Judge: Douglas W. Stern, Case: 23STCV20311, Date: 2023-10-23 Tentative Ruling
Case Number: 23STCV20311 Hearing Date: October 23, 2023 Dept: 68
International
Line Builders Inc. vs Skanska USA Building Inc., et al., 23STCV20311
Motion to Compel
Arbitration
Moving
Party – Plaintiff International Line Builders Inc.
Moving Party’s Position
Plaintiff International Line
Builders Inc. (Plaintiff) filed its complaint on August 24, 2023. In
Plaintiff’s complaint, it alleges several causes of action related to a breach
of contract against Defendants Skanska USA Building Inc.; CHA Hollywood Medical
Center, L.P.; Wells Fargo Bank; Zurich American Insurance Company; Liberty
Mutual Insurance Company; Federal Insurance Company; Berkshire Hathaway
Specialty Insurance Company; and Continental Casualty Company. There is an
arbitration clause in the Prime Contract, called Construction Management
Services with Guaranteed Maximum Price, between Skanska and CHA. The
arbitration clause reads as follows:
“Subject to detail terms and conditions
specified in the General Conditions any controversy arising out of or relating
to this Agreement or in the breach thereof shall be settled by arbitration in
accordance with the rules then obtaining of the American Arbitration
Association and judgment upon the award may be entered in any court having
jurisdiction thereof, and in accordance with Article 15 of the General
Conditions.”
(Motion,
Ex. 2, p. 11.)
Article 15 reads as follows:
“Any Claim arising out of or related to
the Contract, except Claims relating to aesthetic effect and those waived as
provided for in Section 9.1 0.4, referred to but not resolved by mediation,
shall be subject exclusively to binding arbitration, which shall be
administered by the American Arbitration Association in accordance with its
Construction Industry Arbitration Rules currently in effect; provided, however,
that the matter shall be referred to a single arbitrator notwithstanding any
procedure or requirement established by such rules. A demand for arbitration
shall be made in writing, delivered to the other party to the Contract, and
filed with the person or entity administering the arbitration. The party filing
a notice of demand for arbitration must assert in the demand all Claims then
known to that party on which arbitration is permitted to be demanded. The
locale for the arbitration shall be Los Angeles, California.”
(Motion, Ex.
2, p. 16.)
Plaintiff indicates that there is pending arbitration between Skanska
and CHA, and that Skanska is passing through to CHA some or all of the claims
made by Plaintiff against Skanska and the Sureties. Skanska has indicated to
Plaintiff that it desires to have Plaintiff’s claims heard in the arbitration
proceedings. (Kavcioglu Decl., ¶ 2.) Plaintiff argues that its claims fall
within the arbitration provision under section 13.4.2 of the Subcontract
because Plaintiff’s claims are based, in part, on acts, errors or omissions for
which CHA may be responsible.
Most of the named Defendants, including the Sureties, have filed
notices of non-opposition to Plaintiff’s motion to compel arbitration. The only
party that did not file an opposition or non-opposition is Wells Fargo.
Analysis
I.
Legal Standard
California law incorporates many of the basic policy
objectives contained in the Federal Arbitration Act, including a presumption in
favor of arbitrability. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving the
existence of a valid arbitration agreement by the preponderance of the
evidence. (Rosenthal v. Great Western Financial Securities Corp. (1996)
14 Cal.4th 394, 413.) The Court is empowered by CCP § 1281.2 to compel parties
to arbitrate disputes pursuant to an agreement to do so.
Code of Civil Procedure § 1281.2 states that:
“The court
shall order the petitioner and the respondent to arbitrate the controversy if
it determines that an agreement to arbitrate the controversy exists, unless it
determines that:
(a) The right to compel arbitration has been waived by the
petitioner; or
(b) Grounds exist for the revocation of the agreement.
(c) A party
to the arbitration agreement is also a party to a pending court action or
special proceeding with a third party, arising out of the same transaction or
series of related transactions and there is a possibility of conflicting
rulings on a common issue of law or fact. For purposes of this section, a
pending court action or special proceeding includes an action or proceeding
initiated by the party refusing to arbitrate after the petition to compel
arbitration has been filed, but on or before the date of the hearing on the
petition. This subdivision shall not be applicable to an agreement to arbitrate
disputes as to the professional negligence of a health care provider made
pursuant to Section 1295.” (CCP § 1281.2.)
The party petitioning to compel arbitration under written
arbitration agreement bears the burden of proving the existence of a valid
arbitration agreement by a preponderance of the evidence. The trial court acts
as the trier of fact, weighing all the affidavits, declarations, and other
documentary evidence. (CCP § 1281.2.)
A. Existence of an Agreement
Under California law, arbitration agreements are valid,
irrevocable, and enforceable, except on such grounds that exist at law or
equity for voiding a contract. (Winter v. Window Fashions Professions, Inc.
(2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must
establish the existence of a written arbitration agreement between the parties.
(CCP § 1281.2.) In ruling on a motion to compel arbitration, the court must
first determine whether the parties actually agreed to arbitrate the dispute,
and general principles of California contract law help guide the court in
making this determination. (Mendez v. Mid-Wilshire Health Care Center
(2013) 220 Cal.App.4th 534, 541.)
Once petitioners allege that an arbitration agreement
exists, the burden shifts to respondents to prove the falsity of the purported
agreement, and no evidence or authentication is required to find the
arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001)
88 Cal.App.4th 215, 219.)
“With respect to the moving party’s burden to provide
evidence of the¿existence¿of an agreement to arbitrate, it is generally
sufficient for that party to present a copy of the contract to the court. (See¿Condee
v. Longwood Management Corp.¿(2001) 88 Cal.App.4th 215, 218); see also Cal.
Rules of Court, rule 3.1330 [“A petition to compel arbitration or to stay
proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must
state, in addition to other required allegations, the provisions of the written
agreement and the paragraph that provides for arbitration. The provisions must
be stated verbatim or a copy must be physically or electronically attached to
the petition and incorporated by reference”].) Once such a document is
presented to the court, the burden shifts to the party opposing the motion to
compel, who may present any challenges to the enforcement of the agreement and
evidence in support of those challenges. [Citation]” (Baker v. Italian Maple
Holdings, LLC¿(2017) 13 Cal.App.5th 1152, 1160.)
While
an arbitration agreement exists, Plaintiff was not a party to that original
agreement. However, Plaintiff argues in its motion that the controversy in
question arises out of or is related to the Prime Contract. Further, Plaintiff
argues that its claims against the Sureties are also subject to arbitration
because the payment bond with the Sureties attaches to the Prime Contract with
the arbitration clause. None of the Sureties objected to Plaintiff’s motion to
compel arbitration, and in fact, most of them filed a notice of non-opposition
to the motion.
The
parties appear to be in agreement that this case should be arbitrated. The
Court grants Plaintiff’s motion to compel arbitration.
ORDER
1. Plaintiff’s
Motion to Compel Arbitration is GRANTED.
2. This
action is stayed pending arbitration.