreements). “Although ordinarily
the question of contract interpretation, being a question of the parties’ intent, is a question of fact [subject to the clearly erroneous standard of review] . . . [when]
there is definitive contract language, the determination
of what the parties intended by their . . . commitments
is a question of law [over which our review is plenary]
. . . .” (Internal quotation marks omitted.) Fischer v.
People’s United Bank, N.A., 216 Conn. App. 426, 438,
285 A.3d 421 (2022), cert. denied, 346 Conn. 904, 287
A.3d 136 (2023).
Our Supreme Court recently set forth the legal standard that Delaware courts apply to interpret contracts.
rule is that the court is responsible for deciding whether a dispute is arbitrable absent the parties’ contrary intent . . . . [T]he language of the contract, [however], controls . . . . Parties to an arbitration agreement may provide in their agreement that the arbitrating body, rather than a court, shall interpret the arbitration agreement to determine whether the issue in dispute is within the purview of the parties’ undertaking to arbitrate. . . . They can do so by including in their arbitration agreement an express provision to that effect or, alternatively, through the use of broad terms to describe the scope of arbitration, such as all questions in dispute and all claims arising out of the contract or any dispute that cannot be adjudicated. . . .
“If there is clea[r] and unmistakabl[e] evidence that the parties have agreed to arbitrate the issue of arbitrability . . . then the court must issue an order compelling arbitration without further consideration of the scope of the agreement to arbitrate. . . . Conversely, if the agreement is ambiguous as to who, i.e., the arbitrating body or the court, is to interpret the arbitration agreement to determine whether the agreement provides for arbitration of the issue in dispute . . . [then] the court, not the arbitrating body, initially interprets the arbitration agreement to make that determination.” (Citations omitted; emphasis altered; internal quotation marks omitted.) Brownstone Exploration & Discovery Park, LLC v. Borodkin, supra, 220 Conn. App. 814–15.
Bee v. RAH Equity Holdings, LLC
See Clinton v. Aspinwall, 352 Conn. 597, 338 A.3d 1103
(2025). “Under Delaware law . . . courts start with the
text to determine what the contractual parties intended.
. . . In upholding the intentions of the parties, [Delaware] court[s] . . . construe the agreement as a whole,
giving effect to all provisions therein. . . . To aid in the interpretation of the text’s meaning, Delaware adheres
to the objective theory of contracts, i.e. a contract’s
construction should be that which would be understood
by an objective, reasonable third party. . . . When the
contract is clear and unambiguous, [Delaware courts] will
give effect to the [plain meaning] of the contract’s terms
and provisions, without resort to extrinsic evidence. . . . Delaware courts do not consider extrinsic evidence unless
[they] find that the text is ambiguous. Ambiguity is present only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or
may have two or more different meanings. Critically, a
contractual provision is not rendered ambiguous simply
because the parties in litigation differ as to the proper
interpretation.” (Citations omitted; internal quotation
marks omitted.) Id., 608–609.
The Delaware Supreme Court in James & Jackson,
LLC v. Willie Gary, LLC, supra, 906 A.2d 76, addressed
a situation similar to the one now before us, namely,
review of a trial court’s conclusion that the court, and
not an arbitrator, should decide whether claims were
arbitrable under a written arbitration agreement. Like
the agreement now before this court, the arbitration
agreement at issue in James & Jackson, LLC, contained
no express provision regarding who the parties intended
to resolve disputes over arbitrability, but it incorporated a set of AAA arbitral rules that authorized an arbitrator to determine arbitrability. See id., 80. The Delaware
Supreme Court stated that it generally agreed with the
trial court’s analysis that the court, not an arbitrator,
should decide the parties’ dispute over whether the defendant’s claims should be arbitrated, and elected to “write
separately only to address the significance that should be
Bee v. RAH Equity Holdings, LLC
attributed to reference to the AAA rules in an arbitration clause.” Id.
