Filed 5/14/21 WFP Securities v. Davis CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
WFP SECURITIES, INC. et al., B304048
(Super. Ct. No. BS136533)
Plaintiffs and Respondents,
v.
JAIMIE DAVIS,
Defendant and Appellant.
APPEAL from orders of the Superior Court of Los Angeles
County, Edward B. Moreton, Judge. Reversed in part, affirmed
in part, and remanded with directions.
Jaimie Davis, in pro. per., for Defendant and Appellant.
Reif Law Group, Brandon S. Reif, and Marc S. Ehrlich for
Plaintiff and Respondent Curtis J. Sathre III.
_________________________
INTRODUCTION
This is the third time Jaimie Davis and her former
investment advisor at WFP Securities, Inc., Curtis J. Sathre III,
have been in this court. In her first appeal, Davis challenged the
superior court’s 2012 judgment confirming a Financial Industry
Regulatory Authority (FINRA) arbitration award against her
after she lost an arbitration she filed against WFP Securities,
Sathre, and others to recover losses allegedly incurred as a result
of their bad investment advice. The judgment confirming the
arbitration award included an award against Davis of over
$135,000 in costs and expert fees. We affirmed the judgment.
(WFP Securities, Inc. v. Davis (Apr. 15, 2014, B244528)
[nonpub. opn.].)
In a subsequent petition for a writ of mandate, Davis
challenged various postjudgment orders relating to Sathre’s
attempt to enforce his monetary judgment against Davis. We
held the superior court erred in denying several motions by Davis
without allowing her to appear telephonically at, and providing a
court reporter for, the hearings on those motions. We reversed
the postjudgment orders and directed the superior court to
designate a different judge to hear Davis’s motions. (Davis v.
Superior Court (2020) 50 Cal.App.5th 607.)
In this appeal Davis challenges orders denying her motion
to compel arbitration of various claims she says she has against
Sathre and others at WFP Securities, her request to stay Sathre’s
efforts to enforce the money judgment against her, and her
request to vacate certain abstracts of judgment and notices of
lien. We conclude that the superior court erred in denying
Davis’s motion to compel arbitration of her tort claims, but that
2
the court did not err in denying some of her other requests for
relief. Therefore, we reverse some of the orders and affirm
others.
FACTUAL AND PROCEDURAL BACKGROUND
A. Sathre’s Efforts To Enforce the Judgment
Sathre has been trying to enforce a money judgment
against Davis since 2012. In October 2012 the clerk of the Los
Angeles County Superior Court issued an abstract of judgment,
which Sathre recorded with the Orange County recorder’s office.
In December 2017 and July 2018 Sathre filed requests for orders
for Davis to appear for a judgment debtor examination. In
September 2018 he filed notices of lien against Davis’s potential
recoveries in Davis v. Mid-Century Insurance Company, Inc. et
al., Orange County Superior Court case number 30-2016-
00877480-CL-BC-CJC, and Davis v. Beugelmans, LLP et al., San
Francisco County Superior Court case number CGC-17-558105.
In February 2019 Sathre served Davis with an order to appear
for a judgment debtor examination. Davis filed ex parte
applications and motions to quash the order requiring her to
appear for examination and to stay the proceedings.
B. Davis Files a Motion To Compel Arbitration
On September 27, 2019 Davis filed a motion to compel
arbitration, followed by an amended motion on October 7, 2019, a
second amended motion on October 28, 2019, and a third
3
amended motion on December 24, 2019.1 Davis argued
controversies had arisen between the parties that were subject to
the arbitration agreement in the Direct Purchase Application
Forms she signed with WFP Securities when she made her
investments, which had required arbitration of her original
claims for bad investment advice. Davis and Sathre, on behalf of
WFP Securities, signed the same arbitration form on at least 12
different occasions.
The arbitration agreement stated: “I agree that all
controversies which may arise between us concerning any
transaction, the construction, performance or breach of this or
any other agreement between us, whether entered into prior, on
or subsequent to the date hereof, or any other matter, shall be
determined by arbitration in accordance with the rules of the
National Association of Securities Dealers, Inc. then in effect. I
understand that judgement [sic] upon any arbitration award may
be entered in any court of competent jurisdiction.”2 The
agreement also stated: “The parties are waiving their right to
seek remedies in court, including the right to a jury trial.”
