Edward D. Jones & Co., Llc,, and Alan Frazier v. Charles Michael Lewis, Individually and as Representative of the Estate of Charley Lewis, Deceased; Lauren Lewis; Andrea Lewis; And Margaret Anne Lewis

2020 Ark. App. 327

• Court: Court of Appeals of Arkansas
• Decided: June 3, 2020
• Status: Published

Opinion

Cite as 2020 Ark. App. 327 Reason: I attest to the accuracy and integrity of this document ARKANSAS COURT OF APPEALS Date: 2021-07-07 12:38:44 Foxit PhantomPDF Version: 9.7.5 DIVISION I No. CV-19-702

Opinion Delivered: June 3, 2020 EDWARD D. JONES & CO., LLC, AND ALAN FRAZIER APPELLANTS APPEAL FROM THE JEFFERSON COUNTY CIRCUIT COURT V. [NO. 35CV-18-698]

CHARLES MICHAEL LEWIS, INDIVIDUALLY AND AS HONORABLE ROBERT H. WYATT, REPRESENTATIVE OF THE ESTATE JR., JUDGE OF CHARLEY LEWIS, DECEASED; LAUREN LEWIS; ANDREA LEWIS; AND MARGARET ANNE LEWIS AFFIRMED APPELLEES

BART F. VIRDEN, Judge

Appellees filed a complaint against appellants, Edward D. Jones & Co., LLC, and Alan

Frazier (“Edward Jones”), alleging various causes of action, including breach of contract.

Edward Jones filed a motion to compel arbitration, which was denied by the Jefferson County

Circuit Court. We affirm the trial court’s decision.

I. Arbitration Agreements

As with other types of contracts, the essential elements for an enforceable arbitration

agreement are (1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual

agreement, and (5) mutual obligations. Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 2019

Ark. 305, 586 S.W.3d 624. As the proponent of the arbitration agreement, Edward Jones had

the burden of proving these essential elements. See id. We review a trial court’s denial of a

motion to compel arbitration de novo on the record. Courtyard Gardens Health & Rehab., LLC v. Arnold, 2016 Ark. 62, 485 S.W.3d 669. The Arkansas Supreme Court has said that “de novo

review does not mean that this court can entertain new issues on appeal when the opportunity

presented itself for them to be raised below, and that opportunity was not seized.” Lamontagne

v. Ark. Dep’t of Human Servs., 2010 Ark. 190, at 6, 366 S.W.3d 351, 354 (citing Jones v. Jones,

320 Ark. 449, 453, 898 S.W.2d 23, 25 (1995)).

II. Background

After Charley Lewis died on May 11, 2018, appellees Charles Michael Lewis,

individually and as personal representative of the Estate of Charley Lewis, deceased; Lauren

Lewis; Andrea Lewis; and Margaret Anne Lewis1 filed a complaint against Donna Scruggs;

Stephanie Evans; Edward D. Jones & Co., LLC; and Alan Frazier alleging causes of action for

fraud and deceit, conversion, unjust enrichment, breach of fiduciary duty, undue influence,

constructive trust, negligence, and breach of contract. 2 Lewis alleged that Charley had an

“intimate, on-again, off-again, confidential relationship” with Scruggs for approximately

fourteen years. Lewis further alleged that Scruggs and her daughter, Evans, interfered with

Charley’s family relationships and kept him isolated. Lewis also alleged that Charley had opened

an investment account with Edward Jones on July 1, 2004, that Charley had been diagnosed

with Parkinson’s disease in 1999, and that Edward Jones had been made aware of Charley’s

diagnosis. Lewis alleged that Frazier managed Charley’s account after January 1, 2015.

According to Lewis, Charley began having auditory and visual hallucinations in December

2014; he was hospitalized many times in the years leading up to his death; and Charley’s various

Charles Michael Lewis is Charley Lewis’s son; Lauren, Andrea, and Margaret Anne are 1

Charley’s granddaughters. They will be referred to collectively as “Lewis.”

2The trial court granted Lewis’s motion for default judgment as to separate defendants Scruggs and Evans after they failed to timely respond to Lewis’s complaint.

2 diagnoses pointed to a decline in his mental state. Lewis alleged that Scruggs began making

financial decisions for Charley and that Edward Jones permitted her to make those decisions,

including changing the beneficiaries of Charley’s investment account—worth over one million

dollars—to Scruggs and her daughter.

Edward Jones filed a motion to stay the proceedings and compel arbitration, citing an

arbitration provision in what it referred to generally as its “account agreements.”3 Edward Jones

attached an account authorization and acknowledgement form signed by Charley in 2004,

which refers to an arbitration provision on page 20 in an “Account Agreement and Disclosure

Statement.” The account agreement was not included with the acknowledgment. After Lewis

pointed out that Edward Jones had not provided the account agreement referred to in the

acknowledgment, Edward Jones supplied an account agreement as it existed on May 30, 2003,

that was neither signed nor dated. In fact, it had no spaces for signatures and dates.

