Ramirez v. Gomez CA2/3 ( 2016 )

Filed 2/19/16 Ramirez v. Gomez CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.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 THREE
MARIO H. RAMIREZ, B261783
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC551901)
v.
EDGARDO GOMEZ et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los Angeles County,
Michael P. Linfield, Judge. Affirmed.
Krane & Smith and Benjamin J. Smith for Defendants and Appellants.
Roy Legal Group and Frank P. Agello for Plaintiff and Respondent.
_______________________________________
INTRODUCTION
Plaintiff Mario H. Ramirez entered into an investment agreement with
defendants Edgardo Gomez and Derek Martin through which he agreed to invest
$50,000 in defendant Martin Development, LLC, a.k.a. Martin Enterprises (the
company), in return for an equity position and portion of the company’s profits.
According to Ramirez, Gomez and Martin represented that the company had a franchise
relationship with non-party GlobalTranz, Inc. (GlobalTranz), a transportation
management company. The investment agreement included a clause requiring the
parties to arbitrate any legal dispute “regarding any influence on the [c]ompany or its
business operations.”
About one year after executing the agreement, Ramirez sued Gomez, Martin, and
the company (collectively, defendants) for breach of the investment agreement, misuse
of his investment for personal expenditures, and intentional misrepresentation about the
existence of a franchise relationship. Gomez filed a motion to compel arbitration of
Ramirez’s claims. The trial court denied the motion. We affirm.
FACTUAL AND PROCEDURAL SUMMARY
1. The Investment Agreement
In August 2013, Gomez and Martin asked Ramirez to invest $50,000 in the
company. Gomez and Martin claimed the company had a franchise relationship with
a larger logistics and transportation management company, GlobalTranz. They told
Ramirez that his investment would be used to hire additional employees to generate
more revenue for the company. Gomez and Martin also claimed that they were
shareholders in an existing corporation, Martin Business Enterprises.
On August 30, 2013, Ramirez, Gomez, and Martin executed the “Martin
Development, LLC Investor Agreement” (the investment agreement), through which
Ramirez agreed to invest $50,000 in the company. Under the agreement, $30,000 of
Ramirez’s investment would be disbursed immediately to the company, with the
remaining $20,000 to be held in a separate account under investor control. In exchange
for his investment, Ramirez would receive a 20% interest in the company’s profit until
2
his investment was repaid in full, at which point he would retain a “10% equity position
and split of profit.” Under the investment agreement, the company would begin making
monthly installment payments to Ramirez 90 days after the investment date, with the
investment to be repaid in full within 12 months of the investment date.
The investment agreement designates Ramirez, Gomez, and Martin as “Key
Men” of the company. It defines “Key Men” as the company’s “owners and stock
holders.” The investment agreement also contains a “Dispute Resolution” clause which
provides: “Should there be any legal dispute between Key Man members regarding any
influence on the Company or its business operations, it is agreed to be settled via
Arbitration by a neutral party and professional Arbitrator as licensed by the California
Board of Arbitrators in lieu of any Civil Court proceedings.”
2. Defendants’ Alleged Misuse of Ramirez’s Money
According to Ramirez, after he executed the investment agreement, he
discovered that Martin Business Enterprises, the entity in which Gomez and Martin
claimed to be part owners, did not exist when he executed the agreement. Nevertheless,
Gomez and Martin opened two bank accounts in which they deposited Ramirez’s
investment, one in the name of “Martin Development, LLC,” and the other in the name
of “Martin Business Enterprises.” On September 20, 2013, a business named “Martin
Business Enterprises” was registered with the California Secretary of State.
Ramirez alleged that between September and December 2013, Gomez and
Martin used his investment for non-business related expenses, including personal meals
and unidentified cash withdrawals from the recently opened accounts. When Ramirez
confronted Gomez and Martin about the expenditures, they claimed that they had used
Ramirez’s investment for business purposes only.
On December 8, 2013, Ramirez, Gomez, and Martin amended the investment
agreement to include a “Ownership Draw Guidelines” provision, which required their
unanimous consent before any money could be drawn out of the company’s funds. On
the same day, Ramirez agreed to loan the company $2,000 to pay the company’s rent
for December 2013. Ramirez believed he would forfeit his capital investment if he did
3
not loan the company money. Ramirez claimed that defendants misused his $2,000 loan
because they used it to pay the company’s employees’ wages instead of paying the
company’s rent.