1 The trial court struck any briefing filed after November 25,
2019, and the court ruled on the second amended motion Davis
filed. The second and third amended motions were essentially
identical except for the date of the hearing, which the third
amended motion stated was continued to January 8, 2020.
2 FINRA is the successor to the National Association of
Securities Dealers, Inc. (NASD). (See Lickiss v. Financial
Industry Regulatory Authority (2012) 208 Cal.App.4th 1125,
1128, fn. 2.)
4
Davis argued she had claims against Sathre, WFP
Securities, and John Schooler, WFP’s president, that were subject
to the arbitration agreement. She asked the court to order the
parties to arbitrate her claims, to select Judicial Arbitration and
Mediation Services, Inc. (JAMS) in Las Vegas as the dispute
resolution provider organization, and to stay Sathre’s
enforcement of judgment proceedings pending the arbitration.
Davis also asked the court to vacate the abstract of judgment and
notices of lien, which she argued were “remedies in court” covered
by the arbitration agreement.
And what were the claims Davis said she had against
Sathre, Schooler, and WFP Securities that were subject to
arbitration under the agreement? In her motion to compel
arbitration, Davis said they were for “civil conspiracy to commit
fraud, defamation, fraud, intentional infliction of emotional
distress, invasion of privacy, declaratory relief, breach of
contract, and conspiracy to cause economic harm.” Davis claimed
that, after reviewing deposition transcripts from the FINRA
arbitration, she learned Sathre, Schooler, and WFP Securities
made derogatory statements about her, including that she begged
Sathre, Schooler, and WFP Securities to sell her the investments,
that she bought the investments on the recommendation of her
stepfather, and that she lied to FINRA staff and submitted false
documents to FINRA after the arbitration. Davis alleged that
Sathre, Schooler, and WFP Securities engaged in conspiracies to
commit fraud and cause her economic harm and to intentionally
cause her emotional distress. These conspiracies included
defaming Davis and other clients to make Sathre, Schooler, and
WFP Securities look good, representing they “would change their
business practices so that actions like those of [Davis] would not
5
be able to get past their internal review system,” and blaming
their malfeasance on Davis to deprive her “of millions in
whistleblower rewards . . . . ” Davis also alleged Sathre defamed
her by making false statements about her to members of her
family and to the jury in a case Davis and another plaintiff
brought in San Diego County Superior Court that the parties
refer to as Phalen v. Hosaka, including that Davis was crazy, lied
to serve her interests, and lied in the FINRA arbitration. Davis
also claimed that Sathre and his attorney, Brandon Reif,
conspired to obtain deposition transcripts from the Phalen matter
without Davis’s consent and without notice and that Sathre used
those transcripts to tailor his testimony in Phalen to assist the
defendant in that case, who Davis said was Sathre’s “lifelong
friend of 40 plus years.”
Davis also stated her conspiracy and intentional infliction
of emotional distress claims were based on “outrageous abusive
and harassing debt collection tactics.” According to Davis,
Sathre, Schooler, and WFP Securities were aware she had a life-
threatening medical condition and used “outrageous and illegal
collection tactics,” such as “staking ‘large, menacing men’”
outside her father’s home and verbally harassing Davis and her
father. Davis also claimed Sathre caused her severe emotional
distress by serving her with an order for a judgment debtor
examination during the Phalen trial in the presence of the jurors.
Finally, Davis claimed Sathre, Schooler, and WFP
Securities breached the arbitration agreement by going to court
to enforce the judgment against her. Davis said she was seeking
declaratory relief to determine the rights of Sathre, Schooler, and
WFP Securities “to utilize remedies in court including abstracts
of judgments, orders for examination, and judgment liens.”
6
Sathre opposed the motion, arguing that Davis did not give
proper notice of the motion, that there was no existing
controversy between the parties, that the arbitration agreement
in the Direct Purchase Application Forms did not apply to Davis’s
claims, and that res judicata barred Davis from relitigating many
of her claims. Sathre also argued that, in the absence of an
applicable arbitration agreement, the court should not issue a
stay.
