THOMAS AHERN еt al., Plaintiffs and Appellants, v. ASSET MANAGEMENT CONSULTANTS, INC., et al., Defendants and Respondents.
B309935
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN
Filed 2/1/22
CERTIFIED FOR PUBLICATION; (Los Angeles County Super. Ct. No. BC484356)
Catanzarite Law Corporation, Kenneth J. Catanzarite, Nicole M. Catanzarite-Woodward and Eric V. Anderton for Plaintiffs and Appellants Thomas Ahern and Amlap Ahern, LLC.
Jackson Tidus and Charles M. Clark for Defendants and Respondents Asset Management Consultants, Inc., BH & Sons, LLC and James R. Hopper.
The superior court granted the petition filed by Asset Management Consultants, Inc. (AMC), BH & Sons, LLC and James R. Hopper (collectively BH parties) to confirm an arbitration award dismissing the investment fraud claims of Thomas Ahern and Amlap Ahern, LLC (collectively Ahern parties) as barred by the governing statutes of limitation; denied the Ahern parties’ petition to vacate or correct the award; and entered judgment in favor of the BH parties. The arbitration was conducted pursuant to the arbitration provision in the cotenancy agreement between BH & Sons, on the one hand, and tenant in common investors in commercial property located on East La Palma Avenue in Anaheim (the Amlap property), including Amlap Ahern, on the other hand.
On appeal the Ahern parties contend arbitration should not have been compelled because the cotenancy agreement was void as an unlawful contract to provide services requiring a real estate broker‘s license, which BH & Sons did not (and could not) have, and, in any event, their investment fraud claims
We agree the Ahern parties’ claims were not within the scope of the arbitration provision in the cotenancy agreement, reverse the judgment and remand with directions to the trial court to deny the petition to confirm the arbitration award and to grant the Ahern parties’ petition to vacate the award.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Tenant in Common Investment
Based on tax advice from their lawyers and accountants, Ahern and his wife, Priscilla Ahern,1 sold a fractional tenant in common interest in property on South Robertson Boulevard in Los Angeles in mid-2006 and reinvested a portion of the net proceeds from that sale in a tenant in common interest in the Amlap property, an office building in Anaheim, which had been acquired by BH & Sons from iStar CTL I (iStar) to market to tax-motivated investors.2
BH & Sons and its manager, AMC,3 provided preliminary information to qualified sophisticated investors in connection with the investors’ evaluation of the property. After receiving that information, interested investors were provided with a property information package (or private placement memorandum) with due diligence and undеrwriting material and a tenant in common purchase and sale agreement. Both the property information package and the purchase and sale agreement stated the purchase price for the Amlap property was $34,550,000. The property information package also disclosed, “At closing, AMC will receive a real estate commission of One Million, Three Hundred Thousand Dollars ($1,300,000) from the Seller.”
The tenant in common purchase and sale agreement for direct investors like the Aherns provided BH & Sons was selling a property interest to the investor and assigning and transferring to the investor BH & Sons‘s rights
The venture performed according to expectations for approximately three years (through September 2009) when the lease of the sole tenant (Cingular Wireless) ended; no replacement tenant was found. The secured lender foreclosed on the Amlap property in May 2010, eliminating the tenant in common investors’ interests.
2. The Cotenancy Agreement
The tenant in common investment in the Amlap property was managed and operated pursuant to the terms of a cotenancy agreement. That agreement, which defined BH & Sons as “Manager,” recited that the cotenants “have agreed to join together as tenants in common to acquire, hold and operate certain Property (defined below) for investment purposes” and declared, “The Cotenants desire to enter into this Agreement to arrange for the management and operation of the Property, and to govern the respective rights and obligations of each Cotenant.” In a paragraph titled “Acquisition” the agreement further provided:
The Cotenants have agreed to jointly acquire and operate the property. The rights and obligations of the Cotenants shall be determined pursuant to this Agreement. The Cotenants do not intend by this Agreement to create a partnership or a joint venture, but merely to set forth the terms and conditions upon which Cotenants shall hold and manage undivided interests in the Property, and to meet the requirements of the holder of the Mortgage Loan.
Paragraph 2.3 of the agreement governed cotenant advances: “Upon Closing of the acquisition of the Property, each of the Cotenants shall deposit with the Manager or its designee such Cotenant‘s proportionate share of funds reasonably required by the Manager for Reserves.” Paragraph 3.1 delegated management responsibility to BH & Sons: “Except as otherwise required by the Majority in Interest of the Cotenants or this Agreement, the Cotenants delegate responsibility for the management and supervision of the Cotenants’ Ownership Interests in the Property, and all decisions concerning the business and affairs of the Property shall be made by the Manager.”
