Filed 6/14/13 Brown v. UBS Financial Services CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR
B242971
GARY BROWN, Individually and as (Los Angeles County
Trustee, etc., Super. Ct. No. SC109123)
Plaintiff and Appellant,
ORDER MODIFYING OPINION
v. AND DENYING REHEARING
[NO CHANGE IN JUDGMENT]
UBS FINANCIAL SERVICES, INC., et
al.,
Defendants and Respondents.
THE COURT:*
It is ordered that the opinion filed herein on May 24, 2013 be modified as
follows: On page 12, lines 23-25 and page 13, line 1, delete the parenthetical
remark:
[broker‟s agreement with his firm requiring arbitration of “any dispute” arising out
of his sale of securities obliged broker to arbitrate his wrongful termination claim
predicated on independent employment contract]
and replace it with:
[broker‟s agreement with national association of securities dealers requiring
arbitration of “any dispute” between broker and his firm obliged broker to arbitrate
his wrongful termination claim predicated on independent employment contract
with firm]
Appellant‟s petition for rehearing is denied. The modification does not
change the judgment.
_________________________________________________________________
*WILLHITE, Acting P. J., MANELLA, J. SUZUKAWA, J.
2
Filed 5/24/13 Brown v. UBS Financial Services CA2/4 (unmodfied version)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR
B242971
GARY BROWN, Individually and as (Los Angeles County
Trustee, etc., Super. Ct. No. SC109123)
Plaintiff and Appellant,
v.
UBS FINANCIAL SERVICES, INC., et
al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles, John Segal
and H. Chester Horn, Judges. Affirmed.
Rehm & Rogari and Ralph Rogari for Plaintiff and Appellant.
Keesal, Young & Logan and Michael M. Gless, for Defendants and
Respondents.
Appellant Gary Brown challenges the trial court‟s confirmation of an
arbitration award in favor of respondents UBS Financial Services, Inc. (UBS), and
Barry Bayat. He argues that the court erred in granting respondents‟ motion to
compel arbitration. We affirm.
RELEVANT FACTUAL AND PROCEDURAL
BACKGROUND
A. Complaint
In August 2010, appellant initiated the underlying action against
respondents. In the original complaint, appellant asserted two claims for breach of
fiduciary duty in his capacity as trustee of the Estelle Brown Trust (trust). 1 The
complaint alleged that some time before 2002, Estelle Brown‟s husband, Robert
M. Brown, placed significant portions of their joint assets in a UBS account
controlled by Bayat.2 After Robert died, the trust was created in 2002, and was
funded with the assets in the UBS account. Estelle and her son Robert Jr. acted as
the trustees. Because both trustees were unsophisticated in financial matters and
Estelle was then almost 80 years old, the trustees “relied upon [respondents] for
investment management and control of [the] [t]rust assets.” According to the
complaint, respondents improperly adopted a high risk investment strategy for the
assets, and otherwise breached their fiduciary duties. As a result, the trust suffered
losses exceeding $300,000.
1 Appellant is one of three sons of Estelle and Robert M. Brown.
2 Because key individuals involved in the trust share a surname, we generally refer
to them by their first names.
2
B. Motion For An Order to Compel Arbitration
On September 10, 2010, respondents sought an order compelling appellant
to submit his claims to arbitration. Supporting the motion was a declaration from
Evelyn C. Best, an attorney with the law firm of Keesal, Young & Logan, which
represented respondents. Best stated that in February 2002, Estelle and Robert Jr.
opened a securities brokerage account.
Attached to Best‟s declaration were documents she identified as the
pertinent account application and “Master Account Agreement.” The documents
themselves referred to the applicable financial services entity as “UBS
PaineWebber.” Within the account application was a signature page disclosing
what appeared to be Estelle‟s and Robert Jr.‟s signatures. On the same page,
above those signatures, was a paragraph in bold print, stating: “I UNDERSTAND,
ACKNOWLEDGE AND AGREE: . . . that in accordance with the last paragraph
of the Master Account Agreement entitled „Arbitration‟ I am agreeing in advance
to arbitrate any controversies which may arise with, among others, UBS
PaineWebber in accordance with the terms outlined therein . . . .”
The accompanying Master Account Agreement stated that its provisions,
including the arbitration provisions, were binding upon the “[c]lient[s],” as well as
their “authorized agents, personal representatives, heirs, successors and assigns.”
The agreement further provided: “Client agrees . . . that any and all controversies
which may arise between UBS PaineWebber [and] any of [its] employees . . . and
Client concerning any account, transaction, dispute or the construction,
performance or breach of this Agreement or any other agreement, whether entered
into prior to, on or subsequent to the date hereof, shall be determined by
arbitration.” (Italics added.)