C. The Trial Court Denies Davis’s Motion
The trial court denied the motion. The court ruled: “There
was no notice of the motion. There’s no clear statement in the
papers that were filed of the precise relief sought. And, in part,
as a consequence of that, there’s insufficient legal authority and
insufficient admissible factual support for a judicial order. Also,
while the precise relief sought is not completely clear, it appears
that the principle of res judicata probably does apply. And
additionally, there is insufficient showing to support the
requested stay of proceedings.” Davis argued that she did give
proper notice of her motion and that her motion included a
statement of her arbitrable claims. Davis also argued res
judicata did not apply because the events giving rise to her claims
occurred after the arbitration award in 2012. Davis timely
appealed.3
3 An order denying a petition to compel arbitration is
appealable. (Code Civ. Proc., § 1294, subd. (a); Swain v.
LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 66.)
7
DISCUSSION
A. The Superior Court Erred in Denying Davis’s Motion
To Compel Arbitration of Her Tort Causes of Action
The basis for the trial court’s denial of Davis’s motion to
compel arbitration is not very clear. The court stated there was
no notice of motion, but there was.4 The court stated Davis did
not clearly state what relief she sought, but she did.5 The court
4 The notice of motion stated: “TO ALL PARTIES AND
THEIR ATTORNEYS OF RECORD: [¶] PLEASE TAKE
NOTICE THAT on November 25, 2019 at 9:30am, in dept. 44 or
as soon thereafter as the matter may be heard in the above-
entitled Court, Defendant Jaimie Davis . . . will motion this court
for an order compelling arbitration of all matters and disputes
between the parties, for an order staying all proceedings between
the parties pending completion of the arbitration, and for an
order to vacate abstracts of judgments, liens and order for
examination. This Motion is made pursuant to Code of Civil
Procedure §1281, §1281.2, §1281.4, §1281.8, §1292.4 and §1293.2,
on the grounds that there is a binding arbitration agreement
between the parties that requires arbitration of all controversies
and any other matter which may arise between the parties be
determined by arbitration and the arbitration agreement. A
controversy has arisen between the parties and Defendant makes
claims of civil conspiracy to commit fraud, defamation, fraud,
intentional infliction of emotional distress, invasion of privacy,
declaratory relief, breach of contract, and conspiracy to cause
economic harm.” Kind of hard to miss that.
5 The motion stated: “WHEREFORE, Defendant prays: [¶]
1. That the arbitration proceed pursuant to the arbitration
provision set forth in the agreement to arbitrate; [¶] 2. That the
8
stated res judicata “probably” applied, but whether it did was an
issue for the arbitrator, not the court. (See Loscalzo v. Federal
Mutual Ins. Co. (1964) 228 Cal.App.2d 391, 398 [preclusive effect
of a prior judgment “bears upon the merits of the matter to be
arbitrated which is to be determined by the arbitrator”];
Interinsurance Exchange of Automobile Club of Southern Cal. v.
Bailes (1963) 219 Cal.App.2d 830, 836 [“It is for the tribunal in
which a claim of res judicata is made to pass on the validity of
such a contention, including a determination of the effect of the
prior judgment.”]; Chiron Corp. v. Ortho Diagnostic Systems, Inc.
(9th Cir. 2000) 207 F.3d 1126, 1132 [“a res judicata objection
based on a prior arbitration proceeding is a legal defense that, in
turn, is a component of the dispute on the merits and must be
considered by the arbitrator”].) And the court’s statement there
was “insufficient legal authority and insufficient admissible
factual support for a judicial order” doesn’t shed much light on
the court’s reasoning.
