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Docket Number

No. 09-31078 Summary Calendar.

Attorney(S)

Joseph S. Piacun, Gennusa, Piacun Ruli, Metairie, LA, for Defendant-Appellant. Jack Etherton Truitt, Counsel, Truitt Law Firm, L.L.C., Covington, LA, for Defendants-Appellees.

Judges

Jerry Edwin Smith

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Smart Summary

Summary of Opinion — Burt E. Huete v. Maier Maier, PLLC et al.

Factual and Procedural Background

In October 2006 Burt Huete filed a provisional patent application for the "Stalker" wireless tracking device, listing himself with Richard and Gail Blaustein and Thomas Benjamin as inventors. Those individuals formed Special Projects Limited, LLC ("SPL") and retained the law firm Maier Maier PLLC (the "Maiers") under a written fee agreement that listed SPL as the client and contained a binding arbitration clause. The agreement was signed by officers of SPL, including Huete and Richard Blaustein, with Huete signing as a representative of SPL.

The relationship deteriorated; Huete alleges that the Blausteins and the Maiers conspired to let the provisional patent lapse and later omitted him as an inventor. Huete retained outside counsel; the Maiers filed a subsequent patent application as Huete had requested and then withdrew citing a conflict. Huete sued the Blausteins and other SPL members in state court; the Blausteins sued Huete in federal court and the matters were consolidated in federal court. Blaustein and Huete amended complaints to add claims against the Maiers. The Maiers moved to dismiss Huete's claims, and the district court concluded that Huete was a party to the fee agreement and dismissed his claims pursuant to the agreement's arbitration clause (Blaustein v. Huete, 2009 WL 2982928). Huete appealed.

Legal Issues Presented

Whether Huete's signing of the fee agreement as a representative of SPL was sufficient to bind him individually to the contract's arbitration clause.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Garrett v. Circuit City Stores, Inc., 449 F.3d 672, 674 (5th Cir. 2006)	Standard of review for rulings on motions to dismiss to compel arbitration (de novo).	The court invoked Garrett to state that its review of the district court's dismissal to compel arbitration is de novo.
Iowa Beef Packers, Inc. v. Thompson, 405 U.S. 228, 230, 92 S.Ct. 859, 31 L.Ed.2d 165 (1972)	Presumption favoring liberal enforcement of arbitration clauses.	The court acknowledged the presumption favored by Iowa Beef Packers but held that it does not apply to the threshold question whether a party agreed to arbitrate.
Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347 (5th Cir. 2003)	Use of "four corners" contract analysis and that ordinary contract/agency principles may bind a nonsignatory.	The court relied on Bridas to examine the four corners of the fee agreement and to note that ordinary contract and agency principles might bind a nonsignatory, leaving such a determination to the district court on remand.
Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069 (5th Cir. 2002)	Ordinary contract principles, rather than federal policy favoring arbitration, apply to whether there is a valid agreement to arbitrate.	Cited (via Bridas) to support that ordinary contract principles govern the threshold determination whether a party agreed to arbitrate.
Blaustein v. Huete, 2009 WL 2982928, at 3-4 (E.D. La. Sept. 11, 2009)	District court decision holding that Huete was a party to the fee agreement and dismissing his claims pursuant to arbitration clause.	The panel reversed the district court's conclusion that Huete was bound merely by signing as SPL's representative.
City of Millville v. Rock, 683 F.Supp.2d 319, 327 (D.N.J. 2010)	Example showing that explicit evidence of an officer's intent to expose himself to personal liability may require separate personal signature (citing the Salzman rule).	The court cited City of Millville (and Salzman) as an example of the accepted practice that, to bind individuals as well as a corporate client, firms can require explicit separate signatures.
Salzman Sign Co. v. Beck, 10 N.Y.2d 63, 217 N.Y.S.2d 55, 57, 176 N.E.2d 74 (N.Y. 1961)	Rule that explicit evidence is required to show a corporate officer's intent to be personally bound (officer signs in official and personal capacity).	Cited (via City of Millville) to illustrate that firms may require separate personal signatures to bind corporate officers individually.

