Filed 9/30/26 StormQuant v. Purvis CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
STORMQUANT, INC., H052765
(Santa Clara County
Plaintiff and Respondent, Super. Ct. No. 23CV420854)
v.
REUBEN “TRIPP” PURVIS,
Defendant and Appellant.
In January 2019, appellant Reuben “Tripp” Purvis became the chief executive
officer (CEO) of respondent StormQuant, Inc. (StormQuant or the Company).
StormQuant is a startup company “providing hyperlocal radar data that transforms how
the world sees, prepares for, and responds to weather and airspace threats.” Purvis
entered into a contract with StormQuant in April 2019, entitled “At-Will Employment,
Confidential Information, Invention Assignment, and Arbitration Agreement” (the
Agreement). It contained a provision under which the parties agreed to arbitration of
claims and disputes (the arbitration provision).1 In January 2023, Purvis resigned from
StormQuant. He then submitted a demand for arbitration with JAMS, seeking salary,
benefits, and penalties from StormQuant.
1
Although the provision in the overall Agreement between the parties that calls
for arbitration is itself an agreement to arbitrate, to avoid confusion, we will refer to it as
the arbitration provision.
StormQuant then filed the instant lawsuit for declaratory relief, contending that the
Agreement and the arbitration provision contained therein were unenforceable, and that
JAMS had no jurisdiction to arbitrate any controversy between the parties. Purvis filed a
petition to compel arbitration of the dispute pursuant to the parties’ Agreement.2
StormQuant opposed the petition, contending that the Agreement containing the
arbitration provision: never became effective because it was contingent upon the
Company receiving specific outside funding, which never occurred; and was executed
based upon Purvis committing fraud by falsely representing that the Agreement was
contingent upon the Company’s receipt of outside financing.
After an initial hearing, the court issued an order concluding that the
“enforceability of the arbitration agreement” was to be determined by the court, rather
than by an arbitrator after a second hearing. Following an evidentiary hearing and
posthearing briefing, the trial court denied the petition to compel arbitration on
November 5, 2024. The court held that StormQuant’s alternative arguments had merit,
concluding that: (a) the Agreement never became an effective, binding contract because
there was no mutual assent; and (b) the Agreement was void because its execution by the
Company was the result of fraud because Purvis falsely stated that it would become
effective only after the Company received the anticipated outside funding.
On appeal from that order, Purvis makes three contentions. First, he asserts that
the trial court had no jurisdiction to determine the validity of the Agreement; an arbitrator
was required to make such determination. Second, Purvis argues the court’s findings that
2
Purvis captioned its pleading as a motion to compel arbitration. As provided in
Code of Civil Procedure section 1292.4, “If a controversy referable to arbitration under
an alleged agreement is involved in an action or proceeding pending in a superior court, a
petition for an order to arbitrate shall be filed in such action or proceeding.” (Italics
added; see also id., § 1281.2, subd. (a) [referring to “petition of a party to an arbitration
agreement” seeking to compel arbitration of a controversy].) We will hereinafter refer to
Purvis’s request as a petition to compel arbitration.
2
the Agreement (1) was not a binding contract because there was never a meeting of the
minds and (2) was void due to fraud in the execution, were not supported by substantial
evidence. Third, he contends the trial court deprived him of his constitutional right to
due process by determining the issue of the Agreement’s validity without giving him the
opportunity to conduct discovery.
We conclude that the trial court properly assumed jurisdiction to determine the
validity of the Agreement. We find that there was substantial evidence to support the
court’s conclusion that the Agreement was not a binding contract because there was no
meeting of the minds. And we reject Purvis’s argument that he was denied due process.
Accordingly, we will affirm the order denying Purvis’s petition to compel arbitration.
I. PROCEDURAL BACKGROUND
A. Demand for Arbitration
On March 1, 2023, Purvis filed a demand for arbitration with JAMS, alleging that
he had a wage claim dispute with StormQuant arising out of the Agreement that included
an arbitration provision. Counsel for StormQuant responded that there was no agreement
to arbitrate and thus “the demand for arbitration [was] improper.” JAMS advised the
parties that it would administer the proceedings and appoint an arbitrator. On August 29,
2023, JAMS appointed an arbitrator to decide the controversy.
B. Complaint
On August 9, 2023, StormQuant filed a complaint for declaratory relief. It alleged
that on March 1, 2023, Purvis filed a demand for arbitration with JAMS to enforce the
Agreement. The Company alleged that in April 2019, Purvis, as its CEO, directed
Andrew Bryant, chief technical officer, to sign Purvis’s Agreement on the Company’s
behalf. At that time, there was prospective outside funding of $5 million pending from
an entity, Marrs Blue Water (hereafter, the Marrs funding). StormQuant alleged further
that “Purvis informed Bryant that the … Agreement would not become effective and
enforceable unless and until the [Marrs] funding took place. … Bryant would not have
3
signed Purvis’ … Agreement had Bryant known Purvis would claim it was enforceable
without the Marrs Blue Water funding.”
StormQuant alleged in its complaint that the Agreement never became effective
because the contingency of the completion of the Marrs funding never occurred.
StormQuant sought declaratory relief that the “Agreement and/or arbitration agreement
[were] unenforceable, and that JAMS [had] no jurisdiction to adjudicate any dispute
regarding the enforceability of the … Agreement and/or arbitration agreement.”3
C. Petition to Compel Arbitration
In response to StormQuant’s complaint, Purvis filed a petition to compel
arbitration on September 28, 2023. He claimed that there were in fact two arbitration
agreements. In addition to the arbitration provision contained in the Agreement,
arbitration of disputes was agreed upon in the written offer dated April 10, 2019 (Offer
Letter), which stated that Purvis would be required to sign the Agreement as a condition
of his employment. Purvis contended that his claim for unpaid compensation was subject
to arbitration under the Agreement and the Offer Letter. He asserted further that the
matters raised in StormQuant’s complaint, including its claim that the Agreement was
“non[]existent and unenforceable,” should be arbitrated.
StormQuant opposed the petition to compel arbitration on the bases stated in its
complaint. In addition to asserting the Agreement never became effective because the
Marrs funding never closed, StormQuant asserted that Purvis committed fraud by falsely
representing that the Agreement was contingent on the Company receiving such funding.
And the Company argued that, under the Federal Arbitration Act (FAA; 9 U.S.C. §§ 1–
3
StormQuant sought and obtained an ex parte temporary restraining order
preventing Purvis from proceeding with arbitration before JAMS. The court thereafter
granted a preliminary injunction in which it enjoined and restrained Purvis from
participating in the JAMS arbitration until the court had ruled on his motion to compel
arbitration.
4
14), it was the court, not the arbitrator, that had jurisdiction to decide two threshold
issues, namely, “whether: (i) a valid arbitration agreement exists and, if so, (ii) the
agreement encompasses the dispute at issue.”
The trial court conducted an initial hearing on the petition to arbitrate on February
13, 2024.4 On March 8, 2024, the trial court issued an interim order. It held that the “the
enforceability of the arbitration agreement” must be determined by the court. The court
concluded further that it would hold an evidentiary hearing on that issue, and the
proceedings before JAMS would be ordered stayed pending the court’s ruling.
An evidentiary hearing took place on June 28, 2024. After the submission of two
posthearing briefs by each party, the trial court ruled in StormQuant’s favor by denying
the petition. In its final order of November 5, 2024, the court found that the Agreement
was void because “at the time Purvis and Bryant signed [it], there was no mutual assent.