As of July 2014, the company had yet to make any payments to Ramirez, and
defendants had refused to repay any portion of Ramirez’s investment.
3. The Lawsuit and Motion to Compel Arbitration
On July 14, 2014, Ramirez filed a lawsuit naming Gomez, Martin, and the
company as defendants.1 The complaint alleges causes of action for restitution, breach
of contract, breach of the covenant of good faith and fair dealing, account stated, open
book account, money had and received, breach of fiduciary duty, fraud, conversion, and
accounting. Ramirez seeks recovery for defendants’ alleged misuse of Ramirez’s
$50,000 investment and $2,000 loan, and punitive damages in the amount of $156,000.
On October 23, 2014, Gomez filed a motion to compel arbitration and stay
litigation pending arbitration under Code of Civil Procedure sections 1281.2 and 1281.4
(motion to compel). He argued the investment agreement’s arbitration clause requires
the parties to arbitrate all of Ramirez’s claims because they arise out of defendants’
performance under the agreement. Gomez also argued that the arbitration clause is so
broadly worded that any dispute between Ramirez and defendants, including tort claims,
is subject to arbitration. In his opposition, Ramirez argued his claims are not subject to
arbitration because they do not concern defendants’ influence on the company or its
business operations. Ramirez also argued the arbitration clause is ambiguous and
therefore cannot govern his claims.
The trial court denied Gomez’s motion.2 The court found that the arbitration
clause does not cover all of Ramirez’s claims because they are based on defendants’
1
The complaint includes an “alter-ego” provision, alleging that the company and
Martin Business Enterprises are the alter egos of Gomez and Martin.
2
Only the court’s written ruling is included in the record; there is no record of the
oral proceedings of the hearing on Gomez’s motion to compel arbitration.
4
alleged misuse of his investment for personal reasons, and not on defendants’ influence
on the company or its business operations. The court also noted that the arbitration
clause is too narrowly-worded to cover Ramirez’s claims, contrasting it with more
common, broadly-worded provisions, such as ones that require arbitration of “ ‘any
claim arising from or related to [the parties’] agreement.’ ”
DISCUSSION
Before the trial court, Gomez essentially took an “all or nothing” approach to his
motion to compel; he argued that all of Ramirez’s claims are subject to arbitration.
Specifically, he never argued that if some, but not all, of Ramirez’s claims are subject to
arbitration, the court should compel arbitration of only those arbitrable claims. In fact,
Gomez never made any serious attempt to interpret the arbitration clause in the
investment agreement to determine which, if any, of Ramirez’s claims fall within the
scope of the clause. Gomez did not attempt to define what the term “influence” means
or what would constitute influence on the company or its business operations. Rather,
he argued only that the clause is identical to more common arbitration clauses that
encompass “any” dispute arising out of or related to the underlying agreement. Gomez
took the same position on appeal.
At oral argument, we requested the parties to submit supplemental letter briefs
addressing the following issues: (1) whether, in the event we conclude that some, but
not all, of Ramirez’s claims fall within the scope of the arbitration clause, the trial court
erred in denying Gomez’s motion to compel when Gomez requested only that the court
compel arbitration of all of Ramirez’s claims, and he did not request the court to compel
arbitration of only the arbitrable claims; and (2) whether Gomez forfeited any claim on
appeal that the court should have ordered arbitration of only the arbitrable claims, when
Gomez did not request such relief below.
Only Gomez filed a supplemental letter brief. However, he addresses only the
first issue raised at oral argument; he does not address whether he forfeited any
argument that the parties should be ordered to arbitrate some, but not all, of Ramirez’s
claims. As we explain below, Gomez did not preserve this argument for appeal.
5
I. Applicable Legal Principles
An “order denying a petition to compel arbitration, like any other judgment or
order of a lower court, is presumed to be correct, and all intendments and presumptions
are indulged to support the order on matters as to which the record is silent.” (Gutierrez
v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 88 (Gutierrez).) The appellant has the
burden of demonstrating that the trial court erred. (Ketchum v. Moses (2001) 24 Cal. 4th
1122, 1140-1141 (Ketchum); People v. Giordano (2007) 42 Cal. 4th 644, 666 [the
appellant must affirmatively demonstrate error].) The appellant may not “rest on the
bare assertion of error but must present argument and legal authority on each point
raised.” (Boyle v. CertainTeed Corp. (2006) 137 Cal. App. 4th 645, 649.) “To
demonstrate error, appellant must present meaningful legal analysis supported by
citations to authority and citations to facts in the record that support the claim of error.”