3
Appellant‟s opposition to the motion contended that his claims were not
subject to the arbitration provisions of the 2002 account application and
agreement. He maintained that he was not a signatory to the account application,
and that there was no evidence establishing UBS‟s relationship to UBS
PaineWebber. He also argued that Best‟s declaration was insufficient to show the
existence of an arbitration agreement, arguing that the declaration was hearsay,
that Best lacked personal knowledge of the pertinent events, and that she was
incapable of authenticating the documents. Appellant further requested an
opportunity to conduct discovery into Robert Jr.‟s execution of the 2002 account
application, noting that Robert Jr. was now dead.
Respondents‟ reply maintained that UBS was the successor of UBS
PaineWebber. Supporting the reply was a declaration from Bayat, who stated that
he was a UBS employee and “the [f]inancial advisor for the [trust] account from
its commencement in 2002.” Attached to Bayat‟s declaration were copies of the
UBS PaineWebber documents accompanying Best‟s declaration, which Bayat
collectively described as the “February 2002 Client Trust Agreement.”
Respondents‟ reply also argued that in 2005, Estelle and Robert Jr., in their
capacity as trustees, executed new agreements with UBS containing arbitration
provisions similar to those found in the 2002 agreement. Attached to Bayat‟s
declaration were two UBS documents that he characterized as the “Client Trust
Agreement[s]” that Estelle and Robert Jr. executed in 2005. The documents, dated
June 8, 2005 and July 19, 2005, were applications for additional services for the
account, which they characterize as the “Estelle Brown Trust.”3 On the signature
3 The 2005 documents bore the same account number as the 2002 account
application and agreement. The June 2005 application sought the right to make online
transactions, and the July 2005 application requested wallet checks.
4
page of each application, above what appeared to be Estelle‟s and Robert Jr.‟s
signatures, were paragraphs in bold print, stating: “ACCOUNT HOLDER
UNDERSTANDS[,] ACKNOWEDGES AND AGREES . . . that in accordance
with the last paragraph of the Master Account Agreement entitled „Arbitration‟ the
[a]ccount [h]older agrees in advance to arbitrate any controversies which may
arise with[,] among others[,] [UBS] in accordance with the terms outlined therein
. . . .” Although Bayat‟s declaration also purported to provide the pertinent UBS
Master Account Agreements for the 2005 applications, those agreements were not
attached to the declaration.
On October 8, 2010, the trial court conducted a hearing on the motion to
compel. Although the court‟s tentative ruling was to compel arbitration, it granted
appellant‟s request for an opportunity to submit further briefing on whether
respondents were required to authenticate the purported arbitration agreements,
and whether a trustee‟s arbitration agreement binds subsequent trustees. 4
C. First Amended Complaint And Ruling On Motion to Compel
On October 15, 2010, appellant filed his first amended complaint (FAC),
and a supplemental opposition to the pending motion to compel arbitration. The
FAC contained claims for fraud, breach of fiduciary duty, and unfair business
practices which appellant asserted as an individual, as beneficiary of the trust, and
as trustee. The FAC alleged that after his father died, appellant assisted his mother
Estelle in managing the family‟s assets. After the trust was created in 2002, it was
funded with his late father‟s and Estelle‟s assets in a UBS account. The
beneficiaries were appellant and his siblings. The initial trustees -- that is, Estelle
4 The record before us contains no reporter‟s transcript of the initial hearing.
5
and Robert Jr. -- relied on appellant and respondents for “investment management
and direction” of the trust‟s assets.
According to the FAC, respondents engaged in fraud and other misconduct,
thereby breaching their fiduciary duties to the trustees. Furthermore, Bayat
“preyed upon” Estelle‟s mental incapacity to induce her to breach her duties as
trustee, and respondents otherwise contravened duties owed to the trust
beneficiaries. The FAC also alleged, inter alia, that respondents‟ misconduct
constituted “unlawful, unfair or fraudulent business act[s] or practices.”
Appellant‟s supplemental opposition contended that arbitration should not
be ordered with respect to the claims asserted in the FAC. He argued that Best‟s
declaration was inadequate to establish the existence of an arbitration agreement
binding on him. He further denied that he was bound by the arbitration provisions
of the 2005 agreements, arguing that Estelle and Robert Jr. did not execute the
agreements in their capacity as trustees. In addition, appellant maintained that the
2005 agreements did not oblige him to arbitrate the claims that he asserted as an
individual and as a beneficiary of the trust.
