Joseph Britton v. Co-Op Banking Group, Jeff Liebling

4 F.3d 742 62 USLW 2171 , Fed. Sec. L. Rep. P 97,752 Joseph BRITTON, Plaintiff-Appellee, v. CO-OP BANKING GROUP, Defendant. Jeff Liebling, Defendant-Appellant. No. 91-16851. United States Court of Appeals, Ninth Circuit. Submitted April 14, 1993 * . Decided Sept. 1, 1993. 1 Jeff Liebling, pro se. 2 William P. Torngren, Andrea M. Miller, David C. Adams, Bartel, Eng, Miller and Torngren, Sacramento, CA, for appellee. 3 Appeal from the United States District Court for the Eastern District of California. 4 Before: CANBY, BRUNETTI, Circuit Judges, and ROBERT E. JONES. ** ROBERT E. JONES, District Judge: 5 The issue on appeal is whether Jeff Liebling, a non-signatory to a contract entered into by a company he later purchased, may invoke the contract's arbitration clause. 6 We find that Liebling may not invoke the contract's arbitration clause because: (1) Plaintiffs 1 are not estopped from claiming Liebling has no standing to compel arbitration; (2) Liebling was not a third party beneficiary or successor in interest to the contract; and (3) Although Liebling became an agent, officer and employee of the original contracting party, none of his allegedly wrongful acts arose out of or were…

The issue on appeal is whether Jeff Lie-bling, a non-signatory to a contract entered into by a company he later purchased, may invoke the contract’s arbitration clause.

We find that Liebling may not invoke the contract’s arbitration clause because: (1) Plaintiffs 1 are not estopped from claiming Liebling has no standing to compel arbitration; (2) Liebling was not a third party beneficiary or successor in interest to the contract; and (3) Although Liebling became an agent, officer and employee of the original contracting party, none of his allegedly wrongful acts arose out of or were related to the contract.

The decision of the district court is affirmed.

Facts and proceedings below

This appeal is part of a class action alleging that defendants perpetuated a securities fraud scheme by selling a fraudulent tax shelter investment and that Liebling engaged in fraudulent activity after the initial sales. Plaintiffs signed a contract for the allegedly fraudulent securities with Gold Depository and Loan Company (“GDL”). This contract contained an arbitration provision. Liebling, a non-signatory to the contract who later bought GDL, demanded arbitration but the plaintiffs refused. His…

dissenting:

The majority holds that the acts Liebling allegedly committed were “unrelated to any provision or interpretation of the contract” between plaintiffs and GDL. As a result, it finds that Liebling lacks standing to invoke the arbitration provision in that contract. The panel’s interpretation ignores contemporary federal principles on the issue of arbi-trability, and its erroneous conclusion proves fatal to an otherwise well-reasoned opinion. Accordingly, I dissent.

The Supreme Court has emphasized repeatedly the strong federal policy in favor of arbitration:

AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650 , 106 S.Ct. 1415, 1419 , 89 L.Ed.2d 648 (1986), quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 , 80 S.Ct. 1347, 1353 , 4 L.Ed.2d 1409 (1960). The balance of this presumption is the principle that “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit.” Warrior & Gulf, 363 U.S. at 582 , 80 S.Ct. at 1353 ; Southern California Dist. Council of Laborers v. Berry Constr., 984 F.2d 340 , 343 (9th Cir.1993).

We are not free to…