NUMBER 13-13-00279-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

AMERIPRISE FINANCIAL 

SERVICES, INC., Appellant,

v.

VICTORIA FARIAS AND 

VALERIE FARIAS, Appellees.

On appeal from the 92nd District Court

of Hidalgo County, Texas.

MEMORANDUM OPINION 

Before Justices Benavides, Perkes, and Longoria

Memorandum Opinion by Justice Longoria

In this interlocutory appeal, Ameriprise Financial Services, Inc. (“Ameriprise”) 

challenges the trial court’s order denying its motion to compel arbitration and stay 
2

proceedings in this suit filed by Valerie Farias and Victoria Farias (the “Farias 

Plaintiffs”). For the reasons set forth below, we reverse the trial court’s order and 

remand for further proceedings consistent with this opinion.

I. BACKGROUND1

On or about January 29, 1999, the 92nd Judicial District Court of Hidalgo County 

entered Decrees to Establish Trusts for the sole benefit of Victoria Aynnae Farias and

Valerie Annette Farias (the “Trust Decrees”). The district court appointed Javier Farias, 

the father of the Farias Plaintiffs, as trustee for the Farias Plaintiffs’ trusts. The Trust 

Decrees instructed Javier Farias to deliver the trusts’ funds to American Express 

Financial Advisors for initial investment in the IDS Mutual Fund Group and thereafter “in 

such other investment vehicles as [Javier Farias] shall, in his sole discretion determine 

to be in the best interest of [the Farias Plaintiffs].” The Trust Decrees also provided the 

following: “The Trustee shall have all of the discretionary powers deemed necessary 

and appropriate to administer this Trust, provided that such administration shall be in 

the best interest of Beneficiary and in furtherance of the purpose of the Trust. . . .” The 

Trust Decrees also provided that the trusts would terminate when the Farias Plaintiffs 

reached the age of twenty-five. Accordingly, the trust for Victoria terminated on June 6, 

2012, and the trust for Valerie terminated on February 14, 2011. Ameriprise was not 

involved in the underlying litigation or hearings regarding the Trust Decrees. 

On or about October 11, 2000, pursuant to his authority under the Trust Decrees 

naming him as trustee for the benefit of his daughters, Javier Farias signed American 

Express Brokerage Account Applications and Agreements in connection with the 

 1

 We take the relevant factual background from Ameriprise’s statement of facts because the 

Farias Plaintiffs have not contradicted them. See TEX. R. APP. P. 38.1(g) (“In a civil case, the court will 

accept as true the facts stated unless another party contradicts them.”).
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opening of accounts for Victoria Farias and Valerie Farias (the “Account Agreements”). 

The Account Agreements specifically state, in bold letters, immediately above the 

signature line:

I acknowledge I have received the American Express Financial Advisors 

client agreement and agree to abide by their terms as currently in effect or 

as they may be amended from time to time. This account is governed by 

a predispute arbitration clause which is found in the arbitration section, 

Section 6, of the client agreement. I acknowledge receipt of the 

predispute arbitration clause.

In another section, also in bold letters, the agreements provide:

6. Arbitration

(i) Arbitration is final and binding the parties.

(ii) The parties are waiving their right to seek remedies in court, 

including the right to a jury trial.

(iii) Pre-arbitration discovery is generally more limited than, and 

different from, court proceedings.

(iv) The arbitrators’ award is not required to include factual findings 

or legal reasoning and any party’s right to appeal or to seek 

modification of rulings by the arbitrators is strictly limited.

(v) The panel of arbitrators will typically include a minority of 

arbitrators who were or are affiliated with the securities industry.

Any controversy arising out of, relating to, my accounts, to transactions 

with you or your Brokers and/or employees for me or to this agreement or 

the breach thereof, shall be settled by arbitration and conducted pursuant 

to the Federal Arbitration Act . . . .

