Opinion ID: 1160537
Heading Depth: 2
Heading Rank: 2

Heading: Legal Sufficiency of the Plaintiffs' Declarations

Text: GWFSC contends plaintiffs' declarations are legally insufficient to raise a nonarbitrable issue because their claims of fraud, even if believed, are not directed specifically at the arbitration clauses. GWFSC relies on Prima Paint v. Flood & Conklin (1967) 388 U.S. 395, 404 [18 L.Ed.2d 1270, 1277-1278, 87 S.Ct. 1801] ( Prima Paint ), in which the high court held that under the USAA, unless the parties have agreed otherwise, claims of fraud in the inducement of the contract generally, that is, fraud claims not going to the `making' of the agreement to arbitrate, are to be decided by the arbitrator rather than the court. We have interpreted section 1281.2 to embody the same standard of enforceability. ( Ericksen, Arbuthnot, McCarthy, Kearney, & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 322-323 [197 Cal. Rptr. 581, 673 P.2d 251] ( Ericksen ).) [8] To consider GWFSC's Prima Paint argument, we must separate out the two fraud theories upon which plaintiffs have relied to avoid enforcement of the arbitration agreements: fraud in the execution of the client agreements, and fraud permeating the agreements. (6) California law distinguishes between fraud in the execution or inception of a contract and fraud in the inducement of a contract. In brief, in the former case `the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.' ( Ford v. Shearson Lehman American Express, Inc. (1986) 180 Cal. App.3d 1011, 1028 [225 Cal. Rptr. 895].) Fraud in the inducement, by contrast, occurs when `the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable. In order to escape from its obligations the aggrieved party must rescind. ...' ( Ibid. ) (7) GWFSC asserts Prima Paint mandates arbitration of any fraud claim, even one going to the execution of the contract, except an independent or separate and distinct challenge to the arbitration clause itself. Statements to that effect appear in some decisions applying Prima Paint. (See, e.g., Rowland v. Paine Webber, Inc. (1992) 4 Cal. App.4th 279, 285 [6 Cal. Rptr.2d 20] [independent challenge]; Union Mutual Stock Life Ins. v. Beneficial Life. (1st Cir.1985) 774 F.2d 524, 529 [same]; see also R.M. Perez & Associates, Inc. v. Welch (5th Cir.1992) 960 F.2d 534, 537-538 [holding fraud in the factum, as well as in the inducement, subject to Prima Paint ].) [9] We do not believe, however, the language or logic of Prima Paint compels such a reading. To the contrary, we conclude claims of fraud in the execution of the entire agreement are not arbitrable under either state or federal law. If the entire contract is void ab initio because of fraud, the parties have not agreed to arbitrate any controversy; under that circumstance, Prima Paint does not require a court to order arbitration. (Accord, Rice v. Dean Witter Reynolds, Inc., supra, 235 Cal. App.3d at p. 1024; Strotz v. Dean Witter Reynolds, Inc., supra, 223 Cal. App.3d at pp. 217-218; Three Valleys Mun. Water Dist. v. E.F. Hutton, supra, 925 F.2d at pp. 1140-1141; Cancanon v. Smith Barney, Harris, Upham & Co. (11th Cir.1986) 805 F.2d 998, 999-1000; see also Rush v. Oppenheimer & Co., Inc. (S.D.N.Y. 1988) 681 F. Supp. 1045, 1049 [allegations of fraud need not be directed exclusively at the arbitration clause].) The central rationale of the high court's decision in Prima Paint was that arbitration clauses must, under federal law established in the USAA, be viewed as `separable' from other portions of a contract ( Prima Paint, supra, 388 U.S. at p. 402 [18 L.Ed.2d at pp. 1276-1277]); hence, fraud in the inducement relating to other contractual terms does not render the arbitration agreement unenforceable, even when it might justify rescission of the contract as a whole. By entering into the arbitration agreement, the parties established their intent that disputes coming within the agreement's scope be determined by an arbitrator rather than a court; this contractual intent must be respected even with regard to claims of fraud in the inducement of the contract generally. Where, however, a party's apparent assent to a written contract is negated by fraud in the inception, there is simply no arbitration agreement to be enforced. As one Court of Appeal recently explained, Prima Paint does not require allegations directed specifically and solely at the agreement to arbitrate. Prima Paint, rather, requires some allegation [and, as we held earlier, evidence] from which it may be determined that the parties in fact did not intend to arbitrate the issues set forth in the pleadings. The allegation may be directed solely at the `making' of the agreement to arbitrate or, as recognized by the doctrine of fraud in the inception, it may be directed at the `making' of the contract as a whole. ( Hayes Children Leasing Co. v. NCR Corp. (1995) 37 Cal. App.4th 775, 784 [43 Cal. Rptr.2d 650].) In the absence of a contrary agreement, parties to a predispute arbitration agreement are presumed to have intended arbitration of controversies, including allegations of fraud in the inducement of the contract generally, that may allow rescission or reformation of the contract or part of it. They cannot, however, have intended arbitration under a contract wholly void for fraud in its execution. We therefore conclude Prima Paint does not preclude the court from deciding claims of fraud in the execution of the entire contract. The same is