Filed 9/29/16 Blue Haven National Management v. Gordon & Rees CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
BLUE HAVEN NATIONAL D062967
MANAGEMENT, INC., et al.,
Plaintiffs and Respondents,
(Super. Ct. No. 37-2012-00096122-
v. CU-PN-CTL)
GORDON & REES, LLP, et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of San Diego County, Jeffrey B.
Barton, Judge. Affirmed.
Pettit Kohn Ingrassia & Lutz, Douglas A. Pettit, Valerie Garcia Hong and Derek
Hecht for Defendants and Appellants.
Panakos Law Center, Stephen L. Gordon; and Robert Tier for Plaintiffs and
Respondents.
Defendants Gordon & Rees LLP (G&R), Kevin Alexander, and Eric Volkert
appeal from the trial court's order denying their motion to compel arbitration of legal
malpractice and other claims by plaintiffs Blue Haven National Management, Inc. (Blue
Haven), Golden State Industries, Inc. (Golden State), P&A Holdings, Inc. (P&A), Robert
Namer, and R'Nelle Lahlou, also known as R'Nelle Lazlo (Lazlo), in connection with
defendants' representation of plaintiffs in Katz v. Blue Haven National Management Inc.,
et al. (Super. Ct. San Diego County, No. 37-2009-00097863; AAA Case # 73 166 00064
10 DEVI) (Katz).1 No legal services agreement was prepared for Katz. Rather,
defendants rely on an arbitration provision in a legal services agreement with Blue Haven
and Golden State in an earlier case, Davis et al. v. Blue Haven National Management
Inc., et al. (Super. Ct. Los Angeles County, No. BC 380153) (Davis). They contend this
agreement applied to their work on Katz, including with respect to the nonsignatories
(Namer, Lazlo, and P&A). Plaintiffs contend the agreement did not apply to Katz and
that, even if it did, the nonsignatories still would not be required to arbitrate. We
conclude the Davis agreement does not require any plaintiffs to arbitrate Katz-related
disputes. The order is affirmed.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Background of the Dispute
1. Davis
In January 2009 G&R was retained to represent Blue Haven and Golden State in
Davis, which was filed in the Superior Court of Los Angeles County. On January 20,
2009, G&R entered into a legal services agreement with Blue Haven and Golden State
1 Trial court case reference information noted herein is drawn from the parties'
briefs and the record.
2
(Davis Agreement). The agreement defined "Attorney" as G&R and "Clients" as Blue
Haven and Golden State. Alexander, managing partner of G&R's San Diego office,
signed on behalf of G&R. Namer signed on behalf of the companies as the executive
vice president of each entity.
Several portions of the Davis Agreement are pertinent to the parties' arbitration
dispute. The scope provisions provide:
"2. LEGAL SERVICES TO BE PROVIDED. The legal services to
be provided by Attorney to Clients are as follows: advising Clients
in connection with the dispute arising from the civil suit entitled
Ronald Davis and Carol Davis, et al v. Blue Haven National
Management, Inc., et al., Los Angeles Superior Court Case No.: BC
380153.; and other legal matters upon request by Clients and written
acknowledgement by Attorney to perform such other services.
"3. LEGAL SERVICES SPECIFICALLY EXCLUDED. If Clients
desire Attorney to provide any legal services not to be provided
under this Agreement, a separate agreement between Attorney and
Clients will be required."
Alexander addressed these provisions in a declaration supporting the motion to
compel.2 Discussing paragraph 2, Alexander stated G&R intended the Davis Agreement
to apply to " 'other legal matters' requested by Blue Haven, [Golden State], or Namer as
recurring clients for future matters that G&R acknowledged . . . in writing." He
explained paragraph 3 "required that the parties would prepare a different agreement if
the parties did not want the LSA to apply." At his deposition, Alexander elaborated that
2 Unless otherwise noted, G&R partners discussed herein provided statements in
declarations filed in support of the motion to compel.
