Digital Landscape Inc. v. Media Kings LLC

Citations

• 2018 COA 142
• 440 P.3d 1200

Syllabus

Media Kings LLC (Media) entered into a contract to provide marketing services to Transcendent Marketing, LLC (Transcendent). Media then contracted with Digital Landscape Inc. (Digital) to provide advertising services to Transcendent. The contract between Media and Digital had an arbitration clause providing that any disputes arising under the agreement would be resolved by binding arbitration. Per the contract, Media agreed to pay Digital a portion of its earnings from Transcendent in exchange for Digital's work on the project. Media failed to pay Digital, and Transcendent proposed that Digital take over the project. Digital's principal officer agreed, but had one of his other companies take over the work. Thus, Media was effectively cut out of its agreement with Transcendent. Digital sued Media for breach of contract, and as relevant here, Media filed a counterclaim alleging that Digital had breached the implied covenant of good faith and fair dealing. The district court ordered the parties to arbitrate the dispute. The arbitrator awarded Digital $68,197.41. While discussing the counterclaim, the arbitrator also referred to it as addressing a breach of Digital's duty of loyalty to Media. The arbitrator decided that Digital still owed a duty of loyalty to Media that it had breached, and she awarded Media damages on the counterclaim. Lastly, finding that there was no prevailing party, she declined to award either party attorney fees. The district court confirmed the order. On appeal, Digital contended that the arbitrator lacked jurisdiction to consider whether Digital had breached a duty of loyalty to Media because this claim did not \arise under\ the arbitration clause. The Court of Appeals analyzed the phrase \arising under\ and concluded that it was sufficiently broad to include the duty-of-loyalty counterclaim. Further, the arbitration clause was unrestricted. Digital further contended that the arbitrator improperly converted the counterclaim alleging breach of i