true of California law under our decision in Ericksen, supra, 35 Cal.3d 312, in which we explicitly distinguished cases where the party opposing arbitration `denied ever agreeing to anything.' ( Id. at p. 323, fn. 8.) Although the question of fraud in the execution is for the trial court to decide, we reach a different conclusion on plaintiffs' second theory, fraud permeating the agreements. The permeation doctrine has developed in California courts as an ill-defined exception to the Prima Paint rule of arbitrability. (See Strotz v. Dean Witter Reynolds, Inc., supra, 223 Cal. App.3d at pp. 212-217 ( Strotz ) [tracing origins of the doctrine and ultimately rejecting it as vague and potentially inconsistent with Prima Paint ].) After examining various statements of the doctrine, we conclude it conflicts with Prima Paint and, thus, is not a ground for avoiding arbitration. In Main v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 67 Cal. App.3d at page 27 ( Main ), the court, having reviewed Prima Paint and several of its federal and state progeny, concluded, where it is alleged that fraud either induced the arbitration clause itself, or permeated the entire agreement including the arbitration clause, that issue will be determined judicially and not by arbitration. (Italics added.) The court then found the plaintiff's allegations sufficient to show constructive fraud, in that defendants gained an advantage over plaintiff by inclusion, in the lending agreement, of the provision to arbitrate. ( Id. at p. 31; but see Strotz, supra, 223 Cal. App.3d at p. 216 [persuasively criticizing Main's conclusion on the last point].) In Ericksen, supra, 35 Cal.3d at page 323, footnote 8, this court mentioned Main's analysis briefly, but with apparent approval. In doing so, however, we apparently understood the permeation doctrine to be identical or very similar to fraud in the inception or execution of a contract: we held it inapplicable because `this is not a case ... where the defendant denied ever agreeing to anything.' ( Ibid. ; see also Hayes Children Leasing Co. v. NCR Corp., supra, 37 Cal. App.4th at p. 784 [ Ericksen treated permeation as identical to the doctrine of fraud in the inception]; Herman Feil, Inc. v. Design Center of Los Angeles (1988) 204 Cal. App.3d 1406, 1416 [251 Cal. Rptr. 895] [As was observed in Ericksen, however, the `permeation' claim is applicable only where the party seeking to avoid arbitration denies having agreed to anything. ].) The permeation doctrine received its broadest application in Ford v. Shearson Lehman American Express, Inc., supra, 180 Cal. App.3d at pages 1019-1028 ( Ford ). The court there interpreted Prima Paint as requiring arbitration only when the fraud claim goes to the performance under a contract; claims of fraud going to the making or procurement of a contract are to be decided by the trial court. ( Id. at p. 1022.) In the case before it, the court concluded, arbitration could be avoided on a theory of fraud permeating the contract because the plaintiff had alleged a grand scheme of fraud which permeated the entire relationship and transactions perpetrated by all defendants. ( Id. at p. 1027.) Thus, the plaintiff sufficiently alleged the fraud practiced on him pertained to the `making' of the agreements containing the arbitration clause. ( Id. at p. 1023.) As another Court of Appeal has since explained, the Ford court appears to have ignore[d] the rule in Prima Paint that the arbitration agreement is severable from the principal contract. [¶] The Supreme Court in Prima Paint did not hold that fraud which goes to the making of the contract is for the court and fraud related to the performance of the contract is for the arbitrator. Rather, the court specifically and expressly made a distinction between fraud which is directed at the arbitration agreement and fraud directed at the principal contract. The court quite clearly held that only fraud directed at the making or performance of the arbitration agreement is to be determined by the court. ( Prima Paint Corp. v. Flood & Conklin, supra, 388 U.S. 395, 403-404 [18 L.Ed.2 1270, 1277-1278].) ( Strotz, supra, 223 Cal. App.3d at p. 217.) Thus, the permeation doctrine conflicts with Prima Paint to the extent it indicates that an agreement to arbitrate may be found invalid simply because the contract as a whole was induced by fraud. ( Hayes Children Leasing Co. v. NCR Corp., supra, 37 Cal. App.4th at p. 784.) To the extent, on the other hand, the permeation doctrine is merely another name for fraud in the execution of a contract, it is unnecessary. Seeing, therefore, no legally valid use for the theory, we decline further to recognize it. Claims that a party has employed fraud in inducing consent specifically to the arbitration agreement (e.g., by actively concealing its existence or misrepresenting its meaning or value) are, under Prima Paint, to be decided by the court, because they go to the validity of the making of the arbitration clause itself. Claims that, due to fraud in the execution of the agreement as a whole, the parties reached no contract containing an arbitration clause, are also to be decided by the court. But claims that the contract as a whole was obtained through fraud in the inducement are, in the absence of evidence of the parties' contrary intent, arbitrable under Prima Paint. Included in this rule of arbitrability are claims of a grand scheme of fraud, or fraud permeating the transaction.
