Judge: Joseph Lipner, Case: 24STCP01671, Date: 2024-08-06 Tentative Ruling

Case Number: 24STCP01671    Hearing Date: August 6, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Petitioner Wells Fargo Clearing Services, LLC (“Wells Fargo”) petitions the Court to confirm the Financial Industry Regulatory Authority Office of Dispute Resolution (“FINRA”) arbitration award (the “Award”) granting expungement of all references to Occurrence Number 2175401 (the “Occurrence”) from the Central Registration Depository (“CRD”) records for Daniel Arthur Evans (“Evans”) (CRD Number 1573625).

The Court GRANTS the petition.

Background

This action relates to arbitration proceedings which Respondent Santa Rosa Rancheria Tachi Yokut Tribe (the “Tachi Yokut Tribe”) initiated with FINRA against Wells Fargo, entitled Santa Rosa Rancheria Tachi Yokut Tribe vs. Wells Fargo Clearing Services, LLC (FINRA Case No. 21-03053) (the “Arbitration”). (Lee-Sanchez Decl. ¶ 2, Ex. A.) The parties have settled the underlying dispute, which related to Wells Fargo’s management of the Tachi Yokut Tribe’s assets. (Lee-Sanchez Decl., Ex. G at p. 4.) The Award here relates to an ancillary issue in the Arbitration – a complaint that was entered into Evans’ professional records, which are maintained by FINRA, as a result of the arbitration complaint.

Evans, who was not a named party in the Arbitration, is employed as a financial advisor by Wells Fargo and was the financial advisor associated with the Tachi Yokut Tribe’s account with Wells Fargo. (Lee-Sanchez Decl., Ex. G at p. 4.) As a financial advisor, Evans has a profile in FINRA’s CRD, which is a system that FINRA maintains to track information about the licenses and registrations held by firms and brokers in the securities industry. Much of the information in the CRD is available to the public.

The Tachi Yokut Tribe’s arbitration complaint alleged that Evans breached his fiduciary duties to the Tachi Yokut Tribe. This resulted in a complaint for the Occurrence appearing in Evans’ CRD records – Occurrence Number 2175401. Wells Fargo obtained an arbitration award approving the expungement of the Occurrence from Evans’ CRD records, and now seeks confirmation of that award.

The Tachi Yokut Tribe initiated the Arbitration on December 16, 2021. (Lee-Sanchez Decl. ¶ 2, Ex. A.) On February 24, 2022, Wells Fargo submitted an agreement consenting to arbitrate before FINRA. (Lee-Sanches Decl., ¶ 5, Ex. D.) FINRA arbitrators Robert B. Hansolin, Joseph Alfred Davis, and Robert Rosen (collectively, the “Panel”) were appointed by FINRA and accepted by the parties. (Lee-Sanchez Decl., ¶ 6.)

On November 9, 2023, Wells Fargo filed a motion for expungement on behalf of Evans. (Lee-Sanchez Decl., ¶ 7, Ex. E.)

On January 22, 2024, the Tachi Yokut Trial submitted a notice of non-participation in the hearing. (Lee-Sanchez Decl., ¶ 8, Ex. F.)

On April 2, 2024, the Panel conducted a hearing on the motion for expungement. (Lee-Sanchez Decl., ¶ 9.) The Tachi Yokut Tribe did not participate in the hearing. (Lee-Sanchez Decl., ¶ 9.) The hearing was held in Los Angeles, California. (Lee-Sanchez Decl., ¶ 10, Ex. G at p. 1.)

On April 16, 2024, FINRA issued the Award, granting the expungement of the Occurrence from Evans’ CRD records. (Lee-Sanchez Decl., ¶ 10, Ex. G at p. 3.)

On April 18, 2024, Wells Fargo submitted a waiver request to FINRA requesting that FINRA waive its requirement that it be named in proceedings to confirm the Award pursuant to FINRA Rule 2080. (Lee-Sanchez Decl., ¶ 11, Ex. I.) On May 23, 2024, FINRA notified counsel for Wells Fargo that FINRA had reviewed and approved Wells Fargo’s request to waive the obligation under FINRA Rule 2080 to name FINRA as a party in these confirmation proceedings. (Lee-Sanchez Decl., ¶ 12, Exh. J.)

