Richard Blaustein v. Burt Huete

449 F. App'x 347
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 26, 2011
Docket11-30057
StatusUnpublished
Cited by9 cases

This text of 449 F. App'x 347 (Richard Blaustein v. Burt Huete) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Richard Blaustein v. Burt Huete, 449 F. App'x 347 (5th Cir. 2011).

Opinion

PER CURIAM: *

This appeal from an order to arbitrate arises out of a patent dispute, which involves the inventors, an LLC in which the inventors were members, and a law firm hired to draft a patent application. The issues before us concern the nature of the relationship among these parties and which parties are bound to an arbitration agreement between the LLC and the law firm. The district court dismissed Inventor Burt David Huete’s claims against the law firm, holding that Huete, as a direct beneficiary of the fee agreement between the LLC and the law firm, was estopped from litigating this dispute in violation of the agreement’s terms. For the reasons that follow, we AFFIRM.

I.

Burt David Huete claims that he, along with Richard and Gail Blaustein, invented a wireless device called “the Stalker.” Huete filed a provisional patent for the Stalker in October 2006. The inventors formed an LLC, Special Projects Limited (“SPL”), to market the Stalker, and retained Timothy and Christopher Maier of Maier & Maier, P.L.L.C. (“the Maiers”) to prepare a non-provisional patent application. The Maiers’s fee agreement, which listed SPL as the client, contained a clause requiring arbitration of disputes related to the agreement and another clause requiring any litigation to be brought in a court in Northern Virginia. Richard Blaustein and Burt David Huete signed the fee agreement on SPL’s behalf.

Huete contends that after the execution of this agreement, the Blausteins con *349 spired with the Maiers to extinguish his patent rights, creating a conflict of interest in the Maiers’s representation of his interests. According to Huete, the patent application the Maiers prepared was deficient in a number of ways, causing the inventors to lose the continuity intended to come from a provisional patent.

II.

Huete sued the Blausteins and other members of SPL in state court. The Blau-steins, in turn, sued Huete in federal court, where the two suits were consolidated. Both the Blausteins and Huete amended their respective pleadings to add claims against their attorneys, the Maiers. Against the Maiers, Huete pled claims of legal malpractice, negligence, breach of fiduciary duty, and breach of an implied contract.

The Maiers moved to dismiss on several grounds. On September 11, 2009, the district court found that Huete was a party to the fee agreement and was thus bound to arbitration; it dismissed all of Huete’s claims. Blaustein v. Huete, 2009 WL 2982928, at *3-*4 (E.D.La. Sept. 11, 2009).

Huete appealed the district court’s ruling, which was reversed and remanded by a panel of the Fifth Circuit on June 18, 2010. Blaustein v. Huete, 434 Fed.Appx. 304, 304-05 (5th Cir.2010). The panel found that because Huete signed the fee agreement in a representative capacity, he was not personally bound. Id. at 304. The panel did not, however, “foreclose the possibility that Huete can be held to the arbitration agreement as a non-party beneficiary.” Id. at 306. The panel remanded the case to the district court to decide whether Huete, as a non-signatory, could be bound to the agreement under principles of contract and agency law. Id.

On remand, the Maiers filed another motion to dismiss, asserting that the doctrine of direct benefits estoppel required Huete to arbitrate his individual claims. The district court granted the Maiers’s motion to dismiss on that basis on December 22, 2010, finding that Huete knowingly sought and obtained direct benefits from the fee agreement and asserted claims stemming from that agreement. Huete appeals.

III.

Huete contends that the district court erred in applying the doctrine of direct benefits estoppel to bind him to the arbitration agreement between SPL and the Maiers. He argues that any benefit he would have received under the agreement was indirect and that he actually “received” detriment because the Maiers performed their services poorly. Huete also argues that he and the Blausteins had separate attorney-client relationships with the Maiers and that these relationships, not the relationship embodied in the fee agreement, form the basis of his claims. Lastly, Huete argues that enforcing the fee agreement against him would violate Louisiana’s public policy against allowing attorneys to compel arbitration with clients.

The Maiers counter that Huete was aware of the terms of the fee agreement and received client-like benefits from it. They argue that the allegations in Huete’s complaint require referencing the fee agreement, and that there is no public policy in Louisiana against arbitration between attorneys and clients. The Maiers also argue that the district court’s order bound Huete to the forum selection clause in the fee agreement and that Huete, by neglecting discussion of the forum selection clause in his primary brief, has waived any argument that he is not bound to litigate in Northern Virginia. In the Mai- *350 ers’s view, this waiver necessitates dismissal of this appeal, and they filed a motion to dismiss advancing this position after oral argument.

IV.

A.

We review a district court’s application of the doctrine of direct benefits estoppel for abuse of discretion. Noble Drilling Servs., Inc. v. Certex USA, Inc., 620 F.3d 469, 472 (5th Cir.2010) (citing Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 528 (5th Cir.2000)). A district court abuses its discretion where it erroneously applies the law or makes a clearly erroneous assessment of the facts. Id. at 473.

“[S]o long as there is some written agreement to arbitrate, a third party may be bound to submit to arbitration. Ordinary principles of contract and agency law may be called upon to bind a non-signatory to an agreement whose terms have not clearly done so.” Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 355-56 (5th Cir.2003) (internal citation omitted). Direct benefits estoppel is one theory by which non-signatories may be bound to arbitrate. Hellenic Inv. Fund, Inc. v. Det Norske Veritas, 464 F.3d 514, 517 (5th Cir.2006). The theory applies to “‘non-signatories who, during the life of the contract, have embraced the contract despite their non-signatory status but then, during litigation, attempt to repudiate the arbitration clause in the contract.’ ” Id. at 517-18 (quoting E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 200 (3d Cir.2001)).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
449 F. App'x 347, Counsel Stack Legal Research, https://law.counselstack.com/opinion/richard-blaustein-v-burt-huete-ca5-2011.