Olshan Foundation Repair Co. of Jackson, LLC v. Gloria Moore, 251 So. 3d 725

Background

Phillip Moore contracted with Olshan Foundation Repair to repair his home's foundation; contract included a mandatory arbitration clause. Gloria Moore (wife) and adult daughter Katelyn Moore lived in the home.
Phillip, Gloria, and Katelyn sued Olshan and Wayne Brown alleging various claims; Phillip and Gloria sought contract damages, Katelyn alleged negligent/intentional infliction of emotional distress (tort).
Olshan and Brown moved to compel arbitration for all plaintiffs based on the contract signed by Phillip.
The trial court compelled arbitration for Phillip and Gloria but denied enforcement as to Katelyn, finding she was not a third‑party beneficiary and equitable estoppel/direct‑benefit estoppel did not apply.
Olshan and Brown appealed only the denial as to Katelyn. The Mississippi Supreme Court affirmed, holding Katelyn (a nonsignatory) was not bound to arbitrate her tort claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a nonsignatory (Katelyn) is bound by arbitration clause in a contract she did not sign	Katelyn: her claims are torts independent of the contract and she is not bound	Olshan: federal and state policy favor arbitration; Katelyn is bound either as a third‑party beneficiary or by equitable/direct‑benefit estoppel	Held: Katelyn is not bound; arbitration denied as to her claims
Whether Katelyn is a third‑party or direct beneficiary of the contract	Katelyn: not named, not an owner, only an incidental beneficiary (resident)	Olshan: residence and harm “stem from” contract performance, so she should be within intended beneficiaries	Held: Not a third‑party/direct beneficiary; incidental beneficiary only (Simmons controls)
Whether equitable estoppel/direct‑benefit estoppel applies to bind her	Katelyn: she had no knowledge of or intent to rely on the contract; her claims do not require contract reference	Olshan: her injuries arise from the contract performance so she embraced its benefits and should be estopped from avoiding arbitration	Held: Estoppel does not apply; her claims sound in tort and can be pursued independent of the contract
Whether FAA or federal policy governs enforcing arbitration against nonsignatory	Katelyn: Mississippi law governs the contract (parties selected state law), FAA not applicable	Olshan: urges rigorous enforcement under FAA and federal policy favoring arbitration	Held: FAA does not apply; Mississippi contract law controls and courts will not override clear contract text to force arbitration of nonsignatories

Key Cases Cited

Harrison Cty. Commercial Lot, LLC v. H. Gordon Myrick, Inc., 107 So.3d 943 (Miss. 2013) (standard of review for arbitration motions is de novo)
Cmty. Bank of Miss. v. Stuckey, 52 So.3d 1179 (Miss. 2010) (arbitration‑related jurisprudence referenced for standards)
East Ford, Inc. v. Taylor, 826 So.2d 709 (Miss. 2002) (discussing federal policy favoring arbitration)
B.C. Rogers Poultry Inc. v. Wedgeworth, 911 So.2d 483 (Miss. 2005) (courts should not override clear contractual intent simply because arbitration policy is implicated)
Simmons Housing, Inc. v. Shelton ex rel. Shelton, 36 So.3d 1283 (Miss. 2010) (nonsignatory children not bound by parents’ arbitration clause; framework for third‑party beneficiary and estoppel analysis)
Hattiesburg Health & Rehab Center, LLC v. Brown, 176 So.3d 17 (Miss. 2015) (tort claims independent of an admission agreement are not subject to arbitration by estoppel)
Pinnacle Trust Co., L.L.C. v. McTaggart, 152 So.3d 1123 (Miss. 2014) (direct‑benefit estoppel applied narrowly; nonsignatory trustees not bound)
Rein v. Benchmark Construction Company, 865 So.2d 1134 (Miss. 2004) (incidental beneficiary doctrine in construction/contract contexts)
Terminix Int’l, Inc. v. Rice, 904 So.2d 1051 (Miss. 2004) (equitable estoppel applied where plaintiff’s claims relied exclusively on contract)
Scruggs v. Wyatt, 60 So.3d 758 (Miss. 2011) (discussion of when nonsignatories may be bound via estoppel)
Noble Drilling Servs., Inc. v. Certex USA, Inc., 620 F.3d 469 (5th Cir. 2010) (direct‑benefit estoppel doctrine described for nonsignatories)
Burns v. Washington Savings, 171 So.2d 322 (Miss. 1965) (third‑party‑beneficiary test foundations)
Yazoo & M.V.R. Co. v. Sideboard, 133 So. 669 (Miss. 1931) (older precedent on third‑party beneficiary elements)