Filed 6/27/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
JOHN WILLIAMS et al., 2d Civil No. B282513
(Super. Ct. No. 56-2016-
Plaintiffs and Respondents, 00484702-CU-MM-VTA)
(Ventura County)
v.
ATRIA LAS POSAS,
Defendant and Appellant.
Atria Las Posas (Atria) appeals from an order
denying its petition to compel arbitration. The trial court denied
the petition because of an integration clause in an agreement the
parties signed. It determined that the clause precluded Atria
from relying on a separate agreement containing an arbitration
clause. We reverse the order because the integration clause does
not preclude proof of the arbitration agreement, and we remand
to the trial court with directions to consider other objections
raised by respondents to the arbitration agreement.
FACTUAL AND PROCEDURAL HISTORY
John Williams, M.D., suffered major injuries,
including a traumatic brain injury, in a bicycle accident.
Vicktoriya Marina-Williams is his wife.
Atria is an entity which owns and operates a
residential care facility for elder or dependent adults. After his
bicycle accident, Williams was admitted to Atria’s facility. At
that time, Marina-Williams explained to Atria’s representatives
that her husband had previously been placed in a locked
“Memory Unit” due to his cognitive impairments.
Atria personnel asked Williams to sign a “Residency
Agreement,” and he did so. Marina-Williams did not sign the
agreement. The agreement contains an integration clause which
reads in relevant part as follows: “This Residency Agreement
and all of the Attachments and documents referenced in this
Residency Agreement constitute the entire agreement between
you and us regarding your stay in our Community and
super[s]edes all prior agreements regarding your residency.” The
Residency Agreement does not contain an arbitration clause.
Immediately after signing the Residency Agreement,
Williams signed a separate “Agreement to Arbitrate Disputes.”
“Article I: Arbitration” provides in relevant part as follows: “It is
understood that any and all legal claims or civil actions arising
out of or relating to care or services provided to you at [Atria] . . .
or relating to the validity or enforceability of the Residency
Agreement for [Atria], will be determined by submission to
arbitration as provided by: (1) the Federal Arbitration Act (FAA),
9 U.S.C., Sections 1-16, or (2) CA law, in the event a court
determines that the FAA does not apply.” Again, Marina-
Williams did not sign this agreement.
Shortly after his admission to Atria, Williams walked
away from the facility. When last observed at 5:00 a.m., he had
not yet had his breakfast or his morning medications. Several
hours later, paramedics found him lying in a ditch five miles
2
away. He suffered kidney failure, respiratory arrest, heat stroke,
and a second traumatic brain injury.
Williams and Marina-Williams sued Atria and
Williams’s primary care physician, Steven Barr, M.D. In one
cause of action, they alleged that both Atria and Barr were
negligent. In another, Marina-Williams sued both Atria and Barr
for loss of consortium.
Atria petitioned to compel arbitration based upon the
arbitration agreement. Williams and Marina-Williams opposed
the petition. They argued that the integration clause in the
Residency Agreement bars proof of the arbitration agreement;
that the third party litigation exception to arbitration in Code of
Civil Procedure section 1281.2, subdivision (c) (hereafter section
1281.2(c)) applies; that the arbitration agreement is
unconscionable; and that Marina-Williams is not a party to nor
bound by the arbitration agreement.1 The trial court denied the
petition after concluding that the integration clause of the
Residency Agreement is “dispositive.”
DISCUSSION
1. The Integration Clause
Atria contends that the trial court erred when it
concluded that the integration clause in the Residency
Agreement precludes it from relying on the arbitration
agreement. We agree and reverse.
“‘“‘There is no uniform standard of review for
evaluating an order denying a [petition] to compel arbitration.
[Citation.] If the court’s order is based on a decision of fact, then
we adopt a substantial evidence standard. [Citations.]
1 Although not relevant to this appeal, they also argued
that Williams lacked capacity to sign the agreements.
3
Alternatively, if the court’s denial rests solely on a decision of
law, then a de novo standard of review is employed. [Citations.]’”’
[Citation.]” (Avila v. Southern California Specialty Care, Inc.
(2018) 20 Cal.App.5th 835, 839-840 (Avila).) When the parties to
an agreement express their intention that it is the final and
complete expression of their agreement, an integration occurs.
Such a contract may not be contradicted by evidence of other
agreements. Whether an agreement is an integration, i.e.,
intended as the final and complete expression of the parties’
agreement, is a question of law for de novo review. (Hayter
Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th
1, 14-15.)
Here the trial court concluded that the Residency
Agreement was intended by the parties as the complete and final
expression of their agreement. In doing so, it relied on Grey v.