… [N]either party believed that the [A]greement was an enforceable contract at the time
the contract was signed and that both instead believed the contract would only be
enforceable once StormQuant obtained the then-pending third-party funding.” The court
held that the Agreement was void due to “fraud in the execution” based upon the
following reasoning: “However, even if Purvis believed the contract was enforceable at
the time he signed it (which belief is belied by the extensive evidence to the contrary, …),
Purvis told Bryant Purvis did not view the agreement as enforceable without the third
party funding, so it was okay to sign it, leading Bryant to ‘be deceived as to the nature of
his act’ of putting his signature on the [A]greement, rendering that agreement void.”
Purvis filed a timely notice of appeal from the order denying the petition to
compel arbitration. (See Code Civ. Proc., § 1294, subd. (a).)
4
Prior to the initial hearing, the court issued a tentative ruling in which it indicated
that (1) it was for the court to determine arbitrability, and (2) “the preponderance of the
evidence favors the conclusion that the arbitration agreement is unenforceable.”
5
II. DISCUSSION
A. Applicable Law
Statutory schemes exist under federal and California law for the enforcement of
arbitration agreements. The FAA governs contractual arbitration in written contracts
concerning interstate or foreign commerce. (9 U.S.C. §§ 1, 2.) The California
Arbitration Act (Code Civ. Proc., § 1280 et seq.) sets forth “a comprehensive statutory
scheme regulating private arbitration in this state.” (Moncharsh v. Heily & Blase (1992)
3 Cal.4th 1, 9.) Here, the arbitration provision contained in the parties’ Agreement
specifically stated that the FAA governed and applied.
Section 2 of the FAA provides in relevant part: “A written provision in … a
contract evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction … shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” (9 U.S.C. § 2.) This statute stands as “a congressional
declaration of a liberal federal policy favoring arbitration agreements, notwithstanding
any state substantive or procedural policies to the contrary.” (Moses H. Cone Memorial
Hospital v. Mercury Construction Corp. (1983) 460 U.S. 1, 24; see also Ericksen,
Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312,
322 [California has a “strong public policy in favor of arbitration as a speedy and
relatively inexpensive means of dispute resolution”].)
“[T]he FAA requires courts to ‘place arbitration agreements on an equal footing
with other contracts [citation] and [to] enforce them according to their terms.’ [Citation.]
However, the high court has qualified this statement by reference to ‘[t]he final phrase of
§ 2,’ which is known as the FAA’s ‘saving clause’ and which ‘permits arbitration
agreements to be declared unenforceable “upon such grounds as exist at law or in equity
for the revocation of any contract.” ’ [Citation.] This clause, the high court has stated,
‘indicates’ that Congress’s ‘purpose’ in enacting the FAA ‘was to make arbitration
6
agreements as enforceable as other contracts, but not more so.’ [Citation.] Thus,
arbitration agreements, ‘[l]ike other contracts,’ ‘may be invalidated by “generally
applicable contract defenses, such as fraud, duress, or unconscionability.” ’ ” (McGill v.
Citibank, N.A. (2017) 2 Cal.5th 945, 961–962.)
The FAA ensures the enforcement of arbitration agreements by preempting
“ ‘state laws which “require a judicial forum for the resolution of claims which the
contracting parties agreed to resolve by arbitration.” ’ ” (Pinnacle Museum Tower Assn.
v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 235 (Pinnacle
Museum).) “Nonetheless, it is a cardinal principle that arbitration under the FAA ‘is a
matter of consent, not coercion.’ [Citation.] Thus, ‘ “a party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.” ’ [Citations.] In
determining the rights of parties to enforce an arbitration agreement within the FAA’s
scope, courts apply state contract law while giving due regard to the federal policy
favoring arbitration.” (Id. at p. 236.)
The trial court has two considerations in ruling on a petition to compel arbitration:
“ ‘ “(1) whether there is a valid agreement to arbitrate between the parties; and (2)
whether the dispute in question falls within the scope of that arbitration agreement.”
[Citation.]’ ” (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1283 (Bruni).) “In these
summary proceedings, 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.) The burden rests with the party seeking
arbitration to prove the existence of an arbitration agreement. (See Pinnacle Museum,
supra, 55 Cal.4th at p. 236.)
B. Standard of Review
The issues presented in an appeal may result in the application of multiple
standards of review. (See, e.g., Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 408
7
[challenge to order granting preliminary injunction based on trial court’s finding that the
plaintiff was likely to prevail potentially “trigger[ed] any or all of three standards of
appellate review”].) This is true in the case of an appeal from an order denying a petition
to compel arbitration, where “[t]here is no uniform standard of review … .” (Robertson
v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425 (Robertson).) “If
the court’s order is based on a decision of fact, then we adopt a substantial evidence
standard. [Citations.] Alternatively, if the court’s denial rests solely on a decision of
law, then a de novo standard of review is employed. [Citations.]” (Ibid.) As we will
discuss, there are three issues in this appeal for which we must identify the appropriate
standard of review.
First, we must determine whether the trial court correctly held that it, rather than
the arbitrator, was required to resolve StormQuant’s threshold challenge to the
Agreement’s validity. The Company contended the Agreement was not an effective
contract because there was no meeting of the minds on its essential terms, or, in the
alternative, because there was fraud in the execution that rendered it void. The
arbitrability of StormQuant’s challenges to the effectiveness of the Agreement are
arbitrable is a question of law that we review de novo. (Robertson, supra, 132
Cal.App.4th at p. 1425.)
Second, assuming the trial court properly assumed jurisdiction, we review whether
the trial court erred in concluding that the Agreement was not a binding contract. If we
conclude the court did not err in this determination, then the underlying arbitration
provision contained in the Agreement would likewise be unenforceable. Whether the
Agreement was a binding contract is “a decision of fact” that is based upon the trial
court’s resolution of conflicting evidence, which we review for substantial evidence.
(Robertson, supra, 132 Cal.App.4th at p. 1425; see also Lopez v. Bartlett Care Center,
LLC (2019) 39 Cal.App.5th 311, 318 [factual finding that party did not authorize
8
daughter to sign agreement on her behalf reviewed for substantial evidence]; Nielsen
Contracting, Inc. v. Applied Underwriters, Inc. (2018) 22 Cal.App.5th 1096, 1106
(Nielsen Contracting) [“i]f the trial court resolved contested facts,” factual findings are
reviewed for substantial evidence].) Thus, if the facts concerning the issue of whether the
parties entered into a binding agreement are disputed—as is the case here—the trial
court’s findings regarding the existence of a contract are reviewed for substantial
evidence. (See Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc.
(2015) 240 Cal.App.4th 763, 771–772.)
As one court has summarized the substantial evidence standard: “This traditional
standard of review is highly deferential. It has three pillars. First, we accept all evidence
supporting the trial court’s order. Second, we completely disregard contrary evidence.
Third, we draw all reasonable inferences to affirm the trial court. These three pillars
support the lintel: we do not reweigh the evidence. [Citation.] Under this standard of
review, parties challenging a trial court’s factfinding bear an ‘ “enormous burden. …’
[Citation.] [¶] If substantial evidence supports factual findings, those findings must not
be disturbed on appeal. [Citation.] Inferences favorable to appellants may create
conflicts in the evidence, but that is of no consequence. [Citation.] When a civil appeal
challenges findings of fact, the appellate court’s power begins and ends with a
determination of whether there is any substantial evidence — contradicted or
uncontradicted —to support the trial court findings. [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. [Citation.] [¶] Our job
is only to see if substantial evidence exists to support the verdict in favor of the prevailing
party, not to determine whether substantial evidence might support the losing party’s
version of events. [Citation.] [¶] Venerable precedent holds that, in a bench trial, the
trial court is the ‘sole judge’ of witness credibility. [Citation.] The trial judge may
9
believe or disbelieve uncontradicted witnesses if there is any rational ground for doing so.
