January 7, 2019- Simon Rodriguez v. J.G. Forrester, No. A-1-CA-36223

1 	IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 	SIMON RODRIGUEZ and
3 JUAN M. RODRIGUEZ,
4 	Plaintiffs-Appellees,
5 v. 	A-1-CA-36223
6 J~G. FORRESTER,
7 	Defendant-Appellant.
8 APPEAL FROM THE DISTRICT COURT OF EDDY COUNTY
9 Jane Shuler-Gray, District Judge
10 Marrs Griebel Law, Ltd.
11 	Clinton W. Marrs
12 Albuquerque, NM
13 	for Appellees
14 	Sutin, Thayer & Brown, P.C.
15 	Frank C. Salazar
16 Jacqueline K. Kafka
17 Albuquerque, NM
18 	for Appellant
19
20 	HANISEE, Judge.
MEMORANDUM OPINION
21 	{t} 	Defendant appeals from the district court's denial of his motion to compel
22 arbitration. We affirm in part and reverse in part.
Court of Appeals of New Mexico
Filed 1/7/2019 11:08 AM
Mark Reynolds

1 BACKGROUND
2 	{2} 	Defendant J.G. Forrester (Forrester) is the sole owner and managing partner
3 	of Black Gold Resources, Inc. (Black Gold), a Tennessee company incorporated in
4 December 2013. Forrester serves as president, chief executive officer, director, and
5 registered agent of Black Gold. Black Gold is the managing partner of Roaring Fork
6 JV (Roaring Fork), a Tennessee general partnership created by Forrester in 2013 to
7 drill wells for oil and gas in Kansas, Texas, and Oklahoma.
8 	{3} 	In December 2014, Plaintiff Juan Rodriguez (Son) signed a subscription
9 agreement (the Agreement) with Forrester to purchase a "Unit" in the Roaring Fork
10 partnership. 	Plaintiff Simon Rodriguez 	(Father) 	transferred 	$60,000 	to 	Son's
11 	checking account so that Son could fund the investment. Father was not a signatory
12 to 	the 	Agreement, 	which 	contains 	an 	arbitration 	provision 	requiring 	"all
13 	controversies, disputes, or claims pertaining in any manner whatsoever [to] be
14 resolved exclusively through binding arbitration."
15 	{4} 	Plaintiffs commenced this action against Forrester and one of his employees 1
16 	in January 2016 alleging, among other things, a violation of the New Mexico
17 Uniform Securities·Act and the New Mexico Unfair Practices Act. Pursuant to the
18 	complaint, Plaintiffs "seek to recover $60,000 they lost because of [Forrester's]
1The second named defendant has since been dismissed with prejudice from
the case.
2

1 unlawful solicitation of their investment in the securities of Black Gold . . . and
2 	[Forrester''s] unlawful sale of the securities to them."
3 	{5} 	Forrester 	moved 	to 	dismiss 	Plaintiffs' 	complaint 	for 	lack 	of personal
4 jurisdiction or, in the alternative, to stay the proceedings and compel arbitration in
5 accordance with the terms of the Agreement. With respect to the latter, Forrester
6 argued that the Agreement's arbitration provision covered "all the claims brought by
7 Plaintiff [sic]" and that the "proper defendants" in the action were not Forrester and
8 his employee but rather "the entities that sold [Son] the Roaring Fork Unit and signed
'
9 the Agreement: Black Gold and Roaring Fork." In sum, Plaintiffs' effort to avoid
10 the arbitration clause by "attempting to hold [Forrester] personally liable for actions
11 	allegedly taken by the Black Gold entity" was "an impermissible tactic" that the
12 district court should reject.
13 	{6} 	The district court denied Forrester's motion to compel arbitration on the basis
14 that Father and Son "have chosen to sue individually J.G. Forrester" and that "they
15 	have not sued ... Roaring Fork and Black Gold." The court certified its decision for
16 interlocutory appeal, which we granted.
17 DISCUSSION
Standard of Review	18 	I.
19 	{7} 	As an initial matter, it was unnecessary for the district court to certify its order
20 	denying Forrester's motion to compel arbitration for interlocutory appeal. The New·
3

