* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 11-41199

SCOTT BALDWIN, JR.; SJBR ENTERPRISES, INC.; JOHN B. BALDWIN,

Plaintiffs - Appellees,

v.

CLIFFORD W. CAVETT; CAVETT, TURNER AND WYBLE, L.L.P.,

Defendants - Appellants.

Consolidated with 12-40289

SCOTT BALDWIN, JR.; SJBR ENTERPRISES, INCORPORATED; JOHN B.

BALDWIN,

Plaintiffs - Appellees,

v.

LARRY A. TURNER; ROBERT J. WYBLE,

Defendants - Appellants.

Appeals from the United States District Court

for the Eastern District of Texas

USDC No. 2:10-CV-401

Before HIGGINBOTHAM, ELROD, and HAYNES, Circuit Judges.

PER CURIAM:*

United States Court of Appeals

Fifth Circuit

F I L E D

November 6, 2012

Lyle W. Cayce

Clerk
No. 11-41199

2

In this case we must decide whether the defendants may rely on an

arbitration agreement they did not sign to compel the plaintiffs’ claims against

them to arbitration. The defendants’ motions to compel arbitration were denied

in the district court based on the conclusion that there is no agreement to

arbitrate the plaintiffs’ claims. For the reasons that follow, we find no reversible

error and, therefore, AFFIRM the orders denying the motions to compel

arbitration.

I.

Clifford W. Cavett (“Cavett”), Larry A. Turner (“Turner”), and Robert J.

Wyble (“Wyble”) are partners in the accounting firm Cavett, Turner & Wyble

L.L.P. (“CTW”). According to the Second Amended Complaint, Cavett and CTW

began providing accounting services to Scott and John Baldwin, their law firm,

and several Baldwin family entities (collectively, “the Baldwins”) in the

mid-1990s. In 2000 and 2001, the Baldwins allege that Cavett, in his role as the

representative of CTW, conducted quarterly meetings with Scott Baldwin to

discuss the Baldwins’ tax returns, business records, and the accounting details

of the Baldwins’ investment accounts. During these meetings, Cavett allegedly

told Scott Baldwin that his current investment advisor was charging excessive

fees and encouraged the Baldwins to transfer their investment accounts to

Ronald J. Legnion (“Legnion”), a registered securities broker with Raymond

James Financial Services (“RJFS”).

Eventually, in December 2004, the Baldwins opened their first account

with RJFS. When opening the account, Scott Baldwin signed two documents.

First, he signed a “Disclosure of Receipt of Other Compensation From Referral

of Clients to Raymond James Financial Services by Partners and Staff of Cavett,

Turner & Wyble, L.L.P.” (the “Disclosure Form”), which explained that Cavett,
No. 11-41199

3

Turner, and Wyble are also partners with Legnion in LTC Financial Services,

Ltd. (“LTC”). The Disclosure Form specified that Legnion assigns to LTC all of

the compensation he receives from servicing RJFS accounts, and that a portion

of those earnings are allocated to Cavett, Turner, and Wyble based on their

interest in LTC. The Disclosure Form did not contain an arbitration clause.

Second, Scott Baldwin signed an RJFS New AccountForm, whichLegnion

also signed as “Financial Advisor” and “Branch Manager.” Cavett did not sign

the New Account Form and was merely listed as the “CPA” designated to receive

duplicate copies of RJFS statements. Above Scott Baldwin’s signature on the

New Account Form is the following statement:“By signing below, I acknowledge

that I have received, read, understand, and agree to abide by all the terms and

conditions set forth in the Client Agreement incorporated herein by this

reference.”

The Client Agreementis a two-page, unsigned documentthat contains the

following arbitration clause:

Any dispute or controversy, either arising in the future or in

existence now, between me and you (including your officers,

directors, employees or agents and the introducing broker, if

applicable) will be resolved by arbitration conducted before the New

York Stock Exchange, Inc., the National Association of Securities

Dealers, Inc., the American Stock Exchange, Inc., or other

self-regulatory organizations (SRO) subjectto the jurisdiction ofthe

Securities and Exchange Commission (SEC) pursuant to the

arbitration rules of the applicable SRO.

