Carter v. Francisco CA4/3 ( 2013 )

Filed 4/17/13 Carter v. Francisco CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
FOURTH APPELLATE DISTRICT
DIVISION THREE
JOHN R. CARTER et al.,
Plaintiffs and Respondents, G047234
v. (Super. Ct. No. 30-2012-00563015)
RENIERO FRANCISCO et al., OPINION
Defendants and Appellants.
Appeal from an order of the Superior Court of Orange County, Kirk
Nakamura, Judge. Affirmed.
Alavi & Broyles, Samuel G. Broyles, Jr., and Max Alavi, for Defendants
and Appellants Reniero Franciso, Cynthia Francisco, and Bendisyon, Inc.
Law Offices of Frank N. Masino, Frank N. Masino, for Defendants and
Appellants Abdul Sultan Walji, Arista LLC, and Calpension, Inc.
Law Offices of Thomas E. Francis and Thomas E. Francis for Plaintiffs and
Respondents.
* * *
This is an appeal from an order denying arbitration. The appellants are
defendants Abdul Sultan Walji, individually and as trustee of the Stone Lamm Trust,
Arista LLC, Calpension, Inc., Reniero Francisco, Cynthia Francisco and Bendisyon, Inc.
Other defendants, who did not join in the appeal, are LPL Financial Corporation,
Milagros Investments, LLC, and Investment Resource Partners, Inc. The respondents are
plaintiffs John R. Carter and Carmen Carter. We affirm the court’s denial of the motions
to compel arbitration under Code of Civil Procedure section 1281.2, subdivision (c).
STATE OF THE RECORD
At the outset, we take note of problems with the record. We have a clerk’s
transcript (two volumes) and a supplemental clerk’s transcript (three volumes). Although
they contain mostly the same documents, different page numbers pertain to different
documents. Furthermore, the page numbering on both sets of transcripts is confusing to
say the least. The pages of each transcript initially contain a printed page number. In the
clerk’s transcript, starting with printed page number 101, the printed numbers are blocked
out and replaced with a different handwritten number through printed page number 276,
creating duplicate page numbers within the same transcript. In the supplemental clerk’s
transcript the substitute paging starts on printed page number 105, and continues through
printed page number 283. On some of these pages we can decipher the printed number;
on many more, we cannot. When page numbers are given in the briefs, it is unclear
which of these page numbers are intended.
The subject of this appeal, the motion to compel arbitration, together with
its supporting documents covers over 200 pages; we did not find a table of contents.
Although we attempted to make sense of the record, it is not our responsibility to plow
through several hundred pages of material to try and find support for appellants’
contentions. A fundamental principle of appellate law is the judgment or order of the
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lower court is presumed correct and the appellant must affirmatively show error by an
adequate record. (Bianco v. California Highway Patrol (1994) 24 Cal. App. 4th 1113,
1125.) This includes a requirement that each factual allegation be supported by a
reference to the exact page where such a fact may be found. (Evans v. Centerstone
Development Co. (2005) 134 Cal. App. 4th 151, 166-167.) Should we have overlooked a
document in our analysis, the appellants failure to provide us with specific page
references is to blame.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs sued the appellants and the non-appealing defendants purporting
to assert some 13 causes of action. The complaint alleges various relationships between
the numerous defendants. The gist of the 29-page complaint is that plaintiffs invested
funds on the recommendation of some of the defendants and that they lost in excess of $1
million as a result of the misdeeds of some of the defendants. Other defendants are
alleged to be liable to plaintiffs because of their relationships with the defendants with
whom plaintiffs dealt directly.
Appellants Reniero Francisco and Cynthia Francisco filed a motion “to
compel arbitration and to stay proceedings pending completion of arbitration
proceedings.” Appellant Bendisyon, Inc. filed a “notice of joinder . . . in the notice of
motion . . . by Reniero Francisco and Cynthia Francisco to compel arbitration . . . .”
There is no indication in the record supplied that any other defendants, including
appellants Walji, Arista LLC, or Calpension, Inc., joined in the motion; yet these latter
three defendants are also appealing the denial of the motion. Moving parties apparently
relied on an arbitration clause contained in a 38-page document entitled “Arista, LLC
Operating Agreement.” Although the document was attached to the motion, we did not
find any declaration authenticating it. The exhibit consisting of this document bears the
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typewritten name “Abdul S. Walji, President” but is unsigned. “Calpension, Inc.” is
typed above his name. The notice of motion states that “defendant Francisco” (without
specifying which of the two Franciscos) is a principal of Arista LLC. But no evidence
was presented to support this contention. Separate documents bear the signature of
plaintiffs. But there is no declaration indicating that these documents pertain to the very
document containing the arbitration clause.
