Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, No. 37-2009-00084899-CU-PN-CTL Ronald S. Prager, Judge.
McDONALD, J.
Defendant Gary M. Erickson, an attorney, appeals an order denying his Code of Civil Procedure section 1281.2 motion to compel arbitration of the action filed by plaintiff Betsy Merritt arising out of her investment in Remley La Jolla, LLC (Remley), a real estate development company Erickson controlled. On appeal, Erickson contends the evidence is insufficient to support the trial court's findings that: (1) at the time of the investment transaction Merritt was his client for purposes of rule 3 300 of the Rules of Professional Conduct of the State Bar of California; and (2) the transaction and its terms were not fair and reasonable to her. He also contends the evidence shows he advised her in writing that she may seek the advice of an independent attorney, she was given a reasonable opportunity to seek advice before she entered into the transaction, and she thereafter consented in writing to the terms of the transaction.
All statutory references are to the Code of Civil Procedure unless otherwise specified.
All rule references are to the Rules of Professional Conduct of the State Bar of California.
FACTUAL AND PROCEDURAL BACKGROUND
Because we apply the substantial evidence standard of review in determining this appeal, we set forth the factual background in this case based on evidence favorable to Merritt.
In 2004, Merritt retained Erickson to represent her regarding a number of legal matters, including representation at a deposition, trust and estate issues, and the formation of a limited liability company. He drafted a declaration of trust for her. He also advised her regarding her mother's estate. In 2006, he advised her regarding a lease for commercial property she was renting, a personal loan she was planning to make, her estate plan, and documentation for the possible purchase of Santee real property. In 2007, he advised her regarding the purchase contract for the sale of a business and a small claims action she had filed against former renters.
In early November 2007, Merritt apparently contacted Erickson, in his capacity as a real estate broker, inquiring whether he knew of any real estate investment opportunities to complete her Internal Revenue Code section 1031 exchange. In December, Erickson asked her to make a short term loan to him and his agency, Prudential Dunn Realtors (Prudential), apparently for a real estate transaction. Subsequently, he sent her various documents for her proposed investment in the Remley development project. In exchange for her loan to Remley of about $729,579.74, Merritt would receive a 49 percent membership interest in Remley, while Erickson would receive a 51 percent controlling interest in Remley and act as its managing member in exchange for his capital contribution of $132,750. On or about December 17, Merritt signed an investor member subscription agreement, Erickson signed articles of incorporation to form Remley, and they both signed Remley's operating agreement. The operating agreement contained an arbitration clause governing any dispute arising out of the agreement. On or about December 28, Merritt transferred $729,579.24 to the escrow company as a deposit toward the purchase of the Remley property. On or about December 31, the escrow for the purchase of the Remley property apparently closed.
Section 13.10 of the operating agreement provided: "Except as otherwise provided in this Agreement, any dispute arising out of this Agreement shall be submitted to the American Arbitration Association for resolution. The arbitration shall be scheduled to take place in San Diego, California, and all of the fees and costs of the arbitration shall be shared equally by the parties. Attorney fees may be awarded to the prevailing party at the discretion of the arbitrator, but the arbitrator shall have no power to alter or amend this Agreement or to award any relief inconsistent with the provisions herein or unavailable in a court of law."
On or about January 7, 2008, Erickson, as Remley's managing member, signed a promissory note pursuant to which Remley agreed to pay Merritt $729,579.74, with accrued interest at a rate of 12 percent, on or before December 31, 2008. On January 9, Erickson sent Merritt a letter informing her that he considered his contribution of $132,750 that he made before Remley was incorporated to be his capital contribution required by Remley's operating agreement. That letter also stated that, on Remley's payment of Merritt's loan, she would receive a 10 percent equity share in the project and other capital contribution adjustments would be made.
