Avila v. S. Cal. Specialty Care, Inc.

• Decision Date: 26 February 2018
• Docket Number: G054269
• Court: California Court of Appeals Court of Appeals
• Parties: Alex AVILA et al., Plaintiffs and Respondents, v. SOUTHERN CALIFORNIA SPECIALTY CARE, INC., et al., Defendants and Appellants.

20 Cal.App.5th 835

230 Cal.Rptr.3d 42

Alex AVILA et al., Plaintiffs and Respondents,

v.SOUTHERN CALIFORNIA SPECIALTY CARE, INC., et al., Defendants and Appellants.

G054269

Court of Appeal, Fourth District, Division 3, California.

Filed February 26, 2018

Giovanniello Law Group, Alexander F. Giovanniello, Karen A. Bocker, Danielle M. VandenBos and Thomas C. Swann, Brea, for Defendants and Appellants.

Valentine Law Group, Kimberly A. Valentine, Jennifer L. Turner, Mission Viejo, and Joseph F. Fighera for Plaintiffs and Respondents.

OPINION

MOORE, ACTING P.J.

Southern California Specialty Care, dba Kindred Hospital–Santa Ana and Kindred Healthcare Operating, Inc. (Kindred or defendants) appeal from the trial court's order denying its petition to compel arbitration as to the negligence and elder abuse claims of now-deceased Antonio Avila (Antonio), and the wrongful death claim brought by his son and survivor, Alexis Anthony Avila (Alex)¹ (collectively plaintiffs). The trial court ruled that Alex's wrongful death claim was not subject to arbitration. The court further exercised its discretion under Code of Civil Procedure section 1281.2, subdivision (c),² to refuse to enforce the arbitration agreement as to the remaining claims due to the risk of inconsistent judgments. We find no error and affirm the order.

IFACTS

In 2007, Antonio executed California's statutory power of attorney form, naming his son, Alex, as his agent. In March 2015, Antonio, age 87 at the time, was transferred from another facility to Kindred, a long-term acute care hospital, suffering from various conditions, including sepsis and chronic renal failure

.

The next day, after Antonio had begun receiving care, Alex was presented with a stack of documents, including a document entitled "Voluntary Alternative Dispute Resolution (ADR) Agreement" (the agreement). Alex signed the agreement on Antonio's behalf.

The agreement provided for arbitration after mediation, with "submission to arbitration as provided by California law." It also refers to section 1281.6 (court appointment of an arbitrator if the parties cannot agree) and Evidence Code section 1157 with regard to confidentiality of peer review proceedings.

The agreement stated "any dispute as to medical malpractice," in addition to "any legal claim or civil action arising out of or relating to your hospitalization" was subject to arbitration. "This ADR agreement also covers any claim or action brought by a party other than you (e.g., an action by your spouse, legal representative, agent, heir) arising out of or relating to your hospitalization...." The agreement also included a 30-day period in which to rescind.

On the signature page, immediately prior to the signature area, there is a statement pursuant to section 1295, subdivision (b) stating that by signing, the signator is "agreeing to have any issue of medical malpractice decided by neutral arbitration and you are giving up your right to a jury or court trial." The signature line under "name of patient" was stamped "unable to sign," and the signature was Alex's, followed by the word "son." (Original capitalization omitted.) It was also signed by Alex under a statement regarding his certification that he was authorized to act as Antonio's agent.

According to the complaint, Antonio died within five days of admission as a result of Kindred's neglect. A dislodged feeding tube began infusing into the throat and/or esophagus instead of the stomach, and Antonio's impaired gag reflex was unable to clear his lungs. He aspirated, resulting in cardiopulmonary arrest

and rapid decline until his death.

In March 2016, the initial complaint was filed on behalf of Antonio, "by and through his successor-in-interest" Alex, and individually on Alex's behalf. The first cause of action for "negligence/willful misconduct" and the second cause of action for elder abuse and neglect was on behalf of both plaintiffs. A third and final cause of action for wrongful death was filed on Alex's behalf only. In May, defendants filed an answer, demand for jury trial, and notice of posting of juror fees. They also sent a letter to plaintiffs' counsel demanding dismissal of the lawsuit and proceeding to arbitration. Plaintiffs declined.

In July, Kindred filed the instant petition to compel arbitration and motion to stay. They argued there was a written agreement between plaintiffs and defendants providing for arbitration of all disputes, and plaintiffs had refused their demand. Kindred argued, among other things, that the Federal Arbitration Act ( 9 U.S.C. § 1, et seq. (FAA) ) applied to the agreement, that no traditional defenses to contract law applied, and the agreement was enforceable as to Alex as well as to Antonio. Defendants also contended the agreement was enforceable under California law as well as the FAA.