[Citation.] The fact finder’s determination of the veracity of a witness is final.
[Citation.] Credibility determinations thus are subject to extremely deferential review.”
(Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 582 (Schmidt).)
Third, we will address Purvis’s contention that the trial court deprived him of due
process by determining the issue of the Agreement’s validity without giving him the
opportunity to conduct discovery. “We review due process claims de novo, ‘because “the
ultimate determination of procedural fairness amounts to a question of law.” ’ ”
(Cardona v. Soto (2024) 105 Cal.App.5th 141, 150.)
C. Court’s Jurisdiction to Decide Arbitrability
1. Parties’ Contentions
Purvis contends that the trial court had no jurisdiction to decide whether, as
contended by StormQuant, the Agreement containing the arbitration provision was
invalid. He asserts that under established law, if the party resisting arbitration challenges
“the entire contract, and not just the arbitration provision therein, based on allegations of
fraud, the court must determine if this is a claim of fraud in the execution or fraud in the
inducement of the entire contract.” A finding of the contract’s invalidity based on fraud
in the execution would render it void, while a conclusion that a party was induced by
fraud to enter into the contract would result in it being voidable. Purvis argues that only
fraud in the execution claims may be decided by the court; if the claim is that the contract
is voidable because of fraud in the inducement, the issue must be decided by the
arbitrator. Purvis contends that because StormQuant (purportedly) claimed here that the
Agreement was invalid because of fraud in the inducement, the trial court had no
jurisdiction to decide the matter.
StormQuant contends the trial court had jurisdiction to decide whether the
Agreement was valid. It argues that “the [t]rial [c]ourt resolved the precise threshold
issue California law requires courts—not arbitrators—to decide as a matter of law:
10
whether any … agreement, and therefore any arbitration agreement [contained therein],
was ever formed in the first place.” StormQuant alternatively contends that the trial court
properly resolved factual conflicts in concluding that there was fraud in the execution that
negated the formation of the Agreement.
After reviewing legal principles, we address Purvis’s threshold jurisdictional
challenge to the trial court’s actions.
2. Applicable Legal Principles
Under the terms of the Agreement, the provision requiring arbitration was to be
governed by the FAA. The arbitration provision stated that “any and all controversies,
claims, or disputes” Purvis had with StormQuant, as well as “any disputes that the
Company ha[d] with [Purvis],” “shall be subject to binding arbitration under the Federal
Arbitration Act … . The FAA’s substantive and procedural rules shall govern and apply
to this arbitration agreement with full force and effect, and any state court of competent
jurisdiction may stay proceedings pending arbitration or compel arbitration in the same
manner as a federal court under the FAA. …” (Capitalization omitted.)
Under section 2 of the FAA, “a written provision for arbitration ‘in any maritime
transaction or a contract evidencing a transaction involving commerce … shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.’ ” (Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967)
388 U.S. 395, 400, fn. omitted (Prima Paint).) As the United States Supreme Court has
explained, under section 2 of the FAA, “[c]hallenges to the validity of arbitration
agreements ‘upon such grounds as exist at law or in equity for the revocation of any
contract’ can be divided into two types. One type challenges specifically the validity of
the agreement to arbitrate. [Citation.] The other challenges the contract as a whole,
either on a ground that directly affects the entire agreement (e.g., the agreement was
fraudulently induced), or on the ground that the illegality of one of the contract’s
11
provisions renders the whole contract invalid.” (Buckeye Check Cashing, Inc. v.
Cardegna (2006) 546 U.S. 440, 444, fn. omitted (Buckeye Check Cashing).)
In Prima Paint, supra, 388 U.S. at pages 399 to 400, the high court considered
whether a fraud-in-the-inducement challenge to a contract that contained a provision
requiring arbitration of disputes under the FAA should be decided by the court or through
arbitration. The high court concluded that where the challenge was to the entire
agreement on grounds of fraud in the inducement, and not specifically to the making of
the arbitration agreement, the arbitrator, not the court, was required to address it. (See id.
at p. 404.)
The Supreme Court in Buckeye Check Cashing, supra, 546 U.S. at page 449
reiterated this conclusion that challenges to the entire contract, as opposed to the
arbitration provision imbedded in that agreement, must be decided by the arbitrator.
There, the claim was that the contract in its entirety was invalid because it contained a
usurious finance charge. (Id. at p. 444.) In holding that this question must be decided by
the arbitrator, the high court identified “three propositions[: 1] … as a matter of
substantive federal arbitration law, an arbitration provision is severable from the
remainder of the contract[; 2] … unless the challenge is to the arbitration clause itself, the
issue of the contract’s validity is considered by the arbitrator in the first instance[; 3] …
this arbitration law applies in state as well as federal courts.” (Id. at pp. 445–446.)
In Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394
(Rosenthal), the California Supreme Court made a clear distinction in the arbitrability of
two types of fraud challenges to contracts containing arbitration provisions: a claim of
fraud in the inception (or execution) of the contract rendering it void ab initio, and a
claim of fraud in the inducement rendering the contract voidable. (See id. at pp. 415–
419.) It held that challenges based on fraud in the inception were not arbitrable. (See id.
at pp. 416–417.) Our high court explained: “California law distinguishes between fraud
12
in the ‘execution’ or ‘inception’ of a contract and fraud in the ‘inducement’ of a contract.
… [I]n 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 [or she] 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.” ’ [Citation.] Fraud in the inducement, by contrast, occurs when
‘ “the promisor knows what he [or she] is signing but his [or her] 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 … .” ’ ” (Id. at p. 415.)
The Supreme Court in Rosenthal concluded that the court, not the arbitrator, must
decide whether the underlying contract was void based upon fraud in the execution. It
reasoned: “The central rationale of the high court’s decision in Prima Paint was that
arbitration clauses must, under federal law established in the [FAA], be viewed as
‘ “ separable” ’ from other portions of a contract [citation]; 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.” (Rosenthal, supra, 14 Cal.4th at pp. 416–417.) The court
concluded: “If the entire contract is void ab initio because of fraud, the parties have not
13
agreed to arbitrate any controversy; under that circumstance, Prima Paint does not
require a court to order arbitration.” (Id. at p. 416, second italics added.)
There is a second instance in which a challenge to a contract containing an
arbitration provision is subject to court adjudication: If the contention is that there was
no formation of the contract, the court, not an arbitrator, makes that determination. This
further arbitrability limitation to the challenges to the entire contract stems from a
footnote in Buckeye Check Cashing. There, the United States Supreme Court provided a
caveat to its holding that the respondents’ challenge to the contract based on fraudulent
inducement was arbitrable, indicating that this challenge differed from an issue it was not
deciding, i.e., the arbitrability of “the issue whether any agreement between the alleged
obligor and obligee was ever concluded.” (Buckeye Check Cashing, supra, 546 U.S. at p.
444, fn. 1; see also Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 71, fn. 2
[reiterating distinction between validity of contract and whether contract “ ‘was ever
concluded’ ”].)
