Wednesday, December 25, 2013

Ex Parte Stamey case brief

Ex Parte Stamey case brief summary
776 So.2d 85 (2000)

Petitioners buyers sought a writ of mandamus directing the Mobile Circuit Court (Alabama) to vacate its order compelling arbitration of their claims against respondents mobile home seller and bank.

Petitioners contracted with respondent seller to purchase a mobile home which included the installation of a septic system, and borrowed money for the purchase from respondent bank. When petitioners were sued over of allegations that their septic system violated state health laws, they filed a third-party complaint against respondents. Respondents' motions to compel arbitration of petitioners' claims in accordance with the petitioners' and respondent bank's financing agreement were granted. Petitioners sought a writ vacating the order.


  • The court denied the writ, holding that respondent seller had the right to enforce the arbitration agreement even though it was a nonsignatory. 
  • Because petitioners' claims against respondent seller were related to the financial contract entered into with respondent bank, petitioners were equitably estopped from arguing their claims were not subject to arbitration. 
  • Respondent seller was a third-party beneficiary to the financing contract because petitioner and respondent bank intended to benefit respondent seller through the contract; therefore it was entitled to enforce the contract's arbitration agreement.

Writ denied because respondent seller had the right to enforce the arbitration agreement contained in the financial contract entered into between petitioner and respondent bank under the theories of equitable estoppel and third-party beneficiary.

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