Judge Ronald F. Frank, Case Number: 23TRCV01025, Date: 2024-01-05 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCV01025, Date: 2024-01-05 Tentative Ruling

Case Number: 23TRCV01025 Hearing Date: February 6, 2024 Dept: 8

Tentative Ruling

HEARING DATE: February 6, 2024¿

CASE NUMBER: 23TRCV01025

CASE NAME: American Ironworks Manufacturing Inc. v. Inglewood Market Gateway LLC, et al.

MOVING PARTY: Defendant, Milender White Residential SoCal Corp.

RESPONDING PARTY: Plaintiff, American Ironworks Manufacturing, Inc.

TRIAL DATE: Not Set

MOTION:¿ (1) Motion to Compel Arbitration

Tentative Rulings: (1) Motion to Compel Arbitration is GRANTED as against Plaintiff, but the Court DENIES to compel non-signatory ARCH into arbitration but stays the civil litigation as to ARCH pending a hearing on a petition to enforce the arbitrator’s award. The Court also sets an arbitration status conference for December 10, 2024 at 8:30 a.m. in Department IW-8

I. BACKGROUND¿

A. Factual¿

On April 4, 2023, Plaintiff, American Ironworks Manufacturing, Inc. (“Plaintiff”) filed a Complaint against Defendant, Inglewood Market Gateway LLC, ST Market D3, LLC, MW Residential SoCal Corp., and DOES 1 through 150. The Complaint alleges causes of action for: (1) Breach of Contract; (2) Enforcement of Mechanics Lien; (3) Common Counts; and (4) Lien Release Bond.

Defendant, Milender White Residential SoCal Corp. (“Milender”) now files a Motion to Compel Plaintiff into Arbitration.

B. Procedural

On November 22, 2023, Milender filed a Motion to Compel Arbitration. On December 21, 2023, Plaintiff filed an opposition. On December 28, 2023, Milender files a reply brief.

On January 5, 2024, this Court continued the hearing on the arbitration motion and sought supplemental briefs or a stipulation of the parties bearing on whether Arch Insurance could be compelled into arbitration. The Court set a briefing schedule for defendant, Arch Insurance Company for its supplemental brief on the non-signatory party issue to be filed by January 19, 2024, and any opposition to Arch’s brief or sur replies to Arch’s brief to be filed by January 26, 2024.

On January 19, 2024, Arch filed a brief arguing it could not be required to participate in arbitration between AIM and Milender.

On January 26, 2024, Plaintiff AIM filed a non-opposition, noting it would not oppose Arch’s brief on whether it could be compelled to arbitrate.

II. ANALYSIS

A. Legal Standard

The Federal Arbitration Act (“FAA”) states that “[a] written provision in any . . . 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.) 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, 971-72.) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

Pursuant to Code of Civil Procedure §1281.2, generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2)¿the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting¿rulings on common issues. As a general rule, subject to several exceptions, a party who has not signed the arbitration agreement in not normally compelled to participate in an arbitration between signatory parties or with a signatory party.

If the court orders arbitration, then the court shall stay the action until arbitration is completed. (See Code Civ. Proc., § 1281.4.)

B. Discussion

In the Court’s previous tentative ruling, it granted Milender’s motion to Compel Arbitration, but ordered the parties to brief the issue of whether ARCH, a non-signatory to the arbitration agreement, could be ordered to participate in the arbitration. “A third-party beneficiary may enforce a contract expressly made for his benefit. [Citation.] And although the contract may not have been made to benefit him alone, he may enforce those promises directly made for him. [Citations.]” (Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 943.) With regard to arbitration clauses, a third-party beneficiary wishing to invoke an arbitration clause has to show that the arbitration clause itself was made expressly for its benefit. (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.)

ARCH argues that there is no evidence to suggest that either AIM or Milender intended for ARCH to be bound by the Arbitration provision. Specifically, Plaintiff argues that there is no language stating that in the event a Mechanic’s lien is recorded, the surety issuing a mechanic’s lien bond would be bound by the agreement, and no evidence ARCH agreed or intended to participate in arbitration agreements. As such, there is an issue as to whether a non-signatory can be bound to the arbitration provision. ARCH argues that it is not a third-party beneficiary to the subcontract agreement, nor is there any agency relationship that would require ARCH to participate in the arbitration. ARCH also argues that the Mechanic’s Lien recorded by AIM did not incorporate the subcontract agreement, that there is no evidence the parties to the subcontract agreement intended for ARCH to participate in arbitration, and no exceptions that would permit ARCH to be included in the arbitration proceedings.

Further, the contracting party, AIM, filed a non-opposition to this supplemental briefing.

Accordingly, with no signatory party to the arbitration agreement arguing that Arch should be compelled into the arbitration between the two signatories tot eh arbitration agreement and in the absence of a stipulation to the contrary, the Court has no basis to order ARCH into the arbitration between AIM and Milender and therefore denies the motion to compel to the extent it might have been read to include Arch in its ambit. The Court will sever the claims and causes of action asserted against Arch pending the completion of the arbitration and order a stay of the civil litigation matter pending a hearing on any petition to enforce the arbitrator’s award. The Court sets an arbitration status conference for December 10, 2024 at 8:30 a.m. in Department IW-8.

Defendant ARCH is ordered to give notice.