law-arbitration-non-signatories | arbitration cases | arbitration mandamus | Federal Arbitration Act FAA
challenging arbitration agreements |
CAN NON-SIGNATORIES BE COMPELLED TO ARBITRATE?
In re Rubiola, No. 09-0309 (Tex. Mar. 11, 2011)(Medina)(arbitration and non-signatories)
In this original mandamus proceeding, Relators seek to compel arbitration under an arbitration agreement they did not
sign. The real parties in interest, who are signatories to the arbitration agreement, object to arbitration and contend that
Relators cannot compel arbitration because Relators are not parties to the arbitration agreement. The trial court apparently
agreed because it denied Relators’ motion to compel arbitration. The underlying arbitration agreement, however,
designated certain non-signatories as parties to the agreement.
We conclude that signatories to an arbitration agreement may identify other parties in their agreement who may enforce
arbitration as though they signed the agreement themselves. We further conclude that the underlying arbitration agreement
in this case identified the Rubiolas as parties to the agreement and that they accordingly had the right to compel arbitration.
Finally, we conclude that the trial court’s order denying arbitration is an abuse of discretion for which we conditionally grant
Relators’ request for mandamus relief. Tex. R. App. P. 52.8(c). The writ will issue only if the trial court fails to enforce the
IN RE JOSEPH CHARLES RUBIOLA, ET AL.; from Bexar County; 4th district (04-09-00115-CV, ___ SW3d ___, 03-04-09)
stay order issued May 15, 2009, lifted
The Court conditionally grants the writ of mandamus.
Justice Medina delivered the opinion of the Court. [pdf]
View Electronic Briefs 09-0309 IN RE JOSEPH CHARLES RUBIOLA
In Re Golden Peanut Co.,LLC, No. 09-0122 (Tex. Nov. 20, 2009)(per curiam)(mandamus compelling
arbitration granted) (arbitration and nonsignatories, wrongful death plaintiffs bound by arb agreement
signed by worker killed on the job as derivative claimants and must arbitrate claim against employer,
pre-injury waivers, forum selection vs. waiver of substantive rights)
IN RE GOLDEN PEANUT COMPANY, LLC; from Gaines County;
11th district (11 08 00215 CV, 269 SW3d 302, 11 13 08)
Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court
conditionally grants the petition for writ of mandamus.
Whether Nonsignatory Is Bound Is a Gatway/Threshold Matter for the Court to Determine
[W]e have concluded that whether an arbitration agreement binds a nonsignatory is a gateway matter to
be determined by the court, rather than the arbitrator, unless the parties clearly and unmistakably provide
otherwise. In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005); see also In re Labatt Food Serv.,
L.P., 279 S.W.3d. 640, 643 (Tex. 2009) (when “arbitration agreement is silent about who is to determine
whether particular persons are bound by the agreement, courts, rather than the arbitrator, should
determine the issue”). In re Morgan Stanley & Co, Inc. No. 07-0665 (Tex. Jul. 3, 2009)(Medina) (arbitration
vs. litigation: legal capacity of party to arbitration agreement, does the court or the arbitrator decide the
Nonsignatories Bound by Arbitration Agreement Signed by Worker Who Died On the Job
We have previously determined that nonsignatories to an agreement subject to the FAA may be
bound to an arbitration clause when rules of law or equity would bind them to the contract
generally. In re Weekley Homes, 180 S.W.3d at 131 (noting that if state law would bind a nonparty
to a contract generally, the FAA appears to preempt an exception for arbitration clauses because
the FAA requires states to place arbitration contracts on equal footing with other contracts); see
also Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 281 (2005) (noting that a state
“may not . . . decide that a contract is fair enough to enforce all its basic terms . . . [yet] not fair
enough to enforce its arbitration clause”). Therefore, we look to whether the agreement signed by
Dancy would generally bind his beneficiaries under Texas law. In re Labatt Food Service, LP, No. 07-
0419 (Tex. 2009)(Johnson)
(arbitration mandamus granted, arbitration of wrongful death claim by nonsignatories compelled)
Several rules of law and equity may bind nonsignatories to a contract. For example, we have held
that the principles of equitable estoppel and agency may bind nonsignatories to an arbitration
agreement. In re Weekley Homes, 180 S.W.3d at 131-35; see also In re Kellogg Brown & Root,
166 S.W.3d at 739 (noting nonsignatories may be bound to arbitration agreement under “direct
benefits estoppel”); In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 191-95 (Tex. 2007)
(recognizing estoppel may bind a nonsignatory to an arbitration agreement but holding plaintiffs
were not bound to arbitration agreement under “concerted misconduct estoppel” because it was
not a recognized theory of estoppel under Texas law); In re FirstMerit Bank, N.A., 52 S.W.3d 749,
755-56 (Tex. 2001) (holding a nonsignatory who sues based on a contract subjects himself to the
contract’s terms, including its arbitration agreement).
