Barba v. Goldline CA2/2 ( 2020 )

Filed 11/17/20 Barba v. Goldline CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO
ARACELY BARBA, B295417
Plaintiff and Respondent, (Los Angeles County
Super. Ct.
v. No. BC720007)
GOLDLINE, INC., et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of
Los Angeles County. Michael L. Stern, Judge. Reversed and
remanded for further proceedings.
Gordon Rees Scully Mansukhani, Matthew G. Kleiner and
Casey Shaw for Defendants and Appellants.
Rosen Saba, Ryan D. Saba and Elizabeth L. Bradley for
Plaintiff and Respondent.
______________________________
Defendants and appellants A-Mark Precious Metals, Inc.
(A-Mark), and Goldline, Inc. (Goldline), appeal from an order
denying their motion to compel arbitration. On the basis of
information contained in an unverified complaint filed by
plaintiff and respondent Aracely Barba, as well as counsel’s
argument, the trial court denied defendants’ motion on the
grounds that plaintiff had been fraudulently induced into
agreeing to arbitrate her dispute with defendants.
We conclude that the trial court should have held an
evidentiary hearing regarding the issue of fraudulent
inducement. Accordingly, we reverse the trial court’s order and
remand the matter for an evidentiary hearing.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
A. Plaintiff’s employment with defendants
Plaintiff began working for Goldline, LLC (the LLC), as an
account executive in July 2011. The LLC employed numerous
account executives; according to Goldline, the number of account
executives fluctuated based on market forces, such as precious
metals supply, consumer demand for precious metals, inflation,
interest rates, the value of the dollar, and geopolitical factors.
In August 2017, A-Mark purchased the assets of the LLC
and converted the company into Goldline. At the time, plaintiff
had been on medical leave from the LLC since March 27, 2017.
According to Blair J. Harris, the former executive vice
president of the LLC and later the president of Goldline, “[w]hen
A-Mark purchased the LLC, it terminated [plaintiff].” Then,
when Goldline emerged from the purchase it offered plaintiff the
position of senior account executive. In fact, on August 25, 2017,
Goldline client relations director, Lisa Weedman (Weedman),
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sent notice to all of the LLC employees on leave, including
plaintiff, that the LLC employees would become Goldline
employees upon acquisition and that employee benefits would
continue with the new company. The letter instructed plaintiff to
contact Weedman if and when she was able and willing to begin
work for Goldline.
Plaintiff contends that she never received a copy of this
letter from Weedman.
B. Plaintiff returns from medical leave to join Goldline; she
signs two agreements that contain arbitration provisions
When plaintiff returned from leave on October 30, 2017,
Weedman handed plaintiff a manila folder containing both a
formal offer letter (the offer letter) and a document titled Binding
Mutual Agreement to Arbitrate Claims (the arbitration
agreement). The offer letter is a three-page letter on A-Mark
letterhead formally offering plaintiff the position with Goldline,
an A-Mark wholly-owned subsidiary, and includes an arbitration
provision. The arbitration agreement is a single-page document
containing four paragraphs concerning arbitration.
The offer letter and arbitration agreement (collectively the
agreements) contain nearly identical1 arbitration provisions: “I
agree that to the fullest extent allowed by law, any controversy,
claim or dispute between me and [A-Mark or Goldline] and/or any
of its related entities, holding companies, parents, subsidiaries
1 In the offer letter, plaintiff agreed to submit any claims
against Goldline or any holding company or parent (presumably
A-Mark) to binding arbitration. In the arbitration agreement,
plaintiff agreed to submit any claims against A-Mark or its
subsidiaries (presumably Goldline) to binding arbitration.
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. . . (collectively, ‘Company’) will be submitted to final and
binding arbitration as the sole and exclusive remedy, regardless
of whether such dispute is initiated by Company or me.” The
agreements also set forth, in all capital letters: “BY AGREEING
TO THIS BINDING MUTUAL ABITRATION PROVISION,
BOTH I AND COMPANY GIVE UP ALL RIGHTS TO A TRIAL
BY JURY.” Finally, the agreements provide: “I understand that
this Agreement is voluntary and my decision to accept or reject it
will not impact my employment in any way.”
