Outcome Depended On Capacity In Which Signatory Signed
The trial court determined that Plaintiff Allen Othman was not a party to a contract containing an arbitration provision in an agreement, and therefore was not bound to arbitrate his claims against Zions First National Bank. Mr. Othman had tried to purchase a property through a “short sale”, but Zions, the secured lender, ended up instead foreclosing on the property before Mr. Othman’s escrow closed. As a result, the property was sold to a third party. In fact, Mr. Othman had signed a confidentiality agreement with Zions providing for arbitration of all disputes, as “Buyer.” But the first paragraph of the agreement stated that it was between USS Cal Builders Inc. and Zions. Mr. Othman was a VP of USS Cal Builders Inc. No wonder the trial court said this “was a close case.” Othman v. Zions First National Bank, Case No. B229825 (2nd Dist. Div. 7 May 8, 2012) (Jackson, J., author) (unpublished). Zions appealed the denial of its motion to compel arbitration.
Perhaps the determining piece of evidence was Mr. Othman’s declaration he had signed the agreement solely on behalf of the corporation, despite his characterization of himself on the signature page as the potential buyer. That was “substantial evidence” enough in this murky situation to support the trial court’s finding on appeal.
We note that Mr. Othman did not sue on the agreement containing the arbitration provision. If he had done so, the result would have been different.
Moral: signature blocks, and the capacity in which a person signs, can make a difference, when it comes to enforcing an arbitration provision.
Comments