(In re S.C. (2006) 138 Cal. App. 4th 396, 408.)
In addition, the appellant also must establish that he raised a specific challenge in
the trial court before he may raise that challenge on appeal. “ ‘ “ ‘[I]t is fundamental
that a reviewing court will ordinarily not consider claims made for the first time on
appeal which could have been but were not presented to the trial court.’ Thus, ‘we
ignore arguments, authority, and facts not presented and litigated in the trial court.
Generally, issues raised for the first time on appeal which were not litigated in the trial
court are waived. [Citations.]’ ” [Citation.] “Appellate courts are loath to reverse
a judgment on grounds that the opposing party did not have an opportunity to argue and
the trial court did not have an opportunity to consider. [Citation.] In our adversarial
system, each party has the obligation to raise any issue or infirmity that might subject
the ensuing judgment to attack . . . . ” [Citation.]’ [Citation.]” (Premier Medical
Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal. App. 4th
550, 564 (Premier Medical).)
6
II. Gomez Has Failed to Demonstrate the Trial Court Erred in
Denying his Motion to Compel
Gomez contends all of Ramirez’s claims fall within the scope of the arbitration
clause at issue here because the clause is so broadly-worded that it encompasses any
dispute arising out of, or related to, the investment agreement. He argues that because
all of Ramirez’s claims arise out of the investment agreement or are related to the
parties’ conduct under the agreement, the trial court should have compelled arbitration
of all of Ramirez’s claims. We disagree. The arbitration clause is much more
narrowly-worded than Gomez contends. Although some of Ramirez’s claims fall within
the clause’s scope, at least one of his claims, namely the cause of action for fraud, falls
outside that scope. Because Gomez did not request the trial court to compel arbitration
of only those claims that fall within the clause’s scope, the trial court did not err in
denying Gomez’s request to compel arbitration of all of Ramirez’s claims.
An analysis of whether a particular dispute falls within an arbitration clause
depends largely on the breadth of the clause. (Bono v. David (2007) 147 Cal. App. 4th
1055, 1067 (Bono).) A clause that calls for arbitration of “any” dispute arising out of or
related to the parties’ agreement or relationship will be interpreted broadly to cover all
disputes that have a significant relationship to, or are “rooted in,” the agreement or
relationship. (See Buckhorn v. St. Jude Heritage Medical Group (2004)
121 Cal. App. 4th 1401, 1407; Vianna v. Doctors’ Management Co. (1994)
27 Cal. App. 4th 1186, 1190.) By contrast, a clause that uses more narrow language will
not be afforded as strong of a presumption in favor of arbitration. (See Bono, supra,
147 Cal.App.4th at pp. 1067-1068; see also Knight et al., Cal. Practice Guide,
Alternative Dispute Resolution (The Rutter Group 2015) ¶ 5:223 [“More narrowly
worded clauses invite litigation as to the scope of the arbitration agreement”].)
Here, Gomez argues the arbitration clause at issue is very broadly-worded,
equating it to more common arbitration clauses that encompass “any” dispute arising
out of or related to the underlying agreement. (See e.g., Rowe v. Exline (2007)
153 Cal. App. 4th 1276, 1280 [“All disputes under this Agreement shall be subject to
7
mandatory arbitration”]; Larkin v. Williams, Woolley, Cogswell, Nakazawa & Russell
(1999) 76 Cal. App. 4th 227, 229 [“ ‘Any controversy or claim arising out of or relating
to any provision of this Agreement or the breach thereof shall be settled by
arbitration’ ”].) Gomez argues that we should apply a strong presumption in favor of
arbitration to the clause at issue here, as we would to such broadly-worded clauses, and
conclude that all of Ramirez’s claims fall within the scope of the clause because they
“arise out of” or are “related to” the investment agreement. Gomez’s contentions ignore
the actual language of the arbitration clause at issue here. As noted by the trial court,
the clause does not reference all disputes arising out of or related to the investment
agreement. Indeed, the clause makes no reference to the investment agreement. Rather,
it applies only to disputes concerning “influence on the Company or its business
operations.” Accordingly, we must look to the usual and ordinary meaning of the
clause’s language to determine which of Ramirez’s claims fall within the clause’s
scope. (Bono, supra, 147 Cal.App.4th at p. 1063.)
