Pacific Westline v. C.W.
Driver
Filed 1/9/13
Pacific Westline v. C.W. Driver CA4/3
OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits
courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
PACIFIC
WESTLINE, INC.,
Plaintiff and Appellant,
v.
C.W. DRIVER,
INC.,
Defendant and Respondent.
G046357
(Super. Ct. No. 30-2008-00113282)
O P I N I O N
Appeal
from an order of the Superior Court of
County, Sheila Fell, Judge.
Affirmed.
Rogers,
MacLeith and Stolp, and Douglas R. MacLeith for Plaintiff and Appellant.
Law
Offices of Ted R. Gropman and Ted R. Gropman for Defendant and Respondent.
INTRODUCTION
Pacific
Westline, Inc. (Pacific), has appealed an order compelling arbitration after a
judgment confirming the arbitration award. Pacific was a subcontractor of general
contractor C.W. Driver, Inc. (Driver), for remodeling work on a hotel at Disneyland. Pacific alleged that Driver ordered
additional work on the hotel for which it refused to pay. Driver successfully petitioned to compel
arbitration of the dispute. Pacific
appeals from the order granting Driver’s petition.
We
affirm. The language of the subcontract
supports arbitration of disputes such as the one between Driver and
Pacific. The court correctly granted the
petition to compel arbitration.
FACTS
Pacific
subcontracted with Driver in 2008 to do finish carpentry and other
ornamentation work for a luxury suite at a Disneyland hotel. Driver was the
general contractor on the project.
According to Pacific’s complaint, Driver ordered additional work on the
suite and refused to pay for it.
Pacific
sued Driver and Walt Disney World Co. (the hotel owner) in October 2008. The causes of action were all
contract-based:
contract, and three common counts.
to the two causes of action against it by pointing out the lack of any
allegation of privity between itself and Pacific for claims based on a
contract. The court allowed Pacific to
amend the complaint, but it did not do so and ultimately dismissed Disney from
the action.
The subcontract
between Pacific and Driver incorporated the dispute resolution procedure
adopted in the “prime contract†(the contract between Disney and Driver) into
the Pacific-Driver subcontract, except for “disputes not involving the acts,
omissions or otherwise the responsibility of [Disney] under the prime contract.
. . .†The subcontract then mandated
arbitration “for disputes not involving the acts, omissions or otherwise the
responsibility of [Disney].†“For claims
not involving the acts, omissions or otherwise the responsibility of [Disney]
under the prime contract, the parties hereto shall submit any and all disputes
arising under or relating to the terms and conditions of the Subcontract to
arbitration in accordance with the Construction Industry Rules of the American
Arbitration Association.†The
subcontract also contained a “Pass Through Claims†provision, obligating Driver
to present “[a]ll claims of [Pacific] arising out of the acts or omissions of
[Disney]†to Disney on Pacific’s behalf.
Pacific’s claims against Disney were to be “finally resolved through the
claims procedure (arbitration, litigation or otherwise) applicable between
[Driver] and [Disney].â€
Driver
petitioned to compel arbitration; Pacific opposed the petition on the grounds
that the subcontract did not compel arbitration, because the dispute “involvedâ€
Disney. The court granted the petition
in July 2009 and stayed the action.
The
arbitration commenced in October 2009.
One of the first issues placed before the arbitrator was whether he had
jurisdiction to hear the matter. The
arbitrator ruled that he did.
place in March 2011, and the arbitrator issued his award on May 20, 2011. He awarded Pacific nothing.
award and entered judgment on November 17, 2011. Pacific appealed from both the judgment and
the order compelling arbitration. Its
sole issue on appeal, however, is the order.
DISCUSSION
An
order compelling arbitration, although not itself appealable, can be reviewed
on appeal from the judgment confirming the arbitration award. (Handy
v. First Interstate Bank (1993) 13 Cal.App.4th 917, 922.) We review an order compelling arbitration de
novo if the court interpreted the contract language without the aid of
extrinsic evidence or for substantial evidence if the trial court based its
decision on a resolution of disputed facts.
