Arbitration/Record/1281.2: Second District, Division 2 Affirms Trial Court’s Order Denying Petition To Compel Arbitration, Based On Slim Record

A Statement of Decision Couldn’t Have Hurt Appellants Here

     The facts are somewhat odd here.  Defendants/Appellants were involved in a fee dispute with Plaintiff/Respondent, a law firm.  Defendants moved to compel arbitration, while arguing that the parties’ agreement, governed by the Los Angeles County Bar Association rules, did not allow the arbitrators to decide an alter ego claim. Plaintiff pointed out some of the interested parties were not subject to arbitration, but expressed a willingness to arbitrate, “noting that the only issue in dispute was whether the arbitration would include the alter ego claim.”  The trial court said that if the parties “’really want to arbitrate, I’ll let you stipulate to arbitrate’ but emphasized that any arbitration must be ‘all or nothing.’”  You guessed it – no stipulation, so no arbitration.  Defendants appealed.  Tesser Ruttenberg & Grossman LLP v. Forever Entertainment LLC, B249042 (2/1 Aug. 27, 2014) (Chavez, Boren Ashmann-Gerst) (unpublished). 

     The appellants failed to establish reversible error, perhaps because they failed to request a statement of decision.   An order denying a petition to compel arbitration “is presumed to be correct, and all intendments and presumptions are indulged to support the order on matters at to which the record is silent.”  Here, the record appeared to be silent on matters as to which Appellants argued the trial court had gone sideways.  “The presumption of correctness is particularly applicable when, as was the case here, defendants failed to request a statement of decision explaining the factual and legal basis for the trial court’s ruling denying their motion to compel arbitration.”

     That meant that the Court of Appeal only had to find one ground that would support the trial judge’s order, and it did in Cal. Code of Civ. Proc., section 1281.2(c), giving the trial court discretion to deny arbitration so all issues between the parties are resolved in a judicial proceeding. 

     Defendants argued that the record contained no ruling under section 1281.2(c).  No matter.  “Their failure to request a statement of decision resulted in the forfeiture on appeal of any objection based on the absence of such findings or ruling.”  Surely there is a moral here.

    Comment:

    If the Federal Arbitration Act alone had governed the arbitration, Cal. Code Civ. Proc. section 1281.2(c) would have been preempted, and would not have been a basis for denying arbitration.