In response, plaintiffs argued the agreement was unconscionable, and the defendants had waived their right to arbitrate by their unreasonable delay. They further argued that Alex was not a signatory to the agreement, which was unenforceable against him, and the presence of his nonarbitrable wrongful death claim created the risk of inconsistent rulings. Accordingly, they requested the trial court, in an exercise of discretion, to retain jurisdiction. Defendants filed a reply in due course.

The trial court initially issued a tentative decision granting defendants' motion, but after hearing argument, took the matter under submission. The court's final order denied the motion, concluding defendants had failed to show a valid arbitration agreement with respect to Alex. The court exercised its discretion under section 1281.2, subdivision (c), to refuse to order arbitration of the remaining claims, citing the risk of inconsistent rulings.

Defendants now appeal.

IIDISCUSSION

Standard of Review

" ‘ "There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed. [Citations.]" ’ " ( Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686, 195 Cal.Rptr.3d 34.) The issue of whether a third party is bound by an arbitration agreement is a question of law. ( Daniels v. Sunrise Senior Living, Inc. (2013) 212 Cal.App.4th 674, 680, 151 Cal.Rptr.3d 273 ( Daniels ).)

"[T]he ultimate determination whether to stay or deny arbitration based on the possibility of conflicting rulings on common questions of law or fact is reviewed for an abuse of discretion. [Citation.] ‘The court's discretion under section 1281.2, subdivision (c) does not come into play until it is ascertained that the subdivision applies, which requires the threshold determination of whether there are nonarbitrable claims against at least one of the parties to the litigation (e.g., a nonsignatory).’ " ( Daniels , supra , 212 Cal.App.4th at p. 680, 151 Cal.Rptr.3d 273 ; see Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 971, 153 Cal.Rptr.3d 135 ( Acquire ).)

The FAA, CAA, or Both

Defendants argue the FAA applies to the agreement; plaintiffs argue the California Arbitration Act (§ 1280, et seq.) (CAA) applies instead. The reason this is of relevance here is because of the trial court's exercise of its discretion under section 1281.2, subdivision (c), to refuse arbitration in certain cases.³ Defendants claim that if the FAA applies, the trial court erred as a matter of law in applying section 1281.2, subdivision (c). Defendants, however, are incorrect.

The FAA, which includes both procedural and substantive provisions, governs agreements involving interstate commerce. The agreement does not mention the FAA at all, although it does mention California law several times, including the statement in the opening article, that disputes "will be determined by submission to arbitration as provided by California law." The agreement also provides that section 1281.6 will govern if the parties cannot agree on an arbitrator, and Evidence Code section 1157"shall be enforced in any arbitration" under the agreement.

The procedural aspects⁴ of the FAA do not apply in state court absent an express provision in the arbitration agreement. (See Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 922, 190 Cal.Rptr.3d 812, 353 P.3d 741 [even where agreement specifies FAA governs any disputes, CAA governs procedures]; Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 388-390, 25 Cal.Rptr.3d 540, 107 P.3d 217 ; see Volt Info. Sciences, Inc. v. Bd. of Trustees (1989) 489 U.S. 468, 476-477, fn. 6, 109 S.Ct. 1248, 103 L.Ed.2d 488 ; Los Angeles Unified School Dist. v. Safety National Casualty Corp. (2017) 13 Cal.App.5th 471, 479-480, 220 Cal.Rptr.3d 546.)

As noted above, the agreement here does not even mention the FAA, much less expressly adopt its procedural rules. Accordingly, the FAA's procedural rules do not apply here. Any state law procedural provisions regarding arbitration are valid unless they defeat the rights granted by the FAA to equal enforcement of arbitration clauses. Defendants argue section 1281.2, subdivision (c), places arbitration agreements "on an unequal footing than other contracts," but do not cite any case where California or federal courts that reach that conclusion. Indeed, there is ample case law to the contrary, including from the California Supreme Court, which has held that section 1281.2, subdivision (c), does not defeat the rights granted by the FAA, and is therefore not preempted. ( Cronus Investments, Inc. v. Concierge Services , supra , 35 Cal.4th at p. 393, 25 Cal.Rptr.3d 540, 107 P.3d 217.)

MICRA or Not MICRA

A key issue in this case is whether Alex is bound by the agreement. Defendants concede that Alex did not sign the agreement in his individual capacity, but as Antonio's agent. But they argue...