Unless the relief sought requires the exercise of the equity powers of a court of competent jurisdiction, any dispute arising in connection with the interpretation or enforcement of the provisions of this Agreement, or the application or validity thereof, shall be submitted to arbitration.
The cotenancy agreement contained an integratiоn clause. Hopper signed the agreement for BH & Sons as president of AMC, BH & Sons‘s manager. Ahern signed as president of Amlap Ahern.
3. The Initial Iteration of Ahern‘s Lawsuit5
Ahern initially filed this lawsuit in May 2012 against BH & Sons, AMC, Hopper and a number of others, including several affiliated attorneys and accountants, alleging in a 77-page, 16-cause-of-action putative class action complaint that he had been fraudulently induced to enter into the Amlap investment through the promotional materials developed and distributed by BH & Sons and AMC. Specifically, Ahern alleged the offering materials falsely represented the purchase price for the Amlap property was $34,550,000 and a $1.3 million commission was to be paid by the seller to AMC and related individuals as the buyer‘s broker. In fact, the true purchase price was $30 million or less and “what was purported to be a commission was an illegal and secret mark-up of the Property purchase price in which the defendants conspired to inflate the price to hide the fact the Property could have been purchased for $30,000,000 or less.” That is, the purported real estate commission did not reduce the negotiated purchase pricе received by the seller, as it would if the seller truly paid the commission, but was added to the negotiated price so that its economic burden was shifted to the investors, thereby diluting the value of the investment.6
Following the court‘s order the Ahern parties elected not to pursue their claims against the BH parties and the related defendants who had successfully moved to compel arbitration, and voluntarily dismissed the complaint as to them. On January 3, 2013, pursuant to a stipulation between the Ahern parties and the remaining defendants, the court dismissed the complaint‘s class allegations without prejudice; and the Ahern parties were permitted to proceed individually.
Notwithstanding their dismissal from the litigation, the BH parties initiated arbitration pursuant to the court‘s order compelling arbitration, seeking a determination their dismissal was with prejudice; a finding they had not orchestrated a fraudulent scheme to induce the Ahern parties to purchase fractional interests in the Amlap property in order to earn a secret profit; and contractual indemnity from Ahern under the tenant in common purchase and sale agreement and from Amlap Ahern under the cotenancy agreement. The Ahern parties did not participate in the arbitration heаring, maintaining their objection that there was no valid arbitration agreement between them and the BH parties and that the arbitrator thus lacked jurisdiction over them.
Proceeding in the absence of the Ahern parties as permitted under the governing arbitration rules, the arbitrator found no merit to the Ahern parties’ claims against the BH parties. To the contrary, the arbitrator concluded the Ahern parties’ complaint arose from their own breach of their representations and warranties that they were sophisticated investors, had reviewed and understood the various offering and purchase materials, including the descriptions of risk involved in the investment in the Amlap property, and would conduct an independent investigation of facts determined to be material to their investment decision. As a result, the Ahern parties were found liable for
We reversed the judgment in Ahern v. Asset Management Consultants, Inc. (Aug. 11, 2015, B253974 & B257684) [nonpub. opn.], holding the trial court had erred in compelling arbitration and thеreafter confirming the arbitration award against the Ahern parties based on the arbitration provision in the real estate purchase and sale agreement between iStar and BH & Sons.7 We explained that agreement neither established nor governed any relationship between the Ahern and the BH parties. The matter was remanded with directions to the superior court to vacate its September 19, 2012 order compelling arbitration, to deny the BH parties’ petition to confirm the arbitration award and to grant the Ahern parties’ petition to vacate that award.
