Arista Films, Inc. v. Gilford Securities, Inc.

Defendant and appellant Gilford Securities, Inc. (Gilford) appeals an order denying its petition to compel arbitration of a lawsuit brought by plaintiff and respondent Arista Films, Inc. Employee Profit Sharing Plan (Arista).

Gilford did not obtain its own arbitration agreement with Arista. Therefore, the essential issue presented is whether Gilford, an “introducing broker,” may enforce an arbitration agreement between Arista and PrudentialBache Securities, Inc. (Prudential), the “clearing broker” (not a party to this action), as a third party beneficiary of that agreement.

We conclude the language of the arbitration agreement reflects it was only intended to govern the relationship between Arista and Prudential and could not have alerted Arista to anticipate otherwise. Further, there was no showing the relationship between Prudential and Gilford was other than one between two completely independent entities. Accordingly, Gilford, having failed to obtain its own arbitration agreement with Arista, cannot “piggy back” onto Prudential’s arbitration agreement with Arista.

Factual and Procedural Background

Gilford is a small securities brokerage firm based in New York…