beneficiary’s claims of breach of fiduciary duty and negligence against financial advisor arose from duties beyond the duties under the account agreement; court reasoned that under Oklahoma law fiduciary duties can arise outside of a contractual relationship; also because agreement excluded third-party beneficiaries from being bound
How later courts described this case
- beneficiary’s claims of breach of fiduciary duty and negligence against financial advisor arose from duties beyond the duties under the account agreement; court reasoned that under Oklahoma law fiduciary duties can arise outside of a contractual relationship; also because agreement excluded third-party beneficiaries from being bound
- explaining a valid contract requires “a meeting of the minds”
Written by the judges who cited it.
The opinion
KENNETH L. BUETTNER, Judge:
(specially concurring).
¶ 16 At issue in this case is whether a trust beneficiary, who was not a signatory to the trust account set up with Merrill Lynch by the trustee, may be compelled to arbitrate based on an arbitration provision included in the trust account agreement. Appellant, the beneficiary of the trust which was purportedly dissipated by the trustee without Appellant’s knowledge, filed his petition against Merrill Lynch alleging that Merrill Lynch breached its fiduciary duty to Appellant and also alleging that Merrill Lynch negligently failed to protect the trust corpus.
¶ 17 The majority holds that Appellant may not be bound by the arbitration clause in the account agreement because Appellant did not sign the agreement, was unaware of the agreement, and because a trustee is not an agent of the trust beneficiaries. In addition, the majority holds that the Petition alleges violations of duty independent of the account agreement. Under these circumstances, I agree that the reference to arbitration was error. However, I would not go as far as the majority opinion goes by implying that under no circumstances may a non-signatory be bound contractually to arbitration. It has been held that a party may be bound by an arbitration agreement even when that party has not signed the arbitration agreement. Merrill Lynch, Pierce, Fenner & Smith v. Eddings, 838 S.W.2d 874, 879 (Tex.App.1992). Eddings held that trust beneficiaries may be bound by an arbitration clause *100 included in a trust account agreement entered by the trustee and an investment firm even when the beneficiaries have not signed the account agreement. Id. The key is whether the account agreement, containing the arbitration clause, is the underlying basis for all of the beneficiaries’ claims; if so, the non-signatory beneficiary will be bound by the arbitration agreement. Id. In other words, if the beneficiaries would have no claim against the investment firm in the absence of the agreement containing the arbitration clause, then the beneficiaries are bound by the arbitration clause in the agreement giving rise to their claims, despite the fact they did not sign the agreement themselves. Id. I find Eddings persuasive.
¶ 18 I concur with the majority’s decision to the extent that Appellant is able to articulate some claim against Merrill Lynch not arising out of the account agreement which contained the arbitration clause. At this point, we are dealing solely with allegations in the Petition, and not addressing the validity of those claims either legally or factually. If Appellant’s claims all arise out of the account agreement signed by the trustee and Merrill Lynch, then based on the holding in Eddings , the trial court correctly ruled that Appellant was bound by the arbitration agreement.