Bertero v. Superior Court for Los Angeles County

• Decision Date: 15 May 1963
• Citation: 216 Cal.App.2d 213,30 Cal.Rptr. 719
• Parties: John B. BERTERO, Petitioner, v. The SUPERIOR COURT of the State of Calllfornia, FOR the COUNTY OF LOS ANGELES, Respondent; NATIONAL GENERAL CORPORATION and Fox West Coast Theatres Corporation, Real Parties in Interest. Civ. 26970.
• Court: California Court of Appeals Court of Appeals

Page 719

30 Cal.Rptr. 719

216 Cal.App.2d 213

John B. BERTERO, Petitioner, v. The SUPERIOR COURT of the State of Calllfornia, FOR the COUNTY OF LOS ANGELES, Respondent;

NATIONAL GENERAL CORPORATION and Fox West Coast Theatres Corporation, Real Parties in Interest.

Civ. 26970.

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

May 15, 1963.

Hearing Denied July 10, 1963.

Bodkin, Breslin & Luddy and Henry G. Bodkin, Jr., Los Angeles, for petitioner.

No appearance for respondent.

Hindin, Sterling, McKittrick & Powsner and Robert H. Powsner, Beverly Hills, for real parties in interest.

FILES, Justice.

Petitioner is the plaintiff in a civil action which he began in the superior court to enforce a written contract of employment against his employers, National General Corporation (formerly named National Theatres and Television, Inc.) and its subsidiary, Fox West Coast Theatres Corporation, who will be referred to collectively as 'National.' The latter made a motion in the superior court for an order compelling arbitration. After a hearing the court made an order under Code of Civil Procedure, sections 1281.2 and 1281.4, that petitioner and National proceed to arbitrate, and that the civil action be stayed until arbitration is had. Petitioner now asks this court to issue an appropriate writ to compel the superior court to vacate its orders and go forward with the civil action. The matter has been heard on an order to show cause issued by this court. National has filed a return which admits the substance of the factual allegations of the petition, though denying certain averments which embrace legal conclusions.

The facts will be stated here as they appear from the petition and the appendix, containing copies of the superior court documents.

Petitioner was first employed in 1930 by the business organization which is now operated by National. After continuous service as attorney, officer, and director, he became president of National on October 1, 1958, in which capacity he served until December 1, 1959. On September 17, 1958, petitioner and National entered into a written agreement whereby petitioner was employed to perform executive services for a term of five years, commencing October 1, 1958, at a stated salary, plus certain other benefits. This contract further provided that petitioner would be employed for an additional five-year period as a part-time consultant at a lower rate of compensation.

On November 12, 1959, the parties entered into a written modification of the 1958 contract. This 1959 agreement provides that commencing December 1, 1959, for a term of five years petitioner shall serve as a part-time executive for a specified salary and other stated benefits. The conditions of this part-time employment are described in some detail. This 1959 agreement also provides for an additional five-year term as a consultant, to follow the five years as a part-time executive. Both the 1958 contract and the 1959 modification contain the following language:

'If any dispute or disagreement shall arise between the parties hereto and the parties hereto shall fail or be unable to agree promptly upon a settlement thereof, such dispute or disagreement shall be submitted to arbitration in Los Angeles, California, in accordance with the Rules of the American Arbitration Association then obtaining, and judgment upon the award rendered may be entered in any court having jurisdiction thereof.'

To and including March 23, 1962, National regularly paid to petitioner his weekly salary as specified in these agreements. On March 29, 1962, National sent to petitioner a letter over the signature of its new president, which stated as follows:

'Dear Mr. Bertero:

'The agreement dated November 12, 1959, between yourself and National Theatres & Television, Inc. has at my request recently come under close scrutiny and review. The considered conclusion is that it represents a serious detriment to and drain upon the company and that the interests of the company and its shareholders require its immediate termination.

'The circumstances under which it was entered into render it invalid and unenforceable. Moreover, it can only be construed as an agreement to pay you for such services as you may be called upon to perform. To construe it otherwise would compound its invalidity.