The parties dispute whether plaintiffs' declarations, even if believed, show fraud in the inception or execution of the client agreements sufficient to render the agreements entirely void. In assessing the legal sufficiency of plaintiffs' claims, we apply the California law of contracts generally, rather than any rules uniquely tailored to enforcement of arbitration agreements. We are precluded under section 2 of the USAA from singling out arbitration provisions for suspect status. ( Doctor's Associates, Inc. v. Casarotto, supra, 517 U.S. ___, ___ [134 L.Ed.2d 902, 909, 116 S.Ct. 1652, 1656].) [10] (8a) The central disputed question is whether plaintiffs could justifiably rely on GWFSC's misrepresentations without themselves ascertaining the nature of the documents they signed. GWFSC argues plaintiffs had a reasonable opportunity to know the terms of the client agreements, but failed through their own neglect to read them. Plaintiffs, however, claim their failure to read the client agreements is legally excused by virtue of GWFSC's asserted fraud. They rely on Lynch v. Cruttenden & Co. (1993) 18 Cal. App.4th 802, 807 [22 Cal. Rptr.2d 636] ( Lynch ), in which the court stated, The general rule in California is that even in the absence of a fiduciary relationship plaintiff's failure to read a contract is excusable where reliance is placed on the misrepresentations of the other party. (Accord, Strotz, supra, 223 Cal. App.3d at pp. 218-219.) California law supports GWFSC's position that fraud does not render a written contract void where the defrauded party had a reasonable opportunity to discover the real terms of the contract. A contract may, however, be held wholly void, despite the parties' apparent assent to it, when, ` without negligence on his part, a singer attaches his signature to a paper assuming it to be a paper of a different character.' ( C.I.T. Corporation v. Panac, supra, 25 Cal.2d at p. 549, quoting 1 Williston on Contracts (3d ed. 1957) § 95A, pp. 350, 351, italics added; see also Gardner v. Rubin (1957) 149 Cal. App.2d 368, 372 [308 P.2d 892] [negotiable instrument not enforceable even by holder in due course where executed through fraud and  in the absence of negligence on the part of the maker  (italics added)]; Ramirez v. Superior Court (1980) 103 Cal. App.3d 746, 756, fn. 3 [163 Cal. Rptr. 223] [no agreement exists unless the parties signing the document act voluntarily and are aware of the nature of the document and have turned their attention to its provisions or reasonably should have turned their attention to its provisions  (italics added)].) A release of a liability claim, for example, may be rendered void on the grounds of fraud or misrepresentation regarding the nature of the claim covered by the release so long as the releasor's failure to learn the nature of the terms was not attributable to his own negligence.  ( Frusetta v. Hauben, supra, 217 Cal. App.3d at p. 557, italics added; see also Casey v. Proctor (1963) 59 Cal.2d 97, 103 [28 Cal. Rptr. 307, 378 P.2d 579] [release not binding if releaser's misapprehension of nature or scope caused by other party's misconduct and  not due to his own neglect  (italics added)].) The Restatement position is similar. Restatement Second of Contracts section 163, titled When a Misrepresentation Prevents Formation of a Contract, states as follows (italics added): If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has a reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent. As the official comment explains, the misrepresentation in such a case goes to what is sometimes called the `factum' or the `execution' rather than merely the `inducement', and renders the contract void rather than merely voidable. (Rest.2d Contracts, § 163, coms. a & c, pp. 443, 444.) The Lynch and Strotz courts relied for their contrary statements of the law on 1 Witkin, Summary of California Law (9th ed. 1987) Contracts, section 407, pages 366-367. In that section Witkin asserts that, while misrepresentations were once regarded as an excuse for failure to read a contract only within a fiduciary relationship, [i]t is now settled ... that the excuse may be asserted even in the situation where the parties are in no such relationship. ( Id. at p. 366.) Upon examination of the authorities, we conclude Witkin and the courts in Lynch and Strotz state the rule of excuse too broadly. While some prior cases have held equitable relief, such as rescission or reformation of the contract, may be available despite the defrauded party's failure to read the contract, our law is clear that misrepresentation does not render the contract void unless the misled party, before making the agreement, lacked a reasonable opportunity to learn its terms. Aside from a case stating a special rule for insurance policies, Witkin relies principally on two decisions of this court: California Trust Co. v. Cohn (1932) 214 Cal. 619 [7 P.2d 297] ( Cohn ) and Van Meter v. Bent Construction Co. (1956) 46 Cal.2d 588 [297 P.2d 644] ( Van Meter ). (1 Witkin, Summary of Cal. Law, supra, Contracts, § 407, pp. 366-367.) Both cases, however, involve reformation of contracts, rather than the determination a contract is void for fraud in the execution. In Cohn, the cross-complainants alleged