Can a Non-Signatory to a Written Agreement Compel Arbitration Against an Unwilling Signatory?
West Virginia’s courts have determined that responding to an offer by acting on it – even when accompanied by silence – provides an acceptance of an agreement that goes along with the transaction. Sometimes a party accepting an offer decides to file a lawsuit despite the contract stipulating all disputes must be settled through arbitration. Such suits are typically filed when the party who agreed to the arbitration mandate wants to sue the original (non-signatory) third party involved.
A Berkeley County resident brought suit against an internet catalog merchant after purchasing more than $3,300 worth of goods through financing offered by the catalog company’s third-party credit partner. Claiming she had a right to sue the catalog company because it was the non-signatory party to the arbitration agreement, the plaintiff alleged it was operating a scheme designed to evade the state’s Credit and Consumer Protection Act. She claimed that the catalog company was using a credit partner in order to charge late fees and high interest rates.
In its defense, the company compelled arbitration and motioned to dismiss the complaint, arguing that the agreement the plaintiff had entered into with their credit partners stated disputes must be resolved through arbitration. The Supreme Court of West Virginia determined that the plaintiff was provided notices from the company to that effect. Although the catalog company had changed credit partners several times, a new agreement was always sent to the plaintiff. She claimed that she did not receive all of the new agreements, but the court found that agreements she received in 2007 and 2010 contained an express arbitration provision. It also contained a clause that provided an opportunity to “opt out.”
The agreement she received in 2010 stated that upon first use of the credit account, the agreement to arbitrate becomes operable. The plaintiff did not opt out of that agreement and made 41 purchases after receiving the change-in-terms notice. By continuing to use the credit partner’s account to purchase goods from the catalog company, she provided her acceptance to resolve disputes with the credit partner or the catalog company through arbitration. The state Supreme Court held that the catalog company was within its rights to force arbitration.
A court will force arbitration when:
- A valid agreement states parties agree to arbitration with the signing parties or any third parties affiliated with the transaction.
- Any changes made in the terms of agreement do not render any previous agreement to resolve disputes through arbitration invalid.
Pullin, Fowler, Flanagan, Brown & Poe are knowledgeable attorneys in drafting arbitration agreements. Call us at 304-344-0100 or contact us online to see if your company’s contract or agreement is eligible for a binding alternative dispute resolution.