Reicker v. Merrill Lynch CA2/6

Filed 6/20/13 Reicker v. Merrill Lynch et al. CA2/6 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.111.5.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

DANIEL A. REICKER, 2d Civil No. B244285 (Super. Ct. No. 1374101) Plaintiff and Respondent, (Santa Barbara County)

v.

MERRILL LYNCH PIERCE, FENNER & SMITH, INCORPORATED et al.,

Defendants and Appellants.

Appellants, Merrill Lynch Pierce, Fenner & Smith Incorporated, Bank of America Investment Services, Inc., and Charles Chester, appeal from an order denying their renewed motion to arbitrate a fraud action involving the sale of a "vanishing 1 premium" life insurance policy. (Code Civ. Proc., §§ 1008, subd. (b); 1294.) We affirm. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 393-394.)

1 There is a split of authority on whether orders denying reconsideration are appealable. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140, fn 5; see e.g., Freeman v. State Farm Mut. Auto Ins. Co. (1975) 14 Cal.3d 473, 477, fn. 2 [order denying reconsideration appealable because motion "was made in part upon new grounds."] Because the trial court had the inherent authority to reconsider the motion to compel arbitration (LE Francois v. Goel (2005) 35 Cal.4th 1094, 1096-1097), the order denying appellants' renewal motion is appealable.

Facts In 1987, Michael Muench and his wife Diane Muench purchased a "vanishing premium" life insurance policy for the Muench Irrevocable Life Insurance Trust. Appellants (the broker defendants) sold the policy as an estate planning device and said they would monitor the policy and notify the trust if anything affecting the policy required action. The policy was issued by Manulife Financial and its successors, Manufacturers Life Insurance Company and John Hancock Life Insurance Company (collectively Manulife). On February 23, 2011, Daniel A. Reicker, trustee of the Muench Irrevocable Life Insurance Trust, sued Manulife and appellants for misrepresentation, concealment, breach of fiduciary duty, and unfair business practices. The first amended complaint states that defendants falsely represented that the life insurance policy required a single premium at time of purchase and subsequent premiums would be paid from dividends credited to the policy or from loans against the policy. After the policy was sold, Manulife falsely represented that the policy was performing in accordance with the original projections. It is alleged that Manulife and appellants failed to disclose that the policy would lapse in eight to nine years unless cash premiums totaling hundreds of thousands of dollars were paid to keep the policy afloat. . Motion to Compel Arbitration Appellants moved to compel arbitration based on a Merrill Lynch Client Relationship Agreement to arbitrate "all controversies that may arise between us. . . ." Reicker was a signator to the agreement but not Manulife. On June 22, 2011, the trial court denied the motion to compel arbitration on the ground that Manulife was not a party to the arbitration agreement and there was a strong possibility that arbitration would result in conflicting rulings on common issues of law. (Code Civil Proc., § 1281.2, subd. 2 (c).)