the cross-defendant had made an oral agreement to hold certain real property in trust for the cross-complainants, to sell the property to third parties, and to pay cross-complainants part of the proceeds. Cross-defendant had then prepared and, by misrepresenting the writing's contents, induced cross-complainants to sign a written agreement under which cross-complainants were obliged to purchase the property themselves. Cross-complainants sought reformation of the written contract to reflect the terms of the oral agreement. ( Cohn, supra, 214 Cal. at pp. 622-624.) This court held the alleged facts sufficient to warrant a reformation of the written contract, despite cross-complainants' admitted failure to read the written agreement before signing it. ( Id. at p. 626.) We noted [t]here has always been a sharp struggle in the courts between the desire to repress fraud upon the one hand, and on the other to discourage negligence and the opportunity and invitation to commit perjury. ( Id. at p. 627.) We concluded that where the failure to familiarize one's self with the contents of a written contract prior to its execution is traceable solely to carelessness or negligence, reformation as a rule should be denied; but that where such failure, and perhaps negligence, is induced, as alleged and admitted by the demurrer in this case, by the false representations and fraud of the other party to the contract that its provisions are different from those set out, the courts, even in the absence of a fiduciary or confidential relationship between the parties, should reform, and in most cases have reformed, the instrument so as to cause it to speak the true agreement of the parties. ( Ibid., italics added.) Thus, in Cohn, this court allowed equitable relief for fraud, through reformation of the written contract, despite a party's failure to read the writing. We did not hold a party who had reasonable opportunity to learn the terms of a contract before executing it but failed to do so, could, because of another party's misrepresentations, obtain a judgment the contract was completely void for lack of assent. Van Meter involved a subcontractor's negligent failure to ascertain that the area of land to be cleared was greater than represented by the general contractor. As in Cohn, the plaintiff sought reformation of the contract rather than a declaration it had never been entered into. ( Van Meter, supra, 46 Cal.2d at pp. 590, 593.) This court held the subcontractor's negligence did not bar it from obtaining relief. We noted that since the general contractor had believed true its statements regarding the area to be cleared, the contract might be reformable or rescindable under a theory of mutual mistake. ( Id. at p. 594.) In addition, we relied on the principle that a defendant who had misrepresented the facts should not generally be heard, in an action for equitable relief, to assert the plaintiff's reliance on his misrepresentations was negligent, at least in the absence of facts making the plaintiff's conduct preposterous or irrational. ( Id. at p. 595.) Van Meter, like Cohn, thus concerns only the propriety of equitable relief, and does not speak to the facts necessary to show a party's apparent assent is ineffective because of fraud in the execution of the contract. Witkin also cites a section of the Restatement as treating the same subject, i.e., negligence of the defrauded party. (1 Witkin, Summary of Cal. Law, supra, Contracts, § 407, p. 367.) Notably, however, the section cited is section 172, which deals only with fraud as grounds for avoidance or reformation of a contract (Rest.2d Contracts, § 172 & com. a, p. 469), rather than section 163, which, as discussed earlier, concerns fraud negating assent to a contract and thereby rendering it void. Section 172 provides that a defrauded party's fault in not knowing or discovering the facts before making the contract does not make his reliance unjustified unless it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. Comment a to the section explains it as an elaboration of the rule that [t]he recipient's reliance on the misrepresentation must be justified in order to entitle him to avoidance (§ 164)[ [11] ] or reformation (§ 166). (Rest.2d Contracts, § 172, com. a, p. 469.) When the defrauded party seeks such equitable relief, relief will not be barred by the mere fact that he could, by the exercise of reasonable care, have avoided the mistake. ( Ibid. ) As the comment further explains, however, such negligence does bar the defrauded party from claiming the contract is void for lack of assent: However, the recipient's fault will prevent application of the rule stated in § 163, under which a misapprehension as to the very nature of a proposed contract makes his apparent manifestation of assent ineffective. That rule applies only if he has neither knowledge nor reasonable opportunity to obtain knowledge of the character or essential terms of the proposed contract. ( Ibid. ) The same contrast between the standards for equitable relief and a finding of voidness is made in comment b to section 163. (Rest.2d Contracts, § 163, com. b, p. 444; see also id., § 164, com. a, p. 445.) (9) We therefore conclude that, whatever validity the rule stated in Lynch, Strotz