Plaintiffs’ Pleading Allegations Didn’t Help Their Argument.
The somewhat anomalous circumstances in this case allowed a nonsignatory defendant to arbitrate its claims with a nonsignatory plaintiff. O’Donnell Strategic Industrial REIT v. Super. Ct., G049498 (4/3 Jan. 28, 2015) (Thompson, Bedsworth, Moore) (unpublished).
In a dispute concerning the setting up and operation of a real estate investment trust, plaintiffs sued defendants for breach of contract, fraud, breach of fiduciary duty, and declaratory relief. Defendants/respondents successfully sought to compel arbitration of the dispute under a broad clause in an Advisor Operating Agreement providing for arbitration of, “[a]ny dispute, controversy, or claim arising out of or in connection with this Agreement . . . “ Furthermore, the Advisor Operating Agreement, together with a related Dealer Management Agreement, had to be read as a single unified contract. As a result of the broadly construed arbitration provision and the unified contract, the trial court and Court of Appeal found all claims were covered by the arbitration clause.
The greater problem was that not all the parties were signatories to the arbitration agreement, and in fact, not all the parties existed at the time the arbitration agreement was signed. The Court dealt with this problem by noting – based on plaintiffs’ pleadings -- “Plaintiffs also acknowledge the causes of action against each of the defendants are substantially intertwined with those against the others.” Also, all the parties were related to and affiliated with each other. The Court reasoned, “nonsigning parties could be compelled to arbitrate if the claims were sufficiently dependent on each other.” Petition denied.
If all the parties, except for one, could be compelled to arbitrate, proceedings could have gotten messy, so perhaps pragmatic considerations also played a part.