SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the 

convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the 

interest of brevity, portions of any opinion may not have been summarized.)

Michael E. Hirsch v. Amper Financial Services, LLC (A-9-12) (070751)

Argued May 13, 2013 -- Decided August 7, 2013

LaVECCHIA, J., writing for a unanimous Court.

The issue in this appeal is whether it was proper to compel arbitration between a non-signatory and a 

signatory to a contract containing an arbitration clause on the basis that the parties and claims were sufficiently 

intertwined to warrant application of equitable estoppel.

This action involves claims by plaintiffs Michael Hirsch, Robyn Hirsch, and Hirsch, LLP, that they lost 

money invested in securities that were part of a “Ponzi” scheme. In 2002, plaintiffs’ accountant, EisnerAmper LLP, 

referred them to Marc Scudillo, a financial advisor employed by Amper Financial Services, LLC (AFS), for 

investment planning. Scudillo also served as a representative for Securities America, Inc. (SAI), a separate 

corporation that served as a broker-dealer handling securities transactions. Plaintiffs hired Scudillo and invested in a 

portfolio with a conservative investment strategy. Their relationship was not formalized by a written contract. Later, 

on Scudillo’s recommendation, plaintiffs purchase securitized notes from Medical Provider Financial Corporation 

(Med Cap) totaling $550,000. Plaintiffs signed two applications with SAI for the purchase of the Med Cap notes. 

Scudillo signed each of these agreements as the “registered representative” of SAI. Each SAI application contained 

an arbitration clause requiring disputes to be arbitrated by the Financial Industry Regulatory Authority (FINRA).

In 2008, one of the notes defaulted. Scudillo assured plaintiffs that the Med Cap investments were still safe. 

In 2009, the United States Securities and Exchange Commission launched an investigation and charged Med Cap 

senior officers with securities fraud. Plaintiffs eventually lost their investment in the Med Cap notes and filed two 

separate actions. First, they instituted FINRA arbitration proceedings against SAI and Scudillo, alleging breach of 

contract, fraud, breach of fiduciary duties, negligence, violations of federal and state securities laws, and conspiracy. 

Second, plaintiffs filed a complaint in the Law Division against EisnerAmper and AFS, alleging breach of contract, 

violations of the New Jersey Consumer Fraud Act, breach of fiduciary duties, negligent supervision, 

misrepresentation, violations of the New Jersey Uniform Securities Law, and malpractice.

In the Law Division action, AFS and EisnerAmper denied plaintiffs’ allegations and filed a third-party 

complaint against SAI for indemnification and contribution. SAI moved to compel arbitration, arguing that (1) the 

language of the arbitration clause is sufficiently broad to cover the disputes with AFS and EisnerAmper; (2) AFS is 

a party to the arbitration clause because Scudillo, who served as a representative for both SAI and AFS, signed the 

arbitration agreement; (3) AFS and EisnerAmper are subject to the arbitration agreement under agency principles; 

and (4) AFS and EisnerAmper are subject to the arbitration agreement under the doctrine of equitable estoppel. AFS 

and EisnerAmper joined in SAI’s motion. The trial court granted the motion, finding that plaintiffs were attempting 

to circumvent the policy favoring arbitration by not naming SAI as a defendant in the Law Division action. 

The Appellate Division affirmed for different reasons. Relying on EPIX Holdings Corp. v. Marsh & 

McLennan Cos., Inc., 410 N.J. Super. 453 (App. Div. 2009), the panel concluded that the “complex and intertwined 

relationship” between the parties provides “sufficient basis to invoke estoppel” to compel arbitration. The Court 

granted plaintiffs’ petition for certification. 212 N.J. 288 (2012). 

HELD: Although traditional contract principles may in certain cases warrant compelling arbitration absent an 

arbitration clause, the intertwinement of the parties and claims in a dispute, viewed in isolation, is insufficient to 

warrant application of equitable estoppel to compel arbitration.

1. The strong preference to enforce arbitration agreements is not without limits. The preliminary question is whether, 

under state contract-law principles, there is a valid agreement to arbitrate. This arbitrability analysis underscores the 

fundamental principle that a party must agree to submit to arbitration. In the absence of an express arbitration clause, 

courts can compel parties to arbitrate by applying principles of contract law, such as equitable estoppel. (pp. 13-16)
2

2. In EPIX Holdings, the appellate panel held that a non-signatory to an arbitration agreement, which was the parent 

company of a signatory, may compel the other signatory to arbitrate because the claims and parties were 

“substantially connected” and the claims fell within the scope of the arbitration clause. Another case, Angrisani v. 

Financial Technology Ventures, L.P., 402 N.J. Super. 138 (App. Div. 2008), involved claims against Nexxar Group, 

Inc., with whom the plaintiff had an employment contract containing an arbitration clause, and claims against 

Financial Technology Ventures, L.P. (FTV), from whom the plaintiff had purchased Nexxar stock pursuant to an 

agreement that did not include an arbitration clause. The panel concluded that the plaintiff could not be compelled to 

arbitrate his claims against FTV because he did not engage in any conduct that could support a finding of equitable 

estoppel. The panel noted that other cases applying equitable estoppel to compel arbitration generally involved

claims against a non-signatory to the contract that was closely aligned to a contracting party, such as a parent or 

successor corporation. In this appeal, the panel’s decision further reflects an emerging “intertwinement” theory--

described as an extension of equitable estoppel--that the Court now addresses and limits. (pp. 17-21)