l 	Mexico Uniform Arbitration Act, NMSA 1978, §§ 44-7A-1 to -32 (2001) states that,
2 "[a]n 	appeal 	may 	be 	taken 	from 	... 	an 	order denying 	a 	motion to 	compel
3 arbitration[.]" Section 44-7A-29(a)(l).
4 	{8} 	We apply a de novo standard of review to a district court's denial of a motion
5 to compel arbitration. Heye v. Am. Go((Corp., 2003-NMCA-138, ~ 4, 134 N.M. 558,
6 80 P.3d 495. Similarly, whether the pmiies have agreed to arbitrate presents a
7 question of law, and we review the applicability and construction of a contractual
8 provision requiring arbitration de novo. Santa Fe Techs., Inc. v. Argus Networks,
9 Inc., 2002-NMCA-030, ~ 51, 131 N.M. 772, 42 P.3d 1221.
10 	{9} 	The right to directly appeal an order denying a motion to compel arbitration
11 	reflects New Mexico's strong preference for resolving disputes through arbitration
12 where parties have, as a matter of contract, agreed to that form of dispute resolution.
13 	See Horne v. Los Alamos Nat'/ Sec., L.L.C., 2013-NMSC-004, ~ 16, 296 P.3d 478
14 (explaining that "there is strong public policy in this state in favor of resolution of
15 	disputes through arbitration" and that "[w ]hen a party agrees to a non-judicial forum
16 	for dispute resolution, the party should be held to that agreement" (omission, internal
17 quotation marks, and citations omitted)); Christmas v. Cimarron Realty Co., 1982-
18 NMSC-079, ~ 7, 98 N.M. 330, 648 P.2d 788 ("Arbitration is a contractual remedy
19 for the settlement of disputes by extrajudicial means."). Much as parties cannot be
20 	forced to arbitrate when they have not contractually agreed to do so, see Heye, 2003-
4

1 NMCA-138, 18 (explaining that "8: legally enforceable contract is a prerequisite to
2 arbitration [and that] without such a contract, parties will not be forced to arbitrate"),
3 "when parties have agreed to arbitrate, the courts must compel arbitration." Santa
4 Fe Technologies, Inc., 2002-NMCA-030, 151.
5 II. 	The District Court Erred in 	Denying Forrester's Motion to 	Compel
6 	Arbitration as to Son
7 	{IO} 	The sole question before us is whether Forrester may compel Father and Son
8 to arbitrate their claims. In the district court, Plaintiffs argued that the only two
9 parties to the Agreement were Son and Roaring Fork and that there existed in the
10 record "no contract of any kind, whether arbitration agreement or otherwise,"
11 	between Plaintiffs and Forrester. The district court agreed with Plaintiffs and denied
12 Forrester's motion to compel arbitration, reasoning that Plaintiffs had "chosen to sue
13 	individually J.G. Forrester" and that "they have not sued ... Roaring Fork and Black
14 	Gold." We reverse the district court's ruling with respect to Son. As to Father, we
15 	agree that as a nonsignatory to the Agreement and on the record before us, Father
16 cannot be compelled to arbitrate. We explain.
17 	{11} 	We begin by addressing the district court's treatment of Plaintiffs jointly
18 	notwithstanding that, 	as 	between the two, 	Son was the only signatory to the
19 Agreement. In Monette v. Tinsley, 1999-NMCA-040, 111, 6, 12, 126 N.M. 748,975
20 P.2d 361, this Court addressed a similar situation where one plaintiff, Donald
21 	Monette, was a signatory to an agreement containing an arbitration provision that
5

