Court Opinion

ID: 624875
Source: CourtListenerOpinion
Date Created: 2012-03-08 16:35:02+00
Date Added: 2024-06-11T17:51:08.858346
License: Public Domain

10-2310-cv, 11-0742-cv
     Bonnant v. Merrill Lynch

 1                                UNITED STATES COURT OF APPEALS
 2                                    FOR THE SECOND CIRCUIT
 3
 4                                        SUMMARY ORDER
 5
 6   RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
 7   A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
 8   GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
 9   LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
10   THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
11   ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
12   A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
13   COUNSEL.
14
15          At a stated term of the United States Court of Appeals for the Second Circuit, held at the
16   Daniel Patrick Moynihan Courthouse, 500 Pearl Street, in the City of New York, on the 8th day
17   of March, two thousand twelve.
18
19   Present:
20                Pierre N. Leval,
21                Rosemary S. Pooler,
22                              Circuit Judges,
23                Denise L. Cote*,
24                              District Judge.
25
26   ________________________________________________
27
28   Marc Bonnant,
29
30                Plaintiff-Appellant,
31
32                          v.                                       Nos. 10-2310-cv, 11-0742-cv
33
34   Merrill Lynch, Pierce, Fenner & Smith, Inc.,
35   Merrill Lynch Capital Services, Inc,
36
37                Defendants-Appellees.
38

              *
           The Honorable Denise L. Cote, United States District Judge for the Southern District of
     New York, sitting by designation.
 1   ________________________________________________
 2
 3   For Plaintiff-Appellant:                  DAVID J. HOFFMAN, Law Offices of David J. Hoffman,
 4                                             New York, NY.
 5
 6   For Defendants-Appellees:        DAVID J. LIBOWSKY (Brian F. Amery, Dominick F.
 7                                    Evangelista, on the brief), Bressler, Amery & Ross,
 8                                    P.C., New York, NY.
 9   ________________________________________________
10
11           Appeal from the United States District Court for the Southern District of New York

12   (Sullivan, J.).

13           ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and

14   DECREED that the judgment of the district court dated May 18, 2010, be and hereby is

15   VACATED and REMANDED.

16           Plaintiff Marc Bonnant appeals from the district court’s grant of summary judgment in

17   favor of Defendants Merrill Lynch, Pierce, Fenner & Smith, Inc. (hereinafter “Merrill Lynch”)

18   and Merrill Lynch Capital Services, Inc., directing Bonnant to arbitrate a claim brought against

19   him by Defendants. The district court held that, in signing a contract between Sophin

20   Investments, S.A. and Merrill Lynch to open an International Cash Management Account for

21   Sophin at Merrill Lynch, Bonnant, who signed for Sophin as its officer and representative, also

22   unambiguously identified himself as “accountholder,” or otherwise consented to arbitration. The

23   district court’s ruling cannot be sustained unless Bonnant’s status either as an accountholder, or

24   as a party to the agreement, is unambiguously established on the face of the document. The

25   district court based its interpretation primarily on the fact that Bonnant signed the agreement

26   twice. After considering the agreement in its entirety, we conclude that Bonnant’s second

                                                     -2-
 1   signature did not unambiguously identify him either as accountholder or as a party to the

 2   agreement.

 3   I.     Background

 4          Plaintiff Marc Bonnant is an attorney who resides in Switzerland. On November 12,

 5   2001, Bonnant opened a Merrill Lynch Cash Management Account for Sophin by executing

 6   Merrill Lynch’s three-part form for such accounts, which upon execution constitutes the

 7   contract. Sophin, which is identified on the first page of the Merrill Lynch document as the

 8   “accountholder” is, according to Bonnant’s declaration, a British Virgin Islands company, which

 9   Bonnant set up for a client for the receipt and investment of the client’s inheritance. Bonnant is

10   identified in the Corporate Resolutions portion of Merrill Lynch’s form as Sophin’s

11   “President/Director” and “Representative.” At the end of the Application portion of the

12   agreement, Bonnant signed his name twice, first on the first signature line, captioned, “Signature

13   (Accountholder) (If Corporation, Authorized Representative)”, and again on the second signature

14   line, captioned “Signature (Accountholder)”. Just above the signature lines, and in bold print, the

15   document advises parties that by signing below they agree to arbitrate any controversies.