3. Courts properly have recognized that arbitration may be compelled by a non-signatory on the basis of agency 

principles. That said, use of equitable estoppel as a basis to compel arbitration has limited applicability. Application 

of estoppel to compel arbitration based solely on the connection between the parties and claims overlooks that the 

parties are giving up their right to sue in court when they agree to use arbitration to resolve their disputes. The 

decision to compel arbitration in EPIX Holdings was appropriate given the agency relationship between the parent 

and subsidiary corporations in the litigation, not because of a theory of intertwinement. Equitable estoppel is 

invoked in the interests of justice and fairness. It does not apply absent proof that a party detrimentally relied on 

another party’s conduct. (pp. 21-24)

4. In this case, the only arbitration clause is in the contract between plaintiffs and SAI. The clause mentions no other 

parties aside from Scudillo, who served as SAI’s representative when executing the agreement. There is no express 

arbitration obligation with respect to AFS or EisnerAmper. Also, AFS and EisnerAmper did not have standing to 

compel arbitration under an agency relationship. Scudillo signed the contract as an agent of SAI, not as an agent of 

AFS or EisnerAmper. SAI shares no corporate ownership with AFS or EisnerAmper. Though plaintiffs’ claims

against defendants all arose out of the same alleged Ponzi scheme and the parties had some form of relationship with 

each other, that intertwinement of claims and parties alone is insufficient to warrant application of equitable 

estoppel. There is no evidence in the record that AFS or EisnerAmper expected to arbitrate their disputes in 

detrimental reliance on plaintiffs’ conduct. The motion to compel arbitration should have been denied. (pp. 24-28)

The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the Law 

Division for further proceedings.

CHIEF JUSTICE RABNER; JUSTICES ALBIN, HOENS, and PATTERSON; and JUDGES 

RODRÍGUEZ and CUFF (both temporarily assigned) join in JUSTICE LaVECCHIA’s opinion.
SUPREME COURT OF NEW JERSEY

A-9 September Term 2012

070751

MICHAEL E. HIRSCH, ROBYN J. 

HIRSCH, and HIRSCH, LLP,

Plaintiffs-Appellants,

v.

AMPER FINANCIAL SERVICES, 

LLC, and EISNERAMPER, LLP 

(f/k/a AMPER, POLITIZNER &

MATTIA, LLP),

Defendants/Third-Party

Plaintiffs-Respondents,

 v.

SECURITIES AMERICA, INC.,

Third-Party DefendantRespondent.

Argued May 13, 2013 – Decided August 7, 2013

On certification to the Superior Court, 

Appellate Division.

Joel N. Kreizman argued the cause for 

appellants (Scarinci & Hollenbeck, 

attorneys).

Denis C. Dice, a member of the Pennsylvania 

bar, argued the cause for respondent 

(Marshall, Dennehey, Warner, Coleman & 

Goggin, attorneys; Joel M. Wertman, on the 

brief).

Craig S. Hilliard on behalf of respondents 

Amper Financial Services, LLC and 

EisnerAmper, LLP join in the brief by 
2

respondent Securities America, Inc. (Stark & 

Stark, attorneys).

JUSTICE LaVECCHIA delivered the opinion of the Court.

Commercial arbitration has developed as a popular method of 

dispute resolution for complex business relationships. Parties

to a contract can customize an arbitration to handle particular 

types of business transactions, including adopting their own 

procedural rules, selecting the substantive law applicable to 

the dispute, and appointing arbitrators with specialized 

expertise. Additionally, parties can take solace in knowing 

that the arbitral award likely will be confirmed and enforced in 

light of the deference for arbitration’s finality. For those

reasons, arbitration can be a cost-effective and speedy method 

of resolving litigation. 

However, because parties must waive their right to pursue 

claims in state or federal court, there ordinarily must be an 

agreement to arbitrate. Typically, parties reach an agreement

by including an arbitration clause in a contract, which provides 

evidence to a court that the parties agreed to arbitrate

disputes. A court then can determine whether a particular claim

falls within the scope of the arbitration clause.

In this case, the trial court granted a motion to compel 

arbitration between a non-signatory and a signatory to a 

contract containing an arbitration clause. Even though the 
3

signatory had not expressly agreed to arbitrate any disputes 

with the non-signatory, the court found that the parties and 

claims were sufficiently intertwined to warrant application of 

equitable estoppel. The Appellate Division affirmed.

We now reverse and hold that the trial court should have 

denied the motion to compel arbitration. Commercial arbitration 

is a creature of contract. Although traditional principles of 

contract may in certain cases warrant compelling arbitration

absent an arbitration clause, the intertwinement of the parties 

and claims in a dispute, viewed in isolation, is insufficient to 

warrant application of equitable estoppel. 

Equitable estoppel should be used sparingly to compel 

arbitration. It is a theory “designed to prevent injustice by 

not permitting a party to repudiate a course of action on which 

another party has relied to his detriment.” Knorr v. Smeal, 178 

N.J. 169, 178 (2003). Equitable estoppel is more properly 

viewed as a shield to prevent injustice rather than a sword to 

compel arbitration. 

I.

A.

Michael Hirsch, Robyn Hirsch, and Hirsch, LLP (collectively 

plaintiffs) lost a significant sum of money invested in 
4

securities that allegedly were part of a “Ponzi” scheme.1 

Plaintiffs filed suit against various parties involved in the 

purchase of the securities: Securities America, Inc. (SAI), 

Marc Scudillo, Amper Financial Services, LLC (AFS), and 

EisnerAmper, LLP.

Scudillo was employed as a financial advisor by AFS, a 

financial services firm associated with EisnerAmper, an 

accounting firm.2 EisnerAmper often referred clients to AFS for 

wealth planning services. Scudillo, who maintained brokerage 

licenses, was responsible for advising clients on issues such as 

asset allocation, retirement planning, and insurance. 