3
the intent of paragraph 2 was to "provide an easier mechanism so that we don't have to
reinvent the wheel every time a new matter comes in . . . . "
Another provision, paragraph 4, addresses the parties' responsibilities. G&R
agreed to "perform the legal services called for under this Agreement, keep Clients
informed of progress and developments, and respond promptly to Clients' inquiries and
communications." Blue Haven and Golden State agreed to "cooperate with Attorney,
attend all meetings, arbitrations, mediations or court events as requested, provide
necessary declarations, promptly pay all fees and costs, and keep [Attorney] informed of
Clients' whereabouts."
Finally, the malpractice arbitration provision, paragraph 17, stated in relevant part:
"If a dispute arises between Attorney and Clients (defined as including any agents,
employees, officers, representatives or related entities or persons of Clients) as to whether
any legal services rendered by Attorney under this agreement or otherwise, were
improperly, negligently, or incompetently rendered, or otherwise rendered in breach of a
contractual or ethical duty, the dispute will be submitted for arbitration, and Attorney and
Clients will be bound by the result. [¶] . . . [¶] . . . Attorney and Clients agree that this
Attorney's law office in San Diego, California shall be a proper venue for any legal
proceedings hereunder."
2. Seyfferth
In or around February 2009, Blue Haven and Diving Lady Pools of Arizona, Inc.,
were sued in Arizona in Robert Seyfferth Company, Inc., et al. v. Diving Lady Pools of
Arizona, Inc, et al. (Super. Ct. Maricopa County, No. CV 2009-090480) (Seyfferth).
4
According to G&R partner David O'Daniel, Namer requested G&R provide
representation and G&R agreed to do so. O'Daniel stated G&R "engaged in many
communications, including but not limited to written correspondence[], billing invoices,
and verbal discussions, with Mr. Namer confirming acknowledgment of representation,"
but the record contains none of the letters or invoices. O'Daniel indicated he was
informed and believed Blue Haven was an existing client when he began representing it.
He also believed a "written agreement existed concerning . . . legal services by . . . G&R
for a lawsuit involving [Blue Haven] and [Golden State] and their 'other legal matters.' "
O'Daniel indicated no written agreement was requested for Seyfferth. The record
contains an unsigned legal services agreement for Seyfferth (Seyfferth Agreement), but
O'Daniel did not address it.3
3. Zamel
In or around April 2009, all of the plaintiffs were sued in California in Zamel
Enterprises LP v. Eisman et al. (Super. Ct. San Diego County, No. 37-2009-00088045-
CU-BT-CTL) (Zamel). As with Seyfferth, a G&R attorney (here, Alexander) indicated
Namer requested representation, G&R agreed to provide it, and there were written
communications and invoices (which, again, are not in the record). G&R partner
Marshall Brenner provided input on Zamel. He believed Blue Haven and Golden State
3 According to plaintiffs' opposition brief in the trial court, defendants "emailed [an]
LSA [legal services agreement] (hereinafter 'Seyfferth LSA') to Blue Haven that specified
the legal services to be provided. (Declaration of Aaron Sadock . . . , Exhibit A.)"
However, Sadock's declaration attached only the agreement, not the e-mail, and did not
address the preparation of the agreement or why it remained unsigned.
5
were existing clients and a written legal services agreement was in place. Brenner
prepared a letter acknowledging the representation and seeking a conflict waiver, which
he indicated plaintiffs provided. The letter is not in the record. Brenner indicated
plaintiffs did not request a new legal services agreement for Zamel.
4. TMC
In or around May 2009, Golden State was sued in Arizona in TMC Pool Care &
Repair LLC v. Golden State Industries, Inc. (Super. Ct. Maricopa County, No. CV 2009-
091543) (TMC). Namer requested that G&R provided representation. G&R entered a
legal services agreement with Golden State (TMC Agreement). Namer signed on behalf
of Golden State, but the page with G&R's signature is omitted from the record. The TMC
Agreement contains similar scope provisions to the Davis Agreement.4 The agreement
also contains an arbitration provision, but it differs from the one in the Davis Agreement
(including by requiring arbitration to take place in Arizona).
4 The TMC scope provisions are as follows: "2. LEGAL SERVICES TO BE
PROVIDED. The legal services to be provided by Attorney to Client are as follows:
advising and defending Client in connection with the dispute arising from the civil suit
entitled [TMC] v. [Golden State] . . . , and other legal matters upon request by Client and
written acknowledgment by Attorney to perform such other services. [¶] 3. LEGAL
SERVICES SPECIFICALLY EXCLUDED. If Client desires Attorney to provide any
legal services not to be provided under this Agreement, a separate agreement between
Attorney and Client will be required."