Respondents‟ supplemental brief contended that Bayat‟s declaration in
support of their reply adequately authenticated Estelle and Robert Jr.‟s 2002
agreement and proved the existence of Estelle and Robert Jr.‟s 2005 agreements.
They also argued that the arbitration provisions of those agreements encompassed
appellant‟s claims as a trustee and a trust beneficiary. In support of these
contentions, respondents submitted a second declaration from Bayat, who
provided a copy of the UBS Master Account Agreement in effect in June 2005. 5
5 Also attached to Bayat‟s second declaration were the pertinent declaration of trust,
as well as 2002 UBS PaineWebber documents executed by Estelle and Robert Jr.,
(Fn. continued on next page.)
6
Respondents‟ supplemental brief further argued that appellant‟s claims as an
individual fell within the scope of an arbitration agreement that he personally
executed in 2002 regarding his own account with UBS PaineWebber. According
to Bayat‟s second declaration, on May 28, 2002, appellant executed his own
account application and agreement with UBS PaineWebber. Attached to Bayat‟s
second declaration were copies of those documents. On the signature page of the
account application, above what appeared to be appellant‟s signature, was a
paragraph in bold letters, stating: “I UNDERSTAND, ACKNOWLEDGE AND
AGREE: . . . that in accordance with the last paragraph of the Master Account
Agreement entitled „Arbitration‟ I am agreeing in advance to arbitrate any
controversies which may arise with, among others, UBS PaineWebber in
accordance with the terms outlined therein . . . .” The pertinent Master Account
Agreement provided for arbitration of “any and all controversies” regarding “any
account[], transaction, dispute or the construction, performance or breach of this
Agreement or any other agreement, whether entered into prior to, on or
subsequent to the date hereof . . . .” (Italics added.)
On October 27, 2010, following a hearing, the trial court ordered arbitration
regarding the claims asserted in the FAC and stayed the proceeding pending the
completion of the arbitration. In so ruling, the court concluded that appellant was
obliged to arbitrate his claims as trustee and trust beneficiary under Estelle and
Robert Jr.‟s 2002 agreement.6 Later, in December 2010, the court denied
appellant‟s motion for reconsideration.
designating appellant as a successor trustee and authorizing him to make trades related to
their account.
6 The record before us contains no reporter‟s transcript of the hearing.
7
D. Subsequent Proceedings
The arbitration occurred before a three-member panel of the Financial
Industry Regulatory Authority. In April 2012, following an evidentiary hearing,
the arbitrators issued their award. The arbitrators denied appellant‟s claims, and
recommended that references to the arbitration be expunged from Bayat‟s records.
On May 11, 2012, respondents filed a petition to confirm the award.
Appellant opposed the petition and sought to vacate the award on several grounds,
including that he never agreed to arbitrate his claims. Following a hearing, the
trial court confirmed the award and denied the petition to vacate. On June 6, 2012,
judgment was entered confirming the award. This appeal followed.
DISCUSSION
Appellant challenges the grant of the motion to compel arbitration on
several grounds. He contends, inter alia, that there was insufficient evidence that
the claims asserted in the FAC were subject to an arbitration agreement, and that
his claim for unfair business practices is nonarbitrable. For the reasons explained
below, we reject his contentions.
A. Governing Principles
Our analysis follows established principles. Public policy favors
contractual arbitration as a means of resolving disputes. (Mercury Ins. Group v.
Superior Court (1998) 19 Cal.4th 332, 342.) Generally, one must be a party to an
arbitration agreement to be bound by it. (Westra v. Marcus & Millichap Real
Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763.)
Nonetheless, the rule that only parties to an arbitration agreement may be
compelled to arbitrate is subject to several exceptions. (Suh v. Superior Court
8
(2010) 181 Cal.App.4th 1504, 1513 [discussing theories under which
nonsignatories may be bound to arbitrate claims].)
A petition to compel arbitration is a suit in equity seeking specific
performance of an arbitration agreement. (Hotels Nevada, LLC v. L.A. Pacific
Center, Inc. (2012) 203 Cal.App.4th 336, 347 (Hotels Nevada).) Code of Civil
Procedure section 1281.2 provides that “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, unless it determines that
. . . [g]rounds exist for the revocation of the agreement.”7 To the extent the trial
court resolved factual disputes in ordering arbitration, we review its
determinations for the existence of substantial evidence. (Hotels Nevada, supra,
203 Cal.App.4th at p. 348.)
Section 1281.2 establishes “a summary proceeding” for resolving petitions
to compel arbitration. (Engalla v. Permanente Medical Group, Inc. (1997) 15
Cal.4th 951, 972 (Engalla).) In Rosenthal v. Great Western Fin. Securities Corp.
