Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ryan v. Salisbury

United States District Court, D. Hawaii

May 14, 2019

KATHY RYAN, INDIVIDUALLY, AND IN HER CAPACITY AS TRUSTEE OF THE BRODY FAMILY TRUST; Plaintiff,
v.
CHRISTOPHER S. SALISBURY; C. SALISBURY, LLC; CLARAPHI ADVISORY NETWORK, LLC; NATIONAL ASSET MANAGEMENT, INC.; MICHAEL DIYANNI; LAKE FOREST BANK & TRUST COMPANY, N.A.; WINTRUST LIFE FINANCE; AURORA CAPITAL ALLIANCE; SECURITY LIFE OF DENVER INSURANCE COMPANY; and ALEJANDRO ALBERTO BELLINI, Defendants.

          ORDER GRANTING IN PART AND STAYING IN PART DEFENDANT CLARAPHI'S MOTION TO DISMISS AND COMPEL ARBITRATION

          Alan C. Kay Sr. United States District Judge.

         For the reasons set forth below, the Court GRANTS IN PART and STAYS IN PART Defendant Claraphi Advisory Network, LLC's Motion to Dismiss and Compel Arbitration, ECF No. 82. The parties are ORDERED to proceed to arbitration in accordance with the terms of the Agreement. The portion of the Motion that seeks dismissal of the claims against Defendant Claraphi is STAYED pending the arbitrator's disposition of the issue of arbitrability.

         BACKGROUND

         The Court sets forth herein only those facts pertinent to the disposition of the instant Motion.

         The Brody Family Trust (“the Trust”) was created on February 9, 1993, with Plaintiff Kathy Ryan (then Kathy Brody) (“Plaintiff”) serving as its trustee. Compl. ¶ 23. The Trust was organized under the laws of California. Id. Sometime in 2002 or thereafter, the estate planning company that first established the Trust referred Plaintiff to Defendant Christopher S. Salisbury (“Defendant Salisbury”) for her investment and financial planning needs. Id. ¶ 24. Defendant Claraphi Advisory Network, LLC (“Defendant Claraphi”) is a Washington limited liability company with a principal place of business in California that provides investment advisory services through independent investment advisor representatives. Declaration of Mark Roth (“Roth Decl.”), ECF No. 82-3 ¶ 2-3. Defendant Salisbury is currently a resident of Michigan. Compl., ECF No. 1 ¶ 10; Defendant Christopher S. Salisbury and C. Salisbury, LLC's Answer (“Salisbury Defs.' Ans.”), ECF No. 47 ¶ 12. At some point in the past, Defendant Salisbury could be served at an address in Laguna Hills, California. Compl. ¶ 11; see Salisbury Defs.' Ans. ¶ 13.

         In April 2013, Defendant Salisbury entered into a relationship with Defendant Claraphi. Roth Decl. ¶¶ 4-6; Declaration of Melinda Weaver (“Weaver Decl.”), ECF No. 114-2 ¶ 2; Investment Adviser Representative Public Disclosure Report (“IAR Report”), Pl.'s Ex. 2 at 1275, 1279.[1] The parties dispute the nature of this relationship-whether Defendant Salisbury was employed by Defendant Claraphi, Opp., ECF No. 114 at 4-5; IAR Report at 1275, 1279; Compl. ¶ 13, or was instead an independent contractor, MTD at 3; Roth Decl. ¶¶ 4-6. The IAR Report indicates that Defendant Salisbury's relationship with Defendant Claraphi lasted until April 1, 2019. IAR Report at 1279. Defendant Claraphi represents that, pursuant to the Independent Advisor Agreement that existed between itself and Defendant Salisbury, Defendant Salisbury agreed to conduct investment advisory activities solely through Defendant Claraphi. Roth Decl. ¶ 5.[2]

