Affirmed and Majority and Dissenting Opinions filed July 10, 2018.

In The 

Fourteenth Court of Appeals 

NO. 14-18-00003-CV

SHAFQAT ALI A/K/A MICHAEL ALI, INDIVIDUALLY AND AS FIRST 

ALTERNATE INDEPENDENT EXECUTOR OF THE ESTATE OF AMJAD 

“A.J.” SULTAN, DECEASED, Appellant 

V.

DARLENE PAYNE SMITH, SUCCESSOR ADMINISTRATOR WITH 

WILL ANNEXED OF THE ESTATE OF AMJAD “A.J.” SULTAN, 

DECEASED, Appellee 

On Appeal from the Probate Court No. 3 

Harris County, Texas 

Trial Court Cause No. 448,030-402 

M A J O R I T Y O P I N I O N 

This is an appeal from the denial of a motion to compel arbitration based on 

an arbitration clause contained in a will. Darlene Payne Smith is the successor 

administrator with will annexed for the estate of Amjad “A.J.” Sultan. Smith 
2

brought this underlying action against Shafqat “Michael” Ali, the former 

independent executor for the estate, alleging that Ali failed to responsibly handle 

the finances of the estate, converted assets of the estate, and used estate funds in 

violation of his fiduciary duties. 

Ali filed a motion to compel arbitration based on an arbitration provision 

contained in Sultan’s will. The trial court denied the motion, and Ali brings this 

interlocutory appeal. 

In this appeal, we assume that courts must enforce a testator’s intent, as 

reflected in the will, that “all disputes” between executors and their successors be 

resolved through binding arbitration. But, because the Texas Arbitration Act 

requires the party seeking to compel arbitration to show the existence of an 

“agreement” to arbitrate, courts may not compel arbitration under the Act unless 

the will is “supported by the mutual assent required to render the [will] an 

agreement and the arbitration provision valid.” See Rachal v. Reitz, 403 S.W.3d 

840, 845 (Tex. 2013) (enforcing arbitration provision in a trust based on theory of 

direct-benefits estoppel). 

We hold that Ali failed to meet his burden to show the existence of a valid 

arbitration agreement amongst non-signatories based on a theory of direct-benefits 

estoppel. Thus, the trial court did not err, and we affirm. 

Background 

In the will, Sultan appointed Ali as one of several alternate independent 

executors. After Sultan’s death, the trial court appointed Ali as the independent 

executor. Ali resigned from the position after Sultan’s adult son applied for a 

temporary restraining order and injunction against Ali for alleged mismanagement 

of the estate, breaches of fiduciary duties, failures to distribute estate property, and 
3

a failure to establish a testamentary trust for Sultan’s minor children. The trial 

court signed an order stating that Ali resigned as the independent executor, that no 

subsequent named executors were suitable to serve, and that the parties agreed to 

the appointment of a third party as a successor administrator with will annexed. 

The court appointed Smith as the administrator. 

Smith then brought this underlying action against Ali. Under the heading 

“facts” in the petition, Smith alleges that Ali (1) “failed to responsibly handle the 

finances of the estate”; (2) “caused the Estate to be damaged and caused 

unnecessary expenses”; and (3) “refused to produce or file an accounting in the 

estate, in any form.” Smith also alleges that assets of the estate that came into Ali’s 

possession “have been wasted, misappropriated, converted or otherwise disposed 

of inappropriately by Defendant Ali.” 

Under the heading “declaratory judgment,” Smith requests a declaratory 

judgment as follows: 

Darlene Payne Smith, as Successor Administrator with Will 

Annexed, seeks a declaratory judgment against Defendant Ali, as 

former Independent Executor of the Estate, for a finding that he has 

failed to perform or has committed the following acts: 

1. Failed to responsibly handle the finances of the estate and 

related entities; 

2. Converted assets of the Estate to his own personal use; and 

3. Used estate funds in violation and dereliction of his 

fiduciary duties; 

The above described acts of Defendant Ali constitute failure on his 

part to carry out the duties and responsibilities of his position as 

former Independent Executor of the Estate. By his actions, Defendant 

Ali has failed to well and truly perform his duties and obligations as 

Independent Executor, thereby causing damage to the Estate in the 

amount of at least $250,000.00. 
4

 Ali filed a motion to compel arbitration based on the following provision in 

the will: 

If a dispute arises between or among any of the beneficiaries of my 

estate, the beneficiaries of a trust created under my Will, the Executor 

of my estate, or the Trustee of a trust created hereunder, or any 

combination thereof, such dispute shall be resolved by submitting the 

dispute to binding arbitration. It is my desire that all disputes between 

such parties be resolved amicably and without the necessity of 

litigation. 

