FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JASVIRO MUNDI, as successor in 

interest to Harnam Singh Mundi, No. 07-16171 Plaintiff-Appellee,

D.C. No.

v.  CV 06-1493 OWW

UNION SECURITY LIFE INSURANCE OPINION CO.,

Defendant-Appellant. 

Appeal from the United States District Court

for the Eastern District of California

Oliver W. Wanger, District Judge, Presiding

Argued and Submitted

December 9, 2008—San Francisco, California

Filed February 11, 2009

Before: A. Wallace Tashima, William A. Fletcher, and

Marsha S. Berzon, Circuit Judges.

Opinion by Judge Tashima

1673
COUNSEL

Shane Reich, Fresno, California, for the plaintiff-appellee. 

Kevin A. Rogers, Wells Marble & Hurst, Ridgeland, Mississippi, for the defendant-appellant. 

OPINION

TASHIMA, Circuit Judge: 

Union Security Life Insurance Company (“USLIC”)

appeals a decision of the district court denying its motion to

compel arbitration in its dispute with Jasviro Mundi, the

widow of Decedent Harnam S. Mundi. USLIC issued a life

insurance policy to cover a loan taken out by Decedent. The

life insurance policy did not contain an arbitration agreement;

however, the loan agreement, to which USLIC was not a

party, did contain an arbitration provision. The question,

therefore, is whether USLIC may enforce the arbitration

agreement, even though it is a nonsignatory to the agreement.

We have jurisdiction pursuant to 9 U.S.C. § 16, and we affirm

the district court’s denial of USLIC’s motion to compel arbitration. 

I.

In May 2004, Decedent and Gurdip S. Gill obtained a home

equity line of credit from Wells Fargo Bank, memorialized in

a document called the EquityLine Agreement. Section 25 of

the EquityLine Agreement required that “any dispute between

1676 MUNDI v. UNION SECURITY LIFE
me and the Bank, regardless of when it arises or arose, will

be settled using the following procedures.” The arbitration

provision provided as follows:

A dispute is any unresolved disagreement between

the Bank and me that relates in any way to accounts,

loans, services or agreements subject to this Arbitration provision. It includes any claims or controversy

of any kind, which arise out of or are in any way

related to these accounts, loans, services or agreements. It includes claims based on broken promises

or contracts, tort (injury caused by negligent or

intentional conduct), breach of fiduciary duty or

other wrongful actions. It also includes statutory,

common law and equitable claim [sic]. A dispute

also includes any disagreement about the meaning of

this Arbitration Section and whether a disagreement

is a “dispute” subject to binding arbitration as provided for in this Arbitration Section. No dispute may

be joined in an arbitration with a dispute of any other

person or arbitrated on a class action basis. Furthermore, I agree that any arbitration I have with the

Bank shall not be considered with any other arbitration and shall not be arbitrated on behalf of others

without the consent of both me and the Bank.

In conjunction with the line of credit, Decedent purchased

credit insurance in the amount of $50,000 to cover the amount

of the loan. The charges for the insurance were added to the

amount of the loan each month. Wells Fargo was the creditor

beneficiary of the insurance — the insurance certificate provided that claim payments would be made to the creditor beneficiary “to pay off or reduce your debt.” The certificate

contained two questions in a medical application section, and

it stated that the life insurance would not be paid if death

resulted from a pre-existing condition. The certificate further

provided that the insurance would stop on the date the loan

stopped, or on the date that the borrower was in default. 

MUNDI v. UNION SECURITY LIFE 1677
Following Decedent’s death, Mundi filed a claim with

USLIC, asking the insurer to pay the $50,000 amount that was

outstanding on the line of credit. USLIC denied the claim,

stating that Decedent had answered “no” to the medical questions on the insurance application, even though he did have

treatment for at least one of the pre-existing conditions listed

on the application. USLIC explained that it would not have

issued coverage if it had been aware of Decedent’s complete

medical history and therefore denied coverage. Decedent’s

death was not the result of any of these preexisting conditions.

Mundi filed a complaint in state court, alleging that she had

been damaged by USLIC’s refusal to pay the $50,000 to

Wells Fargo and that USLIC acted in bad faith by unreasonably denying the claim. She sought to recover the costs that

she had incurred and sought punitive damages. 

USLIC removed the action to federal court and filed a

motion to compel arbitration. The district court reasoned that,

even though the insurance was purchased in order to repay the

loan, Mundi’s claims did not in any other way involve the

terms of the EquityLine Agreement. The court further reasoned that the arbitration provision excluded the arbitration of

claims of third parties and that USLIC was not an agent of

Wells Fargo. The court accordingly denied the motion to

compel arbitration. USLIC timely appealed. 

II.

The question we must answer is whether USLIC, a nonsignatory to the arbitration agreement contained in the EquityLine Agreement, can require Mundi to arbitrate her claims

against USLIC.1 There is no question that the insurance certificate did not contain an arbitration provision. USLIC argues,

however, that Mundi’s claims are subject to the arbitration

1The denial of a motion to compel arbitration is reviewed de novo. Cox

v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008). 