Meanwhile, Scudillo also served as a representative for 

SAI, a separate corporation that served as a broker-dealer 

handling securities transactions. According to plaintiffs, 

Scudillo was compensated by SAI as a salesperson for promoting 

certain financial products.

In the middle of 2002, EisnerAmper referred plaintiffs, who 

had been using EisnerAmper as their accountant, to Scudillo and 

 

1 A “Ponzi” scheme is “a classic, pyramid-style investment 

fraud,” in which “no investment is ever made.” In re 

Application of Matthews, 94 N.J. 59, 64 (1983). Rather, “the 

promised returns for the first set of investors are paid from 

the proceeds garnered from a second set of investors. The 

second set of investors is then paid off with the funds 

deposited by a third set of investors, and so on.” Ibid.

2 Scudillo was the managing partner and fifty percent owner of 

AFS. The other fifty percent ownership interest in AFS was held 

by EisnerAmper.
5

AFS for investment planning. Plaintiffs hired Scudillo and 

agreed to invest approximately $3.4 million in an initial 

portfolio. Plaintiffs agreed to a conservative investment 

strategy, which Scudillo described in several documents dated 

November 2002 as “[w]ealth building through a prudent and 

conservative allocation of investments” and “[w]illing to 

sacrifice a higher return for principal stability.” 

Scudillo’s compensation was calculated as a percentage of 

plaintiffs’ total asset value under his management. As part of 

the arrangement, Scudillo met with plaintiffs several times per 

year to discuss any changes in investment strategies. However, 

plaintiffs’ relationship with Scudillo was never formalized by a 

written contract. 

In 2004, Scudillo recommended that plaintiffs purchase

securitized notes in the amount of $550,000. On Scudillo’s 

recommendation, plaintiffs purchased two notes from Medical 

Provider Financial Corporation (Med Cap): $300,000 in a Class 

‘A’ Note on July 13, 2004; and $250,000 in a Class ‘A’ Note on 

April 10, 2006. Plaintiffs reinvested -- again on Scudillo’s 

advice -- the principal from these two investments into another 

two Med Cap notes: $300,000 in a Class ‘A’ Note on July 11, 

2007; and $250,000 in a Class ‘B’ Note on May 6, 2008. 

Notably, plaintiffs signed two applications with SAI for 

the purchase of the Med Cap notes: one on June 29, 2004, in the 
6

name of Hirsch, LLP, and the other on June 7, 2006, in the names 

of Michael and Robyn Hirsch. Scudillo signed each of these 

agreements as the “registered representative” and the 

“principal” of SAI. Each of the SAI applications incorporated 

an arbitration clause:

This agreement contains a predispute 

arbitration clause. By signing an 

arbitration agreement the parties agree as 

follows:

A) All parties to this agreement are giving 

up the right to sue each other in court, 

including the right to a trial by jury, 

except as provided by the rules of the 

arbitration forum in which a claim is 

filed.

B) Arbitration awards are generally final 

and binding, a party’s ability to have a 

court reverse or modify an arbitration 

award is very limited.

C) The ability of the parties to obtain 

documents, witness statements and other 

discovery is generally more limited in 

arbitration than in court proceedings.

D) The arbitrators do not have to explain 

the reason(s) for their award.

E) The panel of arbitrators will typically 

include a minority of arbitrators who 

were or are affiliated with the 

securities industry.

F) The rules of some arbitration forums may 

impose time limits for bringing a claim 

in arbitration. In some cases, a claim 

that is ineligible for arbitration may 

be brought in court.
7

G) The rules of the arbitration forum in 

which the claim is filed, and any 

amendments thereto, shall be 

incorporated into this agreement.

All controversies that may arise between us 

(including, but not limited to controversies 

concerning any account, order or 

transaction, or the continuation, 

performance, interpretation or breach of 

this or any other agreement between us, 

whether entered into or arising before, on 

or after the date this account is opened) 

shall be determined by arbitration in 

accordance with the rules then prevailing of 

the New York Stock Exchange, Inc., or the 

[National Association of Securities Dealers 

(NASD)] as I may designate. If I do not 

notify you in writing of my designation 

within five (5) days after I receive from 

you a written demand for arbitration, then I 

authorize you to make such designation on my 

behalf. I understand that judgment upon any 

arbitration award may be entered in any 

court of competent jurisdiction.

Based on that contractual language, arbitration was to be 

handled by the Financial Industry Regulatory Authority (FINRA),3

 

3 In many ways, FINRA arbitration procedures are similar to those 

used in other institutional arbitrations, such as the American 

Arbitration Association. The claimant initiates the proceedings 

by filing a statement of claim, the respondent files an answer, 

and the parties together appoint three arbitrators. FINRA Code 

of Arbitration Procedure for Customer Disputes §§ 12302-12303, 

12400-12403 [hereinafter FINRA Code]. Prehearing conferences 

are scheduled to resolve preliminary issues, and discovery 

proceeds according to the Codes of Arbitration Procedure. Id.

§§ 12500-12501, 12505-12514. At the conclusion of discovery, a 

hearing is held to allow the parties to present evidence and 

arguments in support of their claims. Id. § 12600. After the 

hearing, the arbitrators consider the issues and render an 

award. Id. § 12904.

An award rendered at the conclusion of FINRA arbitration is 

subject to limited review in court. The Federal Arbitration Act 
8

an organization “created through the consolidation of NASD and 

the member regulation, enforcement and arbitration operations of 

the New York Stock Exchange” in July 2007. FINRA, NASD and NYSE 

Member Regulation Combine to Form the Financial Industry 

Regulatory Authority - FINRA, available at 

http://www.finra.org/Newsroom/NewsReleases/2007/p036329 (last 

visited July 25, 2013). 

