Wolf, et al., v. Langemeier, et al.,

Filing 70

ORDER signed by Judge Garland E. Burrell, Jr. on 8/2/2011 GRANTING 66 Motion to Compel Arbitration and Stay Proceedings; This action is STAYED under 9U.S.C. § 3 pending arbitration; Status Conference RESET for 2/13/2012 at 09:00 AM in Courtroom 10 (GEB) before Judge Garland E. Burrell Jr. A Joint Status Report shall be filed 14 days prior to the status conference. (Michel, G)

1
2
3
4
5
6
7
8

IN THE UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11
12
13

BRADY HEATH, THERESA HEATH,
TAMSCO PROPERTIES, LLC, JKR
LASER INVESTMENT, LLC, SURFER
BEACH, LLC, and TO BE
DETERMINED, LLC,
Plaintiffs,

14
v.

15
16

LORAL LANGEMEIER and, LIVE OUT
LOUD, INC.,

17

Defendants.
________________________________

18

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

2:09-cv-03086-GEB-EFB
ORDER GRANTING DEFENDANTS’
MOTION TO COMPEL ARBITRATION
AND STAYING PROCEEDINGS
PENDING ARBITRATION*

19

Defendants Loral Langemeier (“Langemeier”) and Live Out Loud,

20

Inc. (“LOL”) (collectively, “Defendants”) filed a motion for an order

21

compelling Plaintiffs Brady Heath and Theresa Heath (collectively, the

22

“Heaths”) to arbitrate under 9 U.S.C. § 4 and for an order staying the

23

remainder of this litigation pending arbitration. (ECF No. 66.) The

24

Heaths oppose the motion. (ECF No. 67.) For the following reasons, the

25

motion to compel arbitration will be granted and the remainder of this

26

litigation will be stayed pending arbitration.

27
28

*

This matter is deemed suitable for decision without oral
argument. E.D. Cal. R. 230(g).
1

1

I. BACKGROUND

2

A. Plaintiffs’ Allegations and Claims

3

Plaintiffs attended various investment education events, known

4

as “Big Table” programs, at the Embassy Suites Hotel in South Lake

5

Tahoe, California in May and September 2006, and in January 2007.

6

(Compl. ¶¶ 9, 12-15.) Defendants, and LOL’s predecessor in interest

7

Coaching Resources, Inc. (“CRI”), marketed these programs, at which they

8

encouraged Plaintiffs to “invest in various real estate ventures and

9

other

investment

opportunities.”

Id.

¶¶

18-19.

Plaintiffs

allege

10

Defendants made several misrepresentations when they promoted these

11

“high risk and not safe” investments “in pursuit of their own pecuniary

12

interests.” Id. ¶¶ 20, 117. Each Plaintiff alleges a loss of tens or

13

hundreds of thousands of dollars as a result of the investments they

14

made following the Big Table programs. Id. ¶¶ 123, 195, 221, 239, 257.

15

Plaintiffs allege the following claims in their Complaint: (1)

16

fraud

17

California

18

violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5; (6) violation

19

of California Corporation Code § 25401; (7) assisting in the violation

20

of California Corporation Code § 25401; (8) violation of California

21

Corporation Code § 25110; (9) assisting in the violation of California

22

Corporation Code § 25110; and (10) violation of California Business and

23

Professions Code §§ 17200, et seq.. Id. ¶¶ 115-144, 189-302.

and

deceit;
Civil

24

(2)

Code

aiding
§

abetting

(4)

breach

3373;

and

fraud;
of

(3)

fiduciary

breach

of

duty;

(5)

B. Previous Motions and Orders

25

On January 20, 2010, Defendants moved to stay this action

26

pending arbitration under 9 U.S.C. § 3. (ECF No. 9.) Defendants relied

27

on

28

Plaintiffs. (ECF No. 10.) In an Order filed August 24, 2010 (“August 24

arbitration

clauses

in

Big

Table

2

Agreements

signed

by

five

1

Order”), the Court determined that the five Big Table Agreements that

2

were signed by Plaintiffs Laurie Wolf, Delores Berman, Kimchi Chow,

3

Steven A. Newell, and Marilyn Cadreau Newell, and Langemeier, on behalf

4

of CRI, were not procedurally or substantively unconscionable. (Order

5

12:13-14, 14:10-18, ECF No. 37.) Therefore, the action was “stayed under

6

9 U.S.C. § 3 pending arbitration of Plaintiffs Laurie Wolf, Delores

7

Berman, Kimchi Chow, Steven A. Newell, and Marilyn Cadreau Newell’s

8

claims in accordance with the terms of the Big Table Agreements.” Id.

9

16:9-12.

10

In their motion, Defendants also relied on arbitration clauses

11

in Alumni Agreements signed by six Plaintiffs, including the Heaths.

12

(ECF No. 10.) However, the Court did not consider the agreements to

13

arbitrate in the Alumni Agreements, since Defendants failed to show how

14

the Alumni Agreements relate to the dispute at issue in Plaintiffs’

15

Complaint. (Order 6:9-11, ECF No. 37.)