The trial court held a hearing on Edward Jones’s motion to compel arbitration. The trial

court heard only arguments of counsel and considered the briefs and attachments. No testimony

was presented. At the hearing, Edward Jones argued that Charley had signed the agreement,

that the agreement clearly identified Edward Jones and Charley, that the agreement stated that

any dispute regarding the account is subject to arbitration, and that there is a mutuality provision

providing that claims by either party are subject to arbitration. Lewis resisted the motion based

on lack of mutual agreement and lack of mutual obligations. Specifically, with respect to mutual

3 Edward Jones initially moved to compel arbitration based in part on a transfer-on-death (TOD) agreement with a beneficiary-designation form that had been signed by Scruggs as power of attorney for Charley. Edward Jones has, however, abandoned the argument with respect to the TOD agreement, so we do not discuss it.

3 agreement, Lewis pointed out that no representative from Edward Jones had signed the account

agreement. Edward Jones offered no counter argument.

The trial court denied Edward Jones’s motion to compel arbitration. The trial court

noted in its written order that Edward Jones had the burden of proof and that Edward Jones

failed to prove “mutuality” with respect to the arbitration agreement it sought to enforce.

Edward Jones filed a timely interlocutory appeal from the trial court’s order. Ark. R. App. P.–

Civ. 2(a)(12).

III. Discussion

When a trial court denies a motion to compel arbitration without expressly stating the

basis for its ruling, that ruling encompasses the issues presented to the trial court by the briefs

and arguments of the parties. Reg’l Care of Jacksonville, LLC v. Henry, 2014 Ark. 361, 444 S.W.3d

356. Here, the trial court’s ruling that Edward Jones failed to demonstrate “mutuality” could

include either lack of mutual agreement or lack of mutual obligations or both. Lewis challenged

both elements in his argument below, and Edward Jones did not respond to Lewis’s argument

or offer any evidence to disprove Lewis’s argument as it pertained to mutual agreement.

Similarly, on appeal, Edward Jones does not argue in its opening brief that the trial court erred

in finding that it failed to offer proof of mutual agreement.

On appeal, Edward Jones argues that (1) both federal and Arkansas policies favor

enforcing arbitration agreements; (2) the arbitration agreement had the requisite mutuality as it

applied equally to both parties; (3) nonsignatories to arbitration agreements can be compelled

to arbitrate their claims;4 (4) the claims against appellants arise out of the Edward Jones accounts,

4 The context makes it clear that the “nonsignatories” to which Edward Jones refers are Lewis and Charley’s granddaughters, who did not sign the investment agreement containing an arbitration provision.

4 account agreements, or transactions conducted by Edward Jones—all of which are covered by

the arbitration agreement; and (5) Lewis is bound by the arbitration agreement because he seeks

the benefits of the account agreement. While Edward Jones acknowledges Lewis’s argument

that the agreement lacked mutuality because no representative from Edward Jones signed the

agreement, Edward Jones then discusses mutuality of obligations—that arbitration applies

equally to both parties. Mutual agreement and mutual obligations, however, are two separate

elements of a contract, both of which Edward Jones was required to establish in order to enforce

arbitration. Phillips, supra. Edward Jones does not argue in its opening brief that there was,

indeed, mutual agreement regardless of whether its representative signed the arbitration

agreement. Of course, issues not argued by the appellant are waived. Country Gentleman, Inc. v.

Harkey, 263 Ark. 580, 569 S.W.2d 649 (1978); see also Cummings v. Boyles, 242 Ark. 923, 415

S.W.2d 571 (1967) (setting aside on rehearing its earlier modification of a decree in 242 Ark.

38, 411 S.W.2d 665, because the supreme court recognized that the appellant had not argued

that theory as a basis for reversal).

Only in its reply brief does Edward Jones address what has been Lewis’s argument all

along: the lack of mutual agreement due to the absence of any signature by a representative for

Edward Jones. Unfortunately, an argument made for the first time on reply comes too late. It

is well established that we will not consider an argument made for the first time in a reply brief.

Orintas v. Point Lookout Prop. Owners Ass’n Bd. of Dirs., 2015 Ark. App. 648, 476 S.W.3d 174.

In finding that Edward Jones failed to sustain its burden of proving entitlement to

arbitration because Edward Jones did not prove “mutuality,” the trial court’s ruling included

the essential element of mutual agreement, the lack of which was specifically argued by Lewis

below. Edward Jones did not respond to this particular argument at the trial court level and

5 does not argue in its opening brief on appeal that the trial court erred in finding it failed to show

mutual agreement. While Edward Jones addresses mutual obligations in its opening brief,

Edward Jones does not address mutual agreement. Lack of mutual agreement amounted to an

alternative, independent basis for the trial court’s ruling, which has gone unchallenged by the

party with the burden of proof below and the burden of demonstrating error on appeal—

Edward Jones. When an appellant fails to challenge a trial court’s alternative, independent basis

for its ruling, we will affirm. Fairpark, LLC v. Healthcare Essentials, 2011 Ark. App. 146, 381

S.W.3d 852. We thus affirm the trial court’s decision without reaching the merits of Edward

Jones’s arguments, and we express no opinion on whether a signature by an Edward Jones

representative was required to establish mutual agreement.

Affirmed.

GRUBER, C.J., and SWITZER, VAUGHT, and HIXSON, JJ., agree.

HARRISON, J., dissents.

Bequette, Billigsley & Kees, P.A., by: George J. Bequette, Jr., for appellants.

Humphries, Odum & Eubanks, by: Brent J. Eubanks, for appellees.