[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-12654 JULY 11, 2007
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 05-00118-CV-1-MP-AK
ANNE S. BECKER, individually and
as Trustee of Anne S. Becker
Charitable Remainder Unitrust,
Defendant-Appellee,
versus
JOHN A. DAVIS,
a.k.a. Jeff Davis,
FALCON FINANCIAL MANAGEMENT, INC.,
FALCON FINANCIAL PLANNING, INC.,
MULTI-FINANCIAL SECURITIES CORPORATION,
successor by merger to IFG Network
Securities Inc.,
Plaintiffs-Appellants,
WILLIAM D. KING, et al.,
Defendants.
________________________
Appeal from the United States District Court
for the Northern District of Florida
_________________________
(July 11, 2007)
Before CARNES, WILSON and HILL, Circuit Judges.
WILSON, Circuit Judge:
This appeal concerns a motion to compel a plaintiff, Anne S. Becker
(“Becker”), to submit the claims in her complaint to arbitration pursuant to the
Federal Arbitration Act, 9 U.S.C. §§ 1-16. Becker, on her own behalf and as
trustee on behalf of her charitable remainder trust, filed a complaint against various
financial advisors alleging that they provided her and the trust with unsound
financial advice. We conclude that some of Becker’s individual claims are subject
to arbitration and others are not. We further conclude that the financial advisors
who did not contract with Becker to submit their disputes to arbitration can compel
arbitration only to the extent that they allegedly collaborated with those who did so
contract.
Becker, individually and as the trustee for the Anne S. Becker Charitable
Remainder Unitrust (“the Trust”) (collectively “the plaintiffs”), filed suit in the
United States District Court for the Northern District of Florida against John A.
Davis, Jr.; William D. King; Falcon Financial Management, Inc.; Falcon Financial
Planning, Inc.; Multi-Financial Securities Corporation, successor by merger to IFG
Network Securities, Inc.; IFG Advisory Services Inc., f/k/a Associated Financial
Planners, Inc.; Michael T. Hartley; Dale K. Ehrhart; Michael G. Tillman; Michael
2
Tillman, P.A.; and Tillman Hartley LLC. Essentially, the complaint alleges that
these defendants provided Becker and the Trust with unsound financial advice that
lined the pockets of the the defendants at the expense of plaintiffs.
The defendants John A. Davis (“Davis”), Falcon Financial Management,
Inc., (“Falcon FM”), Falcon Financial Planning, Inc. (“Falcon FP”), Multi-
Financial Securities Corporation, successor to IFG Network Securities, Inc. (“IFG-
SEC”) and IFG Advisory Services, Inc. (“IFG-AS”) (collectively “the defendants”)
filed a motion to compel arbitration based on three contractual agreements that the
Trust entered into with Davis and IFG-SEC. Each of the three agreements contain
an arbitration clause. The district court granted the defendants’ motion in part and
denied the motion in part. The court granted the motion as it related to the claims
brought by Becker as trustee on behalf of the Trust. The court denied the motion
as it related to the claims brought by Becker in her individual capacity, because she
was not a signatory to the agreements. The district court also denied the motion as
to Falcon FM and Falcon FP, because they, too, were not signatories to the
agreements. The defendants appeal the district court’s order. We affirm in part,
reverse in part, and remand for the reasons set forth in this opinion.
I. BACKGROUND
In 1994 Becker inherited approximately $9 million and moved to Florida a
3
year later. Shortly after her arrival in Florida, Becker met Defendant William D.
King (“King”), who introduced her to Davis and defendant Michael G. Tillman
(“Tillman”).1 During all relevant times, Davis was president and principal owner
of Falcon FM and Falcon FP. Davis was also a registered representative and
registered principal of IFG-SEC and a registered investment advisor of IFG-AS. In
late 1996, on the advice of Davis, Becker created the Trust and named herself and
Davis as trustees.2 Becker claims that she ultimately placed approximately $3
million, one third of her assets, in the Trust.
A. The Complaint
On July 15, 2005, Becker and the Trust filed suit against the defendants.
The complaint alleges a wide variety of allegations. In general, the complaint
alleges that all the defendants were working together to induce Becker and the
Trust to adopt a financial strategy that was unsuitable for her personal investment
objectives. The complaint also generally alleges that the “Conspiring Defendants”3
failed to disclose that they were engaged in a scheme to defraud Becker and the
1
The defendants King and Tillman are not part of this appeal.
