Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC391844, Edward A. Ferns, Judge. Affirmed.
Gronemeier & Associates and Elbie J. Hickambottom, Jr., for Defendants and Appellants.
Smith & Lipow and Jeffrey A. Lipow for Plaintiff and Respondent.
MALLANO, P. J.
Plaintiff retained attorneys to represent her in a wrongful termination case against her former employer. She signed a retainer agreement requiring the arbitration of any claims arising out of or related to the legal services provided. The case settled with a substantial payment to plaintiff. The settlement agreement contained a confidentiality provision, a breach of which would result in a payment of $25,000 in liquidated damages.
After the case had settled, the attorneys borrowed $100,000 from plaintiff, evidenced by a promissory note and a security agreement, neither of which had an arbitration clause. Meanwhile, the attorneys contacted other employees at plaintiff’s former employer, attempting to generate new business. As a result, plaintiff had to pay the employer $25,000 for a breach of the settlement agreement’s confidentiality provision.
Plaintiff filed this action against the attorneys, seeking to recover the amount owed on the loan and to be indemnified for the $25,000. The attorneys filed a motion to compel arbitration of the indemnification claim and to stay the claim based on the loan. The trial court denied the motion. The attorneys appealed.
We conclude that none of the claims in the complaint arises out of or is related to the legal services provided in the wrongful termination case. It follows that the trial court properly denied the motion to compel arbitration.
I
BACKGROUND
The following allegations and facts are taken from the complaint and the papers submitted in conjunction with the petition to compel arbitration.
In June 1991, plaintiff Patricia Dahlstrom retained the law firm of Gronemeier & Barker (G&B) to represent her in a wrongful termination case against Litton Data Systems (Litton). She signed a “Professional Services Agreement,” which recited that G&B would “provide legal services to Client... concerning Client’s employment discrimination, breach of contract, and allied claims against Litton.” The agreement contained an arbitration provision, stating: “ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE BREACH THEREOF, THE SERVICES RENDERED BY G&B TO CLIENT, OR ANY ALLEGED BREACH OF FIDUCIARY DUTY, FRAUD, NEGLIGENCE OR MALPRACTICE BY G&B SHALL BE SETTLED BY BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION AT LOS ANGELES, CALIFORNIA, AND JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF....”
G&B filed suit against Litton on behalf of Dahlstrom and two other individuals. In July 1993, the case settled for a substantial sum. The settlement agreement contained a confidentiality clause, stating that in the event of a breach by Dahlstrom, Litton would be entitled to $25,000 in liquidated damages.
In the fall of 1993, Attorney Barker contacted Dahlstrom and explained that G&B was experiencing financial problems. Barker asked Dahlstrom to loan the firm $100,000. She agreed. Under the terms of a promissory note dated September 29, 1993, the loan was to be repaid within one year at 10 percent interest per annum. The loan was covered by a “Security Agreement.” Neither the promissory note nor the security agreement contained an arbitration provision.
In 1994, Attorney Gronemeier informed Dahlstrom that Litton was claiming she had breached the confidentiality provision in the settlement agreement. Actually, Litton’s contention was based on a postsettlement letter sent to Litton employees by Gronemeier in an effort to generate new business for G&B. Litton’s claim was submitted to arbitration. G&B represented Dahlstrom in the arbitration proceedings. The arbitrator issued an award against Dahlstromin the amount of $25,000. G&B promised to indemnify her for the loss.
On June 2, 2008, Dahlstrom filed this action against Barker and Gronemeier individually (defendants), not as a firm, alleging causes of action for breach of contract and breach of fiduciary duty. Both causes of action were based on the same allegations: Defendants had not fully repaid Dahlstrom on the loan, nor had they fulfilled their promise to indemnify her for the $25,000 arbitration award. Each cause of action sought damages in the amount of $76,128.61.
Defendants answered the complaint and filed a cross-complaint for “unjust enrichment and overpayment of promissory note due to mistake,” alleging they had overpaid Dahlstrom on the note by $2,250. Dahlstrom answered the cross-complaint.
On August 26, 2008, defendants filed a motion “to compel arbitration and stay proceedings.” They argued that the note had been paid in full, leaving only the claims for indemnification and breach of fiduciary duty. Those claims, defendants asserted, arose out of or were related to the legal services G&B had rendered pursuant to the Professional Services Agreement and were therefore subject to arbitration.
