Judge Arthur Spatt
Carvant finances purchases of used cars. Autogard and Dimension Service Corp. provide service contracts for vehicles such as those financed by Carvant. American Bankers Insurance Co. (ABI) insures Autogard's provision of agreed upon services under its services contracts with Carvant's customers. Autogard and Dimension purportedly induced Carvant's provision of service contracts. Carvant held a lien on each covered vehicle. The service contracts bore an arbitration clause. Carvant and Dimension were also parties to a lender agreement. After removing Carvant's state court suit sounding in contract breach, Autogard, Dimension and ABI sought to compel arbitration on the ground that Carvant was a third-party beneficiary bound by the service contract's arbitration provision. The court denied defendants' motion to compel Carvant to arbitrate its claims against Dimension, but found Carvant estopped from denying enforcement of the arbitration provision as against Autogard and ABI. Because it enjoyed a lien on each vehicle, Carvant received a "direct benefit" from the service contracts. The court found the appropriate action was to stay litigation and compel arbitration of Carvant's claims against Autogard and ABI.