2
The documents that created the Trust are not part of the record. The complaint alleges
that the Trust was created on December 2, 1996, and one of the agreements that the Trust entered
into with IFG-SEC also indicates that the Trust was created on December 2, 1996. However, the
Trust opened an account with IFG-SEC on November 11, 1996.
3
In the complaint, the “Conspiring Defendants” are the defendants Davis, King, Hartley,
and Tillman.
4
Trust:
(a) by wrongfully creating an inappropriate investment environment and
structure to control the use and investment of Plaintiff’s assets for an
inordinately long period of time; (b) by wrongfully creating an investment
vehicle or structure for Plaintiff that would make it very difficult, if not
impossible, for her to extricate herself or her assets from the Conspiring
Defendants’ control; (c) by wrongfully charging Plaintiff and sharing among
themselves excessive, illegal, and undisclosed fees and commissions; (d) by
wrongfully creating for themselves opportunities to provide and charge
Plaintiff for extensive, unnecessary, and improper fee generating
“professional” services; and (e) by preparing or causing to be prepared
complex documents lacking provisions customarily found in, or containing
provisions not usually found in, similar types of documents properly
prepared by others, and by inducing Plaintiff to execute them in order to
extend improperly their own control over Plaintiff’s assets, and to facilitate
their continuing Scheme to Defraud; all without regard for Plaintiff’s
interests, and for the fundamental purpose of maximizing their own profits
and wealth at the expense of their client.
The complaint more specifically alleges actions by the defendants as to
Becker and actions by the defendants as to the Trust. As to Becker as an
individual, the complaint alleges, among other things, that Davis, Tillman, and
King gave her improper financial advice concerning a real estate transaction where
Becker had purchased, along with a partner, Susan Berger, approximately 175
acres of land in Micanopy, Florida to start a business to train and board horses.
Becker also alleges that Davis opened a money market account without her consent
in the name of “ANNE S. BECKER & JOHN A. DAVIS JR JTWROS (joint
tenants with right of survivorship).” Further, based on Davis’s advice, Becker also
5
created the Anne S. Becker Irrevocable Trusts. These two trusts were created to
provide life insurance benefits to certain beneficiaries. Becker alleges that Davis
received, without her knowledge, an insurance agent commission in connection
with the insurance policy issued to her and that the trusts themselves were
unsuitable for Becker’s needs.
The complaint alleges, among other things, that pursuant to the advice of
Davis and King, the Trust invested in the CNL Income Fund XVIII, Ltd. (“CNL”)
and the investment in this security was unsuitable for the Trust. Also pursuant to
Davis and King’s advice, the Trust opened investment accounts with DKE and SEI
Investments. The complaint alleges that Davis and his companies received
improper fees based on these investments.
Based on these and other factual allegations, Becker and the Trust filed a
twenty-count complaint. Becker, in her individual capacity, brought fifteen counts.
The Trust brought four counts, and Becker and the Trust collectively brought one
count.4
B. The Arbitration Agreements
During the course of Becker and the Trust’s relationship with the
defendants, the Trust executed three agreements with IFG-SEC. On November 11,
4
Counts Thirteen and Eighteen do not seek relief against moving the defendants.
6
1996, the Trust executed the Goals Direct Client Services Agreement (“agreement
one”). Agreement one, which was signed by Becker, as trustee, and lists Davis as
the registered representative of IFG-SEC, opened an investment account with IFG-
SEC, which would provide the Trust with broker and portfolio advisor services for
the purchase and sale of securities. Agreement one contains an arbitration clause,
which states that “[a]ny controversy between us arising out of our business or this
agreement shall be submitted to arbitration conducted before the National
Association of Securities Dealers Inc., in accordance with their rules.”
On December 7, 1996, the Trust executed a document that opened another
account with IFG-SEC (“agreement two”). Agreement two also contains an
arbitration clause, which provides that “[i]t is agreed that any controversy between
myself and IFGNS 5 arising out of the business of IFGNS or this Agreement . . .
shall be submitted to arbitration conducted under the Code of Arbitration
Procedure, then applying, of the National Association of Securities Dealers, Inc.”
The record copy of agreement two is practically illegible, and the line containing
the parties signatures is cut off. However, it is clear that the account was opened
on behalf of the Trust.
On October 18, 1998, the Trust executed a document opening another
5
IFGNS refers to IFG Network Securities, Inc., which is referred to as IFG-SEC in this
opinion.