The appellate court in Bruni, supra, 160 Cal.App.4th 1272 emphasized that it is
the court that must adjudicate the threshold issue of whether the overall agreement was
ever concluded, i.e., whether the parties were bound by contract. The Bruni court
explained: “A court, however, still must consider one type of challenge to the overall
contract: a claim that the party resisting arbitration never actually agreed to be bound.
[Citation.] ‘ “[A]rbitration is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.” [Citation.]’
[Citations.] ‘Where … a party’s apparent assent to a written contract is negated … , there
is simply no arbitration agreement to be enforced.’ [Citation.] ‘There would … be a
severe problem of bootstrapping if a party to a contract could be forced to arbitrate the
question whether he had been coerced or deceived into agreeing to arbitrate disputes
14
arising under the contract.’ ” (Id. at p. 1284; see also Najarro v. Superior Court (2021)
70 Cal.App.5th 871, 889 [‘[d]espite the existence of a clear and unmistakable delegation
clause, a court remains able to determine ‘whether any agreement between the parties
“was ever concluded” ’ ”]; Three Valleys Municipal Water District v. E.F. Hutton & Co.,
Inc. (9th Cir. 1991) 925 F.2d 1136, 1140–1141 [“party who contests the making of a
contract containing an arbitration provision cannot be compelled to arbitrate the threshold
issue of the existence of an agreement to arbitrate”].)
A panel of this court in Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th
748 (Mendoza) considered a putative class action wage and hours suit in which the
employer petitioned to compel arbitration; the plaintiff opposed the petition on the bases
that “any agreement to arbitrate was void for lack of mutual consent or voidable on the
grounds of unilateral mistake … .” (Id. at p. 759.) Although there was a delegation
clause that contained broad language “that the arbitrator ‘shall have exclusive authority to
resolve any dispute relating to … formation of the arbitration policy’ ” (id. at p. 776), this
court held “as a matter of law, the question whether the parties entered into an agreement
to arbitrate anything at all is for a court to decide” (ibid., italics added). Accordingly,
we held that because the plaintiff “challenged contract formation and the very existence
of an agreement to arbitrate, the trial court did not err when it addressed those issues.”
(Ibid., italics added; see also Ahlstrom v. DHI Mortg. Co., Ltd., L.P. (9th Cir. 2021) 21
F.4th 631, 635 (Ahlstrom) [“ ‘[a]lthough challenges to the validity of a contract with an
arbitration clause are to be decided by the arbitrator, challenges to the very existence of
the contract are, in general, properly directed to the court’ ”].)
3. Court Had Jurisdiction to Determine Agreement’s Existence
Purvis contends the trial court lacked jurisdiction to decide StormQuant’s
challenge to the enforceability of the Agreement. We begin our analysis by identifying
StormQuant’s enforceability challenge. In its complaint, StormQuant alleged that: (1)
15
“the … Agreement and arbitration [provision] never went into effect because it was not to
be executed or become effective and enforceable until StormQuant received funding,
which never occurred”; (2) “Purvis informed Bryant that the … Agreement would not
become effective and enforceable unless and until the … funding took place”; and (3)
there was “[a] dispute and actual controversy” between the parties in that StormQuant
contended that “the … Agreement never became a legally binding contract … [and was]
invalid and unenforceable.” (See Buckeye Check Cashing, supra, 546 U.S. at p. 444
[evaluating whether challenge was to validity of arbitration agreement or to the contract
as a whole by viewing “[t]he crux of the complaint”].)
In seeking a temporary restraining order to stay the JAMS arbitration proceedings
initiated by Purvis, StormQuant submitted a declaration from Bryant. He declared that
Purvis, “the CEO and [his] boss, instructed [him] to sign [Purvis’s] Agreement on behalf
of StormQuant,” stating to Bryant that the Agreement “would not become effective and
enforceable unless and until the Marrs Blue Water funding took place.” Bryant stated
that he would not have signed the Agreement had he known that Purvis would later assert
that it was enforceable without the Marrs funding.
In its opposition to the petition to compel arbitration, StormQuant asserted the
Agreement was not valid or enforceable because: “(1) it was contingent, which Purvis
now denies, and the contingency was not met; or (2) Purvis misrepresented that it was
contingent, the agreements were not to be executed, and they were never enforceable—
i.e., Purvis committed fraud.”
Bryant’s testimony at the second hearing about his understanding of the
Agreement confirmed what he previously indicated in his declaration. As addressed in
greater detail, post, Bryant testified that: Purvis told Bryant on two occasions that the
Agreement would not become effective until the Marrs funding closed; Bryant relied on
those assurances when he signed the Agreement on behalf of the Company; and Bryant
16
would never have signed the Agreement had he understood that it was effective
immediately without StormQuant having received the Marrs funding.
In its posthearing briefs, StormQuant argued that the evidence showed “there was
never a meeting of the minds to enter into a contract on all material terms of [the
Agreement].” StormQuant asserted—juxtaposing Bryant’s testimony that he understood
the Agreement’s effectiveness was contingent upon the Company receiving the Marrs
funding with Purvis’s testimony that he at all times believed the Agreement was valid
upon execution—“there was certainly no meeting of the minds, and no contract was
formed.” StormQuant argued, alternatively, that “there was undeniable fraud in the
execution of [the A]greement which renders the entire contract void.” (Original boldface
omitted.)5
Based upon this backdrop, it is clear that Purvis’s jurisdictional challenge fails.
The arguments made by StormQuant in opposing the petition were founded on challenges
to the Agreement as a whole, not to the arbitration provision.6 Accordingly, although
such challenges, in general, would be arbitrable (see Buckeye Check Cashing, supra, 546
U.S. at p. 449; Prima Paint, supra, 388 U.S. at p. 404), two exceptions to that rule are
dispositive here.
First, “[a] court … must consider one type of challenge to the overall contract: a
claim that the party resisting arbitration never actually agreed to be bound.” (Bruni,
supra, 160 Cal.App.4th at p. 1284.) StormQuant argued that it never agreed to be bound
5
We acknowledge Purvis’s position that there was some lack of clarity below in
StormQuant’s explanation concerning its challenge insofar as it appeared to have
confused the distinct doctrines of fraud in the inducement and fraud in the execution.
StormQuant nonetheless made it clear in its closing briefs that it was contending that the
Agreement was void due to fraud in its execution.
6
As pointed out by Purvis, the trial court acknowledged during the first hearing
that StormQuant’s challenge was to the validity of the Agreement as a whole, not
specifically to the arbitration provision.
17
by the Agreement—to the extent that in its written form, it contained no condition
precedent making it valid and enforceable only if the Marrs funding to the Company was
ultimately concluded. And, as discussed, post, the evidence offered by StormQuant
supported its position that a contract was never consummated. Therefore, the trial court,
not the arbitrator, had jurisdiction to determine the merits of the opposition to compelling
arbitration where StormQuant “challenged contract formation and the very existence of
an agreement to arbitrate …” (Mendoza, supra, 75 Cal.App.5th at p. 776; see also
Ahlstrom, supra, 21 F.4th at p. 635 [“ ‘challenges to the very existence of the contract
are, in general, properly directed to the court’ ”].)
