Court Opinion

ID: 9779645
Source: CourtListenerOpinion
Date Created: 2023-08-30 00:31:02.449253+00
Date Added: 2024-06-11T07:33:37.372627
License: Public Domain

KIRSCH, Judge,
dissenting.
I respectfully dissent.
The employment contract between Williams and ISTA requires Williams to "devote his full time to the affairs of the Indiana State Teachers Association and to carry out efficiently and properly the duties of the Executive Director position, as defined from time to time by the Board of Directors." Appellant's App. at 361. The employment contract between Frankel and ISTA contains the same provision, substituting "Deputy Executive Director of ISTA Financial Services Program position" for "Executive Director." Id. at 370.
Pursuant to and as an integral part of their employment agreements, the duties imposed by the ISTA Board of Directors on Williams and Frankel included the performance significant managerial services for the Trust. In addition to serving ex officio as a Trustee of the Trust, Williams was directed by the ISTA Board of Directors to serve as Executive Director of the Trust. Because of his position with ISTA, Frankel served ex officio as Director of the Trust. Williams devoted approximately twenty percent of his total work with ISTA on the work of the Trust, and Frankel devoted forty percent of his time to the work of the Trust.
Neither Williams nor Frankel had a separate employment agreement with the Trust; and neither was compensated separately by the Trust for the work that either did on its behalf. Williams and Frankel were not outside directors or trustees; to the contrary, they had the day-today managerial responsibility for the Trust operations. Nothing in the record before us indicates that Williams or Frankel rendered any services to or on behalf of the *675Trust that were not included in the overall services that they rendered pursuant to the employment agreements.
The Trust received the benefits of Williams's and Frankel's services. The duties that Williams and Frankel carried out on behalf of the Trust, fiduciary and otherwise, were the duties (1) defined by the ISTA Board of Directors, (2) carried out as an integral part of their overall duties as full-time employees of ISTA, and (8) rendered pursuant to their employment agreements with ISTA. Because the services rendered by Williams and Frankel were rendered pursuant to their employment agreements with ISTA, the Trust was a third party beneficiary of such agreements.
The employment agreements contain provisions for arbitration "should any issue arise regarding the performance of any obligation under the terms of this Agreement...." Id. at 362, 371. In TWH, Inc. v. Binford, 898 N.E.2d 451 (Ind.Ct.App.2008), we held that a third party beneficiary of a contract containing an enforceable arbitration provision is bound by such provision even though such beneficiary was not a signatory to the agreement. "Where a contract contains a legally enforceable arbitration clause, the general view is that the beneficiary is bound by it to the same extent that the promisee is bound.'" Id. at 454 (quoting WILLISTON ON CONTRACTS § 37:24 at 154 (4th ed.2000)). A "beneficiary should not be able to sue for breach of contract and simultaneously disavow a term of the contract that required submission of disputes to arbitration." Id.; see also Hartford Accident & Indem. Co. v. Scarlett Harbor Assocs. Ltd. P'ship, 109 Md.App. 217, 674 A.2d 106, 143 (1996), trans. granted, aff'd by 346 Md. 122, 695 A.2d 153 (1997).
Here, the Trust's Complaint against Williams and Frankel alleges that Williams and Frankel breached their obligations as Executive Director and Director, respectively, of the Trust to oversee Trust investments in compliance with Trust policy and to keep the Board of Trustees of the Trust advised regarding such investments. These duties were not fiduciary duties imposed by law, but managerial duties imposed by ISTA upon its Executive Director and its Deputy Executive Director of ISTA Financial Services Program. These duties arose directly from the duties imposed by the employment agreements.
The Trust's Complaint alleges that "Williams and Frankel were obligated to act with ordinary care, skill, and prudence in managing the affairs of the Trust alleges," and that "Williams and Frankel failed to act with such skill, and prudence in managing the affairs of the Trust." Complaint, paragraphs 169-170, Appellants' App. at 35. These allegations fall squarely within the provision of the employment agreements that require each employee to "devote his full time to the affairs of the Indiana State Teachers Association and to carry out efficiently and properly the duties of the ... position, as defined from time to time by the Board of Directors." Id. at 361. The affairs of the Indiana State Teachers Association included those of the Trust. As defined by the ISTA Board of Directors, the duties of the positions that Williams and Frankel held with ISTA required them to carry out their duties with the Trast.
The employment agreements provide for arbitration "should any issue arise regarding the performance of any obligation under the terms of this Agreement...." Id. at 362. The Trust received the benefits of those agreements in the managerial services that Williams and Frankel provided. Having received the benefits of such agreements, the Trust should not now be able to disavow the arbitration provisions *676contained therein. It should be bound to the arbitration provisions of such agreements to the same extent that ISTA itself is bound.
I would reverse the decision of the trial court and 'remand with instructions to grant the appellants' motion to compel arbitration.