Lynch v. Cruttenden & Co.

Good Law

18 Cal. App. 4th 802·1993 Cal. App. LEXIS 912·22 Cal. Rptr. 2d 636·93 Daily Journal DAR 11395·93 Cal. Daily Op. Serv. 6712

Court of Appeal of CaliforniaSeptember 2, 1993Docket Nos. B065198, B066610California2,700 words

Opinion

Gilbert, J.

This consolidated appeal concerns the denial of two motions to compel arbitration made in the same case. We hold that the plaintiffs’ allegations of fraud are sufficient to support the denial of the motions, and that the denial does not conflict with Prima Paint v. Flood & Conklin (1967) 388 U.S. 395 [ 18 L.Ed.2d 1270 , 87 S.Ct. 1801 ],

Facts

Robert and Betty Lynch filed an action against Cruttenden & Company, Talley McNeil & Company, Robert C. Carty (hereinafter collectively Cruttenden) and Sutro & Co. The complaint alleged that Carty, a licensed securities broker, acted as the agent of and in conspiracy with Cruttenden and Sutro, licensed brokerage houses, to defraud the Lynches by taking excessive fees.

The complaint states that the Lynches became personal friends of Carty in 1989. Carty encouraged them to have trust and confidence in him and to rely on him for financial advice. The Lynches opened accounts with Cruttenden and Sutro through Carty and transferred money to the defendants. Carty instructed the Lynches to sign various documents from time to time. He told the Lynches the documents were “. . . necessary to effect the continuing reliance and trust by [the…

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