6
5. Katz
On September 4, 2009, plaintiffs were sued in California in Katz, along with two
additional parties, Alvin G. Eisman and BRP, Inc.5 Plaintiffs were served on September
9. On September 10, Namer sent the Katz complaint to Alexander by e-mail. According
to Alexander, Namer requested that G&R provide representation and Alexander advised
him to contact his insurance carrier to seek approval of G&R. On September 15, the
carrier e-mailed Alexander (copying Namer), identifying P&A as the insured party,
indicating Namer consented to the carrier sending a copy of the Katz complaint, and
asking Alexander to advise whether G&R could represent P&A. On September 22,
Alexander sent the carrier and Namer a letter referencing Katz and stating, "Thank you
for engaging [G&R] in connection with the above matter." Plaintiffs did not request a
new legal services agreement for Katz.
On June 18, 2010, Alexander sent Eisman, Namer, and Lazlo a letter, stating in
part: "Dear Al, Robert, and R'Nelle: [¶] We are pleased to have the opportunity to
defend you and [Blue Haven], [Golden State], [and P&A] . . . in the [Katz] matter. . . . [¶]
The purpose of this letter is to seek your written approval of our joint representation and
waiver of any actual or potential conflict of interest." Lazlo signed the waiver letter for
herself, while Namer signed on behalf of himself and (it appears) the corporate entities.
Alexander indicated Namer represented to him that he was executive vice president and
director of Blue Haven, Golden State, and P&A, while Lazlo represented she was vice
5 It appears Eisman and BRP are not parties to the malpractice action here. We omit
further discussion of them, unless necessary to provide context.
7
president and director of Blue Haven. Alexander stated Namer also advised him that
P&A was a related entity of Blue Haven and Golden State.
Neither the September 22 or June 18 letter mentioned the Davis Agreement or
arbitration under it. At his deposition, Alexander indicated the June 18 letter was an
"example of a written acknowledgement to perform legal services." His understanding
was that the letter, along with "prior confirming written letters," was "[p]art and parcel"
of "trigger[ing] Paragraph 2 of the Davis Agreement . . . ." He did not "recall specifically
discussing with [Namer and Lazlo] the Davis LSA during the Katz case."6
B. Malpractice litigation and motion to compel
Plaintiffs later sued defendants in connection with their work on Katz, for legal
malpractice and other claims. Defendants requested that plaintiffs stipulate to arbitration,
based on the Davis Agreement. Plaintiffs rejected the request. Defendants then filed a
motion to compel arbitration, which plaintiffs opposed.
The trial court denied the motion. The court explained defendants had the burden
to show plaintiffs entered a valid written arbitration agreement and their reliance on the
Davis Agreement was "unavailing." First, the court noted the agreement was entered into
"almost nine months prior" to Katz. Second, the court found the agreement ambiguous.
It explained: "Paragraph 2 suggests that if other legal matters other than Davis are
worked on, there must be a written acknowledgment by the attorney to provide the
additional services. One could presume that the legal matters performed upon request by
6 Neither party addresses Volkert's role here. From the first amended complaint, it
appears he was a G&R partner and lead counsel in Katz.
8
the clients would be somewhat related to the Davis case, rather than to an unrelated
lawsuit. However, paragraph 3 suggests that there must be a separate written agreement
if there are other legal services to be performed." The court observed any ambiguity in a
retainer agreement is construed against the attorney. It also noted defendants asserted
plaintiffs never requested a new agreement, but did not show it was their responsibility to
do so. Third, the court focused on the parties' conduct, observing the September 22 and
June 18 letters did not mention arbitration as part of the representation (or the Davis
Agreement) and defendants "had entered . . . intervening retainer agreements . . . ." The
court queried how a client would know "which arbitration provision should be the one
relied upon . . . ." Finally, the trial court stated, without elaboration, that defendants
sought to "hold non-signatories to the arbitration agreement merely because [they]
represented these other parties in other cases, or by agency."
The trial court concluded defendants had not met their burden to show a valid
arbitration agreement. Defendants timely appealed.