(1996) 14 Cal.4th 394, 413 (Rosenthal), our Supreme Court explained the
requisite procedure: “[W]hen a petition to compel arbitration is filed and
accompanied by prima facie 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. Because the
existence of the agreement is a statutory prerequisite to granting the petition, the
7 All further statutory citations are to the Code of Civil Procedure, unless otherwise
indicated.
9
petitioner bears the burden of proving its existence by a preponderance of the
evidence. If the party opposing the petition raises a defense to enforcement
. . . that party bears the burden of producing evidence of, and proving by a
preponderance of the evidence, any fact necessary to the defense.” Furthermore,
facts relevant to the enforceability of the arbitration agreement “are to be proven
by affidavit or declaration and documentary evidence, with oral testimony taken
only in the court‟s discretion.” (Id. at pp. 413-414.)
In examining the ruling on the motion to compel, we are not bound by the
trial court‟s rationale. (Cheng-Canindin v. Renaissance Hotel Associates (1996)
50 Cal.App.4th 676, 683, fn. 3; Chan v. Drexel Burnham Lambert, Inc. (1986) 178
Cal.App.3d 632, 645 & fn. 6.) On appeal, “[w]e do not review the trial court‟s
reasoning, but rather its ruling. A trial court‟s order is affirmed if correct on any
theory . . . . [Citations].” (J.B. Aguerre, Inc. v. American Guarantee & Liability
Ins. Co. (1997) 59 Cal.App.4th 6, 15-16.) Thus, we may affirm the ruling “on any
basis presented by the record whether or not relied upon by the trial court.” (Day
v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 252, fn. 1.)
B. Analysis
We conclude that the trial court properly ordered appellant to arbitrate the
claims in the FAC. As explained below, respondents established that appellant‟s
claims were subject to at least one arbitration agreement regarding the trust
account, and also to an arbitration agreement that appellant executed as an
individual. Although appellant asserted objections to respondents‟ evidence, he
submitted no conflicting evidence. Because respondents‟ showing was
undisputed, we find no error in the trial court‟s ruling.
10
In assessing the adequacy of respondents‟ showing, we may properly
examine the allegations in the FAC and respondents‟ evidence. (Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696,
709-710 (Molecular Analytical Systems).) Prior to the ruling on the motion to
compel arbitration, respondents submitted two declarations from Bayat, who stated
that he was a UBS employee and the financial advisor for the trust account since
its creation in 2002. Accompanying Bayat‟s declarations were copies of four
agreements containing arbitration provisions: (1) Estelle and Robert Jr.‟s 2002
account application (and the related Master Account Agreement) regarding UBS
PaineWebber account No. TP24576BB; (2) Estelle and Robert Jr.‟s June 2005
application (and the related Master Account Agreement effective June 2005) for
the same UBS account; (3) Estelle and Robert Jr.‟s July 2005 application for the
same UBS account; and (4) appellant‟s own 2002 account application (and the
related Master Account Agreement) for UBS PaineWebber account No.
TP25898BB.
The allegations in the FAC and respondents‟ evidence are sufficient to show
that UBS was UBS PaineWebber‟s successor in interest, for purposes of the
arbitration provisions in the agreements. The FAC alleges that when the trust was
created, it was funded with Estelle‟s and Robert Sr.‟s assets “maintained in an
account at UBS.” These allegations, coupled with Bayat‟s declaration statements,
and the uniform account number found on items (1) through (3), establish that
UBS PaineWebber was, in fact, UBS‟s predecessor.
We further conclude that the broad arbitration provisions of the agreements
encompass appellants‟ claims as trustee, trust beneficiary, and as an individual.
Generally, arbitration clauses are construed in favor of the arbitrability of claims.
(Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 641-642.)
11
Here, both Master Account Agreements related to items (1) and (2) state that their
arbitration provisions are binding upon the “clients” and their “successors.”
Furthermore, the Master Account Agreements related to items (1), (2), and (4)
contain materially identical terms regarding the broad scope of arbitration. All
provided for arbitration of “any and all controversies” regarding “any account[],
transaction, dispute or the construction, performance or breach of this Agreement
or any other agreement, whether entered into prior to, on or subsequent to the
date hereof . . . .” (Italics added.)
In view of these provisions, the agreements obliged appellant to arbitrate his
claims, to the extent he asserted them as trustee. Because the June 2005
agreement (item (2)) was executed by the original trustees, its arbitration
provisions are binding on their successor trustees, including appellant. As
explained in Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613, footnote 5,
because “„a new trustee “succeed[s] to all the rights, duties, and responsibilities of
his predecessors[,]”‟ . . . a successor trustee is bound by a valid arbitration
agreement executed by a predecessor.”
