NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
BEUS GILBERT MCGRODER, PLLC, Petitioner/Appellee,
v.
ROBERT WILLIAMS and KAREN WILLIAMS, Respondents/Appellants.
__________________________________
ROBERT WILLIAMS AND KAREN WILLIAMS, Plaintiffs/Appellants,
v.
STEVEN R. BEUS, et us, et al., Defendants/Appellees.
No. 1 CA-CV 21-0650
FILED 10-06-2022
Appeal from the Superior Court in Maricopa County
No. CV2021-003081
CV2021-008078
The Honorable Joan M. Sinclair, Judge
AFFIRMED
COUNSEL
Poli, Moon & Zane, PLLC, Phoenix
By Michael N. Poli, Jeffrey G. Zane
Counsel for Plaintiffs/Appellants
Law Offices of Steven R. Beus, Phoenix
By Steven R. Beus
Co-Counsel for Defendants/Appellees
Beus Gilbert McGroder, PLLC, Phoenix
By Leo R. Beus
Co-Counsel for Defendants/Appellees
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz delivered the decision of the Court, in
which Judge Angela K. Paton and Judge Samuel A. Thumma joined.
C R U Z, Judge:
¶1 Robert Williams and Karen Williams (collectively “the
Williamses”) appeal the superior court’s order compelling arbitration. For
the following reasons, we affirm.
FACTUAL AND PROCEDURAL HISTORY
¶2 The Williamses were members of the Arizona limited liability
company Devise Development and Restoration, LLC (“Devise”). Karen
Williams was Devise’s CFO, and Robert Williams made personal loans to
Devise and cosigned for Devise’s credit lines and debt. Thomas Hewitt was
the Williamses’ business partner.
¶3 Believing that Hewitt and his wife wrongfully depleted
Devise’s business assets, the Williamses first retained Steven R. Beus and
later Beus Gilbert McGroder, PLLC (“Beus Gilbert”) to represent them
against Hewitt. In a meeting with Steven Beus, the Williamses signed a
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Decision of the Court
Legal Representation Agreement (“the Agreement”) with Beus Gilbert on
February 12, 2016.1
¶4 The Agreement addressed fees and contained a three-page
arbitration provision covering disputes, including disputes about legal fees
and costs, professional malpractice, and breach of fiduciary duty and
contract. The provision allowed each party to designate an arbitrator and
the party-designated arbitrators would then attempt to decide the dispute
and, if they were unable to do so within a set time period, they would jointly
select a third arbitrator. The arbitration provision’s heading was bolded
and underlined; it contained language discussing the advantages and
disadvantages of arbitration, including waiving the right to a jury trial. The
provision also highlighted the Williamses’ right to seek review by
independent counsel, noting that if they had “any questions regarding the
effect of Arbitration on” their rights, “and the waiver of such rights,” they
“should seek advice of and consult with independent counsel” of their
choice “in regards to the terms of these arbitration provisions” before
signing the Agreement. In the signature block of the Agreement, the
Williamses avowed that they had “READ THE FOREGOING LEGAL
RESPRESENTATION AGREEMENT AND CLIENT’S SIGNATURE
BELOW INDICATES THAT CLIENT FULLY UNDERSTANDS AND
AGREES TO ALL OF THE TERMS OF THIS AGREEMENT INCLUDING,
BUT NOT LIMITED TO, ITS ARBITRATION PROVISIONS.”
¶5 In December 2015, the Williamses, represented by Beus
Gilbert, sued Hewitt. After Hewitt filed bankruptcy, Beus Gilbert filed a
complaint on behalf of the Williamses against Hewitt in the bankruptcy
court. The Williamses reached a settlement with Hewitt, but the
bankruptcy court denied relief without prejudice after finding the
Williamses gave improper notice.
¶6 Meanwhile, in August 2019, the Williamses stopped paying
for legal services. In December 2019, Beus Gilbert served a demand for
arbitration on the Williamses. When that effort failed, in February 2021,
Beus Gilbert filed a petition to compel arbitration of the fee dispute. The
Williamses opposed the petition, arguing the arbitration provision was
invalid because Beus Gilbert failed to comply with State Bar of Arizona
1 The record indicates that the Williamses had entered into a
“substantively identical fee agreement[]” with Steven Beus on October 19,
2015. There is no indication that Steven Beus has sought to compel
arbitration under that October 2015 fee agreement and, in any event, the
enforceability of that agreement is not before this court.
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Decision of the Court
Ethics Opinion (“EO”) 94-05 and Ethics Rule (“ER”) 1.8 and because the
Williamses lacked full understanding of the provision and had inadequate
opportunity to consult independent legal counsel before signing the
Agreement.
¶7 Their opposition attached a declaration, under oath, by Karen
Williams stating that the Williamses “had little if any time to go through”
the Agreement “in detail” and that they signed the Agreement after having
“skimmed” it. Her declaration added that “[b]ecause of the hurried manner
in which” the Agreement was signed, they “did not realize that buried in
the” Agreement “at page 5, we were not only agreeing to arbitrate any
potential fee dispute, we were also agreeing to arbitrate any claims for
professional malpractice. If we had understood this, we would not have
signed” the Agreement “but would have sought a second opinion from
another attorney.”