In any event, it is undisputed there was an agreement to
arbitrate. Davis submitted copies of the Direct Purchase
Court order Plaintiffs to arbitrate all controversies and all
matters which have arisen between the parties and to arbitrate
the disputes which are the subject of this Motion in JAMS
arbitration under JAMS Consumer rules in Orange County,
California; [¶] 3. That all proceedings and all future proceedings
between the parties be stayed pending completion of the
arbitration; [¶] 4. For an Order that Plaintiffs vacate and remove
the liens placed on Defendant’s property and civil litigations and
the order for examination pending the arbitration to preserve the
rulings of the arbitrator and prevent those rulings from being
moot, or in the alternative require the Plaintiffs to post a bond of
$185,000 or an amount the court finds just.” Ditto.
9
Application Forms that included the arbitration agreement, and
Sathre did not object to their admissibility or argue they did not
exist. To the contrary, in opposition to the motion to compel
Sathre acknowledged their existence. Nor on appeal does he
argue that there was no arbitration agreement or that he, unlike
WFP Securities, is not a party to the agreement. The only issue
is whether the arbitration agreement covers Davis’s claims.
Davis argues that the arbitration agreement, which applies
to “all controversies” between the parties concerning “any . . .
matter,” requires the parties to arbitrate her claims for fraud,
conspiracy, defamation, intentional infliction of emotional
distress, declaratory relief, invasion of privacy, and breach of
contract. Sathre acknowledges the broad language of the
arbitration agreement but contends it does not encompass Davis’s
claims because her claims are unrelated to the contracts
containing the arbitration agreement. Sathre also points out that
FINRA rules apply to the arbitration.
The superior court must order arbitration “if it determines
that an agreement to arbitrate the controversy exists” between
the parties and that one of the parties refuses to arbitrate the
controversy. (Code Civ. Proc., § 1281.2.)6 Because California has
a strong public policy favoring arbitration, “‘“[c]ourts should
indulge every intendment to give effect to such proceedings
[citation] and order arbitration unless it can be said with
assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.”’” (Victrola 89,
LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 356.)
“‘[A]ny reasonable doubt as to whether a claim falls within the
6 Statutory references are to the Code of Civil Procedure.
10
arbitration clause is to be resolved in favor of arbitration.’”
(Ibid.) “If the court determines that a written agreement to
arbitrate a controversy exists, an order to arbitrate that
controversy may not be refused on the ground that the
petitioner’s contentions lack substantive merit.” (§ 1281.2; see
San Francisco Police Officers’ Assn. v. San Francisco Police Com.
(2018) 27 Cal.App.5th 676, 691 [section 1281.2 “‘expressly forbids
the court from reaching the merits of the parties’ dispute’”].) “It
is the party opposing arbitration who bears the burden to show
the arbitration provision cannot be interpreted to cover the
claims in the complaint.” (Aanderud v. Superior Court (2017)
13 Cal.App.5th 880, 890.)
Questions of arbitrability rest “‘substantially on whether
the clause in question is “broad” or “narrow.”’” (Rice v. Downs
(2016) 248 Cal.App.4th 175, 186.) “‘A “broad” clause includes
those using language such as “any claim arising from or related
to this agreement”’ [citation] or ‘“arising in connection with” the
agreement’ [citation]. ‘It has long been the rule in California that
a broadly worded arbitration clause . . . may extend to tort claims
that may arise under or from the contractual relationship.
“There is no requirement that the cause of action arising out of a
contractual dispute must be itself contractual.”’” (Ibid.; see
Howard v. Goldbloom (2018) 30 Cal.App.5th 659, 663-664.) “For
a party’s claims to come within the scope of such a clause, the
factual allegations of the complaint ‘need only “touch matters”
covered by the contract containing the arbitration clause.’”
(Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1052.)
“Broad arbitration clauses are interpreted to apply to
extracontractual disputes between the contracting parties, ‘“so
long as they have their roots in the relationship between the
11
parties which was created by the contract.”’ [Citations.] In
deciding whether a dispute has its roots in the relationship
created by the contract, we ‘examine[ ] the nature of the
agreement and of the claims and their relationship to one
another . . . . ’” (Howard, at p. 664.)7
The arbitration agreement here is the broadest of broad. It
provides for arbitration of controversies between the parties
concerning (1) “any transaction”; (2) the construction,
performance, or breach of (a) the agreement or (b) any other
agreement between the parties (regardless of when the parties
entered into it); and (3) “any other matter.” And (3) is a whopper:
It provides for arbitration of a controversy between the parties
concerning any matter at all, regardless of whether, as some
agreements limit the scope of the arbitration provision, the
claims arise out of or relate to the agreement. (3) easily includes
the tort claims Davis alleges she has against Sathre, Schooler,
and WFP Securities.