Labatt argues that under these circumstances the beneficiaries should be bound by the
agreement because (1) they are third party beneficiaries of the agreement; (2) they are bound by
the agreement because of the derivative nature of their claims; and (3) Texas Family Code
section 151.001 afforded Dancy the legal authority to bind his minor children to the agreement.
Because we determine it is dispositive, we first consider Labatt’s argument that the beneficiaries
are bound to arbitrate due to the derivative nature of their claims.
At common law there was no recognized cause of action for the wrongful death of another person.
Russell v. Ingersoll-Rand Co., 841 S.W.2d 343, 344 (Tex. 1992). The Legislature enacted the
Wrongful Death Act in order to create a cause of action to allow a deceased tort victim’s surviving
parents, children, and spouse to recover damages for their losses from the victim’s death.
Shepherd v. Ledford, 962 S.W.2d 28, 31 (Tex. 1998); see Tex. Civ. Prac. & Rem. Code §§
71.002-.004. Under the Wrongful Death Act as it applies here, wrongful death beneficiaries may
pursue a cause of action “only if the individual injured would have been entitled to bring an action
for the injury if the individual had lived.” Tex. Civ. Prac. & Rem. Code § 71.003(a). This language
is not a recent innovation but is a recodification of language which has consistently been part of
the Wrongful Death Act. See Russell, 841 S.W.2d at 346. And we have consistently held that the
right of statutory beneficiaries to maintain a wrongful death action is entirely derivative of the
decedent’s right to have sued for his own injuries immediately prior to his death. See id. at 345-
47. Thus, it is well established that statutory wrongful death beneficiaries’ claims place them in the
exact “legal shoes” of the decedent, and they are subject to the same defenses to which the
decedent’s claims would have been subject. Id. at 347.
Accordingly, we long ago held that a decedent’s pre-death contract may limit or totally bar a
subsequent action by his wrongful death beneficiaries. See Sullivan-Sanford Lumber Co. v.
Watson, 155 S.W. 179, 180 (Tex. 1913); Thompson v. Fort Worth & R.G. Ry. Co., 80 S.W. 990,
992 (Tex. 1904); see also Russell, 841 S.W.2d at 347 (affirming holdings in Thompson and
Sullivan-Sanford Lumber Co.). In Thompson, R.K. Thompson sued to recover damages for injuries
he suffered while riding a train. He accepted a settlement offer and executed a full release of the
railway company. 80 S.W. at 990. Shortly after signing the release, Thompson died from his
injuries. Id. at 991. His wife and children then sued the railway company seeking to recover
damages for his death. Id. at 990. The Court noted that if Thompson had survived, he would not
have been entitled to bring suit because of the contractual release and because the Wrongful
Death Act provided, in language similar to the current Act, that beneficiaries were only entitled to
bring suit if the decedent would have been entitled to maintain an action for the injury. Id. at 991-
92. The Court held that although the beneficiaries were not parties to the release, the contractual
release signed by Thompson barred their wrongful death claims because they stood in the same
legal shoes as Thompson and were subject to the same contractual defenses. Id. at 992.