1678 MUNDI v. UNION SECURITY LIFE
agreement because they arise from and relate to the EquityLine Agreement, and that equitable estoppel should be

applied to compel arbitration. 

[1] In determining whether parties have agreed to arbitrate

a dispute, we apply “general state-law principles of contract

interpretation, while giving due regard to the federal policy in

favor of arbitration by resolving ambiguities as to the scope

of arbitration in favor of arbitration.” Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996); see also First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)

(“When deciding whether the parties agreed to arbitrate a certain matter . . . , courts generally . . . should apply ordinary

state-law principles that govern the formation of contracts.”).

The presumption in favor of arbitration, however, does not

apply “if contractual language is plain that arbitration of a

particular controversy is not within the scope of the arbitration provision.” In re Tobacco Cases I, JCCP 4041, 21 Cal.

Rptr. 3d 875, 887 (Ct. App. 2004); see also AT&T Techs., Inc.

v. Commc’ns Workers, 475 U.S. 643, 648 (1986)

(“ ‘[A]rbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not

agreed so to submit.’ ” (quoting United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960))); Victoria v. Superior Court, 710 P.2d 833, 834 (Cal. 1985) (en

banc) (stating that “ ‘the policy favoring arbitration cannot

displace the necessity for a voluntary agreement to arbitrate’ ”

(quoting Wheeler v. St. Joseph Hosp., 133 Cal. Rptr. 775, 783

(Ct. App. 1976))); Crowley Mar. Corp. v. Boston Old Colony

Ins. Co., 70 Cal. Rptr. 3d 605, 611 (Ct. App. 2008) (“The

public policy favoring arbitration does not apply to disputes

the parties have not agreed to arbitrate.”). “In addition,

‘[h]owever broad may be the terms of a contract, it extends

only to those things concerning which it appears that the parties intended to contract.’ ” Victoria, 710 P.2d at 834 (quoting

Cal. Civ. Code § 1648) (alterations in original). 

[2] The arbitration provision here defines a dispute as a disagreement between Wells Fargo and the borrower that “reMUNDI v. UNION SECURITY LIFE 1679
lates in any way to accounts, loans, services or agreements

subject to this Arbitration provision.” Mundi’s dispute with

USLIC is not a disagreement between Wells Fargo and Decedent. Although there may be an attenuated relation between

the EquityLine Agreement and the dispute between USLIC

and Mundi, given that the insurance was taken out by

Mundi’s husband to pay off amounts owed under the EquityLine Agreement in the event of his death, this relation is irrelevant. The arbitration agreement is premised on a

disagreement between Wells Fargo and the borrower. In the

absence of such a disagreement, the arbitration provision does

not apply. Thus, any disagreement between the borrower and

a third party, such as USLIC, is simply not within the scope

of the arbitration agreement, even if it is related in some attenuated way to “accounts, loans, services or agreements” subject to the arbitration provision. Moreover, there is no

indication in the arbitration provision that the parties intended

to arbitrate or agreed to arbitrate a claim based on the insurance certificate. The face of the contract accordingly indicates

that this dispute “is not within the scope of the arbitration provision.” In re Tobacco Cases, 21 Cal. Rptr. 3d at 887. 

We turn therefore to USLIC’s argument that arbitration

should be compelled on the basis of equitable estoppel. General contract and agency principles apply in determining the

enforcement of an arbitration agreement by or against nonsignatories. Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th

Cir. 2006). “Among these principles are ‘1) incorporation by

reference; 2) assumption; 3) agency; 4) veil-piercing/alter

ego; and 5) estoppel.’ ” Id. (quoting Thomson-CSF, S.A. v.

Am. Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995)).2

2A nonsignatory also can seek to enforce an arbitration agreement as a

third party beneficiary. Comer, 436 F.3d at 1101. USLIC, however, does

not rely on third party beneficiary principles. Nor can it, because there is

no evidence in the EquityLine Agreement that the signatories to the agreement intended to benefit third parties. Id. at 1102. 

1680 MUNDI v. UNION SECURITY LIFE
[3] “Equitable estoppel ‘precludes a party from claiming

the benefits of a contract while simultaneously attempting to

avoid the burdens that contract imposes.’ ” Id. (quoting Wash.

Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 267 (5th Cir.

2004)). We have examined two types of equitable estoppel in

the arbitration context. In the first, a nonsignatory may be

held to an arbitration clause “where the nonsignatory ‘knowingly exploits the agreement containing the arbitration clause

despite having never signed the agreement.’ ” Id. (quoting E.I.

DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin

Intermediates, 269 F.3d 187, 199 (3d Cir. 2001)). Under the

second, a signatory may be required to arbitrate a claim

brought by a nonsignatory “because of the close relationship

between the entities involved, as well as the relationship of

the alleged wrongs to the non-signatory’s obligations and

duties in the contract and the fact that the claims were intertwined with the underlying contractual obligations.” DuPont,

269 F.3d at 201. 

[4] Neither line of cases addresses the precise situation we

face. Although DuPont addressed the issue of a nonsignatory

seeking to enforce an arbitration agreement against a signatory, in that case, it was a nonsignatory who brought claims

against the signatory, rather than the signatory bringing

claims against a nonsignatory. Comer itself addressed whether

a signatory to an arbitration agreement could enforce the

agreement against a nonsignatory. And, in light of the general

principle that only those who have agreed to arbitrate are

obliged to do so, we see no basis for extending the concept

of equitable estoppel of third parties in an arbitration context

beyond the very narrow confines delineated in these two lines

of cases. 

