The Tenth Circuit’s First American Title arbitration decision, Fucci v. First Am. Title Ins. Co., 24-4051, slip op. (10th Cir. Sep 10, 2025), clarifies the limits of arbitration enforcement by nonsignatories under Florida and Ohio law, and recognizes that the arbitration agreement itself may further restrict that enforcement.
As the Supreme Court recognized in Arthur Andersen LLP v. Carlisle, 556 U. S. 624, 631 (2009), and as we discussed in a 2009 post, “traditional principles of state law allow a contract to be enforced by or against nonparties to the contract through assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, [and] waiver and estoppel.” 556 U.S. at 631. The First American Title arbitration decision’s nonsignatories argued for enforcement of the arbitration agreement on the ground they were allegedly parties, third-party beneficiaries, or agents. They also sought enforcement under equitable estoppel principles. But the Court rejected all of their arguments and affirmed the district court’s denial of the motion for an order staying litigation and compelling arbitration.
The First American Title Arbitration Decision: Background
Real estate investors bought interests in Ohio and Florida event-center projects through Purchase and Sale Agreements (“PSAs”) with Rockwell Debt Free Properties, Inc., and affiliates (collectively, “Rockwell”). The PSAs contained arbitration clauses covering “any dispute between the parties[:]”
Arbitration. Any dispute between the parties will be submitted to binding arbitration according to the Commercial Rules of the American Arbitration Association …. Except for actions relating to the payment of money for services rendered, an action under this Agreement must be filed within 90 days of the date of closing pursuant to this Agreement. Arbitration will be conducted in [Florida or Ohio (depending on the contract)], before a single arbitrator…. Judgment upon the award may be entered in any court having jurisdiction.
Slip op. at 4 (emphasis and bracketed text in original).
First American Title Insurance Company (“First American”) was designated as escrow agent in the contracts, and its employee served as an escrow agent, but neither First American nor its employees (collectively, the “FA Defendants”) signed any of the contracts. Slip op. at 4-5. When no event venues were constructed and the projects failed, investors sued First American, alleging various claims, including, among others, breach of fiduciary duty; securities violations; aiding and abetting tortious conduct; and abuse of vulnerable adults. Slip op. at 5-6.
The FA Defendants moved to compel arbitration in September 2021 but one month later the Rockwell bankruptcy trustee expressly waived the arbitration provisions in each PSAs to which at least one of the Rockwell entity Plaintiffs was a party.
In September 2021 the FA Defendants filed a motion to compel arbitration based on the arbitration clauses in the PSAs. A month later, Rockwell’s bankruptcy trustee expressly waived the arbitration provision in each PSA to which at least one of the Plaintiffs was a party. The waiver was effected by letter agreement between the trustee and Plaintiffs’ attorney, which provided that the arbitration agreements were deleted from the PSAs.
It was unclear whether the district court had been informed of the letter agreement, but in December 2021 the district court denied the motion to compel without prejudice, stating that it would await the Tenth Circuit’s ruling in DiTucci v. First American Title Insurance Co., No. 21-4120, 2023 WL 382923 (10th Cir. Jan. 25, 2023), “a related case involving similar parties and issues in which the FA Defendants appealed the denial of a motion to compel arbitration.” Slip op. at 6.
The Tenth Circuit affirmed the district court’s order in DiTucci, which denied the motion to compel in that related case. In response the FA Defendants renewed their motion to compel arbitration, which a magistrate judge denied. The FA Defendants filed objections to the district court but the district court judge overruled them and adopted the magistrate judge’s order. Slip op. at 6 (citing district court decision, Fucci v. Bowser, No. 2:20-cv-00004-DBB-DAO, 2024 WL 2076855, at *18 (D. Utah May 9, 2024)).
An appeal followed and, in the First American Title arbitration decision, the Tenth Circuit affirmed the district court’s denial of the motion to compel.
First American Title Arbitration Decision: The Court’s Reasoning
In the First American Title arbitration decision the Tenth Circuit rejected every theory advanced by First American.
The FA Defendants were not Parties to the PSAs
First American was not a signatory, nor identified as a party. The Court explained that the PSAs established that Plaintiffs and Rockwell were the only parties to the PSAs—indeed, “[t]he first sentence of each PSA states that the agreement is made ‘by and between’ Rockwell and the buyers, without mention of any other parties.” Slip op. at 9.