B.

In 2008, the Class ‘A’ Med Cap Note for $300,000 defaulted. 

According to plaintiffs, Scudillo reassured them that the

investment was still safe, and, at all relevant times, 

maintained that the Med Cap notes were low-risk securities

consistent with plaintiffs’ investment goals. 

The following year, plaintiffs’ investments in the Med Cap 

notes suffered additional setbacks. The United States 

Securities and Exchange Commission (SEC) launched an

investigation into Med Cap and placed all interest payments on 

hold. In July 2009, the SEC charged Med Cap senior officers 

with securities fraud and placed the corporation in 

receivership. Then, in January 2010, the Commonwealth of 

Massachusetts launched its own investigation into Med Cap and 

 

provides that a court only may vacate an award in limited 

circumstances. 9 U.S.C.A. § 10. If the award is not ultimately 

vacated, the court can confirm or modify the award. 9 U.S.C.A.

§§ 9, 11. 
9

reached similar conclusions. Taken together, these

investigations indicated that the Med Cap notes were being 

operated as a Ponzi scheme.

Plaintiffs eventually lost the entirety of their investment 

in the Med Cap notes and filed two separate actions in October 

and November 2010. First, plaintiffs instituted arbitration

proceedings with FINRA against SAI and Scudillo in October 2010. 

Plaintiffs alleged breach of contract, fraud, breach of 

fiduciary duties, negligence, gross negligence, unjust 

enrichment, violations of federal and state securities laws, and 

conspiracy. Second, plaintiffs filed a complaint in the Law 

Division, including a demand for trial by jury, against AFS and 

EisnerAmper in November 2010. Plaintiffs alleged breach of

contract, violations of the New Jersey Consumer Fraud Act, 

breach of fiduciary duties, negligent supervision, negligent 

misrepresentation, violations of the New Jersey Uniform 

Securities Law, and professional malpractice.

In January 2011, AFS and EisnerAmper filed an answer 

denying the entirety of the allegations, and they filed a thirdparty complaint against SAI. In their third-party complaint, 

AFS and EisnerAmper sought indemnification and contribution,

arguing that should they be found liable to plaintiffs, SAI was 

a joint tortfeasor.
10

Several months later, SAI filed in the Law Division a 

Motion to Compel Arbitration and Stay Proceedings Pending 

Arbitration. In its motion, SAI argued that (1) the language of 

the arbitration clause is sufficiently broad to cover the 

disputes with AFS and EisnerAmper; (2) AFS is a party to the 

arbitration clause because Scudillo, who served as a 

representative for SAI and AFS, signed the arbitration 

agreement; (3) AFS and EisnerAmper are subject to the 

arbitration agreement under agency principles; and (4) AFS and 

EisnerAmper are subject to the arbitration agreement under the 

doctrine of equitable estoppel. AFS and EisnerAmper joined in 

SAI’s Motion to Compel Arbitration, and plaintiffs opposed the 

motion. 

After hearing oral argument on the motion, the trial court 

granted SAI’s motion. The court relied on Alfano v. BDO 

Seidman, LLP, 393 N.J. Super. 560 (App. Div. 2007), in 

concluding that plaintiffs were “attempting to circumvent the 

policy favoring arbitration” by failing to name SAI as a 

defendant in the civil action filed in the Law Division. 

The Appellate Division affirmed the trial court’s judgment

but relied on a different rationale. First, the panel 

acknowledged this state’s “long-standing policy favoring 

arbitration as a speedy and efficient approach to dispute 

resolution,” as well as the Federal Arbitration Act’s preference 
11

to resolve contractual ambiguities in favor of arbitration. 

Second, the panel broadly interpreted the arbitration clause in 

light of the preference for arbitration. Third, the panel

applied equitable estoppel -- predominantly using the analysis 

from EPIX Holdings Corp. v. Marsh & McLennan Cos., Inc., 410 

N.J. Super. 453, 463-68 (App. Div. 2009) -- to conclude that 

compelling arbitration was the appropriate course of action. In 

its view, “[t]he complex and intertwined relationship between 

and among plaintiffs, Scudillo, EisnerAmper and AFS is an 

‘integral’ one which provides ‘sufficient basis to invoke 

estoppel,’” (quoting id. at 466).

We granted plaintiffs’ petition for certification. Hirsch 

v. Amper Fin. Servs., LLC, 212 N.J. 288 (2012). 

II.

Plaintiffs argue that the Appellate Division erred in 

affirming the order compelling arbitration. They maintain that 

arbitration can only be compelled when parties agree to 

arbitrate their disputes by inserting an arbitration clause into

a contract. Because the arbitration clause here only applied to 

disputes arising between plaintiffs and SAI, the arbitration 

should exclude AFS and EisnerAmper.

Plaintiffs contend that the Appellate Division’s 

application of equitable estoppel to compel arbitration should 

be rejected because such a decision negates the contractual 
12

requirement for arbitration. Alternatively, even should 

equitable estoppel be appropriate, plaintiffs argue that its 

application here contravenes language found in the arbitration 

clause. 

Further, plaintiffs call on this Court to establish the 

parameters of the theory of intertwinement applied by the 

Appellate Division. Finally, plaintiffs argue that the 

appropriate forum, if all the claims must indeed be resolved 

together, is the Law Division rather than FINRA because the bulk 

of their claims primarily arise out of interactions and dealings 

with AFS and EisnerAmper, not with SAI.