Ali argued that the Texas Arbitration Action, Tex. Civ. Prac. & Rem. 

Code §§ 171.001–.098, required arbitration although the parties were nonsignatories to the will. 

Ali referred to the doctrine of direct-benefits estoppel in the motion and 

elaborated in his later reply in support of his motion that Smith “accepted benefits 

under the Will, including her claims, compensation and payment of attorneys’ 

fees.” Ali attached the trial court’s “order authorizing appointee fees,” in which the 

trial court authorized Smith to collect $51,777.07 from the funds of the estate for 

reasonable compensation of necessary services in her position as successor 

administrator with will annexed. 

Ali also argued in the reply in support of his motion that Smith’s claim was 

within the scope of the arbitration provision because the will defines “Executor” 

broadly to include “successors” such as Smith. The will provides: 

Unless another meaning is clearly indicated or required by context or 

circumstances, the term “Executor” or “Trustee” shall also mean and 

include any Co-Executors, Co-Trustees, alternates, or successors. 

 After a hearing, at which the trial court took judicial notice of the court’s 

file, the trial court signed an order denying Ali’s motion to compel arbitration. Ali 

brings this appeal with the following issues presented: 
5

1. Does the Texas General Arbitration Act or any other statute or case 

precedent bar arbitration clauses in a will, which governs fiduciary 

duties, and successor administrators or executors, and does the 

Successor cite any law to support her position in the Court Record 

of the Underlying Suit? 

2. Can the successor administrator of the Estate of Amjad “A.J.” 

Sultan receive compensation under the Will, bring claims under the 

Will of Amjad “A.J.” Sultan, and enforce the provisions of the 

Will while simultaneously refusing to comply with its arbitration 

provision?

3. Are the claims raised within the arbitration provision’s scope when 

the Will provides that executor includes alternates and successors 

and the claim is “by or among” the Successor and the Former 

Executor? 

4. Did the Court abuse its discretion in denying the Appellant’s 

Motion? 

Direct-Benefits Estoppel 

Ali’s second issue is dispositive, so we need not address whether there is any 

categorical bar to arbitration provisions in wills, or whether Smith’s claims are 

within the scope of the arbitration provision. See Tex. R. App. P. 47.1 

In his second issue, Ali contends that the trial court erred by not enforcing 

the will’s arbitration clause under the Texas Arbitration Act amongst nonsignatories. He contends that the arbitration clause is enforceable under the 

doctrine of direct-benefits estoppel because Smith has (1) “enforced the will” and 

brought claims against Ali “for failing to comply with the will” and (2) “received 

appointee fees.” 

I. Standard of Review and Legal Principles 

Ali, as the party seeking to compel arbitration, has the burden to show the 

existence of (1) a valid arbitration agreement and (2) a dispute within the scope of 

the agreement. See Rachal v. Reitz, 403 S.W.3d 840, 843 (Tex. 2013). We review 
6

de novo whether an arbitration agreement is enforceable. Id. No presumption in 

favor of arbitration arises until the party seeking to compel arbitration proves that a 

valid arbitration agreement exists. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 

223, 227 (Tex. 2003). Whether an arbitration agreement is binding on a nonsignatory implicates the issue of whether there is a valid arbitration agreement. See 

ENGGlobal U.S., Inc. v. Gatlin, 449 S.W.3d 269, 274 (Tex. App.—Beaumont 

2014, no pet.) (citing In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 

2005)); see also Rachal, 403 S.W.3d at 849–50 (determining first whether the 

arbitration provision was enforceable against a non-signatory, and then whether the 

dispute was within the scope of the agreement). 

The language of the Texas Arbitration Act indicates a legislative intent to 

enforce arbitration provisions in “agreements.” Rachal, 403 S.W.3d at 845. An 

agreement is a manifestation of mutual assent by two or more persons. Id.

“Typically, a party manifests its asset by signing an agreement.” Id.; see also In re 

Rubiola, 334 S.W.3d 220, 224 (Tex. 2011) (noting that generally “parties must 

sign arbitration agreements before being bound by them”).1

 Ali and Smith agree 

that they are not signatories to the will. 