On March 11, 2009, Merritt filed the instant action against Erickson and Prudential "for rescission and damages, " alleging causes of action for: (1) legal malpractice; (2) breach of fiduciary duty; (3) professional negligence (as a real estate agent/broker); (4) negligent supervision (against Prudential); (5) accounting; and (6) fraud. Erickson filed a section 1281.2 motion to compel arbitration of the causes of action against him pursuant to the arbitration provision set forth in Remley's operating agreement. He submitted his declaration and lodged exhibits in support of his motion. Merritt opposed the motion to compel, arguing the operating agreement, including its arbitration provision, was void or voidable because Erickson did not comply with rule 3 300's requirements before entering into the Remley transaction with her. She submitted her declaration and lodged exhibits in support of her opposition. Erickson filed a reply memorandum and a supplemental declaration and lodged supplemental exhibits in support of his motion.
On or about August 20, 2009, the trial court issued a tentative ruling denying Erickson's motion to compel arbitration. On August 28, the court heard arguments of counsel, confirmed its tentative ruling, and issued a minute order denying the motion. Erickson timely filed a notice of appeal.
DISCUSSION
I
Arbitration and the Standard of Review
Section 1281 provides: "A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." Because the right to arbitration depends on a contract, "a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract." (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) Section 1281.2 provides:
"On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶]... [¶] (b) Grounds exist for the revocation of the agreement...." (Italics added.)
"[A]rbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98, fn. omitted.) "In other words, although under federal and California law, arbitration agreements are enforced 'in accordance with their terms' [citation], such enforcement is limited by certain general contract principles ' "at law or in equity for the revocation of any contract." ' " (Discover Bank v. Superior Court (2005) 36 Cal.4th 148, 163.) The statutory term "revocation of a contract" is "a misnomer under California law. Offers are 'revoked' [citation]. Contracts are extinguished by rescission. [Citations.] [¶] The grounds for rescission under California law include mistake, lack of capacity, undue influence, material failure of consideration, duress, illegality... and, of course, fraud." (Knight et al., California Practice Guide: Alternative Dispute Resolution (The Rutter Group 2010) ¶ 5:111, p. 5-81 (rev. #1, 2008).) "If a contract includes an arbitration agreement, and grounds exist to revoke [or, more accurately, rescind] the entire contract, such grounds would also vitiate the arbitration agreement. Thus, if an otherwise enforceable arbitration agreement is contained in an illegal contract, a party may avoid arbitration altogether." (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 29-30.) "California law obligates the trial court [, not an arbitrator, ] to decide illegality issues when the entire contract is illegal." (Hotels Nevada, LLC v. Bridge Banc, LLC (2005) 130 Cal.App.4th 1431, 1437.) Illegal or unlawful contracts include those contrary to express provisions of law or contrary to the policy of express law. (Civ. Code, § 1667; Kelton v. Stravinski (2006) 138 Cal.App.4th 941, 949 ["In general, a contract contrary to public policy will not be enforced."]; Green v. Mt. Diablo Hospital Dist. (1989) 207 Cal.App.3d 63, 73.) Civil Code section 1689, subdivision (b), provides: "A party to a contract may rescind the contract in the following cases: [¶]... [¶] (5) If the contract is unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault...."
"In ruling on a petition to compel arbitration, the trial court may consider evidence on factual issues relating to the threshold issue of arbitrability.... Parties may submit declarations when factual issues are tendered with a motion to compel arbitration." (Engineers & Architects Assn. v. Community Development Dept., supra, 30 Cal.App.4th at p. 653.) In the summary proceedings on a motion to compel arbitration, "the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination." (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) "[T]he applicable standards of appellate review of a judgment based on affidavits or declarations are the same as for a judgment following oral testimony: We must accept the trial court's resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence." (Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.) As the parties in this case agree, the trial court's findings on disputed facts are reviewed on appeal for substantial evidence to support those findings. (Ibid.; Engineers, at p. 653; Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.) However, to the extent the trial court decided questions of law, on appeal we determine those questions de novo, or independently. (Robertson, at p. 1425.)