16          Sophin experienced large losses in the account as a result of unsuccessful trading in

17   naked options and swaps. On July 7, 2008, in accordance with the provision of the contract that

18   “[t]he parties are waiving their right to seek remedies in court” and “all controversies, which

19   may arise between us . . . shall be determined by arbitration,” Sophin commenced arbitration

20   against Defendants Merrill Lynch and Merrill Lynch Capital Services, Inc. before the Financial

21   Industry Regulatory Authority. Sophin alleged that the losses in the account were “the result of

                                                     -3-
 1   unauthorized and unsuitable trades.” In their answer in the arbitration, Defendants claimed that

 2   Bonnant authorized the contested trading. They asserted a counterclaim against Sophin seeking

 3   to recover the deficit in the Sophin account, as well as an early termination fee.

 4          In addition, Defendants named Bonnant as a third-party defendant in the arbitration, and

 5   asserted claims against him personally, claiming entitlement to indemnification by Bonnant in

 6   the event the arbitration resulted in an award in Sophin’s favor. Their claim of entitlement to

 7   indemnification by Bonnant was based on the contention that he authorized the trades Merrill

 8   Lynch executed for Sophin and that he “may have misrepresented Sophin’s investment

 9   experience, financial condition, [and] risk tolerance.”

10          Bonnant then brought this action in the district court seeking to enjoin Defendants from

11   bringing him into the arbitration. Bonnant’s suit is based on his assertion that he is “not a party

12   to any arbitration agreement with Merrill Lynch; therefore [he] cannot be required to arbitrate

13   with Merrill Lynch.” His declaration asserts that he signed the agreement opening Sophin’s

14   account “in a purely representative capacity on behalf of Sophin and never intended to be bound

15   personally by this agreement,” and that “[n]one of [his] personal funds are in Sophin.”

16          Bonnant moved for a preliminary injunction, which the district court denied, concluding

17   that Bonnant failed to demonstrate a likelihood of success on the merits. Bonnant v. Merrill

18   Lynch, Pierce, Fenner & Smith, Inc., No. 09 Civ. 3007, 2009 WL 1809980, at *5 (S.D.N.Y. June

19   25, 2009). Noting that Bonnant signed Sophin’s application twice, and citing case law which the

20   court considered as precedential support for its ruling, the court stated that “[Bonnant’s] second

21   signature, as a separate ‘[a]ccountholder,’ indicates that [Bonnant] opened the Sophin ICMA

                                                      -4-
 1   Account in both representative and personal capacities.” Id. (second alteration in original).

 2          Defendants then moved for summary judgment and to compel arbitration. The district

 3   court granted summary judgment in favor of Defendants, ordering Bonnant to arbitrate. Bonnant

 4   v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 09 Civ. 3007 (S.D.N.Y. May 18, 2010). The

 5   court gave various reasons for its conclusion that the contract unambiguously identified Bonnant

 6   as an accountholder and as a party to the agreement, including by reference the reasons set forth

 7   in the court’s previous order denying Bonnant’s motion for a preliminary injunction. We

 8   examine each of the court’s reasons below.

 9   II.    Discussion

10          A.      Merrill Lynch

11          We review a district court’s interpretation of contract provisions and its award of

12   summary judgment de novo. Bank of N.Y. v. First Millenium, Inc., 607 F.3d 905, 914 (2d Cir.

13   2010). “[A]rbitration is a matter of contract and a party cannot be required to submit to

14   arbitration any dispute which he has not agreed so to submit.” AT & T Techs., Inc. v. Commc’ns

15   Workers of Am., 475 U.S. 643, 648 (1986) (quoting United Steelworkers of Am. v. Warrior &

16   Gulf Navigation Co., 363 U.S. 574, 582 (1960)) (internal quotation marks omitted). Principles of

17   contract and agency determine whether a party is bound by an arbitration agreement. McAllister

18   Bros. v. A & S Transp. Co., 621 F.2d 519, 524 (2d Cir. 1980).

19          Under New York law, which governs this contract, “[t]he threshold question in a dispute

20   over the meaning of a contract is whether the contract terms are ambiguous.” Revson v. Cinque

21   & Cinque, P.C., 221 F.3d 59, 66 (2d Cir. 2000). In a contract dispute, generally, a motion for

                                                     -5-
1    summary judgment may be granted only when the contract language is “wholly unambiguous”

 2   and conveys “a definite meaning.” Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir.