(Hartnell Community College Dist.
v. Superior Court (2004) 124 Cal.App.4th 1443, 1448-1449.)
California has a
strong public policy favoring arbitration.
“Courts should indulge every intendment to give effect to such
proceedings [citation] and order arbitration unless it can be said with
assurance that the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.†(
Cal.App.3d 1, 9.) Doubts are resolved in
favor of sending the matter to arbitration.
(Rowe v. Exline (2007) 153
Cal.App.4th 1276, 1282.)
When
presented with a petition to compel arbitration, a court has two main
tasks. First, it must determine whether
an agreement to arbitrate exists. If it
does, then the court decides – if the party opposing arbitration raises the
objection – whether the agreement is enforceable. The party petitioning to compel arbitration
bears the burden of proving its existence by preponderance of the evidence. The party opposing arbitration bears the
burden of proving the agreement is not enforceable. (Rosenthal
v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; see also
Code Civ. Proc., § 1281.2.)
In
opposing Driver’s petition, Pacific raised no defense to enforcement, such as
unconscionabilty, fraud, waiver, or the like.
It argued instead that no agreement to arbitrate existed because its
lawsuit “involved†Disney and therefore came under one of the exceptions to
arbitration.
title="">[6] The right to arbitration
thus hinges mainly on the interpretation of “involve.â€
“Involveâ€
has several meanings. It can mean
“engage in as a participant,†as in a country involved in a war or in political
intrigues. “Involve†can also mean
“entail†(becoming a championship swimmer involves a lot of work), “include†(a
mystery story usually involves a dead body), or “affect†(the virus involves
the entire respiratory system), among other meanings. (See Webster’s 3d New Internat. Dict. (1981)
p. 1191, col. 2.)
In
light of the rule that doubts are resolved in favor of arbitration, “[i]t seems
clear that the burden must fall upon the party opposing arbitration to
demonstrate that an arbitration clause cannot
be interpreted to require arbitration of the dispute.†(Coast
Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th
677, 686-687; see also Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th
696, 705 [“The party opposing arbitration has the burden of showing that the
agreement, as properly interpreted, does not apply to the dispute.â€].)
Obviously
the arbitration clause in this case can be interpreted to require
arbitration. One common meaning of
“involve†is “engage in as a participant.â€
Pacific’s dispute or claim does not “involve†Disney’s acts, omissions,
or responsibility under the prime contract; nothing in the complaint suggests
that Disney participated in – or indeed had anything to do with – Driver’s
refusal to pay Pacific according to the terms of the contract alleged in
Pacific’s complaint. Of course Disney was
“involved†in the hotel project itself; it was after all Disney’s hotel that
was being renovated. But involvement in
the project is not the key to arbitration; the clause speaks instead of
involvement in the claim or the
The only claims or disputes alleged in the complaint are those against
Driver, for failing to pay what was owing under either a written or an oral
contract or according to common counts.
Pacific
argues that the declaration of one of its officers, in opposition to Driver’s
petition, presented evidence of Disney’s involvement. The declarant stated that Disney requested
the work done on the project and that the subcontract incorporated the prime
contract’s provisions into the subcontract.
In the
first place, this evidence may not have been properly before the court. “In determining whether an arbitration
agreement applies to a specific dispute, the court may examine only the
agreement itself and the complaint filed by the party refusing arbitration . .
. .†(Weeks v. Crow (1980) 113 Cal.App.3d 350, 353.) If the court must resolve disputed facts in
order to determine enforcement, then the parties may submit evidence in the
form of documents and declarations. The
court may also, in its discretion, order oral testimony. (See Rosenthal
v. Great Western Fin. Securities Corp., supra, 14 Cal.4th at pp.