When an appellant contends the evidence is insufficient to support a judgment, order, or factual finding, we apply the substantial evidence standard of review. "Where findings of fact are challenged on a civil appeal, we are bound by the 'elementary, but often overlooked principle of law, that... the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, ' to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor in accordance with the standard of review so long adhered to by this court." (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) "Substantial evidence" is not synonymous with "any" evidence; rather, it means the evidence must be of ponderable legal significance, reasonable, credible, and of solid value. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) An appellate court presumes in favor of the judgment or order all reasonable inferences. (Id. at pp. 1632-1633.) If there is substantial evidence to support a finding, an appellate court must uphold that finding even if it would have made a different finding had it presided over the trial. (Rupf v. Yan (2000) 85 Cal.App.4th 411, 429-430 & fn. 5; Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.) An appellate court does not reweigh the evidence or evaluate the credibility of witnesses, but rather defers to the trier of fact. (Lenk v. Total-Western, Inc. (2001) 89 Cal.App.4th 959, 968; Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631.) "The substantial evidence standard [of review] applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial." (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.)
II
Finding That Merritt Was a "Client" under Rule 3 300
Erickson contends the evidence is insufficient to support the trial court's finding that at the time of the Remley transaction Merritt was his client for purposes of rule 3 300.
A
Rule 3 300, entitled "Avoiding Interests Adverse to a Client, " provides:
"A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied:
"(A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and
"(B) The client is advised in writing that the client may seek the advice of an independent lawyer of the client's choice and is given a reasonable opportunity to seek that advice; and
"(C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition."
It is implicit that rule 3 300's provisions do not apply unless the transaction or acquisition involves a "client" within the meaning of rule 3 300. If rule 3 300 applies to an attorney's business transaction with a client, the attorney's failure to comply with rule 3 300's requirements makes that transaction voidable at the client's election. (BGJ Associates v. Wilson (2003) 113 Cal.App.4th 1217, 1229.)
" 'The fiduciary relationship existing between lawyer and client extends to preliminary consultation by a prospective client with a view to retention of the lawyer, although actual employment does not result.' [Citation.] 'When a party seeking legal advice consults an attorney at law and secures that advice, the relation of attorney and client is established prima facie.' [Citation.] 'The absence of an agreement with respect to the fee to be charged does not prevent the relationship from arising.' " (Beery v. State Bar (1987) 43 Cal.3d 802, 811-812.) "An objective standard is used to determine whether an attorney's representation has been continuous." (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 887 [regarding statute of limitations for attorney malpractice claim].) "Continuity of representation ultimately depends, not on the client's subjective beliefs, but rather on evidence of an ongoing mutual relationship and of activities in furtherance of the relationship." (Worthington v. Rusconi (1994) 29 Cal.App.4th 1488, 1498, fn. omitted [regarding statute of limitations for attorney malpractice claim].) "Although not every contact between an attorney and his or her client will amount to representation, " communications between an attorney and client may manifest "an ongoing mutual relationship and the giving of legal advice in furtherance of that relationship." (Ibid.) "[I]n the event of an attorney's unilateral withdrawal or abandonment of the client, the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. [Citations.] That may occur upon the attorney's express notification to the client that the attorney will perform no further services...." (Gonzalez v. Kalu (2006) 140 Cal.App.4th 21, 30.)
B
In denying Erickson's motion to compel arbitration, the trial court implicitly, if not expressly, found Merritt was his client within the meaning of rule 3 300. The court stated: "[Merritt] presented evidence that she continually solicited [Erickson's] advice on various matters through 2007 and gained some knowledge regarding the funds [she] used in the Remley transaction." The court further noted that "[r]egardless of whether [Merritt] was a current or former client, case law and secondary sources state that '[a] "client" within the meaning of [rule] 3 300 includes present and former clients of the attorney.' " The court also cited Hunniecutt v. State Bar (1988) 44 Cal.3d 362, 371, in which the California Supreme Court stated: "[W]hen an attorney enters into a transaction with a former client, the transaction must be scrutinized for signs of unfairness despite the fact that the attorney-client relationship has terminated for most purposes." Furthermore, at the hearing on Erickson's motion and the trial court's tentative ruling, the court implicitly found there was a continuing attorney-client relationship between Merritt and Erickson. The court stated: "Wouldn't it be reasonable for a client who has used an attorney for that long, many... years, for many, many different transactions when dealing with that attorney even if there is not some ongoing thing right now that there is that trust. It doesn't just, you know, evaporate once the last transaction is complete.... [I]t lingers on. There is that relationship of trust." The court further stated: "I don't think it's unreasonable to believe that there was a contemporaneous [attorney-client] relationship...."