 3   2008). A contract is ambiguous if it is capable of “more than one meaning when viewed

 4   objectively by a reasonably intelligent person who has examined the context of the entire

 5   integrated agreement and who is cognizant of the customs, practices, usages and terminology as

 6   generally understood in the particular trade or business.” Int’l Multifoods Corp. v. Commercial

 7   Union Ins. Co., 309 F.3d 76, 83 (2d Cir. 2002) (internal quotation marks omitted).

 8          Accordingly, the district court could not properly grant the motion for summary judgment

 9   ordering Bonnant to submit to the arbitration unless the agreement unambiguously established

10   his agreement to arbitrate any claims Merrill Lynch would bring against him personally arising

11   out of the agreement establishing Sophin’s account.

12          The district court relied on several different theories, some explained in its opinion

13   denying Bonnant’s motion for a preliminary injunction and some explained in its brief oral

14   opinion granting summary judgment, which adopted by reference the reasons set forth in the

15   earlier ruling. We have examined each of the court’s theories and find that none of them

16   unambiguously establishes Bonnant’s agreement to arbitrate claims brought by Defendants

17   seeking to establish his personal liability. Each theory expressed by the district court relies on a

18   misreading or misinterpretation of some aspect of the contract or the legal precedents. We

19   discuss each theory below.
20
21
22                  1.      The District Court mistakenly read the legend preceding Bonnant’s
23                          second signature to identify him as the “accountholder.”
24

                                                      -6-
1           It appears the district court’s principal justification for its judgment was its perception,

2    first explained in the opinion denying Bonnant’s motion for a preliminary injunction, and

3    adopted by reference in the decision granting summary judgment, that Bonnant unambiguously

4    accepted the status of “accountholder” because “[o]n the signature page of the document . . .

 5   [Bonnant] signed his name twice – once as Sophin’s ‘Authorized Representative’ and once as an

 6   additional ‘Accounholder.’” 2009 WL 1809980, at *1. The court concluded that Bonnant’s

 7   “second signature, as a separate ‘[a]ccountholder,’ indicates that [Bonnant] opened the Sophin

 8   ICMA Account in both representative and personal capacities.” Id. at *5.

 9          Putting aside the question of whether extrinsic evidence might show that Bonnant made

10   himself a party to the agreement, which question is beyond the scope of this appeal, we find that

11   the agreement cannot be construed to establish that status for Bonnant unambiguously, as is

12   required for grant of summary judgment. Numerous aspects of the way Bonnant filled in the

13   blanks in the Merrill Lynch form are inconsistent with the conclusion reached by the district

14   court. And, as explained below, while some of Bonnant’s entries would be consistent with his

15   being personally the accountholder, these entries are also wholly consistent with his being the

16   signatory for the corporate accountholder. To assess the question raised by the motion for

17   summary judgment, furthermore, it is not sufficient to look only at the signature line in isolation.

18   What is written on a signature line must be understood in the light of the entire agreement.

19   Accordingly, we examine several terms of the agreement establishing Sophin’s International

20   Cash Management Account.

21

                                                      -7-
1            The agreement was made on a fourteen-page form provided by Merrill Lynch for the

2    opening of an International Cash Management Account, with numerous blanks to be filled in by

3    the applicant for the account. The form is in three parts. The first four pages are the

4    “International CMA Account Application and Agreement Form” (the “Application”), which

5    inter alia specifies the type of account (whether single, joint, corporate, trust, estate, or other)

6    and identifies the accountholder or accountholders. The next two pages are captioned

7    “Corporate Resolutions”; in the case of a corporate client, these provide the form of board

8    resolutions which will authorize the account agreement in a manner satisfactory to Merrill

9    Lynch, as well as specify who are the representatives of the corporation who are authorized to

10   give instructions and to sign on behalf of the corporate accountholder. Finally pages seven

11   through fourteen are captioned “International Cash Management Account Agreement” (the

12   “Agreement”). This latter portion specifies numerous terms and conditions of the agreement

13   required by Merrill Lynch and contains no blanks to be filled in by the applicant.

