German American Financial Advisors & Trust Co. v. Reed
2012 Ind. App. LEXIS 296
| Ind. Ct. App. | 2012Background
- Reed opened an IRA with PrimeVest/GAFA on March 13, 2003, signing the 2003 New Account Application that referenced an arbitration clause and Customer Agreement Section 20.
- The Customer Agreement incorporated by reference in the application contains an arbitration clause requiring arbitration of disputes.
- In 2006 Reed rolled his IRA into a John Hancock variable annuity; Tooley allegedly misrepresented penalties and withdrawal terms.
- On April 15, 2009 Reed filed a complaint alleging securities violations, fraud, negligence, and fiduciary-duty claims.
- Appellants moved to compel arbitration in 2009 and 2010, with issues about what version of the arbitration agreement existed and whether records supported arbitration; the trial court denied both motions.
- The Indiana Court of Appeals reversed and remanded, holding there was an enforceable arbitration agreement and that Reed’s claims against GAFA must be arbitrated under equitable estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitration enforceability of the agreement | Reed argues no enforceable agreement exists due to missing/altered documents | GA/Tooley show an enforceable arbitration clause in the 2003-2008 documents | Arbitration agreement exists and covers the dispute; second motion to compel affirmed on remand |
| GAFA’s right to arbi trate Reed’s claims | Reed contends GAFA cannot be compelled under arbitration | Appellants argue GAFA is bound as third-party beneficiary or via equitable estoppel | Equitable estoppel binds Reed to arbitrate against GAFA; GAFA compelled to arbitrate |
Key Cases Cited
- Williams v. Orentlicher, 939 N.E.2d 663 (Ind. Ct. App. 2010) (standard for reviewing motion to compel arbitration; contract interpretation favors arbitration when appropriate)
- MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942 (11th Cir. 1999) (equitable estoppel allows nonsignatories to compel arbitration under certain interdependent claims)
- Sunkist Soft Drinks v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir. 1993) (equitable estoppel framework for nonsignatories)
- Showboat Marina Casino P’ship v. Tonn & Blank Constr., 790 N.E.2d 595 (Ind. Ct. App. 2003) (arbitration scope and enforceability principles under Indiana law)
- Bielfeldt v. Nims, 805 N.E.2d 415 (Ind. Ct. App. 2004) (arbitration contract terms must have reasonable certainty)
- Wolvos v. Meyer, 668 N.E.2d 671 (Ind. 1996) (exclusive focus on essential terms for contract enforceability)