Judge Bruce G. Iwasaki, Case Number: 24STCV08976, Date: 2025-03-19 Tentative Ruling

Tentative Ruling: The Motion to Compel Arbitration is granted; the matter is stayed pending resolution of the arbitration.

This action arises from a dispute between a contractor and its subcontractor over the performance of construction services on a construction project (Project). Plaintiff Caston, Inc. (the subcontractor) filed suit against Defendants Hamel Contracting, Inc. (the contractor for the Project), the City of Pasadena (the owner of the Project), and Nationwide Mutual Insurance Company (Hamel’s payment bond surety), alleging causes of action for (1) Breach of Contract; (2) Common Count – Quantum Meruit; (3) Enforcement of Stop Payment Notice; and (4) Recovery on Public Works Payment Bond.

On December 5, 2024, Defendants Hamel Contracting, Inc. and Nationwide Mutual Insurance Company filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. No opposition was filed.

Under Code of Civil Procedure section 1281.2, a court may order arbitration of a controversy if it finds that the parties have agreed to arbitrate that dispute. Because the obligation to arbitrate arises from contract, the court may compel arbitration only if the dispute in question is one in which the parties have agreed to arbitrate. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 352.) Since arbitration is a favored method of dispute resolution, arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question. (Id. at p. 353; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.)

In ruling on a motion to compel arbitration, a court must determine two threshold matters: first, whether a valid agreement to arbitrate exists; and second, whether that agreement encompasses the dispute at issue. (See Code Civ. Proc. § 1281.2.)

By way of background, Defendant Hamel entered into a contract with the City of Pasadena to perform construction services as a prime contractor on the Project. Thereafter, on June 15, 2022, Plaintiff Caston contracted with Defendant Hamel to provide the drywall and plastering scopes of work on the Project (Subcontract). (Compl., ¶ 9, Ex. 1.)

General Condition 23 of the Subcontract states, in relevant part: “… any controversy or claim arising out of or relating to this subcontract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its construction industry arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof . . ..” (Compl., ¶ 9, Ex. 1, p. 4.)

Notwithstanding this provision, on April 9, 2024, Plaintiff Caston filed a Complaint against Defendants Hamel, Swiss Re Corporate Solutions America Insurance Corporation,[1] and the City, alleging causes of action for: (1) Breach of Contract; (2) Common Count – Quantum Meruit; (3) Enforcement of Stop Payment Notice; and (4) Recovery on Public Works Payment Bond.

In support of this motion to compel arbitration, Defendants Hamel and Nationwide argue that each of Plaintiff Caston’s causes of action fall within the scope of the arbitration provision in the Subcontract and must be compelled to arbitration.

This unopposed argument is well taken. Each cause of action seeks compensation for work allegedly performed by Plaintiff Caston on the Project, pursuant to the Subcontract. Here, Plaintiff Caston’s first cause of action against Hamel is for a breach of the Subcontract. (Compl., ¶¶ 11-17.) Plaintiff Caston’s second cause of action against Hamel seeks compensation for work, labor, and/or materials provided on the Project . (Compl., ¶¶ 18-22.) Plaintiff Caston’s third cause of action against Hamel and the City seeks compensation for work allegedly performed by Plaintiff Caston on the Project, pursuant to the terms of the Subcontract and at the direction of Defendant Hamel. (Compl., ¶¶ 23-28.) Finally, Plaintiff Caston’s fourth cause of action for recovery on public works payment bond against Hamel and Nationwide seek payment on the bond for work, labor, equipment, and materials provided by Plaintiff to the Project based on the terms of the Subcontract. (Compl., ¶¶ 29-34.) As such, each and every of Plaintiff Caston’s causes of action against Defendants arise out of and relate to the Subcontract. (Compl., ¶¶ 9-34.)

Based on the foregoing, Defendants have carried their initial burden of demonstrating the existence of a valid, binding arbitration agreements and that Plaintiff’s claims fall within the scope of this binding arbitration agreement. In the absence of any opposition from Plaintiff, Defendants have met their burden on this motion.

Accordingly, the Court grants Defendants’ motion to compel arbitration. The motion to compel arbitration is granted; the matter is stayed pending the outcome of arbitration.

[1] Defendant Swiss Re Corporate Solutions America Insurance Corporation has since been dismissed. Defendant Nationwide Mutual Insurance Company was added by way of Doe Amendment on August 7, 2024.

Department 58