14           On the opening pages of the Application, the first blank, captioned “Type of Account,”

15   directs the applicant to “check the appropriate box” to indicate the type of account being opened,

16   as between “Single, Joint, Corporate, Trust, Estate, and Other” (with a blank line for explanation

17   of what “Other” represents). The only entry in this portion is that “Corporate” has been checked.

18   The second blank on the form, captioned “Account Information,” instructs the applicant to “print

19   the names of all accountholders” (emphasis added). Above the legend “Primary Accountholder

20   Name,” “Sophin Investment” has been entered. The second half of the line calls for “Secondary

21   Accountholder Name, if Joint Account.” This portion of the line was left blank. Another line

                                                       -8-
 1   calls for the identification of “Additional Accountholders.” This line was also left blank. Thus,

 2   these portions of the Application, taken by themselves, state that this is a “Corporate” account

 3   and that Sophin is the sole accountholder.

 4          The Corporate Resolutions portion of the agreement calls for the insertion of the name of

 5   the corporation applying to open a corporate Cash Management Account at Merrill Lynch. The

 6   words “Sophin Investment” have been filled in. Further down the page are three blank lines

 7   calling for the names and signatures of “Representatives” who are authorized to act for and sign

 8   for the corporate accountholder. Lines 1 and 2 were both filled in with the name “BONNANT

 9   MARC,” followed by Bonnant’s signature. (The third line was left blank. No explanation is

10   given why Bonnant’s name and signature were written in twice.) This Corporate Resolutions

11   portion of the agreement concludes with a blank for certification by an officer or director of the

12   corporation to the due adoption of the specified resolutions by the “unanimous vote of the Board

13   of Directors of said Corporation.” These blanks have been filled in to indicate that the

14   certification on behalf of Sophin’s board is made by “Marc Bonnant,” as “President/Director of

15   Sophin Investment,” and with Bonnant’s signature at the bottom.

16          On the same date Bonnant executed these forms, he also executed IRS Form W-8BEN, a

17   Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (the “Tax

18   Certificate”), which identifies the beneficial owner of the account. The Tax Certificate lists

19   Sophin as the beneficial owner of the account, identifies Sophin as a corporation, and gives its

20   addresses. Bonnant’s signature appears at the line that reads “Signature of beneficial owner (or

21   individual authorized to sign for beneficial owner)”.

                                                     -9-
 1           The entries made in the Application under Type of Account and Account Information,

 2   the Corporate Resolutions, and the Tax Certificate all consistently state that the Sophin account

 3   is a corporate account, and not a single, joint, or other type of account, that the sole

 4   accountholder is Sophin Investment, that Merrill Lynch’s sole counterparty to the agreement is

 5   the corporation known as Sophin Investment, and that Bonnant’s role in signing the agreement

 6   was as officer, director, representative, and authorized signatory of the corporate accountholder.

 7           We proceed from there to examine the other portions of the agreement, which led the

 8   district court to conclude that, notwithstanding the previously considered sections that

 9   unambiguously identify Bonnant as the representative of the corporate accountholder, Bonnant

10   unambiguously identified himself as accountholder of the Sophin account and as a party to the

11   agreement.

12           As noted above, the district court found that Bonnant unambiguously accepted the role of

13   accountholder and thus is bound by the arbitration agreement because, in the district court’s

14   words, “[o]n the signature page of the document . . . [Bonnant] signed his name twice – once as

15   Sophin’s ‘Authorized Representative’ and once as an additional ‘Accounholder,’” 2009 WL

16   1809980, at *1. According to the court, Bonnant’s “second signature, as a separate

17   ‘[a]ccountholder,’ indicates that [Bonnant] opened the Sophin ICMA Account in both

18   representative and personal capacities.” Id. at *5 (first alteration in original).