In response, SAI argues that the Appellate Division 

properly applied the well-recognized doctrine of equitable 

estoppel to compel arbitration. SAI contends that the plain 

language of the arbitration clause is sufficiently broad to 

encompass the claims against AFS and EisnerAmper. In its view, 

all of the claims arose out of the transactions contemplated by 

the contract between plaintiffs and SAI. Specifically, the 

claims focus on the purchase of the Med Cap notes, which were 

the focus of the contract. 

Moreover, SAI cites the strong presumption in favor of 

arbitration in both state and federal courts. For that reason, 

SAI contends that the Superior Court is not the appropriate 
13

forum for resolving the claims; instead, the claims should be 

resolved through the FINRA arbitration.

AFS and EisnerAmper adopted SAI’s arguments without 

submitting additional briefs.

III.

A.

Orders compelling arbitration are deemed final for purposes 

of appeal. R. 2:2-3(a); GMAC v. Pittella, 205 N.J. 572, 587

(2011). We review those legal determinations de novo. See

Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 

378 (1995) (“A trial court’s interpretation of the law and the 

legal consequences that flow from established facts are not 

entitled to any special deference.”). In reviewing such orders,

we are mindful of the strong preference to enforce arbitration

agreements, both at the state and federal level. See Hojnowski 

v. Vans Skate Park, 187 N.J. 323, 341-42 (2006) (noting federal

and state preference for enforcing arbitration agreements); 

Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A.,

168 N.J. 124, 131 (2001) (recognizing “arbitration as a favored 

method of resolving disputes”). 

The Federal Arbitration Act (FAA), 9 U.S.C.A. §§ 1 to 16,

was enacted “to abrogate the then-existing common law rule 

disfavoring arbitration agreements ‘and to place arbitration 

agreements upon the same footing as other contracts.’” 
14

Martindale v. Sandvick, Inc., 173 N.J. 76, 84 (2002) (quoting 

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. 

Ct. 1647, 1651, 114 L. Ed. 2d 26, 36 (1991)). Section 2 of the 

FAA provides:

A written provision in any . . . contract 

evidencing a transaction involving commerce 

to settle by arbitration a controversy 

thereafter arising out of such contract or 

transaction, or the refusal to perform the 

whole or any part thereof, or an agreement 

in writing to submit to arbitration an 

existing controversy arising out of such a 

contract, transaction, or refusal, shall be 

valid, irrevocable, and enforceable, save 

upon such grounds as exist at law or in 

equity for the revocation of any contract.

[9 U.S.C.A. § 2.]

The New Jersey Arbitration Act (Arbitration Act), N.J.S.A.

2A:23B-1 to -32, is similar in nature to the FAA. The 

Arbitration Act, in part, provides “[a]n agreement contained in 

a record to submit to arbitration any existing or subsequent 

controversy arising between the parties to the agreement is 

valid, enforceable, and irrevocable except upon a ground that 

exists at law or in equity for the revocation of a contract.” 

N.J.S.A. 2A:23B-6(a).

However, the preference for arbitration “is not without 

limits.” Garfinkel, supra, 168 N.J. at 132. A court must first 

apply “state contract-law principles . . . [to determine] 

whether a valid agreement to arbitrate exists.” Hojnowski, 
15

supra, 187 N.J. at 342. This preliminary question, commonly 

referred to as arbitrability, underscores the fundamental 

principle that a party must agree to submit to arbitration. 

Garfinkel, supra, 168 N.J. at 132 (“The point is to assure that 

the parties know that in electing arbitration as the exclusive 

remedy, they are waiving their time-honored right to sue.” 

(internal quotation marks omitted)); Guidotti v. Legal Helpers 

Debt Resolution, L.L.C., 716 F.3d 764, ___ (3d Cir. 2013) (slip 

op. at 13) (explaining that “a judicial mandate to arbitrate 

must be predicated upon the parties’ consent” (citation 

omitted)). Notably, the arbitrability analysis is expressly 

included in the Arbitration Act. See N.J.S.A. 2A:23B-6(b) (“The 

court shall decide whether an agreement to arbitrate exists . . 

. .”).

We have explained that “‘a state cannot subject an 

arbitration agreement to more burdensome requirements than those 

governing the formation of other contracts.’” Hojnowski, supra, 

187 N.J. at 342 (quoting Leodori v. CIGNA Corp., 175 N.J. 293, 

302, cert. denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d 

250 (2003)). In evaluating the existence of an agreement to 

arbitrate, a court “consider[s] the contractual terms, the 

surrounding circumstances, and the purpose of the contract.” 

Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)

(citation omitted). 
16

After finding the existence of an arbitration clause, a 

court then must evaluate whether the particular claims at issue 

fall within the clause’s scope. A court must look to the 

language of the arbitration clause to establish its boundaries. 

See Garfinkel, supra, 168 N.J. at 132. Importantly, “a court 

may not rewrite a contract to broaden the scope of arbitration.” 

Ibid. (internal quotation marks omitted). 

B.

At issue in this appeal is the application of equitable 

estoppel to compel arbitration. The United States Supreme Court 

has recognized that, in the context of arbitration,

“‘traditional principles’ of state law allow a contract to be 

enforced by or against nonparties to the contract through 

‘assumption, piercing the corporate veil, alter ego, 

incorporation by reference, third party beneficiary theories, 

waiver and estoppel.’” Arthur Andersen LLP v. Carlisle, 556 

U.S. 624, 631, 129 S. Ct. 1896, 1902, 173 L. Ed. 2d 832, 840 

(2009) (emphasis added) (quoting 21 Williston on Contracts § 

57:19, at 183 (4th ed. 2001)). In other words, in assessing 

whether parties can be compelled to arbitrate, courts can use 

principles of contract law even in the absence of an express 

arbitration clause. See ibid.

