Van Luven v. Rooney Pace, Inc.

This is yet another in a seemingly endless stream of cases involving brokerage houses and arbitration agreements, On the record presented here, we hold the successor of a nonsignatory to a contract containing an arbitration provision cannot require a signatory to arbitrate.

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Margaret Van Luven’s complaint recounts the following: Account executive Steven Sullivan, employed by the Newport Beach office of now defunct J. David Securities, commenced supervision of her securities trading accounts in 1980. When Van Luven, then age 76, entered Hemet Valley Hospital in March 1983, she telephoned Sullivan and requested him to hold all her securities for “safekeeping.”

In February 1984, shortly after J. David’s demise, Sullivan joined Rooney Pace and transferred Van Luven’s accounts to that firm. Before and after Sullivan’s change of employment, he frequently sold blocks of Van Luven’s stock and redeemed bonds and bond interest coupons, placing the proceeds in the account of a dummy corporation appropriately yclept “Liberty Street Securities.” Sullivan forged Van Luven’s signature on a general power of attorney and several other documents to facilitate these schemes and even…