II. DISCUSSION
A. Applicable Law
1. Relevant principles regarding enforcement of an arbitration agreement
"[W]hen presented with a motion to compel arbitration, the court's first task is to
determine whether the parties have entered into an agreement to arbitrate their claims.
[Citation.] Courts 'apply general California contract law to determine whether the parties
formed a valid agreement to arbitrate their dispute.' [Citation.] . . . ''The petitioner
[seeking arbitration] bears the burden of proving the existence of a valid arbitration
9
agreement by a preponderance of the evidence, while a party opposing the petition bears
the burden of proving by a preponderance of the evidence any fact necessary to its
defense." (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 685-686
(Ramos).)
In determining the scope of an arbitration clause, " ' "[t]he court should attempt to
give effect to the parties' intentions, in light of the usual and ordinary meaning of the
contractual language and the circumstances under which the agreement was made
[citation]." ' " (Bono v. David (2007) 147 Cal.App.4th 1055, 1063 (Bono).) "[T]he terms
of the specific arbitration clause under consideration must reasonably cover the dispute as
to which arbitration is requested." (Ibid.) "The burden is on . . . the party opposing
arbitration[] to show that the arbitration clause cannot be interpreted to cover the
claims . . . ." (EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1321
(Pless).)
" 'California has a strong public policy in favor of arbitration and any doubts
regarding the arbitrability of a dispute are resolved in favor of arbitration.' " (Bono,
supra, 147 Cal.App.4th at p. 1062.) However, " ' " 'there is no policy compelling persons
to accept arbitration of controversies which they have not agreed to arbitrate . . . .' " ' "
(Id. at p. 1063.)
2. Relevant principles of contract interpretation
The "ordinary rules of contract interpretation" are well established. (Santisas v.
Goodin (1998) 17 Cal.4th 599, 608 (Santisas).) " '[T]he mutual intention of the parties at
10
the time the contract is formed governs interpretation. (Civ. Code, § 1636.)[7] Such
intent is to be inferred, if possible, solely from the written provisions of the contract. (Id.,
§ 1639.) The "clear and explicit" meaning of these provisions, interpreted in their
"ordinary and popular sense," unless "used by the parties in a technical sense or a special
meaning is given to them by usage" (id., § 1644), controls judicial interpretation. (Id., §
1638.)' " (Ibid.)
" 'A [contract] provision will be considered ambiguous when it is capable of two
or more constructions, both of which are reasonable. [Citation.] But language in a
contract must be interpreted as a whole, and in the circumstances of the case, and cannot
be found to be ambiguous in the abstract.' " (Pless, supra, 150 Cal.App.4th at p. 1321.) "
'A party's conduct occurring between the execution of the contract and a dispute about the
meaning of the contract's terms may reveal what the parties understood those terms to
mean.' " (Banning Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903,
915 (Banning Ranch).)
"It is a well-settled rule of law that ambiguities in a written contract are to be
construed against the party who drafted it." (Victoria v. Superior Court (1985) 40 Cal.3d
734, 745 (Victoria).) Further, in the context of legal services, "[a]ny ambiguity in a
retainer agreement is construed in favor of the client and against the attorney." (Banning
Ranch, supra, 193 Cal.App.4th at p. 913; see Mayhew v. Benninghoff (1997) 53
Cal.App.4th 1365, 1370 [affirming denial of attorney's motion to compel business dispute
7 Subsequent statutory references are to the Civil Code unless otherwise noted.
11
with client; noting "the doctrine of contra proferentum (construing ambiguous
agreements against the drafter) applies with even greater force when the person who
prepared the writing is a lawyer"] (Mayhew).)
3. Standard of review
The relevant facts are not in dispute. Therefore, this appeal presents questions of
law, which we review de novo. (See Turtle Ridge Media Group, Inc. v. Pacific Bell
Directory (2006) 140 Cal.App.4th 828, 833; Los Angeles County Metropolitan
Transportation Authority v. Shea-Kiewit-Kenny (1997) 59 Cal.App.4th 676, 682, fn. 2.)