As previously explained by this Court, 

[e]quitable estoppel has been defined as
17

the effect of the voluntary 

conduct of a party whereby he is 

absolutely precluded, both at law 

and in equity, from asserting 

rights which might perhaps have 

otherwise existed . . . as against 

another person, who has in good 

faith relied upon such conduct, 

and has been led thereby to change 

his position for the worse . . . . 

The doctrine is designed to prevent a

party’s disavowal of previous conduct if

such repudiation would not be responsive to 

the demands of justice and good conscience.

[Heuer v. Heuer, 152 N.J. 226, 237 (1998)

(internal quotation marks and citations 

omitted).]

Equitable estoppel “is invoked in the interests of justice, 

morality and common fairness.” Knorr, supra, 178 N.J. at 178

(internal quotation marks omitted); see also Summer Cottagers’ 

Assoc. of Cape May v. City of Cape May, 19 N.J. 493, 503-04

(1955) (noting that doctrine prevents party “from taking a 

course of action that would work injustice and wrong to one who 

with good reason and in good faith has relied upon such conduct”

(citations omitted)).

To establish equitable estoppel, parties must prove that an

opposing party “engaged in conduct, either intentionally or 

under circumstances that induced reliance, and that [they] acted 

or changed their position to their detriment.” Knorr, supra,

178 N.J. at 178 (citation omitted). In other words, equitable 
18

estoppel, unlike waiver, requires detrimental reliance. Ibid. 

With that in mind, two Appellate Division decisions warrant our 

review.

In EPIX Holdings, supra, the Appellate Division recognized 

that “a non-signatory to an arbitration agreement may compel a 

signatory to arbitrate.” 410 N.J. Super. at 463. EPIX Holdings

Corp., a professional employer organization, entered into a 

workers’ compensation insurance agreement with National Union 

Fire Insurance Company (National Union), a subsidiary of 

American International Group, Inc. (AIG). Id. at 459-60. The 

Payment Agreement between EPIX and National Union “expressly set 

forth in detail the terms and conditions of EPIX’s payment 

obligation.” Id. at 460. “The Payment Agreement also contained 

an arbitration clause” which provided that disputes other than 

payment issues “must be submitted to arbitration.” Id. at 460-

61. EPIX ultimately filed suit against National Union, AIG, and 

several other related companies. Id. at 461. The claims arose 

out of “an alleged elaborate conspiracy . . . to manipulate the 

market for insurance.” Ibid. (internal quotation marks 

omitted). AIG, in response, moved to compel arbitration, but 

the trial court denied the motion because AIG was not a party to 

the Payment Agreement containing the arbitration clause even 

though its subsidiary was a signatory. Id. at 462. 
19

The Appellate Division reversed, reasoning that (1) “AIG 

ha[d] standing as a non-signatory to compel arbitration” because 

the claims and parties were “substantially interconnected,” id.

at 467-68, and (2) EPIX’s claims fell within the scope of the 

arbitration clause, id. at 475. The panel noted that “the 

principle of equitable estoppel has been invoked, under 

appropriate circumstances, to force an objecting signatory to 

arbitrate the same claims against a non-signatory as alleged 

against the other party to the contract.” Id. at 465-66. 

“[E]ven where the inextricable connectivity was not considered 

itself dispositive of the issue, the combination of the 

requisite nexus of the claim to the contract together with the 

integral relationship between the non-signatory and the other 

contracting party [has been] recognized as a sufficient basis to 

invoke estoppel.” Id. at 466 (emphasis removed). 

The conclusion in EPIX Holdings stands in contrast to the 

result of an earlier decision in Angrisani v. Financial 

Technology Ventures, L.P., 402 N.J. Super. 138 (App. Div. 2008). 

There, the plaintiff, Frank Angrisani, entered into two 

contracts: an employment contract with Nexxar Group, Inc. 

(Nexxar)4 and a stock purchase agreement with Financial 

Technology Ventures, L.P. (FT Ventures) to purchase shares in 

 

4 The plaintiff actually entered into a contract with Nexxar’s 

predecessor; however, that distinction is not relevant for 

purposes of this discussion. See id. at 143-44. 
20

Nexxar. Id. at 143-44. The employment contract with Nexxar

included an arbitration clause that required the plaintiff and 

Nexxar to “arbitrate any and all controversies, claims or 

disputes arising out of” the contract or employment relationship 

before the American Arbitration Association. Id. at 149. 

However, the stock purchase agreement with FT Ventures did not 

contain an agreement to arbitrate disputes. Id. at 145. 

Angrisani filed claims against Nexxar and FT Ventures after 

his agreements with the two companies took a turn for the worse. 

Id. at 145-46. Angrisani asserted multiple claims against FT 

Ventures and Nexxar. Id. at 146. In response, Nexxar and FT 

Ventures jointly filed a motion to compel arbitration. Ibid. 

The trial court granted the motion, ibid., but the Appellate 

Division reversed in part, id. at 147. The panel concluded 

that, although Angrisani’s “claims against Nexxar [fell] within 

the arbitration provision of his employment agreement,” the 

“claims against FT Ventures [were] not covered by the 

arbitration provision.” Ibid. In other words, Angrisani could

“not be compelled to arbitrate those claims [against FT 

Ventures] because the stock purchase agreement . . . [did] not 

provide for arbitration.” Ibid. 