7
account with IFG-SEC (“agreement three”). Agreement three is the same
document as agreement two and contains the same arbitration clause. Agreement
three was signed by Becker as trustee and Davis as a representative of IFG-SEC.
However, agreement three contains an additional page that limits the type of
services provided by IFG-SEC to the Trust.6 Paragraph twelve on the second page
of agreement three states that the representative, “might offer non-securities
products and services. I also understand all non-securities products and services
are outside Representative’s relationship with IFGNS and as such I shall hold
IFGNS harmless for any loss I may incur associated with non-securities products
and services.” Agreement three describes such non-securities products and
services as insurance, real estate, accounting, tax preparation, and financial
planning, among other things.
Relying on these three agreements, the defendants filed a motion to compel
arbitration of all the counts against them in the complaint, both the counts brought
on behalf of the Trust, as well as the counts brought on behalf of Becker. In its
order granting in part and denying in part the defendants’ motion, the district court
made three separate rulings, each of which is before us on appeal. First, the district
6
It is apparent that at least two of the three agreements contained in the record are
incomplete. Agreement one is missing pages. Agreement two is virtually illegible and is only
one page, even though the document indicates that it had a reverse side to it.
8
court denied the defendants’ motion as it related to Becker’s individual claims,
because Becker, in her individual capacity, was not a signatory to the agreements.
Second, the district court found that only the defendants Davis, IFG-SEC, and IFG-
AS 7 could compel the Trust to arbitrate, for the other defendants, Falcon FM and
Falcon FP, were not signatories to the agreements. Third, the district court held
that Becker and the Trust’s claim for an accounting of the Trust’s assets did not
arise from the “business” as referred to in the three agreements, and therefore, this
claim was not subject to arbitration.
To decide this appeal, we review the scope of the three arbitration
agreements between the Trust and the defendants, and engage in a painstakingly
thorough review of a twenty-count, 110 page complaint.
II. STANDARD OF REVIEW
“We review de novo a district court’s denial of a motion to compel
arbitration.” Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 873
(11th Cir. 2005). We also review de novo a district court’s decision to deny a
motion to compel arbitration on the ground that the moving party was not a
signatory. MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 946 (11th Cir. 1999).
III. DISCUSSION
7
In its order, the district court refers to the defendants IFG-SEC and IFG-AS as Multi-
Financial Securities Corp., the successor corporation.
9
A. Scope of the Arbitration Agreements
The first step in determining the propriety of a motion to compel arbitration
pursuant to Section 4 of the Federal Arbitration Act (“FAA”) is “to determine
whether the parties agreed to arbitrate the dispute.” Klay v. All Defendants, 389
F.3d 1191, 1200 (11th Cir. 2004) (citing Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth Inc., 473 U.S. 614, 626, 105 S. Ct. 3346, 3353, 87 L. Ed. 2d
444 (1985)).8 While there is a liberal federal policy favoring arbitration
agreements, “the FAA’s strong proarbitration policy only applies to disputes that
the parties have agreed to arbitrate.” Id. A party cannot be forced to arbitrate any
dispute that the party has not agreed to submit to arbitration. See Volt Info. Scis.,
Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479, 109 S.
Ct. 1248, 1256, 103 L. Ed 2d 488 (1989) (“Arbitration under the [FAA] is a matter
of consent, not coercion . . .”).
In agreement one, the parties agreed to arbitrate “any controversy between
us arising out of our business or this agreement.” The arbitration clauses in
agreements two and three are substantially similar to agreement one’s arbitration
clause in that the parties agreed to arbitrate “any controversy between myself and
8
The second step in ruling on a motion to compel arbitration is to determine “whether
legal constraints external to the parties’ agreement foreclosed arbitration.” Mitsubishi Motors,
473 U.S. at 628, 105 S. Ct. at 3355. Because the parties dispute only the scope of the
agreements, and not their enforcement, we need not discuss the second step of the analysis.
10
IFGNS arising out of the business of IFGNS or this agreement.” All three
arbitration clauses state that the arbiter of any potential dispute would be the
National Association of Securities Dealers, Inc. (“NASD”).
We agree with the district court’s finding that the “business” referred to in
the arbitration clauses was the business of providing investment services in
connection with the buying and selling securities. This is evidenced by the plain
language of the agreements. Agreement one outlines that the portfolio advisor will
make recommendations to the Trust “with respect to investment and reinvestment
of the assets in the Account in no-load investment company shares (no load mutual
funds) or in load investment company shares at their net asset value.” Agreement
one also names a specific representative to handle all sale and purchase orders
directed to it by the broker and also to handle other custodial functions performed
with respect to the security brokerage account.
