Alexander v. Calton & Associates, Inc.

Citation137 N.M. 293,110 P.3d 509
Decision Date08 February 2005
Docket NumberNo. 23,398.,23,398.
PartiesGlen ALEXANDER and Doris Alexander, individually, and as trustees of the Glen & Doris Alexander Revocable Trust, Plaintiffs-Appellants, v. CALTON & ASSOCIATES, INC., Stephen Blake Murchison, and Southwest Securities, Inc., Defendants-Appellees.
CourtCourt of Appeals of New Mexico

110 P.3d 509
137 N.M. 293

Glen ALEXANDER and Doris Alexander, individually, and as trustees of the Glen & Doris Alexander Revocable Trust, Plaintiffs-Appellants,
v.
CALTON & ASSOCIATES, INC., Stephen Blake Murchison, and Southwest Securities, Inc., Defendants-Appellees

No. 23,398.

Court of Appeals of New Mexico.

February 8, 2005.


Clinton W. Marrs, Vogel, Campbell & Blueher, P.C., Albuquerque, New Mexico, for Appellants.

Robert M. Strumor, Hughes & Strumor, Ltd. Co., James C. Compton, The Business Law Firm, Albuquerque, New Mexico, for Appellees.

OPINION

ROBINSON, Judge.

{1} Appellants appeal the district court's decision ordering arbitration. Appellants simultaneously filed a complaint in district court and filed a statement of claim for arbitration against Appellees. On appeal, Appellants contend that (1) the district court order compelling arbitration must be reversed because it failed to determine the existence of a pre-dispute arbitration agreement, and (2) the mere filing of a claim for arbitration does not waive their right to challenge arbitrability. We reverse and remand.

BACKGROUND

{2} The following is a summary of the allegations contained in the complaint of Mr. and Mrs. Alexander (Appellants). Appellants are retired and were dependant on their fixed income investment portfolio maintained with Calton & Associates (Appellees) to generate income. Between June 1995 and April 2000, the portfolio at issue was invested

110 P.3d 510
in high-quality corporate and municipal bonds

{3} Without Appellants' knowledge, Appellees opened a margin account, and from time-to-time, Stephen Murchison and Southwest Securities (Appellees) purchased bonds in the account on margin. Appellees were not authorized to use margins in Appellants' account and never subsequently obtained Appellants' agreement to the use of a margin account to purchase securities on credit.

{4} Beginning in or about April 2000, Stephen Murchison, an agent of Calton & Associates (Appellee), solicited Appellants' consent to invest a portion of their portfolio's assets in option securities. Appellants did not understand the options market and resisted the solicitation. After Appellees expressed they would not invest more than $15,000 in the options market and that they would pursue the option investment strategy for only a short time, Appellants relented.

{5} Beginning in April 2000, Appellees began to sell "put" options in Appellants' account. These options subjected their account to a risk of loss of principal far in excess of $15,000. Without Appellants' knowledge, Appellees used Appellants' corporate and municipal bonds as collateral to buy the put options in the event the option holders exercised the options.

{6} Thereafter, in or about June 2000, Appellees, without Appellants' consent, began increasing their use of margins extended by Southwest Securities to facilitate the option strategy. These additional options were written on highly volatile stocks. In January 2001, holders of these options exercised the options. The exercise of these options obligated Appellees to purchase the underlying securities in Appellants' portfolio. As the market value of these margined stocks declined further, the account became subject to calls by Southwest Securities for additional collateral to secure the margin balance. Appellants' portfolio lost almost all its value, declining from a balance over $514,000 in the summer of 2000 to approximately $75,000 by the spring of 2001.

{7} On April 23 and July 31, 2001, Appellants requested from Appellees confirmation of whether they had entered into a pre-dispute arbitration agreement. Appellees did not respond to either request. Based on the above, on July 30, 2001, Appellants filed a claim...

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5 cases
  • Fiser v. Dell Computer Corp.
    • United States
    • Court of Appeals of New Mexico
    • 30 Abril 2007
    ...an agreement to arbitrate exists." (internal citations omitted)); see Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 8, 137 N.M. 293, 110 P.3d 509 ("The appropriate standard of review for a district court's grant of a motion to compel arbitration is de III. DISCUSSION A. Choice of La......
  • Rodriguez v. Forrester
    • United States
    • Court of Appeals of New Mexico
    • 7 Enero 2019
    ...unless it finds that there is no enforceable agreement to arbitrate." Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 9, 137 N.M. 293, 110 P.3d 509. "Arbitration agreements are a species of contract, subject to the principles of New Mexico contract law." L.D. Miller Constr., Inc. v. K......
  • Murken v. Deutsche Morgan Grenfell, Inc.
    • United States
    • Court of Appeals of New Mexico
    • 5 Junio 2006
    ...of the arbitration agreement under a de novo standard of review. See Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 8, 137 N.M. 293, 110 P.3d 509 (stating that we review the district court's grant of a motion to compel arbitration de novo); see also DeArmond v. Halliburton Energy Inc......
  • Doctor's Assocs. Inc. v. Carbonell
    • United States
    • Court of Appeals of New Mexico
    • 29 Junio 2015
    ...arbitration in the absence of an enforceable agreement to arbitrate. Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, ¶ 9, 137 N.M. 293, 110 P.3d 509. We decide this issue as a matter of contract. See Clay v. N.M. Title Loans, Inc., 2012-NMCA-102, ¶ 14, 288 P.3d 888 ("[The general] rule ......
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