Non-Signatory Cannot Be Forced to Arbitrate Fraud Claim, 3rd Circuit Rules

PHILADELPHIA — A non-signatory cannot be forced to arbitrate a fraud claim –– even though he benefited from the contract containing the arbitration clause –– because he does not allege breach of the contract, but rather fraud antecedent to the contract, a federal appeals court has ruled.

In a dispute involving alleged fraud in connection with a "life settlement," the 3rd Circuit U.S. Court of Appeals on Aug. 11 ruled in a precedential opinion that the theory of equitable estoppel does not apply because the plaintiff’s claims would exist even if the contract containing the arbitration clause were void.

In …