Agreement three specifically limits the extent of the agreement to cover only
security related products and services and expressly excludes non-security services
such as advice on accounting, real estate, tax preparation, and financial planning.
Agreement three also specifically states that “[the client] appoints IFGNS as my
agent for the purpose of carrying out my directions with respect to the purchase
and sale of securities and, as such, IFGNS is authorized to open or close brokerage
11
accounts, place and withdraw orders and take such other steps as are reasonable to
carry out my directions.” Therefore, the parties agreed to arbitrate all disputes
concerning the defendants’ security related investment advice to the Trust.
B. Becker’s Individual Claims
1. Becker as a Nonsignatory
Having outlined the scope of the arbitration agreements, we next consider
whether Becker, as a nonsignatory to these agreements, can be bound by the
agreements’ arbitration clauses. The defendants argue that the district court erred
in finding that Becker did not have to arbitrate her individual claims simply
because she was not a signatory to the three agreements. We agree to the extent
that Becker’s individual claims rely upon the terms of the agreements and attempt
to hold the defendants to these terms.
“Although arbitration is a contractual right that is generally predicated on an
express decision to waive the right to trial in a judicial forum, this court has held
that the lack of a written arbitration agreement is not an impediment to arbitration.”
Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 756-57 (11th Cir.
1993). Certain exceptions, such as equitable estoppel, can bind a nonsignatory to
an arbitration agreement. Id. at 757. The defendants cite Blinco v. Green Tree
Servicing, LLC, 400 F.3d 1308 (11th Cir. 2005); and McBro Planning &
12
Development v. Triangle Electrical Construction Co., 741 F.2d 342 (11th Cir.
1984); in support of this argument.
In Blinco, Mr. and Mrs. Blinco, a husband and wife, signed and executed a
mortgage. Mr. Blinco alone signed and executed the promissory note that
contained an arbitration clause. Later, the Blincos brought an action against Green
Tree, who owned the mortgage, for violating the Real Estate Settlement Procedures
Act. We held that even though Mrs. Blinco was not a signatory on the note, she
was bound by the arbitration clause because “[e]quitable estoppel precludes a party
from claiming the benefits of a contract while simultaneously attempting to avoid
the burdens that contract imposes.” Id. at 1312 Since Mrs. Blinco’s claims against
Green Tree derived from her status as a borrower under the promissory note, we
held that she could not rely on the note to establish her claims and at the same time
seek to avoid the obligation to arbitrate her claims. Id.
In McBro, we also held that a party may be equitably estopped from
asserting that the lack of a written arbitration agreement precludes arbitration. 741
F.2d at 344. The plaintiff, a general contractor, entered into an agreement to
renovate a hospital. The agreement contained an arbitration clause, as well as
references to the construction manager, McBro. The agreement also detailed
McBro’s duties. After the project began, the general contractor alleged that McBro
13
interfered with its work, and the contractor filed an action alleging, among other
things, contractual interference and negligence counts. McBro moved the district
court to compel arbitration, and the court granted the motion. The contractor
argued that it did not have a written agreement with McBro, and the Federal
Arbitration Act requires that there be a written agreement between parties to
arbitrate.
We affirmed the district court’s order compelling arbitration. Id. at 344. We
stated that although the contract between the contractor and the hospital actually
disclaimed any contractual relationship between the contractor and McBro, “the
general conditions of that contract are replete with references to McBro’s duties as
construction manager . . . [with] regards to the supervision of the project” and “the
contractor’s claims are ‘intimately founded in and intertwined with the underlying
contract obligations.’” Id. (quoting Hughes Masonry Co. v. Greater Clark County
Sch. Bldg. Corp., 659 F.2d 836, 841 n.9 (7th Cir. 1981)). In asserting its claims
against McBro, the contractor was relying on the agreement with the hospital as it
related to McBro’s duties; therefore, the contractor could be equitably estopped
from then repudiating the arbitration clause contained in the same agreement. Id.
Blinco and McBro establish that if a party relies on the terms of a written
agreement in asserting the party’s claims, that party is equitably estopped from
14
then seeking to avoid an arbitration clause within the agreement. Therefore, to the
extent that Becker is relying upon the terms of the three agreements and attempting
to hold the defendants to those terms in asserting her individual claims, she is
bound by the arbitration clauses contained in those agreements. Accordingly, we
must focus on the nature of Becker’s individual claims against the defendants to
determine whether her claims fall within the scope of the arbitration clauses
contained in the agreements.
