Filed 7/21/14 Bachenheimer v. Wells Fargo Bank CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
BETH BACHENHEIMER, B251980
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC502330)
v.
WELLS FARGO BANK, N.A.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los Angeles County, Kevin C.
Brazile, Judge. Affirmed.
Jones, Bell, Abbott, Fleming & Fitzgerald, G. Thomas Fleming III, William M.
Turner and Kasumi Takahashi for Defendant and Appellant.
Law Offices of John A. Belcher and John A. Belcher for Plaintiff and Respondent.
I. INTRODUCTION
Defendant, Wells Fargo Bank, N.A., appeals from the September 24, 2013 order
denying its motion to compel arbitration. Plaintiff, Beth Bachenheimer, had an
investment account with defendant. She subsequently filed a complaint alleging
fiduciary duty breach, negligence, and elder abuse after defendant allegedly lost her
investment. Defendant moved to compel arbitration. Plaintiff contended defendant
failed to present sufficient evidence she had signed any arbitration agreement. The trial
court denied defendant’s motion to compel arbitration on that ground.
Defendant concedes it does not have the original or a copy of the agreement
signed by plaintiff. However, defendant submitted declarations from two individuals
who claimed plaintiff could not have opened an account unless she agreed to the
arbitration provision. Defendant argues these declarations are sufficient proof of the
arbitration agreement between the parties because the original documents were lost or
destroyed. We affirm.
II. BACKGROUND
A. Plaintiff’s Complaint
On March 5, 2013, plaintiff filed her complaint against defendant. Plaintiff
alleges she is a dependent adult under Welfare and Institutions Code section 15610.23.
She resides in Los Angeles County. Defendant is a nationwide bank with branches
throughout the United States. Plaintiff alleges having a significant decline in cognitive
and emotional functions because of a traumatic brain injury. Defendant and plaintiff
entered into a custodial agreement. Defendant served as trustee and custodian of
plaintiff’s funds. Plaintiff alleges: defendant invested plaintiff’s funds in highly
speculative stocks; all of plaintiff’s funds were lost; and claims fiduciary duty breach,
negligence and elder abuse.
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B. Defendant’s Motion To Compel Arbitration
On June 28, 2013, defendant filed a motion to compel arbitration which contains
the following allegations. On June 3, 2005, plaintiff opened an investment account with
Atlas Securities via a fund transfer. She maintained two funds with Atlas Securities—the
Atlas Strategic Fund and the Atlas Global Growth Fund. In 2007, Atlas Securities ceased
operations. Atlas Global Growth Fund was acquired by Evergreen Investments.
Evergreen Investment is the mutual fund affiliate of Wachovia Corporation. The Atlas
Global Growth Fund was converted into the Intrinsic World Equity Fund. The shares
were held in Wachovia Corporation’s clearing firm, First Clearing, LLC.
Defendant submitted a declaration from Sasha Azarmi, a financial advisor
employed by defendant in Los Angeles and a former consultant with Wachovia
Corporation. Mr. Azarmi declared, “For customer accounts held at First Clearing, all
customers were required to enter into a standard form of Wachovia Client
Agreement . . . .” The client agreement in effect during this time contained an arbitration
provision which provided: “It is agreed that all controversies or disputes which may arise
between you and [Wachovia] including controversies or disputes with [Wachovia’s]
clearing agent (collectively, ‘us’) concerning any transaction or the construction,
performance or breach of this Agreement or any other agreement between us, whether
entered into prior to, on, or subsequent to the date of this Agreement, including any
controversy concerning whether an issue is arbitrable, shall be determined by arbitration
conducted before, and only before, an arbitration panel set up by either the National
Association of Securities Dealers, Inc. . . . or the New York Stock Exchange, Inc. . . . in
accordance with their respective arbitration procedures.” In July of 2010, defendant
acquired Wachovia Corporation and its subsidiaries. As a result of the acquisition, the
Evergreen Investments funds were converted to a Wells Fargo Advantage Fund.
Defendant also submitted the declaration of Kelly Jelenchick, defendant’s client
service consultant. Ms. Jelenchick declared the Wells Fargo Advantage Fund sent all
former Evergreen Investment customers a new custodial agreement and disclosure in
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August 2010. She stated, “In the ordinary course of [Wells Fargo Advantage Fund’s]
business, Plaintiff would have been sent the Custodial Agreement along with the same
mailing to other former Evergreen customers.” The custodial agreement stated, “Any
controversy regarding your Wells Fargo Traditional IRA is subject to arbitration.”
According to Ms. Jelenchick, the agreement further stated, “The participant
acknowledges and agrees to arbitrate controversies as described in other account opening
documents.”
