In 2000, law firm #1 sent a letter to a lawyer offering him employment; the letter contained an arbitration provision. In 2006, law firm #2, which had subsumed law firm #1 in a merger, and the lawyer signed a termination agreement/resignation letter. Later, the lawyer sued law firm #2 for breach of the termination agreement. Law firm #2 petitioned for arbitration, and the lawyer contended the 2006 termination agreement, which did not contain an arbitration provision, constituted a novation of the offer letter. Finding the termination agreement did not supersede the offer letter, the trial court granted the petition to compel arbitration. The arbitrator found law firm #2 had breached the termination agreement and awarded damages to the lawyer, but nevertheless rejected many of the lawyer’s claims. The trial court confirmed the award at law firm #2’s request. The lawyer appealed. The Court of Appeal held the lawyer forfeited his nonsignatory/standing argument by not raising it below, and also by stating a “plaintiff may be equitably estopped to deny the nonsignatory defendant’s right to enforce an arbitration clause that is contained within the contract that plaintiff has placed at issue.” Additionally, the appellate court found law firm #2 succeeded to law firm #1’s contract rights, and also, the court held the offer letter was not modified by the termination agreement. (Jenks v. DLA Piper Rudnick Gray Cary US LLP (Cal. App. First Dist., Div. 1; December 16, 2015) 243 Cal.App.4th 1.)Pre-Merger Arbitration Agreement Survived Merger.
In 2000, law firm #1 sent a letter to a lawyer offering him employment; the letter contained an arbitration provision. In 2006, law firm #2, which had subsumed law firm #1 in a merger, and the lawyer signed a termination agreement/resignation letter. Later, the lawyer sued law firm #2 for breach of the termination agreement. Law firm #2 petitioned for arbitration, and the lawyer contended the 2006 termination agreement, which did not contain an arbitration provision, constituted a novation of the offer letter. Finding the termination agreement did not supersede the offer letter, the trial court granted the petition to compel arbitration. The arbitrator found law firm #2 had breached the termination agreement and awarded damages to the lawyer, but nevertheless rejected many of the lawyer’s claims. The trial court confirmed the award at law firm #2’s request. The lawyer appealed. The Court of Appeal held the lawyer forfeited his nonsignatory/standing argument by not raising it below, and also by stating a “plaintiff may be equitably estopped to deny the nonsignatory defendant’s right to enforce an arbitration clause that is contained within the contract that plaintiff has placed at issue.” Additionally, the appellate court found law firm #2 succeeded to law firm #1’s contract rights, and also, the court held the offer letter was not modified by the termination agreement. (Jenks v. DLA Piper Rudnick Gray Cary US LLP (Cal. App. First Dist., Div. 1; December 16, 2015) 243 Cal.App.4th 1.)