16

Plaintiffs then moved under Federal Rule of Civil Procedure

17

(“Rule”) 54(b) for revision of the August 24 Order, arguing “defendants

18

committed fraud on the court” when obtaining the August 24 Order. (ECF

19

No. 42.) This motion was denied. (Order 4:2-3, ECF No. 57.)

20

Subsequently, Plaintiffs voluntarily dismissed Laurie Wolf,

21

Delores Berman, Kimchi Chow, Steven A. Newell, and Marilyn Cadreau

22

Newell, following which the stay was lifted. (ECF Nos. 38, 58-61, 63.)

23

Defendants argue the instant motion to compel arbitration is brought

24

against the Heaths since Defendants have discovered a fully executed

25

copy of the Heaths’ Big Table Agreement, which contains an identical

26

arbitration clause to those discussed in the August 24 Order. (Mot.

27

2:14-21, 3:17-22; Decl. of Langemeier, Ex. C, ECF No. 51.)

28

///
3

1

II. LEGAL STANDARD

2

Plaintiffs argue that “[a]lthough defendants have brought this

3

motion

4

reconsideration[ of the August 24 Order, b]ut the motion fails to

5

present any procedural or substantive grounds for reconsidering this

6

court’s

previous

7

previous

motion

8

arbitration; Defendants have not previously sought to compel arbitration

9

under 9 U.S.C. § 4. Therefore, the current motion does not seek

10
11
12
13
14
15
16
17
18
19
20
21
22

under

9

U.S.C.

[§]

decision.”
sought

an

4,

it

(Opp’n
order

is

[in]

essence

2:15-18.)
staying

the

a

However,

motion

for

Defendants’

litigation

pending

reconsideration of the August 24 Order.
Defendants’ motion to compel arbitration concerns Section 4 of
the Federal Arbitration Act (“FAA”) which prescribes:
A party aggrieved by the alleged failure, neglect,
or refusal of another to arbitrate under a written
agreement for arbitration may petition any United
States district court which, save for such
agreement, would have jurisdiction . . . for an
order directing that such arbitration proceed in
the manner provided for in such agreement. . . .
The court shall hear the parties, and upon being
satisfied that the making of the agreement for
arbitration or the failure to comply therewith is
not in issue, the court shall make an order
directing the parties to proceed to arbitration in
accordance with the terms of the agreement. . . .
If the making of the arbitration agreement or the
failure, neglect, or refusal to perform the same be
in issue, the court shall proceed summarily to the
trial thereof.
9 U.S.C. § 4.

23

A district “court’s role under the [FAA] is . . . limited to

24

determining (1) whether a valid agreement to arbitrate exists and, if it

25

does, (2) whether the agreement encompasses the dispute at issue.”

26

Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th

27

Cir. 2000) (citations omitted). “If the response is affirmative on both

28
4

1

counts, then the [FAA] requires the court to enforce the arbitration

2

agreement in accordance with its terms.” Id.

3

“[A] party who contests the making of a contract containing an

4

arbitration provision cannot be compelled to arbitrate the threshold

5

issue of the existence of an agreement to arbitrate. Only a court can

6

make that decision.” Three Valleys Mun. Water Dist. v. E.F. Hutton &

7

Co., Inc., 925 F.2d 1136, 1140-41 (9th Cir. 1991) (footnote omitted).

8

Before a party to a lawsuit can be ordered to
arbitrate and thus be deprived of a day in court,
there should be an express, unequivocal agreement
to that effect. If there is doubt as to whether
such an agreement exists, the matter, upon a proper
and timely demand, should be submitted to a jury.
Only when there is no genuine issue of fact
concerning the formation of the agreement should
the court decide as a matter of law that the
parties did or did not enter into such an
agreement. The district court, when considering a
motion to compel arbitration which is opposed on
the ground that no agreement to arbitrate had been
made between the parties, should give to the
opposing party the benefit of all reasonable doubts
and inferences that may arise.

9
10
11
12
13
14
15
16
17

Id. at 1141 (quoting Par–Knit Mills, Inc. v. Stockbridge Fabrics Co.,

18

636 F.2d 51, 54 (3d Cir.1980)). “This standard is . . . recognized as

19

the standard used by district courts in resolving summary judgment

20

motions pursuant to [Rule] 56(c).” Par-Knit Mills, Inc., 636 F.2d at 54

21

n.9.

22

accompanied by supporting affidavits, . . . in most cases should be

23

sufficient to require a jury determination on whether there had in fact

24

been a ‘meeting of the minds.’” Id. at 55 (citations omitted).

“An

unequivocal

denial

25

that

the

agreement

had

been

made,

III. DISCUSSION

26

Defendants rely on the declaration of Langemeier in support of

27

their

28

declaration is a fully executed Big Table Agreement for the Heaths,

motion

to

compel

the

Heaths

5

to

arbitrate;

attached

to

her

1

which appears to bear the signatures of the Heaths and Langemeier. (Mot.