In September 2005, American Express Financial Advisors, Inc. changed its name 

to Ameriprise Financial Services, Inc. as a result of a spin-off of its parent corporation. 

On or about September 18, 2012, three months after the last trust terminated, the 

Farias Plaintiffs filed an original petition and request for disclosure against their father, 

Javier Farias, and Ameriprise. The Farias Plaintiffs allege that Ameriprise “wrongfully 
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disbursed funds from the respective Trusts to the Trustee . . . without Plaintiffs’ 

knowledge or consent.” The Farias Plaintiffs assert causes of action against Ameriprise 

for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, fraudulent 

concealment, negligence, and gross negligence. 

Ameriprise filed a motion to compel arbitration and to stay proceedings based on 

the arbitration provisions of the Account Agreements. The motion invoked the Federal 

Arbitration Act (“FAA”). See 9 U.S.C. § 2. After holding a hearing, the trial court 

entered an order denying the motion. Ameriprise then filed this interlocutory appeal.2 

See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2011) (“In a matter 

subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an 

appeal or writ of error to the court of appeals from the judgment or interlocutory order of 

a district court, county court at law, or county court under the same circumstances that 

an appeal from a federal district court's order or decision would be permitted by 9 

U.S.C. Section 16.”); see also 9 U.S.C. § 16(a)(1)(A)–(C) (“An appeal may be taken 

from . . . an order (A) refusing a stay of any action under section 3 of this title, (B) 

denying a petition under section 4 of this title to order arbitration to proceed, [or] (C) 

denying an application under section 206 of this title to compel arbitration . . . .”).

II. ANALYSIS

Ameriprise argues that the trial court committed reversible error in denying its 

motion to compel arbitration pursuant to the FAA.3

 2

 Javier Farias is not a party to this appeal, and no argument or assertion has been made that 

the claims against Javier Farias are subject to the arbitration provisions of the Account Agreements. 

Accordingly, we confine our analysis to whether the trial court erred in denying Ameriprise’s motion to 

compel arbitration. See TEX. R. APP. P. 47.1.

3

 The Farias Plaintiffs do not contest Ameriprise’s assertion that the FAA applies in this case. 

Accordingly, we review the district court’s ruling on the motion to compel based on the FAA, though we 
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A. Applicable Law

“In general, a party seeking to compel arbitration under the FAA must establish 

that: (1) there is a valid arbitration agreement, and (2) the claims raised fall within that 

agreement’s scope.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex.

2005).

B. Standard of Review

“Generally speaking, we review the trial court’s denial of a motion to compel 

arbitration for abuse of discretion.” See Schlumberger Tech. Corp. v. Baker Hughes 

Inc., 355 S.W.3d 791, 800 (Tex. App.—Houston [1st Dist.] 2011, no pet.). “However, 

when an appeal from a denial of a motion to compel arbitration turns on a legal 

determination, we apply a de novo standard.” Id. (quotations omitted).

C. Did Ameriprise Prove the Farias Plaintiffs Are Bound by Valid Arbitration 

Agreements?

According to Ameriprise, Javier Farias signed written agreements to arbitrate all 

controversies arising from the Farias Plaintiffs’ accounts with Ameriprise, and the FAA 

requires enforcement of contracts providing for arbitration. Specifically, Section 2 of the 

FAA states as follows:

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. § 2. The Supreme Court has affirmed that “[b]y its terms, the [FAA] leaves no 

place for the exercise of discretion by a district court, but instead mandates that district 

 

recognize that Ameriprise also sought to compel arbitration based on the Texas General Arbitration Act. 

See TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.001–.098 (West 2011). 
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courts shall direct the parties to proceed to arbitration on issues as to which an 

arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 

213, 218 (1985). 

