Lack of Privity Allows Receiver to Avoid Arbitration Provision
January 2, 2015After Kevin White defrauded investors in a foreign currency trading scheme, a federal court appointed Kelly Crawford as receiver over the estates and assets of White and his companies. One such entity was a fund operating as a limited partnership called the Revelation Forex Fund. Crawford determined that investors in Revelation had claims against Forex, the company with which Revelation had maintained foreign currency trading accounts. Consequently, the investors assigned their claims to Crawford and he then filed suit against Forex in Colin County District Court.
Forex sought to dismiss the lawsuit based on an arbitration provision in its contract with Revelation. When the trial court denied its motion, Forex appealed. The Dallas Court of Appeals affirmed based on the crucial distinction that Crawford’s claims were brought as an assignee of the investors’ claims, not in his role as trustee. Because only Revelation (and not the individual investors) had agreed to arbitrate claims against Forex, venue in Colin County was proper.
