Opinion
NOT TO BE PUBLISHED
Superior Court County of Santa Barbara County No. 1266304, Denise de Bellefeuille, Judge
Marks, Golia & Finch, Davide Goliea, Jeffrey B. Baird and Christopher R. Sillari, for Defendant and Appellant.
Griffith & Thornburgh, and Nathan C. Rogers, for Plaintiff and Respondent.
COFFEE, J.
Mid Canada Millwork, Ltd. (MCM) appeals from an order denying its petition to compel arbitration. MCM argues that the court erred by failing to deem all of the facts in its petition admitted where Alta Lab Casework, Ltd. (Alta) filed an untimely response, and by concluding that the contracts between MCM and Alta lack mandatory arbitration provisions. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Hensel Phelps Construction Co. (Hensel) served as prime contractor in two public works projects. In 2003 and 2004, Hensel and MCM entered into two substantially identical contracts (the Hensel contracts) whereby MCM would provide services for each project.
In 2004, MCM and Alta entered into two substantially identical subcontracts whereby Alta would perform services for each project (the subcontracts). Each subcontract contains the following relevant provisions:
"In the event MCM's contract with [Hensel]... contains a provision for arbitration of disputes arising between MCM and [Hensel]..., the following clauses shall be in effect as a part of this Agreement, but not otherwise:
"If, at any time any controversy shall arise between MCM and [Alta] regarding anything pertaining to this Agreement and which the parties hereto do not promptly adjust and determine, or which [Hensel's] representative,... cannot decide to the satisfaction of both parties, then the written orders of MCM to [Alta] shall be followed. The controversy shall be submitted to and determined by arbitration... and the parties hereto agree to be bound by the Award in such Arbitration.
"In addition,[Alta] shall be bound to MCM to the same extent MCM is bound to... [Hensel]... by all items and provision of the prime contract and be expressly bound by any provisions thereunder to arbitrate."
On February 20, 2008, Alta filed a complaint against MCM alleging its failure to pay for services Alta performed under the subcontracts. The complaint includes causes of action for breach of contract, breach of implied contract, quantum meruit, and unjust enrichment, and seeks compensatory damages and other relief.
On April 10, 2008, in lieu of filing an answer, MCM filed a petition to compel arbitration, sought a stay of the litigation, and noticed a hearing for May 15, 2008. On May 2, 2008, Alta filed a response to the petition and argued that the subcontracts do not include mandatory arbitration provisions.
On May 8, 2008, MCM filed a reply and argued that the court must deem all of the facts in its petition admitted because Alta did not file a timely response. It further argued that the subcontracts include unambiguous mandatory arbitration provisions. However, MCM acknowledged that the Hensel contracts allow for voluntary arbitration.
The trial court issued the following tentative ruling:
"The petition to compel arbitration is denied.
"The court will not deem the allegations of the petition admitted, as urged by MCM, and will address the petition on its merits. Generally speaking, when a legal action is already pending, parties are permitted to seek to compel arbitration by either noticed motion or by petition. A petition to compel arbitration is the required form only where no legal proceedings have yet been instituted, and one is seeking to compel another to arbitrate; filing and service of the petition then give the court the jurisdiction and authority to compel the objecting party to arbitrate the dispute. Where, as here, the legal proceeding was pending at the time the petition was filed, and the court already had jurisdiction over both parties to the dispute, the court will not elevate form over substance, and refuse to consider responsive papers that were timely filed with respect to a motion to compel arbitration, but did not comply with the time requirements for a petition to compel arbitration.
"On the merits, the court finds that no agreement to arbitrate exists, and therefore denies the petition.
"The contracts between MCM and Alta Lab provide that, in the event MCM's contracts with the Prime Contractor [Hensel] or the owner contain a provision for arbitration of disputes arising between them, the mandatory arbitration provisions in MCM's contracts with Alta Lab shall be in effect, but not otherwise. The contracts between MCM and Hensel state that the parties may mutually agree to submit their disputes to arbitration. As set forth in Titan Group, Inc. v. Sonoma Valley County Sanitation District (1985) 164 Cal.App.3d 1122, 1128 [italics added], such a clause adds nothing to a contract insofar as arbitration is concerned, and is meaningless, in that parties can agree to arbitrate even without the clause.
"Given the importance of the right to a jury trial in our system of jurisprudence, a waiver of such right must appear in clear and unmistakable form. The Court finds that the mere mention of a completely voluntary arbitration option in the MCM/Hensel contracts[] is insufficient to constitute an 'arbitration provision' which would invoke the mandatory binding arbitration provision in the MCM/Alta Lab contracts. Where a binding arbitration clause hinges on whether a truly meaningless clause constituted a 'provision for arbitration of disputes,' a reasonable contracting party would not believe that it had waived its right to a trial by jury. It is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation. Had it truly been MCM's intent to require binding arbitration, it could have easily and clearly done so. It did not; the contract's obligation was illusory. Based solely on the terms of the contracts, the court finds that no agreement to arbitrate existed, and therefore denies the petition."