2. Applicability of the Arbitration Agreements to Becker’s Individual
Claims
Citing McBro, the defendants argue that since each count in the complaint
incorporates allegations that the defendants failed to provide Becker and the Trust
with proper investment advice, Becker’s individual claims are intertwined with or
connected to the agreements that contain the arbitration clauses. Therefore, the
defendants argue that all of Becker’s individual claims are subject to arbitration.
Our holding in McBro does not compel a finding that all the disputes in the
complaint are subject to arbitration. In McBro, we adopted the Seventh Circuit’s
reasoning in Hughes that a plaintiff’s claims were subject to arbitration if in the
complaint the plaintiff was attempting to hold the defendant to the terms of the
agreement that contained an arbitration clause. 741 F.2d at 344. Only then would
the plaintiff’s claims be “‘intimately founded in and intertwined with the
15
underlying contract obligations.’” Id.; see Sunkist, 10 F.3d at 757 (stating that the
decision in McBro “rest[ed] on the foundation that ultimately, [the] party must rely
upon the terms of the written agreement in asserting [the party’s] claims”).
In this case, not all aspects of Becker’s claims rely upon or attempt to hold
the defendants to the terms of the three agreements. For example, in Count Seven,
Becker alleges that the defendants breached a fiduciary duty owed to her as an
individual.9 Not all aspects of this count concern investment advice to the Trust.
Paragraphs 54–64 allege that in early 1996, prior to the creation of the Trust,
Becker and her friend Susan Berger purchased approximately 175 acres of land to
train and board horses. Becker and Berger owned the farm as joint tenants with
right of survivorship, and Becker incorporated the business, naming it Broken
Fiddle. Becker borrowed a large sum of money in order to operate the business
and secured the note with the farm’s mortgage. Becker alleges that the defendants
Davis, Tillman, and King gave her poor financial advice as to the structure of the
note and mortgage, and they failed to secure Berger’s financial obligations to the
business. In paragraphs 66–68, Becker alleges that she provided approximately $2
million of financial assistance to Broken Fiddle, and Davis permitted Becker to file
a report with the Internal Revenue Service that the financial assistance to the
9
In Count Seven, Becker realleges paragraphs 1–113.
16
business was a gift and not a loan or an investment. Therefore, Davis allowed
Becker to forfeit substantial income tax benefits.
In these allegations, Becker is not relying on or attempting to hold the
defendants to the terms and duties contained in the three agreements. To find
otherwise would lead to an illogical result. The terms and duties contained in the
three agreements refer to the defendants’ obligations to the Trust concerning
security investments. If we were to find that in the above allegations, some of
which occurred prior to the creation of the Trust, that Becker is attempting to hold
the defendants to the terms and duties in the agreements and therefore send these
disputes to arbitration, the NASD would be required to arbitrate a dispute
concerning Davis’s advice to Becker about the structure of the farm’s mortgage
and the filing of her personal income tax return. These are not the type of disputes
that the parties agreed to arbitrate in the three agreements. Moreover, agreement
three specifically excludes real estate and tax preparation disputes from the
agreement. Our case law forecloses us from forcing parties to arbitrate disputes
that they did not agree to arbitrate. Klay, 389 F.3d at 1200.
We acknowledge that many disputes contained within Count Seven are
covered by the agreements and are thus subject to arbitration. Paragraph 176
specifically alleges that Davis’s decision to invest in CNL was unsuitable for the
17
Trust. This dispute clearly falls within the scope of the arbitration agreements, and
Becker, as a nonsignatory, is bound to arbitrate this dispute, because in this
instance, she is attempting to hold the defendants to the terms of the agreements.
We further acknowledge that the manner in which the complaint is pled is
problematic because many, if not all, of Becker’s individual claims against the
defendants contain both arbitrable and non-arbitrable disputes. For example, in
Count Nine, Becker alleges that the defendants engaged in fraud and deceit.10 She
generally alleges that “Defendant Davis falsely represented to Plaintiff that
everything he did was intended to protect and enhance her financial interests,” and
that his representations and promises to her were false. Paragraphs 74–88
specifically refer to investments concerning the Trust. These disputes are within
the scope of the arbitration agreements and are thus arbitrable. However,
paragraphs 90–92 allege that Davis opened a money market account with Scudder
Investments in the name of “ANNE S. BECKER & JOHN A. DAVIS JR JTWROS
(as joint tenants with right of survivorship).” Becker alleges that she never gave
Davis “any right, title, or interest” to her money that was deposited in the account.