4. The Amended Pleadings and the New Demand for Arbitration
The Ahern parties, who had filed a first amended complaint on March 13, 2013, were granted leave to file a second amended complaint on October 13, 2016, which, among other changes, reinstated the BH parties, identified Thomas Ahern as Priscilla Ahern‘s surviving spouse and conformed certain allegations to be consistent with discovery and investigation following the filing of the first amended complaint. The second amended complaint was filed October 19, 2016.8
In December 2016 the BH pаrties moved to compel arbitration of the Ahern parties’ claims based on the arbitration provision in the cotenancy agreement. The Ahern parties opposed the petition, arguing their tenant in common interest in the Amlap property had been acquired through the tenant in common purchase and sale agreement, which did not contain an arbitration provision, and had been promoted through misrepresentations and omissions in the marketing and offering materials. The cotenancy agreement concerned only the management and operation of the investment after its acquisition, they insisted. Accordingly, the narrow arbitration provision in that agreement did not apply to their fraud and breach of fiduciary duty claims. The Ahern parties also argued the cotenancy agreement was void because it obligated BH & Sons to provide services requiring a real estate broker‘s license, which BH & Sons, as a limited liability company, did not have and could not obtain; AMC and Hopper were not signatories to the cоtenancy agreement and could not compel arbitration; Ahern was neither a signatory to, nor a party
The trial court rejected the Ahern parties’ arguments and granted the motion to compel arbitration on January 27, 2017.9 With respect to the Ahern parties’ argument their claims against the BH parties did not fall within the scope of the arbitration provision in the cotenancy agreement, the court quoted Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401 (Buckhorn), which held that, once a valid arbitration agreement has been proved, the burden is on the party opposing arbitration to demonstrate the arbitration clause cannot be interpreted to require arbitration of the parties’ dispute (id. at p. 1406) and that, even if a рlaintiff was not suing on a claim based on a contract that requires arbitration of disputes concerning the enforcement or interpretation of their agreement, tort claims “rooted” in the contract relationship between the parties must be arbitrated (id. at p. 1408). The court then explained, “The Aherns attempt to downplay the significance of the Cotenancy Agreement to their claims, arguing that the relationship created by that agreement ‘was BH‘s retention as the cotenants’ manager to manage and operate the Amlap Property following its acquisition.’ [Citation.] However, the Cotenancy Agreement itself states that ‘[t]he Cotenants have agreed to join together as tenants in common to acquire, hold and operate certain Property (defined below) for investment purposes’ and ‘[t]he Cotenants desire to enter into this Agreement to arrange for the management and operation of the Property, and to govern the respective rights and obligations of each Cotenant.’ [Citation.] Further, as the BH Defendants point out, the Aherns’ original complaint had a different view of the Cotenancy Agreement, alleging that ‘each [Special Purpose Entity] and the Company were required to enter into a Cotenancy Agreement which passed control of the aggregate investment funds and Property to the HOPPER Defendants [defined to include the BH parties] who were the effective issuer, broker, investment manager and the Property Manager.‘”
5. Arbitration
In the arbitration proceeding the BH parties demurred to the claims asserted by the Ahern parties (as did the respondents in seven other consolidated arbitration cases involving various participants in the same or similar tenant in common or limited partnership investments, including lawyers, accountants and real estate brokers), asserting each cause of action in the lawsuit, filed nearly six years after the Amlap transaction, was barred by the
Over the Ahern parties’ objection they were entitled to an evidentiary hearing on the issue of delayed discovery,10 the arbitrator ruled it was proper to use a demurrer procedure in an arbitration and sustained the demurrer in its entirety without leave to amend.11 In his January 2019 ruling the arbitrator found “the language of the offering Memoranda as to the ‘fee’ or ‘commission’ was an unambiguous disclosure that the buyers would be paying money on top of the original purchase price. If the Claimants thought that there was some sort of fraudulent meaning to this ‘fee’ or ‘commission’ then they should have made a full and thоrough inquiry before signing the [purchase and sale agreements].” The arbitrator issued an interim award in favor of the BH parties and other demurring parties in the consolidated proceedings. In April 2020 the arbitrator adjudicated the issue of attorney fees for the BH parties as prevailing parties and issued a final award. Following a motion by the Ahern parties, the arbitrator issued a corrected final award on June 24,
6. Confirmation of the Arbitration Award
The Ahern parties petitioned to vacate the award or, in the alternative, to correct it. The BH parties cross-petitioned to confirm the award. After hearing oral argument, the trial court on September 8, 2020 granted the petition to confirm the award and denied the petition to vacate.12
The court ruled the plaintiffs were not prejudiced by the arbitrator‘s use of a demurrer procedure or his refusal to consider evidence. The arbitrator‘s ruling, the court explained, demonstrated that his “findings” were dеrived from a favorable reading of the allegations in the complaint, “which presumably ‘contains their strongest statement of th[ose] cause[s] of action.’ [Citation.] If the unchallenged allegations in Plaintiffs’ detailed complaint could not save their claims, then it is unlikely that immaterial, redundant evidence could.” Moreover, although there was no evidentiary hearing, the court continued, the plaintiffs had ample opportunity to present their opposition and counterarguments. The court also ruled the arbitrator did not exceed his jurisdiction when applying the statute of limitations to the claims, pointing out that the plaintiffs’ contention statutes of limitation do not apply in arbitration unless explicitly agreed to by the parties was unsupported by any authority and, in any event, at most constituted an unreviewable error of law.