Second, “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.” (Rosenthal, supra, 14 Cal.4th
at p. 416, second italics added.) StormQuant argued below that there was fraud in the
execution rendering the entire Agreement void because Purvis represented to Bryant on
multiple occasions that the Agreement would not be effective unless and until the Marrs
funding occurred, and Bryant signed it in reliance on those representations. Under
Rosenthal, StormQuant’s theory was in essence that Purvis’s false representation about
the contingent nature of the Agreement went “ ‘ “to the inception or execution of the
agreement, so that [Bryant was] deceived as to the nature of his act, and actually … [did]
not intend to enter into a contract at all, [so that] mutual assent [was] lacking … .” ’ ”
(Id. at p. 415.) Since StormQuant claimed that there was fraud in the execution rendering
the Agreement void, this challenge was also subject to resolution by the court, not the
arbitrator. (See id. at p. 416.)
Accordingly, the trial court properly assumed jurisdiction to decide the matter.7
7
The parties made extensive argument below concerning the meaning and effect
of the delegation clause in the arbitration provision, which reads in part: “I … agree to
arbitrate any and all disputes arising out of or relating to the interpretation or application
18
D. Substantial Evidence Supporting Trial Court’s Findings
It remains for this court to consider whether the trial court erred in concluding that
the Agreement was unenforceable because no binding contract was formed.8 Purvis
contends that there was no basis for this finding by the court. We review for substantial
evidence the court’s findings concerning the validity of the Agreement that it made after
the court resolved contested facts. (See Nielsen Contracting, supra, 22 Cal.App.5th at p.
1106.)9
of this agreement to arbitrate, but not disputes about the enforceability, revocability, or
validity of this agreement to arbitrate … .” (Capitalization and boldface omitted.) Purvis
argued that: the challenge to arbitration related to the contract as a whole and was thus
arbitrable; and (b) even if StormQuant’s challenge were construed as being to the validity
of the arbitration provision, under that provision, the parties delegated issues concerning
the enforceability of the contract as a whole to the arbitrator. StormQuant countered that,
because the Agreement contained a severability clause—that provided for the possibility
of “ ‘the court’ ” making a finding that a provision of the Agreement was invalid or
unenforceable—there was no clear and unmistakable delegation to the arbitrator, and the
challenge to the entire Agreement’s enforceability was to be decided by the court. In its
interim and final orders, the trial court concluded the arbitration provision did not clearly
and unmistakably delegate issues concerning its enforceability to the arbitrator. We have
concluded that StormQuant’s alternative challenges to the entire Agreement were by their
very nature not arbitrable. (See Rosenthal, supra, 14 Cal.4th at p. 416; Bruni, supra, 160
Cal.App.4th at p. 1284.) Accordingly, the legal question of whether the arbitration
provision clearly and unmistakably delegated a challenge to the enforceability of that
provision is not relevant to disposing of this appeal, and we need not address it. (See
Hiser v. Bell Helicopter Textron Inc. (2003) 111 Cal.App.4th 640, 655 (Hiser) [appellate
courts generally “decline to decide questions not necessary to the decision”].)
8
As we discuss, post, substantial evidence supported the trial court’s conclusion
that the Agreement was unenforceable because there was no meeting of the minds. We
therefore need not address Purvis’s argument that there was no basis for the court’s
alternative conclusion that the Agreement was void due to fraud in the execution. (See
Hiser, supra, 111 Cal.App.4th at p. 655.)
9
In his opening brief, Purvis, appears to focus only on the court’s finding that the
Agreement was void due to fraud in the execution. His reply brief includes some
discussion of the trial court’s conclusion that there was no enforceable contract because
there was no meeting of the minds between the parties, but he does not provide the
required fair description of the underlying evidence. (See Foreman & Clark Corp. v.
19
1. Evidence Presented
a. Execution of the Agreement
Purvis joined StormQuant as its CEO in January 2019, and he became its chairman
of the board in August of that year. He was recruited by Bryant, one of the Company’s
founders and its chief technology officer. Purvis was responsible for its day-to-day
operations and business, and he located and worked with the Company’s accountants.
Purvis testified that when he started with StormQuant, there was no money in the bank,
and the best source of funding for the Company was the outside infusion of capital ($5
million) from the prospective Marrs funding. Such investment capital was critical to
StormQuant.
Between February and March 2019, Purvis worked with Wilson Sonsini Goodrich
and Rosati (Wilson), the Company’s attorneys, in preparing incorporation documents, as
well as employment and stock agreements for its four founders: Purvis, Bryant, Nick
Muhlhauser, and Kevin Shoemaker (collectively, the founders).10 Purvis communicated
with Wilson about the terms that should be included in the employment agreements, one
Fallon (1971) 3 Cal.3d 875, 881.) We will nonetheless consider whether there was
substantial evidence to support this finding.
10
The record reflects that StormQuant did not exist until early 2019. Its
predecessor company was StormQuant LLC, formed in November 2017, with its
members consisting of Bryant, Muhlhauser, Shoemaker, and Ed Rossi. At the hearing,
Purvis included Rossi, an investor, as one of the founders of the successor entity,
StormQuant. As Rossi was never involved in the Company’s day-to-day operations and
did not sign an employment agreement, we will, for convenience here, refer to
StormQuant’s founders as the four individuals who signed employment agreements.
20
of which was the arbitration provision.11 In March 2019, StormQuant received a
commitment from Marrs for $5 million in seed funding with an anticipated May closing.
According to Bryant’s testimony, prior to the execution of the Agreement in April
2019, he and Purvis met at a restaurant, Café Margaux, in Cocoa, Florida. At the time,
the two “were excited that it looked like the Marrs [funding] was going to close,” and
they had a celebratory drink. Bryant testified that Purvis stressed to him at the meeting
that unless the employment agreements for the four founders were “in place[, …
StormQuant] would not get funding, and the company would be in danger [of] shutting
down.” Purvis told Bryant that “the employment agreements would not take effect until
we close the seed round,” which Purvis identified specifically as the Marrs funding.
(Italics added.)
On or about April 10, 2019, Purvis and StormQuant (through Bryant), signed
Purvis’s Agreement. At the time, Bryant was an officer (chief technology officer) and a
director of StormQuant. Bryant testified that Purvis instructed him to sign the Agreement
on behalf of the Company. Bryant felt he needed to sign the Agreement because Purvis,
his boss and the CEO, told him to do so.12 Bryant testified that, at the time they executed
the Agreement —echoing their prior conversation at Café Margaux—Purvis “said these
[agreements] won’t take effect until we get a Series A [funding] closed.” (Italics added.)
Bryant testified to his state of mind in signing the Agreement: “[W]e were
expecting to get a series round. Tripp said he wanted to get all the ducks in a row. He
11
Bryant testified that he had made the initial contact with Wilson through a
friend. Purvis was the founder who worked with the law firm to prepare the corporate
documents, including the employment agreements. Bryant received copies of
communications with the attorneys but had no direct involvement, other than
participating in a few telephone calls Purvis had with the Wilson firm about the creation
of corporate documents. Bryant testified that Purvis was in charge of providing
instructions and reviewing the terms of the documents with the attorneys.
12
During his testimony, Bryant twice described Purvis’s management style at
StormQuant as “overbearing.”
21
went back, and he wrote minutes for the previous three or four board meetings, which I
signed—this is all at the same time—had these drafted. … And when we went to execute,
he said these won’t take effect until we get a Series A closed. [¶] I would have never
signed something like this without money in the bank to pay it. We didn’t have money to
pay the salaries, so I just—yeah. But given the assurance it wouldn’t take effect until we
closed the Series A round, I signed.” (Italics added.) The court questioned: “What was
the point of signing it at all?” He responded: “It seemed like everything was about to
close. We had a fund source lined up, we had a term sheet in place, and it seemed like
that was about to happen. So Tripp just said this is what we need to do; we need to get all
this sorted out beforehand, so we don’t have to try to do it after we raise the money.”