1 the defendants were attempting to enforce against Donald and his brother and co-
2 plaintiff, Charles Monette, who was not a signatory to the agreement. We affirmed
3 the district court's denial of the motion with respect to Charles, concluding that
4 Charles was not a party to the contract and that the defendants had failed to show
5 why Charles, a nonsignatory, should be bound to arbitrate in that case. Id. ,r,r 9, 12.
6 Monette thus illustrates that determinations regarding whether a plaintiff can be
7 compelled to arbitrate must t~ke into account whether the plaintiff is a signatory or
8 nonsignatory to an agreement to arbitrate.
9 	{12} 	The record in this case reflects that the district court did not consider how each
10 Plaintiffs relationship to the Agreement-Le., Son's status as a signatory, and
11 	Father's status as a nonsignatory-separately affected whether or not he could be
12 	compelled to arbitrate his claims against Forrester. We thus proceed with separate
13 	analyses of whether Son, on the one hand, and Father, on the other, may be
14 compelled to arbitrate.
15 	A. 	Son is a Signatory to the Agreement and Must Arbitrate His Claims
16 {13} 	When faced with a motion to compel arbitration, a district court "is compelled
17 to order the parties to arbitrate unless it finds that there is no enforceable agreement
18 to arbitrate." Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ,r 9, 137 N.M.
19 	293, 110 P.3d 509. "Arbitration agreements are a species of contract, subject to the
20 principles of New Mexico contract law." L.D. Miller Constr., Inc. v. Kirschenbaum,
6

l 	2017-NMCA-030, 118, 392 P.3d 194. "Courts are to interpret the provisions of
2 arbitration agreements by the rules of contract law and are to apply the plain meaning
3 	of the language utilized, in order to give effect to the agreements struck by the
4 parties." Horne, 	2013-NMSC-004, 1 16 (internal quotation marks and citation
5 omitted).
6 	{14} 	The Agreement for the purchase of one unit in Roaring Fork was "entered into
7 	... between Black Gold ... , as [m]anaging [v]enturer of the Roaring Fork ... , and
8 [Son.]" The signatories to the Agreement were "J.G. Forrester, President" on behalf
9 	of Black Gold, 	and Son. 	The purpose 	of the Agreement was to 	formalize 	a
10 relationship between Son and Forrester's company, Black Gold, whereby Son gained
11 	a working interest in up to two wells being drilled in Kansas by Roaring Fork, the
12 general partnership of which Forrester's company was the managing partner. Son's
13 	working interest of 1. 7 5 percent had the potential to yield him a 1.3125 percent net
14 revenue interest in each of the wells. The Agreement's broadly worded arbitration
15 	clause provided that:
16
17
18
19
20
21
22
It is agreed that any and all controversies, disputes, or claims pertaining
in any manner whatsoever to this Agreement or the purchase of Units
in the Joint Venture shall be resolved exclusively by binding arbitration
. . . . This agreement to arbitrate . . . shall be broadly interpreted and
covers all controversies, disputes, and claims arising out of or relating
to a Unit purchase including, but not limited to[,] contract claims, tort
claims, and statutory claims or any combination of claims.
7

1 By its plain language, the arbitration clause covers all types of claims-contract,
2 tort, statutory, or other-that may have accrued both before and after the parties
3 entered the Agreement, so long as such claims "pertain[] in any manner whatsoever"
4 and/or "aris[e] out of or relat[e] to" not only the Agreement itself but also Son's
5 purchase of the unit, i.e., what led to and resulted-or failed to result-from the
6 purchase. 	Indeed, 	Son conceded in the hearing before the district court that
7 "unquestionably, [Son] would be required to arbitrate [his] claims if he chose to
8 bring claims against Roaring Fork."
9 {15} 	Son contends, however, that he cannot be compelled to arbitrate his claims
10 against Forrester because he sued Forrester in his individual capacity (i.e., J.G.
11 	Forrester) and not in his corporate capacity (i.e., J.G. Forrester, President). He argues
12 that construing the Agreement to include Son's claims against Forrester "for his
13 	own, individual[] misconduct" would impermissibly "fashion a new agreement"
14 between Son and Forrester that does not exist. We disagree.
15 	{16} 	It 	is 	well established that "[p]arties contracting 	to 	resolve disputes by
16 arbitration are bound by their agreement." Luginbuhl v. 	City of Gallup, 	2013-
17 NMCA-053, ,r 25, 302 P.3d 751 (internal quotation marks and citation omitted). It
18 	is also true that "[g]enerally, third parties who are not signatories to an arbitration
19 agreement are not bound by the agreement and are not subject to, and cannot compel,
20 arbitration." Horanburg v. Felter, 2004-NMCA-121, ,r 16, 136 N.M. 435, 99 P.3d
8