American Management Services (2012) 204 Cal.App.4th 803
(Grey). But Grey is inapposite.
In Grey, the plaintiff applied for employment and was
required to sign an “issue resolution agreement” (IRA) as a
condition to having his application considered. (Grey, supra, 204
Cal.App.4th at p. 805.) The IRA included a broad arbitration
provision. (Ibid.) Later, he was hired and signed an employment
agreement. The employment agreement included a more limited
arbitration provision and an integration clause. (Ibid.) When the
plaintiff sued years later for employment discrimination,
harassment, and retaliation, his employer asserted a right to
arbitrate based on the broad arbitration provision of the IRA.
(Id. at p. 806.)
The Grey court concluded that the employment
agreement superseded the IRA, and the employer therefore could
4
not rely on the terms of the IRA to compel arbitration, because an
integrated agreement “‘may not be contradicted by evidence of
any prior agreement or of a contemporaneous oral agreement.’
[Citation.]” (Grey, supra, 204 Cal.App.4th at p. 807; see Code
Civ. Proc., § 1856, subd. (a).) “Since the IRA predates the
employment contract, it was superseded by that contract’s
integration clause.” (Grey, at p. 808.)
Here, a review of the timing of the two agreements,
as well as their contents, establishes that the Residency
Agreement was not intended as the final and complete expression
of the parties’ agreement. By its express terms, it superseded
“prior” agreements. But the arbitration agreement was signed
after the Residency Agreement. And the arbitration agreement
expressly provides that it applies to claims regarding “the
validity or enforceability of the Residency Agreement.”2 The trial
court erred in concluding that the integration clause in the
Residency Agreement precludes proof of the later signed
Agreement to Arbitrate Disputes.
2. Other Defenses to Arbitration
Our conclusion that proof of the arbitration
agreement is not barred by the integration clause does not,
however, end our inquiry. Respondents raised other objections to
enforcement of the arbitration clause which were not decided
because the trial court found the integration clause to be
dispositive. Marina-Williams contends that because she did not
2 Although respondents point out that the Residency
Agreement contains a grievance procedure, that procedure only
applies to internal grievances or requests for investigation by a
local or state ombudsman. It does not discuss litigation or
arbitration as a means of dispute resolution.
5
sign the arbitration agreement, she is not bound by it. In
addition, the trial court did not decide whether section 1281.2(c)
would apply if the arbitration clause were enforceable. Finally,
the court did not determine if the Agreement to Arbitrate
Disputes is unconscionable and therefore unenforceable.
a. The Loss of Consortium Claim
Atria contends that Marina-Williams’s claim for loss
of consortium “falls within the arbitration agreement,” even
though she did not sign it, because it purports to include claims
arising out of Atria’s care brought by the spouses of injured
parties. We disagree.
Whether a third party is bound by an arbitration
agreement presents a question of law. (Avila, supra, 20
Cal.App.5th at p. 840.) “[P]arties can only be compelled to
arbitrate when they have agreed to do so.” (Id. at p. 843.) But
here, no evidence was presented that Marina-Williams signed the
Agreement to Arbitrate Disputes, or otherwise agreed to its
terms.
And Marina-Williams’s claim is not derivative of her
husband’s cause of action. In California, a claim for loss of
consortium is an independent claim. (Leonard v. John Crane,
Inc. (2012) 206 Cal.App.4th 1274, 1279-1280.) Because Marina-
Williams is not acting as a representative or heir of her husband,
but is pursuing her own claim based on the alleged misconduct of
others, she is not bound by an arbitration agreement which she
did not sign. (See Bush v. Horizon West (2012) 205 Cal.App.4th
924, 931.)
Accordingly, we conclude the order should be
affirmed as to her cause of action for loss of consortium. (Hoover
v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193,
6
1201 [if appealed order is correct on any theory, it must be
affirmed regardless of trial court’s reasoning].)
b. Applicability of Section 1281.2(c)
Atria contends that because the arbitration
agreement provides for the application of the FAA, the procedural
rules of the FAA apply here to the exclusion of section 1281.2(c).
On this point, Atria is mistaken.
In Cronus Investments, Inc. v. Concierge Services
(2005) 35 Cal.4th 376, 394 (Cronus), our Supreme Court held that
language “calling for the application of the FAA ‘if it would be
applicable,’ should not be read to preclude the application of
[section] 1281.2(c), because it does not conflict with the applicable
provisions of the FAA and does not undermine or frustrate the
FAA’s substantive policy favoring arbitration.” This is so, held
the court, because like other federal procedural rules, the
procedural provisions of the FAA are not binding on state courts
“‘“provided applicable state procedures do not defeat the rights
granted by Congress.” [Citation.]’ [Citation.]” (Id. at p. 390.)
