Can a title company compel arbitration as a third-party beneficiary? First American Title v. Barron Explained

The Utah Court of Appeals addressed whether a title insurance company could compel arbitration when it wasn’t a signatory to the underlying contracts containing arbitration clauses in First American Title Insurance Company v. Barron.

Background and Facts

Between November 2018 and early 2019, multiple purchasers entered into real estate purchase agreements to buy fractional interests in a Colorado commercial property. Each purchase agreement contained an arbitration clause and specifically required that “the balance of the purchase price shall be wired, or otherwise transferred, to First American Title Company within twenty-four hours of closing.” First American served as both title insurer and escrow agent for all transactions. When purchasers later sued First American alleging participation in a fraudulent scheme, First American moved to compel arbitration based on the arbitration clauses in both the purchase agreements and the title insurance policies.

Key Legal Issues

The central issue was whether First American, as a non-signatory to the purchase agreements, could enforce their arbitration clauses. The court had to determine: (1) which state’s law applied to the third-party beneficiary analysis, and (2) whether First American qualified as a third-party beneficiary with standing to compel arbitration under Colorado law.

Court’s Analysis and Holding

The court applied Colorado law based on express choice-of-law provisions in the purchase agreements. Under Colorado’s third-party beneficiary doctrine, a non-party may enforce an arbitration clause if the contracting parties intended to confer a specific legal right on the non-party. The court found this intent was manifest because the agreements didn’t merely contemplate using an escrow agent—they expressly required the parties to use First American specifically. This created more than an “incidental” benefit; it placed First American in a key contractual role. The court emphasized Colorado’s strong preference for arbitration, noting that ambiguities should be resolved in favor of arbitration.

Practice Implications

This decision demonstrates the importance of precise contract drafting when designating service providers. Courts will examine whether contracts merely contemplate using a type of service provider versus specifically naming and requiring particular entities. The ruling also reinforces that Utah courts will apply other states’ laws when contracts contain valid choice-of-law clauses, and that strong policy preferences for arbitration can influence third-party beneficiary analyses. Practitioners should consider how arbitration clauses interact with non-signatory doctrines when advising clients involved in complex transactions with multiple parties and service providers.