Prima Donna Dev. Corp. v. Wells Fargo Bank, N.A., H045379
Decision Date | 13 November 2019 |
Docket Number | H045379 |
Citation | 255 Cal.Rptr.3d 174,42 Cal.App.5th 22 |
Court | California Court of Appeals Court of Appeals |
Parties | PRIMA DONNA DEVELOPMENT CORPORATION, Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent. |
Counsel for Plaintiff/Appellant Prima Donna Development Corporation, Dincel Law Group, Kim Omer Dincel, San Jose.
Counsel for Defendant/Respondent Wells Fargo Bank, N.A., Severson & Werson, Jan T. Chilton, San Francisco, Marquis I. Wraight.
Plaintiff and appellant Prima Donna Development Corporation appeals from a judgment confirming an arbitration award in favor of defendant Wells Fargo Bank, N.A. Prima Donna challenges both the order compelling arbitration and the denial of its motion to vacate the arbitration award. We conclude the trial court properly ordered the matter to arbitration and confirmed the arbitration award. Accordingly, we affirm the judgment.
Appellant Prima Donna Development Corporation (Prima Donna) is a California corporation that develops, builds, and manages hotel properties in California and Oregon. Michael Chiu is Prima Donna's president. In March 2007, Chiu opened several commercial bank accounts on behalf of Prima Donna at respondent Wells Fargo Bank, N.A. (Wells Fargo).
As part of the paperwork for opening the accounts, Chiu either signed or agreed to be bound by a number of agreements. One of these agreements, the commercial account agreement, contained an arbitration agreement, which stated, "Except as stated in ‘No Waiver of Self-Help or Provisional Remedies’ below,[2 ] Company and Bank agree, at Company's or Bank's request, to submit to binding arbitration all claims, disputes and controversies, between or among Company and Bank ... whether in tort, contract or otherwise arising out of or relating in any way to Company's Account(s) and/or Service(s) and their negotiation, execution, administration, modification, substitution, formation, inducement, enforcement, default or termination."
Under a section entitled "Governing Rules," the arbitration agreement stated "Any arbitration proceeding will (i) proceed in a location selected by the American Arbitration Association (‘AAA’) in the state whose laws govern Company's Account; (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between Company and Bank; and (iii) be conducted by the AAA, or such other administrator as Company and Bank shall mutually agree upon, in accordance with the AAA's commercial dispute resolution procedures."
The arbitration agreement also provided that "[t]he arbitrator[ ] shall resolve all Disputes in accordance with the substantive law of the state whose laws govern Company's Account and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award."
In opening the commercial bank accounts for Prima Donna at Wells Fargo, Chiu also signed a wire transfer services security procedures agreement (wire transfer agreement) for each account he opened. In each wire transfer agreement, Prima Donna "agree[d] that it is bound by any Order, whether or not authorized, issued in its name and accepted by Bank in compliance with the security procedure selected by Company."3 The wire transfer agreement specified security procedures for transfers initiated by "voice-initiated transfers" (presumably by phone) and security procedures applicable to transfers initiated through the Internet.
For voice-initiated wire transfers, the wire transfer agreement provided that Wells Fargo would call Chiu by telephone to verify the order and, if Wells Fargo was unable to reach Chiu, it would not process the wire transfer. Wells Fargo also allowed for wire transfers initiated through the Internet, using Wells Fargo's "commercial electronic office portal" (CEO). In the case of an Internet transfer, a "company administrator" selected by Prima Donna could initiate a wire transfer through CEO. The wires at issue in this appeal were initiated through Wells Fargo's CEO portal.