This clause applies to each of the accounts thatthe Baldwins opened with RJFS.

Cavett and CTW continued to provide accounting services to the Baldwins

after they opened the RJFS accounts, and the Baldwins signed additional

documents clarifying the accounting services that they were receiving.
No. 11-41199

4

Specifically, in November 2005, Scott Baldwin signed an “Outside Activity

Disclosure Letter” (the “Activity Letter”), which states: “I understand that the

below noted product/service is being offered to me by my CPA in his/her

individual capacity and not in the capacity as a registered representative of

[RJFS].” The “product/service” listed in the Activity Letter was “Cavett Turner

& Wyble (Certified Public Accountants).” Soon after Scott Baldwin signed the

Activity Letter, Cavett executed and delivered to him another letter (the

“Engagement Letter”), which was “to confirm [their] understanding ofthe terms

and objectives of [their] engagement and the nature and limitations of the

services [CTW] will provide.” The Engagement Letter described three

accounting services: (1) compiling interim and annual statements of assets,

liabilities, and capital; (2) preparing quarterly and year-end payroll returns and

information reports; and (3) preparing federal income-tax returns.

The Baldwins allege that by May 2006 they had moved all of their

investments to RJFS because Cavetttold them that doing so would be good from

a tax perspective. They further allege that Cavett continued to provide them

with tax advice regarding their investments. The parties sharply dispute

whether the Baldwins knew that Cavett was working not only with Legnion, but

also as a RJFS securities broker himself.

As the financial markets plummeted in 2007 and 2008, the Baldwins told

Cavettthatthey wanted to get out ofthe market. Cavett allegedly convinced the

Baldwins to stay in the market because, again, it would be good from a tax

standpoint. By 2009, the value of the Baldwins’ investments had decreased

substantially.

In September 2010, the Baldwins sued Cavett and CTW in the Eastern

District of Texas. The Baldwins’ suit alleges violations of the Racketeer
No. 11-41199

5

Influenced and Corrupt Organizations (RICO) statute, see 18 U.S.C. § 1961 et

seq., as well as various state-law claims, including common law fraud, negligent

misrepresentation, accountant malpractice, and breach of fiduciary duty. Cavett

and CTW moved to compel the dispute to arbitration based on the arbitration

clause in the Client Agreement. The Baldwins opposed the motion and filed

their First Amended Complaint, which altered several allegations concerning

Cavett. Cavett and CTW then filed a motion to compel the revised claims in the

First Amended Complaint to arbitration.

The district court referred the case to a magistrate judge for pretrial

purposes. On September 12, 2011, the magistrate judge issued a report

recommending that the district court deny Cavett and CTW’s motion to compel

arbitration. The district court adopted the magistrate judge’s conclusions and

denied the motion to compel arbitration, which prompted Cavett and CTW to

appeal.

After Cavett and CTW filed their notice of appeal, the Baldwins filed a

Second Amended Complaint adding Turner and Wyble as defendants. Turner

and Wyble moved to compel the Baldwins’ claim to arbitration, arguing

essentially the same theories that Cavett and CTW previously advanced.

Because those arguments were resolved in the earlier ruling on Cavett and

CTW’s motion to compel arbitration, the motion was denied. Turner and Wyble

then filed a notice of appeal. The two appeals have been consolidated in this

court.

II.

To determine whether a person may be compelled to arbitrate, we apply

a two-step analysis. Jones v. Halliburton Co., 583 F.3d 228, 233–34 (5th Cir.

2009) (citing Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir.

2008)). First, we examine whether the person agreed to arbitrate the dispute.
No. 11-41199

6

Id. This inquiry requires us to ask: “(1) is there a valid agreement to arbitrate

the claims and (2) does the dispute in question fall within the scope of that

arbitration agreement.” Id. at 234 (quoting Sherer, 548 F.3d at 381). Second,

if the answer to both ofthese questions is “yes,” we consider whether any federal

statute or policy renders the dispute nonarbitrable. Id.