And section 1281.2(c) does not defeat rights granted by Congress
because it is “‘part of California’s statutory scheme designed to
enforce the parties’ arbitration agreements, as the FAA
requires.’” (Id. at p. 393.) Nevertheless, our Supreme Court
pointed out that parties to an arbitration agreement can
“expressly designate” that FAA procedural rules rather than
state procedural laws shall apply. (Id. at p. 394, italics omitted.)
That is what occurred in Rodriguez v. American
Technologies, Inc. (2006) 136 Cal.App.4th 1110. In Rodriguez,
the parties expressly designated that FAA procedural rules would
apply when they agreed unconditionally that claims would be
arbitrated “pursuant to the FAA.” (Id. at p. 1122.) The court
7
held this language to be “broad and unconditional” because there
was “no other contract provision suggesting the parties intended
to incorporate California arbitration law.” (Ibid.) Nor was there
“any language” suggesting that some provisions of the FAA would
apply but not others. (Ibid.)
But here, the parties agreed to arbitration “as
provided by” the FAA or California law “in the event a court
determines that the FAA does not apply.” Thus, this case is more
like Cronus, which held that conditional language “calling for the
application of the FAA ‘if it would be applicable,’ should not be
read to preclude the application of [section] 1281.2(c).” (Cronus,
supra, 35 Cal.4th at p. 394.)
Respondents on the other hand urge us to find that
section 1281.2(c) applies, and then to apply it to affirm the order
denying arbitration. But that is not our role. The third party
litigation exception set forth in section 1281.2(c) only applies
when the court determines that three conditions are satisfied.
(Acquire II, Ltd. v. Colton Real Estate Group (2013) 213
Cal.App.4th 959, 967-968 [exception applies when: (1) party to
arbitration agreement also a party to a pending court action with
a third party; (2) third party action arises out of the same
transaction or series of transactions; and (3) there is a possibility
of conflicting rulings on a common issue of law or fact].) Once all
three conditions are satisfied, section 1281.2(c) identifies four
options from which the trial court may choose, including denial or
stay of arbitration proceedings, among other things. (Id. at p.
968.) These options are entrusted to the trial court’s discretion.
(Avila, supra, 20 Cal.App.5th at p. 840.)
Accordingly, we will remand to the trial court for it to
determine whether the conditions of section 1281.2(c) have been
8
met, and if so, to exercise its discretion on whether to stay or
deny arbitration. (See Avila, supra, 20 Cal.App.5th at p. 840.)
c. Unconscionability
Finally, respondents contend that the arbitration
agreement is unconscionable and urge us to affirm the trial
court’s order on that basis. We decline to do so.
Whether an agreement is unconscionable presents a
question of law which we review de novo. But “factual issues
may bear on that determination. [Citations]. Thus, to the extent
the trial court’s determination that the arbitration agreement
was unconscionable turned on the resolution of conflicts in the
evidence or on factual inferences to be drawn from the evidence,
we consider the evidence in the light most favorable to the trial
court’s ruling and review the trial court’s factual determinations
under the substantial evidence standard.” (Baker v. Osborne
Development Corp. (2008) 159 Cal.App.4th 884, 892.)
Here, the trial court made no findings regarding
either substantive or procedural unconscionability because it
found the integration clause to be dispositive. Accordingly, we
will remand to the trial court for its determination in the first
instance.3
DISPOSITION
The order denying the petition to compel arbitration
of Marina-Williams’s cause of action for loss of consortium is
affirmed. As to all other causes of action, the order is reversed
and the cause remanded with directions to the trial court to
consider and rule on respondents’ objections to enforcement of the
3 Because this is an unqualified reversal, the trial court on
remand can also consider respondents’ claim of lack of capacity
and other objections to enforcement of the arbitration agreement.
9
arbitration agreement. The parties shall bear their own costs on
appeal.
CERTIFIED FOR PUBLICATION.
TANGEMAN, J.
We concur:
GILBERT, P. J.
PERREN, J.
10
Rocky J. Baio, Judge
Superior Court County of Ventura
______________________________
Lewis Brisbois Bisgaard & Smith, Lann G. McIntyre,
Brittany Bartold Sutton, Catherine M. Asuncion and Jeffrey
Healey, for Defendant and Appellant.
Law Offices of Terence Geoghegan, Terence
Geoghegan; Law Offices of John R. Contos and John R. Cantos,
for Plaintiffs and Respondents.