Dahlstrom filed opposition, including a declaration in which she stated that, according to her accounting records, defendants had not paid off the loan or fulfilled the indemnification promise. Further, she had periodically submitted her accounting records to defendants — showing outstanding payments on the promissory note and the indemnification promise — and defendants had never questioned or disagreed with her allocation of the payments.
In reply, defendants attempted to characterize the case as nothing more than an accounting dispute concerning their prior payments, arguing that Dahlstrom had improperly credited a prior payment to the indemnification obligation instead of the loan. If the payment had been properly credited, so they argued, the loan would have been overpaid, and the indemnification claim, part of which was still outstanding, had to be arbitrated. Defendants also asserted that the claim for breach of fiduciary duty fell within the exact language of the arbitration provision.
The motion to compel was heard on September 26, 2008. The trial court found that, regardless of any accounting errors, none of plaintiffs’ claims was subject to arbitration. An order was entered to that effect. Defendants appealed.
II
DISCUSSION
“‘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....’ ([Code Civ. Proc.,] § 1281.2.) In a petition to compel arbitration, ‘the moving party, in essence, requests specific performance of a contractual agreement to arbitrate the controversy.... The trial court must determine in advance whether there is a duty to arbitrate the controversy.... This determination “necessarily requires the court to examine and, to a limited extent, construe the underlying agreement.”’” (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 770–771.)
“The interpretation of an arbitration provision ‘is solely a judicial function unless it turns upon the credibility of extrinsic evidence; accordingly, an appellate court is not bound by a trial court’s construction of a contract based solely upon the terms of the instrument without the aid of evidence.’... Where, as here, the language of an arbitration provision is not in dispute, the trial court’s decision as to arbitrability is subject to de novo review.” (Gravillis v. Coldwell Banker Residential Brokerage Co., supra, 143 Cal.App.4th at p. 771, citation omitted.)
Our interpretation of the arbitration clause is guided by well settled rules of construction. “‘The court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.’... Because California has a ‘“strong public policy in favor of arbitration”’..., ‘... arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question’.... ‘Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.’...” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189, citations omitted.) “‘“[But] [t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.”’” (Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701.)
Defendants argue that the claims for indemnification and breach of fiduciary duty should be arbitrated while the remaining claims should be stayed pending the outcome of arbitration. (See Code Civ. Proc., § 1281.4.) We conclude, as did the trial court, that none of the claims should be arbitrated.
The indemnification claim arose out of the solicitation letter Gronemeier sent to Litton employees in an effort to obtain new business for G&B. The letter was sent long after G&B had settled Dahlstrom’s wrongful termination case. Although the letter ultimately led to a $25,000 arbitration award against Dahlstrom for breaching the confidentiality provision of her settlement agreement, neither the solicitation letter, the ensuing arbitration, nor the award arose out of or was related to the legal services G&B provided to her. Her wrongful termination case had concluded, and G&B no longer represented her with respect to that matter. In short, the indemnification claim arose out of and was related to G&B’s own economic interests in obtaining new clients, not any interest the firm was pursuing on Dahlstrom’s behalf.
The fiduciary duty claim alleged that “[a]t all times herein relevant, the Defendants... owed Plaintiff fiduciary duties based on the attorney-client relationship which existed by and between the parties. [¶]... Defendants... breached their fiduciary duties to Plaintiff by placing their own financial interests ahead of those of Plaintiff, by unethically engaging in business dealings with client-Plaintiff, by repeatedly breaching their promises of repayment of their debts to Plaintiff, by belatedly objecting to Plaintiff’s accountings as to monies owed by Defendants after leading Plaintiff to believe that her accountings had been accepted by Defendants, and by wrongfully refusing to repay Plaintiff monies owed to her.”
Defendants seize on the reference to the “attorney-client relationship” in arguing that the fiduciary duty claim should be arbitrated. But the claim itself merely seeks to recover on the promissory note and the promise to indemnify Dahlstrom for the $25,000 arbitration award. As already explained, neither of those debts arose out of or was related to the services rendered under the Professional Services Agreement. Accordingly, the fiduciary duty claim does not come within the arbitration clause.
III
DISPOSITION
The order is affirmed.
We concur: CHANEY, J., JOHNSON, J.