Our inquiry here begins and ends with the first step. While Cavett and

the other defendants contend that there is an agreement to arbitrate the

Baldwins’ claims, their arguments are unpersuasive for the reasons below.

A.

Cavett, Turner, and Wyble argue that they are “parties” to the arbitration

clause contained in the Client Agreement because it expressly references

“employees or agents” of RJFS. We disagree.

Our jurisprudence recognizes an important distinction between signatories

and nonsignatories to an arbitration agreement. See, e.g., Westmoreland v.

Sadoux, 299 F.3d 462, 465 (5th Cir. 2002) (stating that “an arbitration clause

must be in writing and signed by the party invoking it” and explaining that “we

will allow a nonsignatory to invoke an arbitration agreement only in rare

circumstances”). Here, it is undisputed that Cavett, Turner, and Wyble did not

sign the New Account Forms or Client Agreements that contain the arbitration

clause. Furthermore, generally-applicable rules of contract interpretation and

enforcement govern arbitration clauses. See 9 U.S.C. § 2. The parties here have

assumed thatTexas law applies, and three elements comprise contract formation

in Texas: offer, acceptance, and a “meeting of the minds.” Bocchi Ams. Assocs.,

Inc v. Commerce Fresh Mkt., Inc., 515 F.3d 383, 392 (5th Cir. 2008) (citing Prime

Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st

Dist.] 2002, pet. denied)). Cavett neither made an offer to the Baldwins, nor

accepted an offer from them. The same is true for Turner and Wyble. Therefore,
No. 11-41199

7

under ordinary contract principles, Cavett, Turner, and Wyble are not parties

to the arbitration agreement. We reject their attempts to refute this straightforward conclusion.

B.

Cavett, Turner, and Wyble next contend that there is an agreement to

arbitrate the Baldwins’ claims against them because they are agents of RJFS.

In Westmoreland, we joined other courts of appeal in concluding that a

nonsignatory may not compel arbitration “merely because he is an agent of one

of the signatories.” 299 F.3d at 466. But Cavett, Turner, and Wyble assert that

this case is different because the arbitration clause applies to “[a]ny dispute or

controversy” and “includes . . . employees or agents.” They insist that they may

compel to arbitration any claims that any RJFS customer subject to the Client

Agreement may have against them for any conduct, no matter how unrelated to

their work for RJFS. In support of this argument, they direct us to In re

Rubiola, 334 S.W.3d 220 (Tex. 2011). We agree that Rubiola is instructive here,

but it reveals that Cavett, Turner, and Wyble’s position is untenable.

In Rubiola, the Salmons agreed to purchase a home from Greg Rubiola,

who along with his brother, J.C., operated several real estate businesses. Id. at

222. Greg and J.C. were president and vice-president, respectively, of Rubiola

Mortgage Company (“RMC”)—a corporation they used to obtain financing for

real estate buyers. Id. The Salmons applied for mortgage financing with RMC,

and as part ofthe lending process, executed an arbitration agreement with RMC.

Id. The arbitration agreement applied to “any and all controversies or claims

between the parties of whatever type or manner,” and it expressly defined

“parties” to include:

Rubiola Mortgage Company, and each and all persons and entities

signing this agreement or any other agreements between or among

any ofthe parties as part ofthis transaction.“The parties” shall also
No. 11-41199

1 Despite Cavett, Turner, and Wyble’s argument to the contrary, our conclusion here

is consistent with Downer v. Siegel, 489 F.3d 623 (5th Cir. 2007). There, we addressed the

scope of an arbitration clause and held that the parties’ dispute was within the scope of the

clause because “[a] reasonable interpretation . . . support[ed] a conclusion that the clause

cover[ed]the dispute.” Id. at 626. This case is different from Downer because we deal here not

with the scope of an arbitration clause, but with whether there is an agreement to arbitrate

the claims. We need not reach the question of scope when there is no agreement to arbitrate,

8

include individual partners, affiliates, officers, directors, employees,

agents, and/or representatives of any party to such documents, and

shall include any other owner and holder of this agreement.

