Gone to the Beach LLC v. Choicepoint Services, Inc.

2007 WL 2768256 (2007)

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Gone to the Beach LLC v. Choicepoint Services, Inc.

United States District Court for the Western District of Tennessee
2007 WL 2768256 (2007)

Facts

In March 2004, Gone to the Beach LLC (GTTB) (plaintiff) and Choicepoint Services, Inc. (Choicepoint) (defendant) entered an asset purchase agreement. In the agreement, GTTB sold all the assets of its business to Choicepoint and Choicepoint agreed to operate the business “in the ordinary course consistent with [GTTB’s] past practice” for the remainder of 2004. GTTB was to receive a base price and an earnout payment based on the business’s performance in 2004. The agreement also provided that any controversy arising out the agreement must be settled by arbitration in Atlanta, Georgia. The agreement also provided an audit firm in Birmingham, Alabama, would resolve any dispute arising out of the calculations of the earnout payment for GTTB. In June 2005, Choicepoint informed GTTB the earnout payment would be lower than anticipated. In August 2005, GTTB made a demand for arbitration in Atlanta, Georgia. GTTB asserted that Choicepoint objected to the arbitration and that Choicepoint asserted they would only agree to an arbitrator deciding whether the issues raised by GTTB were arbitrable. GTTB filed a suit in the United States District Court for the Western District of Tennessee, arguing that Choicepoint failed to operate the business in accordance with the agreement and diminished GTTB’s earnout payment. GTTB sought a declaratory judgment as to the arbitrability of the issue of the earnout payment and Choicepoint’s failure to operate the business as required by the contract. Choicepoint opposed the suit, arguing that the issue regarded the earnout payment and that the audit firm in Birmingham, Alabama, should resolve the issue. Both parties agreed that either an arbitrator or the audit firm should resolve this issue.

Rule of Law

Issue

Holding and Reasoning (McCalla, J.)

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