1 685. However, there are numerous exceptions to this rule, and even a party who is
2 not a signatory to an arbitration agreement may, in certain circumstances, enforce an
3 agreement to arbitrate or be compelled to arbitrate. See Damon v. StrucSure Home
4 	Warranty, LLC, 2014-NMCA-116, ,r,r 11, 16, 338 P.3d 123 (identifying the "five
5 theories for binding nonsignatories to arbitration agreements" that federal courts
6 have recognized and concluding that one of the theories-equitable estoppel-
7 applied to prevent the plaintiff in that case, a nonsignatory to the . arbitration
8 agreement, 	from 	avoiding 	arbitration 	(internal 	quotation 	marks 	and 	citation
9 omitted)). Thus, when a district court 	is 	presented with a motion to 	compel
10 arbitration and must determine whether an arbitration agreement is enforceable
11 	between the parties, the question of enforceability cannot be answered simply by
12 	comparing 	the 	case's 	caption 	to 	the 	agreement's 	signature 	lines 	to 	confirm
13 	identicality of the parties. Rather, the district court must determine whether the
14 	agreement may be enforced by the party seeking to compel arbitration against the
15 	party resisting arbitration despite the fact that one party-either the party seeking to
16 compel or the party seeking to avoid arbitration-is not a signatory to the agreement.
17 The question is ultimately one of intent: did the parties in the instant case intend to
18 	decide their claims through arbitration? See Mitsubishi Motors 	Corp. 	v. 	Soler
19 	Chrysler-Plymouth, Inc., 473 U.S. 614,626 (1985) (explaining that "the first task of
20 a court asked to compel arbitration of a dispute is to determine whether the parties
9

1 agreed to arbitrate that dispute" because "as with any other contract, the parties'
2 intentions control").
3 {17} 	Here, Son agreed to arbitrate "any and all controversies, disputes, or claims
4 pertaining in any manner whatsoever to this Agreement or the purchase of Units in
5 the Joint Venture." Son's argument that he only agreed to arbitrate any claims he
6 may have against Roaring Fork and that he cannot be compelled to arbitrate by
7 anyone other than Roaring Fork is unavailing. We have no difficulty concluding that
8 if Son had named Forrester in his corporate capacity (i.e., J.G. Forrester, President)
9 as a defendant in the instant suit, Forrester would be able to compel arbitration of
10 	Son's claims based on his clear status as a signatory to the Agreement. The question,
11 	here, is simply whether Son may avoid the Agreement's arbitration provision by a
12 	stratagem of naming Forrester in his individual, rather than corporate, capacity in
13 	the complaint.
14 	{18} 	In arguing that he has "stated claims against Mr. Forrester for his own personal
15 	statutory and tortious misconduct[,]" Son appears to either confuse or erroneously
16 	conflate suits against an individual corporate agent for personal liability and suits
17 against a person in their personal, rather than corporate, capacity. Citing and
18 	devoting much discussion to cases such as Kaveny v. MDA Enters., Inc., 2005-
19 NMCA-118, 138 N.M. 432, 120 P.3d 854, Stinson v. Berry, 1997-NMCA-076, 123
20 N.M. 482,943 P.2d 129, and Kreischer v. Armijo, 1994-NMCA-118, 118 N.M. 671,
10

