[00:00:01] Speaker 00:
Good morning, your honors.

[00:00:03] Speaker 00:
May it please the court, I'm Elizabeth Thelmuth for the Appellant Ameriprise Financial Services, and I respectfully reserve two minutes for rebuttal.

[00:00:11] Speaker 00:
All right.

[00:00:12] Speaker 00:
Upon further review of the underlying briefs and in determining and reviewing the court's order from earlier this week, dated October 6th, we believe there are now only two single issues before the court today.

[00:00:25] Speaker 00:
The first issue is whether the district court had subject matter jurisdiction pursuant to 28 USC 1332A and whether the underlying pleadings sufficiently alleged diversity of citizenship and the required jurisdictional amount and controversy.

[00:00:41] Speaker 00:
What I understand by way of the court's October 6th order is that the court is suggesting that it does not have jurisdiction to even address this appeal.

[00:00:51] Speaker 00:
Or alternatively, the court is trying to determine whether Mr. Marshall must amend his pleading to assert proper subject matter jurisdiction.

[00:01:00] Speaker 00:
Now, the complaint only makes a blatant statement that there is subject matter jurisdiction under 28 USC 1332A, but it does not set forth any specific facts regarding the citizenship of both parties, nor whether the plaintiff can meet the minimum jurisdictional amount that's in controversy here.

[00:01:21] Speaker 00:
We believe that Mr. Marshall will be able to amend properly to establish diverse citizenship, but we are unsure whether he will be able to meet the amount and controversy thresholds, and we believe this requires further proceedings at the district court level.

[00:01:37] Speaker 00:
It is unclear based on the record, the complaint, and particularly the district court's ruling on the motion to compel arbitration, whether Mr. Marshall's claims total $75,000.

[00:01:50] Speaker 03:
So is your position a limited remand for the district court to determine a diversity jurisdiction?

[00:01:57] Speaker 00:
We are also asking a remand, Your Honor, for there to be an evidentiary hearing on the fiduciary issue and the scope of that fiduciary duty that existed between Mr. Marshall and Mr. Ghentafari.

[00:02:08] Speaker 03:
Did you ask for an evidentiary hearing the first time around?

[00:02:12] Speaker 00:
The evidentiary hearing, we did not, Your Honor.

[00:02:14] Speaker 00:
However, that being said, the record indicates that there was a discussion amongst the court about the lack of evidence given the fact that Mr. Ginzenfari has since deceased.

[00:02:28] Speaker 00:
And we believe that it was an abuse of discretion by the trial court to not allow for an evidentiary hearing to occur and take place.

[00:02:39] Speaker 04:
How is it an abuse of discretion if you didn't ask for it?

[00:02:45] Speaker 00:
well your honor you're playing the court responded to a motion and abused its discretion so what you're arguing is there's a sui sponte duty to have a hearing and what's your authority for that yes there was a sui sponte obligation by the district court to and what case does that the we don't have a direct case on point your honor but the ashburn case is

[00:03:12] Speaker 00:
somewhat on point and suggests that an evidentiary hearing when there are particular factual issues, which there were in this case, given the fact that there was such a limited amount of evidence available to Ameriprise, that the court should have made that determination to respond to that evidentiary hearing was necessary.

[00:03:31] Speaker 04:
So tell me what you would do at an evidentiary hearing since your primary witness is deceased and unavailable.

[00:03:36] Speaker 00:
We needed to have the opportunity, your honor, in order to cross-examine Mr. Marshall to determine his credibility.

[00:03:43] Speaker 00:
In this instance, the fiduciary relationship that existed between Mr. Marshall and Mr. Ghazanfari, it's a unique relationship considering the fact that Mr. Marshall is alleging that he's a vulnerable adult because he suffers from dyslexia.

[00:04:05] Speaker 00:
The district court erred in not allowing us to further cross-examine and determine whether or not Mr. Marshall, number one, was credible, and number two... And where did you ask for that?

[00:04:20] Speaker 00:
We did not ask for the ability to cross-examine him.

[00:04:22] Speaker 04:
So when you say he erred when he didn't allow us to, you didn't ask, so he wasn't presented with that decision, right?