The Second Circuit addressed a situation similar to ours in

Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354 (2d

Cir. 2008), where the defendants, who were nonsignatories to

an arbitration agreement, sought to compel a signatory to arbitrate its claims against the defendants on estoppel grounds.

MUNDI v. UNION SECURITY LIFE 1681
The court examined cases in which a nonsignatory was

allowed to compel a signatory to arbitrate based on estoppel

and reasoned that it was “essential in all of these cases that the

subject matter of the dispute was intertwined with the contract

providing for arbitration.” Id. at 361. In addition to the

requirement that the factual issues be intertwined, the court

required “a relationship among the parties of a nature that justifies a conclusion that the party which agreed to arbitrate

with another entity should be estopped from denying an obligation to arbitrate a similar dispute with the adversary which

is not a party to the arbitration agreement.” Id. at 359. Finding

neither requirement met, the court affirmed the denial of the

motion to stay pending arbitration. Id. at 359-62. 

The Fourth Circuit also has addressed the situation of a

nonsignatory seeking to compel a signatory to arbitrate its

claims against the nonsignatory. In American Bankers Insurance Group, Inc. v. Long, 453 F.3d 623 (4th Cir. 2006), the

Longs, signatories to a contract that contained an arbitration

clause and that incorporated by reference a promissory note

purchased by the Longs, sued American Bankers Insurance

Group (“ABIG”), a nonsignatory to the agreement containing

the arbitration clause. The Fourth Circuit reversed the district

court’s denial of ABIG’s motion to compel arbitration, reasoning that all of the Longs’ claims depended on the terms of

the note. Id. at 630. Because the note was appended to and

incorporated by reference into the contract that contained the

arbitration agreement, the court held that “it would be inequitable to allow the Longs to seek recovery on their individual

claims and at the same time deny that ABIG was a party to

the [contract]’s arbitration clause.” Id. at 630. 

By contrast, in Brantley v. Republic Mortgage Insurance

Co., 424 F.3d 392 (4th Cir. 2005), the Fourth Circuit affirmed

the denial of the defendant nonsignatory’s motion to compel

the plaintiffs to arbitrate their claims against the defendant.

The plaintiffs entered into an arbitration agreement with their

mortgage lender, but their mortgage insurance contract, which

1682 MUNDI v. UNION SECURITY LIFE
was a separate transaction from the mortgage, did not contain

an arbitration agreement. The Fourth Circuit held that equitable estoppel did not apply to compel the plaintiffs to arbitrate

their Fair Credit Reporting Act claim against the mortgage

insurance company because the claim did not arise out of or

relate to the contract that contained the arbitration agreement.

Id. at 396. Rather, the plaintiffs’ claim was “wholly separate

from any action or remedy for breach of the underlying mortgage contract that is governed by the arbitration agreement.”

Id. The court further reasoned that there were no allegations

of collusion or misconduct by the mortgage lender to require

equitable estoppel, and that the defendant was not a third

party beneficiary of the arbitration agreement because the

contract did not mention the defendant or the mortgage insurance transaction. Id. at 396-97. 

[5] Mundi’s claim that USLIC breached the insurance policy is not “intertwined with the contract providing for arbitration” — the EquityLine Agreement. Sokol, 542 F.3d at 361;

see also Chastain v. Union Sec. Life Ins. Co., 502 F. Supp. 2d

1072, 1079-81 (C.D. Cal. 2007) (denying the insurer’s motion

to compel arbitration under equitable estoppel, reasoning that

the plaintiff’s claims regarding his insurance policies were not

intertwined with the credit card agreements that the policies

covered). Nor does her claim “ ‘arise[ ] out of’ ” or “ ‘relate[ ]

directly to’ ” the EquityLine Agreement. Brantley, 424 F.3d

at 396 (quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d

942, 947 (11th Cir. 1999)) (alterations in original). The resolution of her claim does not require the examination of any

provisions of the EquityLine Agreement. The EquityLine

Agreement does not mention the insurance certificate, let

alone incorporate it by reference, as in American Bankers. As

in Brantley, Mundi’s claim is based solely on USLIC’s

actions, and there are no allegations of collusion or of misconduct by Wells Fargo, the signatory to the arbitration agreement. Given these circumstances, USLIC may not compel

Mundi to arbitrate her claims against it. The order of the district court denying USLIC’s motion to compel arbitration is

MUNDI v. UNION SECURITY LIFE 1683
AFFIRMED.3

3Because we affirm the district court’s denial of USLIC’s motion to

compel arbitration, we need not address USLIC’s challenge to the district

court’s finding that USLIC waived its right to seek arbitration. 

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