In Blaustein v. Huete, No. 09-31078 (5th Cir. June 18, 2010), Burt Huete (“Huete”) along with Richard and Gail Blaustein, formed Special Projects Limited, L.L.C. (“SPL”) in connection with an application for a provisional patent for a wireless tracking device they had invented. SPL hired the law firm Maier & Maier (“Maier”) to serve as patent counsel. Their written fee agreement contained an arbitration clause and listed SPL as the client, with Huete and Blaustein serving as signatories for SPL.
Soon after, Huete hired separate counsel and sued the Blausteins in state court, and the Blausteins sued Huete in federal court. Huete alleged that the Blausteins and Maier conspired to let the provisional patent lapse and failed to list him as an inventor on a subsequent patent application. The suits were consolidated in federal court and added Maier as a defendant. Maier moved to dismiss Huete’s claims and the district court found that Huete was a party to the fee agreement between Maier and SPL. Therefore, the court granted Maier’s motion to compel arbitration pursuant to the agreement’s arbitration clause. Huete appealed.
The Fifth Circuit, after an “examination for the ‘four corners of the agreement’ ” reasoned that Huete is not a signatory to the arbitration clause. The court began its analysis by saying that “there is a presumption favoring liberal construction of arbitral clauses.” However, the court noted that the agreement stated: “[t]he Client and Maier & Maier PLLC jointly agree that any dispute, controversy, or claim between us arising out of or relating in any way to this engagement shall be resolved through binding arbitration . . . .” The court concluded that Huete signed the agreement as “the Client,” representing SPL and this was not enough to bind him individually.
In reversing the district court dismissal, the Fifth Circuit did not foreclose the “possibility that Huete [could] be held to the arbitration agreement as a non-party beneficiary.”
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