and Witkin may have when the plaintiff seeks equitable relief for fraud in the inducement of a contract, and whatever the exact parameters of that rule might be, the rule is not a correct statement of the test to be applied when the plaintiff seeks a judicial determination the contract is void for fraud in the execution. In the latter case, California law, like the Restatement, requires that the plaintiff, in failing to acquaint himself or herself with the contents of a written agreement before signing it, not have acted in an objectively unreasonable manner. One party's misrepresentations as to the nature or character of the writing do not negate the other party's apparent manifestation of assent, if the second party had reasonable opportunity to know of the character or essential terms of the proposed contract. (Rest.2d Contracts, § 163, p. 443.) If a party, with such reasonable opportunity, fails to learn the nature of the document he or she signs, such negligence precludes a finding the contract is void for fraud in the execution. ( C.I.T. Corporation v. Panac, supra, 25 Cal.2d at p. 549.) (8b) It follows that one party's unreasonable reliance on the other's misrepresentations, resulting in a failure to read a written agreement before signing it, is an insufficient basis, under the doctrine of fraud in the execution, for permitting that party to avoid an arbitration agreement contained in the contract. Whether a fraud claim that is insufficient as a defense to an arbitration demand may, if proven, nonetheless form the basis for equitable or other relief in the arbitral forum, is a separate issue, with which we have no concern in this case.
It remains only to apply the foregoing test to the facts shown by the plaintiffs' declarations. We first examine the evidence common to most or all plaintiffs. (10) Many plaintiffs in the instant case declare GWFSC representatives told them the written client agreements were unimportant, or that plaintiffs need not read them. (See, e.g., declarations of Allen [`it's not necessary to read them']; Fitzgerald [documents just restated what he had already told me]; George Lampel [documents were necessary for us to open our account but were merely standard forms and just repeated what he told us]; Pupo [`just a formality for opening your account']; Rosenthal [just a formality and they just restated what he had already told me]; and Warren [not necessary to read the form].) Such statements, even if falsely and fraudulently made, do not void a written contract, because it is generally unreasonable, in reliance on such assurances, to neglect to read a written agreement before signing it. One party's making of such an assurance does not, by itself, deprive the other party to a prospective contract of the reasonable opportunity to discover the character and essential terms of the agreement. [12] Many plaintiffs also declare they were longtime depositors with GWB before they invested in mutual funds with GWFSC, and were led to believe the GWFSC representative worked for GWB. Plaintiffs generally contend, and some expressly declare, that for these reasons they placed their trust in the GWFSC representatives and relied upon the representatives' assurances they did not need to read the contract. Floyd Allen, for example, declares he had banked at the same GWB branch for 30 years and believed the woman who sold him the funds to be an employee of GWB, since her desk was near the tellers [one of whom referred Allen to her] and was in the same room as the other bank operations. Betty Connolly banked at the same GWB branch for more than 25 years. A GWFSC representative called her from the GWB branch to discuss her GWB certificate of deposit, which was expiring. Because he had information regarding her GWB account, and because his desk was in the branch along with other banking operations desks, she thought he was a GWB employee. She signed the client agreement without reading it, because I trusted Great Western and its employees and he [the representative] had said that the forms just repeated what he had told me.... Ruby Rosenthal, 94 years old, had banked at GWB for about 30 years. She thought the GWFSC representative worked for GWB because he worked in the same area as GWB staff, and had her telephone number and access to her bank records. She relied on the representative, signing the client agreement without reading it. Other plaintiffs make similar declarations. Plaintiffs' long-term relationship with GWB and their belief the GWFSC representatives actually represented GWB do, to some degree, explain their asserted reliance on the representatives' assurances they need not read the client agreements. We do not believe, however, these facts are so compelling as to make reasonable plaintiffs' complete reliance on the representatives. To make out a claim of fraud in the execution, it must be remembered, plaintiffs must show their apparent assent to the contracts  their signatures on the client agreements  is negated by fraud so fundamental that they were deceived as to the basic character of the documents they signed and had no reasonable opportunity to learn the truth. By their claim of fraud in the execution, plaintiffs do not seek equitable relief in the form of