The Appellate Division specifically rejected FT Ventures’s 

argument that Angrisani was “equitably estopped from refusing to 

arbitrate those claims because they [were] intertwined with and 
21

dependent upon the employment agreement.” Id. at 153 (internal 

quotation marks omitted). The panel reasoned that Angrisani 

“did not engage in any course of conduct that could support a 

finding of equitable estoppel.” Ibid. The panel also 

distinguished several federal cases that applied equitable 

estoppel to compel arbitration, finding that “those cases 

generally involve[d] situations where a party to a contract 

containing an arbitration clause [sought] to bring an action . . 

. against a non-signatory to the contract that [was] closely 

aligned to a contracting party, such as a parent or successor 

corporation.” Id. at 154. 

These two Appellate Division decisions are not in 

synchronicity in their rationales concerning the application of 

equitable estoppel to compel arbitration. The panel’s decision

in this appeal further reflects an emerging “intertwinement” 

theory -- described as an extension of equitable estoppel --

that has never been addressed by this Court. We now address 

that doctrine and limit its application.

IV.

A.

At the outset, it must be acknowledged that, as a matter of 

New Jersey law, courts properly have recognized that arbitration

may be compelled by a non-signatory against a signatory to a 

contract on the basis of agency principles. See, e.g., Alfano,
22

supra, 393 N.J. Super. at 569-70 (compelling arbitration after 

finding agency relationship existed between non-signatory and 

signatory to contract). That said, although equitable estoppel 

may be used in certain circumstances as a basis to compel 

arbitration, its use has limited applicability. Application of 

estoppel to compel arbitration, when the rationale rests solely 

on the connection between the parties and claims, overlooks our 

case law emphasizing that parties are giving up their right to 

sue in court when they agree to use the alternative dispute 

resolution technique of arbitration. See Garfinkel, supra, 168 

N.J. at 132. 

Stated simply, we reject intertwinement as a theory for 

compelling arbitration when its application is untethered to any 

written arbitration clause between the parties, evidence of 

detrimental reliance, or at a minimum an oral agreement to 

submit to arbitration. As explained earlier, equitable estoppel 

“is invoked in the interests of justice, morality and common 

fairness.” Knorr, supra, 178 N.J. at 178 (internal quotation 

marks omitted). Estoppel cannot be applied solely because the 

parties and claims are intertwined, and, to the extent that EPIX 

Holdings suggests otherwise in its rationale, it extends 

equitable estoppel beyond its proper scope. 

We have not yet had the occasion to review the underlying 

rationale used in EPIX Holdings to compel arbitration. The 
23

decision to compel arbitration in EPIX Holdings was appropriate 

given the agency relationship between the parent and subsidiary 

insurance corporations in the litigation. See 410 N.J. Super.

at 458-59. However, we reject that panel’s reliance on a theory 

of intertwinement under the guise of equitable estoppel. The 

Appellate Division was mistaken in concluding that the 

intertwinement of claims and parties in the litigation -- in and 

of itself -- was sufficient to give a non-signatory corporation 

standing to compel arbitration. See id. at 467-68. The 

appropriate analysis would have focused on the agency 

relationship between the parent and subsidiary corporations in 

relation to their intertwinement with the plaintiff’s claims and 

the relevant contractual language. 

Further, the doctrine of equitable estoppel does not apply 

absent proof that a party detrimentally rely on another party’s 

conduct. See Knorr, supra, 178 N.J. at 178. Reliance is 

critical when a party seeks to compel arbitration using that 

doctrine. It underlies the rationale for applying equitable 

estoppel in the first place, namely, “[t]he doctrine is designed 

to prevent a party’s disavowal of previous conduct if such 

repudiation would not be responsive to the demands of justice 

and good conscience.” Heuer, supra, 152 N.J. at 237 (internal 

quotation marks omitted); see also Angrisani, supra, 402 N.J. 

Super. at 153 (holding that doctrine of equitable estoppel was 
24

inapplicable to compel arbitration because doctrine operates to 

“prevent injustice by not permitting a party to repudiate a 

course of action on which another party has relied to his 

detriment” (internal quotation marks omitted)). 

B.

Turning to this appeal, we note initially that many of the 

claims in plaintiffs’ complaint -- including those rooted in 

negligence and breach of contract -- implicate the right to a 

jury trial. See Jersey Cent. Power & Light Co. v. Melcar Util.

Co., 212 N.J. 576, 593-94 (2013) (reiterating constitutional 

right to jury trial for “common-law cause of action in 

negligence”); Wood v. N.J. Mfrs. Ins. Co., 206 N.J. 562, 578 

(2011) (emphasizing that “breach of contract claim was at common 

law and remains today an action triable to a jury”). That 

recognition informs our analysis given the importance of 

ensuring that a party has actually waived its right to initiate 

a claim in court in favor of submitting to binding arbitration. 

See Garfinkel, supra, 168 N.J. at 132 (noting “[i]n the absence 

of a consensual understanding, neither party is entitled to 

force the other to arbitrate their dispute” (alteration in 

original and internal quotation marks omitted)). Nevertheless, 

we must review the relevant contractual relationships to 

determine whether plaintiffs agreed to arbitrate with AFS and 

EisnerAmper. 
25

No party disputes that the only applicable arbitration 

clause is the one contained in the contract between plaintiffs 

and SAI, which provides in relevant part:

All controversies that may arise between us 

(including, but not limited to controversies 

concerning any account, order or 

transaction, or the continuation, 

performance, interpretation or breach of 

this or any other agreement between us, 

whether entered into or arising before, on 

or after the date this account is opened) 

shall be determined by arbitration in 

according with the rules then prevailing of 

the New York Stock Exchange, Inc., or the 

NASD as I may designate.