C
We conclude there is substantial evidence to support the trial court's finding that at the time of the Remley transaction Merritt was Erickson's client within the meaning of rule 3 300. There is substantial evidence to support a finding that Merritt and Erickson had a continuing attorney-client relationship that did not terminate until after the Remley transaction. In opposition to Erickson's motion to compel arbitration, Merritt submitted her declaration and lodged exhibits showing the nature of her continuing attorney-client relationship with Erickson. She declared that she retained Erickson in 2004 to represent her regarding certain legal matters, including representation at a deposition, trust and estate issues, the formation of a limited liability company, and advice regarding a real estate transaction. He drafted a declaration of trust for her and advised her regarding her mother's estate. He billed her for the services he provided in 2004. In 2005, Erickson continued providing services regarding her limited liability company and billed her for those services. In 2006, he advised her regarding a lease for commercial property she was renting, a personal loan she was planning to make, her estate plan, and documentation for the possible purchase of Santee real property. She also sought his advice regarding her use of her limited liability company. In April and May 2007, he advised her regarding the purchase contract for the sale of a business and a small claims action she had filed against former renters. Based on Merritt's declaration and supporting documentation, we conclude there is substantial evidence to support a finding that Merritt had an ongoing attorney-client relationship with Erickson, which relationship began in 2004 and continued through the time of the Remley transaction in December 2007. There is substantial evidence to support the finding that Merritt was Erickson's "client" within the meaning of rule 3 300 at the time of the Remley transaction. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort, supra, 91 Cal.App.4th at p. 887; Worthington v. Rusconi, supra, 29 Cal.App.4th at p. 1498; cf. In re Peavey (Review Dept. 2002) 4 Cal. State Bar Ct. Rptr. 483 [existing attorney-client relationship was found based on client's testimony regarding ongoing relationship and seeking legal advice over period of many years]; Matter of Hagen (Review Dept. 1992) 2 Cal. State Bar Ct. Rptr. 153 [parties stipulated, and evidence showed, that client had ongoing attorney-client relationship with attorney and had periodically visited attorney's office for legal assistance].)
Although Erickson cites evidence showing his last bill for legal services rendered to Merritt was in May 2005 and that he then informed her any new representation would require a new engagement letter, that evidence does not show there is insufficient evidence to support the trial court's finding that his attorney-client relationship with Merritt continued after May 2005. To the extent he relies on the evidence he submitted in support of his motion and ignores or attempts to discredit the evidence Merritt submitted in opposition to his motion, he either misconstrues or misapplies the substantial evidence standard of review. Likewise, Erickson misconstrues and/or misapplies the substantial evidence standard of review in arguing: "[A]t the time of the REMLEY investment..., substantial evidence bears out the inescapable conclusion that no ongoing attorney-client relationship existed between [Erickson] and [Merritt]."
We reject Erickson's assertion that the Remley transaction documents precluded Merritt from reasonably believing he was her attorney at that time because those documents stated that he was acting as Remley's counsel, not her counsel, with respect to the Remley transaction.
Erickson cites his November 9, 2007, letter to Merritt as proof that she was not his client at the time of the Remley transaction. In that letter, he stated:
"The purpose of this letter is to inform you of my intention to retire from law practice effective December 31, 2007. It has been a pleasure and privilege for me to represent you. This decision is a personal decision which I have been contemplating for the last few years. I have decided to close the law office to dedicate my time and energy to my real estate sales and development company and family."
He then referred her to certain attorneys who could provide estate planning and real estate services in the future. His letter did not show he retired from law practice on November 9, 2007 (prior to the Remley transaction), but rather that he intended to retire as of December 31, 2007 (which date ultimately proved to be after Merritt entered into the Remley transaction on December 17, 2007). Furthermore, as Merritt notes, the letter supports a reasonable inference that Erickson considered her to be an existing client on November 9, 2007. The letter stated he considered it a pleasure and privilege to represent her, implying that he had a continuing, ongoing attorney-client relationship with her. Erickson's November 9, 2007, letter supports, rather than detracts from, the trial court's finding that Merritt was Erickson's client within the meaning of rule 3 300 at the time of the Remley transaction. (Gonzalez v. Kalu, supra, 140 Cal.App.4th at p. 30.) Erickson does not carry his burden on appeal to show the evidence is insufficient to support the finding Merritt was his client within the meaning of rule 3 300.