rescission or reformation, or damages for being misled, but, rather, a judicial determination they never assented to any contract. Because the facts described above do not establish these plaintiffs lacked a reasonable opportunity to learn the character of the documents they signed, they do not prove fraud sufficient to make the contracts wholly void. (11) Plaintiffs also contend GWFSC and its representatives owed them a fiduciary duty and breached that duty by failing accurately to explain to plaintiffs the terms of the agreement. The existence of a fiduciary relationship, plaintiffs further contend, excuses their failure to read the client agreements before signing them. GWFSC argues that a stockbroker's fiduciary duty to the customer does not include the giving of legal advice, such as the explanation of contractual terms. Granting the existence of a fiduciary relationship between securities brokers and their customers, the scope of the duty varies with the facts of the relationship. (See Duffy v. Cavalier (1989) 215 Cal. App.3d 1517, 1535 [264 Cal. Rptr. 740] [The question is not whether there is a fiduciary duty, which there is in every broker-customer relationship; rather, it is the scope or extent of the fiduciary obligation, which depends on the facts of the case.].) Plaintiffs, according to their declarations, were given reason to believe the GWFSC representatives worked for GWB, an institution with which they had long acquaintance, and therefore might reasonably have regarded the representatives as generally trustworthy. Nonetheless, they had no ongoing relationship with GWFSC or its representatives. At the times the claimed nondisclosures occurred, no agency relationship had yet been formed, and those aspects of a broker's duty that derive from his or her role as the investor's agent are therefore not applicable. Under these circumstances, we find no authority for the proposition the fiduciary obligations of a broker extend to orally alerting the customer to the existence of an arbitration clause or explaining its meaning and effect. (See Gouger v. Bear, Stearns & Co., Inc. (E.D.Pa. 1993) 823 F. Supp. 282, 286-288; Castro v. Marine Midland Bank, N.A. (S.D.N.Y. 1988) 695 F. Supp. 1548, 1551; Rush v. Oppenheimer & Co., Inc., supra, 681 F. Supp. at p. 1052.) As to other terms of the agreement, such as the risks and benefits of the investments, the question of a breach of fiduciary obligations is a separate matter  in this case for the arbitrators  which we do not address. It should be stressed that plaintiffs' declarations do not establish any actual concealment by GWFSC of the arbitration clause, or any affirmative misrepresentations regarding the existence or meaning of an arbitration clause in the client agreements. The client agreement is a one-page (legal size) document; the arbitration agreement is in bold print in the center of the page's right column of text. It includes a brief explanation of the meaning of arbitration, including the important facts that arbitration is final and binding, that parties to arbitration waive their right to jury trial, and that judicial review of the award is strictly limited. Immediately above the signature line, moreover, is a bold-print reminder that this agreement contains a predispute arbitration clause above in paragraphs 9 and 10. Under these circumstances, plaintiffs understandably rest on their complete failure to read the agreements, which failure they argue was excused by GWFSC's fraudulent misrepresentations as to the nature of the documents, rather than on any specific claims of concealment or misrepresentation as to the arbitration clauses themselves. As we have already concluded, however, the relationship between plaintiffs and GWFSC representatives was insufficient to make reasonable plaintiffs' reliance on the representatives' assurances they need not read the agreements. [13] We conclude that the statements of GWFSC representatives to the effect the client agreements were merely a formality, or did not need to be read, were insufficient, even in light of the parties' relationship, to warrant a finding of fraud in the inception of the agreements. As to those plaintiffs whose declarations disclose no additional evidence of fraud, the petition to compel should have been granted. [14] The remaining plaintiffs' declarations require individual discussion. (12) Plaintiff Giovanna Greco declares she is an 81-year-old Italian immigrant, who speaks only a few words of English and cannot read English at all. (Her signed declaration is in Italian, with an unsigned English translation provided.) Greco's daughter, plaintiff Rosalba Kasbarian, describes herself as a 45-year-old Italian immigrant, who is able to speak and understand simple English, but cannot read English very well at all, and has difficulty reading complicated words or legal terms. (Kasbarian's signed declaration is in English.) Greco and Kasbarian were depositors of GWB. Kasbarian received a telephone call from a man named Dominick, who said he was with Great Western and could help Kasbarian and Greco obtain a higher return than they were getting on their certificates of deposit. Kasbarian and Greco met with Dominick  apparently Dominick Divine, a GWFSC representative  who