According to Weedman, she knew plaintiff was a literate,
English-speaking individual when she presented the agreements
to her. Plaintiff never questioned the paperwork or showed any
confusion. Rather, she seemed eager to sign the agreements and
enthusiastic about joining Goldline. Plaintiff, on the other hand,
claims that she was told she had to sign both of the agreements
immediately. In fact, although the offer letter provides that it
would terminate on the close of business on the second business
day following the date of the letter if not accepted by that date, in
the very next paragraph, it provides: “Please signify your
acceptance of this offer by signing this letter and returning it to
Human Resources by October 30, 2017,” the date plaintiff was
presented with it.
No one reviewed or discussed the provisions of the offer
letter or the arbitration agreement with plaintiff. No one told her
that the terms were negotiable or that she could refuse to agree
to the terms set forth in either document, or that there was some
sort of opt-out procedure for the arbitration agreement. No one
discussed the advantages or disadvantages of agreeing to binding
arbitration with plaintiff; no one explained that she was giving
up her right to a jury trial. No one provided plaintiff with a copy
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of the arbitration rules. And no one told plaintiff that she could
consult with an attorney or hold off on signing any document
until she consulted with an attorney.
Plaintiff signed both the offer letter and the arbitration
agreement that day.
C. Plaintiff’s employment is terminated
On November 15, 2017, plaintiff’s employment with
Goldline was terminated. According to defendants, “Goldline let
[her] go as part of a reduction in workforce driven by market
forces.” There is no evidence as to why plaintiff was included in
the reduction in force (RIF) or when the decision was made to lay
off plaintiff as part of the RIF. According to plaintiff, had she
known that her job was going to be terminated 16 days after
returning from medical leave, or had she known that she was
going to be part of a RIF, she never would have signed either the
offer letter or the arbitration agreement.
II. Procedural Background
Following the termination of her employment, plaintiff filed
a lawsuit in Los Angeles Superior Court. Her complaint sets
forth 11 causes of action arising out of her employment with
Goldline. In particular, she alleges that defendants implemented
a discriminatory RIF, whereby they decided in August 2017 to
terminate her employment, but they did not execute the RIF
until November 15, 2017, approximately two weeks after plaintiff
signed an agreement to arbitrate all disputes with defendants.
Defendants promptly moved to compel arbitration. They
argued that because plaintiff signed an enforceable arbitration
agreement, her claims must be submitted to binding arbitration.
Plaintiff opposed defendants’ motion, arguing fraudulent
inducement and unconscionability as defenses to arbitration.
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Specifically, plaintiff asserted that defendants fraudulently
induced her into signing the agreements through an RIF scheme
whereby defendants “[captured] and [got] rid of [their] long-term
employees, like [plaintiff], that had taken a medical leave of
absence from their employment.”
Plaintiff also asserted that the agreements were
procedurally and substantively unconscionable. In support, she
averred that no one from Goldline ever told her that signing the
agreements was voluntary; she also attests that no one explained
the impact of signing the agreements.
After entertaining oral argument, the trial court denied
defendants’ motion to compel arbitration. There is no reporter’s
transcript of that hearing. But, the minute order provides that
the trial court found that “[t]he contract was induced by fraud.”
The trial court instructed plaintiff to give notice.
In accordance with the trial court’s directive, plaintiff filed
and served a notice of ruling, which provides: “After reviewing
the filed motion, opposition, reply and supplemental briefing, and
oral argument of counsel, the Court finds good cause to DENY
the motion to compel arbitration for the following reasons. [¶]
The Court held that Plaintiff’s signing of Defendants’ arbitration
agreement was induced by fraud and that Defendants[] had the
fraudulent intent to deceive Plaintiff into signing the agreement
knowing that Plaintiff’s employment would be shortly terminated
thereafter. Because there was a lack of mutuality, the
arbitration is void on its face, deemed unconscionable, and,
therefore, unenforceable. Therefore, based on circumstantial
evidence presented to the Court, the Court denies Defendants’
Motion to Compel Arbitration and this matter will remain in the
Los Angeles Superior Court.”
