Merger dispute sent to arbitration

CHARLESTON – U.S. District Judge Joseph Goodwin has ordered a dispute between the co-founder of CCV Software and the founder of Journey Education Marketing be sent arbitration.

Catherine Chandler was one of four individuals who brought suit against Journey Education, Fischler and CCV Software in 2010. The plaintiffs claim the 2008 sale of their stock in CCV to Journey was fraudulently induced and Journey did not pay.

The merger agreement called for a cash payment of $2,250,000 to the plaintiffs, the complaint says. The CCV plaintiffs also allege Journey shut down CCV’s West Virginia operations, in violation of a business services agreement.

Arbitration began in 2009, but Journey claimed certain issues raised by the plaintiffs over the merger agreement and business services agreement were not subject to arbitration. Only the escrow agreement was, Journey claimed.

Goodwin clarified a 2010 order that should have said all of the plaintiffs’ claims against Journey were to be arbitrated.

Fischler now claims that all of the pending claims against him as an individual should have been arbitrated, and that the plaintiffs’ failure to assert the claims at the arbitration proceedings constitutes a waiver and abandonment of the claims.

Goodwin ruled the plaintiffs have not waived the right to pursue those claims.

“The arbitration award noted that Journey was the respondent and Fischler appeared as Journey’s representative,” he wrote.

“It is clear from the complaint that the alleged fraud by the plaintiffs was taken by both Journey and Fischler together for the purpose of Journey’s acquisition of CCV, and that the claims are based on the same facts and are inherently separable: the alleged misrepresentations by Fischler are the same alleged misrepresentations by Journey.

“The court has already ruled that the fraud claims against Journey fall within the scope of the arbitration agreements, and therefore the fraud claims against Fischler also fall within their scope.”

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.