19           The district court’s conclusion that the second signature unambiguously made Bonnant

20   the accountholder was based on a misreading of the legend provided in Merrill Lynch’s form

21   beneath the signature line where Bonnant placed his second signature. This legend did not say

                                                      -10-
1    that, by placing his or her signature on the line, the person signing thereby identifies himself or

2    herself as the accountholder. What it said was simply, “Signature (Accountholder).” If Bonnant

3    was indeed the authorized signatory for the accountholder Sophin, as indicated in the

4    Application and the Corporate Resolutions of the Agreement, then the line calling for “Signature

5    (Accountholder)” calls for his signature, as the signatory for Sophin, the accountholder. There is

6    no reason to read his placement of his signature on that line as unambiguously identifying

 7   himself as the accountholder, as such a reading would contradict everything he entered in the

 8   preceding portions of the Application and Corporate Resolutions.

 9          We recognize that the second signature can be seen as introducing an ambiguity. The

10   second signature line calling for “Signature (Accountholder)”, if considered in isolation, would

11   normally be read to identify the person signing as the accountholder. Were it not for the

12   information provided in the overall agreement as to the Type of Account, the Account

13   Information, and the Corporate Resolutions of Sophin, Bonnant’s signature on a line calling for

14   “Signature (Accountholder)” would identify him unambiguously as the accountholder. But when

15   that signature is considered in the context of the full agreement, the overall contract cannot be

16   read to say unambiguously that Bonnant is the accountholder.

17          His signature on a line calling for “Signature (Accountholder)” is fully consistent with

18   the portions of the contract identifying Sophin as the sole accountholder and Bonnant as its

19   representative and signatory. If the question is considered why Bonnant signed twice as

20   representative of Sophin, at least one possible answer is that Merrill Lynch’s standard form for a

21   corporate account could be read to ask twice for the signature of the representative of the

22   corporate accountholder.

                                                     -11-
1                   2.      New York law does not support the proposition that a corporate
2                           representative renders himself liable on the corporation’s contract
3                           merely by signing twice.
4
5           The district court seems to have read New York law as providing that a corporate

6    representative who signs a contract for the corporation and then signs a second time thereby

7    makes himself personally liable. See 2009 WL 1809980, at *5. When ruling on Bonnant’s

8    application for a preliminary injunction, the district court stated, quoting from Salzman Sign Co.

 9   v. Beck, 176 N.E.2d 74, 76 (N.Y. 1961) and Ainbinder v. Kelleher, No. 92 Civ. 7315, 1997 WL

10   420279, at *13 (S.D.N.Y. July 25, 1997), “[E]veryone in business knows that an individual

11   stockholder or officer is not liable unless he signs individually, and where individual

12   responsibility is demanded the nearly universal practice is that the officer signs twice – once as

13   an officer and again as an individual.” 2009 WL 1809980, at *5. However, nothing in the record

14   supports the proposition that it is a convention of the business world that a corporate

15   representative signing for the corporation renders himself personally liable by signing twice. Nor

16   do the cases cited by the district court, or any other precedent known to us, support such a rule.

17          Under New York law, it is well-established that an “agent will not be personally bound

18   unless there is clear and explicit evidence of the agent’s intention to substitute or superadd his

19   personal liability for, or to, that of his principal.” Mencher v. Weiss, 114 N.E.2d 177, 179 (N.Y.

20   1953). For a corporate representative to be personally bound by a contract, the officer must sign

21   both in a representative and in an individual capacity. See Ainbinder, 1997 WL 420279 at *13;

22   Salzman Sign, 176 N.E.2d at 76. In Salzman Sign, which the district court cited in support of its

23   conclusion, the plaintiff company attempted to recover an amount owed to it by a corporate

24   entity from the corporation’s president in his personal capacity. 176 N.E.2d at 75. The plaintiff

                                                     -12-
 1   argued that the contract language specifically stated that any officers signing on behalf of the

 2   corporation also individually guaranteed payment. Id. The Court stated that “everyone in

 3   business knows that an individual stockholder or officer is not liable for his corporation’s

 4   engagements unless he signs individually, and where individual responsibility is demanded the

 5   nearly universal practice is that the officer signs twice–once as an officer and again as an

 6   individual.” Id. at 76. Because the contract had been signed once by the corporation’s president,

 7   signing on behalf of the corporation, the court concluded that the president was not personally

 8   liable. Id. at 75-76. The Court of Appeals neither held nor implied that a corporate representative

 9   is personally bound under the corporation’s contract merely as a consequence of signing twice.

