Reversing a trial court's denial of a motion to compel arbitration of an employment dispute, a Texas appellate court held that an employer's failure to sign an arbitration agreement did not signify a lack of intent to arbitrate when its conduct clearly established its intent to arbitrate.

In In re Citgo Petroleum Corp., No. 09-07-563 CV, 2007 WL 4938701 (Tex. App. Feb. 21, 2008), Pat Tank hired Rose, and Rose signed a "Dispute Resolution Agreement" as part of the employment contract. Later, Rose sued Citgo for injuries suffered while Rose was working at a Citgo refinery. Citgo moved to compel arbitration pursuant to the arbitration agreement Rose had signed with Pat Tank.

The trial court denied the motion, finding (1) that no arbitration agreement existed between Rose and Pat Tank because Pat Tank had not signed the agreement and (2) that Rose and Citgo had not agreed to arbitrate disputes.

On appeal, the Court held that although Pat Tank did not sign the arbitration agreement, it had nevertheless agreed to arbitrate. Although a party's signature strongly evidences assent to a contract's terms, a court may rely on other evidence to show unconditional assent in the absence of a signature. Here, Pat Tank's conduct clearly established that it intended to arbitrate disputes. It required all of its applicants to read and sign the agreement. Additionally, its President acknowledged in an affidavit that Pat Tank considers itself bound to the agreement despite an occasional failure to sign the agreement.

Additionally, the Court found that Rose and Citgo must arbitrate their claims because the arbitration agreement gave relators the right to enforce the agreement despite not being signatories. The Texas Supreme Court has held that a third party may enforce a contract "only if (a) the parties intended to secure a benefit to that third party and (b) the contracting parties entered into the contract directly for the third party's benefit."

Here, the arbitration agreement between Pat Tank and Rose expressly governed claims against Pat Tank's clients. Because Rose suffered injury while working for Pat Tank when it performed work for Citgo, it was evident the parties intended to secure the benefit of arbitration for Citgo, despite the arbitration agreement not expressly mentioning it by name. Additionally, the contract between Pat Tank and Citgo stipulated that Pat Tank would indemnify Citgo for any claims its employees had against it. Consequently, the circumstances indicated intent to give Citgo the benefit of Rose's promise to arbitrate.