Bos Material Handling, Inc. v. Crown Controls Corp.

• Decision Date: 28 October 1982
• Citation: 186 Cal.Rptr. 740,137 Cal.App.3d 99
• Court: California Court of Appeals Court of Appeals
• Parties: , 1982-83 Trade Cases P 65,100 BOS MATERIAL HANDLING, INC., Plaintiff and Respondent, v. CROWN CONTROLS CORPORATION, Defendant and Appellant. Civ. 20735.

Page 740

186 Cal.Rptr. 740

137 Cal.App.3d 99, 1982-83 Trade Cases P 65,100

BOS MATERIAL HANDLING, INC., Plaintiff and Respondent, v. CROWN CONTROLS CORPORATION, Defendant and Appellant.

Civ. 20735.

Court of Appeal, Third District, California.

Oct. 28, 1982.

Hearing Denied January 19, 1983.

Downey, Brand, Seymour & Rohwer and Stephen F. Boutin, Sacramento, Smith & Schnacke and Charles J. Faruki and John E. Tate, Dayton, Ohio, for defendant and appellant.

Robert F. Koehler, Jr., Sacramento, for plaintiff and respondent.

REGAN, Acting Presiding Justice.

Plaintiff Bos Material Handling, Inc., filed causes of action against defendant Crown Controls Corporation and others after Crown refused to renew its year-to-year dealer agreement with Bos. Crown petitioned the court to stay the trial proceedings and to compel arbitration pursuant to an arbitration clause in the dealer agreement. The petition was denied on the ground that the causes of action stated in the Bos complaint were not within the arbitration provision of the dealer agreement. Crown appeals from the order denying arbitration. (Code Civ.Proc., § 1294, subd. (a).) We reverse and remand with instructions.

On May 24, 1972, Crown and Bos entered into a written dealer agreement under which Bos was to be an authorized dealer for Crown equipment, i.e., "forklift trucks." The dealer agreement ran for one year and could be renewed from year to year. The last one-year extension signed by both parties provided that the agreement was to expire on February 28, 1981. In a letter dated February 3, 1981, Crown notified Bos that it would not again renew the agreement but would defer expiration until March 31, 1981, if Bos so desired. Bos responded by a letter stating that the "cancellation" was "without just cause" and requested an extension of time. By written response, Crown extended the dealer agreement only until March 31, 1981.

The arbitration clause in the dealer agreement provided:

"Any controversy or claim arising out of or relating to this agreement, or the breach thereof, shall be settled by arbitration in Dayton, Ohio, in accordance with the rules of the American Arbitration Association then obtaining."

On March 24, 1981, Bos filed the underlying actions in the superior court. Although bearing tort labels, the complaint essentially alleges wrongful acts, initiated by Crown prior to the expiration of the agreement on March 31, 1981, which led to wrongful termination of the dealer agreement.

The first cause of action alleges that Crown's unilateral termination of the agreement was a tortious breach of good faith and fair dealing. The second cause of action, based on a theory of interference with economic relations, also alleges Crown's wrongful termination of the dealership. The third is denominated fraud and alleges Crown wrongfully sought to transfer the dealership to a third party while orally representing to Bos that its dealership was secure. The fourth is for unfair competition and states that Crown intentionally terminated the dealer agreement for the purpose of putting Bos " 'out of business' " and "eliminating competition to its products ...." The fifth is a restraint of trade cause of action under the Cartwright Act and alleges that Crown negotiated, illegally conspired, and agreed with third parties to wrongfully and illegally terminate, without notice, Bos as Crown's dealer. The sixth cause of action, labelled intentional interference with prospective advantage and contract, alleges that, since the beginning of January 1981, Crown and third parties have wrongfully misrepresented to Bos' customers and potential customers that these third parties are the dealer representatives of Crown's products. ¹

Since Bos did not introduce any extrinsic evidence as an aid in interpreting the meaning of the written dealer agreement, we are free to exercise our independent judgment in construing whether the arbitration clause applies to the instant controversy. (Conejo Valley Unified School Dist. v. William Blurock & Partners, Inc. [1980] 111 Cal.App.3d 983, 987-988, 169 Cal.Rptr. 102; Berman v. Dean Witter & Co., Inc. [1975] 44 Cal.App.3d 999, 1003, 119 Cal.Rptr. 130; Parsons v. Bristol Development Co. [1965] 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839.) ²

The dealer agreement contains a provision that its construction shall be governed by Ohio law. However, it is unnecessary to address choice of law problems at this juncture since the result as to arbitrability would be the same in either jurisdiction. (See Berman, supra, 44 Cal.App.3d at p. 1003, 44 Cal.Rptr. 767, 402 P.2d 839; New Linen Supply v. Eastern Environmental Controls, Inc. [1979] 96 Cal.App.3d 810, 817, fn. 2, 158 Cal.Rptr. 251.) Both California (Doers v. Golden Gate etc. Dist. [1979] 23 Cal.3d 180, 189, 151 Cal.Rptr. 837, 588 P.2d 1261) and Ohio (Bellaire City Schools Bd. of Ed. v. Paxton [1979] 59 Ohio St.2d 65, 391 N.E.2d 1021, 1024; Universal Underwriters Ins. Co. v. Shuff [1981] 67 Ohio St.2d 172, 423 N.E.2d 417, 418-419) embrace a judicial policy strongly in favor of enforcing arbitration contracts.