[00:04:29] Speaker 03:
That's correct your honor, but we believe that it was an abuse of discretion by there's no authority for that when you don't ask for something It's generally waived to the extent you had that right So let's work with the record that we have understood your honor

[00:04:44] Speaker 00:
I want to just touch briefly back to the subject matter jurisdiction issue because we, again, we believe that the record is somewhat incomplete and that it is necessary for Mr. Marshall to amend his pleading in order to establish whether or not he can meet the $75,000 threshold.

[00:05:02] Speaker 00:
What's relevant here is that the court ruled that all claims relating to the trust belong in arbitration.

[00:05:08] Speaker 00:
And in 2017, when the trust was created, the annuities that are at issue moved into that trust.

[00:05:14] Speaker 00:
So the issue now is what claims remain still to Mr. Marshall and whether or not those claims can meet the jurisdictional threshold of $75,000.

[00:05:26] Speaker 00:
In this regard, the issues pertaining to arbitrability and the amount that's actually in controversy are so intertwined that remand to the district court would be appropriate for further proceedings.

[00:05:38] Speaker 03:
Right, can you tackle the record that we have on the fiduciary relationship and the vulnerability that Marshall is claiming?

[00:05:46] Speaker 00:
Yes, Your Honor.

[00:05:47] Speaker 00:
So with respect to the vulnerability, Mr. Marshall and what's clearly set forth in the record is that he is a college-educated individual.

[00:05:56] Speaker 00:
He had a highly successful career as an insurance broker for nearly 20-plus years.

[00:06:02] Speaker 00:
He alleges that he has a dyslexia diagnosis and the sole document that he relies upon and

[00:06:08] Speaker 00:
establishing that diagnosis is a letter that is dated from the late 1980s from the University of Cal State Berkeley.

[00:06:18] Speaker 00:
And we do not know based on that letter in and of itself whether or not.

[00:06:25] Speaker 00:
He put in a declaration, right?

[00:06:27] Speaker 00:
He attached it to his declaration.

[00:06:29] Speaker 03:
Right.

[00:06:30] Speaker 03:
So that's evidence that the district court is considering saying that he has a 20-year fiduciary relationship.

[00:06:38] Speaker 03:
20 year fiduciary relationship with this advisor and he informed the advisor from the very beginning that he has trouble reading and would be relying on the advisor to alert him to any important provisions and then periodically he would remind the advisor every time documents came up that he has this issue with reading.

[00:07:04] Speaker 03:
So why isn't that enough to support the district court's findings?

[00:07:08] Speaker 00:
Well, it's not enough to support the district court's finding, your honor, because as the concurring opinion held in Brown, in the instances where fiduciary duty is raised to a heightened standard, where there is this obligation to disclose the context of an arbitration provision to a client, it's very limited in certain situations where there's a vulnerable adult and where there's trust and confidence that's being created by way of the relationship.

[00:07:36] Speaker 00:
There's nothing in the record indicating that Mr. Marshall did not have the ability to discover the terms of the contract.

[00:07:43] Speaker 00:
All that his disability diagnosis, this dyslexia allegation indicates is that- But that's where the trust comes from, right?

[00:07:52] Speaker 03:
You hire an advisor, you tell the advisor, I'm going to rely on you to tell me if there's anything important because I have trouble reading and digesting the information, then periodically throughout an extensive

[00:08:05] Speaker 00:
Two-decade long relationship you periodically remind the advisor of that that that's not a trusting relationship the trusting relationship not necessarily from our perspective your honor know because the issue here is whether or not he he could have had the ability to discover the underlying terms of the contract and the record is clear that

[00:08:33] Speaker 00:
He didn't have an inability to read.

[00:08:35] Speaker 00:
It's just that it was going to take him more time.

[00:08:37] Speaker 00:
In fact, if you go through the declaration, he makes representations that it would have been, quote unquote, exhausting for him to read.

[00:08:45] Speaker 00:
And that's directly in contrast with the cases like Ashburn and Brown, where the plaintiffs in those cases testified to points that the advisors were trying to rush them through the execution of the contracts.

[00:08:59] Speaker 00:
There's nothing in the declaration indicating that Mr. Marshall was being rushed

[00:09:03] Speaker 00:
to execute these contracts.