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Defendants did not object to the notice of ruling.
Defendants’ timely appeal ensued.
DISCUSSION
I. Appealability and the Standard of Review
An order denying a petition to compel arbitration is
appealable. (Code Civ. Proc., § 1294, subd. (a).) An order
denying arbitration is generally reviewed for abuse of discretion.
(See Whaley v. Sony Computer Entertainment America, Inc.
(2004) 121 Cal.App.4th 479, 484.) The de novo standard of
review applies only where the trial court’s denial of a petition to
arbitrate presents a pure question of law. (See Robertson v.
Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)
To the extent the trial court’s decision on arbitrability is based
upon the resolution of disputed facts, we review the decision for
substantial evidence. (NORCAL Mutual Ins. Co. v. Newton
(2000) 84 Cal.App.4th 64, 71.)
II. Relevant Law
“California law, like federal law, favors enforcement of
valid arbitration agreements.” (Armendariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.)
Arbitration agreements are valid, irrevocable, and enforceable
unless grounds exist at law or in equity for their revocation. (Id.
at p. 98; Code Civ. Proc., § 1281.)
“‘[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 petitioner bears the burden of proving its
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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.’
[Citation.]” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144
Cal.App.4th 754, 761 (Hotels Nevada).)
According to Rosenthal v. Great Western Fin. Securities
Corp. (1996) 14 Cal.4th 394 (Rosenthal), “facts relevant to
enforcement of the arbitration agreement must be determined
‘“in the manner . . . provided by law for the . . . hearing of
motions.”’ [Citations.] This ‘ordinarily mean[s] the facts are to
be proven by affidavit or declaration and documentary evidence,
with oral testimony taken only in the court’s discretion.’
[Citations.] The Rosenthal court further observed that where ‘the
enforceability of an arbitration clause may depend upon which of
two sharply conflicting factual accounts is to be believed, the
better course would normally be for the trial court to hear oral
testimony and allow the parties the opportunity for cross-
examination.’ [Citation.]” (Hotels Nevada, supra, 144
Cal.App.4th at pp. 761–762.)
“In Rosenthal, the Supreme Court held that the trial court
erred in denying a petition to compel arbitration where, following
an evidentiary hearing, the trial court found that the parties
opposing arbitration had presented sufficient evidentiary support
for their allegations but declined to resolve the factual issues
presented by those allegations. [Citation.] Appellate courts have
likewise reversed denials of petitions to compel arbitration where
the parties opposing arbitration asserted that there were grounds
for revocation of the arbitration agreements but presented no
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evidentiary support for their contentions.” (Hotels Nevada,
supra, 144 Cal.App.4th at p. 762.)
III. Analysis
Pursuant to Hotels Nevada, this matter must be remanded
for an evidentiary hearing on the question of whether plaintiff
was fraudulently induced into signing the agreements. “[F]raud
in the inducement occurs when ‘“the promisor knows what he is
signing but his consent is induced by fraud, mutual assent is
present and a contract is formed, which, by reason of the fraud, is
voidable.”’” (Hotels Nevada, supra, 144 Cal.App.4th at p. 763.)
Here, the allegations of plaintiff’s complaint, coupled with
the arguments set forth in her opposition to defendants’ motion to
compel arbitration, support a potential theory of fraud in the
inducement. She contends that defendants decided to terminate
her employment in August 2017, but delayed in executing that
decision until after plaintiff had agreed to arbitrate any disputes
with them. This theory is sufficient to raise a question about
whether plaintiff was duped into agreeing to arbitration.
But, as defendants rightly point out, plaintiff’s allegations in the
complaint are insufficient to prove fraudulent inducement.
(Hotels Nevada, supra, 144 Cal.App.4th at pp. 762–763.) Rather,
to deny defendants’ motion, the trial court needed evidence.
While plaintiff submitted a declaration in opposition to
defendants’ motion to compel arbitration, her declaration did not
set forth any evidence regarding the alleged fraud; instead, it
simply pointed the reader to the allegations in her complaint.
