ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C., Plaintiff-Appellant, v. JOHN M. O‘QUINN & ASSOCIATES, L.L.P., d/b/a The O‘Quinn Law Firm, Defendant-Appellee.
No. 12-2915-cv.
United States Court of Appeals, Second Circuit.
April 22, 2013.
518 F. App‘x 761
Accordingly, the January 3, 2012 order is VACATED, and the cause is REMANDED for further proceedings consistent with this opinion.
Felicia S. Ennis (Alan M. Pollack, on the brief) of Robinson Brog Leinwand Greene Genovese & Gluck P.C., New York, NY, for Appellant.
Kenneth R. Breitbeil (Norma N. Bennett, on the brief) of McFall, Breitbeil & Smith, P.C., Houston, TX, and Evan Mandel of Mandel Bhandari LLP, New York, NY, for Appellee.
Present: PETER W. HALL, DENNY CHIN, Circuit Judges, JANE A. RESTANI*, Judge.
Plaintiff-Appellant Robinson Brog Leinwand Greene Genovese & Gluck P.C. (“Robinson Brog“) appeals from the judgment of the United States District Court for the Southern District of New York dismissing its claims for breach of contract, promissory estoppel, quantum meruit, breach of implied contract, unjust enrichment, negligent misrepresentation, and equitable estoppel on the grounds that these claims all must be arbitrated as held in the district court‘s Opinion and Order dated July 10, 2012. Robinson Brog argues that it should not be required to submit to arbitration because: (1) there is no arbitration provision contained in the joint representation agreement it signed; (2) its claims are not within the scope of the arbitration clause contained in the Power of Attorney and Contingency Fee Contract (“Client Agreement“) and subsequent Amendment to Power of Attorney and Contingency Fee Contract (“Amendment“) because it did not sign those agreements; and (3) direct benefits estoppel does not apply to compel arbitration because it seeks to enforce its claims against John M. O‘Quinn & Associates, L.L.P. (“O‘Quinn Firm“) solely under the provisions of their joint representation agreement, which does not contain an agreement to arbitrate. We assume the parties’ familiarity with the facts and procedural history of the case, referencing them only as necessary to explain our decision.
Robinson Brog, the O‘Quinn Firm, and Christian, Smith & Jewell, L.L.P. (“CS & J“) agreed to represent jointly a group of investors and shareholders of Escala Group, Inc. (“Escala clients“) on a contingency fee basis in a potential stock fraud and manipulation case. The firms agreed that the O‘Quinn Firm would provide funding for the litigation and that CS & J and Robinson Brog would handle the majority of the day-to-day legal work. Three documents defined the terms of the engagement in the Escala litigation: (1) the Client Agreement detailed the attorney-client relationship, set the 50% contingency fee rate, memorialized the clients’ promise to pay those fees and to cover
We review the enforceability of an arbitration clause de novo. Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144, 147 (2d Cir. 2004). State law contract principles govern whether there is an enforceable arbitration agreement under the Federal Arbitration Act (“FAA“). See Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 295 (2d Cir. 1999). We need not decide what law determines the issue of whether a non-signatory party should be required to submit its claims to arbitration, as the parties agree that Texas law applies and Texas follows this circuit‘s precedent on the issue. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 738 (Tex. 2005) (citing Thomson-CSF, S.A. v. Am. Arbitration Ass‘n, 64 F.3d 773, 776 (2d Cir. 1995)); Fisser v. Int‘l Bank, 282 F.2d 231, 233 (2d Cir. 1960). A nonsignatory may be bound by an arbitration clause when it has “knowingly accepted the benefits of an agreement with an arbitration clause, even without signing the agreement.” MAG Portfolio Consult, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 61 (2d Cir. 2001) (quoting Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993)); see also Kellogg, 166 S.W.3d at 739-40.
When a non-signatory plaintiff seeks the benefits of a contract that contains an arbitration provision, it is estopped from “denying its obligation to arbitrate.” Am. Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (2d Cir. 1999); see also Kellogg, 166 S.W.3d at 739-40. With respect to Robinson Brog‘s claims, only by virtue of the Client Agreement, the Client Consent, and the Joint Agreement functioning together is there even a basis for generating a potential recovery, and only from such recovery may Robinson Brog be paid its attorneys’ fees and expenses. In that respect, the Client Agreement, by establishing the attorney-client relationship between the plaintiffs and the law firms, is the foundation of these interdependent documents. Without a client to represent, there could be no net settlement or recovery and thus no basis for distributing attorneys’ fees. Robinson Brog argues the sole source of its entitlement to a recovery is the Joint Agreement. That Agreement, however, while apportioning among the respective firms the attorneys’ fees that could be paid, does not contain an independent means of generating the pool of funds from which those fees would be paid. Notwithstanding its efforts to assert otherwise, Robinson Brog cannot limit the basis for its claims only to the Joint Agreement but necessarily invokes the clients’ agreement to pay fees and reimburse expenses embodied in the Client Agreement. Robinson Brog may not seek to benefit from the portion of the Client Agreement that creates the pool of funds for payment of attorneys’ fees without also subjecting itself to the arbitration clause contained in that same agreement.
We have considered all of Robinson Brog‘s remaining arguments and find them to be without merit. Accordingly, the judgment of the district court is AFFIRMED.