Opinion ID: 1648193
Heading Depth: 3
Heading Rank: 1

Heading: It is irrelevant whether plaintiff's claims arise out of or relate to Ms. Hilliard's accounts, to transactions by Mr. Scudder or Smith Barney, or to the Client Agreements.

Text: ¶ 28. The majority asserts Henry's claims arise out of or relate to Hilliard's accounts with Smith Barney, and are therefore, subject to the arbitration agreement, citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 406, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). Henry's claims emanate not from her status as a direct beneficiary of the agreement, but rather from her interest in the trust established by Hilliard's will. The fact that the corpus of the trust originated by virtue of the Hilliard SBI agreements is not determinative of the arbitrability of the issues within her complaint. Tracer Research Corp. v. National Envtl. Servs. Co., 42 F.3d 1292, 1295 (9th Cir.1994) (citing Armada Coal Exp., Inc. v. Interbulk, Ltd., 726 F.2d 1566, 1568 (11th Cir.1984)). ¶ 29. In addition, the three cases the majority cites, Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1114 (3rd Cir.1993); Trott v. Paciolla, 748 F.Supp. 305 (E.D.Pa.1990); and Levine v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 639 F.Supp. 1391, 1397 (S.D.N.Y. 1986), to support the claim that broadly worded arbitration provisions in securities agreements with brokerage houses have been held by courts to compel arbitration concern arbitration agreements that remained open and were not closed pursuant to a court order to transfer these funds to an estate. These examples do not apply to this case as the accounts here were not to remain open but were to go to the account of the estate for the creation of the trust. ¶ 30. While the claims asserted in Henry's complaint are related to the very funds once deposited in Hilliard's Smith Barney accounts, they should not be governed by the arbitration agreement. The agreement is to be given effect as it is written. The agreement should follow the parties, but not the funds. To rule otherwise would tie those specific funds, and whoever came into possession of them, to an arbitration agreement they never signed or contemplated. While the agreement does address assignments from Henry to a third party, the agreement is silent on transfers from that third party to another party. The funds in Hilliard's accounts were transferred to the estate and then the estate applied those funds to establish the trust. At this point the trust beneficiary steps in the shoes of an unintended third party as to the account agreements. The funds could have just as easily paid a creditor rather than establish a trust for Henry. Therefore, the agreement follows only the parties specified and not the funds themselves.