In California, the general rule is that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute. (Pacific Inv. Co. v. Townsend [1976] 58 Cal.App.3d 1, 9-10, 129 Cal.Rptr. 489.) In the particular situation where contracts provide arbitration for " 'any controversy ... arising out of or relating to the contract ...' " the courts have held such arbitration agreements sufficiently broad to include tort, as well as contractual, liabilities so long as the tort claims "have their roots in the relationship between the parties which was created by the contract." (Berman, supra, 44 Cal.App.3d at p. 1003, 44 Cal.Rptr. 767, 402 P.2d 839; see also Lewsadder v. Mitchum, Jones & Templeton, Inc. (1973) 36 Cal.App.3d 255, 259, 111 Cal.Rptr. 405; Crofoot v. Blair Holdings Corp. (1953) 119 Cal.App.2d 156, 182, 260 P.2d 156.)

Here, the Bos complaint clearly has its genesis in the contractual relationship. Although cast in terms of tort, it focuses on Crown's unilateral termination of the dealership as the conduct which is wrongful; the dealer agreement has specific provisions controlling termination and extension. Standing alone, the alleged parol representations by Crown do not serve to place the complaint outside the scope of the arbitration provision since those representations occurred during the time period when the agreement was in effect, not thereafter. (See Becker Autoradio v. Becker Autoradiowerk GmbH [3d Cir.1978] 585 F.2d 39, 44.) In sum, we view the dispute centering on the "wrongful" termination or expiration of the dealer contract to be properly arbitrable under its broad arbitration provision, particularly since the contract has specific provisions relating to extension and termination. (See, id., pp. 46-47; New Linen Supply, supra, 96 Cal.App.3d 810, 158 Cal.Rptr. 251.) To hold otherwise would enable a party to frustrate any agreement to arbitrate simply by changing the manner or form in which it frames its claims. (See In re Oil Spill by Amoco Cadiz, etc. [7th Cir.1981] 659 F.2d 789, 794; Altshul Stern & Co., Inc. v. Mitsui Bussan Kaisha, Ltd. [2d Cir. 1967] 385 F.2d 158, 159.)

Unavailing is Bos' attempt to rely on language in Freeman v. State Farm Mut. Auto Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 535 P.2d 341. Freeman merely expresses the basic precept that: "There is indeed a strong policy in favor of enforcing agreements to arbitrate, but there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate...." The intent or mutual assent of contracting parties is governed by an objective, not subjective, standard. (See generally 1 Witkin, Summary of Cal.Law (8th ed. 1973), Contracts, § 88, pp. 92-93.) As we have discussed, the broad language of the arbitration provision here supports a reasonable inference that the parties agreed to arbitrate all controversies, including tort claims, arising out of their contractual relationship.

Bos also unsuccessfully attempts to distinguish the Berman-Lewsadder-Crofoot line of cases on the basis they involved brokerage disputes within a self-regulating industry. The fact that the securities industry is self-regulating does not affect the precedential authority of such cases interpreting " 'any controversy ... arising out of ...' " language in an arbitration agreement to encompass tort claims. (See Berman, supra, 44 Cal.App.3d at p. 1003, 119 Cal.Rptr. 130.)

However, our conclusion that the agreement to arbitrate embraces the instant controversy does not end our inquiry. In opposition to the petition to compel arbitration, Bos also argued that the arbitration provision is not enforceable on adhesion grounds, that the antitrust action under the Cartwright Act is not subject to arbitration, and that the existence of third-party claims renders the controversy nonarbitrable. In the interest of judicial economy, we turn to these remaining issues for the guidance of the trial court.

Adhesion

A " 'contract of adhesion' " is a " '... standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.' " (Graham v. Scissor-Tail, Inc. [1981] 28 Cal.3d 807, 817, 171 Cal.Rptr. 604, 623 P.2d 165, quoting Neal v. State Farm Ins. Cos. [1961] 188 Cal.App.2d 680, 694, 10 Cal.Rptr. 781; see also Keating v. Superior Court [1982] 31 Cal.3d 584, 593, 183 Cal.Rptr. 360, 645 P.2d 1192.) Although most adhesive contracts occur in a consumer context, they also are found in a commercial setting as between businessmen of unequal bargaining strength. (Graham, supra, 28 Cal.3d at pp. 817-818, 171 Cal.Rptr. 604, 623 P.2d 165.)

Here, it is undisputed that the dealer...