Murken v. Deutsche Morgan Grenfell, Inc.

• Decision Date: 05 June 2006
• Docket Number: No. 24,277.,24,277.
• Parties: Arlo and Joyce MURKEN, on behalf of themselves and all others similarly situated, Plaintiffs, v. DEUTSCHE MORGAN GRENFELL, INC., John S. Rendall, and W. Jack Butler, Defendants, and John S. Rendall, Third-Party Plaintiff-Appellant, v. Suncor Energy, Inc.; Syncrude (Canada), Inc.; Shell (Canada), Inc.; Exxon-Mobil, Inc.; Deutsche Bank, AG; Raymond and Rawl (Exxon); R. George (Suncor); Bob Pitman; Al Hyndman (Syncrude); Helmar Kopper (Deutsche Bank); and Merrill Lynch, Inc., Third-Party Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 864

139 P.3d 864

2006 NMCA 080

Arlo and Joyce MURKEN, on behalf of themselves and all others similarly situated, Plaintiffs, v. DEUTSCHE MORGAN GRENFELL, INC., John S. Rendall, and W. Jack Butler, Defendants, and John S. Rendall, Third-Party Plaintiff-Appellant, v. Suncor Energy, Inc.; Syncrude (Canada), Inc.; Shell (Canada), Inc.; Exxon-Mobil, Inc.; Deutsche Bank, AG; Raymond and Rawl (Exxon); R. George (Suncor); Bob Pitman; Al Hyndman (Syncrude); Helmar Kopper (Deutsche Bank); and Merrill Lynch, Inc., Third-Party Defendants-Appellees.

No. 24,277.

Court of Appeals of New Mexico.

June 5, 2006.

COPYRIGHT MATERIAL OMITTED

John S. Rendall, Albuquerque, NM, Pro Se Appellant.

David L. Norvell, Albuquerque, NM, for Appellant.

Robert A. Johnson, Johnson & Nelson, P.C., Albuquerque, NM, Joel R. Sharp, Jenkens & Gilchrist, Dallas, TX, for Appellee Merrill Lynch.

OPINION

KENNEDY, Judge.

{1} Defendant and third-party plaintiff John S. Rendall appeals the district court's order compelling him to arbitrate his claims against Merrill Lynch. Rendall asserted claims against Merrill Lynch after he was named as a defendant in a securities fraud class action brought by former shareholders of Solv-Ex Corporation (Solv-Ex). Rendall had been a corporate officer of Solv-Ex when the company's stock abruptly plummeted. He claimed that Merrill Lynch, among others, had been responsible for the demise of Solv-Ex. The district court, pursuant to a provision in a pledge agreement (the Agreement) between Rendall and Merrill Lynch, compelled Rendall's claims to arbitration.

{2} Merrill Lynch asserts that none of Rendall's claims were preserved for our review. We hold that Rendall's argument that the existence of an arbitration agreement is a question for the jury was clearly not preserved. Rendall's argument that his claims for conspiracy, RICO, and antitrust involve third parties, and are hence not subject to arbitration, was also not sufficiently preserved for our review. We have doubts that Rendall's remaining arguments were preserved, but will give Rendall the benefit of the doubt and address these arguments on the merits.

{3} We hold that Rendall's objection to the Agreement documents could be characterized as an authenticity objection in its most basic terms. However, we hold that Rendall later conceded that the challenged document was authentic because, in the course of challenging the Agreement's accuracy, Rendall made statements that conceded its authenticity. Next, we address the two parts of Rendall's fraud in the inducement claim concerning the Agreement. Rendall admitted signing the second page of the Agreement (which acknowledged the first page and stated that his disputes with Merrill Lynch would be arbitrated). We hold that under these circumstances, the district court properly compelled arbitration. We affirm.

I. BACKGROUND

{4} This case is one of many appeals arising from litigation surrounding the collapse of Solv-Ex stock. In October 1996, after the value of Solv-Ex stock plummeted, Solv-Ex shareholders sued Rendall and others, primarily claiming that these Defendants had in various ways deliberately distorted Solv-Ex's financial condition.

{5} Approximately six years later, in 2002, Rendall filed his answer along with counterclaims, cross claims, and a third-party complaint. Rendall named in his third-party complaint approximately a dozen new parties that he blamed for Solv-Ex's downfall, including Merrill Lynch. He claimed that Merrill Lynch had pulled the "final trigger" in Solv-Ex's demise.

{6} Rendall admitted in his complaint that he had executed a pledge agreement with Merrill Lynch in March 1997 securing a loan of $4 million with approximately 2.61 million restricted shares of Solv-Ex common stock. Shortly after making the loan, Merrill Lynch demanded repayment. When Rendall did not pay, Merrill Lynch started selling the Solv-Ex stock. Rendall claimed that this action caused a sharp decline in the value of Solv-Ex stock, causing Solv-Ex to lose financing, which in turn caused it to shut down operations and later file bankruptcy. He also claimed that Merrill Lynch had "made false and misleading statements to the public in order to make the sale." Merrill Lynch also allegedly forced Rendall to sign a release of his claims against it in return for the Solv-Ex stock still in its possession.

