Inland Empire Dustup Presented Unique Procedural Issue – But The Court Didn’t Resolve It
The Court of Appeals noted at the outside that “we have not found a case that involves the same procedural facts as those presented here, namely, a case in which a party to an ongoing contractual arbitration files a lawsuit that names as defendants the other party to the arbitration as well as purported third parties, and alleges claims in its complaint that could have been but were not asserted in the arbitration, and then moves to stay the arbitration based on the new lawsuit.” PrimeCare of Corona, Inc. v. Hemet Community Medical Group, Inc., E051306 & E052577 (4th Dist. Div. 2 March 26, 2012) (McKinster, J.) (not for publication).
The Court questioned “whether a party to an ongoing arbitration can invoke section 1281.2(c) [allowing for denial of petition to arbitrate to avoid conflicting rulings] in such circumstances.” We got the drift that the Court may have thought this was sharp practice. The Court,however, did not resolve its own question, deciding the case on somewhat different grounds – thereby allowing this case to remain “not to be published in official reports.”
The underlying dispute involved medical professionals allegedly contractually bound by restrictions on their practice, and competing independent physician associations. The trial court had stayed the arbitration of PrimeCare’s breach of contract claim against defendants and respondents Muller and Corona Family Care, Inc. [collectively “Muller”] and denied PrimeCare’s petition to arbitrate claims in Muller’s lawsuit filed against PrimeCare after arbitration began.
PrimeCare appealed the denial of its petition to arbitrate Muller’s further claims, and the stay of an existing arbitration. Result?
Reversal.
First, the exception to compelling arbitration set out in section 1281.2(c) did not apply in this case. The presence in the action of a third party not subject to arbitration is a prerequisite to application of the exception set out in section 1281.2. But here the Court concluded allegations in the lawsuit brought by Muller that defendants were agents, servants and employees of each other effectively rendered them all signatories to the provider services agreement containing the arbitration provision. Furthermore, if that was not the case in one of the various actions that had been brought, the trial court always had the discretion to stay that particular action pending the outcome of the arbitration.
Second, equitable estoppel also applied, because the Muller action relied upon, made reference to, or was intertwined with the provider services agreement containing the arbitration provision. A plaintiff who sues on a written contract containing an arbitration clause may be estopped from denying arbitration if he sues nonsignatories as related or affiliated persons with the signatory entity. Rowe v. Exline, 153 Cal.App.4th 1276, 1287 (2007).
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