As to the argument the arbitrator lacked jurisdiction because the cotenancy agreement was illegal, the court ruled any illegal aspect of the agreement (the provision of real estate broker services by an unlicensed entity) was severable from the remainder of the agreement, including the arbitration provision. The court rejected various procedural objections to the nature of the findings and ruled the arbitrator did not exceed his jurisdiction in awarding attorney fees.
Judgment was entered in favor of the BH parties and against the Ahern parties on October 28, 2020. The Ahern parties filed a timely notice of appeal.
DISCUSSION
1. Governing Law and Standard of Review
We review the trial court‘s interpretation of an arbitration agreement de novo when, as here, that interpretation does not depend on conflicting extrinsic evidence. (Pinnacle, supra, 55 Cal.4th at p. 236; Banc of California, N.A. v. Superior Court (2021) 69 Cal.App.5th 357, 367; DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352.) “Whether an arbitration agreement applies to a controversy is a question of law to which the appellate court applies its independent judgment where no conflicting extrinsic evidence in aid of the interpretation was introduced in the trial court.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 12; accord, Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 497.)
“In determining the scope of an arbitration clause, ‘[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.‘” (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744; accord, Laymon v. J. Rockcliff, Inc. (2017) 12 Cal.App.5th 812, 820; see
2. The Trial Court Erred in Compelling Arbitration of the Ahern Parties’ Claims Pursuant to the Arbitration Provision in the Cotenancy Agreement
The Ahern parties’ lawsuit seeks to recover for injuries suffered as a result of misrepresentations and material omissions in the marketing and sale of their tenant in common investment in the Amlap property. Those claims did not “aris[e] in connection with the interpretation or enforcement of the provisions of [the cotenancy agreement], or the application or validity thereof” and should not have been ordered to arbitration.
To reiterate, the Ahern parties’ tenant in common interest was acquired through the purchase and sale agreement between BH & Sons and Thomas and Priscilla Ahern, which provided BH & Sons was selling to the Aherns an undivided percentage share of the Amlap property and assigning and transferring to them BH & Sons‘s rights under the iStar purchase and sale agreement with respect to their interest in the property. The purchase and sale agreement recited that the underlying contract price for the Amlap property was $34,550,000 and specified the cost of the Aherns’ interest as $1,265,438. The agreement further provided the Aherns were to deliver a deposit upon execution of the agreement to a designated escrow holder and, unless they had exercised their cancellation rights following receipt from BH & Sons of certain additional information, to deliver the total of the purchase price (with various adjustments) three business days before the closing date. The tenant in common purchase and sale agreement, prepared by BH & Sons and AMC and provided by them to the tenant in common investors, contained no arbitration provision.
The cotenancy agreement provided for the operation and management of the Amlap property and the respective rights of the tenants in common in
a. The cotenancy agreement contains a narrow arbitration provision
Significantly, not only did the BH parties elect not to include an arbitration agreement in the tenant in common purchase and sale agreement but also the arbitration provision they drafted for the cotenancy agreement was a limited one. As our colleagues in Division One of this court explained in Rice v. Downs, supra, 248 Cal.App.4th 175, “[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.‘” (Id. at p. 186; accord, Howard v. Goldbloom (2018) 30 Cal.App.5th 659, 663-664.) A broad clause includes language that requires arbitration of “‘any claim arising from or related to‘” the agreement. (Rice, at p. 186; see, e.g., Yuen v. Superior Court (2004) 121 Cal.App.4th 1133, 1138 [arbitration clause stating all disputes relating to contract shall be submitted to arbitration was “broad“]; Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684, 681 & fn. 2 [agreement to arbitrate “‘any problem or dispute’ that arose under or concerned the terms of the [service agreement]” is “clear,” “plain” and “very broad,” giving rise to a presumption parties intended to arbitrate claims including tort claims relating to the agreement].)
