Mission Residential, LLC v. Triple Net Properties, LLC
Virginia Supreme Court
654 S.E.2d 888 (2008)
Triple Net Properties, LLC (Triple) (defendant) and Mission Residential, LLC (Mission) (plaintiff) formed NNN/Mission Residential Holdings, LLC (Holdings). Section 13.9 of the operating agreement provided for binding arbitration conducted under the Commercial Arbitration Rules of the American Arbitration Association (AAA) for any dispute the members were unable to settle. Triple brought arbitration against Mission for breach of contract. Triple also raised a derivative claim on behalf of Holdings. The arbitrator dismissed Triple’s breach claim for lack of standing, leaving only the derivative claim. Mission sued in circuit court for a declaratory judgment that Holdings had never entered an arbitration agreement. The arbitrator refused to delay the arbitration until a court decision based on AAA Rule R-7(a), which vests sole authority to determine arbitrability in the arbitrator. The arbitrator determined that the derivative claim could be arbitrated, and the court agreed. Mission appealed to the Virginia Supreme Court.
Rule of Law
Holding and Reasoning (Russell, J.)