In Sullivan-Sanford Lumber Co., the Court again held that a pre-death contractual release signed
by a decedent barred a subsequent action by his wrongful death beneficiaries. 155 S.W. at 180.
The Sullivan-Sanford Lumber Company allowed non-employees to ride their trains without charge
but issued them boarding passes containing the following language:
The user of this pass rides only on the following conditions: (1) This permit is accepted with the
understanding that the person using it assumes all risk of injury of any character while using the
same and hereby waives any claim for damages in case of injury . . . .
135 S.W. 635, 636 (Tex. Civ. App.—Texarkana 1911), rev’d, 155 S.W. 179 (Tex. 1913). J.A.
Watson was riding a train courtesy of a boarding pass when the train collided with another train
killing Watson. Id. His wife and children sued the Lumber Company. Id. The Court held, as it did in
Thompson, that the beneficiaries were not entitled to recover under the Wrongful Death Act
because Watson himself could not have recovered for his injuries if he had survived, and his
wrongful death beneficiaries were subject to the same contractual defenses that Watson would
have been subject to had he sued. 155 S.W. at 180.
Consistent with our holdings in Thompson and Watson, many courts of appeals have held that a
decedent’s pre-death contract may limit or bar a subsequent wrongful death action. See Newman
v. Tropical Visions, Inc., 891 S.W.2d 713, 719 (Tex. App.—San Antonio 1994, writ denied) (pre-
injury liability release signed by decedent before taking scuba diving lessons barred subsequent
wrongful death and survival action against scuba instructor); Winkler v. Kirkwood Atrium Office
Park, 816 S.W.2d 111, 115 (Tex. App.—Houston [14th Dist.] 1991, writ denied) (release
executed by decedent before joining health club precluded his beneficiaries from bringing
wrongful death and survival action); McClellan v. Boehmer, 700 S.W.2d 687, 690 (Tex. App.—
Corpus Christi 1985, no writ) (release and settlement signed by automobile accident victim
barred survival and wrongful death actions after victim died from injuries sustained in accident).
Despite this line of authority, the wrongful death beneficiaries argue that agreements to arbitrate
are different than other contracts, and they should not be bound by Dancy’s agreement. We reject
their argument. If we agreed with them, then wrongful death beneficiaries in Texas would be bound
by a decedent’s contractual agreement that completely disposes of the beneficiaries’ claims, but
they would not be bound by a contractual agreement that merely changes the forum in which the
claims are to be resolved. Not only would this be an anomalous result, we believe it would violate
the FAA’s express requirement that states place arbitration contracts on equal footing with other
contracts. 9 U.S.C. § 2; see Volt Info. Scs., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489
U.S. 468, 474 (1989).
The beneficiaries also argue that they should not be bound because Dancy did not have the
authority to bind them to the arbitration agreement when the wrongful death cause of action
actually belongs to the surviving spouse, children, and parents of the deceased. While it is true
that damages for a wrongful death action are for the exclusive benefit of the beneficiaries and are
meant to compensate them for their own personal loss, the cause of action is still entirely
derivative of the decedent’s rights. Tex. Civ. Prac. & Rem. Code §§ 71.003(a), .004(a); Russell,
841 S.W.2d at 347. Thus, regardless of the fact that Dancy’s beneficiaries are seeking
compensation for their own personal loss, they still stand in Dancy’s legal shoes and are bound by
In the alternative, the beneficiaries urge us to circumvent the derivative claim rule by holding that
wrongful death actions are analogous to and should be treated similarly to loss of consortium
claims. A tort action seeking damages for loss of consortium, however, is fundamentally different
than a statutory wrongful death action. If Dancy had suffered a severe but nonfatal injury, his
children would have been entitled to bring a claim to recover for the loss of care, guidance, love,
and protection ordinarily provided by their father. Reagan v. Vaughn, 804 S.W.2d 463, 466
(Tex. 1990). Their lost consortium claims would be derivative in the sense that the beneficiaries
would be required to establish Labatt was liable for their father’s underlying injury in order to
recover damages. Whittlesey v. Miller, 572 S.W.2d 665, 668 (Tex. 1978). But loss of consortium
claims are not entirely derivative as are wrongful death claims; instead, they are separate and
independent claims distinct from the underlying action. Id. at 667, 669. Thus, a settlement
agreement signed by an injured spouse does not bar a subsequent loss of consortium claim by
the non-injured spouse. Id. at 669.