This aspect of Count Nine is not within the scope of the arbitration agreements, for
this allegation does not implicate a dispute concerning the accounts that the Trust
10
In Count Nine, Becker realleges the factual allegations set forth in paragraphs 1–53
and 69–113.
18
opened with IFG-SEC for the purpose of buying and selling securities. It is
therefore not subject to arbitration. While it would be much easier to do so, we
will not send clearly non-arbitrable disputes to arbitration merely because a count,
as pled, contains both arbitrable and non-arbitrable disputes.
The complaint’s inclusion of both arbitrable and non-arbitrable disputes
within a single count is also evident in Count One. In Count One, Becker alleges
that the defendants11 violated the Florida Securities and Investor Protection Act.12
Paragraphs 49–53 allege that in February 1996, before the creation of the Trust,
Becker entered into an Investment Management Agreement with Defendant DKE
on the advice of Davis, and Davis secured an improper “kick back” fee
arrangement for the benefit of the defendants. Paragraphs 74–78 allege that
pursuant to Davis’s advice, the Trust invested in the CNL and this investment was
not suitable for the Trust. Count One alleges that in connection with the offer, sale,
or purchase of any investment or security, the defendants acts or practices
constituted a scheme to defraud in violation of Florida Statute § 517.301(1).
At first blush, it appears that Becker is attempting to hold the defendants to
the terms and duties contained in the three agreements; therefore, she should not be
11
Count One does not seek relief against Defendant Falcon FP.
12
In Count One, Becker realleges the factual allegations in paragraphs 1–53, 69–88,
90–92, and 110–113.
19
able to avoid the arbitration clauses contained in those agreements, and Count One
should be sent to arbitration. However, Becker opened her individual account with
DKE prior to the creation of the Trust. The documents that Becker claimed she
signed to open the account with DKE are not part of the record. Therefore, the
defendants, to the extent that they were involved in the purchase and sale of
securities through Becker’s individual DKE account, owed to Becker a duty not to
employ a scheme to defraud her based on their investment advice independent of
the three agreements that the Trust later entered into with IFG-SEC. Accordingly,
to the extent that Count One relies on disputes concerning security investments not
connected to the Trust, these disputes are not within the scope of the arbitration
agreements entered into by the defendants and the Trust, and these aspects of
Count One are not arbitrable. See Bratt Enters., Inc. v. Noble Int’l Ltd., 338 F.3d
609, 613 (6th Cir. 2003) (holding that only the aspects of plaintiff’s breach of
contract claim that the parties had agreed to arbitrate were subject to arbitration).
The defendants also argue that Becker’s allegation that the very creation of
the Trust was an unsuitable investment for her financial objectives, and her
allegation as trustee that certain investments for the Trust were unsuitable for the
Trust are impossible to separate. We disagree. The Trust was created prior to the
time that the Trust opened the accounts with IFG-SEC and entered into the
20
agreements containing the arbitration clauses. Becker alleges that documents used
to create the Trust contained unusual provisions to restrict her ability to ever
replace Defendant Davis as trustee, and this allowed the defendants to control a
large part of her assets and was therefore unsuitable for her personal investment
objectives.13 This allegation is separate and distinct from an allegation that the
investments that the defendants entered into on behalf of the Trust were unsuitable
for the Trust.14
The defendants point to the fact that we have stated that “if allegations
underlying claims ‘touch matters’ covered by parties’ arbitration agreement, then
claims must be arbitrated, whatever legal labels attached to them.” Indus. Risk
Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1448 n.21 (11th Cir.
1998) (citing Genesco v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir. 1987)).
However, we have also stated that even “broad arbitration clauses cannot be
extended to compel parties to arbitrate disputes they have not agreed to arbitrate.”
Klay, 389 F.3d at 1195. In this case, we are presented with a complaint asserting
13
The documents that created the Trust are not part of the record.
14
The defendants also argue that since the complaint alleges that all of Davis’s acts were
done in the course and scope of his employment with IFG-SEC and IFG-AS, Becker’s individual
claims arise out of or relate to the purchase or sales of securities, which is the “business” referred
to in the agreements. However, whether or not Davis was acting within the scope of his
employment with IFG-SEC and IFG-AS when committing certain acts is a separate question
from what type of disputes the parties agreed to arbitrate.