B. Application
1. Applicability of the Davis Agreement to Katz
As a preliminary matter, we observe there is no genuine dispute as to the existence
of an arbitration obligation here, but rather as to its scope. The Davis Agreement
contains an arbitration provision, and plaintiffs do not contest this provision's existence or
validity. Rather, the parties focus on the Davis Agreement's scope provisions and
whether, under these provisions, the agreement as a whole applies to Katz. Thus, for
purposes of our analysis, we assume defendants established a valid arbitration agreement.
(Ramos, supra, 242 Cal.App.4th at pp. 685-686.)8 We now address the issue before us:
whether that obligation extends to Katz.
8 We recognize the trial court suggested the issue was the existence of an arbitration
agreement, not its scope. However, we "review the trial court's ruling, not its rationale."
(City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 80 (Stewart).) We also note
plaintiffs contend, at the end of their brief, that the Davis Agreement is void or voidable
due to a purported conflict of interest by G&R in Katz. Even if the conflict issue were
12
a. Language of the Davis Agreement
In order to discern the parties' intent, we turn first to the agreement's terms. (See
Santisas, supra, 17 Cal.4th at p. 608.) Paragraph 2 includes "other legal matters" as
services provided under the agreement, while paragraph 3 states that "[i]f Clients desire
Attorney to provide any legal services not to be provided under this Agreement, a
separate agreement . . . will be required." Defendants contend a plain reading of these
provisions encompasses non-Davis work, and suggest they operate together as follows:
(1) under paragraph 2, if plaintiffs want G&R to perform non-Davis work under the terms
of the Davis Agreement, they make a request and G&R provides written confirmation;
and (2) under paragraph 3, if G&R does not provide confirmation, or plaintiffs want legal
services under different terms, a new agreement is required. In contrast, plaintiffs
suggest that the way to make paragraphs 2 and 3 consistent is for paragraph 2 to
encompass Davis advice and, upon request, other Davis–related work (e.g., "follow-on
matters"), and for paragraph 3 to apply to non–Davis work.9
Contrary to defendants' position, the scope provisions do not clearly permit non–
Davis work under the Davis Agreement—and, contrary to plaintiffs' view, they do not
properly before us (which defendants dispute), we need not reach it, given our conclusion
that the Davis Agreement does not require arbitration of Katz-related disputes.
9 The parties also disagree about what the agreement covers, prior to any request for
additional work. Plaintiffs rely on paragraph 2 to suggest it encompasses only "advising"
in Davis (in contrast to the "advising and defending" language in TMC) and the clients
would have to request other Davis work. Defendants cite the duties listed in paragraph 4
to show the agreement already covers other Davis work, beyond advising. We not need
resolve this dispute, as the issue here is non–Davis work, but it underscores the
agreement's lack of clarity.
13
clearly exclude it. The provisions reasonably permit both interpretations. Because the
provisions permit different constructions, we will treat them as ambiguous. (Pless, supra,
150 Cal.App.4th at p. 1321.) In turn, we must construe the agreement against defendants,
as both the drafters and the attorneys here. (Victoria, supra, 40 Cal.3d at p. 745; Banning
Ranch, supra, 193 Cal.App.4th at p. 913.) We conclude the Davis Agreement's scope
provisions do not reflect the parties mutually intended the agreement to extend to non–
Davis work.
Defendants disagree that the scope provisions are ambiguous. They maintain the
provisions "provide a framework" for future work, including "matters in addition to . . .
Davis." But, as discussed above, the agreement does not clearly extend to such matters—
and Alexander's explanation about G&R's intent does not bridge the gap. (Reigelsperger
v. Siller (2007) 40 Cal.4th 574, 579 ["[U]ncommunicated subjective intent is
irrelevant."].) Focusing on the trial court's order, defendants also contend the court
"ignore[d] that [the paragraphs] operate in conjunction," the court's "interpretation of
each paragraph renders the other paragraph superfluous," and the court was speculating in
presuming that paragraph 2's "other legal matters" language referred to Davis. These
concerns are unfounded. First, the court's order reflects it considered both paragraphs
together. Second, the court's reading neither results in superfluous language, nor suggests
the court was engaged in speculation. Rather, it appears to result in paragraph 2 covering
14
Davis–related work and paragraph 3 covering other legal services, which, as discussed
ante, is a reasonable interpretation.10
b. Parties' course of conduct
We now turn to the parties' course of conduct. (See Banning Ranch, supra, 193
Cal.App.4th at p. 915.) We conclude the ambiguity of the scope provisions is
highlighted, not rectified, by the parties' conduct.
