In Re Vesta Insurance Group, Inc.

192 S.W.3d 759, 2006 WL 662335
CourtTexas Supreme Court
DecidedMarch 17, 2006
Docket04-0141, 04-0156, 04-0157, 04-0165, 04-0179
StatusPublished
Cited by273 cases

This text of 192 S.W.3d 759 (In Re Vesta Insurance Group, Inc.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Vesta Insurance Group, Inc., 192 S.W.3d 759, 2006 WL 662335 (Tex. 2006).

Opinion

PER CURIAM.

An insurance company and an independent agent agreed to arbitrate rather than litigate any dispute “under or with respect to” their contract. But when the contract was terminated, the agent neither litigated nor arbitrated his dispute with the company; instead, he filed a tortious interference with contract suit against the insurer’s parent company, the agent who took his place, and two officers or affiliates of each. The trial court refused to compel arbitration under the Federal Arbitration Act, 1 and the Second Court of Appeals denied mandamus relief. We conditionally grant it. See In re Weekley, 180 S.W.3d 127, 130 (Tex.2005) (“Mandamus relief is proper to *761 enforce arbitration agreements governed by the FAA.”).

James Cashion and States General Insurance Company signed a contract on September 28, 1999, in which Cashion agreed to sell health insurance policies as a general agent for States General. The contract provided that States General could modify or cancel Cashion’s commissions on 60 days’ notice, and either party could terminate the relationship on 180 days’ written notice. The contract also required arbitration of “any dispute between them under or with respect to this contract.” 2 States General and Cashion were the only parties to the contract.

In November 2000, States General gave notice of its intent to reduce Cashion’s commissions. In December 2000, Vesta Insurance Group and Vesta Fire Insurance Corporation (collectively ‘Vesta”) purchased 100 percent of the stock of States General. A month later, States General terminated Cashion and replaced him with Jimmy Walker.

On March 1, 2001, Cashion filed suit against Vesta and two of its corporate officers, James Tait and William Perry Cronin, 3 and against Walker and two of his affiliates. 4 Generally, the suit alleged tor-tious interference with Cashion’s contracts with States General and with his own sub-agents. States General (now a Vesta affiliate) intervened, but later settled with Cashion and -is no longer a party. Accordingly, the only remaining party who was a signatory of the arbitration agreement is Cashion; the relators who seek to compel arbitration are all nonsignatories.

We recently held that Texas law, consistent with federal law of direct-benefits estoppel, requires a nonparty to arbitrate a claim “if it seeks, through the claim, to derive a direct benefit from the contract containing the arbitration provision.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 741 (Tex.2005); see also Weekley, 180 S.W.3d at 131. While the boundaries of direct-benefits estoppel are not always clear, nonparties generally must arbitrate claims if liability arises from a contract with an arbitration clause, but not if liability arises from general obligations imposed by law. Weekley, 180 S.W.3d at 132,134.

Tortious interference claims do not fall comfortably in either category. The obligation not to interfere with existing contracts is a general obligation imposed by law. But it is not imposed on the parties to that contract, as “a party cannot tortiously interfere with its own contract.” Holloway v. Skinner, 898 S.W.2d 793, 796 (Tex.1995). Nor is it imposed on corporate agents, except for actions completely contrary to corporate interests. Id. In other words, “a person must be a stranger to a contract to tortiously interfere with it.” Morgan Stanley & Co., Inc. v. Texas Oil Co., 958 S.W.2d 178, 179 (Tex.1997). Thus, while liability for tortious interference arises from the general law, nonlia- *762 bility arises from connections with the contract.

For several reasons, we hold that tortious interference claims between a signatory to an arbitration agreement and agents or affiliates of the other signatory arise more from the contract than general law, and thus fall on the arbitration side of the scale.

First, corporations must act through human agents. Holloway, 898 S.W.2d at 795. As a result, every contract claim against a corporation could be recast as a tortious interference claim against its agents. See id. While legal rules might render such claims unprofitable in the long run, in the short run they could be used to forestall arbitration. “The FAA directs courts to place arbitration agreements on equal footing with other contracts.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 293, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002). Accordingly, we must avoid any rule that makes it easier to avoid arbitration clauses than other clauses of a contract. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 230 n. 2 (Tex.2003) (noting most courts have found illusory any contract allowing one party to unilaterally avoid arbitration).

Second, requiring arbitration of such claims complies with the rule that “we look first to whether the parties agreed to arbitrate a dispute.” Waffle House, 534 U.S. at 294, 122 S.Ct. 754. When contracting parties agree to arbitrate all disputes “under or with respect to” a contract (as they did here), they generally intend to include disputes about their agents’ actions because “[a]s a general rule, the actions of a corporate agent on behalf of the corporation are deemed the corporation’s acts.” Holloway, 898 S.W.2d at 795. If arbitration clauses only apply to contractual signatories, then this intent can only be accomplished by having every officer and agent (and every affiliate and its officers and agents) either sign the contract or be listed as a third-party beneficiary. This would not place such clauses on an equal footing with all other parts of a corporate contract.

Finally, many Texas courts of appeals have held that a tortious interference claim against a signatory’s employees or affiliates must be arbitrated, even though the latter are nonsignatories. 5 Several federal *763 courts have agreed. 6 We remain mindful of the importance of keeping federal and state law uniform so that arbitrability does not depend on where one seeks to compel it. Kellogg, 166 S.W.3d at 739.

We agree with Cashion that he would not be required to arbitrate a tortious interference claim against a complete stranger to his contract and its arbitration clause.

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Cite This Page — Counsel Stack

Bluebook (online)
192 S.W.3d 759, 2006 WL 662335, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-vesta-insurance-group-inc-tex-2006.