Wells Fargo filed this petition on May 23, 2024. No party opposes the petition.

Legal Standard

“Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award. The petition shall name as respondents all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.” (Code Civ. Proc., § 1285.) Venue is proper in any court having jurisdiction in the county where the arbitration was held. (Code Civ. Proc., § 1292.2.)

If a petition to confirm an arbitration award is duly served and filed, the court must confirm the award as made, unless the court corrects or vacates the award pursuant to a response to the petition or a petition to correct or vacate the award. (Code Civ. Proc., § 1286; Valsan Partners Limited Partnership v. Calcor Space Facility, Inc. (1994) 25 Cal.App.4th 809, 818 [no authority to alter terms of award absent petition to correct].) “If an award is confirmed, judgment shall be entered in conformity therewith.” (Code Civ. Proc., § 1287.4.) 

“A petition under this chapter shall:

(a) Set forth the substance of or have attached a copy of the agreement to arbitrate unless the petitioner denies the existence of such an agreement.

(b) Set forth the names of the arbitrators.

(c) Set forth or have attached a copy of the award and the written opinion of the arbitrators, if any.”

(Code Civ. Proc., § 1285.4.)

The petition must be served no earlier than 10 days, but no later than 4 years, after service of the award on the petitioner. (Code Civ. Proc., §§ 1288, 1288.4.) The petition, written notice of the time and place of the hearing on the petition, and any other papers upon which the petition is based must be served in the manner provided in the arbitration agreement for service of such petition and notice. (Code Civ. Proc., § 1290.4(a).)

“[A]n arbitrator's decision is not ordinarily reviewable for error by either the trial or appellate courts[.]” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 13.) “[J]udicial review of private arbitration awards [is limited] to those cases in which there exists a statutory ground to vacate or correct the award.” (Id. at pp. 27-28.) These grounds are set forth in Code of Civil Procedure, sections 1286.2 and 1286.6. (Id. at p. 13.) A court may not vacate or correct an award unless a petition or response requesting that the award be vacated or corrected has been duly served and filed. (Code Civ. Proc., §§ 1286.4, 1286.8.)

Discussion

Statutory Requirements

Wells Fargo has provided the agreement to arbitrate, the names of the arbitrators, and a copy of the Award. It has thus complied with Code of Civil Procedure, section 1285.4.

Wells Fargo filed this petition on May 23, 2024, which is more than 10 days, but less than 4 years, after April 16, 2024, when the Award was issued.

No party seeks an order vacating or correcting the Award.

The Court therefore finds that the statutory requirements for confirmation of an arbitration award are satisfied.

FINRA Requirements

            FINRA arbitrators have the power to expunge CRD records. (Lee-Sanchez Decl., Ex. H.) FINRA policy permits expungement of CRD records based on arbitration awards if certain standards are met, FINRA is named as a party to the court action whereby confirmation of an award containing an expungement recommendation is sought, and the award is confirmed by a court of competent jurisdiction. (Lee-Sanchez Decl., Ex. H.)

However, FINRA policy also provides that FINRA will waive the obligation to be named as a party if it determines that the arbitrator’s expungement recommendation is based on an affirmative finding that: (1) the claim, allegation, or information is factually impossible or clearly erroneous; (2) the registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds; or (3) the claim, allegation, or information is false. (Lee-Sanchez Decl., Ex. H.)

The FINRA Panel determined that the claims allegations to the entry of the Occurrence in Evans’ CRD records were false. (Lee-Sanchez Decl., Ex. G at p. 4.) The Panel recommended expungement of all references to the Occurrence from the CRD. (Lee-Sanchez Decl., Ex. G at p. 3-4.)

On May 23, 2024, FINRA waived the obligation under FINRA Rule 2080 to name FINRA as a party in these confirmation proceedings. (Lee-Sanchez Decl., ¶ 12, Exh. J.)

The Court therefore finds that FINRA’s separate requirements for approval of a CRD expungement have been satisfied.

The Court therefore grants the petition.