[00:09:05] Speaker 00:
There's nothing indicating that he wasn't provided an opportunity to take the contract home and review it and go through it himself thoroughly.

[00:09:12] Speaker 00:
All that is indicated in the record is that it would have taken him more time to read, not that he could not read, not that he could not understand what the terms of the contract said.

[00:09:23] Speaker 00:
And that's directly in comparison to the facts of Brown.

[00:09:27] Speaker 00:
where in that case the plaintiff was elderly and blind and therefore did not have the ability to discover what the underlying contract said or similarly in Lynch where there the plaintiff only had a ninth grade education less than a high school degree and arguably he probably didn't even have the mental capacity to even understand what the word arbitration even meant, which is unlike the plaintiff in this case, Mr. Marshall.

[00:09:52] Speaker 00:
He is a seasoned and highly successful insurance broker

[00:09:56] Speaker 00:
And while he might have had

[00:09:59] Speaker 00:
some challenges in the time amount that it took him to read something, that does not necessarily mean that he could not read, and that does not necessarily mean that he did not have the ability to understand.

[00:10:10] Speaker 00:
And that's what's crucial, because an essential element of fraud in the execution, a defense to that claim, is that if the plaintiff has the ability to actually discover what the contract states, and that's from the holding of Brown, then there is no fraud in the execution.

[00:10:27] Speaker 00:
And here,

[00:10:28] Speaker 00:
There is nothing indicating that Mr. Marshall could not have done that.

[00:10:33] Speaker 00:
And that's also, if we're going to look to the Ashburn case, which I anticipate Ms.

[00:10:39] Speaker 00:
Stewart will bring up, the issue there was that whether or not the plaintiffs were actually provided a copy of the arbitration agreement.

[00:10:46] Speaker 00:
There's nothing within the declaration or this record indicating that Mr. Marshall was never provided a copy of the agreement.

[00:10:57] Speaker 00:
that he actually had a copy of them just that he had and needed additional more time to be able to review them.

[00:11:07] Speaker 00:
This is exactly why having an evidentiary hearing would have been necessary because we needed to have an opportunity to cross examine Mr. Marshall and determine

[00:11:16] Speaker 00:
the extent of this disability.

[00:11:19] Speaker 00:
We also needed to know whether or not the challenges he experienced in college based on this letter he relied upon, whether they were still applicable when he was even an Ameriprise client.

[00:11:31] Speaker 00:
Dyslexia is an interesting diagnosis.

[00:11:35] Speaker 00:
It's a reading challenge.

[00:11:37] Speaker 00:
It doesn't necessarily mean that you can read.

[00:11:39] Speaker 00:
It's a hurdle that arguably could improve over time.

[00:11:41] Speaker 00:
So we also needed an opportunity to ask him about that.

[00:11:45] Speaker 00:
and all of these various factual issues, they must be resolved at the district court.

[00:11:53] Speaker 00:
Just going back to the, Your Honor asked a question about the trust component and we believe also that the trial court erred in treating this mere existence of a fiduciary duty and the relationship that existed prior to the 2010 time period was impute,

[00:12:13] Speaker 00:
was able to be imputed upon Ameriprise.

[00:12:16] Speaker 00:
There's not enough information in comparison to the cases like Brown where there was this relationship that existed previously that related to having meetings or managing assets, review of financial account statements.

[00:12:28] Speaker 00:
There's nothing in the record indicating that that level of a relationship was established before these contracts were executed.

[00:12:45] Speaker 00:
And I just want to make one final point for the court, because the issue of the abusive discretion did come out, come up previously by your honor, and the court in Ashburn made clear that failure to exercise as discretion conferred and compelled by law constitutes a denial of a fair hearing, deprivation of fundamental procedural rights, and an abusive discretion.

[00:13:07] Speaker 00:
And for those reasons, we respectfully request that the court remand.

[00:13:11] Speaker 00:
And I'll reserve the remainder of my time.

[00:13:12] Speaker 00:
Thank you.

[00:13:13] Speaker 03:
Thank you, counsel.

[00:13:21] Speaker 02:
Thank you, Your Honor.

[00:13:22] Speaker 02:
My name is Melinda Stewart, and I represent the respondent, John Marshall.

