California Mediation and Arbitration

Arbitration/Unconscionability/Arbitrability: Sixth District Rules Tort Claims, Including Battery, Are Arbitrable

Decision Reversing Trial Court’s Findings of Unconscionability and Non-Arbitrability of Tort Claims is Very Fact Specific – But Ruling On Tort Claims Is Worth Noting

      Bigler v. The Harker School, Case No. H037450 (6th Dist. February 6, 2013) (Elia, J., author 3:0) (published) is a reminder judicial determinations of unconscionability and arbitrability are often nuanced and fact specific, and the burden of proof may tip the balance in reaching an outcome.  Here, the Court of Appeal signaled the outcome twice, by emphasizing that the party opposing arbitration “had the burden of proving the defense of unconsionability”, and the burden to “demonstrate than an arbitration clause cannot be interpreted to require arbitration of the dispute.”  The superior court thought the plaintiff, who sued her private school, met the burden for opposing arbitration, but the Court of Appeal held otherwise.

     Plaintiff Shivani, enrolled as a student in The Harker School, sued the school alleging she had been wrongfully accused of an honor code violation, and that a teacher who humiliated her, had pushed her to the ground.  The school petitioned to compel arbitration, under a broad-based arbitration clause.  The superior court denied the petition, finding the contract unconscionable, and finding that it was “highly unlikely” that the plaintiffs agreed to arbitrate, expecting tort claims would be included in the process.

     On the issue of unconscionability, here are examples of what I mean by “nuanced” and “fact specific”:  The Court of Appeal agreed that the failure to attach AAA rules is “of minor significance”; was “less convinced than the superior court that the other circumstances indicate procedural unconscionability” and was “not as troubled as was the superior court” by a carve-out of tuition disputes from arbitration.  Put this all on a scale and weigh it, and it is the burden of proof that tips the scale against plaintiff.

      What probably made this case worthy of publication is the Court of Appeal’s effort to distinguish other cases, holding that tort claims were not arbitrable, Victoria v. Superior Court, 40 Cal.3d 734 (1985) and RN Solution, Inc. v. Catholic Healthcare West, 165 Cal.App.4th 1511 (2008):  “In each of these cases, the lawsuit focused on conduct that was so removed from the professional relationship between the parties that it could not have been contemplated when they executed their agreement to arbitrate disputes.”  Here, however, alleged battery, negligent infliction of emotional distress, defamation, and negligent hiring, took place on the school campus, with students present, and/or related to the student’s relationship with the school.  Indeed, the plaintiffs were somewhat hoist by their own pleading, having alleged that torts were committed by persons “acting in the course and scope of their employment and agency . . . “

     And if that’s not enough, there is always the burden of proof.

     The Court of Appeal opinion ends:  “Harker may well be found liable under the parties’ contract, on a tort theory, or both, but it is the arbitrator who must resolve the questions presented in Shivani’s complaint.”  “Well”?  Is that an oblique caution, or what?

    

    

Arbitration/Nonsignatories/Equitable Estoppel: Ninth Circuit Puts Brakes On Toyota’s Attempt To Compel Prius Plaintiffs To Arbitrate Their Claims

District Court Could Decide Whether Nonsignatory Could Compel Arbitration

     Toyota has been enmeshed in arbitration concerning the ABS braking system of its 2010 Prius.  In Kramer v. Toyota Motor Corporation, et al., Case No. 12-55050 (9th Cir. January 1, 2013) (Quist, D. J., author 3-0) (published), owners of 2010 Priuses, parties to arbitration agreements with Toyota dealerships, were able to fend off a motion to compel arbitration by Toyota Motor Corporation and Toyota Motor Sales, U.S.A., Inc. (Toyota), nonsignatories to the arbitration agreement.

     The first issue addressed in Kramer was whether the district court or the arbitrator had authority to decide if Toyota, a nonsignatory, could compel arbitration.  This is typically a “threshold issue” determined by the courts, unless the arbitration clause explicitly and clearly delegates the authority to the arbitrator.  Here, the arbitration clause provided that it “applies to any claim or dispute about whether a claim or dispute should be determined by arbitration.”   Okay, that may work to delegate the authority to decide the issue of arbitrability as to signatories.  But as to nonsignatories, “[g]iven the absence of clear and unmistakable evidence that Plaintiffs agreed to arbitrate arbitrability with nonsignatories, the district court had the authority to decide whether the instant dispute is arbitrable.”