Moreover, appellant‟s own 2002 agreement (item (4)) obliged him to
arbitrate his claims, insofar as he asserted them as trust beneficiary or as an
individual. Because the arbitration provisions of that agreement sweep broadly to
encompass not only disputes arising from appellant‟s own account, but also those
arising from “any other agreement” (italics added), he is required to arbitrate “any
and all controversies” regarding the trust account. (See Cione v. Foresters Equity
Services, Inc., supra, 58 Cal.App.4th at pp. 630-631, 640-646 [broker‟s agreement
with his firm requiring arbitration of “any dispute” arising out of his sale of
securities obliged broker to arbitrate his wrongful termination claim predicated on
12
independent employment contract].)8 Accordingly, respondents‟s showing was
sufficient to establish that the claims in the FAC were subject to arbitration.
C. Appellant’s Contentions
Appellant challenges the trial court‟s ruling on several grounds, which we
address below.
1. Adequacy of Prima Facie Showing
Appellant contends that respondents‟ prima facie showing regarding the
arbitration agreements was inadequate because they failed to authenticate the
agreements executed by the trustees. We disagree.
In Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215,
217-219 (Condee), the appellate court held that for purposes of a petition to
compel arbitration, the petitioner may make an adequate prima facie showing
regarding the existence of an arbitration agreement without submitting evidence
sufficient to authenticate the signatures on the agreement. There, the plaintiffs
asserted claims arising out of the death of a relative living in a residential care
center. (Id. at p. 217.) In seeking to compel arbitration on the basis of an
agreement executed when the relative was admitted to the center, the defendants
submitted a declaration from their custodian of records purporting to authenticate
the agreement. (Ibid.) The trial court denied the petition on the grounds of
8 Respondents maintain that the arbitration provisions in items (1) through (3)
encompass appellant‟s claims as a trust beneficiary for a different reason, namely, that
when trustees execute an arbitration agreement, nonsignatory trust beneficiaries may be
subject to the agreement as third party beneficiaries. In view of our conclusion regarding
the arbitration provisions in item (4), it is unnecessary to examine this question.
13
inadequate authentication, even though the plaintiffs had not challenged the
authenticity of the signatures on the agreement. (Ibid.)
Reversing, the appellate court concluded that in the context of a petition to
compel arbitration, “it is not necessary to follow the normal procedures of
document authentication.” (Condee, supra, 88 Cal.App.4th at p. 218.) Pointing to
the language of section 1281.2, the court stated that “as a preliminary matter the
[trial] court is only required to make a finding of the agreement‟s existence, not an
evidentiary determination of its validity.” (Condee, supra, at pp. 218-219.) The
court also noted that the pertinent court rule did not oblige the petitioner to
introduce the agreement into evidence (Cal. Rules of Court, rule 3.1330).
Following Condee, at least one appellate court has determined that a
showing similar to that offered by respondents was sufficient to carry the
petitioner‟s initial burden under section 1281.2. In Molecular Analytical Systems,
an action involving three corporations, the plaintiff‟s complaint asserted claims
predicated on a contract. (Molecular Analytical Systems, supra, 186 Cal.App.4th
at pp. 701-702.) In seeking to compel arbitration on the basis of the contract‟s
arbitration provisions, the defendants pointed to the complaint‟s allegations, and
also submitted a declaration from an employee, to which a copy of the contract
was attached. (Id. at p. 702.) Relying on Rosenthal and Condee, the appellate
court concluded that the defendants “made a sufficient prima facie showing of an
agreement to arbitrate, based not only on the allegations of the complaint but also
on their moving papers and on their proffer of the [agreement].” (Id. at p. 710.)
For the reasons discussed above (see pt. B. ante), we reach the same conclusion
here.
Pointing primarily to Toal v. Tardif (2009) 178 Cal.App.4th 1208 (Toal)
and Engalla, supra, 15 Cal.4th 951, appellant argues that notwithstanding Condee,
14
respondents were obliged to present evidence that the agreements were “valid,”
including evidence sufficient to authenticate the signatures on the agreements. We
disagree. As explained below, neither Toal nor Engalla suggest that respondents
were required to make a greater showing than required under Molecular Analytical
Systems.