[00:13:27] Speaker 02:
First, with respect to federal court jurisdiction, the complaint alleges in paragraphs one, two, and three, respectively, that Plaintiff John Marshall was a resident of California, that John Marshall Irrevocable Trust is a California trust with its principal place of business in California, and Ameriprise is a foreign corporation.

[00:13:48] Speaker 02:
The complaint also alleges losses and damages on investments which totaled $797,000 that were made between 2009 and 2012.

[00:13:57] Speaker 02:
We did allege damages in a sum according to proof.

[00:14:02] Speaker 02:
It is true we did not say in a sum according to proof that's in excess of $75,000.

[00:14:07] Speaker 02:
I think it could be reasonably inferred that when the investments at issue

[00:14:12] Speaker 02:
We're 797,000.

[00:14:14] Speaker 02:
We're going to be talking about more than $75,000 in damages.

[00:14:18] Speaker 01:
If we felt that the complaint was inadequate on these points, on complete diversity and on the amount in controversy, do you believe you would be able to replete this if you were given that opportunity and you would be able to satisfy the requirements for diversity jurisdiction?

[00:14:35] Speaker 02:
Absolutely, and in fact we had to certify to the court when we filed to the district court We had to check off a box that the amount of damages was in excess of 75,000 right, but that's not in your pleading.

[00:14:45] Speaker 04:
So that's the problem with jurisdiction we gauged jurisdiction by the pleadings and you didn't allege Citizenship you only alleged residents, which is not the same and

[00:14:58] Speaker 04:
And you didn't allege the amount of controversy that's required.

[00:15:02] Speaker 04:
Now, I have fair confidence you could amend, but jurisdiction is jurisdiction.

[00:15:10] Speaker 04:
And of course, you've read our recent case where the language about the same as yours and our panel in a binding opinion, a binding on us, reversed.

[00:15:22] Speaker 02:
And I stand corrected on that.

[00:15:24] Speaker 02:
I didn't actually think that was going

[00:15:26] Speaker 02:
come up as an issue.

[00:15:27] Speaker 04:
Right, I mean, they didn't raise it, so I get that, but it's a concern, and so that's why we issued the order to make sure you had an ample opportunity to think about it before getting here.

[00:15:39] Speaker 02:
And it's true, we did allege residency and not citizenship.

[00:15:42] Speaker 02:
I do realize those can be different things, and it doesn't allege that the damages are expected to exceed $1 million.

[00:15:50] Speaker 02:
They're not

[00:15:51] Speaker 02:
We don't have them quantified to the dollar, but we can certainly amend or complain to make it clear that we are talking about more than $75,000.

[00:15:59] Speaker 04:
So would you, just for my interest, what's your damage theory and if you were to put a number on the board today, what number would that be?

[00:16:11] Speaker 02:
So the damages are the difference between the return that he should have realized on the annuities between the time he purchased them and the time they were sold.

[00:16:20] Speaker 02:
and what actually was realized.

[00:16:24] Speaker 02:
Now, there is an issue that shortly before one of them was sold or a couple of them were sold, they were transferred to the trust.

[00:16:31] Speaker 02:
But he had less to transfer to the trust because of the lack of growth.

[00:16:38] Speaker 02:
And to the extent, because we realized that there might be some confusion or overlap, the trust assigned its claims regarding those particular three annuities to John Marshall.

[00:16:50] Speaker 02:
As far as those three annuities go, they were owned by John Marshall, they were purchased by John Marshall, the suitability decision was with respect to John Marshall.

[00:16:59] Speaker 02:
We've done a rough calculation as to what those accounts would have returned over that time frame.

[00:17:05] Speaker 02:
If they'd been invested into market investments, ran some different rough portfolios, and we estimate to be over a million dollars.

[00:17:15] Speaker 02:
Thank you.

[00:17:15] Speaker 02:
As far as the substance of what we were here about, which is the

[00:17:20] Speaker 02:
Motion to propel arbitration.

[00:17:21] Speaker 02:
I think the panel already probably understands what our argument is going to be on the evidentiary hearing.

[00:17:28] Speaker 02:
They waived it.

[00:17:30] Speaker 02:
It's that simple.