Walji’s opening brief states that he is the “managing member” of Arista
LLC. But the record reference for this statement is “SCT 10:5-10,” which we interpret as
supplemental clerk’s transcript, page 10, lines five to ten. But printed page 10 of the
supplemental clerk’s transcript is a page from the register of actions and handwritten
page 10 of the same transcript, bears no line numbers and is a page from the Arista LLC
subscription agreement; we fail to see any reference to Walji on this page either.
DISCUSSION
As far as we are able to ascertain, the arbitration clause is located in an
unsigned document that identifies Abdul S. Walji as president of Arista LLC. The only
declarations we could locate in support of the motion to compel arbitration are the
declaration of Cynthia Francisco and the declaration of one of the lawyers, Samuel G.
Broyles. The Francisco declaration merely states that she and her husband, Reniero
Francisco, are members of Arista LLC. The Broyles’s declaration merely makes the
conclusionary statement that “the claims alleged in the complaint are subject to the
arbitration provisions of the Arista LLC Operating Agreement.”
With respect to other defendants, the motion seems to be based on
relationships between the parties as alleged in the complaint. But, because the parties
apparently have not filed a responsive pleading (at least none is contained in the record),
we cannot determine whether these allegations are contested or not. Even if they are not
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contested, the mere fact some of the appellants were “members” of Arista LLC would not
compel the conclusion they are parties to the document containing the arbitration clause
that is contained in the record. We also note some, but not all defendants sought to
compel arbitration. During oral argument on the motion to compel arbitration, counsel
for the Franciscos acknowledged that not all the defendants were parties to the arbitration
agreement. The Walji appellants acknowledge in their brief “the Carters had no contact
or agreement with either Calpension, Inc. or the Stone Lamm Trust.”
And the Franciscos and Bendisyon, Inc. defendants implicitly acknowledge
in their brief that another defendant, LPL Financial Corporation is not subject to the
arbitration clause. They state plaintiffs “can proceed on a separate track regarding any
duty LPL Financial may have had to the[m], and if such duty was found to have been
breached, the remainder of the claims related to the claimed actions of Reniero Francisco
can be separated and tried after the arbitration of the Carter claims against the
Appellants.”
The court expressed concern about the same case having to be tried twice if
the motion was granted. And the minute order indicates it denied the motion “under CCP
§ 1281.2(c).” Code of Civil Procedure section 1281.2 provides the authority for the court
to order arbitration to parties to an arbitration agreement unless an exception applies. But
subdivision (c) creates such an exception where “[a] party to the arbitration agreement is
also a party to a pending court action . . . with a third party, arising out of the same
transaction or series of related transactions and there is a possibility of conflicting rulings
on a common issue of law or fact.” This is the situation that prevails here. (See
Lindemann v. Hume (2012) 204 Cal. App. 4th 556, 566.) The appellants’ contention
arbitration could be had first, followed by a trial against the parties who are not subject to
the arbitration agreement cannot be denied. But the mere fact such a resolution is
possible does not demonstrate the trial court abused its discretion in rejecting the
employment of that procedure here.
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Appellants Walji, Arista LLC, and Calpension, Inc. also base their
argument on the Federal Arbitration Act. They did not make this argument in the trial
court, and thus waived it. “When a party does not raise an argument at trial, he may not
do so on appeal.” (People v. Clark (1993) 5 Cal. 4th 950, 988, fn. 13, disapproved on
other grounds as stated in People v. Doolin (2009) 45 Cal. 4th 390, 421, fn. 22) “Points
not raised in the trial court will not be considered on appeal.” (Hepner v. Franchise Tax
Bd. (1997) 52 Cal. App. 4th 1475, 1486.) The mere fact these appellants cited some
United States Supreme Court cases in their points and authorities does not establish the
issue of applicability of the Federal Arbitration Act was properly argued in the trial court.
Even if we were to conclude these appellants timely raised the issue in the trial court, no
evidence was presented to support a claim that the parties engaged in interstate commerce
or were otherwise subject to federal arbitration law.
Walji’s argument based on equitable estoppel is also partially supported by
references to federal law, not applicable here. As to state law, for its equitable estoppel
argument, the Walji appellants rely largely on language contained in Goldman v. KPMG,
LLP (2009) 173 Cal. App. 4th 209. But that case makes it clear “[e]quitable estoppel
applies ‘when the signatory to a written agreement containing an arbitration clause “must
rely on the terms of the written agreement in asserting [its] claims” against the
nonsignatory.’” (Id. at p. 218) There is no showing plaintiffs “must rely” on the terms of
the Arista LLC document to establish their case against defendants who bore no
relationship to that document. In fact, the record is devoid of any evidence supporting
such a contention.
There also is an argument that there is a related case, Roode, et al. v. Arista
LLC, where arbitration had been ordered. But nothing in the record supports this
assertion other than a “notice of related case.”
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DISPOSITION
The order denying arbitration is affirmed. Respondents shall recover their
costs on appeal.
RYLAARSDAM, J.
WE CONCUR:
O’LEARY, P. J.
IKOLA, J.
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