Bass, Berry & Sims attorney Chris Lazarini commented on a case in which the plaintiff sued UBS for mismanagement of his deceased mother's estate. The plaintiff challenged the validity of the arbitration agreement arguing that the signature page bearing his mother's signature and the agreement containing the PDAA relied on by UBS were not part of the same document. Plaintiff also argued that the PDAA should not apply to him because he was not the account holder and did not sign the agreement. The court rejected plaintiff's arguments holding that a non-signatory to an agreement containing a valid pre-dispute arbitration clause who embraces the agreement to assert his claims is equitably estopped from rejecting the agreement's arbitration provisions.

Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication.

Castro vs. Harrison & UBS Financial Services of Puerto Rico, No. 16-2731 (D. P.R., 5/9/18) 

A non-signatory to an agreement containing a valid pre-dispute arbitration clause who embraces the agreement to assert his claims is equitably estopped from rejecting the agreement's arbitration provisions.

Plaintiff sued UBS and its agents, alleging violations of the '34 Act and Uniform Commercial Code in connection with UBS' handling of his deceased mother's account. Opposing UBS' motion to compel arbitration and stay the proceedings, Plaintiff challenged the validity of the arbitration agreement, arguing that the signature page bearing his mother's signature and the agreement containing the PDAA relied on by UBS were not part of the same document. Plaintiff also argued that the PDAA should not apply to him because he was not the account holder and did not sign the agreement. Finally, Plaintiff argued that his claims were outside the scope of the PDAA. 

The Court rejects all arguments. First, the signature page refers to UBS' "Client Relationship Agreement"("Agreement") multiple times and the signature page and Agreement are sequentially numbered. The Court also points to the language in the Agreement stating that it applies to "all of your accounts at UBS." Second, Plaintiff is equitably estopped from avoiding the arbitration provisions of the Agreement when, as here, by alleging mismanagement of his mother's account, he "embraces the Agreement." Moreover, Plaintiff, as heir to his mother's estate, is a third-party beneficiary of the Agreement and is bound by it. Finally, the Court finds that the alleged mismanagement of the account falls within the terms of the PDAA, which covers claims related to "any account, transaction [or] dispute." UBS' motion to compel arbitration and stay the litigation proceedings is granted.