The court in James & Jackson, LLC, set forth the following general principles: “Delaware arbitration law
mirrors federal law: [The Delaware Supreme Court] has
recognized that the public policy of Delaware favors
arbitration. A party cannot be forced to arbitrate the
merits of a dispute, however, in the absence of a clear
expression of such intent in a valid agreement. . . . Just
as the arbitrability of the merits of a dispute depends
upon whether the parties agreed to arbitrate that dispute,
so the question of who has the primary power to decide
arbitrability turns upon what the parties agreed about
that matter. . . . [T]he United States Supreme Court
held that courts should not presume that the parties
agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so. In applying the
clear and unmistakable standard, most courts have held
that, when . . . parties explicitly incorporate rules that
empower an arbitrator to decide issues of arbitrability,
the incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an
arbitrator.” (Emphasis added; footnote omitted; internal
quotation marks omitted.) Id., 79. The court held that,
“[a]s a matter of policy, we adopt the majority federal
view that reference to the AAA rules evidences a clear
and unmistakable intent to submit arbitrability issues
to an arbitrator. We do so in the belief that Delaware
benefits from adopting a widely held interpretation of
the applicable rule, as long as that interpretation is not
unreasonable. The majority view does not, however,
mandate that arbitrators decide arbitrability in all cases
where an arbitration clause incorporates the AAA rules.
Rather, [the majority view] applies in those cases where
the arbitration clause generally provides for arbitration
of all disputes and also incorporates a set of arbitration
rules that empower arbitrators to decide arbitrability.”
(Emphasis in original.) Id., 80.
Bee v. RAH Equity Holdings, LLC
The court explained that, although the arbitration
clause before it required arbitration of any controversy
arising out of or relating to the parties’ agreement in
accordance with the AAA rules, the arbitration clause
went on to authorize the nonbreaching party “to obtain
injunctive relief and specific performance in the courts.
Thus, despite the broad language at the outset, not all
disputes must be referred to arbitration. Since this arbitration clause does not generally refer all controversies to arbitration, the federal majority rule does not apply, and
something other than the incorporation of the AAA rules
would be needed to establish that the parties intended to
submit arbitrability questions to an arbitrator. There
being no such clear and unmistakable evidence of intent,
the trial court properly undertook the determination of
substantive arbitrability.” (Emphasis added.) Id., 81. The
holding in James & Jackson, LLC, remains the controlling law of Delaware on this subject matter.
Accordingly, pursuant to James & Jackson, LLC, if
an arbitration agreement or clause incorporates by reference the AAA’s arbitration rules or a “set of arbitration
rules that empower arbitrators to decide arbitrability,”
but otherwise is silent on who determines substantive
arbitrability, then a reviewing court must determine
whether “the arbitration clause generally provides for
arbitration of all disputes . . . .” Id., 80. If it does, then the parties are deemed to have agreed to arbitrate any
dispute over arbitrability in accordance with the rules
that they broadly incorporated. See id. If it does not,
then “something other than the incorporation of the
AAA rules would be needed to establish that the parties
intended to submit arbitrability questions to an arbitrator.” Id., 81. Absent that, the default rule would apply,
and the court would decide arbitrability.12
Applying James & Jackson, LLC, in the present case
to the language of the parties’ arbitration agreement, we
are convinced that the trial court properly determined
that it had the authority to decide in the first instance
12
See footnote 11 of this opinion.
Bee v. RAH Equity Holdings, LLC
disputes over arbitrability. It is not in dispute that the
agreement’s arbitration provision incorporates by reference the AAA’s commercial arbitration rules or that
those rules generally provide arbitrators with the authority to decide issues of arbitrability.13 The agreement,
however, is otherwise silent as to whether disputes over
arbitrability must be arbitrated or decided by a court.
Certainly, there is no express provision addressing arbitrability or any other clear and unambiguous expression
of the parties’ intent on that subject.
Additionally, we agree with the plaintiff and the trial
court that the arbitration clause, read as a whole, does
not generally provide for the arbitration of any and all
disputes between the parties. First, the arbitration clause provides in relevant part that arbitration is limited to
“[a]ny unresolved controversy or claim arising from or
relating to this Agreement or breach thereof . . . .” As the trial court indicated, the parties use of the term “unresolved” to modify the phrase “[a]ny . . . controversy or
claim” suggests that the parties did not intend arbitration to be the sole means of dispute resolution as contemplated by the parties. See Sunline Commercial Carriers,
Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 846 (Del.