But the Texas Supreme Court has “found assent by nonsignatories to 

arbitration provisions when a party has obtained or is seeking substantial benefits 

under an agreement under the doctrine of direct benefits estoppel.” Rachal, 403 

S.W.3d at 845–46. See generally Jody James Farms, JV v. Altman Grp., No. 17-

0062, 2018 WL 2168306, at *4 (Tex. May 11, 2018) (reciting various theories for 

non-signatories to be bound by arbitration agreements). This doctrine precludes a 

plaintiff from seeking to hold a defendant liable based on the terms of an 

 

1 We refer to cases concerning the Federal Arbitration Act in this case involving the 

Texas Arbitration Act because state law governs whether a litigant has agreed to arbitrate. See In 

re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005).
7

agreement that contains an arbitration provision while simultaneously asserting the 

provision lacks force because the plaintiff or defendant is a non-signatory. See 

Jody James Farms, 2018 WL 2168306, at *7 (defendant non-signatory); see also 

In re Weekley Homes, 180 S.W.3d at 131–32 (plaintiff non-signatory). “When a 

claim depends on the contract’s existence and cannot stand independently—that is, 

the alleged liability arises solely from the contract or must be determined by 

reference to it—equity prevents a person from avoiding the arbitration clause that 

was part of that agreement.” Jody James Farms, 2018 WL 2168306, at *7 

(footnote and quotation omitted). On the other hand, “when the substance of the 

claim arises from general obligations imposed by state law, including statutes, torts 

and other common law duties, or federal law, direct-benefits estoppel is not 

implicated even if the claim refers to or relates to the contract or would not have 

arisen but for the contract’s existence.” Id. (quotation omitted). 

Additionally, a non-signatory may be compelled to arbitrate if they 

deliberately seek or obtain substantial benefits from the contract by a means other 

than the lawsuit itself. See In re Weekley Homes, 180 S.W.3d at 132; see also D.R. 

Horton-Emerald, Ltd. v. Mitchell, No. 01-17-00426-CV, 2018 WL 542403, at *8 

(Tex. App.—Houston [1st Dist.] Jan. 25, 2018, no pet.) (mem. op.) (referring to 

this principle as the “second avenue” for binding a non-signatory to an arbitration 

agreement through direct-benefits estoppel). This analysis focuses on the nonsignatory’s “conduct during the performance of the contract.” In re Weekley 

Homes, 180 S.W.3d at 132–35 (applying direct-benefits estoppel to a nonsignatory because, although her personal injury claim was not based on the 

contract, she consistently and knowingly exercised other rights emanating from the 

contract). This doctrine will not apply if the benefits are either insubstantial or 

indirect. Id. at 134. 
8

II. Application of Direct-Benefits Estoppel to Smith 

The parties do not cite any Texas case addressing arbitration in the context 

of administering a will.2

 The most instructive case from the Texas Supreme Court 

is Rachal v. Reitz, in which direct-benefits estoppel applied to a beneficiary of a 

trust who sued the trustee. See 403 S.W.3d at 847–48. The court held that a nonsignatory “who attempts to enforce rights that would not exist without the trust 

manifests her assent to the trust’s arbitration clause.” Id. at 847. 

In particular, the Rachal court considered the fact that the beneficiary did not 

disclaim an interest in the trust and that he claimed he was entitled to profits that 

would accrue to the trust estate. Id. The Rachal court looked further to the 

beneficiary’s allegations in the lawsuit. See id. The beneficiary claimed that the 

trustee had “materially violated the terms of the Trust and his fiduciary duty by 

failing to account to the beneficiary and . . . ha[d] materially violated th[e] terms of 

the Trust by his conversion of the Trust assets which has resulted in material 

financial loss to the Trust.” Id. (omission in original). The court held that the 

beneficiary accepted the benefits of the trust and sued to enforce the terms of the 

trust; thus, he accepted the terms and validity of the trust, including the arbitration 

 

2 Smith contends that due to the lack of Texas authority, it is an “unsettled question of 

whether arbitration should be applied in the context of a will.” We assume without deciding that 

arbitration clauses within wills are generally enforceable, and we decide only the narrower issue 

of whether Ali has proven arbitrability as to a non-signatory administrator under a theory of 

direct-benefits estoppel. Despite the dearth of authority, the inclusion of an arbitration clause in a 

will is nothing new. See George Washington, George Washington’s Last Will and Testament

(July 9, 1799), in 4 The Papers of George Washington, Retirement Series, 20 April 1799 – 13 