In Toal, the plaintiffs asserted claims against the defendants predicated on
the sale of a house. (Toal, supra, 178 Cal.App.4th at p. 1213.) During the
litigation, the parties‟ counsel executed a stipulation regarding arbitration of the
claims. (Ibid.) As the appellate court there noted, the record contained no
indication that the parties themselves had agreed to the stipulation. (Ibid.) After
arbitration was completed and the award had been corrected, the plaintiffs filed a
petition to confirm the corrected award, but submitted neither the stipulation nor
evidence regarding the existence of an arbitration agreement. (Id. at p. 1214.) In
opposition, one of the defendants asserted that he had not authorized his attorney
to enter into the stipulation. (Id. at p. 1215.) The trial court nonetheless granted
the petition. (Ibid.) The appellate court reversed, reasoning that under Rosenthal,
“the party seeking to enforce an award must prove . . . that a valid arbitration
contract exists.” (Id. at p. 1220.) In a footnote, the court also disagreed with
Condee, to the extent that decision suggested that petitioners may carry their initial
burden by merely alleging the existence of an arbitration agreement. (Id. at
p. 1219, fn. 8.)
In Engalla, the trial court, in ruling on a petition to compel arbitration,
treated the petition “as a type of summary judgment motion, in which it was
obliged to determine only that there was a legitimate factual dispute among the
parties and not to resolve that dispute.” (Engalla, supra, 15 Cal.4th at p. 972.) In
concluding that the matter required a remand for a determination of the factual
15
issues, our Supreme Court stated that it had explained the appropriate procedure in
Rosenthal, which it summarized as follows: “The petitioner bears the burden of
proving the existence of a valid arbitration agreement by the preponderance of the
evidence, and a party opposing the petition bears the burden of proving by a
preponderance of the evidence any fact necessary to its defense.” (Ibid.)
Viewed in context, the discussions in Toal and Engalla disclose no
inadequacy in respondents‟ prima facie showing.9 Notwithstanding the remarks in
those decisions that Rosenthal requires the petitioner to show the “validity” of the
agreement, Rosenthal states only that “the petitioner bears the burden of proving
[the agreement‟s] existence . . . .” (Rosenthal, supra, 14 Cal.4th at p. 413, italics
added.) In our view, Molecular Analytical Systems correctly reflects the
application of this requirement in the circumstances before us.
Furthermore, neither Toal nor Engalla suggests that Molecular Analytical
Systems is wrongly decided. Toal stands for a narrow proposition, namely, that
petitioners cannot carry their initial burden against nonsignatories to an arbitration
agreement simply by alleging the existence of a binding agreement executed by
the nonsignatories‟ counsel. That proposition is inapplicable here, as respondents
provided sufficient evidence of the existence of arbitration agreements binding on
appellant.
9 Generally, “language contained in a judicial opinion is „“to be understood in the
light of the facts and issue then before the court, and an opinion is not authority for a
proposition not therein considered. [Citation.]”‟ [Citations.]” (People v. Banks (1993) 6
Cal.4th 926, 945.) Thus, when questions about an opinion‟s import arise, the opinion
“should receive a reasonable interpretation [citation] and an interpretation which reflects
the circumstances under which it was rendered [citation]” (Young v. Metropolitan Life
Ins. Co. (1971) 20 Cal.App.3d 777, 782), and its statements should be considered in
context (see Pullman Co. v. Industrial Acc. Com. (1946) 28 Cal.2d 379, 388).
16
Nor does Engalla require a petitioner to “validate” an arbitration agreement
or authenticate the signatures found on it. There, the sole issue before the
Supreme Court concerned whether the trial court must make factual
determinations in ruling on a petition to compel arbitration. Because the Supreme
Court resolved that issue by pointing to Rosenthal, Engalla stands for the
unremarkable proposition that Rosenthal elaborates the proper procedure. In sum,
we see no deficiency in respondents‟ prima facie showing.
2. Former Trustees’ Consent
Appellant contends that respondents submitted no evidence establishing that
the former trustees read and consented to the Master Account Agreements related
to the 2002 and 2005 agreements. However, for purposes of a petition to compel
arbitration, absent special circumstances, a party is bound by the provisions of an
arbitration agreement, even when some terms are incorporated by reference. (King
v. Larsen Realty, Inc. (1981) 121 Cal.App.3d 349, 358.) Generally, the party
opposing arbitration must show that the agreement was a contract of adhesion
whose arbitration provisions either (1) were not “„conspicuous, plain and clear‟”
or (2) “operate[d] to defeat the reasonable expectations of the parties.” (Madden
v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710, quoting Steven v.
Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 878.) Here, the former trustees
placed their signatures on pages that disclosed the existence of arbitration
provisions in bold letters and referred to the Master Accounts Agreements. As
appellant made no showing regarding the existence of any other special
circumstances, his contention fails.