¶8 After taking the matter under advisement, the superior court
granted the petition to compel arbitration, holding that the Agreement was
enforceable because, in entering into a binding arbitration agreement with
its client, Beus Gilbert met its ethical obligations, and the Williamses gave
informed consent.2 The court then entered a partial final judgment
reflecting that relief, see Arizona Rule of Civil Procedure (“Rule”) 54(b), and
the Williamses filed a timely notice of appeal. We have jurisdiction over
the appeal. See S. Cal. Edison Co. v. Peabody W. Coal Co., 194 Ariz. 47, 54,
¶ 23 (1999) (“An order compelling arbitration is not a final judgment and is
therefore not appealable under A.R.S §§ 12-2101(B) or 12-2101.01. A party
may, however, request that the trial judge enter a final order or judgment
under Rule 54(b) or A.R.S. § 12-2101. If the trial judge makes such an order,
it is appealable.”).
DISCUSSION
¶9 We review the superior court’s decision to compel arbitration
de novo. Allstate Prop. & Cas. Ins. Co. v. Watts Water Techs., Inc., 244 Ariz.
253, 256, ¶ 9 (App. 2018). We defer to the superior court’s findings of fact
2 At about that same time, the Williamses filed a separate malpractice
action against Steven Beus and Beus Gilbert alleging negligence and breach
of fiduciary duty in the bankruptcy case and seeking punitive damages.
The superior court consolidated both cases.
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Decision of the Court
unless clearly erroneous. Harrington v. Pulte Home Corp., 211 Ariz. 241, 246-
47, ¶ 16 (App. 2005).
¶10 “[I]t is the prerogative and obligation of courts to determine
the validity of an arbitration agreement prior to enforcement . . . .” Gullett
ex. rel. Est. of Gullett v. Kindred Nursing Ctrs. W., L.L.C., 241 Ariz. 532, 542,
¶ 33 (App. 2017). “The validity and enforceability of an arbitration
agreement are mixed questions of fact and law . . . .” Allstate, 244 Ariz. at
256, ¶ 9. Upon a party’s showing of a valid and enforceable arbitration
agreement and upon the opposing party’s refusal to arbitrate, “the court
shall proceed summarily to decide the issue and order the parties to
arbitrate.” Arizona Revised Statutes (“A.R.S.”) section 12-3007(A)(2). An
agreement to submit to arbitration any “controversy arising between the
parties is valid, enforceable and irrevocable except on a ground that exists
at law or in equity for the revocation of a contract.” A.R.S. § 12-3006(A).
An arbitration agreement may be unenforceable if it is substantively or
procedurally unconscionable. Clark v. Renaissance W., L.L.C., 232 Ariz. 510,
512, ¶ 8 (App. 2013). An agreement may be substantively unconscionable
when the terms are so one-sided that they oppress or unfairly surprise an
innocent party, and the obligations required and rights imposed are
imbalanced. Maxwell v. Fid. Fin. Servs., Inc., 184 Ariz. 82, 89 (1995). An
agreement may be procedurally unconscionable when there is unfair
surprise, fine print, mistakes, or ignorance of important facts. Clark, 232
Ariz. at 512, ¶¶ 8-9.
¶11 The record supports a finding that the arbitration provision
was valid, enforceable, and fair, and the Williamses signed the Agreement
after meeting and sufficiently discussing it with Steven Beus. The three-
page arbitration provision was clearly marked within the Agreement with
a bolded and underlined heading, and its terms and scope were clearly
defined. The provision provides substantial disclosure about the
arbitration procedures required and, in more than a dozen separate clauses,
summarizes the advantages and disadvantages of arbitration. The
Williamses have failed to show that the arbitration provision in the
Agreement was procedurally or substantively unfair or improper. And the
Williamses’ claimed failure to read the arbitration provision in detail is no
defense. See Rocz v. Drexel Burnham Lambert, Inc., 154 Ariz. 462, 466 (App.
1987).
¶12 The Williamses have not shown that the arbitration
agreement requires the performance of acts that “would be illegal or violate
public policy.” Landi v. Arkules, 172 Ariz. 126, 133 (App. 1992) (citation
omitted). Nor have they shown that it is procedurally or substantively
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Decision of the Court
unconscionable. See Clark, 232 Ariz. at 512 ¶ 8. And although a fee
agreement between a lawyer and a client “is not an ordinary business
contract,” In re Swartz, 141 Ariz. 266, 273 (1984), the Williamses have shown
no basis for the court to invalidate the Agreement they signed with Beus
Gilbert.
¶13 The Williamses argue that the arbitration provision is
unenforceable because the superior court failed to consider ER 1.8 and EO
94-05 in determining its validity. The record, however, is to the contrary.
The superior court’s detailed minute entry discussed in some detail the
requirements of ER 1.8 and EO 94-05. And the record supports the court’s
conclusion that the arbitration provision complied with those ethical
obligations.