'The company, reviewing its business and operations and the absence of any participation therein or services performed by you for the company since November 1959, has determined that there is no need for your services either at the rate set forth in the purported agreement or at all. Moreover, the company has determined that in any event the agreement is invalid, unenforceable and an imposition upon the company and its shareholders.

'Accordingly, you are hereby given notice that the company shall not call upon you to perform any services for it or on its behalf, and that, therefore, you shall be entitled to no further compensation thereunder. You are further notified thereby that in any event the company hereby terminates and cancels such agreement.'

There was some further correspondence between the parties, and on June 8, 1962, petitioner filed in the superior court an action against National for accrued salary and for declaratory relief. National appeared, obtained an ex parte order extending its time to plead, and then on June 22 filed a motion for an order to compel arbitration. On August 14, 1962, National filed with the American Arbitration Association a 'Demand for Arbitration.' This demand stated that National was a party to a written contract dated November 12, 1959, containing an arbitration clause, which clause was quoted verbatim. The demand described the 'claim or relief sought' in the following language:

'1. Determination that the employment agreement between John B. Bertero and National Theatres & Television, Inc. (now National General Corporation), dated November 12, 1959, is invalid and unenforceable, and/or terminable and cancelable by said National General Corporation (and was terminated on March 29, 1962).

'2. Recovery of all compensation paid to John B. Bertero under said contract since the date thereof, to wit, November 12, 1959, in a total amount to be determined.'

National's motion was heard and submitted on October 10, 1962. The ruling of the court was reflected in a minute order of October 16, 1962, as follows:

'Motion of defendants for an order that arbitration proceed, heretofore submitted on October 10, 1962; The Court makes the following findings of fact and conclusions of law in relation thereto:

'1. An agreement to arbitrate the controvery exists.

'2. Plaintiff refuses to arbitrate pursuant thereto.

'3. Any and all issues of controversy between the parties relating to, or growing out of, the contract between them, including the validity of the contract itself, are arbitrable under the provisions of the arbitration agreement.

'4. Defendants have not repudiated the arbitration agreement.

'5. Defendants have not waived their right to enforce arbitration herein, nor are they in default in proceeding with such arbitration.

'6. Defendants are not guilty of laches.

'7. Defendants do not come into this Court with unclean hands.

'It is therefore ordered that plaintiff-respondent and defendants-petitioners proceed to arbitrate all controversy between them relating to that certain contract between them dated November 12, 1959. It is further ordered that the within action is stayed until said arbitration is had.'

On motion of petitioner, there was a rehearing on November 20, after which the court adhered to its earlier ruling.

The statute under which the superior court was required to act is Code of Civil Procedure, section 1281.2, which provides:

'On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

'(a) The right to compel arbitration has been waived by the petitioner; or

'(b) Grounds exist for the revocation of the agreement.

'If the court determines that a written agreement to arbitrate a controversy exists, an order to arbitrate such controversy may not be refused on the ground that the petitioner's contentions lack substantive merit. * * *'

Preliminarily, we observe that National's notice of motion to compel arbitration does not allege the existence of any written agreement. Thus the motion fails to state facts which the statute requires as basis for the order sought. The notice of motion declares that 'a dispute exists between the parties to the aforesaid contracts,' referring to the contracts which are attached to Bertero's complaint. The distinction is not without substance, in view of what National said in its March 29 letter. As Bertero's complaint for declaratory relief alleges, a dispute exists because Bertero contends that the contracts are valid and existing while National contends that the contracts are invalid, unenforceable, terminated and canceled.

In this court, however, National has taken the position that the 1959 contract has enough existence to sustain the validity of the arbitration clause which it now wishes to enforce. Doubtless if the present order were vacated, National would ask leave to amend its notice of motion to allege that much. It is therefore necessary to consider other matters It was Bertero's contention before the superior court, and here, that when National sent the letter of March 29, 1962, it repudiated its entire agreement, including the arbitration clause; that such repudiation amounted to a waiver of its right to demand arbitration; and thus Bertero became free to enforce his contract in the courts. The doctrine of waiver by...