21
claims that contain both arbitrable and non-arbitrable disputes. While it might be
more efficient to send to arbitration all the disputes contained in all the claims, the
parties did not agree to such efficiency. “Congress’s preeminent concern in
enacting the FAA — the enforcement of private agreements to arbitrate as entered
into by parties — requires that the parties only be compelled to arbitrate matters
within the scope of their agreement, and this is so even when the result may be
piecemeal litigation.” Bratt, 338 F.3d at 613. If the defendants, who were
providing advice to both Becker and to the Trust, wanted to arbitrate all disputes
that arose from advice that the defendants gave to Becker concerning her assets
outside of the Trust, then the defendants should have contracted with Becker to do
so.
Accordingly, we find that the district court erred in categorically refusing to
send Becker’s individual claims to arbitration because she was not a signatory to
the agreements. The three agreements were entered into by the Trust and the
defendants and relate to investment advice and services concerning the purchase
and sale of securities for the Trust. To the extent that Becker’s individual claims
concern disputes that rely upon the terms of the three agreements and attempt to
hold the defendants to those terms, she cannot avoid the arbitration clauses
contained in those agreements. Becker is therefore required to arbitrate any aspect
22
of her individual claims against the defendants that involve disputes concerning or
relating to the investment of securities on behalf of the Trust, for the parties agreed
to arbitrate these types of disputes. All other aspects of her individual claims
involving disputes that do not concern or relate to the investment of securities on
behalf of the Trust are not within the scope of the agreements, and are therefore not
subject to arbitration.
C. The Defendants Falcon FM and Falcon FP as Nonsignatories
The defendants argue that the district court erred when it concluded that
because the defendants Falcon FM and Falcon FP were not signatories to the
agreements, they could not compel arbitration of the claims against them. The
defendants argue that since the complaint alleges a conspiracy between signatory
defendants and nonsignatory defendants, equitable estoppel allows a nonsignatory
defendant to compel arbitration. We agree.
The complaint alleges that “[a]ll of Defendant Davis’ acts,
misrepresentations, omissions, and other wrongdoing complained of herein
occurred while [Davis] was acting within the scope and during the course of his
employment with the defendants Falcon FM [and] Falcon FP.” The complaint
further alleges that:
Working together while appearing to be independent of one another enabled
[all] Defendants to induce Plaintiff to adopt a fundamental financial strategy
23
and structure . . . that was unsuitable for her personal investment objectives
and financial situation; and enabled them to induce Plaintiff to authorize the
implementation of certain of their recommendations and courses of action
that were supposedly in her best interest, but in fact were calculated to subtly
but intractably victimize Plaintiff and benefit them, instead, by allowing
them to obtain a substantial amount of Plaintiff’s wealth over many years.
Plaintiffs incorporated these allegations into all their claims.
We stated that the “‘application of equitable estoppel is warranted . . . when
the signatory [to the contract containing the arbitration clause] raises allegations of
. . . substantially interdependent and concerted misconduct by both the
nonsignatory and one or more of the signatories to the contract.’” MS Dealer, 177
F.3d at 947 (alterations and omissions in original). In MS Dealer, Franklin bought
a car from Jim Burke Motors, Inc. Franklin and Jim Burke executed a “Buyers
Order” that contained an arbitration agreement. The Buyers Order incorporated by
reference a Retail Installment Contract in which Franklin was charged a fee for a
service contract through MS Dealer. MS Dealer was not a signatory to either the
Buyers Contract or the Retail Installment Contract.
After discovering defects in the car, Franklin filed suit against Jim Burke
and MS Dealer for breach of contract, fraud, and conspiracy in state court. MS
Dealer filed a petition in federal court to compel Franklin to arbitrate her claims
against it. The district court denied the petition finding that MS Dealer was not a
signatory on the contracts; therefore, it did not have standing to compel arbitration.
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We reversed. We stated that Franklin’s claims against Burke and MS Dealer “are
based on the same facts and inherently inseparable.” Id. at 948 (internal quotation
marks omitted). Franklin’s claim that Burke and MS Dealer conspired with each
other and schemed to defraud her were “allegations of such pre-arranged, collusive
behavior [that they] establish[] that [her] claims against [MS Dealer are] intimately
founded in an intertwined with obligations imposed by the [Buyers Order.]” Id.
