Second District, Division 4 and Division 7 Disagree About Need to Fully Authenticate Arbitration Agreement to Meet Initial Burden
On May 22, 2013, we blogged about The Fine Living Trust v. Merrill Lynch, Pierce, Fenner & Smith, B240869 (2nd Dist. Div. 7 May 20, 2013) (Jackson, J. author 3:0) (unpublished), holding that the party seeking to compel arbitration must carry the initial burden of properly authenticating the arbitration agreement. In that case, Merrill Lynch relied on Condee v. Longwood Management Corp., 88 Cal.App.4th 215 (2001), holding that once the party seeking arbitration alleged the existence of an arbitration agreement, the burden shifts to the opposing party to prove the falsity of the agreement. However, in that case, District 7 disapproved of Condee, to the extent it conflicts with Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (1996), which places the burden of proving the existence of the arbitration agreement by a preponderance of the evidence upon the party seeking to compel arbitration. The panel concluded that Merrill Lynch, by failing to properly authenticate the arbitration agreement, "failed to meet its burden of proving by a preponderance of the evidence the existence of an arbitration agreement. . . . "
Brown v. UBS Financial Services, Inc., B242971 (2nd Dist. Div. 4 May 24, 2013) (Manella, J., author 3:0) (unpublished), views Condee differently, citing with apparent approval the statement in Condee that, in the context of a petition to compel arbitration, "it is not necessary to follow the normal procedures of document authentication.. . . as a preliminary matter the [trial] court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity." In the Brown case (like The Fine Living Trust case, another case involving a financial institution),UBS produced the arbitration agreement and a declaration purporting to authenticate it. Plaintiff ?Brown challenged the authentication of the arbitration agreement, but it appears that producing the agreement with a declaration was enough to get past the initial burden of making a prima facie showing of the "existence" of an arbitration agreement.
The 4th and the 7th District seem somewhat as if they are talking past one another. The 4th Division says that the prima facie burden is to prove the "existence" of an agreement, not the "validity" of the agreement. The 7th Division appears to be saying that one who hasn't properly authenticated the agreement has not met the prima facie burden of establishing its existence.
In Brown, the Court affirmed the trial's judgment, finding no error in granting UBS's motion to compel arbitration.