2

3:17-22; Decl. of Langemeier Ex. C., ECF No. 51.) Langemeier declares:

3

“[e]veryone who attends a Big Table program signs a Big Table Agreement.

4

. . . A person can only attend a Big Table Agreement if there is a fully

5

signed Big Table Agreement.” Id. ¶ 2.

6

Plaintiffs argue the Heaths “did not sign any agreement with

7

CRI, including the written agreement upon which defendants seek[] to

8

compel arbitration, and they never sent any such agreement to CRI or any

9

one else.” (Opp’n 2:1-4.) Plaintiffs submit the declarations of Brady

10

and Theresa Heath in support of their opposition. (ECF Nos. 67-1, 67-2.)

11

Brady Heath declares: “[t]o the best of my recollection I did not sign

12

or send to anyone any written agreement for Loral’s Big Table including

13

that agreement reference in the present motion, which I have examined.”

14

(Decl. of B. Heath ¶ 2, ECF No. 67-1.) Theresa Heath declares: “[t]o the

15

best of my recollection I did not sign or send to anyone any written

16

agreement for Loral’s Big Table including that agreement reference in

17

the

18

recollection of this fact.” (Decl. of T. Heath ¶ 2, ECF No. 67-2.)

present

motion,

which

I

have

examined.

I

have

a

particular

19

Plaintiffs argue in their opposition brief that the Heaths did

20

not agree to arbitrate since they did not sign the Big Table Agreement.

21

(Opp’n 4:9-10, 18-21.) However, the Heaths’ declarations do not support

22

Plaintiffs’ arguments since the Heaths each declare: “[t]o the best of

23

my recollection I did not sign” the Big Table Agreement. (Decl. of B.

24

Heath ¶ 2, Decl. of T. Heath ¶ 2.)

25
26
27
28

A declaration expressing that statements are true
to the best of one’s recollection carries with it
the implication that the affiant does not know
whether the statements are true and correct and the
affiant does not wish to be held accountable if
they are not. While such a phrase (“to the best of
my recollection”) is common speech, it equivocates
and, therefore, does not meet the requirements of
6

1

4

Rule 56(e) that an affidavit “be made on personal
knowledge” and “show affirmatively that the affiant
is competent to testify to the matters stated
therein.”
Rule
56(e)’s
personal
knowledge
requirements prevents such statement “from raising
genuine issues of fact sufficient to defeat summary
judgment.”

5

Wills v. Potter, No. 4:05cv381-WS, 2008 WL 821921, at *11 (N.D. Fla.

6

March 27, 2008) (Mag. decision adopted in full) (quoting Pace v.

7

Capobianco, 283 F.3d 1275, 1278-79 (11th Cir. 2002) (“an affidavit

8

stating only that the affiant ‘believes’ a certain fact exists is

9

insufficient to defeat summary judgment by creating a genuine issue of

10

fact about the existence of that certain fact”). Therefore, the Heaths

11

declarations

12

concerning the formation of the agreement[.]” Three Valleys Mun. Water

13

Dist., 925 F.2d at 1141 (quoting Par-Knit Mills, Inc., 636 F.2d at 55).

14

Plaintiffs also argue “defendants’ motion fails to establish

15

that CRI signed any such agreement.” (Opp’n 2:4-5.) However, the Heaths’

16

Big Table Agreement bears Langemeier’s signature and she declares:

17

“[e]very Big Table Agreement is countersigned by the entity that runs

18

that Big Table program (CRI or LOL, depending on the vintage of the

19

program).” (Decl. of Langemeier ¶ 2, ECF No. 51.) Plaintiffs’ argument

20

does not controvert Defendants’ evidence since “mere argument does not

21

establish a genuine issue of material fact[.]” MAI Sys. Corp. v. Peak

22

Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993). Therefore, there is

23

no genuine issue of fact regarding whether there is a valid agreement to

24

arbitrate.

2
3

are

insufficient

to

create

a

“genuine

issue

of

fact

25

Plaintiffs do not dispute that the arbitration clause in the

26

Heaths’ Big Table Agreement encompasses the dispute at issue. Therefore,

27

Defendants’ motion to compel the Heaths to arbitrate is GRANTED.

28
7

1

Since the remaining Plaintiffs all allege the same claims as

2

the Heaths, against the same Defendants, all allegedly arising out of

3

investments made following advice obtained from the Big Table programs

4

in 2006 and January 2007, the interests of economy and efficiency favor

5

staying this entire action. Therefore, this action is STAYED under 9

6

U.S.C. § 3 pending arbitration of the Heaths’ claims in accordance with

7

the Heaths’ Big Table Agreement.

8

Further,

the

status

conference

currently

scheduled

for

9

November 14, 2011, is continued to commence at 9:00 a.m. on February 13,

10

2012. A joint status report shall be filed fourteen (14) days prior to

11

the

12

proceedings shall be explained.

13

Dated:

status

conference,

in

which

the

status

of

the

August 2, 2011

14
15
16

GARLAND E. BURRELL, JR.
United States District Judge

17
18
19
20
21
22
23
24
25
26
27
28
8

arbitration