(alterations in original) (internal quotation marks omitted). Therefore, Franklin
was equitably estopped from avoiding arbitration with MS Dealer.
In the case before us, the Trust’s claims allege that both signatories (Davis
and IFG) and nonsignatories (Falcon FM and Falcon FP) to the agreements
collaborated to make unsound financial decisions, which ultimately lost money for
the Trust. Therefore, the Trust’s allegations of collusive behavior against the
signatories and nonsignatories “are intimately founded in and intertwined with
obligations imposed” by the agreements the Trust entered into with Davis and IFG-
SEC. See id. (internal quotation marks omitted). Accordingly, the Trust is
equitably estopped from avoiding arbitration with Falcon FM and Falcon FP.
Becker is also equitably estopped from avoiding arbitration with Falcon FM and
Falcon FP to the extent that her individual claims involve disputes that rely upon
the terms of the agreements.
25
The plaintiffs attempt to distinguish MS Dealer by arguing that the
arbitration clause in MS Dealer contained broad language, whereas the arbitration
clause before us is more narrowly written. In MS Dealer, the arbitration clause
stated that: “Buyer hereby acknowledges and agrees that all disputes and
controversies of every kind and nature between buyer and Jim Burke Motors, Inc.
arising out of or in connection with the purchase of this vehicle will be resolved by
arbitration.” Id. at 944 (emphasis added). The arbitration clause in agreement one
states that “[a]ny controversy between us arising out of our business or this
agreement shall be submitted to arbitration.”15 (Emphasis added). The plaintiffs
argue that the arbitration clause at issue does not contain the “in connection with”
language required to constitute a broad arbitration clause.
We have held that there was no meaningful distinction between arbitration
clauses that have “arising out of” language and those that have “arising out of and
in connection with” language. Gregory v. Electro-Mech. Corp., 83 F.3d 382, 386
(11th Cir. 1996). Since federal policy requires us to construe arbitration clauses
generously, resolving all doubts in favor of arbitration, see Gregory, 83 F.3d at
385-86, the plaintiffs’ attempt to parse the language of the arbitration clauses is not
persuasive.
15
The arbitration clauses in agreements two and three also employ the “arising out of”
language.
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D. Count Nineteen
The defendants also argue that the district court erred in refusing to send
Count Nineteen, Becker and the Trust’s claim for an accounting of the Trust, to
arbitration. Count Nineteen alleges that Davis as trustee of the Trust breached his
duty pursuant to Florida Statutes § 737.303 to provide annual statements of the
Trust’s account and all other information pertaining to the Trust’s assets. The
district court stated that this request for an accounting did not arise from the
“business” referred to in the three agreements. However, an accounting is a
remedy attached to a separate independent cause of action. See Johnson v.
Pullman, Inc., 845 F.2d 911, 913 (11th Cir. 1988) (“Although plaintiff’s complaint
contained a count in which an accounting was sought, that relief would not be
available here absent some independent cause of action.”).
Accordingly, if the four substantive claims brought by the Trust against the
defendants arise out of the agreements and are therefore subject to arbitration, as
the parties agree, the Trust’s claim for an accounting, which is merely a remedy for
any liability, would also arise out of the agreements. Furthermore, to the extent
that Becker’s individual claims rely on the terms of the agreements and are
therefore subject to arbitration, Becker’s individual claim for an accounting of the
Trust’s assets also rely on the terms of the agreements and are subject to
27
arbitration. Accordingly, we find that the district court erred in not sending Count
Nineteen to arbitration.
IV. CONCLUSION
We find that the district court erred in holding that all aspects of Becker’s
individual claims were not subject to arbitration because she was not a signatory to
the three agreements that contained arbitration clauses. To the extent that Becker’s
claims concern disputes that rely upon the terms of the agreements and attempt to
hold the defendants to these terms, she cannot avoid the arbitration clauses
contained in those agreements. We affirm the district court to the extent that
Becker’s individual claims do not rely on the terms of the agreements. We also
find that the district court erred in holding that the defendants Falcon FM and
Falcon FP could not compel the Trust and Becker to arbitrate the claims against
them concerning matters that arose from the three agreements. Finally, we find
that the district court erred in holding that Count Nineteen, the Trust and Becker’s
claim for an accounting, was not subject to arbitration since a claim for an
accounting is only a remedy attached to an independent cause of action.
AFFIRMED in part; REVERSED in part and REMANDED to the
district court for further proceedings consistent with this opinion.
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