Arbitration Victory on Behalf of The Carlyle Group

March 2022

On March 8, 2022, Williams & Connolly clients The Carlyle Group, L.P., one of its investment funds, and two fund executives, won a complete victory in a decade-long dispute related to the fund’s acquisition of a privately-held water system in Missoula, Montana. 

After acquiring the water system, Carlyle rejected several offers made by the City of Missoula to purchase the system and later sold it to a third-party water company. The City subsequently obtained the water system from the third party through its powers of eminent domain. Not satisfied with that result, the City filed a separate lawsuit asserting claims for breach of contract and breach of the duty of good faith and fair dealing, alleging that Carlyle had agreed to sell the water system to the City but reneged on that promise. 

After spending the better part of a year litigating a motion to compel arbitration, a state-court judge in Montana agreed with Carlyle that the case belonged in arbitration. After extended discovery and several delays due to the pandemic, the case culminated in a two-week in-person hearing in Missoula spread out over two months in summer 2021, during which Williams & Connolly attorneys were able to cross-examine the Mayor, the City’s investment banker, and the City’s other advisors and experts. Closing arguments took place this past October in Seattle. Ultimately, a panel of three AAA arbitrators (one of whom was handpicked by the City) issued a unanimous award, completely rejecting the City’s claims. The Panel found that Carlyle did not breach any contract with the City and acted in a commercially reasonable manner in rejecting the City’s proposals to buy the system. Moreover, it granted Carlyle’s counterclaim against the City for breaching the parties’ arbitration agreement. In the end, the City was forced to pay the Carlyle fund $4.13 million in attorney’s fees and costs as part of a global resolution.

Partners Robert Van Kirk, who co-chairs the firm’s Commercial Litigation Practice Group, and Kennon Poteat, together with associates Anne Malinee, Melissa Collins, Matt Lachman, and Will Snyderwine, crafted and led a comprehensive litigation strategy for more than six years that led to this favorable result.*

* All cases vary and none is predictive.

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