A wrongful death action is different than a loss of consortium claim because the Wrongful
Death Act expressly conditions the beneficiaries’ claims on the decedent’s right to maintain suit
for his injuries. Tex. Civ. Prac. & Rem. Code § 71.003(a); see Russell, 841 S.W.2d at 346. The
Legislature created an entirely derivative cause of action when it enacted the Wrongful Death Act,
and Dancy’s beneficiaries are bringing an entirely derivative claim. Their wrongful death action is
not in the same category as a loss of consortium claim for purposes of derivative status analysis.
We decline their invitation to circumvent the clear language of the Wrongful Death Act.
In addition, other states have resolved this issue based on whether the wrongful death action is an
independent or derivative cause of action under state law. See Cleveland v. Mann, 942 So.2d
108, 118-19 (Miss. 2006) (beneficiaries bound by decedent’s arbitration agreement because
under Mississippi Wrongful Death Act, beneficiaries may bring suit only if decedent would have
been entitled to bring action immediately before death); Briarcliff Nursing Home, Inc. v. Turcotte,
894 So.2d 661, 665 (Ala. 2004) (administrator of estate bringing wrongful death claim bound
because administrator stands in legal shoes of decedent); Ballard v. Sw. Detroit Hosp., 327 N.W.
2d 370, 372 (Mich. Ct. App. 1982) (administrator bringing wrongful death action bound by
arbitration agreement because wrongful death is a derivative cause of action under Michigan
law); but see Bybee v. Abdulla, 189 P.3d 40, 43 (Utah 2008) (beneficiaries not bound because
wrongful death is an independent cause of action under Utah law); Finney v. Nat’l Healthcare
Corp., 193 S.W.3d 393, 395 (Mo. Ct. App. 2006) (beneficiary not bound because under Missouri
law the wrongful death act creates a new cause of action belonging to the beneficiaries). Other
states, however, resolve the issue based on what the contracting parties intended. Allen v.
Pacheco, 71 P.3d 375, 379-80 (Colo. 2003) (beneficiaries bound when contract reflects intent of
the parties to bind beneficiaries); Herbert v. Superior Court, 215 Cal. Rptr. 477, 480 (Cal. Ct.
App. 1985) (beneficiaries bound when contract reflects intent of the parties to bind beneficiaries).
A review of the cases decided based on statutory language indicates that courts in states where
wrongful death actions are recognized as independent and separate causes of action are more
likely to hold that the beneficiaries are not bound by a decedent’s agreement to arbitrate, see, e.
g., Bybee, 189 P.3d at 46-47; Finney, 193 S.W.3d at 395, while beneficiaries in states where
wrongful death actions are wholly derivative in nature are generally held to be bound by a
decedent’s arbitration agreement. See Cleveland, 942 So.2d at 118-19; Ballard, 327 N.W.2d at
372; Bybee, 189 P.3d at 46 (“Courts that compel nonsignatory heirs to abide by arbitration
agreements often do so because under their law a wrongful death cause of action is wholly
derivative of and dependent on the underlying personal injury claim.”). Our holding is consistent
with those in the majority of states that have statutes similar to the Texas statute and have
considered the issue.
Some Texas courts of appeals have held that wrongful death beneficiaries are not bound by a
decedent’s agreement to arbitrate. See In re Kepka, 178 S.W.3d 279, 288 (Tex. App.—Houston
[1st Dist.] 2005, orig. proceeding [mand. dismissed]); Gomez v. Zardenetta, No. 04-97-0019-CV,
1998 WL 19858, at *7 (Tex. App.—San Antonio Jan. 21, 1998, no pet.) (not designated for
publication). To the extent the holdings of courts of appeals conflict with our decision, we
disapprove of them.