2019) (contracts must be read as whole and meaning
given to each term so as to “[avoid] an interpretation
that would render any term mere surplusage” (internal
quotation marks omitted)). Second, and perhaps more
13
As previously noted, the arbitration clause provided that disputes arising out of the parties’ agreements “shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, then in effect.” See footnote 4 of this opinion. Rule 7 (a) of the AAA’s Commercial Arbitration Rules and Mediation Procedures, which were last amended on September 1, 2022, and thus “in effect” when the defendants commenced their arbitration action, provides: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim, without any need to refer such matters first to a court.” American Arbitration Association, Commercial Arbitration Rules and Mediation Procedures, Rule 7 (a), p.14, available at https:// www.adr.org/media/ueonklrv/2026_commercial-arbitration-rulesmediation-procedures.pdf (last visited August 6, 2026).
Bee v. RAH Equity Holdings, LLC
significantly, there is language in the arbitration clause
that limits arbitration to resolution of claims seeking
awards of “(a) money damages, (b) attorneys’ fees, costs
and expert witness fees to the prevailing party, and (c)
sanctions for abuse or frustration of the arbitration
process.” There is no express language that refers to
arbitration of any and all controversies, including claims
seeking declaratory relief. Last, and relatedly, there is
language in the agreement that authorizes the parties to
seek injunctive relief in a federal or state court having
competent jurisdiction. We agree with the trial court’s
assessment that “[t]his carve out language is similar
to the carve out language in the arbitration provision
at issue in [James & Jackson, LLC], which expressly
authoriz[ed] the [parties] to obtain injunctive relief and
specific performance in the courts and confirmed that the
arbitration clause did not generally refer all controversies to arbitration.” (Internal quotation marks omitted.)
See James & Jackson, LLC v. Willie Gary, LLC, supra,
906 A.2d 81. Therefore, to “clearly and unmistakably”
establish the parties’ intent to arbitrate arbitrability,
the defendants needed to establish something in addition to the reference to the AAA rules, which they have
failed to do.14
The defendants draw our attention to several opinions
of lower Delaware courts that have distinguished the
holding in James & Jackson, LLC, and concluded that,
despite an arbitration agreement having language that
carved out claims of equitable relief as subject to binding arbitration, such language was insufficient to overcome
the effect of the incorporation of the AAA rules and
the use of broad language calling for arbitration of all
disputes arising under the agreement. See Blackmon
14
As the trial court noted in its decision, the defendants took the position that the arbitration provision generally did provide for arbitration of all disputes, and they did not argue or attempt to establish before the trial court “that, if the [agreement’s] arbitration provision generally does not provide for arbitration of all disputes, then something other than the parties’ incorporation of the AAA rules within the [agreement] evidences the parties’ clear and unmistakable intent to arbitrate substantive arbitrability.” (Emphasis added; internal quotation marks omitted.)
Bee v. RAH Equity Holdings, LLC
v. O3 Insight, Inc., , Civ. No. 2020-1014-SG, 2021 WL
868559, *3 (Del. Ch. March 9, 2021); BAYPO Ltd. Partnership v. Technology JV, LP, 940 A.2d 20, 26–27 (Del.
Ch. 2007) (BAYPO). We are not persuaded that these
cases should alter our reliance on the holding in James
& Jackson, LLC, as a basis for rejecting the defendants’
appellate claim.