Id. at 222–23. J.C. signed the agreement on behalf of RMC, but Greg did not

sign it. See id. at 223. The Salmons later sued Greg and J.C., alleging, in part,

that J.C.—as both a listing agent and a principal involved in the construction

and repair of their home—made numerous misrepresentations. Id. The

Rubiolas moved to compel the Salmons’ claims to arbitration, arguing that they

could rely on the arbitration agreement as officers and representatives of RMC.

Id. at 224. The Rubiola court agreed. Id. The arbitration agreement explicitly

provided that nonsignatory officers and representatives were parties to the

agreement, and the Rubiolas were thus entitled to compel arbitration in their

capacity as officers and representatives of RMC. See id. at 224–25.

Cavett, Turner, and Wyble would have us focus entirely on the similarity

between the arbitration agreement in Rubiola, which expressly referenced

officers and representatives of a signatory, and the agreement here, which

“includes . . . employees or agents” of a signatory. But we cannot divorce the

language of the arbitration agreement from the facts. That is because here, as

in Rubiola, the nonsignatories’ ability to compel arbitration depends on their

relationship with a signatory. Cavett, Turner, and Wyble derive their

arbitration rights from RJFS, just as the Rubiolas derived their arbitration

rights from RMC. In both cases, acting on behalf of the signatory is a necessary

condition to relying on the arbitration clause.1 While that did not present an
No. 11-41199

see Jones, 583 F.3d at 233–34, and as we explain above, there is no such agreement between

Cavett, Turner, and Wyble and the Baldwins.

9

obstacle to compelling arbitration in Rubiola, it does here. For their part,

Turner and Wyble make no argument that they were acting on behalf of RJFS

when they allegedly engaged in the conduct of which the Baldwins complain.

Regarding Cavett, the district court adopted the magistrate judge’s

determination that Cavett was not acting on behalf of RJFS when he provided

the services on which the Baldwins base their claims. Cavett contends that

determination was erroneous, but we disagree.

The magistrate judge’s report to the district court explained that Cavett

provided the Baldwins with general accounting services for over seven years

before engaging in the activities of which the Baldwins complain in this suit.

When the Baldwins decided to open accounts with RJFS, Cavett referred them

to his partner, Legnion, instead of representing them himself. Soon after the

Baldwins executed the New Account Forms, they signed the Activity Letter,

which notified them that the accounting services they were receiving from CTW

were “being offered to [them] by [their] CPA in his/her individual capacity and

not in the capacity as a registered representative of [RJFS].” Then, in the

Engagement Letter, Cavett represented to the Baldwins that he was providing

them with three specific types of accounting services. Furthermore, the New

Account Forms merely listed Cavett as the “CPA” to receive duplicate copies of

financial statements, while Legnion was identified as the “Financial Advisor.”

Based on these facts, the magistrate judge recommended and the district court

concluded that “Cavett was acting outside of his role as an agent of RJFS in

providing the [Baldwins] with the general accounting and investmenttax advice

at issue in this case.”
No. 11-41199

10

The standard of review we use in reviewing the district court’s conclusion

depends on the nature of the case. Whether an employee or agent was acting

within the course and scope of his work is a mixed question of law and fact.

Beech v. Hercules Drilling Co., L.L.C., 691 F.3d 566, 569 (5th Cir. 2012) (quoting

Hussaini v. Marine Transp. Lines, Inc., 158 F.3d 584 (5th Cir. 1998)

(unpublished)). If legal issues predominate, such as when all of the facts are

settled and undisputed, then we review de novo the district court’s application

of the law to the facts and its conclusion regarding whether an agent or

employee was acting within the course of his work. Id. But when factual issues

predominate, we review the district court’s course-and-scope determination for

clear error. Id. (quoting Hussaini, 158 F.3d at 584). Clear error exists only if

this court, after reviewing the record, has a definite and firm conviction that the

district court made a mistake. Boudreaux v. United States, 280 F.3d 461, 466

(5th Cir. 2002) (quoting McAllister v. United States, 348 U.S. 19, 20 (1954)); see

Estate of Lisle v. C.I.R., 541 F.3d 595, 601 (5th Cir. 2008) (“If the district court’s

account of the evidence is plausible in light of the record viewed in its entirety,

the court of appeals may not reverse it even though convinced that had it been

sitting as the trier of fact, it would have weighed the evidence differently.”

