On Dec. 9, 2024, the Minnesota Court of Appeals reinforced the state’s strong presumption in favor of arbitration in Provost v. Lundmark.

The case involved a family trust created by the mother for the benefit of her three children and their descendants as the beneficiaries. The trust property included the family’s homestead, which was to be distributed outright to the beneficiaries upon the mother’s death. John, the son and co-trustee, wanted to purchase the homestead from the trust, but as co-trustee, he was prohibited from transferring assets to himself during the mother’s lifetime. The siblings, therefore, executed an agreement that provided John an option to purchase the homestead from the trust for $225,000 following the mother’s death. The option agreement required that John give his sisters written notice of his intent to purchase the homestead within 60 days of the mother’s death. Failure to give timely notice terminated the option under the agreement. The option agreement also provided that “all disputes arising in connection with [the Option] Agreement” had to be submitted to arbitration.

Nearly a year after their mother passed, John attempted to purchase the homestead. The siblings agreed that John had not given timely written notice as required by the option agreement. The sisters argued that the property had to be split among the three of them because the option had expired. John argued that he gave oral notice of his intentions within the 60-day deadline, which he believed was sufficient. When one of his sisters sued for distribution of the trust proceeds, John sought arbitration. His siblings disagreed, arguing that the arbitration provision expired when the option expired.

The district court agreed with John’s siblings, ruling that his failure to give timely notice terminated the option. However, the Court of Appeals disagreed. Emphasizing that Minnesota law strongly favors arbitration, the appellate court concluded that the district court erred in failing to send the case to arbitration.

The primary issue on appeal was whether the arbitration clause applied to disputes concerning the exercise of the option, even if the option had expired. The appellate court held that, in the absence of a clear indication to the contrary, the broad language of the arbitration clause—requiring “all disputes arising in connection with [the] Agreement” to be submitted to arbitration—did indeed cover such disputes. Consequently, the appellate court reversed the district court’s decision and remanded the case with instructions compelling arbitration.

This case reinforces Minnesota’s strong preference for arbitration and holds that an arbitration clause can continue to govern a contract dispute even after the contract has expired.