Alliance Title Company, Inc. v. Boucher

• Decision Date: 02 March 2005
• Docket Number: No. B176545.,B176545.
• Citation: 25 Cal.Rptr.3d 440,127 Cal.App.4th 262
• Court: California Court of Appeals Court of Appeals
• Parties: ALLIANCE TITLE COMPANY, INC., Defendant and Appellant, v. Craig BOUCHER, Plaintiff and Respondent.

25 Cal.Rptr.3d 440

127 Cal.App.4th 262

ALLIANCE TITLE COMPANY, INC., Defendant and Appellant, v. Craig BOUCHER, Plaintiff and Respondent.

No. B176545.

Court of Appeal, Second District, Division 5.

March 2, 2005.

Rehearing Denied March 22, 2005.

Review Denied June 22, 2005.

Pillsbury Winthrop, Roberta S. Hayashi, Palto Alto, Daphne P. Bishop, Los Angeles, Kevin Fong, San Francisco, for Defendant and Appellant.

Elliott R. Speiser & Associates, Elliott R. Speiser, Matthew Norton & Associates, John M. Norton, for Plaintiff and Respondent.

TURNER, P.J.

I. INTRODUCTION

Defendant, Alliance Title Company, Inc., appeals from an order denying its petition to compel arbitration. Defendant sought to compel plaintiff, Craig Boucher, to arbitrate his claims pursuant to the arbitration clause of an employment agreement. The employment agreement was between plaintiff and a co-defendant, Financial Title Company (Financial). Stated differently, defendant, a nonsignatory to the arbitration agreement, sought to compel plaintiff, a signatory, to arbitrate his claims against it. We hold plaintiff is equitably required to arbitrate his causes of action against defendant. Accordingly, we reverse the order denying defendant's petition to compel arbitration.

II. BACKGROUND

A. The Complaint

Plaintiff sued both defendant and Financial. The substantive allegations of plaintiff's complaint are that he entered into a written employment agreement with Financial on June 5, 2003. Plaintiff was to be employed as senior vice-president and division president for a three-year term. He was entitled to specified incentive compensation. The employment agreement could not be modified, waived, or discharged except in a writing signed by plaintiff and Financial. In January 2004, Financial's president, Bruce Maita, spoke to plaintiff. Mr. Maita said that all of Financial's Southern California operations or assets were being transferred to defendant. Plaintiff alleges Financial is "a wholly separate and distinct corporate entity." In addition, plaintiff was notified he would no longer be working for Financial nor would he still be the senior vice-president and division president; instead, he would be working for defendant. The complaint alleges, "Plaintiff [was instructed] that he was obligated to allow unilateral modifications by [defendant] to the Employment Agreement, including but not limited to, a modified and lesser Incentive Compensation Package." Defendant refused to honor plaintiff's contract with Financial. Plaintiff refused to enter into a new agreement with defendant. Thereafter, plaintiff was terminated.

Plaintiff alleges causes of action against both defendant and Financial for: nonpayment of wages in violation of Labor Code section 201; waiting time penalties under Labor Code section 203; breach of the employment contract; breach of the covenant of good faith and fair dealing; and unfair business practices in violation of Business and Professions Code section 17200 et seq.

Plaintiff asserts two causes of action against defendant alone. Those causes of action are for interference with contractual and prospective economic relations. Plaintiff alleges defendant intentionally or negligently disrupted the performance of his employment contract by, among other things: demanding he disclose confidential information; refusing to provide him with necessary staff and offices; refusing to "honor" his sales; demanding he reject his contract with Financial; demanding he enter into a new contract with defendant; and unilaterally terminating his relationship with Financial. Plaintiff further alleges defendant repeatedly directed him to breach the June 5, 2003, employment agreement and constructively terminated him without cause.