413-414.) Pacific’s opposition, however,
did not appear to raise any disputed factual issues. It was not disputed that Disney requested all
the work on the project or that the subcontract incorporated the prime
contract.
But
even if it was properly considered, Pacific’s evidence would not defeat
arbitration. The evidence showed only
Disney’s involvement in the project,
not in the dispute with Driver for refusal to pay under the alleged contracts
(oral or written) between Pacific and Driver.
If “involvement†covered as much ground as Pacific claims for it,
arbitration could almost never be ordered.
Disney would always have some connection with a project of which it was
the owner; as long as the dispute between contractor and subcontractor centered
on the project, Disney would be “involved.â€
The arbitration clause would come into play only on the vanishingly rare
occasions when a dispute was completely unrelated to the project. It is unlikely that the parties intended to
arbitrate only in these anomalous situations.
The main argument Pacific makes on appeal
differs utterly from what it placed before the superior court by way of the
complaint. On appeal, Disney is the
villain – ordering extra work and refusing to pay for it or paying a small
fraction of its value (factual assertions lacking any citation to the
record). The complaint, however, makes
no mention of any misbehavior by Disney.
The bad actor in the complaint is Driver, which ordered the extra work
and refused to pay for it.
When it
made its ruling on the motion to compel arbitration, the court had before it
Pacific’s complaint, the subcontract between Pacific and Driver containing the
arbitration clause, and Pacific’s declaration.
The complaint was clearly framed in terms of a breach of agreements
between Pacific and Driver. Pacific
alleged no contract between itself and Disney, and the only claims in the
complaint were contract claims. After
Disney successfully demurred, the court allowed Pacific to amend its
complaint. It not only chose not to
amend, it also requested Disney’s dismissal, thereby tacitly acknowledging
Disney’s lack of connection with the dispute.
The subcontract required arbitration of disputes purely between the
general contractor and the subcontractor.
According to the complaint extant when the court made its decision, this
was one of those disputes.
Pacific
repeatedly asserts that it could not sue Disney because it had no contract with
Disney, only with Driver. True, Pacific
could not sue Disney for breach of contract.
But if Disney was truly pulling the strings that made Driver refuse to
pay what it owed, Pacific could have sued for contract interference. (See, e.g., Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26,
55 [elements of cause of action].) There
was also a potential suit for unfair business practices if, in truth, Disney
“act[ed] in bad faith, underpaying subcontractors as part of an ongoing
practice,†as stated in Pacific’s opening brief (but not in the
complaint). (See Bus. & Prof. Code,
§§ 17200 et seq.) Or Pacific could have
amended the complaint to explain how Disney orchestrated the non-payment of
Pacific’s charges.
name="_ftnref7" title="">[7] Pacific did not amend, but
instead focused its attention on Driver and on Driver’s failure to pay for the
extra work it had ordered on Disney’s hotel.
According
to the complaint and the evidence before the court at the time Driver
petitioned for arbitration, none of Disney’s acts or omissions had any bearing
on Driver’s refusal to pay Pacific pursuant to the contract between these two
parties, and Pacific alleged no responsibility of Disney under the prime
contract for Driver’s refusal to pay Pacific.
The case was properly sent to arbitration.
DISPOSITION
granting the petition to compel arbitration is affirmed. Respondent is to recover its
BEDSWORTH,
J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
MOORE, J.
name="_ftn1" title=""> [1] These facts are taken from the
record on appeal. In their briefs, by
contrast, both parties have chosen to recount “facts†for which they have
provided no citation to the record – thereby violating rule 8.204(a)(1)(C) of
the California Rules of Court – and which actually do not appear anywhere in
the record. The minimum penalty for such
conduct is the disregarding of all unsupported assertions of facts. (See Liberty
National Enterprises, L.P. v. Chicago Title Ins. Co. (2011) 194 Cal.App.4th
839, 846.)
name="_ftn2" title=""> [2] Disney was a defendant in only the
last two common counts, for labor and materials furnished and for goods sold
and delivered.
