Flintkote Co. v. Aviva PLC
2014 U.S. App. LEXIS 19272
| 3rd Cir. | 2014Background
- Flintkote seeks to compel arbitration of Aviva under a theory of equitable estoppel.
- The Wellington Agreement required arbitration for disputes over coverage among London insurers, but Aviva was not a signatory.
- The 1989 Agreement between Flintkote and Aviva allowed litigation, avoiding Wellington ADR for disputes between them.
- Flintkote filed for bankruptcy in 2004; a mediation with London insurers under Wellington began in 2006.
- Aviva joined mediation though not contractually bound by Wellington; a Mediation Agreement kept mediation confidential.
- The Delaware District Court compelled arbitration; the California action was stayed/dismissed; appellate reversal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aviva is equitably bound to arbitrate under Wellington | Flintkote: Aviva embraced Wellington and benefited, warranting estoppel | Aviva: Aviva did not embrace Wellington; mediation under Mediation Agreement was separate | No; no clear and convincing evidence of embrace under Delaware law |
| Whether Aviva’s mediation participation established detrimental reliance | Flintkote relied on Aviva’s mediation participation to foreclose litigation rights | Aviva: reliance on mediation did not waive litigation rights under 1989 Agreement | No; reliance not reasonably detrimental and no waiver of rights established |
| Choice of law for equitable estoppel analysis | Delaware law governs estoppel analysis | Not clearly contested; Delaware law applied | Delaware law governs; clear and convincing standard applied |
Key Cases Cited
- NAMA Holdings, LLC v. Related World Mkt. Ctr., 922 A.2d 417 (Del. Ch. 2007) (equitable estoppel and contract principles for third parties)
- E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187 (3d Cir. 2001) (non-signatory may be equitably bound to arbitration under certain conditions)
- Aveta Inc. v. Cavallieri, 23 A.3d 157 (Del. Ch. 2010) (embrace theory grounds for equitable estoppel)
- Great Am. Credit Corp. v. Wilmington Hous. Auth., 680 F. Supp. 131 (D. Del. 1988) (delays and reliance principles in equitable estoppel context)
- Bouriez v. Carnegie Mellon Univ., 359 F.3d 292 (3d Cir. 2004) (distinguishes between direct benefit and broader embrace concepts)