Opinion ID: 1903703
Heading Depth: 2
Heading Rank: 1

Heading: Third-Party-Beneficiary Status

Text: The first means by which Allen could be forced to arbitrate her claims against Cook's would be under a theory that she is a third-party beneficiary to the contract. This Court has on several occasions addressed the issue of when a nonsignatory to a contract can be bound by an arbitration agreement contained therein. In Georgia Power Co. v. Partin, 727 So.2d 2 (Ala.1998), an employee sued, alleging negligence, wantonness, and breach of contract against the owner and operators of a loading facility; the trial court refused to enforce an arbitration agreement contained in the contract. This Court stated the general rule that [i]t is ... clear that a third-party beneficiary cannot accept the benefit of a contract, while avoiding the burdens or limitations of that contract. 727 So.2d at 5. Because the plaintiff had specifically invoked the contract as a basis for his action, he could not avoid certain elements of the contract. Justice Shores, in her dissent, expressed the implicit holding of that case when she wrote that the plaintiffs could have avoided arbitration by not amending their complaint to state a contract claim. Id. at 8. This Court had earlier analyzed the issue whether a third-party beneficiary could be compelled to arbitrate, in Ex parte Dyess, 709 So.2d 447 (Ala.1997). Because Dyess had sued upon a contract, this Court held that he could not avoid the arbitration clause found therein. We also noted that `[a] party claiming to be a third-party beneficiary of a contract must establish that the contracting parties intended, upon execution of the contract, to bestow a direct, as opposed to an incidental, benefit upon the third party.' Id. at 450 (quoting Weathers Auto Glass, Inc. v. Alfa Mut. Ins. Co., 619 So.2d 1328, 1329 (Ala.1993)). See also Ex parte Stamey, 776 So.2d 85 (Ala.2000) (holding that the intent of the parties as expressed in the contract determines whether a nonsignatory is a third-party beneficiary). Cook's also relies on our recent opinion in Capitol Chevrolet & Imports, Inc. v. Grantham, 784 So.2d 285 (Ala.2000), for the proposition that a third party's claims can be so dependent upon a contract that a mere disavowal of third-party-beneficiary status cannot defeat a properly supported motion to compel arbitration. Under the facts of Grantham, that was the correct conclusion. However, under the facts of this present case, it appears Allen relies on theories of recovery that do not depend upon the existence of the contract. To the extent that she can prove the prima facie elements of her case against Cook's without reference to the contract between Cook's and Knollwood, she is not bound by the arbitration agreement. Allen has specifically disavowed any status as a third-party beneficiary. Allen amended her complaint to remove any reference to her being a third-party beneficiary, the trial court allowed the amendment, and Cook's has not attempted to have this Court review the order allowing that amendment. Because Allen has not invoked the benefits of the contract, she cannot be considered a third-party beneficiary; thus, she is not burdened by the contract and cannot be compelled to arbitrate her claims against Cook's under a third-party-beneficiary theory.