Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County Super. Ct. No. BC354313, Michael L. Stern, Judge.
Soltman, Levitt & Flaherty, Steven B. Soltman and Mitchell S. Brachman for Defendant and Appellant.
Law Offices of Francis S. Ryu, Francis S. Ryu and Jerry J. Chang for Plaintiff and Respondent.
DOI TODD, J.
Appellant American Career College (College) appeals the trial court’s denial of its motion to compel arbitration pursuant to an arbitration clause contained in its enrollment agreement with its student respondent Cindy Yi. We find that the broad arbitration clause encompasses Yi’s claims against the College and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Yi enrolled in the College’s vocational nursing program in May 2005. To do so she signed an enrollment agreement and installment contract (Agreement) that contained the following arbitration clause: “Any controversy or claim arising out of or relating to the Agreement, or breach thereof, not addressed by the California education code, shall be settled by arbitration in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction.”
The Agreement referenced Yi’s application for a student loan to pay her tuition under the Agreement. In particular, Yi separately initialed a provision acknowledging that her payment schedule under the Agreement would be established based on the determination of the amount of financial assistance she was due. Yi also separately initialed a provision authorizing the College to obtain her “credit history or other information on file with any credit bureau or similar organization.” And the College, in turn, agreed to use Yi’s information for “internal purposes only” and to not release her credit history to third parties without Yi’s written consent.
In June 2006, Yi sued the College for negligent supervision and negligent hiring alleging that she had been required to “divulge confidential personal and financial information” to the College in “remitting tuition payments” and that a College employee stole from her enrollment documents her confidential information which the employee then used to ruin Yi’s credit. The College moved to compel arbitration of Yi’s claims based on the arbitration clause.
We have not been provided a copy of the complaint. In the papers filed with the trial court, both parties characterized the complaint as one for negligent hiring and supervision. On appeal, appellant refers to a cause of action for breach of contract. As we discuss, post, a plaintiff’s choice of legal theories is not determinative of the outcome of a motion to compel arbitration.
The trial court denied the College’s motion on the grounds that the arbitration clause did not apply to the causes of action alleged. The College appealed under Code of Civil Procedure section 1294.1, subdivision (a).
DISCUSSION
I. Contentions on Appeal and Standard of Review.
The College contends that the contractual arbitration clause encompassing “[a]ny controversy arising out of or relating to” the Agreement is broad enough to encompass Yi’s claims based on the theft of her identifying information from her enrollment documents. In addition to refuting College’s contentions, Yi argues that the denial of arbitration was harmless error.
Because the trial court was not asked to resolve any factual disputes we review the trial court’s denial of the motion to compel arbitration de novo. (Clark v. First Union Securities, Inc. (2007) 153 Cal.App.4th 1595, 1608.)
II. The Scope of the Broad Arbitration Agreement Encompassed Yi’s Claims.
The legal principles governing the interpretation of the scope of an arbitration clause are well-established. “California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration. [Citations.] . . . . This strong policy has resulted in the general rule 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. [Citation.]’ [Citation.]” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686 (Coast Plaza).) The party opposing arbitration bears the burden of demonstrating that “an arbitration clause cannot be interpreted to require arbitration of the dispute.” (Id. at pp. 686–687.) Any doubt as to whether a claim falls within the scope of an arbitration clause “must be resolved in favor of arbitration, not against it. [Citations.]” (Id. at p. 687.) Nevertheless, “[h]owever broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.” (Civ. Code, § 1648; Bono v. David (2007) 147 Cal.App.4th 1055, 1063 (Bono).)
“[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’ [Citations.] A ‘broad’ clause includes those using language such as ‘any claim arising from or related to this agreement.’” (Bono, supra, 147 Cal.App.4th at p. 1067.) Here, the arbitration clause is a standard broad form clause providing for the arbitration of “[a]ny controversy or claim arising out of or relating to the Agreement, or breach thereof . . . .” Identical or substantially similar clauses have been found to be broad enough “to embrace tort as well as contractual liabilities so long as they have their roots in the relationship between the parties which was created by the contract. [Citations.]” (Berman v. Dean Witter & Co., Inc. (1975) 44 Cal.App.3d 999, 1003 (Berman) [“‘any controversy . . . arising out of or relating to this contract’” encompassed customer’s breach of fiduciary duty claim against securities broker based on alleged concealment of market information].)
