In this week's Alabama Law Weekly Update, we bring you a case from the Alabama Supreme Court addressing the requirements to compel a non-signatory third-party to arbitrate under a brokerage client agreement.
Ameriprise Financial Services, Inc. v. Jones, [1140893, October 30, 2015] – So. 3d – (Ala. 2015) (non-signatory third-parties' tort-of-outrage claim was dependent on agreement, and plaintiffs were compelled to arbitration under the agreement).
In Ameriprise Financial Services, Inc. v. Jones, Paul and Eleanor Jones (the "Plaintiffs") alleged that Ameriprise Financial Services, Inc. ("Ameriprise") engaged in outrageous conduct by accusing Paul Jones of forgery and kidnapping in connection with changing the beneficiaries of an account owned by Charles Jones and by denying the Plaintiffs' claims to the account proceeds after Charles Jones' death. The trial court held that the Plaintiffs' tort-of-outrage claim was not subject to the arbitration provision in the brokerage client agreement because the tort of outrage claim did not depend on the existence of the agreement. On appeal, Ameriprise argued that the Plaintiffs' claim was governed by the arbitration clause because the claim arose from events connected to the agreement. The Alabama Supreme Court reversed the trial court's ruling that the arbitration clause did not govern the Plaintiffs' tort-of-outrage claim.
A non-signatory third-party is bound by an arbitration provision if the third-party asserts claims that rely on the presence of the underlying contract containing the arbitration provision. The Plaintiffs argued that the tort-of-outrage claim was independent of the underlying contract, claiming there was a minimal connection between the contract and Ameriprise's alleged false reporting of forgery and kidnapping. The Alabama Supreme Court stated that an examination of the facts surrounding the Plaintiffs' claim was required to determine the connection of the claim to the contract.
The Alabama Supreme Court concluded that the Plaintiffs' claim was connected to the contract. In its analysis, the court found that the claim arose from Ameriprise's conduct associated with the Plaintiffs' attempt to change the beneficiary of the account. The court noted that the language of the agreement was broad enough to cover any controversy that arose in connection with the agreement. Concluding that the claim and the contract were sufficiently connected, the Alabama Supreme Court emphasized that without the agreement, the attempted beneficiary change and Ameriprise's subsequent actions would never have occurred.