17
3. Appellant’s 2002 Account Agreement
Appellant contends that in the June 2005 Master Account Agreement
regarding the trust account, UBS disclaimed its predecessor‟s duties and
obligations with respect to his 2002 agreement regarding his own account. The
June 2005 Master Account Agreement states in pertinent part: “Entire Agreement.
[¶] The provisions of this Agreement constitute . . . the entire agreement between
Client and [UBS] with respect to the Account and supercede any prior agreements
relating thereto.” (Italics omitted and added.) Appellant argues that this provision
establishes that UBS had no right under his 2002 agreement to compel arbitration
of his claims asserted as an individual and trust beneficiary. We disagree.
In view of the italicized phrase, the provision, if effective, operated solely to
supercede prior agreements regarding the trust account (No. TP24576BB), rather
than appellant‟s own account (No. TP25898BB). Furthermore, as explained above
(see pt. B., ante), respondents made an adequate showing that the arbitration
provisions of appellant‟s 2002 agreement with UBS PaineWebber encompassed
his claims as an individual and a trust beneficiary, and that UBS was the successor
of UBS PaineWebber. We therefore reject appellant‟s contention.
4. Due Process
Appellant contends he was denied due process because respondents
submitted Bayat‟s first declaration with their reply to appellant‟s opposition and
his second declaration with their supplemental brief. We conclude that he has
forfeited his contentions of error.
In ruling on a motion, the trial court may allow tardy declarations. (Alvak
Enterprises v. Phillips (1959) 167 Cal.App.2d 69, 74-75.) Moreover, it may
continue the hearing on a motion, provided its decision “is based on a reasoned
18
judgment and complies with legal principles and policies appropriate to the case
before the court.” (Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984.) To
preserve due process contentions concerning a belated declaration, a party must
object to the declaration before the trial court. (California Retail Portfolio Fund
GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 Cal.App.4th 849,
861.)
Regarding Bayat‟s first declaration, which was filed shortly before the
initial hearing on respondents‟ motion to compel, the trial court continued the
hearing on the motion at appellant‟s request and permitted him to submit
additional briefing. Appellant‟s supplemental opposition discussed Bayat‟s
declaration, arguing that the copies of the 2005 agreements were insufficient to
show that Estelle and Robert Jr. entered into arbitration agreements as trustees.
We thus find no denial of due process in connection with Bayat‟s first declaration.
Furthermore, the limited record that appellant has provided discloses no
reversible error regarding Bayat‟s second declaration. On the same date that
appellant tendered his supplemental opposition, he also filed his FAC, which
contained new claims that appellant asserted as a trust beneficiary and as an
individual. Respondents were thus presented with a moving target in seeking to
compel arbitration on appellant‟s claims. Accordingly, when respondents
submitted Bayat‟s second declaration with their supplemental brief, this
constituted their first opportunity to address appellant‟s new claims. Because the
record reveals neither a timely objection to Bayat‟s second declaration nor a
request for additional briefing and a continuance, appellant has forfeited his
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contention that he was denied due process by the declaration. (See Hotels Nevada,
supra, 203 Cal.App.4th at p. 348.)10
5. Discovery
Appellant contends he was improperly denied discovery regarding the
arbitration agreements. Generally, “parties to a . . . section 1281.2 proceeding
have discovery rights under the Civil Discovery Act [§ 2016.010 et seq.], subject
to the relevancy requirement and other provisions limiting the scope and timing of
that discovery.” (Bouton v. USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412,
427.) Nonetheless, the failure to afford a party discovery may be harmless.
(Rosenthal, supra, 14 Cal.4th at pp. 412-413.) As explained below, that is the
case here.
Appellant‟s initial request for discovery was made in his original opposition
to respondent‟s motion. There, appellant argued that he required an opportunity to
conduct discovery into Robert Jr.‟s execution of the 2002 agreement because
Robert was dead. Later, at the initial hearing on respondents‟ motion, appellant
appears to have requested discovery regarding the 2005 agreements executed by
Estelle and Robert Jr., which were attached to Bayat‟s first declaration. In seeking
discovery, he argued that “it was impossible to know what Robert [Jr.] and Estelle
purportedly agreed to,” as no copy of the pertinent Master Account Agreement
accompanied Bayat‟s first declaration. He also maintained that the 2005
agreements were “unauthenticated.”
10 In a related contention, appellant maintains that Bayat‟s declarations were
inadmissible because Bayat executed them “under penalty of perjury under the laws of the
State of New York.” This contention has also been forfeited for want of a timely
objection. (Robinson v. Grossman (1997) 57 Cal.App.4th 634, 648.)
