Court Holds That Breadth Of Arbitration Agreement Supports Motion To Compel Tort Claims

In WFP Securities, Inc. v. Davis, a California appellate court was confronted with an arbitration agreement between an individual and her former investment advisors that provided as follows:

“I agree that all controversies which may arise between us concerning any transaction, the construction, performance or breach of this or any other agreement between us, whether entered into prior, on or subsequent to the date hereof, or any other matter, shall be determined by arbitration in accordance with the rules of the National Association of Securities Dealers, Inc. then in effect. “

Having lost an arbitration against the advisors “to recover losses allegedly incurred as a result of their bad investment advice,” the investor responded to the advisors’ judicial efforts to enforce and collect on the arbitration award by asking the court to compel arbitration of new claims she wished to assert. As the appellate court recounted the investor’s description of these claims, they were for “civil conspiracy to commit fraud, defamation, fraud, intentional infliction of emotional distress, invasion of privacy, declaratory relief, breach of contract, and conspiracy to cause economic harm.”

In overruling the lower court’s denial of the investor’s request to arbitrate, the appellate court held that

The arbitration agreement here is the broadest of broad. It provides for arbitration of controversies between the parties concerning (1) ‘any transaction’; (2) the construction,
performance, or breach of (a) the agreement or (b) any other agreement between the parties (regardless of when the parties entered into it); and (3) ‘any other matter.’ And (3) is a whopper:
It provides for arbitration of a controversy between the parties concerning any matter at all, regardless of whether, as some agreements limit the scope of the arbitration provision, the
claims arise out of or relate to the agreement. (3) easily includes the tort claims Davis alleges she has against [the advisors].

The phrase appears at the end of the clause and is not modified by any subsequent language limiting its scope, such as “relating to the agreement” or “relating to the investment” or even ‘having something to do with anything financial.’”

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