Court's Reasoning and Analysis

The court reviewed the district court's dismissal to compel arbitration de novo. It recognized the federal policy favoring arbitration but explained that the presumption favoring liberal enforcement does not resolve the threshold question whether a particular party agreed to arbitrate. The court examined the four corners of the fee agreement and noted that the arbitration clause bound "the Client and Maier Maier" to arbitrate disputes "between us." The contract plainly identified SPL as "the Client" and listed SPL's officers' signatures as the signature of SPL. Huete's signature appeared only as a representative of SPL. On that basis the panel concluded the district court erred in holding that Huete's representative signature alone bound him individually to the arbitration clause.

The court left open whether Huete might nonetheless be bound as a non-signatory under ordinary contract or agency principles or whether he was in fact a client of the Maiers; those determinations were remanded to the district court. The panel also declined to decide Huete's public-policy argument, noting that it was not necessary at this stage.

Holding and Implications

REVERSED and REMANDED.

Holding: The Fifth Circuit reversed the district court's dismissal to compel arbitration to the extent the district court held that Huete was individually bound merely because he signed the fee agreement as a representative of SPL.

Implications: The case is remanded for the district court to determine whether Huete can be bound by the arbitration agreement by some other legal theory (e.g., as a client, non-party beneficiary, or under agency principles) or whether other grounds warrant dismissal. The opinion expresses no view on what rulings the district court should make on remand and does not establish a new, published precedent in this circuit.

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Richard BLAUSTEIN, et al., Plaintiffs, v. Burt Da

JERRY E. SMITH, Circuit Judge:[fn*] [fn*] Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

Burt Huete appeals the dismissal of his claims against the law firm Maier Maier, LLP, and its two partners, Timothy and Christopher Maier (collectively, "the Maiers") pursuant to a binding arbitration agreement. Because we disagree with the district court's conclusion that Huete was a signatory to the contract containing the arbitration agreement, we reverse and remand.

In October 2006, Huete filed an application for a provisional patent to cover the Stalker, a wireless tracking device. That application listed Huete as one of the inventors, along with Richard and Gail Blaustein and Thomas Benjamin. Those individuals formed Special Projects Limited, LLC ("SPL'"), and hired the Maiers to serve as patent counsel. SPL and the Maiers entered into a written fee agreement detailing the representation. The agreement, which contained a binding arbitration clause, listed SPL as the client, with Huete and Richard Blaustein serving as signatories for SPL.

The parties dispute the rightful inventor(s) of the Stalker. Huete claims that he is one of them; the Blausteins and Maiers claim he is not. That dispute is immaterial to the issues on appeal.

The relationship between Huete and the Maiers soon soured. Huete alleges that, unbeknownst to him, the Blausteins and the Maiers conspired to let the provisional patent lapse and then not list Huete as an inventor on the subsequent patent application. Huete eventually retained outside counsel, and the Maiers filed for the patent as Huete originally had wanted. The Maiers then pulled out of the representation, citing a conflict of interest.

Huete claims that he was still harmed, because the patent application filed by the Maiers was deficient.

Huete sued the Blausteins and other members of SPL in state court; the Blausteins, in turn, sued Huete in federal court. Those suits were consolidated in federal court. The Blausteins and Huete then amended their complaints to add claims against the Maiers, who moved to dismiss Huete's claims on a number of grounds. The court determined that Huete was a party to the fee agreement between the Maiers and SPL and dismissed all of Huete's claims pursuant to the binding arbitration clause in that contract. Blaustein v. Huete, 2009 WL 2982928, at *3-*4 (E.D.La. Sept. 11, 2009). Huete appeals.

II.

Huete claims that the court erred in holding that his signing the fee agreement as a representative of SPL was sufficient to bind him individually to the agreement. We review de novo a ruling on a motion to dismiss to compel arbitration. Garrett v. Circuit City Stores, Inc., 449 F.3d 672, 674 (5th Cir. 2006).