¶14 In ER 1.8, a lawyer shall not enter into a business transaction
with a client unless the terms are fair and reasonable to the client and are
fully disclosed in writing that the client can reasonably understand. ER
1.8(a)(1). The lawyer must also advise the client in writing, give a
reasonable opportunity for the client to seek independent counsel, and the
client must give informed consent in writing. ER 1.8(a)(2), (3).
¶15 A lawyer may ethically ask a client to agree to mandatory
arbitration for the client’s future malpractice claims if the lawyer does four
things: (1) ensures the clause is fair and reasonable to the client; (2) fully
discloses in writing and in understandable language the advantages and
disadvantages of arbitration, including the waiver of the right to trial by
jury; (3) gives the client a reasonable opportunity to seek independent
counsel; and (4) obtains the client’s written consent. EO 94-05. “[A]
mandatory arbitration provision does not limit a lawyer’s malpractice
liability” but provides a way to resolve malpractice claims. Id. (citing ER
1.8(h)).
¶16 As noted by the superior court, which addressed in depth the
breadth of Beus Gilbert’s ethical obligations, the first, second and fourth
obligation were clearly met. The arbitration provision was fair and
reasonable, outlined the advantages and disadvantages of arbitration using
plain language, encouraged the Williamses to seek independent legal
counsel and the Williamses provided their written consent to the provision.
¶17 On appeal, the Williamses point to Karen’s declaration as
precluding the superior court from enforcing the arbitration provision and,
instead, argue that the declaration “make[s] clear that they were unable to
provide their informed consent when they signed the” Agreement. By
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Decision of the Court
definition, however, Karen’s declaration is limited to claimed concerns
about her informed consent, not Robert’s. Robert provided no comparable
declaration, meaning he has failed to provide any material factual basis for
his claimed lack of informed consent. Karen’s declaration also fails to show
that the arbitration agreement is not enforceable as to her.
¶18 Although Karen’s declaration asserts that she “had little time
if any to go through the” Agreement, Karen does not allege that it was Beus
Gilbert who rushed her, impeded her from reading the Agreement in any
way or prohibited her from seeking a second opinion from another
attorney. Moreover, other than arguing that she failed to read the
arbitration provision, which is no defense to enforcement, Rocz, 154 Ariz. at
466, Karen’s declaration does not discuss or address the express caution in
the Agreement that if she had “any questions regarding the effect of” the
arbitration provision (including the waiver of rights), before signing the
agreement, she “should seek advice of and consult with independent
counsel of” her choice regarding “the terms of these arbitration provisions.”
And Karen does not argue the arbitration provision was unclear or that she
did not understand it once she took the time to read it.
¶19 After the work was done and these disputes arose, Karen now
invites us to conclude that the arbitration provision is invalid because Beus
Gilbert, after seeing that she “skimmed” the Agreement, should have told
her to do something different. We decline this invitation on the record
provided. Karen nowhere says that she would never have agreed to
arbitration, merely that she “would have sought a second opinion.” She
does not state what that second opinion would have been, let alone that it
would have been a recommendation to not agree to the arbitration
provision and that she would have followed such a recommendation.
¶20 The Williamses cite no case law showing that an otherwise
enforceable arbitration agreement between a lawyer and a client cannot be
enforced when there is a dispute about whether the client was verbally
informed (along with a clear written direction) of the reasonable
opportunity to seek independent counsel. Although such a dispute would
perhaps subject an attorney to disciplinary proceedings (which apparently
have already been resolved in favor of both Steven and Leo Beus here), the
Williamses have shown no basis for the court to find the Agreement was
unenforceable.
¶21 The superior court did not err when it found the arbitration
provision valid and enforceable.
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Decision of the Court
¶22 The Williamses rely on Castillo v. Arrieta, 368 P.3d 1249 (N.M.
Ct. App. 2016), in arguing that they had “no time” to review the Agreement
before they signed it, they were not fully informed and could not give
informed consent. But Castillo is neither dispositive nor persuasive. The
arbitration provision there read in its entirety: “ARBITRATION CLAUSE:
Should any dispute arise, Client and Attorney agree to submit their dispute
to arbitration.” Castillo, 368 P.3d at 1252, ¶ 4. Here, the arbitration
provision was detailed and covered in plain language the advantages and
disadvantages of arbitration and the implications of waiving the right to a
jury trial. The arbitration provision advised the Williamses to seek
independent legal counsel before signing it, but they chose not to do so.
Moreover, Castillo approvingly cited EO 94-05 in noting that a majority of
state bar ethics committees had concluded that a proper arbitration
provision in a retainer agreement “is at least ethically permitted, provided
certain requirements typically involving the client’s informed consent, are
met.” Id. at 1255, ¶ 18 (citing authority). The Williamses were fully
informed when they signed the Agreement and thus gave their informed
consent to it in its entirety, including the arbitration provision.
Accordingly, we find no error in the superior court’s judgment compelling
arbitration.
CONCLUSION
¶23 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: JT
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