Importantly, this arbitration clause makes no mention of other 

parties aside from Scudillo, who served as SAI’s representative 

when executing the agreement containing the arbitration clause. 

Though the language in the arbitration clause is sufficiently 

broad to cover any and all disputes related to the business 

transactions between plaintiffs and SAI, it does not embrace any 

express inclusion of claims involving other parties. See

Garfinkel, supra, 168 N.J. at 132. Thus, we conclude that there 

is no express contractual arbitration obligation with respect to 

the other defendants, AFS or EisnerAmper. 

Moreover, we disagree with SAI’s argument that AFS or 

EisnerAmper had standing to compel arbitration under an agency 

relationship. Although Scudillo did sign the contract 

containing the arbitration clause, he did so as an agent of SAI, 
26

not as an agent of AFS or EisnerAmper. SAI shares no corporate 

ownership with AFS or EisnerAmper. And, notably, AFS and 

EisnerAmper conceded before the Law Division that they “are 

separate and distinct corporate entities.” As a result, in this 

case, an agency relationship cannot serve as the basis for 

compelling arbitration. Contra Alfano, supra, 393 N.J. Super.

at 569-70 (finding agency relationship between signatory and 

non-signatory); EPIX Holdings, supra, 410 N.J. Super. at 458-59

(explaining relationship between defendants as parent and 

subsidiary corporations). 

Though plaintiffs’ claims against SAI, AFS, and EisnerAmper

all arose out of the same alleged Ponzi scheme involving the Med 

Cap notes, and each of the parties had some form of relationship 

with each other, that intertwinement of claims and parties, by 

itself, is insufficient to warrant application of equitable 

estoppel. We see no evidence in the record that AFS or 

EisnerAmper expected to arbitrate their disputes in detrimental 

reliance on plaintiffs’ conduct. See Heuer, supra, 152 N.J. at 

237. We also find nothing in the record to suggest that AFS or

EisnerAmper knew about the arbitration clause in plaintiffs’ 

agreement with SAI, let alone expected to reap the benefits that 

accompany arbitration, prior to SAI raising it as an issue in 

the Law Division. The responsive pleadings filed by AFS and 

EisnerAmper made no request for arbitration, nor did they even 
27

mention the existence of an arbitration clause. See Angrisani, 

supra, 402 N.J. Super. at 153-54.

Finally, although we are sensitive to the preference for 

resolving ambiguities in arbitration clauses in favor of 

compelling arbitration, see Hojnowski, supra, 187 N.J. at 341-

42, that preference only applies when an agreement exists 

between the parties to arbitrate their disputes. In other 

words, absent express contractual language signaling an 

agreement to arbitrate, a court has little to interpret in favor 

of compelling arbitration. See Garfinkel, supra, 168 N.J. at 

132. Instead, when parties have not expressly agreed to 

arbitrate their disputes -- as is the case here between 

plaintiffs, AFS, and EisnerAmper -- careful scrutiny is 

necessary to determine whether arbitration is nonetheless 

appropriate. 

To conclude, because the record here does not support that 

AFS or EisnerAmper detrimentally relied on plaintiffs’ conduct, 

application of equitable estoppel was unwarranted. Plaintiffs 

never sought to arbitrate their disputes with AFS or 

EisnerAmper, and compelling them to do so would result in an 

injustice contrary to the doctrine’s intent. SAI’s motion to 

compel arbitration should have been denied.

5

 

5 On remand, the Law Division has a number of procedural tools at 

its disposal to manage the proceedings, including staying the 
28

V.

For the reasons expressed above, we reverse the Appellate 

Division’s judgment affirming the order compelling arbitration,

and we remand for additional proceedings. 

CHIEF JUSTICE RABNER; JUSTICES ALBIN, HOENS, and PATTERSON; 

and JUDGES RODRÍGUEZ and CUFF (both temporarily assigned) join

in JUSTICE LaVECCHIA’s opinion.

 

litigation during the pendency of the FINRA arbitration. See

N.J.S.A. 2A:23B-7(e). Additionally, if any claim is severable 

from the claims proceeding to arbitration between plaintiffs and 

SAI, the Law Division may limit the stay to certain claims. See

N.J.S.A. 2A:23B-9(f), (g); GMAC, supra, 205 N.J. at 583 n.7 

(explaining trial court “may limit the stay to the arbitrable 

claim if the claims are severable”).
SUPREME COURT OF NEW JERSEY

NO. A-9 SEPTEMBER TERM 2012

ON CERTIFICATION TO Appellate Division, Superior Court

MICHAEL E. HIRSCH, ROBYN J.

HIRSCH, and HIRSCH, LLP,

Plaintiffs-Appellants,

v.

AMPER FINANCIAL SERVICES,

LLC, and EISNERAMPER, LLP

(f/k/a AMPER, POLITIZNER &

MATTIA, LLP),

Defendants/Third-Party

Plaintiffs-Respondents,

v.

SECURITIES AMERICA, INC.,

Third-Party Defendant-Respondent.

DECIDED August 7, 2013

Chief Justice Rabner PRESIDING

OPINION BY Justice LaVecchia 

CONCURRING/DISSENTING OPINIONS BY

DISSENTING OPINION BY 

CHECKLIST REVERSE AND 

REMAND

CHIEF JUSTICE RABNER X

JUSTICE LaVECCHIA X

JUSTICE ALBIN X

JUSTICE HOENS X

JUSTICE PATTERSON X

JUDGE RODRÍGUEZ (t/a) X

JUDGE CUFF (t/a) X

TOTALS 7