(quoting Anderson v. Bessemer City, 470 U.S. 564, 573–74 (1985)). Here, factual

questions predominate. The parties sharply dispute whether the Baldwins knew

that Cavett was a registered RJFS securities broker. They also dispute whether

Cavett provided the Baldwins with investment advice in his role as a broker, or

tax advice in his role as an accountant. The clear-error standard therefore

applies.

Our review ofthe record does not give rise to a definite and firm conviction

thatthe district court made a mistake. The Activity Letter, Engagement Letter,

and the other allegations recited in the magistrate’s report support the district
No. 11-41199

11

court’s conclusion that Cavett was acting outside the course and scope of his

relationship with RJFS when he provided the services that form the basis of the

Baldwins’ claims. Accordingly, the district court did not clearly err.

C.

As a nonsignatory, nonparty, nonagent, CTW asserts that it is entitled to

compel the Baldwins’ claims against it to arbitration based on principles of

equitable estoppel. We disagree.

The doctrine of equitable estoppel can sometimes provide a basis for a

nonsignatory to enforce an arbitration agreement against a signatory. See

Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 527 (5th Cir. 2000). We

have recognized two scenarios in which equitable estoppel applies:

(1) “[W]hen the signatory to a written agreement containing an

arbitration clause must rely on the terms of the written agreement

in asserting its claims against the nonsignatory,” and

(2) “[W]hen the signatory to the contract containing an arbitration

clause raises allegations of substantially interdependent and

concerted misconduct by both the nonsignatory and one or more

signatories.” 

Id. (emphasis and citation omitted). We review for abuse of discretion a district

court’s order denying a motion to compel arbitration based on equitable estoppel.

Weingarten Realty Investors v. Miller, 661 F.3d 904, 912 (5th Cir. 2011).

Generally, an abuse of discretion occurs only when no reasonable person could

agree with the district court’s decision. Friends for Am. Free Enterp. Ass’n v.

Wal-Mart Stores, Inc., 284 F.3d 575, 578 (5th Cir. 2002) (quoting Dawson v.

United States, 68 F.3d 886, 896 (5th Cir. 1995)).

On the facts ofthis case,the district court did not abuse its discretion. The

Activity Letter and Engagement Letter made clear to the Baldwins that the

services Cavett was providing them through CTW were not in his capacity as a
No. 11-41199

12

registered representative of RJFS. Based on these facts and the magistrate

judge’s recommendation, the district court concluded that the Baldwins’ claims

against CTW do not rely on the Client Agreement between the Baldwins and

RJFS. The district court also concluded that CTW could not rely on the

concerted-misconduct theory because Cavett was not a party to the arbitration

agreement. CTW argues that this conclusion is erroneous because Cavett was

a party to the arbitration agreement and acted in his capacity as an RJFS agent

when providing the services of which the Baldwins complain. But for the

reasons we explained above, Cavett was not a party to the arbitration

agreement, and the district court did not clearly err in concluding that Cavett

was acting outside of his role as an RJFS agent when he provided the advice at

issue in this case. Therefore, CTW has not shown that the district court abused

its discretion by denying CTW’s motion to compel arbitration based on equitable

estoppel. See Weingarten, 661 F.3d at 912; Friends for Am. Free Enterp. Ass’n,

284 F.3d at 578.

III.

For the foregoing reasons, we find no reversible error and AFFIRM the

orders denying the motions to compel arbitration.