Mississippi Federal District Court Enforces Unsigned Arbitration Agreement Under Direct-Benefit Estoppel Doctrine

Even if an insured could be considered a “non-signatory” to an arbitration agreement because of his failure to sign the document, the insured cannot avoid arbitration under the direct-benefit estoppel doctrine if he has sought enforcement of the policy’s other provisions, according to a federal district court in Mississippi.

In Masztal v. Meritplan Ins. Co., Civ. No. 1:08-CV-277-HSO-JMR, 2008 WL 4875675 (S.D. Miss. Nov. 12, 2008), Masztal filed a complaint against Meritplan, alleging economic loss and mental distress from the insurer’s denial of his property insurance claim. Meritplan responded by moving to compel arbitration as provided in the parties’ policy.

In its motion, Meritplan admitted that Masztal never signed the acknowledgement of arbitration agreement form provided with the policy. The Court doubted that Masztal was a “non-signatory” to the contract under these circumstances. However, even if Masztal was considered a “non-signatory,” the Court found that he was estopped from avoiding his obligation to arbitrate claims within the scope of the agreement. By embracing the benefits of the insurance policy and seeking the enforcement of its substantive provisions, Masztal was also required to honor the arbitration agreement in the policy, according to the Court.