Bryant believed at the time that, from what Purvis told him, Bryant needed to sign the
Agreement or else the Marrs funding would have fallen through. Bryant felt pressured “a
little bit” by Purvis, who was “pretty insistent that we get this sorted out. It was along
with a lot of other things, … all the noncompete, everything went together. We had to
get all of that done ahead of time so when we closed the funding round, we’ll be ready to
go.”13
Bryant reiterated in his testimony that he would never have signed the Agreement
on behalf of StormQuant had he understood it to have been an immediately effective
contract. He testified that as of the date of the hearing in June 2024 (over five years
later), he believed the Agreement was not an effective contract.
Purvis testified that he did not tell Bryant when he signed the offer letter that his
Employment Agreement would not be effective if StormQuant did not receive certain
funding. Purvis testified that he would not have worked for StormQuant and moved his
family from California to Florida in October 2020 had he not had a valid offer letter,
13
During cross-examination, Bryant acknowledged there was nothing in the
Agreement making it contingent on financing and that he had the ability to request
additions or amendments to the Agreement to include such a contingency.
22
Employment Agreement, and related agreements. And Purvis testified that it was always
his understanding that he had a valid Agreement in which he was to be paid $180,000
annually for his position as CEO.
b. Events Subsequent to Agreement’s Execution
StormQuant never received the $5 million Marrs seed funding.
There was evidence presented that Purvis, from early 2019 to the time he resigned
as CEO in January 2023, conducted himself in a way that suggested he understood that
the Agreement and the other founders’ employment agreements were not in force.
Bryant testified that none of the four founders who signed identically worded
employment agreements in April 2019 were paid pursuant to the agreements. In fact, as
CEO, Purvis testified that it was his decision to treat himself and the three other founders
as independent contractors.14 At least through December 2020, payments to the founders
were made by the Company to the founders’ respective companies. According to Bryant,
the founders were at all times treated as independent contractors, not employees. And in
December 2020, when StormQuant parted ways with Shoemaker and Mulhauser, Purvis
notified the two founders’ companies, Shoemaker Labs, Inc. and Chartwell Enterprises,
that their respective contracts were “terminated effective immediately.” There was no
mention by Purvis of those founders’ employment agreements.
Purvis’s conduct regarding a lawsuit filed in early 2022 was also consistent with a
belief that the founders’ employment agreements had never taken effect. One of the
founders, Muhlhauser, sued StormQuant to recover compensation under his employment
agreement. In February 2022, Ed Rossi (StormQuant shareholder and its largest investor)
wrote in an e-mail to Purvis regarding the presuit claim made by Mulhauser’s attorney:
“Only question I have[:] Did you have any written employment agreement signed by
14
Purvis testified that he understood the distinction between an employer treating
a person as independent contractor versus as an employee.
23
[Muhlhauser]? [O]ther than … his 1099 is [that] it[?]” Purvis responded: “Nick
[Mulhauser] has a stock agreement and he received a few paychecks that were made to
Chartwell Enterprises Inc. [Muhlhauser’s company]. For example, Nick, Kevin, and I
were paid to our respective LLCs or side company. The contracts that [were] created in
February of 2019 would only be executed when we received our seed funding round so
that we could start normal payroll, benefits, etc.” (Italics added.) In that e-mail
response, Purvis did not answer Rossi’s specific question of whether the Company had a
“written employment agreement signed by [Mulhauser][?]”15
Purvis testified that his use of the term “ ‘executed’ ” in his communication with
Rossi about the employment agreements “was probably a poor choice of words on [his]
part.” The court followed up by asking Purvis that, if that were the case, what did he
really mean. Purvis responded: “What I meant was [that] we weren’t able to pay to the
15
Rossi testified at the hearing. He was an investor in StormQuant LLC; after
initially investing $500,000, his personal attorney formed the company (LLC). As of
December 2018, he had invested a total of $750,000. In January 2019, Rossi was
informed that Purvis had been hired as CEO and that the company was being
incorporated. For a period thereafter, Rossi negotiated with Purvis and Bryant to secure a
position with the corporation being formed. During a meeting in April 2019 that Rossi
described as “a little heated,” Rossi told Purvis, Bryant, and Muhlhauser that he required
a board position and stock in the new corporation. Rossi also told Purvis that he needed
copies of all agreements involving the new entity before Rossi could move forward. In
mid-May 2019, Purvis advised Rossi that he would become a member of the Company’s
board and was provided the corporate documents, including draft employment
agreements. As of February 2022 when he wrote to Purvis about the Mulhauser claim,
Rossi was unaware that any written employment agreements containing contingent
liabilities for the Company had ever been executed. Rossi testified that he continued to
invest money and would not have done so had he been aware of the existence of
employment agreements that imposed liabilities upon the Company.
24
terms of the agreement unless we had funding. And other funding was raised that
enabled us to run the business.”
In June 2022, several months after his communications with Rossi, Purvis
prepared a report for StormQuant’s attorneys concerning Mulhauser’s claim that had
ripened into a lawsuit. Purvis wrote that, based upon “multiple” prior discussions with
the founders, “it was very clear to Andrew Bryant, Nick Muhlhauser, and Kevin
Shoemaker that we would not be able to start payroll and company benefits without
securing the $5,000,000 [Marrs] funding round.”16 Purvis stated in the report that the
offer letters had been sent to the four founders because “we were confident that Marrs
Blue Water would close the funding round on April 10, 2022.” And Purvis confirmed
again that the founders were unsalaried independent contractors because of inadequate
capital.17
Bryant testified that Purvis had never accounted in the Company’s records for any
accrued salary under the four founders’ employment agreements. Purvis testified that in
December 2022 (the month prior to his resignation as CEO), he obtained financial reports
prepared by the Company’s accountants; he reviewed and approved them, and he
16
At the hearing, Purvis explained that what he meant by this statement was that
he and the other three founders, who each had the same agreement, could not get the
benefits of those contracts without the Marrs funding.
17
In the context of discussing that the Marrs funding had not come to pass, Purvis
indicated in the report: “It was communicated clearly to the team that we would not start
payroll and company benefits because we did not have adequate capital. Andrew Bryant
(Right Brain Development LLC), Nick Muhlhauser (Chartwell Enterprises Inc), Kevin
Shoemaker (Shoemaker Labs Inc), and Tripp Purvis (Collis Systems LLC) were treated
as independent contractors as we continued to incubate StormQuant Inc and secure
funding.” Similarly, in an October 2021 e-mail, Purvis advised Rossi that after the
Company had failed to obtain the Marrs funding in June 2019 as anticipated, “[i]t was
clear to the contractors [i.e., the founders] … that we would not start payroll until the
Series Seed round closed, and we used stock as compensation.”
25
provided them to Rossi. The financial reports disclosed no debts owed by the Company
to Purvis; similarly, the balance sheet reflected no liabilities in favor of Purvis.
Finally, at no time before he resigned as the Company’s CEO in January 2023 did
Purvis claim an entitlement to benefits under the Agreement. This claim was only
asserted after he left the Company when he made a demand for arbitration through JAMS
in March 2023.
