XTI Aerospace Inc. v. Chardan Capital Mkts. LLC

MEMORANDUM OPINION & ORDER I. INTRODUCTION Respondent Chardan Capital Markets LLC (“Respondent” or “Chardan”) and non-party XTI Aircraft Company (“XTI Aircraft”) entered into an agreement to engage Respondent to assist XTI Aircraft with a potential public offering or business combination. This agreement contained an arbitration provision. XTI Aircraft went on to merge with a subsidiary of Petitioner XTI Aerospace, Inc. (formerly known as Inpixon). Following the merger, Respondent initiated an arbitration action against XTI Aircraft and Petitioner, which is now proceeding before the Financial Industry Regulatory Association (“FINRA”). Petitioner moved this Court to stay the arbitration as to Petitioner, arguing that Petitioner was not bound by the arbitration provision. Because Petitioner was neither a party to the agreement between Respondent and XTI Aircraft nor otherwise bound by the agreement under the principle of equitable estoppel, the Court GRANTS Petitioner’s motion. II. BACKGROUND A. Facts¹ 1. Respondent and XTI Aircraft Entered into an Engagement Agreement On or about June 7, 2022, Respondent and XTI Aircraft entered into an agreement engaging Respondent’s services for a potential initial public offering or merger involving XTI Aircraft. Dkt. No. 25-1 (the “Engagement Agreement”); see also Dkt. No. 24 (Petitioner’s Statement of Undisputed Facts, or “PSUF”)