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COA: Corporate Agent Can Invoke Arbitration Agreement Between Corporation and Plaintiff

By Sean E. Andrussier

Today the COA held that an agent of a corporation can invoke an arbitration agreement in a lawsuit against him in his individual capacity, even though he was not a party to the agreement. The case is Ellison v. Alexander.

Plaintiffs claimed that Defendant was the CEO and director of a company known as The Elevator Channel, and that he induced them to invest in that company by misrepresenting certain material facts about his personal background (his education, experience, etc) and other matters. The stock purchase agreement signed by Plaintiffs provided that all disputes arising from the agreement would be subject to arbitration. The trial court denied Alexander's motion to compel arbitration.

The COA reversed and held that a valid arbitration provision existed. The COA first concluded that because the stock purchase agreement spelled out the terms and
conditions under which Plaintiffs invested in the Company, their claims were connected to the agreement. The COA then held that the arbitration clause of the stock purchase agreement was enforceable even though he was not an individual signatory of the agreement. Because his alleged liability arose from his actions as an agent of the corporate signatory to the arbitration agreement, he was not precluded from enforcing the provisions of the arbitration clause contained in that document.

Full post as published by North Carolina Appellate Blog on October 19, 2010 (boomark / email).