Defendant filed a demurrer which was sustained as to the financial elder abuse
claim. Meanwhile, defendant requested in an e-mail that plaintiff arbitrate her claims
pursuant to the arbitration agreement she purportedly signed when she opened her
account. Plaintiff’s lawyer did not respond to the request to arbitrate.
C. Plaintiff’s Opposition And Defendant’s Reply
On September 13, 2013, plaintiff filed her opposition to defendant’s motion to
compel arbitration. Plaintiff presented no declarations. But plaintiff presented the
following argument: defendant never submitted the original paperwork concerning her
account with Atlas Securities; there was no showing the original paperwork contained an
arbitration provision or an agreement that Atlas Securities could unilaterally modify the
contract; and defendant was attempting to demonstrate the arbitration provision was
added by mail via a “bill stuff.”
Plaintiff also contended defendant’s supporting evidence was not competent. Mr.
Azarmi admitted he lacked contact with plaintiff. Mr. Azarmi declared: “Although I was
listed as Plaintiff Beth Bachenheimer’s broker of record on account statements from 2007
through 2009, I did not have any contact with Plaintiff. Plaintiff did not contact me at
any time concerning her account and I did not effectuate any transactions in her account.”
Plaintiff argued the Wachovia Corporation client agreement was incomplete because
defendant submitted only 17 of the 25 pages. Additionally, there was no signature page
containing plaintiff’s signature on this client agreement. Plaintiff also argued: Ms.
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Jelenchick did not state plaintiff was required to sign any arbitration agreement; there
was no evidence Ms. Jelenchick ever saw plaintiff’s signature on any arbitration
agreement; Ms. Jelenchick presented no evidence a revised contract was sent; there was
no evidence about how Ms. Jelenchick knew it would have been sent; and defendant’s
custodial agreement submitted with the motion does not have her signature. Based on the
foregoing argument, plaintiff concluded there was no competent evidence that the
custodial agreement containing the arbitration provision was ever mailed to her.
On September 17, 2013, defendant filed its reply. Defendant submitted no new
evidence. Defendant argued Mr. Azarmi’s and Ms. Jelenchick’s declarations were
competent evidence because the original documents were lost or destroyed. Defendant
conceded the documents were lost or destroyed because they were outside the statutory
document retention requirement for broker-dealers. Defendant argued: both Mr. Azarmi
and Ms. Jelenchick were employees during the time plaintiff maintained an account with
defendant; they both had personal knowledge of documents and agreements that
investment customers were required to have entered into in order to maintain their
accounts; they also had personal knowledge of the arbitration agreements at issue
attached to defendant’s motion that plaintiff would have received and agreed to at the
time; and plaintiff did not dispute the arbitration terms in the agreements nor the
admission of the declarations.
D. Order Denying Defendant’s Motion To Compel Arbitration
On September 24, 2013, the trial court denied defendant’s motion to compel
arbitration. The trial court found defendant had failed to sustain its burden of proving
that plaintiff signed any arbitration agreement. It found mailing an agreement was
insufficient evidence a party had agreed to it. Defendant subsequently appealed.
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III. DISCUSSION
An order denying a motion to compel arbitration is appealable. (Code Civ. Proc.,
§ 1294, subd. (a); Hong v. CJ CGV America Holdings, Inc. (2013) 222 Cal.App.4th 240,
248; Valentine Capital Asset Management, Inc. v. Agahi (2009) 174 Cal.App.4th 606,
612, fn. 5.) Code of Civil Procedure section 1281.2, subdivision (a) provides in pertinent
part: “On petition of a party to an arbitration agreement alleging the existence of a
written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate
such controversy, the court shall order the petitioner and the respondent to arbitrate the
controversy if it determines that an agreement to arbitrate the controversy exists . . . .”
The moving party bears the burden of proving an arbitration agreement’s existence by a
preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996)
14 Cal.4th 394, 413; Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th
754, 761.)
Here, the trial court found insufficient evidence plaintiff signed an arbitration
agreement. Our Supreme Court has held, “[W]hen a petition to compel arbitration is filed
and accompanied by prima evidence of a written agreement to arbitrate the controversy,
the court itself must determine whether the agreement exists, and, if any defense to its
enforcement is raised, whether it is enforceable.” (Rosenthal v. Great Western Fin.