[00:17:31] Speaker 02:
They didn't ask for one.

[00:17:32] Speaker 01:
Right, but we don't need one if the evidence doesn't even rise to the level of showing that this would fall within really the exception for under California law for when you're not expected to read a contract.

[00:17:45] Speaker 01:
I mean, the presumption is that you are expected to read one.

[00:17:49] Speaker 01:
And so you're trying to fit this case into some of the exceptions that have been recognized.

[00:17:54] Speaker 01:
And so I'd like to hear your view on why you think you meet those.

[00:17:57] Speaker 02:
Sure, and there's two reasons.

[00:17:59] Speaker 02:
One is the fiduciary relationship, and then you add onto that the fact that he's dyslexic.

[00:18:04] Speaker 02:
You don't actually need the dyslexia to meet that standard, because

[00:18:10] Speaker 02:
If you've got a fiduciary relationship, that is an exception under California law that's well recognized, not only in the three... I don't know that that's right.

[00:18:17] Speaker 01:
I mean, I think that the cases talk about people who have certain vulnerabilities or certain specific situations.

[00:18:23] Speaker 01:
I don't think the California law says that fiduciaries always have a duty to inform the other side about an arbitration clause.

[00:18:31] Speaker 01:
It's expected that you would read the contract usually.

[00:18:34] Speaker 02:
Well, I think that it's expected when you're not in a fiduciary relationship.

[00:18:37] Speaker 02:
There are cases outside of the arbitration context

[00:18:40] Speaker 02:
which hold that you don't have constructive knowledge of what's in documents that you receive but might not read because you are entitled to trust on your fiduciary.

[00:18:49] Speaker 02:
In the arbitration context, starting with the Ashman case, the six people who were my clients because it is my case, none of them had any difficulty reading.

[00:18:59] Speaker 02:
They were middle-aged people.

[00:19:01] Speaker 02:
They weren't blind.

[00:19:02] Speaker 02:
They weren't infirm.

[00:19:02] Speaker 02:
They weren't dyslexic.

[00:19:04] Speaker 02:
But the court still held that if the fiduciary relationship had arisen, which is what the evidence suggested,

[00:19:10] Speaker 02:
then there would be an obligation to explain the material terms of the contract, including the arbitration provision.

[00:19:17] Speaker 01:
Wasn't there a question in that case as to whether they even provided with it at all?

[00:19:20] Speaker 02:
Well, that was the second.

[00:19:21] Speaker 02:
There were two issues.

[00:19:22] Speaker 02:
I mean, actually, we had three issues, but one's not addressed in the opinion.

[00:19:26] Speaker 02:
So the first was the issue whether they even received them, and that was disputed.

[00:19:31] Speaker 02:
And then there was the issue of whether, if they had received them, whether because of the fiduciary relationship,

[00:19:39] Speaker 02:
they would have been obligated to read them.

[00:19:41] Speaker 02:
They were two separate points that the court made, two separate holdings within the same case.

[00:19:47] Speaker 02:
So multiple issues, but the same reasoning.

[00:19:53] Speaker 02:
And then if you look at the Lynch case, Mr. Lynch was a multimillionaire.

[00:19:57] Speaker 02:
Sure, he had a ninth grade education, but there was no evidence that he was illiterate.

[00:20:02] Speaker 02:
And it was a trust on the broker.

[00:20:04] Speaker 02:
And then you have this case where you also have a vulnerability because Mr. Marshall

[00:20:08] Speaker 02:
it's undisputed, is dyslexic.

[00:20:12] Speaker 02:
I mean, that was what he stated.

[00:20:13] Speaker 02:
He explained that it was readings exhausting.

[00:20:16] Speaker 02:
He's not saying he's unable to read.

[00:20:18] Speaker 02:
If you give him enough time, he can read something, but it's difficult, especially when it's eight.

[00:20:24] Speaker 01:
But there's not an allegation that he wasn't given enough time, right?

[00:20:27] Speaker 01:
I mean, he's come forward and said, I have difficulty reading.

[00:20:30] Speaker 01:
And he's attached to that a document from many decades ago, I guess, when he was in college.

