Arb Clause Can't Stick to Signatory’s Employee

Jensen v. U-Haul of Cal. Co., No. E065887 (D4d2 Dec. 11, 2017)

Plaintiff was injured when a tire blew out on a rental truck he was driving, so he sued the rental company for negligence. But Plaintiff’s boss, not Plaintiff, had rented the truck. Boss also signed the rental contract, which had an arbitration agreement in it. The Rental Company sought to compel arbitration, which the trial court denied because Plaintiff wasn’t a signatory. 

The law recognizes a bunch of different ways a non-signatory can be bound to arbitrate. But none of the three theories pressed by the Rental Company—third party beneficiary, agency, or estoppel—carry the day. 

Plaintiff was not a third party beneficiary of the rental contract. Although the contract foresaw that someone other than Boss might drive the truck, it didn’t express any intent to convey any benefit on Plaintiff. 

Nor did agency bind Plaintiff. While it is true that Plaintiff was his employer’s agent, absent unusual circumstances, an agent isn’t bound to his principal’s contracts—the imputation goes the other way. The case presented no facts from which it could be implied that the employer had any authority to bind Plaintiff. 

Nor was there an estoppel, which generally arises when the non-signatory Plaintiff’s claim is relies in some way on the contract containing the arb clause. Plaintiff here sues in tort, not contract, so no dice there either.

Affirmed.