1 884 P.2d 827, Son argues that "[i]t is axiomatic that if an agent of a business entity
2 directs or actively participates in the commission of the entity's statutory or tortious
3 violation, the individual agent can be held personally liable." He additionally argues
4 that "[w ]hen acting as an agent of a business enterprise, the individual actor is not
5 free to violate his or her statutory or common law obligations" and that an individual
6 may be held individually liable "even when the individual is acting within the scope
7 of his or her corporate duties[.]" But the fact that corporate agents may be held
8 personally liable for their own individual wrongdoing within the scope of their
9 corporate duties says nothing about whether corporate agents may enforce an
10 	arbitration agreement to which they are signatories, despite that they have been
11 	named in their individual capacities in the plaintiffs complaint. Son's reliance upon
12 the cited cases thus not only is misplaced but also evinces that his claims are, in
13 	actuality, against Forrester in his corporate, not individual, capacity.
14 	{19} 	In light of the breadth of the Agreement's arbitration provision and the fact
15 	that all of Son's claims against Forrester (1) pertain to, arise under, or relate to the
16 Agreement2 or Son's Unit purchase, and (2) involve conduct relating to Forrester's
17 behavior in his corporate, not personal, capacity, we conclude that to allow Son to
18 	avoid the Agreement would be to impermissibly eviscerate or nullify the underlying
2Indeed, we find puzzling Son's attempt to repudiate the Agreement at the
same time he is suing Forrester to recover under the Agreement based on Forrester's
alleged breach of the Agreement.
11

1 agreement into which Son entered. Thus, we reverse the district court's denial of
2 Forrester's motion to compel arbitration with respect to Son.
3 B.
4
5 {20}
Father Was Not a Party to the Agreement and Is Not Compelled to
Arbitrate His Claims
Because arbitration is a matter of contract, "a party cannot be required to
6 submit to arbitration any dispute which he has not agreed so to submit." Clay v N.M
7 	Title Loans, Inc., 2012-NMCA-102, ,r 14, 288 P.3d 888 (internal quotation marks
8 and citation omitted). Thus, for the same reason a district court must order parties to
9 arbitrate where it concludes that an enforceable agreement to arbitrate exists, "if the
10 court finds that there is no enforceable agreement, it may not order the parties to
11 	arbitrate." 	Alexander, 	2005-NMCA-034, 	,r 	9 	(alterations, 	omission, 	internal
12 	quotation marks, and citation omitted); see§ 44-7A-8(c).
13 	{21} 	It is undisputed that Father is a nonsignatory to the Agreement. Unlike Son,
14 Father never agreed to arbitrate any claims he might have related to Son's Unit
15 	purchase and the Agreement, regardless of against whom those claims were brought.
16 	On the record before us, it seems Father's only role in this matter was to lend Son
17 the money by which Son acquired the one-unit interest. We state no opinion
18 	regarding the viability of Father's claims against Forrester and note only that
19 Forrester makes no argument that any exception for binding a nonsignatory applies
20 to Father. Indeed, Forrester's position in the district court was that "[t]here is no
21 	factual or legal basis for [Father's] claims[,]" i.e., by attacking the merits ofFather's
12

1 claims, not whether they are arbitrable. Because Forrester fails to identify any basis
2 upon which Father, an undisputed nonsignatory to the Agreement, may be bound by
3 the 	Agreement, 	we 	affirm that 	portion 	of the 	district 	court's 	ruling 	denying
4 Forrester's motion to compel arbitration as against Father.
5 	CONCLUSION
6 	{22} 	For the foregoing reasons, we affirm the district court's denial of Forrester's
7 motion with respect to Father, reverse with respect to Son, and· remand for further
8 proceedings in accordance with this opinion.
9 	{23}
10
11
IT IS SO ORDERED.
12 WE CONCUR:
15 	~~~
16 	DANI~GA'LEGOS,Ju
J. MILES HANISEE, Judge
13