Matter of Primex Intn'l Corp. v. Walmart Stores, Inc

In Matter of Primex Intn'l Corp. v. Walmart Stores, Inc., 89 N.Y. 2d 594 (1997), successive agreements between the parties executed in 1990 and 1993 provided for arbitration, among other things. Upon the expiration of the 1993 agreement, a third agreement was entered into between the parties. Although the third agreement, when drafted, contained a similar arbitration clause, the arbitration clause was stricken before the 1995 agreement was executed. Thereafter, a dispute arose and Walmart commenced an action in the Circuit Court in Arkansas. Upon commencement of the Arkansas litigation, Primex served a demand for arbitration pursuant to the arbitration clauses in the 1990 and 1993 agreements which had expired. A proceeding to compel arbitration pursuant to CPLR Article 75 was commenced in New York seeking to stay the Arkansas action. Walmart contended that the 1995 agreement which contained a general merger clause had the effect of superceding the 1990 and 1993 agreements and thereby eliminating any obligation to arbitrate. The Supreme Court agreed with Walmart and rejected Primex's petition to stay the Arkansas action. The Appellate Division affirmed. While the Court of Appeals agreed with the lower courts with regard to issues arising solely under the 1995 agreement, it modified the determination of the lower courts holding that the language of the merger clause was insufficient to establish that the parties intended to revoke their previously stated contractual obligation to submit disputes arising thereunder to arbitration. Thus, any disputes arising under the 1990 and 1993 agreements was determined to be arbitrable even though they otherwise expired. That is, the merger clause in the 1995 agreement, in the absence of a specific indication of the intent to abandon the contractual rights provided under the earlier agreements, is insufficient, as a matter of law, to bar the application of the arbitration clauses in the earlier agreements. In addition, the Court of Appeals noted: "The prevailing general rule of both New York and Federal common law of contracts is that absence a clear manifestation of contrary intent, it is presumed that the parties intended that the arbitration forum for dispute resolution provided an agreement will survive termination of the agreement as to subsequent dispute arising thereunder, whether its cessation was the result of the expiration of its term, exercise of a unilateral termination option, or breach ." (Id. at 601-2.)