      Second, Kramer includes a detailed analysis of whether Plaintiffs were “equitably estopped from avoiding arbitration.”  To determine whether Toyota, a nonsignatory, could invoke equitable estoppel and require arbitration under the Federal Arbitration Act, the Court looked to California state contract law.  In particular, the Court drew on the test in Goldman v. KPMG LLP, 173 Cal.App.4th 209 (2009), whether the claims that the nonsignatory sought to arbitrate were “intimately founded in and intertwined with the underlying contract obligations.”  Id. at 221.  Without getting deep in the weeds, let’s just say that the Court did not find the Prius owners’ claims against Toyota sufficiently intertwined with the underlying contract obligations between the Prius owners and the dealerships to require arbitration of the claims against the nonsignatories.

     The panel affirmed the district court’s order denying Toyota’s motion to compel arbitration.

     Blawg Bonus:  Theodore J. Boutrous Jr., one of Toyota’s attorneys, was the lead attorney for Wal-Mart in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), the case resulting in the decertification of a huge class of Wal-Mart female employees.

Arbitration/Section 1295/Section 1281.2: Fourth District, Division 2 Affirms Denial Of Petition To Arbitrate Wrongful Death Claim Against Senior Living Center Outside Context of CCP Section 1295

In Which We Inaugurate A New Side Bar Category:  Section 1295 (Medical Malpractice)

 

 

     “The Patient.”  Frederic Dorr Steele, artist.  1901.  Library of Congress.

    The plaintiff in the next case, Norma Daniels, is alive.  Her mother, Margaret Barcenas, is dead.  Ms. Daniels sued a residential care facility for the elderly (RCFE), its owners and its operators, for elder abuse and related claims (survivor claims), as well as for wrongful death.  The trial court denied defendants’ petition to compel arbitration on the grounds(i) that Daniels was a third party to the arbitration agreement, and also, (ii) that there was a possibility of conflicting rulings if the survivor claims were arbitrated, and the wrongful death claim was not arbitrated.  Daniels v. Sunrise Senior Living, Inc., E054472 (4th Dist. Div. 2 January 4, 2013) (King, J., author) (certified for publication).

     The Court of Appeal affirmed, despite the fact that the agreement with the RCFE contained a broad arbitration clause, covering all claims relating to the mother’s care received at the RCFE, the clause was binding on the mother’s heirs, and Daniels had signed the agreement.  Notwithstanding those bumps in the road, the road to affirmance was relatively direct.

     First, Daniels did not sign in her personal capacity, but as her mother’s attorney in fact, allowing her to be treated as a third party to the agreement.

     Second, while the survivor claims were brought in Daniel’s capacity as an heir, the wrongful death claim was brought in her personal capacity.  “Unlike some jurisdictions wherein wrongful death actions are derivative, Code of Civil Procedure section 377.60 ‘creates a new cause of action in favor of the heirs as beneficiaries, based upon their own independent pecuniary injury suffered by loss of a relative, and distinct from any the deceased might have maintained had he survived. . . . ‘”  Horwich v. Superior Court, 21 Cal.4th 272, 283 (1999).  In her personal capacity, Daniel retained her third party status.

     Third, the case is distinguishable from Ruiz v. Podolsky, 50 Cal.4th 838 (2010) and Herbert v. Superior Court, 169 Cal.App.3d 718 (1985), cases holding nonsignatories to an arbitration agreement must arbitrate wrongful death claims against a health care provider when the decedent agreed to arbitrate medical malpractice claims pursuant to Cal. Code Civ. Proc. 1295.  Section 1295 governs agreements to arbitrate professional negligence or medical malpractice claims in medical services contracts.  Section 1295, however, includes notice safeguards to ensure a person makes an informed choice about arbitration – none of which were present here.  The Court explains that “this is the critical distinction between Herbert and Ruiz and the present case.”” Thus, a policy argument based on an analogy to cases involving 1295, which has its own built-in safeguards, held no attraction here.  (Note:  the Court points out there is no “statutory analog to section 1295, applicable to RCFE’s nonhealth care providers or to claims other than professional negligence . . . “.  Perhaps a lobbyist will now step forward to try and plug the gap.) 