         On April 16, 2013, Defendant Salisbury sent an email to Plaintiff requesting her initials and signature on, inter alia, two pages of a document entitled “Claraphi Advisory Network, LLC Investment Advisory Agreement Representative as Manager Program” (henceforth “the Agreement”). Declaration of Kathy Ryan (“Pl. Decl.”), ECF No. 114-1 ¶ 4; Email and Attachments from Defendant Salisbury to Plaintiff (“Email”), Pl.'s Ex. 1 at 1266, 1268; see also Roth Decl. ¶ 7; Full Claraphi Advisory Network, LLC Investment Advisory Agreement Representative as Manager Program (“Full Agreement”), Def.'s Ex. B, ECF No. 82-5 at 905-10. The pages of the Agreement contained in the Email were numbered 6 and 11, respectively. Email at 1266, 1268. Page 6 of the Agreement contains the following provisions, among others:

The undersigned (“Client”) hereby retains Claraphi Advisory Network, LLC, a Washington limited liability company (“Claraphi”), to perform investment advisory servies through the independent investment advisor representative listed on the signature page (“IAR”) under the terms of this Investment Advisory Agreement (“Agreement”) as set forth below. . . .
Client acknowledges that (a) Client completed or reviewed the Client Profile and that it accurately reflects his or her investment objectives and circumstances, (b) Client has received a copy of this Agreement and agrees to be bound by its terms and conditions, and (c) this Agreement is covered by a pre-dispute arbitration clause located in Section IV of this Agreement.

         Email at 1266; Full Agreement at 905. Section IV of the Agreement appears on page 9, Full Agreement at 908, which was not attached to the Email, see generally Email. Entitled “Arbitration, ” Section IV reads:

Any controversy or claim arising out of or relating to this Agreement or the breach thereof, or any other matter relating to Claraphi's, IAR's or Client's obligations, shall be settled by arbitration in accordance with the Rules then in effect of Judicial Arbitration and Mediation Services, Inc. (“JAMS”), and judgment upon the award rendered by the arbitrator(s) may be entered in any court having competent jurisdiction. Any hearing in connection with the arbitration shall be held in Seattle, Washington. Client understands that this provision does not constitute a waiver of any right the Client may have under the Investment Advisers Act.

Full Agreement at 908.

         The Agreement also contains a choice-of-law provision on page 10, Full Agreement at 909, which was not attached to the email, see generally Email:

This Agreement shall be construed under the laws of the State of Washington without regard to its choice of law provisions in a manner consistent with the Investment Advisors Act of 1940 (“Advisors Act”) and the rules and regulations of the Securities and Exchange Commission thereunder.

Full Agreement at 909.

         Plaintiff initialed the Agreement's page 6 and signed its page 11, the latter of which reflects that it was signed on April 24, 2013. Full Agreement at 905, 910. Also on April 24, 2013, Defendant Salisbury signed the Agreement's page 11 on the line labeled “Advisor, ” and the CEO of Defendant Claraphi signed as well. Id. at 910.

         On October 23, 2018, Plaintiff-proceeding both individually and in her capacity as trustee of the Brody Family Trust-filed a Complaint naming as defendants, inter alia, Defendant Claraphi and Defendant Salisbury. Compl., ECF No. 1. The Complaint asserts twelve causes of action against eleven defendants; Defendants Claraphi is named in each cause of action.[3] Id. The Complaint alleges that Defendant Salisbury engaged in, and Defendant Claraphi authorized, a wrongful course of conduct that included, inter alia, annuity churning, the procurement of an unsuitable life insurance policy and commensurate financing arrangement, and violation of fiduciary duties. See, e.g., Compl. ¶¶ 25-63.[4] The Complaint also charges Defendant Claraphi itself with wrongdoing in its dealings with Plaintiff, charging, inter alia, that Defendant Claraphi breached its fiduciary duties to Plaintiff. See, e.g., id. ¶ 63.

         On February 4, 2019, Defendant Claraphi, citing Federal Rule of Civil Procedure (“Rule) 12(b)(1), filed the instant Motion to Dismiss and Compel Arbitration (“Motion”), ECF No. 82, together with a memorandum in support (“MTD”), ECF No. 82-1. Plaintiff filed her Opposition on April 9, 2019. Opp. Defendant Claraphi filed a Reply on April 16, 2019. ECF No. 122. Defendant NAM filed a joinder of simple agreement to the Motion on April 9, 2019, ECF No. 112, and Defendant ACA filed a statement of no ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.