December 1799, at 479–511 (W. W. Abbot ed., 1999) (“My Will and direction expressly is, that 

all disputes (if unhappily any should arise) shall be decided by three impartial and intelligent 

men, known for their probity and good understanding; two to be chosen by the disputants—each 

having the choice of one—and the third by those two. Which three men thus chosen, shall, 

unfettered by Law, or legal constructions, declare their sense of the Testators intention; and such 

decision is, to all intents and purposes to be as binding on the Parties as if it had been given in 

the Supreme Court of the United States.”), available at http://founders.archives.gov

/documents/Washington/06-04-02-0404-0001.
9

clause. See id. The non-signatory beneficiary was compelled to arbitrate under the 

theory of direct-benefits estoppel. See id. at 842. 

In this case, however, Smith contends that her claims against Ali derive from 

statutes and common law, irrespective of the will. And Smith contends that, to the 

extent her claims theoretically could be determined by reference to the will, Ali 

failed to meet his burden to prove direct-benefits estoppel. We agree with Smith. 

As noted above, Smith alleges in the petition that Ali (1) “Failed to 

responsibly handle the finances of the estate”; (2) “Converted assets of the Estate 

to his own personal use”; and (3) “Used estate funds in violation and dereliction of 

his fiduciary duties.” Unlike the beneficiary in Rachal who alleged violations of 

the trust terms, Smith does not allege in the petition that Ali violated any terms of 

the will. Rather, Smith contends that her claims are based on common law and 

statutory provisions such as Sections 351.001 and 351.101 of the Estates Code: 

The rights, powers, and duties of executors and administrators are 

governed by common law principles to the extent that those principles 

do not conflict with the statutes of this state.

Tex. Estates Code § 351.001. 

An executor or administrator of an estate shall take care of estate 

property as a prudent person would take of that person’s own 

property . . . .

Id. § 351.101. An executor such as Ali also has a statutory duty to deliver the 

property of the estate to a successor representative such as Smith. See id.

§ 351.102(b). And, Smith alleges in the petition that this action was brought 

pursuant to Section 361.153, which provides that a successor representative is 

“entitled to any order or remedy that the court has the power to give to enforce the 

delivery of the estate property” to the successor representative. See id. § 

361.153(b); see also id. § 361.153(c) (granting successor representative the power 
10

to make himself or herself a party to a suit prosecuted against the successor’s 

predecessor and to settle with the predecessor). 

The fiduciary duty that an executor or administrator owes to the estate is 

derived from the statutes and common law. See Mohseni v. Hartman, 363 S.W.3d 

652, 656–57 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing predecessor 

statute); see also Humane Soc’y of Austin & Travis Cty. v. Austin Nat’l Bank, 531 

S.W.2d 574, 577 (Tex. 1975) (“As trustee of the property of the estate, the 

executor is subject to the high fiduciary standards applicable to all trustees.”). As 

the Texas Supreme Court explained when it rejected the defendant’s assertion of 

direct-benefits estoppel in Jody James Farms, “A fiduciary duty generally arises 

from the relationship of the parties and not from the contract.” 2018 WL 2168306, 

at *8–9 (holding that direct-benefits estoppel did not apply to breach of fiduciary 

duty claim brought by an insured against an insurance agent when the insurance 

policy contained an arbitration clause because, although the claim referred to the 

insurance policy, liability was not determined by reference to the policy) 

The plain language of the statutes impose duties on both executors and 

administrators, but executors and administrators are not the same. An executor is 

named in a will, while an administrator with will annexed is not. The source of the 

executor’s power to act is the will. The source of an administrator’s power to act is 

the statutes and the court. See Loewenstein v. Watts, 119 S.W.2d 176, 184–85 

(Tex. Civ. App.—El Paso 1938) (op. on reh’g) (reasoning that an administrator 

with will annexed does not have the powers conferred upon an independent 

executor named in the will, and that administrators do not resort to the will for the 

source of their power to act, but “they, being creatures of the statutes, have no 

powers except those conferred by statutes”), aff’d, 137 S.W.2d 2 (Tex. 1940); see 

also Frisby v. Withers, 61 Tex. 134, 138 (Tex. 1884) (noting that an executor may 
11

have discretionary powers under a will that are personal to the named executor, 

which cannot be exercised by a successor administrator with will annexed). 