Securities Corp., supra, 14 Cal.4th at p. 413; Brodke v. Alphatec Spine Inc. (2008) 160
Cal.App.4th 1569, 1577.) Our Supreme Court has explained, “In these summary
proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations,
and other documentary evidence, as well as oral testimony received at the court’s
discretion, to reach a final determination.” (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972, citing Rosenthal v. Great Western Fin. Securities Corp.,
supra, 14 Cal.4th at pp. 413-414.) Courts of Appeal have held: “‘If the facts are
undisputed, on appeal we independently review the case to determine whether a valid
arbitration agreement exists. [Citations.]’ [Citation.]” (Warfield v. Summerville Senior
Living, Inc. (2007) 158 Cal.App.4th 443, 446-447; Flores v. Evergreen at San Diego,
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LLC (2007) 148 Cal.App.4th 581, 586; see Engalla v. Permanente Medical Group, Inc.,
supra, 15 Cal.4th at p. 973, fn. 7 [because the motion to compel arbitration was similar to
a summary judgment motion, California Supreme Court conducted an independent
review of the evidence].)
Here, defendant contends the submitted evidence was sufficient to demonstrate
plaintiff signed an arbitration agreement. The record does not contain any document in
which plaintiff signed an arbitration agreement. Defendant did not submit plaintiff’s
agreement with Atlas Securities. The submitted Wachovia Corporation client agreement
was incomplete and did not contain plaintiff’s signature. Mr. Azarmi declared he had no
contact with plaintiff concerning her client agreement with Wachovia Corporation. Ms.
Jelenchick declared defendant’s custodial agreement containing the arbitration provision
would have been sent to plaintiff. Ms. Jelenchick did not declare, however, that plaintiff
acknowledged receiving or agreeing to the arbitration provision. The submitted custodial
agreement also did not contain plaintiff’s signature.
No doubt, when documents have been destroyed, secondary evidence may be used
to demonstrate the content of a writing. (Evid. Code, § 1521, subd. (a); Dart Industries,
Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1068-1071.) The content of
defendant’s custodial agreement and Wachovia Corporation’s client agreement, however,
were not in dispute. What was disputed was defendant’s claim that plaintiff had agreed
to an arbitration provision. Defendant attempted to demonstrate the existence of
plaintiff’s signature and thus agreement to arbitrate with declarations. The declarants had
personal knowledge of what system they had in place regarding opening various accounts
with defendant and its predecessor in interest, Wachovia Corporation. However, they
lacked personal knowledge as to whether plaintiff agreed to arbitration. (See Evid. Code,
§ 702, subd. (a) [“[T]he testimony of a witness concerning a particular matter is
inadmissible unless he has personal knowledge of the matter. Against the objection of a
party, such personal knowledge must be shown before the witness may testify concerning
the matter.”]; see People v. Lewis (2001) 26 Cal.4th 334, 356.) The declarants did not
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testify (because they could not) as to whether plaintiff actually agreed to the arbitration
provisions.
As noted, the trial court ruled defendant failed to sustain its burden of proving
plaintiff ever signed an arbitration agreement. The trial court reasonably could have
found: no arbitration agreement was ever entered into because one was never produced;
there is no written record an arbitration agreement was ever sent to plaintiff; it was
unreasonable for sophisticated brokers to lose such an important document; and there is
no explanation as how and when such an important document was lost. The best
evidence of an arbitration agreement is a copy of the document and defendant, the party
with the burden of proof on the subject, never produced it. The trial court acted
reasonably. (Evid. Code § 412; Hardesty v. Sacramento Metropolitan Air Quality Dist.
(2011) 202 Cal.App.4th 404, 425; Vallbona v. Springer (1995) 43 Cal.App.4th 1525,
1537; Duffy v. City of Arcadia (1987) 195 Cal.App.3d 308, 313.)
Defendant correctly argues the Federal Arbitration Act and California public
policy favors arbitration. (Code Civ. Proc., §§ 1281, 1281.2; Moncharsh v. Heily &
Blase (1992) 3 Cal.4th 1, 9.) However, as the Court of Appeal has noted, “[T]here is no
public policy in favor of compelling arbitration where the moving party does not satisfy
the requirements of [Code of Civil Procedure] section 1281.2.” (Brodke v. Alphatec
Spine Inc., supra, 160 Cal.App.4th at p. 1577; accord, Villacreses v. Molinari (2005) 132
Cal.App.4th 1223, 1230.) The trial court reasonably could have found defendant has not
met its burden of proof that there was a valid arbitration agreement between the parties.
The trial court did not err.
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IV. DISPOSITION
The September 24, 2013 order denying the motion to compel arbitration is
affirmed. Plaintiff, Beth Bachenheimer, is awarded her appeal costs from defendant,
Wells Fargo Bank, N.A.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER, P. J.
We concur:
MOSK, J.
MINK, J.*
*
Retired Judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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