As a preliminary matter, we note that the investment agreement does not define
the term “influence.” The parties also did not introduce extrinsic evidence to help us
interpret the term, and they do not attempt to define the term in their briefs. Our own
research has not revealed any case law defining the term when used in an arbitration
clause. Accordingly, we look to the dictionary to determine the usual and ordinary
meaning of the term. (See Stamm Theatres, Inc. v. Hartford Casualty Ins. Co. (2001)
93 Cal. App. 4th 531, 539 [when construing a term in a contract or statute, courts often
will look to a dictionary to ascertain the term’s “ordinary” meaning].) Oxford
Dictionaries defines “influence” as “[t]he capacity to have an effect on the character,
development, or behavior of someone or something, or the effect itself.” (Oxford
Dictionaries (as of January 4, 2016).)
Mirriam-Webster provides as one definition of the term, “The power or capacity of
causing an effect in indirect or intangible ways.” (Mirriam-Webster
(as of January 4, 2016).) In view of these
definitions, we interpret the term “influence” as used in the investment agreement to
8
mean an act or a decision that has an effect on, or can effect, the company or its
business operations.
With these definitions in mind, we find that Ramirez’s fraud cause of action does
not fall within the arbitration clause’s scope because it does not raise a dispute about
any “influence” on the company or its business operations. Rather, the fraud cause of
action raises a dispute about defendants’ conduct during contractual negotiations,
conduct which occurred before the company was formed and began operating. Notably,
Ramirez claims that defendants induced him into executing the investment agreement
by making a number of false representations during negotiations. He alleges that
defendants claimed they were shareholders in a corporation that did not exist at the time
of negotiations and that the company had a franchise agreement with GlobalTranz, Inc.
when no such agreement existed. Because the fraud cause of action falls outside the
scope of the arbitration clause, Ramirez cannot be compelled to arbitrate that claim.
(Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal. App. 4th 534, 540 [a party
cannot be required to arbitrate any dispute which he has not agreed to submit to
arbitration].)
We also find, however, that at least one of Ramirez’s claims does fall within the
scope of the arbitration clause because it raises disputes about the parties’ “influence”
on the company’s operations. For example, in his claim for breach of contract, Ramirez
alleges that defendants misused his initial investment. He alleges that defendants placed
a portion of his investment in a bank account that was not under his control, in violation
of the investment agreement’s terms. He also alleges that defendants used his
investment for personal expenditures, while also alleging that defendants claimed they
used the investment for business purposes only, such as to pay wages, rent, and parking
lot fees, and to purchase office supplies. In our view, these allegations raise a dispute
about how defendants allocated Ramirez’s investment in operating the company,
a decision which would have an effect on the company’s operations.
Our conclusion that at least one of Ramirez’s claims falls within the arbitration
clause’s scope does not, however, mean that the trial court erred in denying Gomez’s
9
motion to compel. As noted, until we requested supplemental briefing at oral argument,
Gomez has consistently taken an “all or nothing” approach to his motion to compel.
Before the trial court, he argued that all of Ramirez’s claims are subject to arbitration,
and he requested the court to compel arbitration of all of those claims. He never
requested the court to compel arbitration of only some of Ramirez’s claims in the event
it found some, but not all, of Ramirez’s claims fall within the arbitration clause’s scope.
He also has never attempted to interpret the actual terms of the arbitration clause or
conduct separate analyses of Ramirez’s individual claims to determine which ones fall
within the clause’s scope. Further, despite our request for briefing on the issue, Gomez
failed to address whether he forfeited his contention that the trial court should have
compelled arbitration of only those claims that fall within the arbitration clause’s
scope.3 Accordingly, Gomez has not preserved that issue on appeal. (See Premier
Medical, supra, 163 Cal.App.4th at p. 564.) Because the trial court correctly
determined that at least one of Ramirez’s claims falls outside the arbitration clause’s
scope, we affirm its order denying Gomez’s motion to compel arbitration.
3
To the extent Gomez may have requested the court to compel arbitration of only
some of Ramirez’s claims at the hearing on the motion to compel arbitration, we have
an inadequate record to evaluate whether such a claim was raised because there is no
reporter’s transcript, settled statement or agreed statement in the record. (See Gee v.
American Realty & Construction, Inc. (2002) 99 Cal. App. 4th 1412, 1416 [if the record
is inadequate for meaningful review, the appellant defaults and the decision of the trial
court must be affirmed].)
10
DISPOSITION
The order denying Gomez’s motion to compel arbitration is affirmed. Ramirez is
awarded his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
LAVIN, J.
WE CONCUR:
EDMON, P. J.
*
JONES, J.
*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
11