Shanoski v. Neiman
In November 2004, plaintiff and respondent Zane Shanoski (Plaintiff) brought a complaint against appellant Arnold Joel Neiman (Defendant), seeking damages for misrepresentation, breach of the corporate securities act, and rescission of a contract for the purchase of securities. (Corp. Code, 25401.) The complaint was amended in July 2005. After about six months of discovery, motion practice, and trial preparation hearings took place, Defendant brought a motion to compel arbitration, based on a clause in a real estate buy-sell agreement between the parties that was entered into the same month as the securities purchase, June 2000. (Code Civ. Proc., 1281.2; all further statutory references are to the Code of Civil Procedure unless otherwise noted.)
The trial court denied the motion to compel arbitration, ruling that the fraud complaint did not arise out of the subject Residential Purchase Agreement (RPA), which contained the arbitration clause sought to be enforced (arbitration provision), nor was the securities transaction a "resulting transaction" within the meaning of that provision. The court ruled that the scope of the arbitration provision was not sufficiently broad to encompass the securities fraud issues alleged in Plaintiff's complaint. Additionally, the court found Defendant had waived any right to arbitrate through delay and other steps that were inconsistent with demonstrating an intent to arbitrate.
Defendant appeals the order denying the motion to compel arbitration, arguing the RPA was only one part of the overall transaction between the parties, and its provisions should be read together with other contractual agreements, resulting in a finding that the parties intended the arbitration provision to apply to the entire dispute. He further argues no waiver of any right to pursue arbitration occurred.
These contentions lack merit. On this record, the trial court appropriately admitted extrinsic evidence to clarify the intentions of the parties regarding the breadth and applicability of the arbitration provision, and it correctly found no basis to compel arbitration of the issues raised in the complaint. Further, substantial evidence supports the trial court's finding that Defendant waived arbitration through his failure to assert the right to pursue it in a timely manner, and there was prejudice to Plaintiff sufficient to justify denial of the motion to compel arbitration. Court affirm.
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