Carter v. TD AMERITRADE HOLDING CORP., 721 S.E.2d 256

Plaintiffs invested beginning in 2001 with LSW, Reinhardt, Capital Investor Group, Fiserv defendants and related entities, later administered by Fiserv ISS and Lincoln Trust.
In 2006, plaintiffs' plan assets were rolled into self-directed IRAs; signatures appear on Traditional IRA Applications with Stretch Provisions creating arbitration agreements and on investment authorization forms directing investments in LLCs.
Arbitration statements in the IRA contracts provide binding arbitration under AAA rules and restrict forum to Denver, Colorado when damages exceed $75,000.
Plaintiffs alleged their signatures on IRA contracts and investment forms were forged; defendants argued signatures were valid and that arbitration clauses are enforceable by contract, agency, ratification or equitable estoppel.
Trial court denied arbitration and ordered release of records; it found insufficient proof of forgery and separately concluded issues of ratification and equitable estoppel but did not compel arbitration.
Court of Appeals held that, applied to the record, plaintiffs ratified the unauthorized act and were equitably estopped from denying arbitration; reversed the trial court and remanded to compel arbitration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is there an enforceable arbitration agreement between the parties?	Carter contends signatures were forged, so no agreement.	Defendants argue FAA and North Carolina law bind via arbitration clauses under agency/ratification/equitable estoppel.	Yes; arbitration enforceable due to ratification and estoppel.
Did plaintiffs ratify the unauthorized IRA documents containing arbitration clauses?	Ratification did not occur since signatures were forged and beyond plaintiffs' control.	Plaintiffs ratified through continued acceptance of benefits and administration under the IRA contracts.	Yes; plaintiffs ratified the unauthorized acts as a matter of law.
Does equitable estoppel preclude plaintiffs from denying arbitration?	Equitable estoppel should not apply since contracts were not signed by plaintiffs.	Plaintiffs cannot reap contract benefits while avoiding arbitration; estoppel supports arbitation.	Yes; plaintiffs are equitably estopped from denying applicability of arbitration.

Perry v. Thomas, 482 U.S. 483 (Supreme Court 1987) (FAA preempts and respects state contract principles in validity of arbitration clauses)
Park v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 159 N.C.App. 120 (2003) (arbitration applicable to contracts involving interstate commerce)
Routh v. Snap-On Tools Corp., 101 N.C.App. 703 (1991) (summarily decide enforceability of arbitration when challenge to agreement exists)
Griggs v. Stoker Service Co., 229 N.C.572 (1948) (when facts are disputed, ratification is a question of fact; otherwise review de novo)
American Bankers Ins. Group v. Long, 453 F.3d 623 (4th Cir. 2006) (equitable estoppel can bind non-signatories to arbitration when underlying claims rely on contract duties)
Long v. American Bankers Ins. Group, 453 F.3d 623 (4th Cir. 2006) (underlying claims depend on contract duties; estoppel applies to enforce arbitration)
International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000) (arbitration and estoppel principles shaping contract-based disputes)
Ellen v. A.C. Schultes of Md., Inc., 172 N.C.App. 317 (2005) (equitable estoppel in arbitration context; contract-based benefits can bind)
Carolina Equipment & Parts Co. v. Anders, 265 N.C. 393 (1965) (knowledge and ratification principles for agency and contract)
Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (background principles of state contract law govern validity/enforceability of arbitration)