In its short opinion dismissing Huete's claims, the district court noted that "the Supreme Court has favored the liberal enforcement of arbitration clauses." Blaustein, 2009 WL 2982928, at *4. It noted, as well, its public-policy concern that Huete's argument, if accepted, "would render all arbitration agreements virtually un-enforceable since parties would be able to sue in an alternative capacity and claim to be outside of the arbitration agreement." Id. at *3. Although there is a presumption favoring liberal construction of arbitration clauses, Iowa Beef Packers, Inc. v. Thompson, 405 U.S. 228, 230, 92 S.Ct. 859, 31 L.Ed.2d 165 (1972) (citation omitted), that presumption is not applicable to the threshold determination whether a party has agreed to arbitrate. An examination of the "four corners of the agreement," Bridas, 345 F.3d at 355, reveals that Huete is not a signatory to the arbitration clause.

Cf., e.g., Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 354 n. 4 (5th Cir. 2003) (citing Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069 (5th Cir. 2002) (noting that ordinary contract principles, rather than the federal policy favoring arbitration, apply to the determination of whether there is a valid agreement to arbitrate)).

The arbitration clause states, in relevant part, that "[t]he Client and Maier Maier PLLC jointly agree that any dispute, controversy, or claim between us arising out of or relating in any way to this engagement shall be resolved through binding arbitration. . . ." Although the substantive scope of that clause is broad enough to cover the issues Huete raises, the clause, by its very terms, only binds "[t]he Client and Maier Maier" on claims "between us." It is readily apparent from the contract that "the Client" is SPL, which is listed as the sole client at the beginning of the contract and again at the end, with the signatures of two of its officers serving as the signature of SPL. Huete signed the agreement, but only as a representative of SPL.

Cf. LA. CIV. CODE ANN. art. 3016 (1998) ("Amandatary who contracts in the name of the principal within the limits of his authority does not bind himself personally for the performance of the contract.").

As for the district court's public-policy concern, we are content with the fact that, to the extent that a firm contemplates representing a corporate entity and its individual officers, and wishes to bind all of those clients to an arbitration clause, it can require that each sign an agreement stating such. That practice works well in other business contexts. See, e.g., City of Millville v. Rock, 683 F.Supp.2d 319, 327 (D.N.J. 2010) ("Under the Salzman [Sign Co. v. Beck, 10 N.Y.2d 63, 217 N.Y.S.2d 55, 57, 176 N.E.2d 74 (N.Y. 1961)] rule, explicit evidence of a corporate officer's intent to expose himself to personal liability must be demonstrated by requiring the officer to sign any contract twice; once in his official capacity and once in his personal capacity".).

Our limited decision, then, is that to the extent that the court held that the mere fact of Huete's signature as a representative of SPL was enough to bind Huete individually to the contract, the court erred. Whether Huete was in fact a client of the Maiers, and thus whether he actually has any individual claims against them separate from those assertable on behalf of SPL, has not yet been established. That can best be determined, if need be, by the district court on remand.

Or that court might dismiss the case for any of the number of other reasons the Maiers point to as warranting dismissal, on which we express no opinion.

We do not foreclose the possibility that Huete can be held to the arbitration agreement as a non-party beneficiary. In some circumstances, "[o]rdinary principles of contract and agency law may be called upon to bind a nonsignatory to an agreement whose terms have not clearly done so." Bridas, 345 F.3d at 356 (citation omitted). It would be inappropriate for us to make that determination in the first instance; we leave it to the district court on remand.

Huete argues that enforcement of the arbitration clause would violate Louisiana public policy. We do not reach that issue, because it is not obvious whether Blaustein, individually, can be held to the contract at all. That has yet to be determined on remand.

The judgment of dismissal is REVERSED and REMANDED. We express no view on what rulings the district court should make on remand.

BLAUSTEIN v. HUETE