Arbitration Clause Did Create Unilateral Right To Compel Arbitration, And There Was No Precedent To Compel Mediation
Members of an LLC ended up in a business dispute leading to a lawsuit followed by defendants’ motion to compel mediation and arbitration. The trial court construed an arbitration agreement as insufficient to allow one party to unilaterally compel arbitration, and further found that it was without jurisdiction to enforce a mediation provision. After defendants lost their motion to compel mediation and arbitration of their disputes, they appealed. Angelakis v. Hennigan, Case No. F064956 (5th Dist. March 12, 2013) (Levy, Acting P.J., author 3:0) (unpublished).
The Court of Appeal acknowledged that there is support, under some circumstances, for construing an arbitration clause as creating a unilateral right to compel arbitration. But not here. The problem for defendants/appellants was that here, the arbitration clause also provided the dispute could be resolved by arbitration “if all parties to the dispute agree to arbitration.” Here, however, all parties did not agree to arbitration, leaving defendants/appellants stuck with the Court’s construction of the plain language of the arbitration clause.
The parties’ operating agreement also provided, “if the members cannot resolve the dispute to their mutual satisfaction, the matter shall be submitted to mediation.” Also, there is a strong policy in favor of promoting mediation. So why wouldn’t the Court require mediation?
The Court agreed that encouraging mediation meant that courts will uphold a sanction, such as denying attorney’s fees, where mediation is a precondition to obtaining attorney’s fees. But the Court refused to force the parties to mediate because mediation is voluntary. Jen-Weld, Inc. v. Superior Court, 146 Cal.App.4th 536, 543 (2007) (an order compelling mediation is antithetical to the entire concept of mediation).
The order denying the defendants’ motion to compel mediation and arbitration was affirmed.