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Arbitration: On Issue Of First Impression, 9th Circuit Holds Arbitration Obligations Survived Contract Termination

by Marc Alexander

September 2020

Marc Alexander

This article was first published here.

Shivkov v Artex Risk Solutions Arises From Tax Shelter Gone Sideways . . .

The numerous Plaintiffs in Shivkov, et al v. Artex Risk Solutions, Inc., et al, No. 19-16746 (9th Cir.  9/9/20) (Smith, Fisher, Hawkins), probably felt that the Artex Risk Solutions was a misnomer by the time they brought suit. Defendants allegedly set up and managed "captive" insurance companies owned by Plaintiffs, to which Plaintiffs paid insurance premiums, claiming the insurance premiums as tax-deductible business expenses without recognizing them as income. Evidently the IRS had other ideas, for as the Court of Appeals wryly observes, "Although this arrangement offered the prospect of tax benefits, that prospect proved fleeting." After having to deal with an audit, delinquency notices, and threatened penalties, Plaintiffs brought suit against Defendants, alleging that the captive insurance companies "were illegal and abusive tax shelters, about which Defendants failed to inform or  advise Plaintiffs." Risk solutions too good to be true?

Defendants, including some non-signatories, moved to compel arbitration, the trial court granted Defendants' motion to compel, and Plaintiffs appealed.

The most interesting part of the opinion is "an issue of first impression in our circuit concerning the survival of arbitration obligations following contract termination," as to which the Court of Appeals holds: "the Agreements do not expressly negate the presumption in favor of post-termination arbitration or clearly imply that the parties did not intend for their arbitration obligations to survive termination." So the arbitration obligations survived. If arbitration obligations did not regularly survive contract termination, a party could always avoid arbitration by terminating a contract.

The Court also held that Arizona state law recognized no fiduciary duty to point out and fully explain an arbitration clause. The arbitration clause encompassed all Plaintiffs' claims here. The availability of class arbitration was a gateway issue to be decided by the court, because there was no "clear and unmistakable" delegation of that issue to the arbitrator. And because the agreements were silent about class arbitration, they did not permit class arbitration. Finally, non-signatories, who were sued for alleged wrongs that arose from the contracts between the parties that Plaintiffs relied upon to bring suit, could invoke the arbitration clause.


        COMMENT: The slip opinion is 36 pages long. I appreciate the Court's concise enumeration of  its resolution of the issues at the beginning of the opinion.




Marc Alexander is of counsel in the Santa Ana office of AlvaradoSmith APC, and a member of the Firm’s litigation department. He has over 30 years of experience in bench and jury trials, binding arbitrations, judicial references, mediations, and appellate work in state and federal courts in California. Mr. Alexander received his B.A. with honors from the University of California, Santa Cruz. He received an M.A. and a Ph.D. in history from Johns Hopkins, and he is a member of Phi Beta Kappa. Mr. Alexander received his Juris Doctor degree from UCLA in 1981, and has been licensed to practice law continuously in California since 1981. Upon graduating from law school, he clerked on the United States Court of Appeals for the Ninth Circuit with the Hon. Warren J. Ferguson. After clerking for the federal court, Mr. Alexander practiced in California as a litigator with Irell and Manella in its Century City and Orange County offices. In 1986, he joined the litigation department at McKittrick, Jackson, DeMarco & Peckenpaugh in Orange County, California. Mr. Alexander was a shareholder in the litigation department at McKittrick, Jackson, DeMarco & Peckenpaugh; Jackson, DeMarco & Peckenpaugh; Jackson, DeMarco, Tidus & Peckenpaugh; and, Jackson, DeMarco, Tidus, Petersen & Peckenpaugh, until 2008.


Mr. Alexander has broad experience in business and real estate litigation. His experience encompasses landlord-tenant disputes, foreclosures, purchase and sale disputes, title disputes, homeowner association disputes; unfair competition disputes, including non-compete and non-solicitation disputes; partnership and corporate disputes; securities defense; and, intellectual property disputes. Mr. Alexander is a mediator on the panel for the United States District Court, Central District of California, and a mediator on the panel for the Superior Court of the County of Orange, California.


Over the years, Mr. Alexander has written a number of articles and book reviews on legal subjects. A sampling of his articles includes: Can Private Attorney General Actions Be Forced Into Litigation?, California Litigation, Vol. 28, No. 2, 2015; Summary Contempt and Due Process: England, 1631, California, 1888," California Litigation, Vol. 27, No. 3 2014; When The American Rule Doesn't Apply: Attorney's Fees As Damages In Litigation, California Litigation, Vol. 21, No. 3, 2008 (co-authored with William M. Hensley), Peril of Private Justice: Suspension of Proceedings, Orange County Lawyer, September 2004, Trespass to Chattel and Unsolicited Bulk Email, Orange County Lawyer, September 2003, Protecting Views With Municipal Ordinances, California Land Use, April, 2001, A Newsperson's Shield Law: A Primer, Civil Litigation Reporter, August, 1995, Despicable Conduct, Or How Punitives Have Been Damaged, Orange County Lawyer, April, 1988, Software Patents and The On-Sale Bar, The Computer Lawyer, January, 1988, When Can An Attorney Contact The Employee Of A Party Represented By Counsel? -- Bright Line And Multi-Factor Approaches, Civil Litigation Reporter, December, 1987, When Is A Software Program "Made For Hire?", The Computer Lawyer, September, 1986, Discretionary Power To Impound And Destroy Infringing Articles: An Historical Perspective, Journal Of The Copyright Society Of The USA (1980). Mr. Alexander is a co-creator and contributor, with his long-time colleague Mike Hensley, to CalAttorneysFees, a blawg about the law of attorney’s fees in California. Mr. Alexander is married and has three grown children. He also has a dog named Watson.


Additional articles by Marc Alexander
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