Defendants contend the Katz events support their position, as plaintiffs
purportedly engaged G&R under the terms of the Davis Agreement, never objected to or
expressed confusion about these terms, and did not request or sign a new agreement.
However, the documentation upon which defendants rely (including the September 22
and June 18 letters) does not mention Davis, and Alexander did not recall discussing
Davis with Namer and Lazlo during Katz. Put simply, there is no evidence plaintiffs
were even aware that defendants viewed the Davis Agreement as applicable to Katz,
much less that plaintiffs engaged G&R under its terms. In turn, we ascribe no
significance to plaintiffs' failure to object to these terms or request a new agreement to
avoid their application.
Defendants also cite Seyfferth and Zamel as further evidence that plaintiffs
understood that the Davis Agreement applied to non–Davis legal matters. But this
argument fails for the same reasons as defendants' contentions regarding Katz: There is
10 To the extent the court's order can be read as finding the provisions were
ambiguous on their face, as defendants suggest, this does not aid defendants. Even if the
court identified a different basis for ambiguity, the result -- construing the agreement
against defendants—was correct. (See Stewart, supra, 126 Cal.App.4th at p. 80.)
15
no evidence that documentation in these matters referenced the Davis Agreement or that
G&R otherwise discussed its application, so there is no relevance to any absence of
objections or new agreements. Indeed, the record is devoid of any documentation from
Seyfferth or Zamel, besides the unsigned Seyfferth Agreement.
Finally, defendants contend the existence of the TMC Agreement does not
undermine their reliance on the Davis Agreement. We disagree. The TMC Agreement
scope provisions parallel those in Davis, but its arbitration provision differs. As the trial
court observed, it is unclear how a client would know which agreement controlled.11
Defendants suggest the TMC Agreement was intended to cover Arizona litigation.
However, nothing in the TMC Agreement states this intent and there is no evidence
plaintiffs were aware of it. In addition, defendants offered inconsistent arguments for the
other Arizona case, Seyfferth. In their opening brief, defendants contend the Davis
Agreement applied in Seyfferth and do not address the unsigned Seyfferth Agreement.
But on reply, defendants acknowledge the Seyfferth Agreement and suggest that, as in
TMC, the Arizona venue required different terms—without clarifying their earlier
position. Defendants also contend we should not consider the party's preparation of the
TMC Agreement in assessing intent. This contention is contrary to both contract
interpretation principles (Banning Ranch, supra, 193 Cal.App.4th at p. 915) and
11 The parties discuss Thiele v. Merrill Lynch, Pierce, Fenner & Smith (S.D. Cal.
1999) 59 F.Supp.2d 1067, in connection with the existence of multiple agreements here.
Thiele deals with a superseded agreement, which is not at issue, and thus is inapposite.
(See Thiele, at pp. 1070-1072 [company could not enforce arbitration under earlier,
superseded contract].)
16
defendants' other arguments (e.g., their attempt to rely on party conduct in Seyfferth and
Zamel).12
We conclude the Davis Agreement does not require arbitration of Katz-related
disputes. If defendants desired the Davis Agreement, and its arbitration obligation, to
extend to other matters, it "was [their] responsibility to draft a clear and explicit
agreement to that effect . . . ." (Mayhew, supra, 53 Cal.App.4th at p. 1370.)13
2. Applicability of the Davis Agreement to nonsignatories
Because defendants cannot compel arbitration of Katz–related disputes under the
Davis Agreement, we need not determine whether the nonsignatories are bound to
arbitrate such disputes. However, we elect to address certain of defendants' arguments in
this regard. The "general rule" is "against compelling nonsignatories to arbitrate," but
12 In an argument relating to party conduct, defendants question the relevance of the
trial court's finding that nine months passed between the Davis Agreement and Katz. We
agree the passage of time, without more, would not render an arbitration agreement
unenforceable. (See, e.g., Buckhorn v. St. Jude Heritage Medical Group (2004) 121
Cal.App.4th 1401, 1403, 1407 [rejecting plaintiff's effort to avoid arbitration under
employment agreement because claims occurred after employment ended, explaining
"temporal test misconstrue[d] the applicable standard" and arbitrability did not turn on
"when the[] [claims] occurred."]; cf. Cochran v. Rubens (1996) 42 Cal.App.4th 481, 488
[physician could not compel arbitration under agreement signed three years prior, where
evidence reflected relationship terminated at the time].)