[00:20:36] Speaker 01:
And in the time since, he's

[00:20:38] Speaker 01:
seemingly been a successful business person who has a pretty significant net worth.

[00:20:44] Speaker 02:
Right, and you can be a successful business person and still have difficulty reading.

[00:20:48] Speaker 04:
Right, but your opponent argues difficulty does not mean impossibility.

[00:20:56] Speaker 04:
And the argument is, you've just heard it, that he says it takes me a long time, therefore I rely on others.

[00:21:07] Speaker 04:
That seems to me a bit different from someone who can't comprehend a document at all.

[00:21:13] Speaker 02:
Right.

[00:21:13] Speaker 02:
And we're not saying it's the same.

[00:21:14] Speaker 04:
Absolutely not.

[00:21:15] Speaker 04:
Yeah.

[00:21:16] Speaker 04:
So tell me, why do you think the difference is... Why do you think there's no difference?

[00:21:23] Speaker 02:
Well, what I think the difference is here is that Mr. Marshall, in his unrebutted declaration, said, I specifically said to Mr. Ghazanfari, you know, I trust you.

[00:21:33] Speaker 02:
I'm relying on you.

[00:21:34] Speaker 02:
You know it's hard for me to read.

[00:21:36] Speaker 02:
I'm dyslexic.

[00:21:38] Speaker 02:
Can you let me know if there's something important in here?

[00:21:41] Speaker 02:
And Mr. Ghazanfari accepted that responsibility and said, no, these are just formalities.

[00:21:47] Speaker 02:
You don't need to worry about it.

[00:21:48] Speaker 02:
There's nothing.

[00:21:50] Speaker 02:
It's just so that I can manage your account.

[00:21:52] Speaker 02:
That's the key difference.

[00:21:53] Speaker 02:
If Mr. Marshall had kept silent about his dyslexia or if Mr. Ghazanfari had said, you know what?

[00:21:59] Speaker 02:
You really need to read this.

[00:22:00] Speaker 02:
I can't help you with that.

[00:22:02] Speaker 02:
It'd be a different situation.

[00:22:04] Speaker 02:
But the situation we have here is you have the combination of all these factors in what, as the district court stated, makes this case fairly unique.

[00:22:13] Speaker 02:
And certainly unique to any case I've had, where you have the 20-year relationship, the dyslexia, which makes it hard for Mr. Marshall to read.

[00:22:21] Speaker 02:
And I can tell you, I've had him as a client for a while, and it takes him a very long time to read things.

[00:22:27] Speaker 02:
I'm not going to say it's impossible.

[00:22:29] Speaker 02:
especially when it's densely worded and packed in like these agreements.

[00:22:34] Speaker 02:
And you have him specifically asking Mr. Ghazanfari to let him know if there's anything important.

[00:22:41] Speaker 02:
And Mr. Ghazanfari specifically accepting that responsibility.

[00:22:45] Speaker 01:
Is there authority that you're aware of that says if someone's capable of reading something, they can essentially shift that duty to somebody else by just telling them, I'm putting that on you?

[00:22:59] Speaker 02:
Well, I think what the case law suggests is that if you've got a fiduciary relationship of trust and reliance, then the fiduciary does have the duty to explain the material terms of the contract.

[00:23:10] Speaker 02:
And those are not my words.

[00:23:11] Speaker 02:
That's an exact quote from the Ashburn case.

[00:23:15] Speaker 02:
And that's also the facts that were in Lynch, where they said they had a relationship of trust and reliance upon their advisor.

[00:23:22] Speaker 02:
And the advisor told them the agreements were just formalities.

[00:23:26] Speaker 02:
And because of that relationship of trust and reliance,

[00:23:29] Speaker 02:
they could trust and rely upon them.

[00:23:31] Speaker 02:
And so those cases are authority.

[00:23:34] Speaker 02:
Now, there isn't 20 cases on this because this is a pretty unique situation, but you do have several published cases, at least three of them, which hold specifically that in a relationship of trust and reliance, the fiduciary does have the duty to explain the material

[00:23:52] Speaker 02:
terms because you're not dealing at arm's length.

[00:23:56] Speaker 01:
What do we make of the fact that Ashburn remanded for an evidentiary hearing?