20
Following the initial hearing on the motion, appellant submitted the FAC,
which alleged that after the trust was created in 2002, Estelle and Robert Jr. relied
on appellant for “investment management and direction of [t]rust assets.” The
FAC further alleged that no later than December 2006, at the request of the
trustees, he began receiving monthly statements regarding the trust account and
spoke frequently to Bayat.
Furthermore, attached to Bayat‟s second declaration was the Master
Account Agreement related to Estelle and Robert Jr.‟s June 2005 agreement, as
well as appellant‟s own 2002 agreement. Also accompanying the declaration was
a July 2002 UBS PaineWebber document which authorized appellant to conduct
trades on the trust account. On the document‟s signature page are what appear to
be Estelle‟s, Robert Jr.‟s, and appellant‟s signatures. The record discloses no
request for discovery related to the documents submitted with Bayat‟s second
declaration.
In view of the events following the initial hearing, the denial of appellant‟s
request for discovery into Estelle and Robert Jr.‟s 2002 agreement was not
prejudicial. As explained above (see pt. B, ante), the trial court‟s ruling is
properly affirmed on the basis of Estelle and Robert Jr.‟s June 2005 agreement and
its accompanying Master Account Agreement, as well as appellant‟s own 2002
agreement.
Nor can the denial of appellant‟s request for discovery regarding Estelle and
Robert Jr.‟s June 2005 agreement be regarded as prejudicial, as Bayat‟s second
declaration provided appellant with the Master Account Agreement that he sought.
Furthermore, the allegations in the FAC and the 2002 trading authorization show
his familiarity with Estelle‟s and Robert Jr.‟s signatures, for purposes of mounting
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a challenge to the authenticity of the signatures on the June 2005 agreement.
Accordingly, appellant has failed to establish reversible error.
6. Unfair Business Practices Claim
Relying on Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303
(Cruz), appellant contends that under the Federal Arbitration Act (FAA) (9 U.S.C.
§ 1 et seq.), his claim for injunctive relief under the unfair competition law (UCL)
(Bus. & Prof. Code, § 17200 et seq.) is not subject to arbitration.11 However,
because appellant failed to present this contention to the trial court, he has
forfeited it. (Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th
1115, 1135-1136 (Nelsen).)12
Furthermore, we would reject the contention were we to consider it. In
Cruz, our Supreme Court concluded that claims for injunctive relief under the
UCL are nonarbitrable under the FAA if they seek to prevent harm to the public at
large. (Cruz, supra, 30 Cal.4th at pp. 315-316.) However, in AT & T Mobility
LLC v. Concepcion (2011) ___U.S.___ [131 S.Ct. 1740, 1748-1749]
11 In seeking arbitration on appellant‟s claims, respondents‟ motion invoked both the
FAA and California arbitration statutes.
12 Appellant suggests that he may raise his contention for the first time on appeal
because it presents only “legal issues.” In limited circumstances, an appellate court may
consider a new theory “where it involves a pure question of the application of law to
undisputed facts.” (Yeap v. Leake (1997) 60 Cal.App.4th 591, 599, fn. 6.) Nonetheless,
under this exception to the rule barring new theories on appeal, a party may not offer a
theory that “contemplates a factual situation the consequences of which are open to
controversy and were not put in issue or presented at the trial[.]” (Panopulos v.
Maderis (1956) 47 Cal.2d 337, 341.) The exception is thus inapplicable here, as
appellant‟s contention under Cruz hinges on a fact subject to dispute, namely, whether the
injunctive relief appellant sought “would more than incidentally benefit the public.”
(Nelsen, supra, 207 Cal.App.4th at p. 1136.)
22
(Concepcion), the United States Supreme Court held that the FAA preempts any
rule based on state law that subjects agreements to arbitrate claims to more
stringent standards than those stated in the FAA. As explained in Nelsen, the
holding in Concepcion appears to compel the conclusion that UCL claims for
injunctive relief are arbitrable under the FAA, notwithstanding Cruz. (Nelsen,
supra, 207 Cal.App.4th at pp. 1135-1136.) In any event, regardless of Cruz’s
continuing validity, appellant‟s contention would fail, as there is no evidence that
the injunction he sought would benefit the public. In sum, appellant has failed to
show reversible error regarding his UCL claim.
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DISPOSITION
The judgment is affirmed. Respondents are awarded their costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
MANELLA, J.
We concur:
WILLHITE, Acting P. J.
SUZUKAWA, J.
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