2. Conclusion Regarding Court’s Findings
The foregoing demonstrates that there was substantial evidence to support the trial
court’s finding that there was no meeting of the minds and thus the Agreement never
became effective.
Bryant testified that when he signed the Agreement on behalf of StormQuant, his
clear understanding was that it would have no effect—and the Company would have no
obligation to pay Purvis as an employee thereunder—unless and until the Marrs funding
closed. Sometime before the Agreement was signed, Purvis told Bryant when they met at
a restaurant in Cocoa, Florida that the founders’ employment agreements (including
Purvis’s Agreement) “would not take effect until [the Company] close[d] the seed
round,” namely, the Marrs funding. Purvis stressed to Bryant the employment
agreements had to be signed before the Marrs funding was completed and that having the
agreements in place was necessary to accomplish the funding. When the Agreement was
signed on April 10, 2019, Purvis repeated his statements to Bryant that the founders’
employment agreements needed to be signed at that time to prevent the Marrs funding
from falling through, but that the agreements would not take effect until that funding
closed. In his testimony, Bryant explained that: (1) he signed the Agreement based on
this understanding; (2) the Company at the time had no money in the bank to pay salaries
so it clearly needed the outside funding to meet the obligations under the employment
26
agreements; (3) it appeared likely that the funding was going to occur soon; (4) his boss,
Purvis, was insistent that Bryant sign the Agreement on behalf of StormQuant, and
Bryant felt some pressure to do so; and (5) he would never have signed the Agreement
had he understood it to have been an immediately effective contract. (See Morey v.
Vannucci (1998) 64 Cal.App.4th 904, 912 [“mutual intention to which the courts give
effect is determined by objective manifestations of the parties’ intent, including the words
used in the agreement, as well as extrinsic evidence of such objective matters as the
surrounding circumstances under which the parties negotiated or entered into the
contract; …”].)
Further—as noted by the trial court—Purvis’s later actions support Bryant’s
understanding that the Agreement, although executed, would not become effective unless
and until the Marrs funding closed. (See Marin Storage & Trucking, Inc. v. Benco
Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1050 [mutual assent to
contract “is determined by objective criteria, … [based upon] whether a reasonable
person would, from the conduct of the parties, conclude that there was a mutual
agreement”]; cf. Seto v. Szeto (2022) 86 Cal.App.5th 76, 90 [in addressing defendants’
claim that no binding contract was created, their “subsequent conduct … , which
afford[ed] the ‘ “ ‘most reliable’ ” ’ means of determining their intent, confirm[ed] that
the settlement agreement constituted a binding contract”].) Purvis’s post-execution
actions included: (1) his termination of the Company’s independent contractor
agreements with Shoemaker and Mulhauser in December 2020, rather than terminating
the executives’ respective employment agreements; (2) his failure to advise StormQuant
investor Rossi in February 2022 (despite Rossi’s specific inquiry) that StormQuant had
an employment agreement with Mulhauser that was the same as Purvis’s Agreement; (3)
27
his e-mail to Rossi in February 2022 indicating that “[t]he contracts that [were] created in
February of 2019 would only be executed when we received our seed funding round so
that we could start normal payroll, …”; (4) his communication in June 2022 with
StormQuant’s attorneys stating that the founders clearly understood that the Company
“would not be able to start payroll and company benefits without securing the $5,000,000
[Marrs] funding round,” and that offer letters had been sent to the four founders because
there was confidence the Marrs funding would close; and (5) the fact that the financial
reports prepared by the Company’s accountants, which Purvis reviewed and approved,
did not disclose any debts (such as accrued wages) owed by the Company to Purvis.
“Contract formation requires mutual consent, which cannot exist unless the parties
‘agree upon the same thing in the same sense.’ [Citations.] ‘If there is no evidence
establishing a manifestation of assent to the “same thing” by both parties, then there is no
mutual consent to contract and no contract formation.’ [Citation.] ‘Mutual assent is
determined under an objective standard applied to the outward manifestations or
expressions of the parties, i.e., the reasonable meaning of their words and acts, and not
their unexpressed intentions or understandings.’ ” (Bustamante v. Intuit, Inc. (2006) 141
Cal.App.4th 199, 208.) There was substantial evidence supporting the trial court’s
conclusion that when StormQuant (through Bryant) and Purvis signed the Agreement,
“there was no mutual assent. … [N]either party believed that the [A]greement was an
enforceable contract at the time the contract was signed and that both instead believed the
contract would only be enforceable once StormQuant obtained the then-pending third-
party funding.”18
18
Even were the evidence construed as showing that when the Agreement was
signed, Bryant understood that it would be effective only upon the close of the Marrs
funding, while Purvis believed the Agreement to be immediately effective, this would
28
We note, of course, that Purvis provided contrary testimony that he did not tell
Bryant that the Agreement, upon its signing, would not become effective if StormQuant
did not receive the Marrs funding, and that Purvis had a consistent understanding that he
had a valid Agreement under which he would be paid $180,000 annually. But we need
not consider this testimony contradicting the evidence presented in support of
StormQuant’s position. (See Schmidt, supra, 44 Cal.App.5th at p. 582 [appellate court, in
reviewing trial court’s factual findings for substantial evidence, accepts all evidence
supporting the order and “completely disregard[s] contrary evidence”].) In any event, the
trial court resolved this conflict in the evidence in StormQuant’s favor. The court stated
in its final order: “Purvis’s testimony that he always believed the agreement was
enforceable is just not credible on this record. Until he resigned from StormQuant,
Purvis did not take a single action to suggest his belief that these agreements were
enforceable—he did not pay anyone (including himself) pursuant to the agreements, he
did not identify the agreements as liabilities from an accounting perspective, and when he
terminated contracts between others working for StormQuant, Shoemaker and
Muhlhauser, Purvis referred to terminating agreements with their ‘side company’ not
their employment agreements.”
Moreover, the trial court questioned Purvis’s credibility, observing that his
February 2022 e-mail to Rossi was “[also] damning to Purvis’s position now” that “he
always believed the [A]greement was enforceable.” In reference to Purvis’s testimony in
response to the court’s question as to what he meant in his e-mail by the word
still support the conclusion that there was no meeting of the minds and thus no formation
of a contract.
29
“ ‘executed,’ ”19 the trial court concluded in its order: “[Purvis’s] testimony does not
explain away this email, however. Rather, it confirms that Purvis did not intend for these
agreements to be enforceable without funding at the time he signed them, and no funding
ever came.” We defer to the trial court in its findings based on conflicting evidence and
its assessment of the credibility of the witnesses. (See Schmidt, supra, 44 Cal.App.5th at
p. 582 [“in a bench trial, the trial court is the ‘sole judge’ of witness credibility” and
“[t]he fact finder’s determination of the veracity of a witness is final”]; Jones v. Adams
Financial Services (1999) 71 Cal.App.4th 831, 839 [“[q]uestions of credibility are for the
trial court”].)
To be sure, there was evidence from which the trial court could have reached the
contrary conclusion that there was a meeting of the minds to form a contract. This
evidence—mostly from Purvis’s testimony and as emphasized by Purvis in his briefing
on appeal (which, to a large measure, ignores evidence supporting the court’s order)—
included: (1) the language of the Agreement itself that contained no Marrs funding
contingency; (2) on April 3, 2019, the Company’s board took action by unanimous
consent to approve the execution of various documents in the corporate formation process
that had been prepared by Wilson, including the execution of employment agreements
and arbitration agreements (containing no condition that their effectiveness was
dependent on obtaining the Marrs funding); (3) Bryant had extensive employment
experience in Silicon Valley and was the holder of a number of patents; (4) Bryant
testified that he “could have pushed back” regarding signing the Agreement that did not
include the funding contingency stated by Purvis, but that it was “easier to kind of go
with the flow … [and Purvis] was pretty insistent that we get this sorted out”; (5) Bryant
19
As discussed, ante, Purvis’s explanation at the hearing was: “What I meant was
we weren’t able to pay to the terms of the agreement unless we had funding. And other
funding was raised that enabled us to run the business.”