     Fourth, Cal. Code of Civ. Proc. 1281.2(c) allows a court to refuse to compel arbitration if there is a danger of inconsistent rulings on common questions of law or fact.  Here, the possibility that survivor claims could be ordered to arbitration, whereas Daniels’s wrongful death claim could not be, presented “a possibility of inconsistent rulings on the claims given that the claims are based on the allegation that Barcenas received inadequate care at Sunrise. . . . Because the trial court’s discretionary ruling does not exceed the bounds of reason, we will not disturb it.”

     This case involves no analysis of federal case law or of the Federal Arbitration Act.  Perhaps federal law was simply irrelevant, given the Court’s conclusion that Daniels was not a party to an arbitration agreement.

      Does anyone believe that the gross facts alleged in this case – pressure sores on heels and ankles, followed by “septic shock, pneumonia, dehydration, and a staph infection”, followed by death of the plaintiff’s 93 year old mother, had any impact on the judges’ decision allowing the plaintiff her day in court?

       

Arbitration/Standard of Review/CCP 1281.2/Nonsignatories: Nonsignatories Created Possibility of Conflicting Rulings And Also There Was Evidence That Aged Plaintiff Never Agreed To Arbitrate

Standard of Review Was Crucial To Affirmance of Trial Court’s Order Denying Motion to Compel Arbitration

     What a difference the standard of review can make. 

     Plaintiff Thiel, an investor, sued MKA Real Estate Qualified Fund I, LLC for investment mismanagement.  Several investment advisors, as well as real estate developers, were named as co-defendants.  MKA moved to compel arbitration with it, and the trial court denied the motion on grounds that Thiel had not agreed to arbitrate, and that third party signatories, who could not be compelled to arbitrate, created the possibility of conflicting rulings.  MKA appealed. Thiel v. MKA Real Estate Qualified Fund I, LLC, Case No.A131683 (1st Dist. Div. 4 November 9, 2012) (Ruvolo, P.J.) (unpublished).

     Evidence cut both ways as to whether there was an agreement to arbitrate.  However, the Plaintiff stated he was not shown a copy of an arbitration agreement, and he never agreed to arbitrate, and his wife backed him up.  If the court’s order to deny a motion to compel arbitration is based on a decision of fact, then a substantial evidence standard governs.  And here, though the evidence was disputed, Thiel’s denials amounted to substantial evidence. 

     Cal. Code of Civ. Proc. section 1281.2(c) authorizes the court to deny a request to arbitrate when arbitration may result in conflicting rulings on a common issue of law or fact.  Applying a de novo standard of review, the Court of Appeal concluded that Plaintiffs’ allegations of agency and conspiracy “would necessarily require presenting evidence and determining the culpability of the codefendants as well as that of MKA,” as a result of which, “there exists a possibility of conflicting rulings on common issues of law and fact . . . warranting the denial of MKA’s motion to compel arbitration.”

     The Court of Appeal’s path to affirmance was made easier by its subsidiary rulings that MKA had forfeited various arguments along the way.

      Affirmed.

Arbitration/Nonsignatories: Fourth District, Division 1 Affirms Trial Court’s Order Denying Petition to Compel Arbitration With Nonsignatory

Parties Moving to Compel Arbitration Were Unable to Take Advantage of Nonsignatory’s Admissions Where Moving Parties Denied Existence of Agreement Between Themselves and Nonsignatory

     Our next case is an odd one in which each of the adversaries took seemingly inconsistent positions.  PMCI and Gregory, a contractor and its principal, were moving parties seeking to compel arbitration of a construction defects lawsuit with Quattro, a nonsignatory to a construction contract.  While moving to compel arbitration, PMCI and Gregory claimed that the nonsignatory Quattro lacked standing to sue and was not a party to the agreement.  The nonsignatory claimed that he had standing to sue under the agreement to construct a house, but that as a nonsignatory, he was not bound by the contract’s arbitration provision.  In another related lawsuit, Quattro had filed a declaration stating that another person, Truppi, was the record owner of the property, and that Quattro “had only a prospective beneficial interest in the property. . . “  

     The arbitration clause provided that it bound signatories, and the trial court denied the petition to compel arbitration on the simple basis that signatures were lacking (Gregory had also failed to sign in his individual capacity).  Truppi v. Pasco Engineering, Inc. and Quattro v. Property Management Contractors, Inc., Case No. D059494 (Dist. 1 Div. 1 October 22, 2012) (Nares, Acting P.J.) (unpublished). 

     Several arguments were advanced by appellants in favor of compelling arbitration, including estoppel and third-party beneficiary arguments, all to no avail.