The signature block, which identified Rockwell and the purchasers as the only signatories, stated that “‘the parties have set their hands’ to the agreement,” thereby demonstrating that the parties intended that Rockwell and the purchasers, and not any of the FA Defendants, were the parties to the agreement. Slip op. at 9-10 (citations and quotation omitted)
The Court stated that its conclusion aligned with “traditional contract doctrine.” Slip op. at 10. It explained that contracts have promisors and promisees: A “promisor. . . ‘manifest[s] the intention [to act or refrain from acting in a specified way].’” Slip op. at 10 (citation and quotation omitted). Promisees are those to whom that manifestation of intent is directed. Slip op. at 10 (citation omitted). Pursuant to the PSAs, Rockwell “promised to convey real-estate interests to the” purchasers, who, in turn, promised to compensate the sellers for that conveyance. Slip op. at 10. By contrast, the FA Defendants did not, under the PSAs, promise anything to anyone. Slip op. at 10.
At most the FA Defendants were incidental beneficiaries. While the PSAs designated First American as escrow agent, and accordingly benefited from the PSAs, nobody under the PSAs addressed any promises to the FA Defendants. Slip op. at 10-11. The Court distinguished Florida and Ohio law cases that the FA Defendants cited in support of their argument that the FA Defendants allegedly became parties to the PSAs. Slip op. at 11-12.
Concluding that “[the FA] Defendants submit no evidence of any offer, acceptance, or mutual assent that could bind them to the arbitration clause in the PSAs[,]” the Court held that the FA Defendants “were not parties to any PSA[,]” and could not compel arbitration on the ground they were allegedly PSA parties. Slip op. at 13. Had “they . . . declined to act as escrow agent in any of the sales transactions, they would not have breached the PSA.” Slip op. at 13. Any “contractual obligation” the FA Defendants might “have had in the escrow transaction could have arisen only from their later agreement to act in that [escrow-agent] capacity[,]” the First American Title arbitration decision states. Slip op. at 13. And none of the PSAs evidenced “an agreement by the FA Defendants to arbitrate any disputes they had with the signatories to the PSA.” Slip op. at 13.
First American Title Arbitration Decision: The FA Defendants were not Third-Party Beneficiaries of the PSAs
The First American Title arbitration decision also rejected the FA Defendants’ argument that they could enforce the PSAs as third-party beneficiaries. While Contracts frequently will confer on a third party a benefit, that alone is insufficient to make that third person an intended beneficiary of the contract, with rights to enforce it. Slip op. at 13. Florida and Ohio law require that the parties “primarily” and “directly” intended to benefit the third party, making that person an intended beneficiary of the contract. Slip op. at 13, 15. A beneficiary of a promise does not become an intended beneficiary unless “‘recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.’” Slip op. at 13-14 (quoting Restatement (Second) of Contracts § 302(1) at 439-40). Intended beneficiaries have the same enforcement rights as a party to a contract. See slip op. at 13-14 (quoting 13 Williston on Contracts § 37:1 at 21-23 (4th ed. 2024)).
The First American Title arbitration decision concluded there was no evidence that the parties intended the PSAs to benefit the FA Defendants primarily and directly, let alone any intent that the arbitration agreements in those PSAs were directly and primarily intended to benefit those Defendants. Slip op. at 15-17 (citations and quotations omitted). First American was identified as the escrow agent for the sole purpose of receiving buyer funds “and to describe the procedures the parties must following closing the transaction.” Slip op. at 15. But that was not enough to make the First American Defendants intended beneficiaries.
“The sole purpose of the PSAs[,]” said the Court, “was to consummate Plaintiffs’ purchases of interests interests in real-estate development projects from Rockwell.” Slip op. at 15. The mutual promises made to effect that purpose did not evidence any direct and primary intention to benefit the FA Defendants. See Slip op. at 15-17 (citations and quotations omitted).
The benefit was therefore, and at most, “incidental or indirect.” Slip op. at 15-17 (citations and quotations omitted).
The Court accordingly held that the FA Defendants did not qualify as intended beneficiaries of the contract under either Florida or Ohio law, and therefore could not compel arbitration under the PSAs. Slip op. at 17.