they thought worked for GWB. Divine described a safe investment with a high return, and they agreed to deposit money in it. According to Greco, she told Divine she could not understand a lot of what he was saying because her English was so poor. He then took out some papers, which he held in his hand and said that he would read them for us and that Rosalba should translate for me. She translated for me what he was saying as he glanced over the documents. He again described the investment as having no risk of loss of principal and as `not at all like stocks.' Divine never mentioned the word `arbitration' or that I was giving up any of my legal rights. Greco did not understand she was investing in a mutual fund or that she was agreeing to waive her legal rights in case of a dispute. Greco continues, After describing what the documents supposedly said, he said, `you just need to sign this to open the account.' He explained that the documents he wanted me to sign `just repeat what I told you and your sister [ sic ].' Because I trusted him to have correctly described the documents to me, I signed them where he pointed for me to sign. Several months later, according to Greco, she and Kasbarian returned to the branch to deposit more money in their new account, and met with a different representative, Nina Daikovich. Daikovich, like Divine, purported to describe the investment accurately for them, but did not mention arbitration and urged them to `just sign here.' Kasbarian's narration of the interactions with Divine and Daikovich is consistent with Greco's. Greco and Kasbarian's declarations, if believed (and interpreted, where ambiguous or self-contradictory, in plaintiffs' favor), would establish facts sufficient to show reasonable reliance as an element of fraud in the execution of the client agreements. In light of plaintiffs' prior relationship with GWB, which they were led to believe was also the employer of Divine and Daikovich, their limited ability to understand English, and Divine and Daikovich's representations that their oral recitals accurately reflected the terms of the agreements, plaintiffs would not have been negligent in relying on the GWFSC representatives instead of reading the agreements themselves. (See C.I.T. Corporation v. Panac, supra, 25 Cal.2d at pp. 553-560 [plaintiffs' functional illiteracy in English, together with other party's misrepresentations regarding the character of the written contract, incomplete oral reading of the agreement, and urgings that plaintiffs sign it without reading it themselves or obtaining independent advice, held sufficient to support finding of fraud in the inception].) Under these circumstances, we conclude, the alleged fraud of GWFSC's representatives, if true, would have deprived Greco and Kasbarian of a reasonable opportunity to learn the character and essential terms of the documents they signed. (Rest.2d Contracts, § 163, p. 443.) The facts in Greco and Kasbarian's declarations, however, are far from undisputed. Divine and Daikovich both submitted responsive declarations contradicting plaintiffs on several critical points, including plaintiffs' English language abilities, the representatives' failure accurately to explain the investments, and the representatives' assurances plaintiffs did not need to read the client agreement. Indeed, Daikovich denies she opened an account for Greco and Kasbarian; instead, she states she opened an account for Greco and her son, Rosario Greco. Daikovich's version is supported in this respect with a copy of a client agreement signed by Greco and Rosario Greco, but not by Kasbarian. An earlier agreement is signed by Greco and Kasbarian. In addition, plaintiffs' declarations are in some respects vague, ambiguous and internally inconsistent. These factual issues are to be resolved by the trial court, as described earlier in this opinion. (13) Plaintiff Jodie Anne Rosen, 30 years old, is legally blind as a result of a 1989 industrial injury. She initially placed her workers' compensation settlement of $125,000 in a short-term GWB certificate of deposit. She chose GWB, where she herself had banked for several years, because my family had banked with Great Western for decades. Shortly thereafter, a GWB employee referred her to Carlos Ferlini, a GWFSC representative, whom the employee described as Great Western's Investment Counselor. Because she recognized Ferlini as a former GWB teller, because Ferlini had access to her account, and because Ferlini's desk was right next to the loan department, she never doubted he was a GWB employee. At the outset of her meeting with Ferlini, Rosen told him she was legally blind so that he would know that he would have to explain things to me and not rely on my being able to read documents. Ferlini told her he had a safe, `government secured' investment for her that would earn 12.5 percent interest. He never told her she was investing in a mutual fund, nor did he mention the arbitration clause or tell her she was waiving her legal right in case of a dispute. After she agreed to invest $110,000 of her settlement money in this `Sierra Fund,' Rosen declares, the following occurred: Mr. Ferlini took out some documents and told me to sign them to open the new account. I told him