13 We note that neither the parties, nor the trial court, focus on the actual arbitration
provision in the Davis Agreement (paragraph 17), which purports to require Blue Haven
and Golden State to arbitrate disputes over G&R's legal services "under this agreement or
otherwise . . . ." On appeal, G&R has failed to make, and thus has forfeited, any
argument based on this language. (People v. Stanley (1995) 10 Cal.4th 764, 793
["'[E]very brief should contain a legal argument with citation of authorities on the points
made. If none is furnished on a particular point, the court may treat it as waived.'"].)
17
there are exceptions. (Crowley Maritime Corp. v. Boston Old Colony Ins. Co. (2008) 158
Cal.App.4th 1061, 1065 (Crowley).) Defendants do not establish any.
First, defendants suggest the nonsignatories are required to arbitrate as third party
beneficiaries of the Davis Agreement. This can be a basis for compelling arbitration
(Crowley, supra, 158 Cal.App.4th at pp. 1069-1070), but the third party beneficiary must
be "one of a class of persons for whose benefit [the agreement] was made." (Steve
Schmidt & Co. v. Berry (1986) 183 Cal.App.3d 1299, 1313.) " '[I]t is not enough that the
third party would incidentally have benefited from performance. [Citations.]' [Citation.]
'The contracting parties must have intended to confer a benefit on the third party.' "
(Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365, 1372.) Under the Davis Agreement,
G&R agreed to provide legal representation to Blue Haven and Golden State. Defendants
identify nothing in the Davis Agreement or the record to suggest the agreement was
intended to benefit the nonsignatories. Even if it were sufficient for the nonsignatories to
receive benefits, defendants have not made that showing, either. They suggest the
nonsignatories benefited from the Davis Agreement by receiving legal representation in
Katz and other matters. But they have not established Katz or the other matters were
governed by the Davis Agreement, meaning they cannot characterize that legal work as a
benefit of the Davis Agreement.
The authorities cited by defendants do not support their position. (§ 3521
[providing "he who takes the benefit must bear the burden," italics added]; NORCAL
Mutual Insurance Company v. Newton (2000) 84 Cal.App.4th 64, 67-68, 84 [wife of
insured psychiatrist required to arbitrate malpractice dispute covered by insurance policy,
18
under which both psychiatrist and wife received a defense; "fundamental point" was she
could not use policy to her advantage, then avoid arbitration under it]; Macauley v.
Norlander (1992) 12 Cal.App.4th 1, 4, 7-8 (Macauley) [introducing broker could enforce
arbitration against investors, as beneficiary of agreement between investors and clearing
broker, where, among other things, agreement explained dual-broker relationship, was
necessary to service investor accounts, and stated arbitration provision applied to
introducing broker].)14
Second, defendants argue the nonsignatories can be compelled to arbitrate based
on their preexisting relationships with G&R. A preexisting relationship can " 'mak[e] it
equitable to compel the nonsignator[ies] to . . . be bound to arbitrate' " and "supports the
implied authority of the party to bind the nonsignatory." (Matthau v. Superior Court
(2007) 151 Cal.App.4th 593, 600.) Again, however, defendants do not establish these
principles apply here.
Defendants contend the Davis Agreement's arbitration provision states it applies to
"agents" and "related entities" and that the nonsignatories must arbitrate under these
provisions. However, defendants do not explain how this language would be sufficient to
bind nonsignatories to arbitration, absent any showing that Blue Haven or Golden State
had authority to bind them or that it would be equitable to do so. (See, e.g., Weyand,
14 Macauley is also distinguishable because it involved a nonsignatory seeking to
compel arbitration. (See Benasra v. Marciano (2001) 92 Cal.App.4th 987, 991 (Benasra)
["It is one thing to permit a nonsignatory to relinquish his right to a jury trial, but quite
another to compel him to do so.]; DK Joint Venture 1 v. Weyand (5th Cir. 2011) 649 F.3d
310, 316 (Weyand) [" '[I]t matters whether the party resisting arbitration is a signatory or
not.' "].)