In Blackmon, the chancery court concluded that,
despite the agreement containing a carve out that permitted the parties to pursue equitable relief in court, “the carveouts and exceptions to committing disputes to arbitration [were not] so obviously broad and substantial as
to overcome a heavy presumption that the parties agreed
by referencing the AAA Rules and deciding to use AAA
arbitration to resolve a wide range of disputes that the
arbitrator, and not a court, would resolve disputes about
substantive arbitrability.” (Internal quotation marks
omitted.) Blackmon v. O3 Insight, Inc., supra, 2021
WL 868559, *3. Similarly, in BAYPO, the arbitration
agreement at issue provided that “[t]he dispute resolution
provisions . . . shall be the binding and exclusive means
to resolve all disputes arising under the [a]greement . . . provided, however, that [the dispute resolution procedures] shall not limit either party’s recourse to courts of competent jurisdiction for injunctive or equitable relief
that may be necessary to protect the rights and property
of such party or maintain the status quo before, during
or after the pendency of the process set forth in [the
dispute resolution procedures].” (Emphasis omitted;
internal quotation marks omitted.) BAYPO Ltd. Partnership v. Technology JV, LP, supra, 940 A.2d 23. The
agreement in BAYPO also contained language that “[t]he
[a]rbitrators shall decide all [d]isputes and all substantive and procedural issues related thereto . . . .” (Emphasis omitted; internal quotation marks omitted.) Id.
The decisions in Blackmon and BAYPO, including
their interpretation and application of the holding in
Bee v. RAH Equity Holdings, LLC
James & Jackson, LLC, are not binding on this court.15
More importantly, the arbitration provisions in the
present case are not like those found in Blackmon and
BAYPO, and, accordingly, the resolution reached by
the courts in those cases are readily distinguishable and
have little bearing on our analysis, which must interpret the language of the arbitration clause before us.
As we have already concluded, unlike in Blackmon and
BAYPO, the arbitration clause in the present agreement does not generally provide for arbitration of all
disputes, and because the defendants have not identified anything other than the incorporation of the AAA
rules from which to conclude that it was the clear and
unmistakable intent of the parties to arbitrate questions of arbitrability, which ordinarily would be subject to adjudication by the courts, we conclude that
the court properly determined that the parties’ dispute over arbitrability was properly before the court.
II
The defendants next claim that, even if the court properly determined that it could decide whether the defendants’ claims were arbitrable under the agreement, the
court improperly determined that the arbitration clause
15
We also agree with the plaintiff that, to the extent the defendants rely on language in McLaughlin v. McCann, 942 A.2d 616 (Del. Ch. 2008), in which the chancery court criticizes the Delaware Supreme Court’s analysis in James & Jackson, LLC, that reliance is misplaced. In McLaughlin, the chancery court states in relevant part: “I confess that I find the standard adopted by the Delaware Supreme Court in [James & Jackson, LLC] a bit puzzling because, if read with great literality, it defeats the efficiency rationale that underlies the federal majority view. . . . I also find the . . . requirement that the arbitration clause generally provides for arbitration of all disputes less than clear. One might interpret that requirement to mean that an arbitration clause must refer all disputes to arbitration without exception for the federal majority view to apply. Although I acknowledge that that interpretation is a plausible one, there are several reasons I do not believe that is what the Delaware Supreme Court meant when it adopted that standard.” (Footnotes omitted; internal quotation marks omitted.) Id., 623–24. As a lower court, the criticisms of the chancery court in McLaughlin have no sway on our application of James & Jackson, LLC, and thus are immaterial.
Bee v. RAH Equity Holdings, LLC
did not authorize the defendants to arbitrate claims for
declaratory relief. We disagree.
“Whether a dispute is arbitrable generally is a question of law over which our review is plenary.” Board of
Education v. Wallingford Education Assn., 271 Conn.
634, 639, 858 A.2d 762 (2004). “[C]ontracting parties
who provide for the arbitration of disputes in their agreements need submit to arbitration only those claims that
touch on the legal rights created by their contract.” Parfi Holding AB v. Mirror Image Internet, Inc., 817 A.2d
149, 151 (Del. 2002), cert. denied, 538 U.S. 1032, 123
S. Ct. 2076, 155 L. Ed. 2d 1061 (2003). “[If] parties to
an agreement decide that they will submit their claims to
arbitration, Delaware courts strive to honor the reasonable expectations of the parties and ordinarily resolve
any doubt as to arbitrability in favor of arbitration.
Nevertheless, arbitration is a mechanism of dispute
resolution created by contract. An arbitration clause,
no matter how broadly construed, can extend only so far
as the series of obligations set forth in the underlying
agreement. Thus, arbitration clauses should be applied
only to claims that bear on the duties and obligations
under the [a]greement. The policy that favors alternate
dispute resolution mechanisms, such as arbitration, does
not trump basic principles of contract interpretation.”