10   What it said was that for a corporate officer to be personally bound, he must sign the

11   corporation’s agreement in both a representative capacity and in his personal capacity. See id. at

12   76.

13           As the district court stated the proposition of law, it is undoubtedly correct. A corporate

14   officer who signs on behalf of the corporation is not liable unless he signs as an individual (in

15   addition to signing as the corporate representative). Thus, if individual liability of the officer is

16   intended, the officer would sign twice–once as representative, and once as an individual. The

17   district court’s correct statement of that legal proposition, however, in no way implies that the

18   representative’s mere placement of his signature twice on the contract commits him to individual

19   contractual liability. If the contract is the corporation’s contract and the representative’s first

20   signature is as the corporation’s representative, the corporation’s representative who signs twice

21   is not liable under the contract unless the second signature is in a context showing that the

22   representative is agreeing to assume personal responsibility. The mere fact of signing twice says

                                                      -13-
 1   no such thing.
 2
 3                    3.    Nor did Bonnant make himself personally liable merely by placing his
 4                          signature once on the Application.
 5
 6          The district court also reasoned that, under express language in the Agreement, any

 7   individual who placed his signature, even once, on the Application, thereby bound himself

 8   personally to arbitrate any dispute with Merrill Lynch arising out of the Agreement. The court

 9   stated in its oral ruling on summary judgment “[T]he agreement itself specifically provides . . .

10   ‘In this agreement, ‘I,’ ‘me,’ ‘my,’ or ‘accountholder’ means each natural or legal person who

11   signs [the Application.]’” The court then pointed out that the signature page of the Application

12   also stated “I acknowledge . . . I am agreeing in advance to arbitrate any controversies which

13   may arise with you.” The district court thus concluded that under the plain language of the

14   Agreement, Bonnant, as a natural person who signed the Application, became an “I” or “me” of

15   the Agreement, and, as such, had made a personal contractual commitment to arbitrate disputes

16   with Merrill Lynch.

17          Through this reasoning, the district court found Bonnant liable to arbitrate Merrill

18   Lynch’s claims against him asserting his personal liability–not because he signed twice, but

19   merely because he signed for Sophin. Under the district court’s reading of this aspect of the

20   Agreement, any time a corporate entity opened a Merrill Lynch account using Merrill Lynch’s

21   forms, the corporate representative signing for the corporate accountholder would make himself

22   personally liable by the mere act of signing for the corporation (at least unless he took pains to

23   expressly negate the boilerplate clause on which the district court relied).

24          This construction is at odds with basic principles of agency and was expressly

                                                     -14-
 1   contradicted by the New York Court of Appeals in Salzman Sign, cited above. In that case, the

 2   contract contained boilerplate to the effect that an officer for the contracting corporation who

 3   signed on its behalf thus rendered himself personally liable. 176 N.E.2d at 75. The Court of

 4   Appeals, as noted above, rejected the contention that by signing the contract the corporate

 5   representative undertook personal responsibility. Id. at 76. If there is a difference between this

 6   contract and the one at issue in Salzman Sign, the difference is that the boilerplate at issue in

 7   Salzman Sign was far clearer in its intention to impose personal liability on an individual based

 8   on his signing in a representative capacity. The boilerplate language in Salzman Sign expressly

 9   and unambiguously stated that one who signed as a corporate representative undertook to

10   guarantee the corporation’s liabilities. Nonetheless the Court of Appeals refused to read the

11   contract as supporting individual liability of the corporate representative who signed. Here the

12   language says nothing of the kind, and seems not to have intended such meaning.

