Opinion ID: 1648193
Heading Depth: 2
Heading Rank: 2

Heading: whether the plaintiff's claims are subject to the arbitration provisions in the client agreements.

Text: ¶ 12. Henry asserts that her claims do not depend upon the formation of the agreements between Smith Barney and Hilliard nor upon Smith Barney's management of these accounts pursuant to its duties to Hilliard under the agreements. Rather, she argues that her basis in the claim goes to the assets of the Hilliard estate and Smith Barney's fiduciary duties to the estate, notwithstanding the fact that such assets were earlier the corpus of Hilliard's personal individual and IRA accounts during her lifetime. The appellants argue that this controversy falls within the broad language of the arbitration agreements. ¶ 13. In Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 406, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), the United States Supreme Court labeled the nearly identical language, any controversy or claim arising out of or related to this agreement, a broad arbitration clause that covered both the execution and acceleration of an agreement. Similar broadly worded arbitration provisions in securities agreements with brokerage houses have been held by courts to compel arbitration. See, e.g., Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1114 (3rd Cir.1993) (noting that courts have broadly construed similar agreement); Trott v. Paciolla, 748 F.Supp. 305 (E.D.Pa. 1990) ( a similar arbitration agreement contained broad sweeping terms [that] clearly encompass claims related to the [customer at issue]); Levine v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 639 F.Supp. 1391 (S.D.N.Y.1986) (enforcing a similar agreement, finding that it is difficult to imagine language broader than the phrase any controversy). ¶ 14. All of the funds which are the subject of Henry's claims were derived directly from Hilliard's accounts and transactions with Smith Barney. Thus, Henry's claims would certainly be encompassed by the broad phrase [a]ny controversy arising out of or relating to those accounts as indicated in the arbitration clauses of the Client Agreements. Furthermore, the alleged removal and closure of the funds at issue by Scudder and Cospelich constitute transactions with Smith Barney which also trigger the arbitration agreements. Clearly Henry's claims arise out of or relate to Hilliard's accounts or transactions with Smith Barney and Scudder and, therefore, are subject to the arbitration agreements.
¶ 15. Henry argues that she is not bound by the arbitration agreements because the obligation to arbitrate terminated with the closing of the Smith Barney accounts. She also argues that Hilliard did not intend for the agreements to survive her death. The appellants argue that the arbitration agreements survived Hilliard's death and the alleged termination of the Smith Barney accounts. ¶ 16. The death of a party to an agreement to arbitrate future disputes does not invalidate the agreement. If the agreement, on its face, evidences a clear intent that such disputes should be arbitrated, the court is bound to uphold the intent of the parties. See In re Scott, 200 A.D. 599, 193 N.Y.S. 403 (N.Y.App.Div.), aff'd mem., 234 N.Y. 539, 138 N.E. 438 (1922). ¶ 17. Henry's claims arise out of Hilliard's accounts. The termination of these accounts does not also terminate the arbitration agreement. Rather, Henry's claims arising out of the termination of the Smith Barney accounts constitute a transaction with Smith Barney, thereby triggering the arbitration agreements. We find that the arbitration agreements were not revoked by the death of Hilliard nor by the closure of the Smith Barney accounts, and are, therefore, enforceable against Henry.
¶ 18. Henry argues that she is a non-signatory, unintended, third-party beneficiary of the agreements and therefore not bound by the arbitration clauses. The agreements plainly state that they are binding on Hilliard's heirs, successors and administrators.... ¶ 19. Other states have interpreted nearly identical agreements in favor of arbitration. In Collins v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 561 So.2d 952, 956 (La.Ct.App.1990), the Louisiana Court of Appeals held that the heirs and successors of a deceased customer of a brokerage firm were bound by the arbitration agreement signed by the customer and the firm. The court stated: We find no merit in plaintiff's argument that they are not bound by the arbitration clause because the Customer Agreement was not signed by them, but by their brother.... By its own terms, the agreement applies to the successors and assigns of the customer. Moreover, we have held that a written agreement to arbitrate does not necessarily have to be signed by both parties. Collins, 561 So.2d at 955. Also, in Herbert v. Superior Court, 169 Cal.App.3d 718, 215 Cal.Rptr. 477 (Cal.Ct.App.1985), the California appellate court held that a widow and her children were bound by an arbitration agreement signed by the children's father which purported to bind his heirs. Likewise, in this case, Henry is an heir of Hilliard. ¶ 20. In the case at hand, we are dealing with an arbitration clause in which Henry is a successor under the terms of Hilliard's will, and as such, she is specifically covered by the agreement. According to the terms of the agreement, Henry is not required to be a signatory in order to be bound by the arbitration clause. As a successor of Hilliard, Henry is covered by the arbitration clause of the client agreements.