As described in the arbitration award, for wire transfer orders placed through CEO,
The arbitrator found
In January 2014, at the time of the disputed wire transfers, Prima Donna's financial controller, Thuy Tran, served as a company administrator for Prima Donna under the wire transfer agreement. In January 2014, while Chiu was out of the country, his Yahoo e-mail account was apparently hacked. On January 23, 27, and 28, Tran received a series of e-mails from a person whom she believed was Chiu, instructing her to wire funds from Prima Donna's Wells Fargo bank accounts to bank accounts overseas. Pursuant to these e-mails, Tran requested (through the CEO portal) that Wells Fargo make a number of wire transfers from Prima Donna's Wells Fargo bank accounts. When Chiu returned to work on January 29, he told Tran that he had not requested that she transfer this money. Although Prima Donna called Wells Fargo to report the fraud, most of the money had already been transferred and could not be recovered. Prima Donna did not recover $638,400 that had been wired from its Wells Fargo accounts.
Prima Donna filed suit in the Santa Clara County Superior Court (trial court) against Wells Fargo alleging two claims under Commercial Code section 112024 titled "Breach of Statutory Duty." In the first cause of action, Prima Donna alleged that Wells Fargo failed to follow the security procedures set out in the wire transfer agreement. ( § 11202, subd. (b)(i)-(ii).) Therefore, the wire transfers were "ineffective and/or unenforceable" under section 11202, and Wells Fargo had the obligation of returning the amount of the wire transfers to Prima Donna pursuant to section 11204. In the second cause of action, Prima Donna alleged that "Wells Fargo did not employ ‘reasonable commercial standards of fair dealing’ in its acceptance and processing" of the wire transfers within the meaning of section 11202. ( § 11202, subd. (c).) Therefore, Wells Fargo had the obligation of returning the amount of the wire transfers to Prima Donna pursuant to section 11204.
Wells Fargo filed a motion to compel arbitration pursuant to the arbitration agreement contained in the commercial account agreement. Wells Fargo stated that in the arbitration agreement the parties agreed to arbitrate all "disputes arising between them." In its motion, Wells Fargo asserted that, "[b]y its terms" the arbitration agreement is governed by the Federal Arbitration Act (FAA). Wells Fargo argued that the trial court should order arbitration because Prima Donna and Wells Fargo had entered into an enforceable arbitration agreement, Prima Donna's claims fell within the scope of the arbitration agreement, and public policy favors arbitration. In addition to requesting that the trial court order the parties to arbitration, Wells Fargo also requested that the trial court stay the civil action pending arbitration.
Prima Donna filed an opposition to Wells Fargo's motion to compel arbitration. Prima Donna did not dispute the applicability of the arbitration agreement but argued that
Prima Donna asserted that, because the Commercial Code and the California Supreme Court's decision in Zengen require that fraudulent wire transfers be addressed only through the statutory provisions of Commercial Code section 11101 et seq., the arbitration agreement was not enforceable as to Prima Donna's claims against Wells Fargo.
In its opposition to the motion to compel arbitration, Prima Donna did not argue that the arbitration agreement was unconscionable. Nor did Prima Donna reference the formation of the arbitration agreement, except to note in...
To continue reading
Request your trial-
Swain v. LaserAway Med. Grp., Inc.
...that "closer scrutiny of [the agreement's] overall fairness is required." ( Ibid. ; accord, Prima Donna Development Corp. v. Wells Fargo Bank, N.A. (2019) 42 Cal.App.5th 22, 38, 255 Cal.Rptr.3d 174.) LaserAway argues the arbitration agreement is not procedurally unconscionable because the a......
-
Bulnes v. Suez WTS Servs. U.S.
...arbitrate “trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” Id. Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614, 628 (1985). It does not-without more-foreclose a plaintiff from vindicating substanti......
-
W. Bagel Co. v. Superior Court of L. A. Cnty.
...to requirements imposed by statute or judicial rule.’ [Citation.]" ( Prima Donna Development Corp. v. Wells Fargo Bank, N.A. (2019) 42 Cal.App.5th 22, 36, 255 Cal.Rptr.3d 174 ( Prima Donna Development Corp. ).) FAA preemption is a matter of federal law that we review de novo. (See Mount Dia......
-
Zaklit v. Hankey Inv. Co.
... ... Securities Corp. (1996) 14 Cal.4th 394, 406 ... ( ... agreements according to their terms." ( Prima Donna ... Development Corp v. Wells Fargo ... ...