Judge: Walter P. Schwarm, Case: 30-2021-01211808, Date: 2022-11-01 Tentative Ruling

Moving Party’s (Baldwin Plumbing, Inc.) unopposed Petition/Motion to Compel Arbitration and to Stay Pending Action (Petition), filed on 6-2-22 under ROA No. 126, is GRANTED.

Code of Civil Procedure section 1281.2 states in part, “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, 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 rescission 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. . . . [¶] If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”

Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1219, provides, “In Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 58 Cal.Rptr.2d 875, 926 P.2d 1061 (Rosenthal), our Supreme Court set forth the procedure to be followed when a petitioner seeks to compel arbitration: ‘[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement—either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation [citation]—that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.’ [Citation.]” (Footnote 8 omitted.) Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060 (Espejo), provides, “In context, the brief discussion of Condee by the court in Toal regarding a petitioner's ultimate burden has no bearing on the question before us—whether defendants may meet their initial burden to show an agreement to arbitrate by attaching a copy of the arbitration agreement purportedly bearing the opposing party's signature. We conclude they may, in compliance with the requirements of section 1281.2 and California Rules of Court, rule 3.1330.” (Italics in Espejo.)

Defendant has demonstrated that plaintiff Laguna Crest Enterprises (LCE) and Chapwood L.P. (Chapwood) entered into a “Home Improvement Contract” (Contract”) dated 6-29-19. (Eschenburg Decl., ¶¶ 2, 3, and Exhibit A.) The Contract identifies an arbitration provision entitled “Attachment No. 5 Arbitration of Disputes.” (Eschenburg Decl., ¶¶ 2, 3, and Exhibit A.) Moving Party, however, has not attached “Attachment No. 5 Arbitration of Disputes” to Exhibit A. Since Defendant joins the Motion to Compel Arbitration filed by defendants Daniel J. Scinto, Francine Scinto, Orange County Associates and Chapwood L.P. (collectively, Scinto-Related Parties), the court refers to the Declaration of Daniel J. Scinto filed 10-4-21 under ROA No. 11. (Petition; 3:8-9.)

“The Agreement contains an arbitration provision entitled “Attachment No. 5 Arbitration of Disputes.” (D. Scinto Decl., ¶ 1 and Exhibit 1.) The arbitration provision provides in part, “ARBITRATION OF DISPUTES: ANY CONTROVERSY OF CLAIM ARISING OUT OF OR RELATED TO THIS CONTRACT, OR BREACH THEREOF, SHALL BE SETTLED BY BINDING ARBITRATION IN ACCORDANCE WITH THE CONSTRUCTION INDUSTRY ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF . . . [¶] NOTICE: BY INITIALING THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHT YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. . . .” (D. Scinto Decl., ¶ 1 and Exhibit 1 (Uppercase in Attachment No. 5.).) 

Moving Party is not a party to the Contract.  Moving Party seeks to compel arbitration by way of equitable estoppel.

Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 785–786 (Garcia), states, “ ‘There is a strong federal policy in favor of arbitration agreements. [Citations.] Questions of arbitrability are to be addressed with regard to that policy. [Citations.]’ [Citation.] Despite this strong policy for contractual arbitration, however, the general rule is ‘one must be a party to an arbitration agreement to be bound by it or invoke it.’ [Citation.] Courts recognize exceptions to  the general rule which allow nonsignatories to compel arbitration of a dispute arising out of the scope of the agreement. [Citation.] One of the exceptions is equitable estoppel. [Citation.] Under this exception, ‘a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claim when the causes of action against the nonsignatory are ‘intimately founded in and intertwined with’ the underlying contract obligations.’ [Citation.] The doctrine applies where the claims are ‘ “ ‘based on the same facts and are inherently inseparable’ ” from the arbitrable claims against signatory defendants.’ [Citation.]”

Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614-615 (Thomas), provides, “John contended at oral argument, however, that the allegations of agency he made in the operative complaint cannot be used to require him to arbitrate his claims against the defendants which are not parties to any of the agreements Katherine executed. According to John, agency is only a theory of tort liability by which he may hold those defendants responsible for the wrongdoing that allegedly arose out of the relationship created by those agreements. We disagree. Having alleged all defendants acted as agents of one another, John is bound by the legal consequences of his allegations. [Citation.] And, as the cases cited above hold, a plaintiff's allegations of an agency relationship among defendants is sufficient to allow the alleged agents to invoke the benefit of an arbitration agreement executed by their principal even though the agents are not parties to the agreement. [Citations.]”

There are no specific allegations in Plaintiff’s (Laguna Crest Enterprise, Inc.) First Amended Complaint (FAC), filed on 1-26-22 under ROA No. 38, as to Moving Party.  Plaintiff added Moving Party to the litigation by way an Amendment to Complaint filed on 2-3-22 under ROA No. 41.  Plaintiff added Moving Party to this litigation after Plaintiff had filed the FAC.  The FAC, however, alleges, “LCE is informed and believes, and based thereon alleges, that at all times mentioned herein, each of the Defendants was acting as the spouse, employee, agent, principal, officer, partner, joint-venturer, director, alter ego or other representative of one or more of the remaining Defendants, and in committing the acts and/or omissions mentioned herein, was acting within the scope and course of such employment, agency, partnership, joint venture, alter ego or other relationship, and with the knowledge, permission and consent of the remaining Defendants.” (FAC, ¶ 15.)

It appears that the eleventh cause of action in the FAC applies to Moving Party because the Amendment to Complaint designated Moving Party as Doe No. 101.  The FAC pleads, “Harrison and DOES 101-110 owed a duty of care to LCE to perform its project management and other services on the Project in a manner that would not cause harm to LCE.” (FAC, ¶ 74.)  Paragraph 18 of the FAC pleads, “On or about January 29, 2019, LCE, the Scinto-Related Parties and DOES 1 through 25 entered into a written agreement, as amended (the ‘Scinto Agreement’) whereby LCE agreed, among other things, to construct a house and related improvements on the Real Property in exchange for a stipulated sum of money (the “Project”). A true and correct copy of the Scinto Agreement is attached hereto as Exhibit ‘A’ and the terms and conditions of the Scinto Agreement are incorporated by reference herein.”  Thus, the Project that applies to Moving Party is based on the Contract.

These allegations sufficiently show that the cause or causes of action against Moving Party are based on agency and are intimately founded in and intertwined with the underlying obligations in the Contract.

The court notes that Plaintiff has not opposed the Motion.  Therefore, the court GRANTS Moving Party’s (Baldwin Plumbing, Inc.) unopposed Petition/Motion to Compel Arbitration and to Stay Pending Action filed on 6-2-22 under ROA No. 126.  Consistent with the court’s 6-28-22 Minute Order, the court stays proceedings pursuant to Code of Civil Procedure section 1281.4.  The court sets an arbitration review hearing on 5-5-23 at 10:00 a.m. in Department C32.

Moving Party is to give notice.