Because we conclude there is substantial evidence to support the trial court's finding that Merritt was an existing client of Erickson at the time of the Remley transaction (i.e., on December 17, 2007), we need not address his assertion that there is insufficient evidence to support the court's alternative finding that, even if she was not an existing client, she was a former client entitled to the protection of rule 3 300 pursuant to Beery and Hunniecutt.
III
Finding That Remley Transaction and Its Terms
Were Not Fair and Reasonable to Merritt
Erickson contends the evidence is insufficient to support the trial court's finding that the Remley transaction and its terms were not fair and reasonable to Merritt within the meaning of rule 3 300(A).
A
Rule 3 300 requires that a business transaction between an attorney and his or her client and its terms be "fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client." (Rule 3 300(A), italics added.)
In opposing Erickson's motion to compel arbitration, Merritt argued the Remley transaction and its terms were not fair and reasonable to her. She noted that pursuant to the terms of the Remley transaction, Erickson was to receive a 51 percent ownership interest in Remley for a capital contribution of $132,750, while she was to receive only a 49 percent interest for an at-risk loan to Remley of $729,579.24. Furthermore, she stated Erickson did not make his capital contribution to Remley and therefore received his 51 percent ownership interest in Remley for no actual capital contribution. In support of her argument, Merritt provided a separate statement of material facts, stating she had never been presented with any evidence showing Erickson made his initial capital contribution of $132,750. She also provided a declaration in which she stated: "I have requested all bank account[] statements for [Remley] from Mr. Erickson. None of the bank account statements that I have reviewed indicate that Mr. Erickson ever made his initial capital contribution of $132,750.00. To this date, I have no information and have seen no evidence that Mr. Erickson ever made his initial capital contribution of $132,750.00."
In his reply in support of his motion, Erickson argued Merritt was aware that his $132,750 capital contribution "was made prior to the formation of [Remley]." Erickson lodged two exhibits showing that he made two wire transfers to a German company. On July 23, 2007, Erickson's bank transferred by wire $25,000 to Imusol Trading, S.A., in Germany. On July 30, Erickson's bank transferred by wire $107,500 to the same German recipient.
At oral argument on Erickson's motion to compel arbitration, Erickson's counsel disagreed with the trial court's tentative ruling that found Erickson had not made a capital contribution to Remley, citing his two wire transfers to the German company showing he made the required capital contribution. Merritt's counsel disagreed, arguing Remley was created in December 2007 and the Remley transaction documents (i.e., the operating agreement) required Erickson and Merritt to make their capital contributions in December 2007. He further argued that Erickson's two wire transfers were made in July 2007 (five months before Remley was formed) and were made to an unrelated partnership, not Remley. He argued Remley's operating agreement did not provide Erickson would be credited for a prior wire transfer toward the capital contribution he was required to make to Remley.
In denying Erickson's motion to compel arbitration, the trial court implicitly found the Remley transaction and its terms were not fair and reasonable to Merritt. The court noted Merritt "presented evidence that [the] Remley transaction was not fair and reasonable to her since [Erickson] received a 51 percent ownership interest for a capital contribution of $132,750.00 while [Merritt] received a 49 percent ownership interest for providing an at risk loan in the amount of $729,579.24. [Citation.] Notably, [Erickson] did not make his capital contribution and thus received a 51 percent ownership interest for no capital contribution."
B
We conclude there is substantial evidence to support the trial court's finding that the Remley transaction and its terms were not fair and reasonable to Merritt. Construing the evidence, and making all reasonable inferences, favorably to support the trial court's finding and order, the court could reasonably conclude Erickson received a controlling 51 percent ownership in Remley for making no capital contribution and Merritt received a minority 49 percent ownership in Remley for making an at-risk loan of $729,579.24 as her capital contribution. The court could rationally conclude that such terms were unfair and unreasonable to Merritt. Even had the court found Erickson's two wire transfers made to another company five months prior to the formation of Remley satisfied his requirement to make a $132,750 capital contribution to Remley, there nevertheless would be substantial evidence to support the court's finding that the Remley transaction and its terms were not fair and reasonable to Merritt. In either scenario, Erickson received a disproportionately greater ownership interest in Remley than Merritt received based on their respective capital contributions (or lack thereof).