Nothing in Smith’s petition indicates that Ali’s liability need be determined 

by reference to the will, even though he would not have been an executor “but for” 

the will. The substance of the claims arise from general duties imposed by statutes 

and the common law. See Jody James Farms, 2018 WL 2168306, at *7–8; see also

Mohseni, 363 S.W.3d at 656–57. Smith has not alleged that Ali violated any terms 

of the will, so this theory of direct-benefits estoppel is inapplicable. Cf. Rachal, 

403 S.W.3d at 847–48 (direct-benefits estoppel applied to fiduciary duty claim 

because the non-signatory alleged violations of the terms of the trust). 

Furthermore, if Smith’s petition is unclear about whether Ali’s liability will 

be determined by reference to the will, the trial court did not err by concluding that 

Ali failed to meet his burden to show the existence of an arbitration agreement that 

is enforceable against Smith. See D.R. Horton-Emerald, Ltd. v. Mitchell, No. 01-

17-00426-CV, 2018 WL 542403, at *6–8 (Tex. App.—Houston [1st Dist.] Jan. 25, 

2018, no pet.) (mem. op.) (holding that the defendant failed to prove arbitrability 

based on direct-benefits estoppel when the plaintiffs’ petition did not specify a 

particular cause of action, and the defendant did not file special exceptions to 

request greater specificity or otherwise show that the plaintiffs’ construction-defect 

claim relied on a duty found in the building contract); ENGlobal U.S., Inc. v. 

Gatlin, 449 S.W.3d 269, 277–78 (Tex. App.—Beaumont 2014, no pet.) (holding 

that a the defendant failed to prove arbitrability based on direct-benefits estoppel 

when the plaintiff’s premises liability claim against the defendant depended on 

proof that the defendant controlled the premises, and the defendant claimed that the 

plaintiff’s proof of control was based on a contract containing an arbitration 

provision; but the petition did not allege that control was based on the contract 
12

rather than actual control, and the defendant did not file special exceptions to 

request greater specificity); Glassell Producing Co. v. Jared Res., Ltd., 422 S.W.3d 

68, 83 & n.13 (Tex. App.—Texarkana 2014, no pet.) (holding that the defendants 

did not prove arbitrability based on direct-benefits estoppel for various claims 

sounding in tort and contract when the plaintiff’s pleadings were vague, the source 

of the obligations for the claims was not clear, and the defendants failed to file 

special exceptions to request greater specificity). 

Under the second avenue for proving direct-benefits estoppel, Ali contends 

that Smith has obtained a benefit from the will by collecting “appointee fees” from 

the estate. Smith contends that she was entitled to the fees by statute, not the will. 

See Tex. Estates Code § 352.051 (entitling a “personal representative” to necessary 

and reasonable expenses and attorney’s fees). We agree with Smith. 

The trial court’s order authorizing Smith to collect appointee fees does not 

state that Smith collected a benefit under the will. And, the authorizing statute does 

not make a distinction based on the existence of a will. See id.; see also 

id. § 22.031(a) (defining “personal representative” as including “(1) an executor 

and independent executor; (2) an administrator, independent administrator, and 

temporary administrator; and (3) a successor to an executor or administrator listed 

in Subdivision (1) or (2).”). 

Because the trial court awarded fees and expenses to Smith without 

reference to the will, Ali has not shown that Smith deliberately sought or obtained 

substantial benefits from the will by a means other than the lawsuit. See In re 

Weekley Homes, 180 S.W.3d at 132. 
13

Ali’s second issue is overruled.3

Conclusion 

Having overruled Ali’s dispositive issue, we affirm the trial court’s order 

denying Ali’s motion to compel arbitration. 

 

 /s/ Ken Wise 

 Justice 

Panel consists of Justices Jamison, Wise, and Jewell. (Jamison, J., dissenting).

 

3

In his reply brief on appeal and at oral argument, Ali suggested that the administrator’s 

taking of the oath under Section 305.051 of the Estates Code showed assent or amounted to 

“ratification” of the will. See Tex. Estates Code § 305.051. This argument was not presented to 

the trial court and is not preserved. See Santander Consumer USA, Inc. v. Mata, No. 03-14-

00782-CV, 2017 WL 1208767, at *3 (Tex. App.—Austin Mar. 29, 2017, no pet.) (mem. op.) 

(party seeking to compel arbitration failed to preserve error from trial court’s denial of motion to 

compel when argument on appeal did not comport with argument to the trial court); see also Tex. 

R. App. 33.1; Bruce v. Cauthen, 515 S.W.3d 495, 511 (Tex. App.—Houston [14th Dist.] 2017, 

pet. denied).