Thus, the matter must be remanded for the trial court to hold an
evidentiary hearing on the issue of fraudulent inducement.
Urging us to reverse and direct the trial court to enter an
order granting their motion to compel arbitration, defendants
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assert that the arbitrator, not the trial court, must determine
whether plaintiff was fraudulently induced into signing the
agreements. Our Supreme Court has held that “claims of fraud
in the inducement of the contract (as distinguished from claims of
fraud directed to the arbitration clause itself) will be deemed
subject to arbitration,” i.e., decided by the arbitrator and not the
trial court. (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh,
Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.) Where,
however, “it is claimed that fraud induced the entering into of the
arbitration clause itself, the matter must be resolved by the court
rather than the arbitrator.” (Johnson v. Siegel (2000) 84
Cal.App.4th 1087, 1095.)
Given plaintiff’s contention that she was misled into
agreeing to arbitration when defendants already had a plan to
terminate her employment and only delayed their execution until
she agreed to arbitration, we conclude that this issue falls within
the scope of the trial court’s duties.
Urging us to affirm, plaintiff argues that the trial court’s
order was based not just upon a finding of fraud in the
inducement; rather, as set forth in her notice of ruling, to which
defendants did not object, the trial court also denied defendants’
motion on the ground that the agreements were unconscionable.2
We do not agree with plaintiff that her notice of ruling trumps
the trial court’s minute order. “A notice of ruling is not an order;
an order is a document which contains a direction by the court
2 Defendants made this issue difficult by not providing us
with a copy of a transcript of the hearing on their motion. (Hotels
Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203 Cal.App.4th
336, 348.)
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that a party take or refrain from action, or that certain relief is
granted or not granted [citations] and which is either entered in
the court’s permanent minutes or signed by the judge and
stamped ‘filed.’ [Citations.]” (Shpiller v. Harry C’s Redlands
(1993) 13 Cal.App.4th 1177, 1179.) “In the event of any
discrepancy between the two [order and notice of ruling], the
order is the governing document. Therefore, if an issue arises as
to what action was taken by the court, refer to the appropriate
formal or minute order (and supply copies thereof if appropriate),
not to the notice of ruling.” (Weil & Brown, Cal. Practice Guide:
Civil Procedure Before Trial (The Rutter Group 2020) ¶ 9:320.4a,
p. 9(I)-141.)
It follows that we reject plaintiff’s contention on appeal
that the trial court denied defendants’ motion on the ground that
the agreements were unconscionable.3 And we express no
opinion on whether the agreements are in fact unconscionable.
Plaintiff further relies upon the doctrines of fraud in the
execution and equitable estoppel in support of the trial court’s
order. But plaintiff did not raise these theories below, and the
trial court did not make any findings vis-à-vis these theories. It
is well-established “that the theory upon which a case is tried
must be adhered to on appeal. A party is not permitted to change
his position and adopt a new and different theory on appeal. To
permit him to do so would not only be unfair to the trial court,
3 Plaintiff’s claim of unconscionability may be wrapped up in
her claim of fraud in the inducement. For example, she may have
evidence of oppression, namely whether she was forced to agree
to arbitration in order to commence or maintain her employment
with Goldline. The trial court can sort these issues out at the
evidentiary hearing.
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but manifestly unjust to the opposing litigant.” (Ernst v. Searle
(1933) 218 Cal. 233, 240–241.) While we have discretion to
consider new theories on appeal, we only do so when that theory
presents questions of law based on undisputed facts. (Vasquez v.
SOLO 1 Kustoms, Inc. (2018) 27 Cal.App.5th 84, 96.) Because
the theories of fraud in the execution and equitable estoppel
necessarily turn upon disputed facts, we decline to consider these
theories raised for the first time on appeal.
DISPOSITION
The order is reversed. The matter is remanded for an
evidentiary hearing on defendants’ motion. Parties to bear their
own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
_____________________, J.
ASHMANN-GERST
We concur:
________________________, P. J.
LUI
________________________, J.
HOFFSTADT
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