      The chief stumbling block for appellants appears to have been that they were not allowed to take advantage of Quattro’s admissions that the contract was for his benefit and that he had performed the contract – admissions that might have supported an estoppel argument.  Why couldn’t appellants take advantage of their opponent’s admissions?  Because “in both their demurrers, general denial, and indeed in their petition to compel arbitration, PMCI and Gregory denied the existence of an agreement between themselves and Quattro . . . “  See Brodke v. Alphatec Spine, Inc., 160 Cal.App.4th 1569, 1575 (2008) (“While plaintiffs’ admissions are an appropriate means by which the existence of an agreement may be proved, there is simply no reason to prove anything until the moving party alleges the existence of that which is to be proved.”).

Above:  Engine for drawing the fuse out of a shell and cross-section of a Petard. 1779.  Library of Congress.

     If you seek to compel arbitration under a contract,yet deny that there is a binding contract, well, that could be a problem.  It was here for appellants.  See the diagram above referring to a “Petard”, and see the Wikipedia article for the origin of the expression, “hoist with his own petard.”

     Order affirmed.

        

    

Arbitration/Nonsignatories/Scope: Plaintiff’s Mere Allegation of Agency Relationships Is Not Necessarily Enough to Enable Nonsignatory to Take Advantage of Arbitration Provision

 

Court of Appeal Delves Further Into Whether Alleged Agency Relationship Relates to Activities Governed By The Arbitration Clause

     The underlying dispute among different YMCA organizations, concerned the right to use camp grounds in the Sierra. Plaintiff Central Valley Young Man’s Christian Association, Inc. ran into financial difficulties, as a result of which the national YMCA dechartered plaintiff, and The Sequoia Lake Conference of Young Men’s Christian Associations removed plaintiff from its membership – then end result being that plaintiff’s members could not use the Sierra campgrounds. Plaintiff sued seeking reinstatement in Sequoia, and various other remedies. Sequoia moved to compel arbitration, but its petition was denied by the trial court. Central Valley Young Man’s Christian Association, Inc. v. The Sequoia Lake Conference of Young Men’s Christian’s Associations, Case No. F061635 (5^th Dist. May 15, 2012) (Hill, P.J., author) (unpublished). Accordingly, Sequoia appealed.

     Though a nonsignatory to any arbitration provision, Sequoia sought to take advantage of an arbitration provision in the Policies and Procedures Manual of the National Committee on Membership Standards (NCMS) of the national YMCA organization, which they asserted was binding on all chartered YMCAs. One of the ways in which a nonsignatory can gain a right to appeal is if the nonsignatory is an agent of a party to an arbitration agreement that governs the dispute. Sequoia sought to take advantage of the application of that rule to the dispute.

     No go, said the Court of Appeal. Though the plaintiff’s complaint did in fact plead agency relationships, the allegations did not establish that the agency relationship related closely enough to the purported arbitration provision and the dispute:

“Sequoia is not alleged to be an agent of GSYMCA and Kings YMCA in any activities or relationship governed by the NCMS policies and procedures manual. Thus, Sequoia has not alleged or demonstrated that it was an agent of GSYMCA or Kings YMCA, or both, in connection with a dispute governed by the arbitration clause found in the NCMS policies and procedures manual.”

     Result: affirmance.  Sequoia failed to establish that it was a party entitled to invoke the arbitration provision, or that the dispute fell within the scope of the arbitration provision.

1917 – 1918.  Library of Congress.

Arbitration/Nonsignatories/Enforcement: Second District, Division 7 Affirms Decision That Plaintiff Was Not Bound By Arbitration Provision In “Close Case”

 

Outcome Depended On Capacity In Which Signatory Signed

     The trial court determined that Plaintiff Allen Othman was not a party to a contract containing an arbitration provision in an agreement, and therefore was not bound to arbitrate his claims against Zions First National Bank. Mr. Othman had tried to purchase a property through a “short sale”, but Zions, the secured lender, ended up instead foreclosing on the property before Mr. Othman’s escrow closed. As a result, the property was sold to a third party. In fact, Mr. Othman had signed a confidentiality agreement with Zions providing for arbitration of all disputes, as “Buyer.” But the first paragraph of the agreement stated that it was between USS Cal Builders Inc. and Zions.  Mr. Othman was a VP of USS Cal Builders Inc.  No wonder the trial court said this “was a close case.” Othman v. Zions First National Bank, Case No. B229825 (2^nd Dist. Div. 7 May 8, 2012) (Jackson, J., author) (unpublished). Zions appealed the denial of its motion to compel arbitration.

