ADR,  Arbitration,  Contracts

Arbitration Agreement May Be Invoked by Non-Parties Sued as Alter Egos of a Party to the Agreement

A contract contains an arbitration provision.  Plaintiff sues you on the contract, even though you are not a party, on the ground that you are an alter ego of the corporation that is a party to the agreement.  Can you invoke the arbitration provision even though you are not a party to the contract?

Yes, says the Court of Appeal in Rowe v. Exline, case no.A116463 (1st Dist. July 31, 2007).  After all, reasons the court, the whole theory behind alter ego liability is that the corporation and the alter ego are one in the same.  Since the corporate party is entitled to the benefit of the provision, so must be the alter ego.  The court also finds that the plaintiff is equitably estopped by his assertion of alter ego liability to deny that the defendants are entitled to the benefits of the provision.

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