Appellants, no signatories of a contract that contained an arbitration clause

Procedural Posture

Appellants, no signatories of a contract that contained an arbitration clause, sought review of an order from the Superior Court of Contra Costa County (California), which denied their motion to compel arbitration of claims related to the contract that were brought against them by respondent, a signatory party.

Overview

The complaint alleged that the nonsignatories, who were shareholders and directors of a dissolved corporation, had improperly dissolved the corporation and distributed its assets. The first cause of action asserted an alter ego theory, and the complaint also contained three statutory claims that made reference to the contract and sought recovery of a sum owed under it. The court stated that there was no persuasive reason why a nonsignatory should be precluded from compelling arbitration if sued as a signatory's alter ego. Because they were sued for breach of the agreement on the ground that they were the corporation's alter egos, litigation attorney Los Angeles the nonsignatories were entitled to the benefit of the arbitration provisions. The court further held that equitable estoppel applied to all causes of action because all of the claims relied upon the agreement. A signatory plaintiff seeking to enforce a written contract containing an arbitration clause could be estopped from denying arbitration as to nonsignatories who were sued as related or affiliated persons with the signatory entity. The nonsignatories were not third parties within the meaning of Code Civ. Proc., § 1281.2, subd. (c).

Outcome

The court reversed and remanded to the trial court for entry of a new and different order granting the motion to compel arbitration.