A narrow clause, on the other hand, typically includes language that requires arbitration of “a claim, dispute, or controversy ‘arising from’ or ‘arising out of’ an agreement, i.e., excluding language such as ‘relating to this agreement’ or ‘in connection with this agreement.‘” (Rice v. Downs, supra, 248 Cal.App.4th at p. 186.) Narrow arbitration clauses are generally interpreted “to be more limited in scope” (Howard v. Goldbloom, supra, 30 Cal.App.5th at p. 664; Rice, at p. 186) and “apply only to disputes
The arbitration provision in the cotenancy agreement is particularly narrow, both omitting any general reference to disputes “related to” the agreement and specifically providing for arbitration only of those disputes arising in connection with “the interpretation and enforcement of the provisions of the agreement.” The BH parties’ efforts to fit the Ahern parties’ claims regarding the marketing of the investment into this narrowly drafted arbitration provision in an agreement govеrning the post-acquisition management of the investment fail.
b. The investors did not pool funds through the cotenancy agreement for the purchase of tenant in common interests
The BH parties’ principal argument that the tenant in common investors pooled funds pursuant to the cotenancy agreement to purchase the property is belied by the relevant documents. The funding activity required by the cotenancy agreement and cited by the BH parties relates to advances that may be necessary for “reserves,” a term defined by the agreement as “[t]he funds set aside or amounts allocated by the Manager on a quarterly basis for reserves for use as working capital of the Property, to pay taxes, insurance, debt service or other costs or expenses incident to the Property, or for any other purpose related to the operation of the Property.” Neither the paragraph potentially requiring advances for reserves nor any other portion of the cotenancy agreement concerned the Aherns’ payment of $1,265,438 to purchase an interest in the Amlap property.
To be sure, in recitals before the actual terms of the cotenancy agreement, the parties stated, “A. The Cotenants have agreed to join together as tenants in common to acquire, hold and operate certain Property (defined below) for investment purposes. [¶] B. The Cotenants desire to enter into this Agreement to arrange for the management and operation of the Property, and to govern the respective rights and obligations of each Cotenant.” The trial court‘s emphasis on sentence A when ordering arbitration was misplaced. That sentence simply described the historic background (as demonstrated by the tenant in common purchase and sale agreement), which led to sentence B and its identification of the purpose of the cotenancy agreement—a description repeated, without variation, in multiple documents surrounding this transaction prepared by BH & Sons and AMC. Similarly, reading paragraph 2.1 as a whole, as we must (see
The trial court‘s reasoning notwithstanding, the superseded allegation in the Ahern parties’ original complaint that, pursuant to the cotenancy agreement, “control of the aggregate investment funds and Property” was passed to the “Hopper defendants” is also insufficient to bring claims regarding the marketing of the investments within the scope of the cotenancy agreement‘s narrow arbitration provision.14 First, as the Ahern parties explain, the original complaint‘s description of the cotenancy agreement as a device for aggregating investor funds was incorrect (and, indeed, inconsistent with the express terms of the cotenancy agreement) and was not repeated in the first amended complaint, filed in March 2013, long before the January 2017 order compelling arbitration, or in subsequent iterations of their pleading. Second, even if the cotenancy agreement had been the conduit for distribution of the allegedly secret buyer-funded commission, as well as for payment of various professional fees relating to the Amlap property transaction, claims based on the BH parties’ fraudulent representations during the marketing of the investors’ interests would not fall within the scope of the agreement‘s arbitration provision, which, as discussed, did not broadly encompass any dispute between the parties relating to the cotenancy agreement, but was limited to disputes concerning the interpretation or enforcement of that agreement‘s terms. (See Howard v. Goldbloom, supra, 30 Cal.App.5th at pp. 669-671 [claims for breach of fiduciary duty to minority shareholders did not fall within scopе of narrow arbitration provisions in plaintiff‘s employment agreements or stock repurchase agreement with defendants].)
c. The Ahern parties’ extracontractual claims are not “rooted in” the cotenancy agreement
Neither the “rooted in” concept, as articulated in Buckhorn, supra, 121 Cal.App.4th 1401, nor
As the BH parties observe, in Buckhorn, supra, 121 Cal.App.4th 1401, the court of appeal concluded an arbitration clause in an employment agreement, which all parties agreed covered the wrongful termination claim of a doctor who had been dismissed by a medical group, also applied to the doctor‘s causes of action for defamation and interference with prospective business advantage even though those alleged torts occurred after termination. Those additional claims were based on allegations the medical group had informed the doctor‘s patients he was no longer with the group “because of marital problems, mental problems, [or] loss of his insurance coverage, and that he was no longer practicing medicine, or that he had ‘just disappeared.‘” (Id. at p. 1405.) The appellate court held the issue of arbitrability “turns on whether the tort claims are ‘rooted’ in the contractual relationship between the parties, not when they occurred.” (Id. at p. 1407.) And his claims were so rooted: They were based on his expectation of future income from his patients, who had consulted him in his capacity as an employee of the defendant medical group. Thus, the court reasoned, the employment agreement “would inform the extent of any economic interest” of the doctor‘s with which the medical group might have interfered. (Id. at pp. 1407-1408.) “Because [the doctor] failed to demonstrate his tort claims were ‘wholly independent’ of the employment agreement,” the court concluded his claims must be submitted to arbitration. (Id. at p. 1408.)