The fact there may have been substantial evidence that could have supported a contrary finding by the trial court does not show the evidence is insufficient to support its finding of unfairness and unreasonableness. Erickson argues Merritt's capital contribution was in the form of a secured loan to Remley, and was not an equity investment, and therefore her loan would have priority in a bankruptcy proceeding, except for the holder of the first trust deed on the Remley property. He also notes that because her loan to Remley accrued 12 percent interest, she would receive money from Remley before the other investor(s). He also argues Merritt would receive a 10 percent "equity kicker" on the profits Remley obtained from its development and sale of the property.
Furthermore, Erickson notes that, in addition to his capital contribution of $132,750, he accepted the full administrative and financial burden of the Remley investment. Erickson argues: "Substantial evidence in the form of the complete terms of the REMLEY investment indicates that the actual and complete terms of the transaction were, and remain, more than fair and reasonable to [Merritt]." However, in so arguing, Erickson misconstrues and/or misapplies the substantial evidence standard of review. On appeal, we do not review the record searching for evidence to support a finding that the trial court could have made in favor of the appellant (i.e., Erickson), but rather review the record to determine whether there is substantial evidence to support the finding actually made by the court. (Jessup Farms v. Baldwin, supra, 33 Cal.3d at p. 660; Kuhn v. Department of General Services, supra, 22 Cal.App.4th at pp. 1632-1633; Rupf v. Yan, supra, 85 Cal.App.4th at pp. 429-430 & fn. 5; Bowers v. Bernards, supra, 150 Cal.App.3d at pp. 873-874; Lenk v. Total-Western, Inc., supra, 89 Cal.App.4th at p. 968; Howard v. Owens Corning, supra, 72 Cal.App.4th at p. 631.) Because Erickson has not carried his burden on appeal to persuade us the evidence is insufficient to support the trial court's finding, we conclude there is substantial evidence to support the court's finding that the Remley transaction and its terms were not fair and reasonable to Merritt. Accordingly, Erickson did not comply with rule 3 300(A).
IV
Additional Rule 3-300 Requirements
Because we conclude substantial evidence supports the trial court's finding the Remley transaction and its terms were not fair and reasonable to Merritt under rule 3 300(A), we need not address the parties' arguments on whether or not the additional rule 3 300(A) requirement was satisfied (i.e., the transaction and its terms "are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client"). It is also unnecessary to address whether the evidence is sufficient to support the contention that Erickson did not satisfy rule 3 300(B)'s requirements, i.e., that he did not advise Merritt in writing that she may seek the advice of an independent attorney, and Merritt was not given a reasonable opportunity to seek such advice before she entered into the Remley transaction, or rule 3-300(C)'s requirements, i.e., that Merritt thereafter consented in writing to the Remley transaction.
V
Order Denying Erickson's Motion to Compel Arbitration
Because Erickson has not carried his burden on appeal to show the evidence is insufficient to support the trial court's findings that rule 3 300 applied to his Remley transaction with Merritt and that he did not comply with all of rule 3 300's requirements, the transaction violated rule 3 300 and was against public policy. Accordingly, that transaction, including the operating agreement's arbitration provision, is voidable at Merritt's election. (BGJ Associates v. Wilson, supra, 113 Cal.App.4th at p. 1229; Mayhew v. Benninghoff (1997) 53 Cal.App.4th 1365, 1370.) Therefore, the trial court properly denied Erickson's motion to compel arbitration.
Erickson does not substantively argue on appeal that the trial court erred by denying his motion to compel arbitration based on his failure to comply with rule 3 300's requirements.
DISPOSITION
The order is affirmed. Merritt is entitled to costs on appeal.
WE CONCUR: HALLER, Acting P. J., McINTYRE, J.