13          We recognize that Merrill Lynch’s form agreement builds in an ambiguity. It arguably

14   identifies the person who signs to be the “I” or “me” of the Agreement and elsewhere provides in

15   the boilerplate, “I am agreeing . . . to arbitrate.” This passage, if considered in isolation, arguably

16   amounts to an agreement by the signer to arbitrate. But this language cannot unambiguously

17   make the person who signs the person who agrees to arbitrate. The clause identifying “I” uses

18   the disjunctive between “individual” and “legal” person. In identifying as “I” each “natural or

19   legal person” who signs, it does not necessarily mean that each natural person who signs agrees

20   to arbitrate. It is also susceptible to the meaning that whatever type of person, natural or legal,

21   that opens an account with Merrill Lynch, agrees to arbitrate. Such an interpretation of the

22   ambiguity is more consistent with the portions of the agreement that identify the Sophin

                                                      -15-
 1   corporation as the maker of the agreement.1

 2                  4.      Because the agreement is ambiguous the district court could not
 3                          properly grant summary judgment.
 4
 5          We conclude that the agreement contains ambiguities which bar the grant of summary

 6   judgment. There are provisions in the contract which can be construed to mean that Bonnant

 7   personally agreed to arbitrate. On the other hand, other provisions of the ambiguous contract are

 8   difficult to reconcile with that interpretation. We therefore vacate the district court’s ruling and

 9   its grant of summary judgment for Merrill Lynch. The court will need to determine whether the

10   agreement, considered in its entirety, can sensibly be construed to include Bonnant’s personal

11   agreement to arbitrate disputes arising out of the Sophin agreement, and, if so, whether extrinsic

12   evidence the parties may offer demonstrates such a status.

13          B.      Merrill Lynch Capital Services

            1
                We note also that the consequences of construing the agreement to make Bonnant the
     “I” and the “accountholder” are potentially huge. The district court may have believed nothing
     more was at stake than the choice of forum. As we view it, however, the district court’s reading
     of the Agreement could not only require Bonnant to arbitrate, but could also make him
     personally liable for millions of dollars in liabilities of Sophin. The Agreement states in Article
     21
              I shall at all times be liable for the payment upon demand of any debit balance or
              other obligations owing in any of my accounts with you. I shall be liable to you
              for any deficiency remaining in any such accounts in event of the liquidation
              thereof, in whole or in part, by you or by me. I will pay such obligations and
              indebtedness upon demand.
     If, as the district court viewed it, “I” means any individual who places his signature on the
     Application, then it would seem to follow that by signing on behalf of Sophin, Bonnant made
     himself personally liable for all deficiencies in Sophin’s account. Arbitrators adjudicating the
     dispute might well regard the equivalency between Bonnant and “I” as conclusively and
     bindingly established by the district court’s opinion, and with it, Bonnant’s liability to pay upon
     demand all deficiencies in Sophin’s account. We do not agree that the face of the Agreement
     unambiguously established that Bonnant undertook any form of personal responsibility merely
     by affixing his signature, as Sophin’s authorized representative, to the Application.
              The district court, apparently mindful of such dangers, stated that its ruling was “[w]ith
     respect to arbitrability only –and I want to be very clear about that.” Notwithstanding the district
     court’s effort to limit the scope of its ruling, the arbitrator might well conclude that, if the word
     “I” means Bonnant in one clause of the contract, it also means Bonnant in the other clauses of
     the contract.

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 1          The district court determined that Bonnant was required also to arbitrate disputes with

 2   Merrill Lynch Capital Services. The court relied on an estoppel theory. 2009 WL 1809980, at

 3   *6-7. To bind a party under this theory a court must first find that there was a valid agreement to

 4   arbitrate between two parties. See JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 177 (2d

 5   Cir. 2004). Because we disagree with the court’s conclusion the Agreement unambiguously

 6   bound Bonnant to arbitrate disputes with Merrill Lynch, we cannot agree with the district court’s

 7   conclusion that under an estoppel theory Bonnant also must arbitrate disputes with Merrill Lynch

 8   Capital Services. The district court’s judgment compelling Bonnant to arbitrate disputes with

 9   Merrill Lynch Capital Services is also vacated.

10   III.   Conclusion

11          The judgment of the district court is VACATED, and the case REMANDED for further

12   proceedings consistent with this order.

13

14                                             FOR THE COURT:
15                                             CATHERINE O’HAGAN WOLFE, CLERK
16
17

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