There is no dispute that arbitration agreements exist between Javier Farias and 

Ameriprise. The issue is whether the agreements are valid and enforceable against the 

Farias Plaintiffs, who did not sign them. “[U]nder certain circumstances, principles of 

contract law and agency may bind a non-signatory to an arbitration agreement.” In re 

Kellogg Brown & Root, 166 S.W.3d at 738. “[C]ourts have applied both federal and 

state law to determine . . . whether non-signatory plaintiffs should be compelled to 

arbitrate their claims.” Id. “Federal courts have recognized six theories, arising out of 

common principles of contract and agency law, that may bind non-signatories to 

arbitration agreements: (1) incorporation by reference; (2) assumption; (3) agency; (4) 

alter ego; (5) equitable estoppel; and (6) third-party beneficiary.” Id. at 739. Here, 

Ameriprise asserts that the Farias Plaintiffs are bound because they are third-party

beneficiaries of the Account Agreements. We agree.4

We begin by noting that “there is a presumption against conferring third-partybeneficiary status on non[-]contracting parties.” S. Tex. Water Auth. v. Lomas, 223 

S.W.3d 304, 306 (Tex. 2007) (per curiam). In deciding whether a third party is a 

beneficiary of a contract, “it is the contracting parties’ intent that controls.” Id. “The 

intent to confer a direct benefit upon a third party must be clearly and fully spelled out . . 

. .” Id. (quotation omitted). Here, the uncontroverted evidence established that Javier 

 4

 Ameriprise also asserts that equitable estoppel binds the Farias Plaintiffs to the arbitration 

provisions of the Account Agreements; however, in light of our holding regarding their status as third-party 

beneficiaries, we do not reach that issue because it is not necessary to the final disposition of this appeal. 

See TEX. R. APP. P. 47.1.
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Farias entered into the Account Agreements with Ameriprise for the direct benefit of the 

Farias Plaintiffs. 

First, Javier Farias opened the accounts pursuant to the Trust Decrees and for 

the direct and exclusive benefit of his daughters. The language in the Trust Decrees is 

identical:

[Javier Farias] shall take possession of all funds recovered for the 

Beneficiary, and shall deliver such funds to American Express Financial 

Advisors . . . . The funds shall be invested . . . in his sole discretion 

determine [sic] to be in the best interest of the Beneficiary.

The language in the Trust Decrees is consistent with Section 142.005 of the Texas 

Property Code, pursuant to which the Trust Decrees were entered:

(a) Any court of record with jurisdiction to hear a suit involving a 

beneficiary may, on application and on a finding that the creation of a 

trust would be in the best interests of the beneficiary, enter a decree 

in the record directing the clerk to deliver any funds accruing to the 

beneficiary under the judgment to a financial institution, except as 

provided by Subsections (m) and (n).

(b) The decree shall provide for the creation of a trust for the 

management of the funds for the benefit of the beneficiary and for 

terms, conditions, and limitations of the trust, as determined by the 

court, that are not in conflict with the following mandatory provisions:

(1) The beneficiary shall be the sole beneficiary of the trust.

(2) The trustee may disburse amounts of the trust’s principal, income, 

or both as the trustee in the trustee’s sole discretion determines to 

be reasonably necessary for the health, education, support, or 

maintenance of the beneficiary. . . .

TEX. PROP. CODE ANN. § 142.005(a), (b)(1)–(2) (West Supp. 2011).

Second, in the Account Agreements, Javier Farias identified the Farias Plaintiffs 

as the primary account holders. Furthermore, as the trustee for the Farias Plaintiffs’ 

trusts, Javier Farias was required to invest and manage the trust funds for the benefit of 
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the Farias Plaintiffs. See id. Based on the foregoing, we conclude that Ameriprise 

established by uncontroverted evidence that the parties clearly and fully spelled out the

intent to confer a direct benefit on the Farias Plaintiffs by opening the accounts at 

Ameriprise. See S. Tex. Water Auth., 223 S.W.3d at 306. Therefore, we conclude that 

Ameriprise established that the Farias Plaintiffs are third-party beneficiaries of the 

Account Agreements. See id. Furthermore, because of their status as third-party 

beneficiaries, the Farias Plaintiffs are bound by the arbitration provisions in the Account 

Agreements even though they are non-signatories to those agreements. See In re 

Kellogg Brown & Root, 166 S.W.3d at 739.