Sathre acknowledges as much, but argues the scope of the
arbitration agreement cannot be “limitless.” To be sure, and as
we will discuss, the arbitration agreement has limits. But Sathre
does not explain how the claims Davis seeks to arbitrate do not
concern “any other matter” between the parties. The phrase
appears at the end of the clause and is not modified by any
subsequent language limiting its scope, such as “relating to the
agreement” or “relating to the investment” or even “having
7 “Where, as here, the evidence is not in conflict, we review
the trial court’s denial of arbitration de novo.” (Pinnacle Museum
Tower Assn. v. Pinnacle Market Development (US), LLC (2012)
55 Cal.4th 223, 236; accord, Kec v. Superior Court (2020)
51 Cal.App.5th 972, 978.)
12
something to do with anything financial.” (Cf. Rice v. Downs,
supra, 248 Cal.App.4th at p. 187 [subsequent language “‘arising
out of this Agreement’” modified the phrase “‘[a]ny
controversy’”].)
Moreover, contrary to Sathre’s assertion, to the extent
Davis’s claims need to “have their roots” in the contractual
relationship between the parties, they do. The contractual
relationship between Davis, as the investor, and Sathre, as the
advisor, governed the investments Davis made with WPF
Securities. Davis’s claims include allegations that Sathre and
others at WFP Securities made false statements about Davis’s
investments and her conduct during and after the FINRA
arbitration and that they attempted to blame Davis for her
investment losses. Similarly, the alleged extrajudicial debt
collection activities (using “large, menacing men” rather than the
legal procedures governing enforcement of judgments) relate to a
debt Davis owes only because of the contractual relationship
between the parties. These claims are firmly planted in matters
relating to the contracts containing the arbitration agreement.
(See Brinkley v. Monterey Financial Services, Inc. (2015)
242 Cal.App.4th 314, 332 [“Stated differently, ‘[t]o require
arbitration, [a party’s] factual allegations need only “touch
matters” covered by the contract containing the arbitration
clause and all doubts are to be resolved in favor of
arbitrability.’”].) The superior court erred in denying Davis’s
motion to compel arbitration of her tort claims.8
8 The parties disagree about where the arbitration should
occur, who should be the arbitrator, and what rules should apply.
Davis argues that, because the NASD is “defunct,” the arbitration
13
B. The Superior Court Did Not Err in Denying Davis’s
Motion To Compel Arbitration of Her Claims
Relating to Sathre’s Legal Efforts To Enforce the
Judgment
Davis argues that one of the controversies covered by the
arbitration agreement is her claim that Sathre is improperly
using judicial remedies to enforce the judgment the court
confirmed after the arbitration. As stated, Davis frames this
controversy as one over Sathre’s right to use California law
governing enforcement of judgments, including his filing of
abstracts of judgment, judgment liens, and requests for orders to
take her judgment debtor examination. Sathre argues the
arbitration agreement allows him to enforce the existing
judgment in court.
Sathre is correct on this point. As stated, the arbitration
agreement provides that the judgment “upon any arbitration
award may be entered in any court of competent jurisdiction.” A
judgment confirming an arbitration award “has the same force
and effect as, and is subject to all the provisions of law relating
to, a judgment in a civil action of the same jurisdictional
classification; and it may be enforced like any other judgment of
the court in which it is entered, in an action of the same
jurisdictional classification.” (§ 1287.4.) Those provisions of law
include all the rights and remedies under the enforcement of
judgments law. (See Gonzalez v. Toews (2003) 111 Cal.App.4th
should be in Las Vegas pursuant to the JAMS Consumer
Arbitration Rules. Sathre argues that FINRA is the successor
organization to NASD and that FINRA rules should apply. These
are matters for the parties and the superior court in the first
instance. (See § 1281.6.)