The FA Defendants could not Enforce the PSAs in their Alleged Capacity as Rockwell’s Agent
The Court held that, even if First American had acted as Rockwell’s agent, agency principles did not provide a basis for the FA Defendants to enforce the PSAs. Slip op. at 17-18. This finding principally turned on the Rockwell bankruptcy trustee’s express, written waiver of the PSAs’ arbitration provisions. Id.
In a letter with a “Waiver of Arbitration” subject line, the trustee waived the arbitration agreements “‘on behalf of the Debtor entities, the estate, and all agents, assigns, employees, and representatives thereof.’” Slip op. at 18 (citation omitted). The Court rejected the five arguments the FA Defendants made in support of their agency argument.
First, the First American Title arbitration decision explained that, contrary to the FA Defendants’ assertions, it did not matter that the waiver did not occur until one month after the FA Defendants filed their motion to compel. According to the Court, “the FA Defendants had the right, in their capacity as agents, to demand arbitration of their dispute is to say that they were acting on behalf of their principals in attempting to have the dispute arbitrated.” Slip op. at 19. But if the principal is not permitted to demand or pursue arbitration, then neither can the agent. See slip op. at 19-20 (citations and quotations omitted). And when the principal lost the right to arbitrate, so did the agent. See slip op. at 19-20
Thus, when on October 20, 2021, Rockwell countersigned the letter, it not only relinquished its “power to demand arbitration of disputes under the PSAs, but also terminated any authority that the FA Defendants may have had to enforce the arbitration agreements. Slip op. at 19-21. It also terminated the agent’s authority by revoking it. Slip op. at 20-21 (citations and quotations omitted). FA had notice of the termination and revocation of its authority on the same date the letter was executed. Any authority First American might have had to enforce the arbitration agreement therefore ceased on October 20, 2021. Slip op. at 19-20, 21.
In any case, an agent is not acting on behalf of its principal when it takes action that it knows the principal does not wish it to take—when an action has legal consequences, an agent must have a reasonable belief that the principal, in accordance with its manifestation of consent to the agent, wants the agent to take that action on its behalf. See slip op. at 20 (citations and quotations omitted).
Even if Rockwell’s desire not to arbitrate was not known at the time the FA Defendants moved to compel, “the motion accomplished nothing irreversible.” Slip op. at 21. The Court could “see no reason why the FA Defendants were compelled, or even authorized, to continue to pursue a demand for arbitration as Rockwell’s agents once they were informed that Rockwell had waived the right to arbitrate.” Slip op. at 21.
Second, the Court rejected the argument that the district court imposed on the FA Defendants the burden to prove the absence of waiver, instead of imposing that burden on Plaintiffs the burden to prove waiver. But the Court said the district court did not impose on the FA Defendants the initial burden of persuasion. Slip op. at 21. The Court explained that the burden shifted when the magistrate judge issued a report and recommendation, and, according to the district court, “the FA Defendants failed ‘to identify the specific reasons why they object’ to the to the magistrate judge’s finding that the bankruptcy trustee waived Rockwell’s arbitration rights.” Slip op. at 21 (citation omitted). In the absence of specific objections, “[t]he district court then assumed what Rockwell might be arguing and rejected those arguments on the merits.” Slip op. at 21.
Third, the FA Defendants argued that the waiver did not comply with the PSA’s provision that modifications be in writing and signed by the parties, but that argument failed because the letter was in writing and was signed on behalf of the Plaintiffs’ by their attorney, and on behalf of Rockwell by the trustee. Slip op. at 21-22. Further, the letter expressly provided that the arbitration clauses were deleted from the PSAs. Slip op. at 21-22.
Fourth, the Court rejected the FA Defendants’ argument that 11 U.S.C. § 363(b)(1) required notice and hearing before the trustee could waive its arbitration rights. Section 363(b)(1) provides that “[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). The FA Defendants, however, “provid[ed] no authority, nor . . . [was the Court] aware of any[]” suggesting the PSAs’ arbitration rights were, under Section 363(b)(1), “property of the estate.” Slip op. at 22 (quoting 11 U.S.C. § 363(b)(1)).
Fifth, the FA Defendants contended that the right to demand arbitration was a “vested right” of a third-party beneficiary to PSAs, but the Court rejected that argument as foreclosed by the Court’s finding that the FA Defendants were not third-party beneficiaries of the arbitration agreements. Slip op. at 22.