(Footnotes omitted.) Id., 155–56.
“[Any time] the arbitrability of a claim is disputed,
the court is faced with two issues. First, the court must
determine whether the arbitration clause is broad or
narrow in scope. Second, the court must apply the relevant scope of the provision to the asserted legal claim
to determine whether the claim falls within the scope
of the contractual provisions that require arbitration.
If the court is evaluating a narrow arbitration clause, it
will ask if the cause of action pursued in court directly
relates to a right in the contract. If the arbitration clause is broad in scope, the court will defer to arbitration on
any issues that touch on contract rights or contract
performance.” Id., 155.
Bee v. RAH Equity Holdings, LLC
Turning to the present case, as we discussed in part I
of this opinion, the arbitration clause at issue does not
broadly state that the parties agree to arbitrate any and
all disputes. Rather, it imposes express limitations on
what may be arbitrated and, thus, we view the clause to
be more narrow than broad in scope. Applying that scope
to the claim that the defendants raised in their arbitration action, we note that the defendants sought only
declaratory relief from the arbitrator and nothing more.
As previously stated, the agreement’s arbitration clause
expressly limits the arbitrator’s authority to awards for
“(a) money damages, (b) attorneys’ fees, costs and expert
witness fees to the prevailing party, and (c) sanctions for abuse or frustration of the arbitration process.” Because
there is no provision authorizing arbitration of claims
for declaratory judgment or empowering an arbitrator
to award declaratory relief, it is reasonable to infer that the defendants’ claims raised in the arbitration action
fell outside the arbitration agreement and, thus, were
not arbitrable.
The defendants argue, as they did to the trial court,
that it is of no moment that declaratory relief is not
among the enumerated remedies that an arbitrator may
award because any limitation on the type of relief available has no bearing on whether the subject matter of the
claim falls within the scope of the parties’ agreement to
submit to arbitration. That may very well be true if the
demand for arbitration had, in addition to declaratory
relief, also sought another form of relief or raises another claim that was authorized by the arbitration agreement,
such as money damages. We reject the argument in the
present case, however, because, unlike the nonbinding
authority relied on by the defendants, a declaratory
judgment was the only claim raised in the defendants’
demand for arbitration and, thus, the only possible award
that could result from an arbitration was an award of
declaratory relief.16
16
The defendants cite several cases from the chancery court to support their argument that limitations on the form of liability available at arbitration does not restrict an arbitrator’s authority to decide a
Bee v. RAH Equity Holdings, LLC
The defendants’ arbitration claim seeks declaratory
relief whereas the arbitration provision of the parties’
agreement does not grant an arbitrator the authority
to award such relief. Accordingly, we agree with the
trial court that an award of declaratory relief would fall
outside of the submission and thus beyond the authority
of the arbitrators to issue, and any such award would
be subject to vacatur pursuant to § 52-407ww (a) (4)
(authorizing court to vacate award if arbitrator exceeds
power granted by arbitration agreement). On the basis
of our review of the plain and unambiguous language of
the parties’ agreement, we conclude that the defendants’
claim seeking declaratory relief was not arbitrable.
The judgment is affirmed.
In this opinion the other judges concurred.
particular claim that generally falls within the subject matter of the arbitration clause. As aptly explained by the trial court in rejecting the same argument, the defendants cite to cases in which a court permitted an arbitration to proceed despite the claimant’s demand having sought a remedy that was not recoverable because the demand also included a claim that undoubtedly was arbitrable. See Medtronic Vascular, Inc. v. NanoMedSystems, Inc., Civ. No. 8888, 2014 WL 795077, *2 (Del. Ch. January 27, 2014); United Engineers & Constructors, Inc. v. Imo Industries, Inc., Civ. No. 12611, 1993 WL 43016, *7 (Del. Ch. February 16, 1993). These cases are distinguishable from the present case in which the defendants’ only claim for relief falls outside the scope of the arbitrator’s authority under the submission as unambiguously set forth in the arbitration agreement.