     Perhaps the determining piece of evidence was Mr. Othman’s declaration he had signed the agreement solely on behalf of the corporation, despite his characterization of himself on the signature page as the potential buyer. That was “substantial evidence” enough in this murky situation to support the trial court’s finding on appeal.

      We note that Mr. Othman did not sue on the agreement containing the arbitration provision.  If he had done so, the result would have been different.

     Moral: signature blocks, and the capacity in which a person signs, can make a difference, when it comes to enforcing an arbitration provision.

Arbitration/Nonsignatories/Third Party Beneficiaries: Financial Advisor of Corporation Can’t Compel Arbitration With Corporation’s Creditors on Third-Party Beneficiary Theory

 

Corporate Creditors Would Have Benefited Alright If Advisor Had Successfully Obtained Financing for Corporation -- But Benefit Alone Does Not a Third-Party Beneficiary Make

     One exception to the rule that a nonsignatory cannot be compelled to arbitrate a dispute is when the nonsignatory is a third-party beneficiary of the contract containing the arbitration agreement. Crowley Maritime Corp. v. Boston Old Colony Ins. Co., 158 Cal.App.4^th 1061, 1069 (2008). A financial advisor tried to avail himself of that exception to compel arbitration with secured creditors of a corporation who sued him for allegedly fraudulent misrepresentations made to induce the creditors to forbear from foreclosing on their security. The refinancing efforts did not succeed, and the corporation became bankrupt. Defendant Kann, the financial advisor, argued the nonsignatory creditors were third-party beneficiaries of the contract between him and the corporation who could be compelled to arbitrate. The trial court disagreed, and denied the financial advisor’s motion. The financial advisor appealed. Epitech, Inc. v. Kann, B230197 (2^nd Dist. Div. 3 April 16, 2012) (for publication) (Croskey, J.).

     The Court of Appeal also disagreed with Kann’s third-party beneficiary argument. For the creditors to qualify as creditor beneficiaries, Kann’s performance of the contract to obtain refinancing would have had to satisfy the corporation’s preexisting obligation to the creditors. But Kann did not contract to pay the creditors any money, or even to obtain financing; he only agreed to perform certain acts “geared toward possibly obtaining financing.” The corporation’s “only obligation to the secured creditors was to repay them, which Kann simply did not contract do do.” The mere fact that the corporate creditors might benefit by a successful refinancing was not enough to make them intended beneficiaries of the financial advisor’s contract with the corporation. Therefore, the order denying arbitration was affirmed.

     Third-party beneficiary analysis can be tricky. This case resulted in an opinion certified for publication.

Arbitration/Nonsignatories: Second District, Division 5 Refuses to Enforce Arbitration Agreement Against Nonsignatory Broker

 

Opinion Not For Publication Rejects Dictum In Published Opinion

     Nonsignatories to arbitration agreements may find themselves bound to arbitrate if they are agents of a signatory party to the transaction. But that didn’t happen to the real estate brokers here. 3118, LLC v. CBD Investment, Inc., B234706 (2^nd Dist. Div. 5 April 10, 2012) (not for publication).

Plaintiff, 3118, LLC, the purchaser of a building, successfully obtained an arbitration order against defendant brokers in a separate action. The Plaintiff appealed from an order denying its motion to compel arbitration and to stay litigation of claims against defendants, including defendant brokers, in the instant action. The real estate purchase agreement included a common mediation/arbitration provision, and a NOTICE provision, requiring initialing. The defendant brokers did not initial the NOTICE provision.

     The published case of Nguyen v. Tran, 157 Cal.App.4^th 1032 (2007) (4th District, Div. 3) needed to be addressed. In Nguyen v. Tran the purchasers signed the purchase agreement. The Court of Appeal stated in that case: “As such, [purchasers’] brokers could have been compelled to arbitrate the claims against them although they did not sign the agreement and were not parties to it.” Id., at p. 1037. That statement would seem to be dispositive and require the brokers to arbitrate in 3118, LLC. However, the statement is dictum in Nguyen v. Tran that the 2^nd District, Division 5 refused to follow.

