To Compel Arbitration, Must Prove Knowing Acceptance of the Agreement
This time, merely proving that the agreement was signed was not enough.
Braga v. VMR Capital Markets, No. B144584 (Cal. App., 2Dist., 2/13/02).
Arbitration Agreement * Contractual Issues (Mutual Assent) * Waiver * State Law, Applicability of * FAA (Section2).
Enforcement of an arbitration agreement requires proof that the parties knowingly entered into the agreement, not just that they signed it.
Ms. Braga lost $9,000 of a $14,000 investment with a VMR broker who has now disappeared — and her lawyers chose court. VMR moved for arbitration of the dispute, based upon an account agreement that Ms. Braga concededly signed, but the trial court has found that Ms. Bragas knowing assent to arbitrate was blocked by several factors related to VMRs presentation of the agreement.
First, the page signed by Ms. Braga appears as an application form, not a contract. She was not told that contract terms, including a predispute arbitration clause, appeared on pages and the backs of page that lay behind the new account form she signed. Moreover, the contractual text was in such small print that the bold-type language, intended by SRO rules to highlight the arbitration clause, actually added to the obscurity of the type. The required acknowledgment about the arbitration clause did appear above the signature line where Ms. Braga put pen to paper, but this Court and the court below found ambiguous at best the reference to a predispute arbitration clause. Observed the lower court: Even counsel could not explain this reference. (ed: Are they mystified about the word predispute??) Given these deficiencies, VMRs burden both to prove the agreement and to prove the lower court wrong, and Plaintiffs unrebutted declarations with respect to not being given a copy of the agreement, this Court accepts the judgment below. The evidence does not establish, as a matter of law, that plaintiff was presented with and signed, but failed to read, a contract containing an arbitration clause. (SAC Ed: Disputes of this size are especially suited for arbitration — seems a shame that it has been sidetracked on an arbitrability issue. The broker could have been named and served, the case submitted to a single Arbitrator for a small charge, an outcome reached by now, and payment of any award made within 30 days, had this case been allowed to proceed through the SROs small claims procedure.) (SLC Ref. No. 02-10-01)
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