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Keywords

contracttortarbitrationappealtrialmotionarbitration clausewrit of mandamus
contracttortarbitrationappealtrialmotionarbitration clausewrit of mandamus

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In re Merrill Lynch, Pierce, Fenner & Smith, Inc., 195 S.W.3d 807

Facts

Lockey Investment Group, co-founded by former Merrill Lynch employees, sued Merrill Lynch for various claims including defamation and tortious interference, alleging that false statements made by Merrill Lynch harmed their business. Merrill Lynch sought to compel arbitration based on arbitration clauses signed by the former employees, arguing that Lockey Investment was attempting to avoid arbitration by bringing claims in its name. The trial court denied the motion to compel arbitration, leading to Merrill Lynch's appeal.

Lockey Investment Group, co-founded by former Merrill Lynch employees, sued Merrill Lynch for various claims including defamation and tortious interference, alleging that false statements made by Merrill Lynch harmed their business. Merrill Lynch sought to compel arbitration based on arbitration clauses signed by the former employees, arguing that Lockey Investment was attempting to avoid arbitration by bringing claims in its name. The trial court denied the motion to compel arbitration, leading to Merrill Lynch's appeal.

Issue

Whether Lockey Investment, as a non-signatory to the arbitration agreement, could be compelled to arbitrate its claims against Merrill Lynch.

Whether Lockey Investment, as a non-signatory to the arbitration agreement, could be compelled to arbitrate its claims against Merrill Lynch.

Rule

A non-signatory may be compelled to arbitrate if its claims are based on a contract containing an arbitration agreement, but it cannot be compelled if the claims stand independently of the contract.

A non-signatory may be compelled to arbitrate if its claims are based on a contract containing an arbitration agreement, but it cannot be compelled if the claims stand independently of the contract.

Analysis

The court analyzed whether Lockey Investment's claims were intertwined with the arbitration agreement signed by its founders. It concluded that Lockey Investment's claims did not seek to enforce the terms of the arbitration agreement and could stand independently, thus rejecting Merrill Lynch's arguments for equitable estoppel and direct benefits estoppel.

The court analyzed whether Lockey Investment's claims were intertwined with the arbitration agreement signed by its founders. It concluded that Lockey Investment's claims did not seek to enforce the terms of the arbitration agreement and could stand independently, thus rejecting Merrill Lynch's arguments for equitable estoppel and direct benefits estoppel.

Conclusion

The court denied Merrill Lynch's petition for writ of mandamus and dismissed the interlocutory appeal, affirming the trial court's decision not to compel arbitration.

The court denied Merrill Lynch's petition for writ of mandamus and dismissed the interlocutory appeal, affirming the trial court's decision not to compel arbitration.

Who won?

Lockey Investment Group prevailed because the court found that it was not bound by the arbitration agreement signed by its founders, as its claims were independent of that agreement.

Lockey Investment Group prevailed because the court found that it was not bound by the arbitration agreement signed by its founders, as its claims were independent of that agreement.

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