Arbitration, Waiver, Scope: Court Of Appeal Affirms Orders Denying Motions To Compel Arbitration Of Right To Copy And Inspect

Arbitration Clause In Operating Agreement Did Not Cover Statutory Request To Copy And Inspect

     In Sachs v. GP/T Holdings, LLC et al., B254289 (2/5 Feb. 20, 2015) (Turner, Krieger, Goodman) (unpublished) plaintiff, alleging rights to copy and inspect documents under the Corporations Code, petitioned to compel defendants to produce documents for inspection and copying.  Nine months after litigation commenced, and after substantial law and motion proceedings had occurred, defendants moved to compel arbitration.  Defendants’ excuse for the delay was that defense counsel had been unaware of the arbitration clause.  Concluding that the delay was substantial and prejudicial, the Court of Appeal added that defense counsel’s (un)awareness of the arbitration clause is irrelevant.  Thus, the orders denying motions to compel arbitration were affirmed.

    Also, the demand to copy and inspect documents was statutory.  The Court concluded that this demand to inspect and copy was not an operating agreement dispute covered by the arbitration clause, providing a second reason for affirmance.