B. The Petition to Compel Arbitration

Defendant and Financial filed a petition to compel arbitration under the United States Arbitration Act. (9 U.S.C., § 1 et seq.) The arbitration clause in the June 5, 2003, employment agreement between plaintiff and Financial states: "Any dispute or controversy arising under or in connection with this Agreement shall be submitted to binding arbitration in Sacramento County, California, in accordance with the rules of the American Arbitration Association then in effect, and any award entered in such arbitration may be reduced to judgment in any court of competent jurisdiction." Defendant presented evidence that Mercury Companies, Inc. (Mercury) is the sole shareholder of Financial. Further, Mercury is the majority shareholder of defendant. Also, in mid-2003, Financial transferred all assets of its Los Angeles branch, at which plaintiff was employed, to defendant. Plaintiff opposed the petition. He argued the United States Arbitration Act did not apply. Plaintiff further argued defendant, a nonsignatory to the employment contract, could not compel arbitration under the January 5, 2003, agreement. The trial court found the United States Arbitration Act was applicable. The trial court granted the petition as to Financial, but denied it as to defendant. The court reasoned that the fundamental point of the federal decisional authority was that a plaintiff should not be allowed to circumvent an arbitration clause by naming a nonsignatory as a party; plaintiff had not done so in the present case; plaintiff had an employment agreement with Financial, but found himself employed by defendant.

III. DISCUSSION

A. Standard of Review

Defendant contends the trial court's order denying its petition to compel arbitration is subject to de novo review. Plaintiff argues that because extrinsic evidence was presented and considered, we must review the trial court's decision for substantial evidence. Plaintiff does not contend, and we do not find, that there was any conflicting evidence before the trial court. Absent conflicting evidence, we review the matter de novo. (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal. App.4th 1705, 1715-1716, 1 Cal.Rptr.3d 328 (Metalclad); NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 71-72, 100 Cal.Rptr.2d 683.)

B. Defendant Is Equitably Entitled to Compel Plaintiff to Arbitrate

In the trial court, plaintiff argued the United States Arbitration Act did not apply. Plaintiff has not raised that issue on appeal. Instead, plaintiff apparently agrees with defendant that, as the trial court found, the United States Arbitration Act governs the duty to arbitrate question. Any issue that could have been raised as to the applicability of the United States Arbitration Act to this case has been waived or forfeited. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4, 188 Cal.Rptr. 115, 655 P.2d 317 [argument asserted in the trial court but not raised on appeal is waived]; Johnston v. Board of Supervisors (1947) 31 Cal.2d 66, 70, 187 P.2d 686, disapproved on another point in Bailey v. County of Los Angeles (1956) 46 Cal.2d 132, 139, 293 P.2d 449 [same].)

It is undisputed that an arbitration agreement exists between plaintiff and Financial. Defendant contends the circumstances of this case obligate plaintiff to arbitrate his claims against it as well. There is a strong federal policy in favor of arbitration agreements. (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26; Saint Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195, 8 Cal.Rptr.3d 517, 82 P.3d 727.) Questions of arbitrability are to be addressed with regard to that policy. (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765; Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 96, 99 Cal.Rptr.2d 745, 6 P.3d 669.) Notwithstanding that strong policy, the United States Supreme Court has held, "`[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" (AT & T Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648; accord United Steelworkers of America v. Warrior & Gulf Nav. Co. (1960) 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409.) Here, there is no written agreement signed by defendant and plaintiff in which they agreed to arbitrate any disputes. Defendant is not a signatory to the June 5, 2003, employment agreement containing the arbitration clause. Only plaintiff and Financial signed that employment agreement. Plaintiff alleges defendant rejected and refused to honor the June 5, 2003, employment contract. Therefore, no written agreement to arbitrate exists between plaintiff and defendant. In addition, there is evidence Financial transferred all of the assets of its Los Angeles operation to defendant. There is no evidence defendant did not remain a separate entity from Financial. The evidence showed the two corporations shared a parent corporation. Mercury owned all of Financial's stock. Further, Mercury, the parent corporation, owned the majority of defendant's stock.

The question presented, then, is whether defendant, a nonsignatory to the June 5, 2003, employment agreement, can rely on it to compel plaintiff to arbitrate his claims. Under the United States Arbitration Act, that question is answered not by state law, but by the federal substantive law of arbitrability. (International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH (4th Cir.2000) 206 F.3d 411, 417, fn. 4 (International Paper); Metalclad, supra, 109 Cal.App.4th at pp. 1712-1713, 1 Cal.Rptr.3d 328.) The United States Supreme Court has not ruled on the issue before us. In the absence of controlling United States Supreme Court decisional authority, we make an independent determination of federal law. (People v. Bradley (1969) 1 Cal.3d 80, 86, 81 Cal. Rptr. 457, 460 P.2d 129; Rohr Aircraft Corp. v. County of San Diego (1959) 51 Cal.2d 759, 764, 336 P.2d 521, revd. on ...