that I could not read print that small.... Mr. Ferlini explained, `These documents just repeat what I have told you. You just need to sign by the Xs.' I told him I could not even see the `Xs' to know where to sign. He then said, `Okay, just sign where my finger is' and he then pointed to several places where I was supposed to sign. My sister, Sundae Rosen, who had come over to the table in the middle of my discussion with Mr. Ferlini, asked what I was signing. Mr. Ferlini said, `It is just a signature card.' [¶] I trusted Mr. Ferlini and thought that I was signing a signature card and some form documents to open an account. Rosen's signed declaration is followed by an attestation from her sister Sundae that Sundae accurately read Rosen the declaration before Rosen signed it. Rosen's declaration, if believed and interpreted in her favor, shows facts that would suffice to establish reasonable reliance for purposes of showing fraud in the execution of the agreement. In light of Rosen's prior relationship with GWB, by whom she reasonably thought Ferlini was employed, her warnings to Ferlini that she could not read the documents, Ferlini's assurances they only repeated what he had told her, and his assurance that Rosen was only signing a signature card, Rosen's failure to take additional steps to learn the contents of the written agreement would not have been negligent. GWFSC's asserted fraud would have deprived her of a reasonable opportunity to learn the character and essential terms of the documents she signed. Rosen's declaration is contradicted by evidence submitted by GWFSC. Although Ferlini did not provide a declaration, GWFSC representative Bret Davidson declares it was he, not Ferlini, who initially met with Rosen. Davidson then introduced Rosen and her sister to Ferlini, who gave them a full presentation. Finally, Davidson filled out the paperwork, reviewed it with her, and obtained her signature. According to Davidson, Rosen never said or demonstrated she was visually impaired. She signed the client agreement and other documents without his aid and without saying she could not read them. The trial court, as discussed above, must resolve these testimonial conflicts. Plaintiff Dorothy Bied did not submit a declaration. However, her daughter and guardian ad litem, Cecile Talsky, declares that Bied, 80 years old, is suffering from Alzheimer's disease. As a result, she has severe memory loss, diminished understanding and is incapable of understanding complicated monetary transactions. According to Talsky, Bied has banked with GWB for 30 years. After learning Bied had, in January 1994, transferred some of her savings to a Sierra Fund, Talsky informed Great Western's branch office that her mother had Alzheimer's disease and should not be permitted to transfer money from certificates of deposit to mutual funds. In October 1994, however, Talsky discovered her mother had agreed to transfer additional savings into the mutual fund. Talsky telephoned GWFSC representative Joseph Duncan and told him to cancel the investment. She told Duncan her mother had Alzheimer's, could not understand the investments, and had, in May 1994, given her and her brother a power of attorney. Although Duncan assured her he would cancel the transaction, he did not. Talsky's declaration provides no evidence any GWFSC representative made any fraudulent statement to Bied in the course of securing her apparent assent to the investments. It is possible, however, that Bied, in light of her asserted disability, can establish constructive fraud in GWFSC's abuse of a confidential or fiduciary relationship. (Civ. Code, § 1573; 1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 400-401, pp. 360-362.) The parties have not specifically briefed this point with regard to Bied, and the facts of her case are so unclear and in such dispute that legal analysis of the question would be premature. [15] In any event, Talsky's declaration, if believed, raises a factual issue as to Bied's capacity to contract; if extreme enough, her mental deficiency could render void any contract to which she apparently assented, including client agreements containing the arbitration clause. (See 1 Witkin, supra, § 358, p. 326.) On remand, the trial court must find the facts and decide whether they render the contract void under either theory. Two other plaintiffs, Raul Pupo and Felix Segarra, produced evidence of limited facility with English, but have not shown facts sufficient to make their complete reliance on GWFSC's representatives reasonable. Unlike Greco and Kasbarian, neither Pupo nor Segarra presents evidence the representative purported to read the contract to them or to explain its full contents orally. Unlike Rosen, they present no evidence they told the representative they could not read the contracts, a fact that in Rosen's case made more reasonable her reliance on the subsequent misrepresentations. As far as appears from his declaration, moreover, Pupo had no prior relationship with GWFSC, GWB or the representative. Under these circumstances, Pupo and Segarra's failure to take measures to learn the contents of the document they signed is attributable to their own negligence, rather than to fraud on the part of GWFSC or its representatives.