     The express language of the real estate form in 3118, LLC provides: “Buyer and Seller agree to . . . arbitrate disputes or claims involving either or both Brokers, . . . . provided either or both Brokers shall have agreed to such . . . arbitration prior to, or within a reasonable time after, the dispute or claim is presented to Brokers.” The capitalized NOTICE provision states in part, “BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’”. The brokers did not initial that NOTICE provision.

     The Court of Appeal simply gave effect to the provision, concluding that the brokers, who did not sign the arbitration agreement, could not be compelled to arbitrate claims by plaintiff, the buyer, in light of the explicit language of the agreement. Refusing to apply equitable principles to override the contract, the Court of Appeal also noted that this was not a case where a nonsignatory wanted to be bound by an arbitration agreement.

     However, the court reversed the order refusing to stay the judicial action against the brokers pending arbitration, because of the existence of overlapping issues and the risk of inconsistent results.

     The opinion is unpublished and therefore cannot be cited as precedent. Nevertheless, if you are a real estate broker or litigator, this is a case you might want to keep in mind.

Arbitration: Third District Rules That FAA Does Not Preempt California Arbitration Statute Allowing for Denial of Arbitration Where There Is Possibility of Conflicting Rulings

 

Elder Abuse of Parent and Emotional Distress of Daughter Set Up Possibility of Conflicting Rulings

     The trial court denied motions of operators of skilled care nursing facilities to compel arbitration of parent’s Elder Abuse claim that was subject to arbitration. Why? Because the daughter’s claim of emotional distress caused by her mother’s alleged abuse created the possibility of conflicting rulings. Cal. Code Civ. Proc. section 1281.2. Defendants appealed. Bush v. Horizon West, C067277 (3^rd Dist. April 9, 2012) (not to be published).

     Above:  Nurse caring for elderly patient. c1906.  Library of Congress.

     Defendants’ chief argument was that the California statutory provision allowing for denial of the motions to compel arbitration was preempted by the Federal Arbitration Act. However, in an earlier case involving Stanford University, the Supreme Court held that “where the parties have agreed that their arbitration agreement will be governed by the law of California,” (which was also the case in Bush v. Horizon West), “application of [section 1281.2(c)] is not preempted by the [FAA].” Volt Info. Sciences v. Stanford Univ., 489 U.S. 468, 470 (1989).

     Okay, so section 1281.2(c) is not preempted where the parties have agreed that the contract will incorporate California law. But section 1281.2(c) also provides that “[t]his 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.” Section 1295 requires particular language be included in an agreement to arbitrate as to the professional negligence of a health care provider, and that language was employed in the agreement here. That gave Defendants a fall-back argument: the exemption for arbitration of medical malpractice claims meant that section 1281.2(c), by its terms, did not apply. The Court of Appeals brushed off that argument of Defendants, pointing out that here, neither the mother nor her daughter had sued for medical malpractice. Instead, the mother had sued for Elder Abuse, and the daughter sued for infliction of emotional distress.

     That was not the end of it, however. Defendants argued that the daughter was not a third party to the arbitration agreement, because of the closeness of the parties, and that therefore, the daughter could also be bound by the arbitration provision. In fact, the California Supreme Court recently held that, “when a person seeking medical care contracts with a health care provider to resolve all medical malpractice claims through arbitration,” the agreement applies “to the resolution of wrongful death claims, when the claimants are not themselves signatory to the arbitration agreement.” Ruiz v. Podolsky, 50 Cal.4^th 838, 841 (2010). At first blush, Ruiz seems close to the situation here, but courts are in the business of drawing distinctions. Here, neither the mother’s nor the daughter’s claims were for wrongful death, and the daughter’s claim for emotional distress – to her – was distinct from the mother’s claim for Elder Abuse. Therefore, Ruiz was not controlling.

     Separately, Defendants argued “equitable estoppel.” A nonsignatory who sues on a contract can sometimes be equitably estopped from disclaiming the binding effect of an arbitration provision in the contract sued upon. You take the benefits, you accept the burdens. The problem for Defendants here is that the daughter’s claim for negligent infliction emotional distress is not a contract claim.

     Finally, Defendants made a policy argument, reminding one of a variant of that old adage: if the facts are against you, argue the law, if the law is against you, argue the facts, and if both are against you, argue policy [or: bang the table]. Concluding that section 1281.2(c) is not preempted, and that the trial court did not abuse its discretion in exercising its power under the statute, the Court of Appeal said, “we can do no more.”

     Result: The orders denying the motions to compel arbitration were affirmed in a 3-0 decision authored by Justice Robie.