Williams v. Orentlicher
2010 Ind. App. LEXIS 2489
| Ind. Ct. App. | 2010Background
- ISTA established the Trust in 1985 as a separate entity to provide insurance programs for Indiana school districts, managed by a nine-member Board of Trustees.
- Williams (Executive Director) and Frankel (Deputy Executive Director of the FSP) served ex officio as Trust trustees and had fiduciary duties to the Trust.
- In 2008–2009, Williams and Frankel renewed their ISTA employment agreements, which contained arbitration clauses, but did not mention the Trust.
- The Trustees filed a lawsuit against Williams and Frankel in July 2009 alleging breaches of fiduciary duties, with the Trust not named as a party to the arbitration actions.
- Williams and Frankel moved to compel arbitration of the Trustees’ claims, arguing the Trust was bound by their ISTA employment arbitration provisions.
- The trial court denied the motion to compel arbitration; Williams and Frankel appeal to challenge that denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Trust is bound by arbitration clauses in ISTA employment agreements | Trust estopped from denying arbitration | Trust as nonparty should be bound by arbitration | Trust not bound; not a party to agreements |
| Whether the Trust is an intended third-party beneficiary of the employment agreements | Trust benefits from agreements and should be bound | Third-party beneficiary status applies; should be bound | Trust is not bound as third-party beneficiary on these facts |
| Whether a close relationship between ISTA and the Trust compels arbitration | Interconnected structure warrants arbitration of Trust claims | Close relationship not enough to bind nonsignatory | Close relationship theory fails; Trust not compelled to arbitrate |
Key Cases Cited
- Hughes Masonry Co. v. Greater Clark County School Building Corp., 659 F.2d 836 (7th Cir. 1981) (estoppel applies when nonparties’ claims are grounded in the contract terms)
- MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942 (11th Cir. 1999) (equitable estoppel of nonsignatories to arbitrate based on intertwined contract claims)
- Sunkist Soft Drinks v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir. 1993) (equitable estoppel for nonsignatories; analyze claim nature to fit arbitration clause)
- MAG Portfolio Consultant, GMBH v. Merlin Biomed Group, LLC, 268 F.3d 58 (2d Cir. 2001) (equitable estoppel depends on nature of claims and their relation to contract)
- TWH, Inc. v. Binford, 898 N.E.2d 451 (Ind.Ct.App. 2008) (third-party beneficiary bound by arbitration where contract benefits are conferred)
- R.J. Griffin & Co. v. Beach Club II Homeowners Association, Inc., 384 F.3d 157 (4th Cir. 2004) (construction-related duties not arising from general contract; arbitration not compelled)
- Binford (TWH, Inc. v. Binford), 898 N.E.2d 451 (Ind.Ct.App. 2008) (dissent’s reliance on third-party beneficiary logic; not adopted in main opinion)
- Med. Realty Assocs., LLC v. D.A. Dodd, Inc., 928 N.E.2d 871 (Ind.Ct.App. 2010) (indiana contract/arbitration principles cited)