Morey v. Concert Wealth Management, Inc. CASE NO. 17CV318589
DATE: 3 March 2020 TIME: 9:00 am LINE NUMBER: 7
This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 20 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 20 at 408.808.6856 and the opposing party no later than 4:00 PM on 2 March 2020. Please specify the issue to be contested when calling the Court and Counsel.

ORDER ON PETITION OF STEVE MOREY TO COMPEL ARBITRATION

NO TENTATIVE RULING.

In November 2017, Petitioner Steve Morey filed a petition to compel arbitration against Concert Wealth Management, Inc. and Patrick White related to the mismanagement of his investment account, which caused Morey losses in excess of $160,000. The Court granted the petition and ordered the matter to arbitration. The matter is now proceeding in arbitration before the Hon. Catherine Gallagher of JAMS.

Petitioner seeks to add Concert Wealth Management, Inc. and its parent company Concert Global Group, LTD and its majority shareholder, Felipe Luna. Petitioner claims that these three entities were the subject of an investigation by the Securities and Exchange Commission. Following its investigation, the SEC issued a Cease and Desist order, which included findings of fact that these entities and Luna had perpetrated a fraud on their investors.

Though Respondents are non-signatories to the Investment Services Agreement, Petitioner claims that they are bound by the arbitration clause therein because they are the alter egos of Concert Wealth Management. Petitioner claims that pursuant to Associated Vendors, Inc. v. Oakland Meat Company (1962) 210 Cal.App.2d 825, the analysis of 28 factors performed by Christian Tregillis, a CPA and forensic accountant at Hemming Morse, LLP, shows a “unity of interest” among all of the defendants/respondents.

Under the holding in Benaroya v. Willis (2018) 23 Cal.App.5th 462, Judge Gallagher does not have jurisdiction to add these parties to the arbitration unless and until this Court orders them to arbitration.

Respondents claim that Petitioner provided no evidence to show that there is such a unity of interest that the corporate entities do not exist. Respondents further claim that the findings of the SEC investigation are inadmissible hearsay. Notwithstanding, respondents assert that the fact that there was a compromise consent decree in which Mr. Luna took responsibility to the investors of Concert Global demonstrates that there was not a unity of interest.

At the hearing on this matter, this Court will ask the following questions:

Why has petitioner waited so long to bring this motion, given that the case was filed almost 2 ½ years ago?

Is there any res judicata/collateral estoppel/issue or claim preclusion effect by the observation that the respondents entered into a consent decree with the Security and Exchange Commission?

What is the status of the arbitration proceeding in front of Judge Gallagher?

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DATED: ______________________¬¬¬________________________

HON. SOCRATES PETER MANOUKIAN

Judge of the Superior Court

County of Santa Clara