Wattenbarger v. A.G. Edwards & Sons, Inc.
150 Idaho 308
| Idaho | 2010Background
- Wattenbargers sue A.G. Edwards & Sons, Inc. and Gene Gillette for negligence/malpractice and fraud arising from annuity investments made for Wattenbarger children.
- A.G. Edwards authorization contract contains an arbitration clause governed by the Custodial Account Agreement and FAA, with broad arbitration language and selected forums.
- Tifani signed a new account card in 1993 adopting the Custodial Account Agreement and acknowledging arbitration provisions on page 21, paragraph 13.
- The district court stayed/dismissed the case and awarded attorney fees to respondents based on the arbitration clause; Wattenbargers appeal.
- The court holds arbitration is valid and applies to the dispute, but reverses the attorney-fee award to respondents; issues focus on arbitrability, scope, and unconscionability.
- The opinion addresses whether FAA or Idaho law governs, whether the agreement is authentic and unambiguous, and whether fees were properly awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing law for arbitration | FAA applies; scope can include subsequent claims. | FAA governs; state-law limits do not apply to scope. | FAA applies; state-law principles govern contract interpretation. |
| Arbitrability as matter of law | Questions of fact exist; mislabeling requires summary judgment review. | Arbitrability can be decided de novo as a matter of law. | Arbitrability determined as a matter of law; no genuine fact issue precludes arbitration. |
| Scope of arbitration (tort claims vs. contract) | Lovey controls; torts arising outside contract may not be arbitrable. | Clause broad: all controversies between depositor and custodian are subject to arbitration. | Clause broad enough to cover the Wattenbargers' tort claims. |
| Binding effect on non-signatories (Jared) | Jared not signer should not be bound. | Non-signatory spousal interests and community-property context bind him. | Both Wattenbargers bound by arbitration; spousal-rights doctrine applies. |
| Unconscionability/ statute-based challenges | Clause is procedurally and substantively unconscionable; statutory unconscionability invoked. | Lovey framework supports enforceability; no procedural unconscionability shown. | Arbitration not unconscionable under Lovey; statutory argument not preserved for review. |
Key Cases Cited
- Lovey v. Regence BlueShield of Idaho, 139 Idaho 37 (Idaho 2003) (arbitration clause enforceable where not procedurally unconscionable)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (state-law principles govern contract formation in deciding to arbitrate)
- Lamprecht v. Jordan, LLC, 139 Idaho 182 (Idaho 2003) (contract ambiguity as a threshold for fact-finding)
- Mason v. State Farm Mut. Auto. Ins. Co., 145 Idaho 197 (Idaho 2007) (arbitrability is a question of law; free review)
- Storey Constr., Inc. v. Hanks, 148 Idaho 401 (Idaho 2009) (doubts resolved in favor of arbitration coverage)
- Int'l Assoc. of Firefighters, Local No. 672 v. City of Boise, 136 Idaho 162 (Idaho 2001) (interpretation of arbitration clauses; coverage rule)
- Kaneff v. Delaware Title Loans, Inc., 587 F.3d 616 (3d Cir. 2009) (summary judgment standard for arbitrability; de novo review)
- Loomis v. Cudahy, 104 Idaho 106 (Idaho 1982) (incorporation by reference of terms not signed)