The FA Defendants Could not Enforce the Agreement under Equitable Estoppel Principles
While sometimes nonsignatories can enforce arbitration clauses, the Court ruled that, under Ohio and Florida law, equitable estoppel cannot expand a clause limited to disputes “between the parties”. Both Florida and Ohio, said the Court, recognize “equitable estoppel” in two instances: “(1) when the signatory relies on the contract containing the arbitration clause to assert a claim against the nonsignatory, and (2) when the signatory alleges collusive misconduct by the nonsignatory and a signatory.” Slip op. at 23.
The Court found that both Florida and Ohio law equitable estoppel cannot be used to expand the scope of the arbitration provision. Slip op. at 23-27 (citations and quotations omitted). Here, the arbitration agreement applied “only to ‘[a]ny dispute between the parties.’” Slip op. at 24 (citation omitted; bracketed text and emphasis in original).
The Court found that applying equitable estoppel to require arbitration under the PSAs would expand the limited scope of the arbitration agreement. As the Court earlier ruled, Rockwell and the Plaintiffs were the only parties to the PSAs, and the dispute was thus not within the scope of the arbitration provisions. Slip op. at 24. Even assuming that the FA Defendants could establish one of the two bases for equitable estoppel, the doctrine was inapplicable here because it would expand the scope of the arbitration provisions.
The limited scope of the arbitration agreement controlled the outcome. Court distinguished this case from cases where “the arbitration clause broadly covered any and all disputes arising out of the PSAs.” Slip op. at 26-27 (citations and quotations omitted).
The Court accordingly affirmed the district court’s denial of the renewed motion to compel.
Policy Implications
Fucci is a “first principle” case, for it underscores that arbitration is a matter of consent, not coercion. (See, e.g., a “first principle” blog post we published a while back.) By denying the FA Defendants’ equitable estoppel argument as contrary to the text of the parties’ arbitration agreement, it gives effect to Stolt-Nielsen’s “rule[] of fundamental importance” under which “parties may specify with whom they choose to arbitrate their disputes.” Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp., 559 U.S. 662, 681-82, 683-84 (2010) (citations and quotations omitted; emphasis in original). Because the parties clearly expressed their intention to limit the scope of their arbitration agreement to disputes “between the parties,” the Court quite correctly decided that extra-contractual equitable estoppel considerations could not be used to rewrite the arbitration agreement.
For businesses, the case highlights at least two basic lessons:
Drafting Matters
If parties want agents, affiliates, or other third-parties to benefit from arbitration rights, the clause should expressly include them and specify whether those arbitration rights will (or not) survive termination or revocation of the agency relationship. Further, the scope of the clause should be drafted in a way that is broad enough to encompass claims by or against third-parties.
On the other hand if the parties wish to preclude third parties from seeking to enforce the arbitration agreement, or otherwise limit or eliminate the rights of third persons, they should consider whether an appropriate third-party beneficiary disclaimer provision, or other limiting language, should be included in the agreement. Nationwide Mut. Ins. Co. v. Home Ins. Co., 150 F. 3d 545, 549-50 (6th Cir. 1998) (New York law).
Business persons who wish to draft their contracts to include or exclude persons that would otherwise not have the right to enforce the contract, or to determine what nonsignatories might have a right to enforce an existing or proposed contract, should consult with experienced counsel with arbitration-law experience to identify pros and cons and suggest appropriate contract language.
Waiver Risks
Bankruptcy of a party is a risk that frequently arises in litigation and arbitration. As the First American Title arbitration provision illustrates, bankruptcy trustees or other representatives may, in certain circumstances, extinguish arbitration rights, binding even affiliated agents.
Contacting the Author
If you have any questions about this article, arbitration, arbitration-law, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094. PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance- or reinsurance-related, and other, matters.
This blog features links to several arbitration-related videos and webinars in which Mr. Loree appears.
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Tags: agency and arbitration, arbitration enforcement, Arbitration Law, contract law, Equitable Estoppel, Federal Arbitration Act, Fucci v. First American, intended beneficiaries, nonsignatories and arbitration, parties to contract, Tenth Circuit, third-party beneficiaries, Waiver of Arbitration