Contending the arbitration provision in Buckhorn involved a narrow arbitration provision similar to the one in the cotenancy agreement, the BH parties argue the “rooted in” doctrine applies here and the Ahern parties’
In addition, even were we to apply the “rooted in” concept in this case when evaluating the scope of the arbitration provision in the cotenancy agreement, the Ahern parties’ claim they were fraudulently induced by the BH parties to invest in the Amlap property has its roots in the contractual relationship between the Aherns and BH & Sons created by the tenant in common purchase and sale agreement, not the cotenancy agreement. (See Rice v. Downs, supra, 248 Cal.App.4th at p. 188 [to be arbitrable, tort claims must have their roots in the relationship between the parties that was created by the contract containing the arbitration provision].)
d. Civil Code section 1642 does not authorize importing the arbitration provision into the tenant in common purchase and sale agreement
The BH parties misconstrue
The fundamental canon of contract interpretation remains to give effect to the mutual intention of the parties as it existed at the time of contracting. (
Here, as reflected in the language of the two agreements, both of which were prepared by the BH parties, the intention is clear that claims arising from the cotenancy agreement would be subject to mandatory arbitration while claims arising from the purchase and sale agreement would not. This is made plain not only from the fact that only the cotenancy agreement contained an arbitration provision but also from the legal costs provision in the purchase and sale agreement (paragraph 9(d)), which expressly contemplated the tenant in common investor or BH & Sons could initiate a lawsuit or other proceeding before a “court, arbitrator or other authority.” In addition, while not dispositive, that the cotenancy agreement contained an integration clause also weighs against merging its provisions with those of the purchase and sale agreement. (See R.W.L. Enterprises v. Oldcastle, Inc., supra, 17 Cal.App.5th at p. 1031.)
The decision in Brookwood, supra, 45 Cal.App.4th 1667, upon which the BH parties rely, is not to the contrary. Brookwood involved a lawsuit for wrongful termination/sex discrimination in violation of California‘s Fair Employment and Housing Act (FEHA) (
The court of appeal affirmed the order compelling Brookwood to arbitrate her wrongful termination claims against both BAIS and Bank, holding substantial evidence supported a finding that Bank‘s contract, BAIS‘s contract and the U-4 transfer form were parts of substantially one transaction and should be taken together. (Brookwood, supra, 45 Cal.App.4th at p. 1675.)16 The court explained, “Bank and BAIS are related companies that hired plaintiff at the same time in a dual capacity with principal responsibilities that required a securities registration. This evidence supports a finding that the employment agreement for salaried employees, registered representative agreement, and U-4 form, were parts of substantially one transaction and should be taken as one. Thus, the arbitration covenant in the [r]egistered representative agreement, U-4 form, and incorporated NASD provisions ran between plaintiff and Bank notwithstanding there was no specific arbitration provision in the employment agreement for salaried employees.” (Id. at pp. 1675-1676.)
Given the express acknowledgement in the agreements of Brookwood‘s dual employment, her simultaneous termination by the two related entities, and the fact her FEHA claims against BAIS were unquestionably subject to arbitration, the conclusion her FEHA claims against Bank should also be arbitrated—that the parties intended Brookwood‘s fully intertwined, contemporaneous employment relationships with the two entities be treated in the same manner—is unremarkable. Here, in contrast, even if considered parts of
In sum, the Ahern parties’ lawsuit does not involve the interpretation or enforcement of a provision of the cotenancy agreement; their claims are not “rooted in” the cotenancy agreement; and applying
DISPOSITION
The judgment confirming the arbitration award is reversed. The matter is remanded with directions to deny the petition to confirm the arbitration award, to grant the petition to vacate the award and to vacate the January 27, 2017 order compelling arbitration. The Ahern parties are to recover their costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
FEUER, J.