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Click here for the full text of this decision FACTS:Ford Motor Co.’s agreement with its dealer, Bullock Motor Co., gave Ford an assignable right of first refusal to acquire Bullock’s business should Bullock want to sell to another. The dealership agreement provided that Ford could discuss the terms of any proposed sale with any potential assignee, as long as such information is treated confidentially. Bullock contracted to sell the dealership to WMCO-GP LLC. Their purchase and sale agreement (PSA) acknowledged Ford’s right of first refusal and, if Ford exercised that right, allowed Bullock to terminate the agreement. Ford exercised its right and assigned it to Alton J. Meyer and Meyer Acquisition Corp. (Meyer) and Bullock accordingly sold its business to Meyer. WMCO sued Bullock, Meyer and Ford. WMCO sought a declaration that Ford’s right of first refusal was void, because in violation of the dealership agreement assignee Meyer had disclosed WMCO’s confidential information to third parties. WMCO also claimed damages against Meyer for tortious interference with the PSA and against Meyer and Ford for conspiring to violate the Texas Motor Vehicle Commission Code. WMCO asserted that although Bullock had breached the PSA, it was joined only as a necessary party, because it would have performed the PSA but for Ford’s exercise of its right of first refusal. Meyer and Ford moved to compel arbitration based on WMCO’s agreement to the PSA’s arbitration clause, to which they, of course, were not parties themselves. Meyer and Ford argued that because WMCO had made this agreement with Bullock, WMCO was equitably estopped from refusing to arbitrate with them. Bullock did not join in the motions. Although the dealership agreement between Bullock and Ford also provided for arbitration and was raised in the trial court, Meyer and Ford conceded, for purposes of this appeal, that the dealership agreement would not apply to WMCO. Meyer and Ford did not rely on the Federal Arbitration Act, but only the Texas General Arbitration Act. The trial court denied the motion and a divided court of appeals affirmed. HOLDING:Reversed and remanded. As a rule, the majority opinion of the Texas Supreme Court stated, arbitration of a claim cannot be compelled unless it falls within the scope of a valid arbitration agreement. But sometimes a person who is not a party to the agreement can compel arbitration with one who is, and vice versa. The Texas Supreme Court noted its prior holding that a person who seeks by his claim “to derive a direct benefit from the contract containing the arbitration provision” may be equitably estopped from refusing arbitration. The court agreed that an arbitration provision may limit the application of this doctrine, known as equitable estoppel. But the court found that the the text of the arbitration provision at issue was not so restrictive. The court also rebutted several other grounds cited by the 9th Court of Appeals in finding that equitable estoppel did not apply to the dispute. Thus, the arbitration provision does not exclude WMCO’s claims, the court stated. The trial court should have granted Meyer’s and Ford’s motions to compel arbitration. Accordingly, the Texas Supreme Court reversed the judgment of the 9th Court and remanded the case to the trial court for further proceedings consistent with its opinion. OPINION:Hecht, J., delivered the opinion of the court, in which Jefferson, C.J., and Wainwright, Brister, Medina, Green, Johnson, and Willett, J.J. joined. DISSENT: O’Neill, J. “Clearly, a nonsignatory can compel a party who has signed an arbitration agreement to arbitrate a dispute under appropriate circumstances . . . . A party who has signed an agreement containing an arbitration clause may be compelled to arbitrate disputes with a nonsignatory when the signatory must rely on the terms of the agreement to prosecute claims against the nonsignatory . . . . A nonsignatory may also be entitled to compel arbitration when claims asserted by a signatory allege”substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.’ . . . . But even the exceptionally strong policy favoring arbitration cannot justify requiring litigants to forego a judicial remedy when they have not agreed to do so.”

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