Rush, C.J.
Agreements to arbitrate have become commonplace in modern society. Many appreciate how they can keep legal costs down, ensure parties’ confidentiality, and provide a flexible alternative to the traditional court system. Despite these benefits, there are limits to enforcing arbitration agreements, particularly when outside parties are involved.
Generally, to enforce an arbitration clause, one must be either a signatory or otherwise provided for in the original agreement. In rare circumstances, however, an outside party not contemplated by the agreement may enforce an arbitration clause against a signatory. One way is by invoking the doctrine of equitable estoppel.
Under Indiana law, equitable estoppel can be applied only if three elements are shown: lack of knowledge, reliance, and prejudicial effect. We reiterate these three requirements today and decline to adopt any alternative theories of the doctrine.
Seventy-seven-year-old Jane Doe II (“Jane”) was asked to leave her previous assisted living facility when it could no longer provide her the care she needed. Jane’s legal guardian, Jane Doe I (“Guardian”), toured a number of communities and ultimately chose Carmel Senior Living (“CSL”). After Guardian paid a deposit to CSL and arranged for Jane to move in, CSL emailed her its residency contract. Within the residency contract was an arbitration agreement (“Agreement”), which Guardian initialed. Guardian later signed and delivered the entire contract to CSL.
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Guardian later amended the complaint to add Certiphi Screening, the company CSL had hired to run background checks on new employees, after she learned of its involvement. The amended complaint alleged that both CSL and Certiphi negligently failed to discover Sullivan’s prior felony convictions for a sex crime and murder
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Applying Indiana contract-law principles, we conclude that Certiphi cannot enforce the Agreement. As explained below, the record does not support a finding of an agency relationship; Certiphi cannot satisfy the established elements of equitable estoppel; and we decline to endorse any alternative theories of the doctrine.
I. Certiphi is not an “agent,” one of the third-party beneficiaries provided for in the arbitration clause.
Certiphi argues that it can enforce the arbitration agreement, reasoning that the agreement explicitly requires Guardian to arbitrate her dispute with an agent of CSL. As explained below, while we agree that an “agent” is an intended third-party beneficiary in the Agreement, there is no evidence of an agency relationship between Certiphi and CSL
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II. Certiphi cannot meet the requirements of equitable estoppel: lack of knowledge, reliance, and prejudicial effect.
In exceptional situations, a court may employ the doctrine of equitable estoppel to allow a nonsignatory to enforce a contract, even though it wasn’t included in the agreement. Certiphi argues this is such a situation.
This powerful doctrine, however, applies only when three elements are met: the party claiming estoppel must (1) lack knowledge and the means of knowledge as to the facts in question, (2) rely upon the conduct of the party to be estopped, and (3) experience a prejudicial change in position based on the conduct of the party to be estopped. Money Store Inv. Corp. v. Summers, 849 N.E.2d 544, 547 (Ind. 2006) (quoting City of Crown Point v. Lake Cty., 510 N.E.2d 684, 687 (Ind. 1987)).
Despite its assertion, Certiphi cannot avail itself of equitable estoppel. There is nothing to suggest that Certiphi knew about the Agreement prior to Guardian’s suit. There is no evidence that Certiphi relied on the Agreement. And there is nothing to show that Certiphi experienced any sort of detriment because of reliance.
Certiphi counters, however, that it need not show these elements of equitable estoppel. Rather, it points out that our Court of Appeals has adopted alternative theories of the doctrine that apply to Guardian’s claims against it.
III. We decline to endorse any alternative equitable estoppel theories.
Certiphi argues that arbitration is required because the alternative theories of equitable estoppel our Court of Appeals adopted in German American Financial Advisors & Trust Co. v. Reed, 969 N.E.2d 621 (Ind. Ct. App. 2012), apply to its dispute with Guardian. But we decline to endorse Reed’s approach.
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Conclusion
We reverse the trial court’s determination that Certiphi can compel Guardian to arbitrate her claims against it—nothing in the record shows that Certiphi is an agent of CSL or that the traditional elements of equitable estoppel are satisfied. As to CSL, Spectrum, and Sullivan, however, we affirm the trial court’s order compelling Guardian to arbitrate.
David, Massa, Slaughter, and Goff, JJ., concur