Basis For The Wrongs Alleged By Plaintiffs Was A Separate Investment Services Agreement Containing No Arbitration Provision
Stephen Goldberg and Victoria Pynchon sued their investment advisors, Coggins Company, for breach of contract, professional negligence, and other claims relating to a real estate investment gone sour in Wildomar Investors, LLC. Among other things, Plaintiffs alleged that Defendants had an undisclosed interest in the LLC, resulting in a possible conflict of interest, and that Defendants mislead Plaintiffs into believing that they had purchased one investment unit, while concealing that Plaintiffs had purchased two units in the LLC. Defendants petitioned to compel arbitration, based on a broadly worded arbitration provision in the LLC operating agreement. The trial court denied the petition on the grounds that “defendants’ allegedly deceptive investment actions arose out of the investment services agreement, and not the Wildomar operating agreement.” Defendants appealed. Goldberg v. The Coggins Company, Case No. B245236 (2nd Dist. Div. 2 Sept. 14, 2013) (Chavez, J., author 3:0) (unpublished).
The Court of Appeal agreed with the trial court that the wrongs alleged by the investors were governed by the investment services agreement, which lacked an arbitration provision, rather than the the LLC operating agreement, which contained the arbitration provision. The investment services agreement and the LLC operating agreement “involved separate enterprises, separate risks, and separate contractual relationships.”
“Cursed by those whose savings he has squandered and whose trust he has betrayed.” “Illustration shows a man, probably Charles Sanger Mellen, standing amid a crowd of angry investors who have lost their savings and investments due to mismanagement of the New Haven Railroad.” Puck, 1913. Library of Congress.