John Norman Bolus, Melinda Lucas Peevy, attorneys for appellant.
Edward Gibson, attorney for appellees.
Before IRVING, P.J., CARLTON and JAMES, JJ.
¶ 1. Janelle Pritchard, the Robert A. Pritchard Marital Trust (" Marital Trust" ), and Hickory Street LLC (collectively " Plaintiffs" ) filed suit against Wells Fargo Advisors LLC (" Wells Fargo" ), as the successor in interest of Wachovia Securities and A.G. Edwards Inc. and Jon Reynolds, in the Circuit Court of Jackson County. Plaintiffs alleged tat Wells Fargo and one of its financial advisors, Reynolds, negligently managed and converted assets in accounts belonging to Janelle, her deceased
husband, Robert A. Pritchard, and Robert's trust accounts.
¶ 2. In response, Wells Fargo filed a motion to compel arbitration and for a stay pending arbitration. In its motion, Wells Fargo indicated that all of the claims asserted in Plaintiffs' action are subject to an arbitration clause in a client agreement. Wells Fargo specifically cited the client agreement for the Marital Trust account. Reynolds joined Wells Fargo's motion to compel arbitration.
¶ 3. Following several hearings, the trial court ultimately denied Wells Fargo's motion to compel arbitration on the grounds that the incidents giving rise to the complaint arose before the arbitration agreement for the Marital Trust was signed and also because the arbitration agreement contained " contradictory and inconsistent statements that negate[d]" it. The record reflects that Plaintiffs allegedly acted negligently in managing the accounts at issue and wrongfully converted the funds of these accounts as early as 2006 and before the mandatory arbitration agreement was executed for one of the accounts. Even though the arbitration agreement contained language rendering the agreement applicable to controversies occurring before the execution of the agreements, the trial court found the retroactive application unenforceable.
¶ 4. Wells Fargo appeals and argues that the trial court erred in refusing to enforce the arbitration agreements set forth in Plaintiffs' various securities-brokerage-account agreements. This Court agrees, and we reverse and remand this case to the trial court for further proceedings consistent with this opinion.
¶ 5. Plaintiffs allege in their complaint that wrongdoing occurred with respect to four accounts beginning in February 2006. The complaint mentions accounts owned by Janelle, the Marital Trust, the Robert A. Pritchard Revocable Living Trust (" Living Trust" ), and Robert and Janelle's " joint accounts."
¶ 6. On or around November 8, 2005, spouses Robert and Janelle opened a joint account. In connection with opening this account, on November 4, 2005, they signed an account agreement containing an arbitration provision. Robert died in May 2006, and Joseph White became the new co-trustee and, as signatory of his new trustee agreement, White agreed to mandatory arbitration.
¶ 7. The Living Trust was previously established on February 10, 2006. On November 30, 2007, White, as a new trustee, signed a " Trustee Agreement and Certification of Trust Investment Powers" form, wherein he agreed the account was subject to mandatory arbitration.
¶ 8. The Marital Trust was opened on December 3, 2007. In connection with opening this account, on November 30, 2007, White and Janelle, as co-trustees, both signed a " Trustee Agreement and Certification of Trust Investment Powers" form, which also included a mandatory-arbitration provision.
¶ 9. On January 31, 2008, Janelle signed a " Nonprobate Transfer on Death Agreement," which was associated with her individual account and included a mandatory-arbitration provision.
¶ 10. All of the agreements referenced above contain mandatory-arbitration language that is virtually identical and include arbitration disclosures, an arbitration agreement, and an acknowledgment of receipt of the arbitration agreement. Each account includes an ...