Opinion ID: 174092
Heading Depth: 1
Heading Rank: 6

Heading: Third Party Beneficiary

Text: The Supreme Court of Missouri visited the issue of third party nonsignatories and arbitration again in Nitro Distributing, Inc. v. Dunn, 194 S.W.3d 339 (Mo.2006). The case involved claims against the Amway family of companies and related individuals. The Amway entities attempted to compel arbitration with Nitro and West Palm, companies owned by an Amway distributor which were not party to any of the Amway agreements signed by the distributor. The court set forth the law with regard to third party beneficiaries as follows: To be bound as a third-party beneficiary, the terms of the contract must clearly express intent to benefit that party or an identifiable class of which the party is a member. In cases where the contract lacks an express declaration of that intent, there is a strong presumption that the third party is not a beneficiary and that the parties contracted to benefit only themselves. Furthermore, a mere incidental benefit to the third party is insufficient to bind that party. Here, the Amway distributorship agreement expresses no intent whatsoever to benefit Nitro and West Palm, and any benefit obtained from the agreement, if at all, was incidental. Accordingly, Nitro and West Palm are not third-party beneficiaries. Id. at 345. There is no evidence that form U-4, the FINRA membership agreement, in any way referenced BOA as a third party beneficiary or that it contained any language benefitting a third party in BOA's position. BOA did not derive any benefit from the FINRA memberships at issue here. It could not even hire FINRA members in their FINRA capacities, because it was not a member of FINRA. BOAIS derived that benefit from the contract, not BOA. In Nitro, the nonsignatory's entire purpose for existing was to provide support for an Amway distributorship (the distributor owned all three companies) and the Missouri Supreme Court found the benefit those companies derived from the Amway operating agreements was incidental if it existed at all. BOA is not a third party beneficiary to any of the FINRA membership contracts such that it could be compelled to arbitrate based on the arbitration provisions contained therein. The district court did not err when it denied the motion to compel BOA to arbitrate its claims against UMB and the individual appellants. BOA did not agree in writing or otherwise to arbitrate claims with any of them and cannot be compelled to do so.