D. Did Ameriprise Establish that the Claims Alleged by the Farias Plaintiffs Fall 

Within the Scope of the Arbitration Agreements?

Next, we must determine whether the claims fall within the scope of the 

arbitration provisions in the Account Agreements. See id. “Doubts regarding an 

agreement’s scope are resolved in favor of arbitration because there is a presumption 

favoring agreements to arbitrate under the FAA.” Id. at 737. “However, the 

presumption arises only after the party seeking to compel arbitration proves that a valid 

arbitration agreement exists because the purpose of the FAA was to make arbitration 

agreements as enforceable as other contracts, not more so.” Id. (quotation omitted). 

As set forth above, Ameriprise has established the existence of valid arbitration 

agreements that are enforceable against the Farias Plaintiffs based on their status as 

third-party beneficiaries of the Account Agreements. Therefore, there is a presumption 

in favor of arbitration, and any doubts regarding the scope of those arbitration 

agreements are resolved in favor of arbitration. See id. 
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The Farias Plaintiffs argue that they rebutted this presumption and established 

that their claims are outside the scope of the arbitration agreements. Specifically, they 

contend that their claims are based solely on the Trust Decrees, not the Account 

Agreements. According to the Farias Plaintiffs, their claims are based on Ameriprise’s 

violation of the following provision in the Trust Decrees:

On application to and approval of the Court, the Trustee may disburse 

such amounts of the Trust principal, income or both as the Trustee

determines to be reasonably necessary for the health, education, support 

or maintenance of the Beneficiary.

However, we note that the Trust Decrees did not appoint Ameriprise as the trustee; 

rather, Javier Farias was appointed as the trustee. In their original petition, the Farias 

Plaintiffs allege that “[w]ithout notice to and unknown to the Plaintiffs, on multiple 

occasions, Defendant Ameriprise, without mandatory application and approval of the 

Court, wrongfully disbursed funds from the respective Trusts to the Trustee.” The 

Farias Plaintiffs further allege that the trustee, Javier Farias, then “cleared out” the trusts 

in violation of the Trust Decrees. In addition, the Farias Plaintiffs allege that Ameriprise 

breached fiduciary duties owed to them or, alternatively, aided and abetted Javier 

Farias’s breach of fiduciary duty.

Again, we note that the relevant inquiry is not whether the claims are based on 

the Account Agreements or the Trust Decrees; rather, the relevant inquiry is whether 

the claims fall within the scope of the arbitration provisions of the Account Agreements. 

See id. at 739. We conclude that they do because the arbitration provisions cover 

“[a]ny controversy arising out of . . . [or] relating to” the accounts. Clearly, the claims in 

this case fall within the scope of this broad language because the Farias Plaintiffs are 

alleging that Ameriprise wrongfully disbursed funds from the accounts to Javier Farias. 
10

Thus, the claims involve a controversy arising out of or relating to the accounts. 

Accordingly, we conclude that the claims against Ameriprise fall within the broad scope 

of the arbitration provisions in the Account Agreements. 

E. Ameriprise Met Its Burden under the FAA

In sum, we conclude that Ameriprise met its burden to prove (1) the existence of

valid arbitration agreements enforceable against the Farias Plaintiffs and (2) that the 

claims asserted by the Farias Plaintiffs fall within the scope of those arbitration 

agreements. See id. Therefore, the trial court abused its discretion in denying the 

motion to compel arbitration. Accordingly, we sustain Ameriprise’s issue on appeal.

III. CONCLUSION

The order of the trial court is reversed, and the case is remanded for further 

proceedings consistent with this opinion.

___________________

NORA L. LONGORIA

Justice

Delivered and filed the

21st day of November, 2013.