Cook v. Superior Court of Los Angeles County

• Citation: 50 Cal.Rptr. 81,240 Cal.App.2d 880
• Decision Date: 17 March 1966
• Docket Number: HOUSTON-CALIFORNIA
• Parties: Gordon W. COOK and Daniel R. Young, Petitioners, v. SUPERIOR COURT OF the COUNTY OF LOS ANGELES, and Superior Court of the County of Orange, Respondents;INVESTMENT CORP., MacDonald Construction Co., the Travelers Indemnity Company, Union Bank, Title Insurance & Trust Co., Fidelity Federal Savings & Loan Assn. of Glendale, P. J. Bonin, Livingston-Graham, Inc., Southern Electric, Byron Zirkle, Gail Southerland, Rossman Mill & Lumber Co., Ltd., James S. Flannagan and Andy Meier, Jr., Real Parties in Interest. Civ. 622.
• Court: California Court of Appeals

Page 81

50 Cal.Rptr. 81

240 Cal.App.2d 880

Gordon W. COOK and Daniel R. Young, Petitioners, v. SUPERIOR COURT OF the COUNTY OF LOS ANGELES, and Superior Court of the County of Orange, Respondents;

HOUSTON-CALIFORNIA INVESTMENT CORP., MacDonald Construction Co., the Travelers Indemnity Company, Union Bank, Title Insurance & Trust Co., Fidelity Federal Savings & Loan Assn. of Glendale, P. J. Bonin, Livingston-Graham, Inc., Southern Electric, Byron Zirkle, Gail Southerland, Rossman Mill & Lumber Co., Ltd., James S. Flannagan and Andy Meier, Jr., Real Parties in Interest.

Civ. 622.

District Court of Appeal, Fifth District,

California.

March 17, 1966.

Leon J. Garrie, Los Angeles, for petitioners.

No appearance for respondents.

Edmond Gattone, Ernest J. Gekas, Loeb & Loeb, Los Angeles, Murray M. Chotiner, Newport Beach, John R. Engman, Everett H. Aspenson, J. Roger Gelsinger, Thomas L. Jensen, Jr., Los Angeles, for real parties in interest.

STONE, Justice.

This action is before us on a petition for a writ seeking review of Orange County Superior Court orders directing arbitration and staying further proceedings until the completion of arbitration, an order by the Superior Court of Los Angeles County staying proceedings until 'releases are obtained in Orange County cases,' and a subsequent order releasing one action from the stay.

Petitioners, owners of real property in Signal Hill, Los Angeles County, proposed to construct a convalescent hospital. After some preliminary negotiating, they entered into an agreement with Houston-California Investment Corporation (Houston) for the preparation of plans and specifications, and a separate agreement for financing. Changes were thereafter made in plans and specifications, estimated building costs were increased, and a financing agreement was finally arranged with a Glendale savings and loan association.

Petitioners, as owners, and Houston and MacDonald Construction Company (MacDonald), as contractors, then entered into a construction agreement for completion of the hospital. The Union Bank of Los Angeles replaced the savings and loan association as the financing agency. The contractors secured an indemnity bond from The Travelers Indemnity Company, as surety, guaranteeing performance to petitioners and also to Union Bank.

Controversies arose between the parties as to each progress payment, and when payments 4 and 5 became due neither Union Bank nor the job architect would approve them because Houston and MacDonald failed to provide invoices, receipted bills or other evidence of payments for construction items. Petitioners threatened to terminate the construction agreement with Houston and MacDonald, alleging numerous violations. In turn, MacDonald catalogued and notified the project engineers of 34 deficiencies in the plans and specifications. Shortly thereafter petitioners filed a complaint in Orange County Superior Court against Houston, MacDonald, Travelers Indemnity and Union Bank.

The first cause of action alleges Houston and MacDonald breached both the construction agreement and the plans and specifications agreement. The second cause of action alleges breach of warranty by Houston and MacDonald with reference to the plans and specifications agreement. The third cause of action asserts negligence by Houston and MacDonald in preparation of the plans. The fourth cause of action realleges the first cause of action and prays for recovery from Travelers under the surety bond. The fifth cause of action alleges misrepresentations by Houston and MacDonald that induced petitioners to enter into the construction agreement, and predicates alleged damages upon the misrepresentations. The sixth cause of action seeks declaratory relief from Houston, MacDonald Travelers and Union Bank regarding sums of money already paid, and an interpretation of the termination clause of the contract. Petitioners ask $200,000 damages from Houston and MacDonald, and $150,000 damages from Travelers.

Houston and MacDonald petitioned the Orange County Superior Court for an order directing arbitration of the dispute raised by petitioners' complaint, pursuant to the arbitration clause in the construction agreement. The court, on November 6, 1964, ordered arbitration between petitioners and Houston and MacDonald, and stayed all other proceedings.

Meanwhile, a number of mechanics lienholders filed actions in the Los Angeles County Superior Court to foreclose liens on the property. Petitioners filed a cross-complaint as to each mechanics' lien action, alleging eleven causes of action, the first six of which are identical to those in the complaint in the Orange County action. The seventh, eighth, ninth, tenth and eleventh causes of action raise new matter not covered by the issues in the Orange County case, and name a number of new cross-defendants who are not parties defendant in the Orange County action.

The Los Angeles County Superior Court, on its own motion, stayed all proceedings 'until releases are obtained in Orange County cases.' Thereafter one mechanics' lien action, Flannagan's, was severed and the parties ordered to proceed as to that one action.

Petitioners seek to have the stay orders vacated in both Orange and Los Angeles Counties, and also to have the order directing arbitration in Orange County set aside. However, petitioners have not requested severance of issues or parties in either the Orange County or the Los Angeles County action.

Since we conclude, for reasons set forth below, that the petition must be denied on its merits, we overrule the demurrers to the petition without comment other than to point out that (1) petitioners have alleged an abuse of discretion by both the Orange County and the Los angeles County Superior Courts; (ii) although mandate will not lie to compel a trial court to exercise its discretion, once discretion is exercised mandate will lie to remedy an abuse thereof (State Farm etc. Ins. Co. v. Superior Court, 47 Cal.2d 428, 432, 304 P.2d 13; Hays v. Superior Court, 16 Cal.2d 260, 265, 105 P.2d 975; Gromeeko v. Superior Court, 114 Cal.App.2d 754, 757, 251 P.2d 29; 3 Witkin, Cal.Procedure, Extraordinary Writs, p. 2530, 1965 Supp. p. 985); (iii) mandamus will lie to correct a non-appealable order compelling arbitration and staying proceedings. (Bertero v. Superior Court, 216 Cal.App.2d 213, 222, 30 Cal.Rptr. 719.)

In determining whether there has been an abuse of discretion, we take up, first, the proceeding in the Orange County Superior Court. Houston and MacDonald, defendants therein, countered petitioners' complaint with a petition for arbitration in accordance with the arbitration clause in the construction agreement, which reads:

'Should any disputes arise with respect to the true construction and meaning of this contract, the drawings or specifications or compliance therewith, or the value of any work added or deleted, the same shall be determined by arbitration which shall be conducted as follows:

'Contractor and Owner each shall appoint one person to hear and determine the dispute and if they shall be unable to agree, then the two persons so chosen shall select a third impartial arbitrator whose decision shall be final and conclusive upon both parties hereto. The cost of such arbitration shall be borne by the losing party or in such proportions as the arbitrator shall decide.'

Since the...