[00:24:00] Speaker 01:
I know your position is that it was waived here and I understand that, but I mean it sort of shows some of the complexities that can be associated with some of these things.

[00:24:08] Speaker 02:
So in Ashburn there were direct conflicts.

[00:24:12] Speaker 02:
There was a declaration from the broker and from the firm that said, I gave them the arbitration agreements.

[00:24:18] Speaker 02:
And then there were declarations from my clients, I've never seen these arbitration agreements.

[00:24:22] Speaker 02:
I never saw these arbitration agreements.

[00:24:25] Speaker 02:
That's about as direct as a conflict as you can get.

[00:24:28] Speaker 02:
And there was conflicting evidence on whether they'd formed a fiduciary relationship.

[00:24:32] Speaker 02:
Well, I didn't really advise them about anything.

[00:24:34] Speaker 02:
No, she did advise me about things.

[00:24:36] Speaker 02:
So when you have directly conflicting evidence, you need that.

[00:24:39] Speaker 01:
But here... Well, I mean, here it's not really possible if Mr. Gundanfari is no longer alive.

[00:24:45] Speaker 02:
Right.

[00:24:46] Speaker 02:
Well, and that is a problem whenever you have somebody who's deceased.

[00:24:49] Speaker 02:
And I don't mean to make light of that.

[00:24:50] Speaker 02:
I've had clients who were deceased where I'm representing a trust.

[00:24:53] Speaker 02:
And the opponent says, they said XYZ, and I can't rebut it.

[00:24:57] Speaker 02:
It's the unfortunate reality that people who passed on aren't here to testify.

[00:25:01] Speaker 02:
There might be notes in the file.

[00:25:03] Speaker 02:
But the reality is, if you had an evidentiary hearing, Mr. Marshall isn't going to go up there and say, no, I'm not really dyslexic.

[00:25:10] Speaker 02:
No, I didn't really trust Mr. Ghazanfari.

[00:25:12] Speaker 02:
No, I didn't really ask him.

[00:25:15] Speaker 02:
His testimony has to be credited as being credible.

[00:25:20] Speaker 02:
It was unrebutted.

[00:25:23] Speaker 02:
And there was no indication by Ameriprise in the trial court to the contrary.

[00:25:28] Speaker 02:
I mean, none of these issues were actually disputed when we were litigating this in the court below.

[00:25:37] Speaker 02:
So I appreciate your questions.

[00:25:40] Speaker 02:
I'm looking to see if there's anything that we didn't cover.

[00:25:44] Speaker 02:
I think, again, I would just reiterate that there is a long-standing, you know, California case law that in a fiduciary relationship, you are entitled to trust and rely upon that fiduciary.

[00:25:56] Speaker 02:
You're not talking about the shoe salesperson at Nordstrom or the doctrine of caveat emptor.

[00:26:02] Speaker 02:
And so you have a 20-year relationship of trust and reliance and you have a specific request of the fiduciary and the fiduciary agreeing to that request, which is an undertaking of that responsibility.

[00:26:14] Speaker 02:
So in a different factual scenario, if Mr. Marshall had not asked Mr. Ghazanfar to let me know if there's something important, then we might be talking about a different outcome.

[00:26:28] Speaker 02:
But you have that factual scenario.

[00:26:30] Speaker 02:
You have him undertaking that responsibility.

[00:26:33] Speaker 02:
And so for those reasons, we believe that the decision was correctly decided under California law and that there should not be remanded on that point.

[00:26:43] Speaker 03:
Thank you, counsel.

[00:26:49] Speaker 03:
You've got a couple of minutes, counsel.

[00:27:00] Speaker 00:
Thank you, your honors.

[00:27:01] Speaker 00:
I'll just be making two points briefly on rebuttal.

[00:27:04] Speaker 00:
First, Ms.

[00:27:05] Speaker 00:
Stewart is inflating the holding of Ashburn, and I just want to highlight for the court that the holding in that case does not indicate

[00:27:15] Speaker 00:
whatsoever that a fiduciary relationship De facto creates an obligation for an advisor to go over material terms of a contract in fact if you go the the sec the final page of the decision makes clear that if the defendant is in a fiduciary relationship with the plaintiff which requires a

[00:27:40] Speaker 00:
the defendant to explain the terms of the contract between them, then failure to read the contract would be reasonable.

