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Samuel Robinson v. Craig Isaacs

October 12, 2011

SAMUEL ROBINSON,
PLAINTIFF,
v.
CRAIG ISAACS, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. SammartinoUnited States District Judge

ORDER

(1) GRANTING MOTION TO COMPEL ARBITRATION AND (2) STAYING LAWSUIT PENDING COMPLETION OF ARBITRATION

(ECF No. 3)

Presently before the Court is Defendants' motion to compel arbitration and an for order staying lawsuit pending completion of arbitration. (Mot. Compel Arbit., ECF No. 3) Also before the Court is Plaintiff's opposition (Resp. in Opp'n, ECF No. 10), and Defendants' reply in support (Reply in Supp., ECF No. 11). For the reasons stated below, the Court GRANTS, Defendants' motion to compel arbitration and STAYS the proceedings pending completion of arbitration.

BACKGROUND

In April 2005, eighty-four year old Plaintiff Samuel Robinson ("Robinson") inherited approximately $3 million dollars. (Compl. ¶ 9, ECF No. 1) Upon receiving this inheritance, Robinson was referred to Defendants Craig Isaacs ("Isaacs") and Nexus Wealth Management, Inc. ("Nexus") for investment advice. (Id. ¶¶ 8--9) Isaacs is the Chief Executive Officer of Nexus, (Id.

¶ 2), and is also an investment advisory representative of Geneos Wealth Management, Inc. ("Geneos"), (Mot. Compel Arbit. 2, ECF No. 3). On May 11, 2005, Isaacs, Robinson, and J. Douglass Jennings met to "review, analyze and discuss plaintiff's estate planning, tax, corporate and investment strategies." (Compl. ¶ 12, ECF No. 1) Based on Defendants' independent financial advice, "on May 16, 2005, plaintiff invested $500,000.00 in Investments of Jackson Hole, LLC, a company formed by Jennings to acquire parcels of real property in Teton County, Jackson Hole, Wyoming," (Id. ¶ 19), and "on May 18, 2005, plaintiff invested $500,000.00 in La Jolla Equities Income Fund I, a business entity over which Jennings exerted complete control," (Id. ¶ 16).

Soon after making these investments, on May 26, 2005, Plaintiff and Isaacs signed a Geneos "New Account Application" contract, which included an arbitration provision. (Mot. Compel Arbit. 4, ECF No. 3); (May, 26, 2005 New Account Application, Ex. D, ECF No. 4-2) Three additional New Account Application contracts-all containing identical arbitration agreements-were signed by Plaintiff and Isaacs on May 27, 2005, August 2, 2005, and September 27, 2006. (Mot. Compel Arbit. 4, ECF No. 3) On September 28, 2006, Plaintiff and Isaacs signed a Geneos "Advisory Services Contract," containing a similar arbitration provision. (Id.) Subsequently, in March 2008 Plaintiff again invested in La Jolla Equities Income Fund I, also based on Defendants' "'independent' financial advice and recommendations." (Compl. ¶ 17, ECF No. 1)

On March 29, 2011, Robinson filed the present action for negligence and breach of fiduciary duty against Defendants in San Diego Superior Court, and on May 10, 2011, Defendants removed the case pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (ECF No. 1) On May 25, 2011, Defendants filed the instant motion to stay this case and compel arbitration. (Mot. Compel Arbit., ECF No. 3)

LEGAL STANDARD

The Federal Arbitration Act ("FAA") governs the enforceability of arbitration agreements in contracts involving transactions in interstate commerce. See 9 U.S.C. § 1, et seq.; Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24--26 (1991). The FAA provides: "A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. If a suit is proceeding in federal court, the party seeking arbitration may move the district court to compel the resisting party to submit to arbitration. Id. § 4. The FAA reflects a "liberal federal policy favoring arbitration agreements." Gilmer, 500 U.S. at 25 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). As such, the FAA "requires district courts to compel arbitration even where the result would be the possibly inefficient maintenance of separate proceedings in different forums." Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 698 (9th Cir. 1986).

In determining whether to compel a party to arbitration, a district court may not review the merits of the dispute; rather, a district court's role under the FAA is limited "to determining

(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). In construing the terms of an agreement, the Court "appl[ies] general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of arbitration." Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996).

If the district court determines that a valid arbitration agreement encompasses the dispute, then the FAA requires the court to enforce the arbitration agreement according to its terms. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). Therefore, a district court must compel arbitration "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that ...


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