Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Nutrapet Systems, LLC v. Proviera Biotech, LLC

Court of Appeals of Missouri, Western District, Fourth Division

December 26, 2017

NUTRAPET SYSTEMS, LLC, Respondent,
v.
PROVIERA BIOTECH, LLC, et al., Appellants.

         APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI THE HONORABLE SANDRA MIDKIFF, JUDGE

          Before Mark D. Pfeiffer, Chief Judge, Lisa White Hardwick, Judge and Edward R. Ardini, Jr., Judge

          EDWARD R. ARDINI, JR., JUDGE

         This appeal follows an Order entered by the Circuit Court of Jackson County denying a Motion to Stay and Compel Arbitration in a case brought by NutraPet Systems, LLC ("NutraPet") against Probiotic Holdings, LLC ("Holdings") and Proviera Biotech, LLC ("Proviera") for breach of contract arising from a promissory note. Holdings and Proviera counterclaimed, alleging breach of confidentiality and non-compete provisions contained in a separate agreement as well as misappropriation of trade secrets. The Order denying the Motion to Stay and Compel Arbitration is affirmed in part and reversed in part.

         FACTUAL AND PROCEDURAL BACKGROUND[1]

         Holdings is the parent company of Proviera, formed in 2012, and Sustainable Community Development, LLC ("SCD"). In 2009, SCD primarily manufactured and distributed probiotic products that could be consumed by livestock such as cattle. In that same year, SCD entered into an Independent Contractor Agreement with NutraPet.[2] Pursuant to the agreement, NutraPet was to provide SCD "consulting for strategic [b]usiness [o]bjectives, [t]echnology [d]evelopment. [and] [o]perational [e]ffectiveness[.]"[3]

         NutraPet was and continues to be solely owned by Gerhard Poppel ("Poppel"). In January 2010, Poppel also became an employee of Kelly Foods Corporation ("Kelly Foods"), a pet food company. This relationship was known to Holdings and SCD, as Poppel introduced Kelly Foods to SCD as a potential customer and a licensing agreement was reached between the two companies. Poppel also continued his relationship with Holdings and its affiliates during this time, making his first financial investments in Holdings and becoming a member of its Board of Directors in late 2010. In October 2011, Holdings and Proviera learned that Poppel and NutraPet had joined Kelly Foods in filing a provisional patent application with the U.S. Patent and Trademark Office, which Holdings and Proviera believed relied on and incorporated their intellectual property.[4]

         In 2012, Proviera was formed to raise capital and commercialize the leather tanning probiotics and biochemical technology developed by SCD. Poppel was still a member of the Holdings' Board of Directors at this time, and in May 2013, NutraPet loaned Proviera $500, 000, which was evidenced by execution of a Promissory Note. The Promissory Note required Proviera to repay the loan with interest through the making of monthly payments over a thirteen-year period. Holdings was the guarantor under the Promissory Note for any outstanding balance. In November 2015, Proviera suspended making its monthly payments required under the Promissory Note and Holdings similarly refused a demand to make payment as the guarantor. On December 15, 2015, NutraPet filed this action in the Circuit Court of Jackson County against Holdings and Proviera alleging breach of the Promissory Note.

         Holdings and Proviera answered and asserted affirmative defenses. Both of these parties also counterclaimed, alleging that NutraPet breached the confidentiality and non-compete provisions contained in the Independent Contractor Agreement and that NutraPet misappropriated trade secrets.[5]

         Holdings and Proviera additionally moved to compel arbitration, relying on a provision contained in the 2009 Independent Contractor Agreement between NutraPet and SCD. The provision provided:

ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR IN CONNECTION WITH, OR RELATING TO, THIS AGREEMENT OR ANY BREACH OR ALLEGED BREACH HEREOF, EXCLUDING ACTIONS FOR INJUNCTIVE RELIEF, SHALL, UPON THE REQUEST OF ANY PARTY INVOLVED, BE SUBMITTED TO AND SETTLED BY BINDING ARBITRATION IN THE CITY OF KANSAS CITY, STATE OF MISSOURI, PURSUANT TO THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION (OR AT ANY OTHER PLACE OR UNDER ANY OTHER FORM OF ARBITRATION MUTUALLY ACCEPTABLE TO THE PARTIES INVOLVED) . . .

         Holdings and Proviera, while not signatories to the agreement, asserted that they were entitled to enforce the arbitration provision based on their relationship to SCD. On November 18, 2016, a hearing was held on the motion to compel arbitration, which the trial court later denied. This appeal follows.

         DISCUSSION

         Holdings and Proviera allege two points on appeal. In their first point, they argue that the trial court erred in finding that they were not entitled to enforce the arbitration provision as third-party beneficiaries or express parties to the Independent Contractor Agreement. They also argue that threshold issues of arbitrability were required to be determined by the arbitrator.[6] In their second point, Holdings and Proviera relatedly assert that the trial ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.