14
977, 980 [the enforcement of judgments law “‘is a comprehensive
scheme governing the enforcement of all civil judgments in
California’”]; Imperial Bank v. Pim Electric, Inc. (1995)
33 Cal.App.4th 540, 546 [“Detailed statutory provisions govern
the manner and extent to which civil judgments are
enforceable.”].) And only a court can enforce a civil judgment.
(See Luster v. Collins (1993) 15 Cal.App.4th 1338, 1349 [absent
the parties’ stipulation, an arbitrator has no statutory power to
enforce a judgment because “[s]uch authority would not only
conflict with judicial power, but absent carefully prescribed
procedures potentially interfere with the respective rights of the
parties”].) The superior court did not err in denying Davis’s
motion to compel arbitration of her claims relating to judicial
enforcement of the judgment.
C. The Superior Court Should Reconsider Davis’s
Request To Stay the Enforcement Proceedings
In connection with her motion to compel arbitration, Davis
sought under section 1281.4 to stay Sathre’s efforts to enforce the
judgment against her. Davis contends that, because she had a
pending motion to compel arbitration, section 1281.4 required the
court to issue the stay she requested. She also sought to vacate
the abstract of judgment and notices of lien, arguing the
arbitration agreement prohibited Sathre from pursuing “court
remedies.” Sathre argues that the arbitration agreement does
not cover these claims and that, even if it did, there is no
statutory basis for vacating the properly filed abstract of
judgment and notices of lien.
Section 1281.4 generally requires the court to stay a
pending court action if a court compels arbitration of a
15
controversy and the controversy overlaps with the issues pending
in the court action. The purpose of a stay under section 1281.4
“‘is to protect the jurisdiction of the arbitrator by preserving the
status quo until arbitration is resolved.’ [Citation.] ‘In the
absence of a stay, the continuation of the proceedings in the trial
court disrupts the arbitration proceedings and can render them
ineffective.’” (Heritage Provider Network, Inc. v. Superior Court
(2008) 158 Cal.App.4th 1146, 1152.) However, “[i]f the issue
which is the controversy subject to arbitration is severable, the
stay may be with respect to that issue only.” (§ 1281.4, third
paragraph; see Jarboe v. Hanlees Auto Group (2020)
53 Cal.App.5th 539, 556 [“‘when there is a severance of arbitrable
from inarbitrable claims, the trial court has the discretion to stay
proceedings on the inarbitrable claims pending resolution of the
arbitration’”].)
As discussed, Davis’s claims relating to Sathre’s ability to
judicially enforce the judgment, including by filing an abstract of
judgment and liens, are not subject to arbitration. The superior
court, however, did not address whether the controversies that
are arbitrable (Davis’s tort claims against Sathre, Schooler, and
WFP Securities) are severable from the controversies that are not
(Sathre’s use of the enforcement of judgment law) or whether the
enforcement of judgment proceedings would disrupt the
arbitration proceedings when and if Davis initiates arbitration of
her claims. Now that we have directed the superior court to
vacate its order denying Davis’s motion to compel arbitration, the
superior court should reconsider Davis’s request for a stay under
section 1281.4 and determine whether the arbitrable and
nonarbitrable claims are severable. (See Heritage Provider
Network, Inc. v. Superior Court, supra, 158 Cal.App.4th at
16
pp. 1152-1153 & fn. 10 [under section 1281.4, “‘[i]f the issue
which is the controversy subject to arbitration is severable, the
stay may be with respect to that issue only’”].)
DISPOSITION
The order denying Davis’s motion to compel arbitration is
reversed. The superior court is directed to enter a new order
granting Davis’s motion to compel arbitration of her claims for
fraud, conspiracy, intentional infliction of emotional distress,
defamation, and invasion of privacy. The order denying Davis’s
request for a stay is reversed, and the superior court is directed
to reconsider Davis’s request for a stay under section 1281.4. The
other orders are affirmed. Sathre’s motion for judicial notice is
granted as to the abstract of judgment and notices of lien and
otherwise denied as unnecessary. The parties are to bear their
costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
17