Brown v. UBS Financial Services

 

 

 

 

 

 

 

 

 

 

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NOT TO BE PUBLISHED IN THE OFFICIAL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opinion has not been certified for publication or ordered published for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

 

 
>

GARY BROWN, Individually and as Trustee, etc.,             Plaintiff and Appellant,             v.   UBS FINANCIAL SERVICES, INC., et al.,             Defendants and Respondents.

B242971       (Los Angeles County       Super. Ct. No. SC109123)           ORDER MODIFYING OPINION       AND DENYING REHEARING       [NO CHANGE IN JUDGMENT]

 

THE COURT:*

          It is ordered
that the opinion filed herein on May 24, 2013 be href="http://www.mcmillanlaw.com/">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.

 

Filed
5/24/13  Brown
v. UBS Financial Services CA2/4 
(unmodfied version)

NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS

 


 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

 

SECOND APPELLATE DISTRICT

 

DIVISION FOUR

 

 
>

GARY BROWN, Individually and as Trustee, etc.,             Plaintiff and Appellant,             v.   UBS FINANCIAL SERVICES, INC., et al.,             Defendants and Respondents.

B242971       (Los Angeles County       Super. Ct. No. SC109123)

 

          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).href="#_ftn1"
name="_ftnref1" title="">^[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.href="#_ftn2" name="_ftnref2" title="">^[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.  

 

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.)     

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.”href="#_ftn3" name="_ftnref3" title="">^[3]  On the signature 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.href="#_ftn4" name="_ftnref4" title="">^[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 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.href="#_ftn5" name="_ftnref5" title="">^[5]  

          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.href="#_ftn6" name="_ftnref6" title="">^[6]  Later, in December 2010, the court denied
appellant’s motion for reconsideration.   


 

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 (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 . . . name=I9288C260021111DF8617C88064A413A7>name=I92882622021111DF8617C88064A413A7>name=I92891080021111DF8617C88064A413A7>name=I92882623021111DF8617C88064A413A7>[g]rounds
exist for the revocation of the agreement.”href="#_ftn7" name="_ftnref7" title="">^[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
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 . . . name="sp_3484_886">name="citeas((Cite_as:_14_Cal.4th_394,_*413,_9">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. 

          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.)  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 independent
employment contract].)href="#_ftn8"
name="_ftnref8" title="">^[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 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, 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 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 name="sp_661_916">name="citeas((Cite_as:_15_Cal.4th_951,_*972,_9">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.href="#_ftn9" name="_ftnref9" title="">^[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.

          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.

 

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 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 contention that he was denied
due process by the declaration.  (See Hotels Nevada, supra, 203
Cal.App.4th at p. 348.)href="#_ftn10"
name="_ftnref10" title="">^[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.” 

      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 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.href="#_ftn11" name="_ftnref11" title="">^[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).)href="#_ftn12" name="_ftnref12" title="">^[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] (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.

 

 

 

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.