[00:27:46] Speaker 00:
What we're looking at here is whether or not there is a requirement under that relationship.

[00:27:51] Speaker 00:
And the requirement based on the holdings of both Brown, Lynch, and even Ashburn is either whether or not there was a vulnerable adult or alternatively whether or not there was an opportunity to actually discover the terms of the contract.

[00:28:06] Speaker 01:
So your friend on the other side says, well, we, you know, Mr. Marshall told Mr. Ghazanfari that he was relying on him for this.

[00:28:14] Speaker 01:
So what's your response to that?

[00:28:16] Speaker 00:
Well, my response to that, number one, Your Honor, is that we needed to have an opportunity to actually cross-examine Mr. Marshall about those representations.

[00:28:25] Speaker 00:
And two,

[00:28:26] Speaker 00:
The scope of the fiduciary duty also requires that the fiduciary accepts those additional responsibilities upon him.

[00:28:34] Speaker 00:
And there's absolutely nothing in the record, nothing in the declaration indicating that Mr. Ghazanfari whatsoever agreed to read over all of these contracts with him.

[00:28:43] Speaker 04:
Well, sure there is.

[00:28:44] Speaker 04:
There is a declaration of Mr. Marsh.

[00:28:47] Speaker 04:
There's a declaration of Mr. Marshall, but nothing in the agreement says that... No, no, I understand that, but I mean, I'm looking at what the trial court was looking at, and he had a declaration that basically satisfied the argument you're making, and nothing on the other side.

[00:29:02] Speaker 04:
And you're just saying we needed to cross without any evidence to the contrary.

[00:29:11] Speaker 00:
The declaration states, your honor, that Mr. Marshall made repeated representations that he had a difficulty reading and that he would trust that Mr. Gensenfari would read to him.

[00:29:21] Speaker 00:
And in response, Mr. Gensenfari allegedly said, yes, I have your best interests at heart.

[00:29:26] Speaker 00:
But there is nothing within that declaration indicating that Mr. Gensenfari said, yes, if there is something that is material within this contract, I agree that I am going to read it to you.

[00:29:38] Speaker 00:
In fact, we should have had an opportunity, presumably, if this relationship stretched over a 20-year period of time, we should have had an opportunity to cross-examine Mr. Marshall and say, well, presumably, when you purchased other securities, there would have been very in-depth contracts that you had to review, including the interviews.

[00:29:55] Speaker 04:
Here's my issue with you, which is, or your argument, I should say.

[00:30:00] Speaker 04:
We probably have the power to remand for an evidentiary hearing, but you're complaining about the District Court's action when you didn't ask for it.

[00:30:09] Speaker 04:
And that's awfully hard to say.

[00:30:10] Speaker 04:
The District Court, you erred in denying a motion that was never made.

[00:30:16] Speaker 00:
Understood, Your Honor.

[00:30:17] Speaker 00:
I think, going back to the record, the transcript from the motion itself is really telling, because within that transcript, we bring up the issue that we did not have the ability to cross-examine.

[00:30:29] Speaker 00:
We bring up the issue that there is a lack of evidence here because we have a deceased broker.

[00:30:33] Speaker 00:
Unlike the Ashburn case handled by my colleague, Ms.

[00:30:37] Speaker 00:
Stewart, in that case there was a lot of conflicting evidence because there was an ability to submit conflicting evidence.

[00:30:42] Speaker 00:
We did not have that ability.

[00:30:44] Speaker 04:
Well, that's what the district courts have.

[00:30:46] Speaker 04:
You don't have the ability to submit conflicting evidence because you have a deceased broker.

[00:30:51] Speaker 04:
I have to decide with the declarations I have.

[00:30:55] Speaker 00:
Right, and we believe that's where the district court aired.

[00:30:58] Speaker 00:
It should have said right there that an evidentiary hearing is necessary.

[00:31:03] Speaker 03:
I understand your argument and you're over time.

[00:31:05] Speaker 03:
Thank you very much, counsel.

[00:31:07] Speaker 03:
Both sides of the argument.

[00:31:08] Speaker 03:
This morning the matter is submitted.