Friday, June 26, 2020
Court of Appeal:
Avenatti’s Involvement on Case Precludes Arbitration Between Parties Who Agreed to That Procedure
Former Playboy Playmate, Ex GOP Finance Official Must Resolve Dispute in Superior Court Notwithstanding Arbitration Agreement in Light of Third-Party Exception, Opinion Says
By a MetNews Staff Writer
Arbitration won’t take place in a case in which Playboy’s November 2010 Playmate of the Month is suing the ex-deputy finance chair of the Republican National Committee for breaching a confidential $1.6 million payoff agreement that was based on his getting her pregnant, the Court of Appeal for this district held yesterday, citing the involvement of a third party, Michael Avenatti.
Elliott Broidy, the former GOP official and a major party contributor, invoked a clause providing for secret arbitration of any dispute arising from his confidential agreement with Shera Bechard under which he would make eight $200,000 installment payments, from which her attorney, Keith Davidson would take 35 percent. Broidy made two payments, but stopped paying after the Wall Street Journal revealed the settlement accord.
In this combination photo, Trump top fundraiser Elliott Broidy, left, and former Playboy playmate Shera Bechard are seen.
Bechard is suing for breach of contract. Davidson’s firm has filed cross-complaint against Broidy and Bechard for declaratory relief.
Davidson apparently told Avenatti—a lawyer who is now on interim suspension by the California State Bar in light of his conviction in the U.S. District Court for the Southern District of New York on attempted extortion and wire fraud counts—about the secret agreement.
Avenatti was then the attorney for porn star Stormy Daniels who had been paid money under a nondisclosure agreement with President Donald Trump, orchestrated by Trump’s lawyer, Michael Cohen.
On April 12, 2018, the day after he spoke with Davidson, Avenatti tweeted:
“In last 18 mos, Mr. Cohen negotiated yet another hush NDA, this time on behalf of a prominent GOP donor who had a relationship with a LA woman, impregnated her and then made sure she had an abortion. The deal provided for multiple payments across many months. #basta.”
Bechard has sued Avenatti for tortious interference with contractual relations.
She opposed arbitration based on Code of Civil Procedure §1281.2(c). That provision says that a trial court need not order arbitration despite an agreement to arbitrate where “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”
Broidy insisted there is no reason that arbitration of the disputes between him and Bechard, and with Davidson, cannot proceed without involvement of Avenatti, who was not a party to the settlement agreement.
Then-Los Angeles Superior Court Judge Elizabeth Allen White agreed that the third-party exception applied, and did not order arbitration. Div. Three of the Court of Appeal for this district yesterday affirmed in an opinion by Justice Luis Lavin.
The jurist noted that Broidy’s failure to provide a copy of the settlement agreement is fatal to his appeal. He explained:
“Importantly, the scope of Becharch’s and Broidy’s obligations and rights under the Settlement Agreement is relevant in determining whether there is a possibility of conflicting rulings if Bechard’s claims against Broidy and Avenatti are resolved in different forums. For example, the Settlement Agreement could include a confidentiality provision that excuses Broidy’s obligation to make settlement payments to Bechard if the existence of the agreement, the identity of the parties to the agreement, or any of the agreement’s terms are made public by a third party.”
“If the Settlement Agreement contains such a provision, the arbitrator and the court could make inconsistent findings with respect to Broidy’s role, if any, in leaking details about the agreement, which, in turn, could affect any potential recovery by Bechard on her breach of contract and tortious interference claims. Without the Settlement Agreement, we also cannot evaluate Broidy’s argument that whether Avenatti ‘knew about the parties’ agreement, how he learned of it, and whether he wanted to disrupt it, are ancillary factual questions immaterial to the resolution of the contract claims by and among’ Bechard, the Law Firm, and Broidy.”
The case is Bechard v. Broidy, B293997.
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