{7} Based on these factual allegations, Rendall asserted claims against Merrill Lynch for breach of a fiduciary duty under the pledge agreement, breach of contract, and breach of the covenant of good faith and fair dealing. Rendall claimed that Merrill Lynch had fraudulently "sold [his] . . . stock under false pretenses, which destroyed the Solv-Ex financing and injured . . . Rendall." Rendall claimed that Merrill Lynch had interfered with his prospective economic advantages when it refused to release the stock remaining in its possession until Rendall relinquished his claims against it. Rendall also claimed intentional or negligent infliction of emotional distress as a result of Merrill Lynch's actions. Finally, Rendall made other claims that did not specify a party against whom he was making the claim.

{8} Merrill Lynch moved to compel arbitration or to alternatively dismiss Rendall's claims against it.¹ Attached to its unverified motion was what it claimed to be "a true and correct copy of the March 20, 1997 Pledge Agreement . . . signed by Mr. Rendall." This copy was almost illegible. Merrill Lynch also attached a clear and easily legible form pledge agreement that was unsigned and did not have any information typed into its blanks. There was no overt explanation in the motion of how this form agreement was related to the Agreement itself. Merrill Lynch asserted that in the pledge agreement, Rendall had agreed to arbitrate all of his claims against Merrill Lynch. Rendall filed a written response to Merrill Lynch's motion.

{9} On June 12, 2003, the district court heard the parties' arguments on this motion. Rendall objected to the admission of the documents that had been attached to Merrill Lynch's motion to compel arbitration. He denied the existence of any arbitration agreement, asserting that he had only signed and faxed back to Merrill Lynch one illegible sheet of paper. He said that the only agreement contained on the sheet of paper he had signed was the agreement to pledge the Solv-Ex shares for a loan of $3.8 to $4 million. After Rendall spoke, the district court orally granted Merrill Lynch's motion to compel arbitration. The district court entered its written order on July 7, 2003, ordering arbitration "in accordance with the agreement attached to the motion." Rendall now appeals the order compelling his claims against Merrill Lynch to arbitration.

II. DISCUSSION

A. Preservation of Issues

{10} Merrill Lynch argues that Rendall did not preserve any of his arguments for our review.

[I]n order to preserve an issue for appeal, a [party] must make a timely objection that specifically apprises the trial court of the nature of the claimed error and invokes an intelligent ruling thereon. . . . [I]t is essential that the ground or grounds of the objection or motion be made with sufficient specificity to alert the mind of the trial court to the claimed error or errors, and that a ruling thereon then be invoked.

State v. Elliott, 2001-NMCA-108, ¶ 21, 131 N.M. 390, 37 P.3d 107 (internal quotation marks and citations omitted).

{11} We first address the preservation of Rendall's argument that the existence of an arbitration agreement is an issue of fact for the jury. We have not discovered any point where Rendall invoked a ruling from the district court on this issue. See id. Rendall has not directed our attention to where this issue was preserved. See Rule 12-213(A)(4) NMRA (requiring a statement of how and where an issue was preserved below). Points in Rendall's pleadings and argument also state, to the contrary, that the district court must decide this issue. We therefore hold that Rendall did not preserve this argument for our review.

{12} Also, Rendall argues that the district court's sending of his conspiracy, RICO, and antitrust claims to arbitration was improper because these claims involve third parties. Merrill Lynch asserts that none of these claims were actually pleaded against itself and that this issue was not preserved. We agree.

{13} Rendall argues that he invoked a ruling from the district court on his legal argument via a statement in his complaint that he "restates and incorporates the preceding fact allegations." This argument confuses the making of a factual assertion with invoking a ruling from the district court on a specific legal argument. See Elliott, 2001-NMCA-108, ¶ 21, 131 N.M. 390, 37 P.3d 107. It does, however, appear that in his reply brief to Merrill Lynch's motion to compel arbitration, he argued that these claims were not subject to arbitration. Rendall then abandoned this argument at the hearing, merely alleging that Merrill Lynch had engaged in a conspiracy and committed RICO and antitrust violations without asserting that these claims had any specific legal consequence to the question of arbitration.

{14} These claims had not been previously asserted against Merrill Lynch. Rendall's complaint listed numerous parties and claims. Rendall failed to specifically assert in his complaint Merrill Lynch's involvement in an alleged conspiracy. Rather, he specifically referred to a conspiracy among Syncrude, Suncor, and possibly Shell and Exxon. His claim for conspiracy under RICO named two categories of people: the "Competitors" and the "Short Sellers." Merrill Lynch was not categorized as either in Rendall's complaint. As for conspiracy under antitrust laws, Rendall only named "the Competitors": Syncrude, Suncor, Shell, and Exxon, whom he generally claimed throughout his complaint were involved in a conspiracy. Rendall did not state in his complaint any action or...