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In re Medeiros Revocable Trust

Court of Appeals of Oklahoma, Division I

July 1, 2019

IN RE: THE MEDEIROS REVOCABLE TRUST, Petitioner/Appellee,
v.
MORGAN STANLEY SMITH BARNEY LLC, Respondent/Appellant.

          Mandate Issued: 08/07/2019

          APPEAL FROM THE DISTRICT COURT OF COMANCHE COUNTY, OKLAHOMA HONORABLE LISA E. SHAW, TRIAL JUDGE

          Phillip G. Whaley, Grant M. Lucky, RYAN WHALEY COLDIRON JANTZEN PETERS & WEBBER PLLC, Oklahoma City, Oklahoma, for Respondent/Appellant,

          Arthur R. South, Vickie Leyja, Lawton, Oklahoma, for Petitioner/Appellee.

          BRIAN JACK GOREE, CHIEF JUDGE

         ¶1 Morgan Stanley Smith Barney, LLC (Morgan Stanley) filed a motion to compel arbitration and the trial court denied it. We have jurisdiction to review the decision de novo as an interlocutory order appealable by right. Okla. Sup. Ct. R. 1.60(i); 12 O.S. §1879 (a)(1); Johnson v. Convalescent Center of Grady County, LLC, 2014 OK 102, ¶5, 341 P.3d 71, 73. The primary issue is whether a receiver, who did not sign the agreement containing the arbitration clause, is nevertheless bound by it. We answer yes and reverse.

         I.

         Background

         ¶2 Milton and Pearl Medeiros formed the Medeiros Revocable Trust, naming themselves as trustees. They signed a client agreement and made deposits to an account in California with Citigroup Smith Barney (Smith Barney). The client agreement contained an arbitration clause, the terms of which are undisputed. [1] It is also undisputed that Morgan Stanley is the successor to Smith Barney. Milton and Pearl agreed that their contract would be binding on their assignees or successors in interest as well as successors to Smith Barney. [2]

         ¶3 Pearl Medeiros died in 2015 and was survived by her husband, Milton, her son, Jon Katvala, and her daughter, Karen Stewart. Jon and Karen (Petitioners) filed this suit in Comanche County, Oklahoma, to construe the trust. A few weeks later, Milton, together with his daughter, Kimberly Sue Lafinier, and his step-daughter, Carol A. Phillips, commenced an action in Washoe County, Nevada, asserting a different construction of the trust and its assets. The ownership and control of the funds on deposit with Morgan Stanley is highly contested.

         ¶4 The district court in Comanche County appointed Allen McCall (Receiver) to receive and collect the outstanding assets including the Morgan Stanley accounts. Four months later, the court entered judgment in favor of Petitioners in the amount of $500, 000, against Carol Philips, Kimberly Medeiros Lafinier, and Milton H. Medeiros, jointly and severally. In the same judgment, the court ordered Petitioners to participate with Receiver "to pursue all legal remedies to return the sum of $500, 000.00 and all other assets to this Trust to be distributed only by further orders of this Court."

         ¶5 Receiver filed a petition asking for judgment against Morgan Stanley for reimbursement to the trust in the amount of $440, 537.05. [3] Morgan Stanley filed a motion to compel arbitration based upon the agreement between Milton and Pearl Medeiros and Morgan Stanley's predecessor-in-interest, Smith Barney. This is an interlocutory appeal from the court's March 9, 2018, order denying Morgan Stanley's motion to compel arbitration.

         II.

         Personal ...


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