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supra, 649 F.3d at pp. 318-319 [rejecting argument that officers were bound to arbitrate
because agreements referred to "affiliates" and officers were affiliates, explaining that
"even if the . . . Agreements could be interpreted in that manner," the corporations lacked
authority to bind the officers and "[i]n the absence of such authority, the language about
'affiliates' . . . cannot have been sufficient to make the arbitration provisions binding on
[them]"].) Neither the status of Namer and Lazlo as corporate officers, nor Namer's
execution of the agreement on behalf of the companies, changes this analysis. (Id. at p.
314 ["[T]hat the . . . corporations entered into the . . . Agreements did not cause their
agents, . . . who acted only as officers on behalf of the corporations, to be personally
bound by those agreements."]; Benasra, supra, 92 Cal.App.4th at p. 991 [rejecting
argument that individual who signed agreement as president of corporation was bound to
arbitrate individual claim].)
Defendants' reliance here on Westra v. Marcus & Millichap Real Estate
Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759 (Westra) is misplaced.
Westra involved a real estate broker's motion to compel arbitration, in an action arising
from a transaction in which the broker was the agent for both parties. (Id. at pp. 762-763,
766.) The broker relied on the arbitration clause in the transaction's purchase agreement,
to which it was not a party. (Id. at p. 763.) The court held the broker could compel
arbitration, based on the preexisting relationships and the arbitration provision, which
stated, "Buyer, Seller, and Agent agree . . . " to arbitration. (Id. at p. 766.) Here, in
contrast, the Davis Agreement did not reflect that the nonsignatories agreed to arbitrate,
but, rather, simply identified agents and related entities as parties purportedly required to
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arbitrate. Further, unlike the Westra broker, who was involved in the underlying
transaction, defendants do not establish the nonsignatories had any role in the Davis case
that would render arbitration equitable. (Id. at p. 765.)15
In addition, defendants suggest compelling arbitration would be equitable because
all respondents were "frequent clients," and reiterate that prior to Katz, G&R represented
plaintiffs in Davis, Zamel, and Seyfferth, "all under the terms of the Davis LSA." But,
again, defendants did not establish the post–Davis cases were under the terms of the
Davis Agreement. In turn, they provide no authority that simply being a frequent client,
without more, would make it equitable to require arbitration under a legal services
agreement for a previous matter.
Finally, defendants suggest the nonsignatories impliedly consented to arbitration
under the Davis Agreement, based on their agreement to the Katz conflict waiver and
"continued representation" by defendants following Davis, including in Katz. Even if
implied consent were a basis for compelling arbitration (and defendants direct us to no
authority that it is), defendants provide no evidence of such consent.16 Rather, they
15 In addition, Westra, like Macauley, supra, 12 Cal.App.4th at page 4, involved a
nonsignatory attempting to compel arbitration. (Westra, supra, 129 Cal.App.4th at p.
763.) See footnote 14, ante.
16 Bak v. MCL Financial Group, Inc. (2009) 170 Cal.App.4th 1118, discussed by
both parties with respect to the consent issue, is inapposite. (Id. at p. 1126 [affirming
sanctions order by arbitration panel against attorney who represented parties in
arbitration, on grounds he subjected himself to the panel's jurisdiction].)
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simply reiterate their other arguments for on-going application of the Davis Agreement,
and we reject them for the same reasons.
We conclude that none of the plaintiffs are required to arbitrate their Katz–related
disputes with defendants.17
III. DISPOSITION
The order is affirmed. Plaintiffs are awarded costs on appeal.
NARES, J.
WE CONCUR:
BENKE, Acting P. J.
O'ROURKE, J.
17 Defendants suggest the trial court held nonsignatories can never be required to
arbitrate. The court's order does not support this assertion. In any event, defendants have
not established any plaintiffs are required to arbitrate here, so any error in this regard
would be harmless. (See, e.g., American Federation of State etc. Employees v. County of
Los Angeles (1983) 146 Cal.App.3d 879, 887.)
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