30
acknowledged in his testimony that he could have refused to sign the Agreement or that
he could have requested changes to the Agreement include additional language
concerning the Marrs funding contingency; (6) when employee Lindsey Mattheson left
the Company in January 2020, after Bryant had signed her offer letter in June 2019, she
was paid all salary owed her; and (7) in response to an inquiry from Rossi in June 2020
about the salaries of certain individuals for a proposed executive compensation and stock
option plan, Purvis stated he had “not modified the current salary structure since last
year” and indicated the structure included $180,000 for both Bryant and Purvis. But the
fact that there may have been some evidence to support a finding in favor of appellant
Purvis is of no consequence here. (See Schmidt, supra, 44 Cal.App.5th at p. 582
[appellate court’s “job is only to see if substantial evidence exists to support the verdict in
favor of the prevailing party, not to determine whether substantial evidence might support
the losing party’s version of events”].)
Here, there was substantial evidence supporting the trial court’s conclusion that
there was no meeting of the minds, and therefore, no formation of a contract, because
Bryant had the clear understanding that the Agreement would not become effective
unless and until the Marrs funding was concluded. (See Sellers v. JustAnswer LLC
(2021) 73 Cal.App.5th 444, 460 [“[m]utual assent, or consent, of the parties ‘is essential
to the existence of a contract’ ”].)
E. Due Process Challenge
Purvis contends the trial court deprived him of his constitutional right to due
process because it adjudicated the issue of the validity of his Agreement “without
affording [him] any opportunity for discovery, or even the exchange of pretrial
evidence.” Purvis asserts that StormQuant, as the holder of its own records, was in a
much better position to litigate the issue, and Purvis “had no opportunity to obtain
important records,” including communications concerning the board’s authorization of
employment agreements, evidence of compensation payments, financial records, and
31
communications with employees regarding their respective employment agreements
subsequent to Muhlhauser’s assertion of his employment claim.
As discussed below, Purvis makes no showing that he actually pursued discovery
that he now claims to have been essential to respond to StormQuant’s opposition to
arbitration, much less that the trial court precluded him from doing so. Moreover, Purvis
fails to cite any relevant legal authority supporting his argument that he was deprived of
due process by not being afforded discovery in the context of this special proceeding on a
petition to compel arbitration. (See People ex rel. 20th Century Ins. Co. v. Building
Permit Consultants, Inc. (2000) 86 Cal.App.4th 280, 284 [failure to cite legal authority
for position in appellate brief “amounts to an abandonment of the issue”].)
At the initial hearing in February 2024, Purvis raised briefly the issue of discovery
in connection with responding to StormQuant’s opposition to the petition. His counsel
asserted that, based upon the court’s tentative ruling that the Agreement was not
enforceable, Purvis had not “had the opportunity for due process to actually present the
evidence—” The court interjected: “Well, that’s not true because your client gets to
oppose the motion with sworn testimony. And under the procedures for analyzing the
petition to compel arbitration, the Court sits as the trier of fact. And so that isn’t true that
your client was not in a position to oppose this motion or oppose the arguments of the
other side.” Purvis’s counsel briefly responded that Purvis was “entitled to discovery, to
litigate the case, and to set forth and to have discovery in the case. That’s the whole
purpose of the court action.” Purvis’s counsel did not request a continuance to conduct
discovery to address StormQuant’s opposition. Nor did Purvis’s counsel otherwise
identify the discovery necessary to respond to the opposition the court ruled on the
petition.
As noted, ante, after the initial hearing, the trial court issued an interim order on
March 8, 2024, indicating that it would set an evidentiary hearing on the petition. That
evidentiary hearing took place on June 28, 2024. At that further hearing, Purvis did not
32
raise any objections that he was being deprived of due process or being denied a right to
discovery.20 And Purvis failed to raise these objections in either of his posthearing briefs.
Moreover, the record does not show that Purvis ever sought discovery below. (See
Bouton v. USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412, 427 [“parties to a Code
of Civil Procedure section 1281.2 proceeding [to compel arbitration] have discovery
rights under the Civil Discovery Act, subject to the relevancy requirement and other
provisions limiting the scope and timing of that discovery”].) This failure to pursue
discovery is noteworthy for two reasons. First, the proceedings extended for more than a
year. Second, a period of more than 15 weeks elapsed from the time the court issued its
interim order to the evidentiary hearing. Certainly, if Purvis had a strong interest in
obtaining documents necessary for the hearing, he had sufficient time to initiate
discovery.21 Purvis has forfeited this due process challenge by failing to preserve it in the
court below. (See Jackpot Harvesting Co., Inc. v. Superior Court (2018) 26 Cal.App.5th
125, 154 [in general, appellant forfeits constitutional challenges not raised in the trial
court].)
There is, in any event, no legal basis for Purvis’s due process claim. As the
California Supreme Court has explained, a petition to compel arbitration is essentially an
equitable suit for specific performance of a contract that is “[a] summary procedure for
decision, without a jury, of whether a valid arbitration agreement exists.” (Rosenthal,
supra, 14 Cal.4th at p. 411.) Although an evidentiary hearing on such a petition is not
20
Purvis’s counsel indicated, in objecting to one exhibit offered by StormQuant,
that there had been no discovery. He did not, however, assert that he had been deprived
of due process or had been denied the right to discovery.
21
Since there is no indication Purvis ever sought discovery, any claim that he was
deprived of any right to discovery—for instance, because StormQuant resisted discovery
and the court denied any motion to compel by Purvis—is based entirely on speculation
and matters not found in the record. (See McKay v. Longsworth (1989) 211 Cal.App.3d
1592, 1596 [rejecting appellant’s argument as based on speculation supported by
“nothing in the record”].)
33
required (see id. at p. 414), the trial court here afforded the parties the right to present
their positions in a full-day evidentiary hearing, followed by the submission by both
parties of posthearing briefs and reply briefs.22 Purvis’s constitutional claim is
substantively without merit.
III. DISPOSITION
The order of November 5, 2024, denying appellant’s petition to compel arbitration
is affirmed. Respondent shall recover its costs on appeal.
22
The trial court’s discretionary decision to hold an evidentiary hearing aligned
with the Supreme Court’s views in Rosenthal concerning the propriety of such a hearing
where resolution of the matter turned on the credibility of witnesses: “There is simply no
authority for the proposition that a trial court necessarily abuses its discretion, in a motion
proceeding, by resolving evidentiary conflicts without hearing live testimony.
Nonetheless, we agree that where … the enforceability of an arbitration clause may
depend upon which of two sharply conflicting factual accounts is to be believed, the
better course would normally be for the trial court to hear oral testimony and allow the
parties the opportunity for cross-examination.” (Rosenthal, supra, 14 Cal.4th at p. 414.)
34
WILSON, J.
WE CONCUR:
GROVER, Acting P. J.
LIE, J.
StormQuant, Inc. v. Purvis
H052765