Court Opinion

ID: 9772796
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:30:17.323596+00
Date Added: 2024-06-11T07:29:08.352607
License: Public Domain

BARNES, Judge,
concurring in part and dissenting in part.
I concur with the majority’s resolution of Issue One in this appeal. I respectfully dissent, however, from its conclusion in Issue Two that GAFA may compel Reed to submit his claims against it to arbitration.
First, Indiana law is that parties are only bound to arbitrate those issues that by clear language they have agreed to arbitrate, and arbitration agreements will not be extended by construction or implication to cover any other matters. Showboat Manna Casino P’ship v. Torn & Blank Constr., 790 N.E.2d 595, 597-98 (Ind.Ct.App.2003). Here, I believe the majority is elasticizing the plain and unambiguous language of the arbitration agreement by allowing GAFA to insist on arbitration when GAFA was not a named party to the arbitration agreement — only PrimeVest and Reed were named. I might also add that, although there are of course important public policy reasons for enforcing arbitration agreements, there are vital public policy concerns, enshrined in the Indiana Constitution, which guarantee open courts, remedies by due course of law, and civil jury trials. See Ind. Const. Art. 1, §§ 13 & 20. A waiver of such constitutional rights must be clear and unmistakable.
There is an Indiana statute governing the creation of arbitration agreements stating, “If the parties to such an agreement stipulate in writing, the agreement may be enforced by designated third persons, who shall in such instances have the same rights as a party under this chapter.” 14 Ind.Code § 34-57-2-l(a). There is no such written stipulation in this case regarding third parties having the right to enforce the arbitration agreement. I believe there is a legitimate inference to be made that, in enacting this statute, the legislature did not contemplate that non-signatory third parties to a contract should be allowed to enforce an arbitration agreement unless there was such a stipulation.
The MS Dealer case relied upon by the majority holds that, because of “equitable estoppel,” it was permitting a non-signatory to an arbitration agreement to enforce it against a signatory to the agreement. MS Dealer, 177 F.3d at 947. This does not seem compatible with the standard Indiana definition of “equitable estoppel,” which requires a party to show its (1) lack of knowledge and of the means of knowledge as to the facts in question, (2) reliance upon the conduct of the party es-topped, and (3) action based thereon of such a character as to change his position prejudicially. Town of New Chicago v. City of Lake Station ex rel. Lake Station Sanitary Dist., 939 N.E.2d 638, 653 (Ind.Ct.App.2010), trans. denied. Here, most importantly, I see no indication whatsoever that Reed misled GAFA into doing anything, based on a representation that he would agree to arbitrate any dispute with GAFA, which I think GAFA would have to prove in order to show “equitable estop-pel” under established Indiana law. This strained definition of “equitable estoppel” is one of the main reasons that our colleagues on the Appellate Court of Illinois have refused to apply MS Dealer’s holding *630in that state. See Ervin v. Nokia, Inc., 849 Ill.App.3d 508, 285 Ill.Dec. 714, 812 N.E.2d 534, 542-43 (2004), app. denied,15
Regardless of the “equitable estoppel” label, MS Dealer and the majority appear to be concerned that a party to a contract with an arbitration clause should not be able to raise claims related to the contract against a non-party while avoiding the contract’s arbitration clause. It is not Reed’s fault that the arbitration clause in this case explicitly refers only to PrimeVest as the party against whom claims must be arbitrated. This clearly was a form document that PrimeVest wrote. Reed has not acted inequitably in this regard. Reed also is not suing GAFA directly for breach of contract; indeed, it does not appear that Reed could enforce any contractual rights or remedies against GAFA, nor could GAFA against Reed. Finally, there is no argument by GAFA or evidence that it is a principal or agent of PrimeVest, or that it is merely a corporate alter ego of Prime-Vest, or a successor in interest to Prime-Vest, or that it is a third-party beneficiary of the PrimeVest-Reed contract.16 Particularly in the absence of any such argument and evidence, and in light of my views stated above, I would hold that GAFA is not entitled to compel Reed to submit his claims against it to arbitration.

. This sentence is an addition to the Uniform Arbitration Act of 1956 on which the Indiana statute is based, and which sentence apparently has not been adopted by any other state.

. Illinois’s definition of "equitable estoppel” is similar to Indiana's, in that it requires "prejudicial reliance” by one party upon representations made by another party. See Ervin, 285 Ill.Dec. 714, 812 N.E.2d at 541.

. GAFA cites cases holding that agents of a signatory to an arbitration agreement may enforce that agreement. See Dunmire v. Schneider, 481 F.3d 465, 467 (7th Cir.2007). However, it makes no argument that it is in fact an agent or principal of PrimeVest.