Thus, in Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309, purchasers of condominiums sued the sellers alleging a tortuous failure to disclose that they would be subject to assessments to pay for curbs, gutters, sewers and flood control structures. The court held that the purchasers’ tort claims were encompassed within a clause mandating arbitration of “any dispute” “‘in connection with’” (id. at p. 1316) the sales contract. The tort claims had their “roots in the purchaser-vendor relationship created by the purchase and sale contract containing the arbitration clause. . . . [Citation.] . . . [the] entire complaint [was] predicated on the very claim that vital information was intentionally withheld by defendants in the communications between the parties leading up to that agreement.” (Ibid.)
Here, Yi characterizes the terms of the Agreement as pertaining to “class enrollment; medical examinations; termination of enrollment; refund policy and right [sic] cancel; academic policies; and other general terms.” But that characterization ignores those terms that apply to Yi’s supplying confidential information in order to secure financial aid to meet her tuition obligations under the Agreement. Specifically, Yi’s payment schedule under the Agreement was held in abeyance until her application for a student loan in conjunction with and in support of her enrollment was completed. She explicitly acknowledged that her schedule of tuition payments would depend upon the amount of financial assistance, if any, she ultimately received. To apply for that assistance she divulged confidential information and authorized the College in the Agreement to obtain further confidential information. The College, in turn, agreed to use Yi’s information “for internal purposes only,” and not to release Yi’s credit history to any third party without her consent. The College employee’s later alleged theft and misuse of the confidential information that Yi provided pursuant to the Agreement appears to be in breach of the terms of the Agreement. The fact that Yi chose to cast her complaint in tort rather than contract is not controlling. (See Berman, supra, 44 Cal.App.3d at p. 1003.) Her tort claims based on the College employee’s alleged misuse of her confidential information had its roots in the Agreement and are encompassed within the Agreement’s arbitration clause.
Yi’s reliance on Medical Staff of Doctors Medical Center in Modesto v. Kamil (2005) 132 Cal.App.4th 679 (Kamil) is misplaced. That case interpreted the scope of an arbitration clause that was narrower in scope than that at issue here. Specifically, the arbitration clause in Kamil provided for arbitration of any problem or dispute “concerning the terms of” the Agreement. (Id. at p. 683.) In Bono, the court noted the legally significant difference between arbitration clauses limited to disputes about the terms of an Agreement and broad clauses, such as that at issue here, pertaining also to matters “‘arising out of or relating to’” the Agreement. (Bono, supra, 147 Cal.App.4th at p. 1067.) Based on the contractual language before it, the court in Kamil concluded that a medical group’s defamation claims against Blue Cross for its public statement that the group performed needless surgeries did not concern the terms of the parties’ agreement for delivery of medical services to Blue Cross beneficiaries. (Kamil, supra, at p. 684.)
In contrast, the arbitration clause at issue here covers “any controversy arising out of or relating to . . .” the Agreement. Moreover, a term of the Agreement was the College’s promise to use Yi’s financial information for “internal purposes only.” The employee’s later use of that information for improper purposes contravened that contractual term. Consequently, Yi’s causes of action are rooted in the Agreement even if cast as tort rather than contract claims. Yi has thus failed to meet her burden of demonstrating that the arbitration clause “cannot be interpreted to require arbitration of the dispute,” and the matter must be compelled to arbitration. (Coast Plaza, supra, 83 Cal.App.4th at pp. 686–687.)
III. The Trial Court’s Erroneous Denial of the Motion to Compel Arbitration Was Prejudicial.
Yi contends that any error in denying the motion to compel arbitration was harmless because the College’s right to assert defenses is not impacted by proceeding in court rather than in arbitration and that, in fact, some of its rights—for example those pertaining to discovery—are actually broader in court than in arbitration.
Yi’s argument ignores the benefits of arbitration that each party secured by entering into the Agreement. “‘The policy of the law in recognizing arbitration agreements and in providing by statute for their enforcement is to encourage persons who wish to avoid delays incident to a civil action to obtain an adjustment of their differences by a tribunal of their own choosing.’ [Citation.] ‘Typically, those who enter into arbitration agreements expect that their dispute will be resolved without necessity for any contact with the courts.’ [Citation.]” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) The College was substantially prejudiced by the trial court’s error in failing to compel arbitration pursuant to the parties’ contract.
The College argues for the first time on appeal that the issue of the scope of the arbitration clause was a matter for resolution by the arbitrators and not the court. Because we have resolved this matter in the College’s favor on other grounds, we need not reach this issue.
DISPOSITION
The order denying the motion to compel arbitration is reversed. Appellant is entitled to costs on appeal.
We concur: BOREN, P. J., CHAVEZ, J.