Judge: Colin Leis, Case: 23STCV29917, Date: 2025-02-27 Tentative Ruling

Case Number: 23STCV29917    Hearing Date: February 27, 2025    Dept: 74

Aguolu et al. v. Regal Medical Group, inc. et al.

Defendants Regal Medical Group, Inc and Monica Boyd’s Petition to Compel Arbitration

BACKGROUND 

            This motion arises from a contractual fraud claim.

            Plaintiff Jeremiah Aguolu, MD in his individual and professional capacity (Plaintiff) filed a complaint against defendants Regal Medical Group, Inc. and Monica Boyd (Defendants).

            Defendants filed a Motion to Compel Arbitration.

DISCUSSION

            The parties entered into an Arbitration Agreement on March 1, 2018, as evidenced by Plaintiff’s signature on page 36.  (Glarum Decl., Ex. 2.)  The agreement states, in pertinent part:

The parties agree that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, whether involving a claim in tort, contract, or otherwise, shall be settled by final and binding arbitration in accordance with the provisions of the California Arbitration Act (California Code of Civil Procedure Sections 1280, et seq.)  The parties waive their right to a jury or court trial. (Glarum Decl., Ex. 2 § 10.4.1.)

Defendants have met their burden establishing that an Arbitration Agreement exists.

            Plaintiff contents that the arbitration agreement is unconscionable, that certain causes of action are not subject to arbitration, that Defendants waived their right to arbitrate, and that Jeremiah Aguolu and Monica Boyd cannot be forced to arbitrate because they are not parties to the Arbitration Agreement.

Unconscionability

For an arbitration agreement to be unenforceable as unconscionable, there must be both procedural and substantive unconscionability.  (Armendariz v. Foundation Health Psychcare Services, Inc. (Armendariz) (2000) 24 Cal.4th 83, 114.) Procedural unconscionability includes oppression arising from unequal bargaining power causing an absence of meaningful choice and real negotiating, and surprise due to hidden terms drafted by the party seeking to enforce the provisions.  (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 581.)

Plaintiff alleges that the Agreement was procedurally unconscionable because the Agreement failed to contain arbitration rules.  Plaintiff does not allege that he was offered the contract on a take-it-or-leave-it basis, nor that he was prohibited from modifying the terms of the provision.  Plaintiff also does not allege that he was an unsophisticated party or that there was a limited number of healthcare services providers with which the Plaintiff could work.

Defendants’ failure to provide the rules of arbitration is not indicative of an unconscionable provision here because Defendants do not impose on Plaintiff a particular arbitration organization, such as JAMS or AAA. Also, Plaintiff has not shown that he was limited in his ability to choose to enter the contract or that he was limited in alternative market sources.  Therefore, the Court does not find that there was procedural unconscionability in the contract formation process.  Because the Court does not find procedural unconscionability, the Court need not address whether substantive unconscionability exists. 

Arbitrability of Causes of Action

            Plaintiff alleges that his Fourth, Sixth and Seventh Causes of Action are not subject to arbitration because they are outside of the scope of the arbitration agreement.  Whether a particular dispute is within the scope of the arbitration provision is the responsibility of the court, unless the parties delegate the arbitrability decision to an arbitrator.  (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 765.)  Here, the Arbitration Agreement does not delegate the arbitrability of causes of action.

            Plaintiff’s Fourth Cause of Action for Defamation alleges that Defendants made slanderous statements to Plaintiff’s current and potential patients.  (Complaint ¶ 43.)  Plaintiff alleges that these statements are ongoing.  (Complaint ¶ 48.)  The Arbitration Agreement only covers disputes that arise under the Primary Care Physician Agreement.  (Glarum Decl., Ex. 2 § 10.4.1.)  The agreement provides that Defendants may list the “name, address, telephone number and other factual information of Provider in its marketing and informational materials.”  (Glarum Decl., Ex. 2 § 2,15.)  The agreement also provides a guide for Enrollee Solicitation with extends 2 years after the end of the contracting relationship.  (Glarum Decl., Ex. 2 § 2.20.)  These provisions provide sufficient support that disputes over Defendants’ statements to Enrollees is covered by the Arbitration Agreement. 

            Plaintiff’s Sixth Cause of Action alleging age discrimination alleges that “Plaintiffs allege that they were denied full and equal access to services and privileges they had contracted for as primary care physical providers.”  (Complaint ¶ 64.)  Plaintiff requests vindication of his private rights under the contract, including damages and injunctive relief.  Claims for injunctive relief are arbitrable if they are for a private purpose.  (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 313-315.)  Like the Fourth Cause of Action, Plaintiff’s cause of action arises primarily under the contract.  Therefore, it is arbitrable under the Arbitration Agreement.

            Plaintiff’s Seventh Cause of Action alleges claims under Unfair Business and Professions Code section 17200.  Unlike Plaintiff’s Sixth Cause of Action, Plaintiff’s claim under the Unfair Business and Professions Code seeks public injunctive relief.  Causes of Action for public relief are not arbitrable.  (Cruz, supra, 30 Cal.4th at pp. 315-15.)  Therefore, the Court declines to compel arbitration of the Seventh Cause of Action.

Third-Party Arbitration

            Finally, Plaintiff alleges that he cannot be compelled to arbitration in his independent capacity and the causes of action against Monica Boyd (Boyd) cannot be compelled to arbitration because she is not a party to the agreement.

            The Agreement specifically provides that it covers physicians on the signature page, stating “This Agreement is binding upon all physicians [] who treat Enrollees on behalf of Provider.”  (Glarum Decl., Ex. 2.)  Therefore, Plaintiff is a party to the Arbitration agreement in his individual capacity. 

            Third parties are bound to arbitration agreements when in an agency or similar relationship with a signatory party.  (Matthau v. Superior Court (2007) 151 Cal.App.4th 593, 599.)  Plaintiff alleges in the Complaint that Boyd was an “employee, officer, manager, agent, and/or representative of Defendant REGAL MEDICAL GROUP, INC.”  (Complaint ¶ 3.)  Therefore, Boyd is bound to the arbitration agreement by her relationship with Regal.  Therefore, the Court will compel arbitration of causes of action against Boyd. 

Stay

Defendants request that all court proceedings be stayed pending the resolution of arbitration.  In the interest of judicial economy and reducing the risk of conflicting judgments, the Court orders a stay of the remaining claims pending the completion of arbitration.  (Code Civ. Proc. § 1281.4.) 

CONCLUSION

            The Court grants in part and denies in part Defendants’ Motion to Compel Arbitration.  The Court grants the Motion as to the First, Second, Third, Fourth, Fifth and Sixth Causes of action and denies as to the Seventh Cause of Action.  The Court stays all proceedings pending the completion of arbitration.

            Defendants to give notice.