On May 15, 2008, the court allowed MCM to present oral argument. It then denied the petition to compel arbitration, and adopted its tentative ruling as the statement of decision.
DISCUSSION
MCM argues that the court erroneously denied its petition to compel arbitration because Code of Civil Procedure section 1290 required it to deem the allegations of its petition to compel arbitration as admitted where Alta had filed an untimely response to the petition. We disagree.
1 All statutory references are to the Code of Civil Procedure unless stated otherwise.
Section 1290 provides in relevant part: "A proceeding [to compel arbitration] under this title in the courts of this State is commenced by filing a petition. Any person named as a respondent in a petition may file a response thereto. The allegations of a petition are deemed to be admitted by a respondent duly served therewith unless a response is duly served and filed." MCM's petition was served by mail upon Alta on April 9, 2008, and filed on April 10, 2008. Alta filed its response on May 2, 2008. MCM argues that under sections 1290.4 and 1290.6, Alta's response was due on April 24, 2008.
At MCM's request, we have considered Taheri Law Group, A.P.C. v. Sorokurs (2009)176 Cal.App.4th 956, which was decided after oral argument. Taheri is inapposite. The legal proceeding in Taheri was initiated by a petition to vacate an arbitration award, contrary to the proceeding below which was pending when MCM filed its petition to compel arbitration. Further, the trial court denied a section 473 motion to extend the time for responding to the petition. (Taheri, supra, at pp. 959-960.) In contrast, the court below considered Alta's response to the petition to compel arbitration.
Section 1290.6 permits the court, upon good cause, to extend the time limit for filing a response to a petition to compel arbitration. In deciding to consider Alta's response, the court stated that it would "not elevate form over substance, and refuse to consider responsive papers that were timely filed with respect to a motion to compel arbitration, but did not comply with the time requirements for a petition to compel arbitration." Although the court did not cite section 1290.6, it impliedly found good cause to extend Alta's time for responding to the petition.
MCM further contends that the court erred in denying its petition to compel arbitration because the contract contained mandatory arbitration provisions. We also reject this contention.
"'The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.... There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate....' [Citation.]" (City of Vista v. Sutro & Co. (1997) 52 Cal.App.4th 401, 407.) In this case, the court based its conclusion solely on the terms of the contracts. It thus presents a question of law for our independent review. (Romo v. Y-3 Holdings, Inc. (2001) 87 Cal.App.4th 1153, 1158, 1160.)
California contract law applies to determine whether the parties formed a valid agreement to arbitrate. (Romo v. Y-3 Holdings, Inc., supra, 87 Cal.App.4th at pp. 1158-1159.) "The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.]... 'The words of a contract are to be understood in their ordinary and popular sense.' [Citations.]" (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955.) When interpreting a contract, a court must focus on the entire agreement, rather than isolating individual words or phrases. (Civ. Code, § 1641; Transportation Guar. Co. v. Jellins (1946) 29 Cal.2d 242, 247-248.)
A court has authority to compel a party to arbitrate a dispute only "if it determines that an agreement to arbitrate the controversy exists...." (§ 1281.2) "Section 1281.2 requires the court to determine whether an agreement to arbitrate actually exists [because] a party cannot be compelled to arbitrate a matter [it] has not agreed to arbitrate." (Ramirez v. Superior Court (1980) 103 Cal.App.3d 746, 752.)
As the trial court stressed, the subcontracts provide that "[Alta] shall be bound to MCM to the same extent MCM is bound to PRIME CONTRACTOR [Hensel] or OWNER by all items and provisions of the prime [Hensel] contract and be expressly bound by any provisions thereunder to arbitrate." The Hensel contract provides for voluntary arbitration.
MCM claims that the subcontracts contain unambiguous language that mandate the arbitration of disputes because they state that "if the Hensel Contracts 'contain a provision for arbitration of disputes,' the mandatory binding arbitration clause detailed in the Subcontracts shall be in effect." In making this claim, MCM ignores the following language from each subcontract: "[ALTA] shall be bound to MCM to the same extent MCM is bound to... [Hensel]... by all items and provision of the prime contract and be expressly bound by any provisions thereunder to arbitrate." (Italics added.)
Thus, the subcontracts require Alta to arbitrate its claims with MCM only to the extent that the Hensel contracts require MCM to arbitrate its claims with Hensel. Because the Hensel contracts do not require MCM to arbitrate such claims, the court correctly concluded that the arbitration provisions of the subcontracts are not mandatory.
DISPOSITION
The judgment is affirmed. Respondent is awarded costs on appeal.
We concur, GILBERT, P.J., PERREN, J.