Opinion
D079562
09-20-2022
BLUE CROSS OF CALIFORNIA et al., Plaintiffs and Respondents, v. EQUALTOX, INC. et al. Defendants; LA GOOD SAMARITAN PATHOLOGY MEDICAL GROUP, INC. et al., Movants and Appellants.
Portales Law and Alejandro Portales, for Intervenors and Appellants. Reed Smith, Kenneth N. Smersfelt, James L. Sanders, Francisca M. Mok, Kasey J. Curtis, Carla M. Wirtschafter, and Charles P. Hyun, for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Orange, No. 30-2018-00993688-CU-FR-CJC Deborah C. Servino, Judge. Dismissed in part, affirmed in part.
Portales Law and Alejandro Portales, for Intervenors and Appellants.
Reed Smith, Kenneth N. Smersfelt, James L. Sanders, Francisca M. Mok, Kasey J. Curtis, Carla M. Wirtschafter, and Charles P. Hyun, for Plaintiffs and Respondents.
BUCHANAN, J.
LA Good Samaritan Pathology Medical Group, Inc., doing business as Advanced Clinical Laboratories, Sadegh Salmassi, MD, and S. Salmassi, MD, Inc. (collectively ACL or ACL parties) appeal from an order denying their motion to (1) intervene in this action; and (2) abate a separate arbitration proceeding initiated against them by Blue Cross of California doing business as Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company (collectively Blue Cross).
We conclude that the portion of the order denying ACL's motion to abate the arbitration proceeding is not appealable. Accordingly, we dismiss ACL's appeal from that portion of the order. We affirm the appealable portion of the order denying ACL's motion to intervene.
FACTUAL AND PROCEDURAL BACKGROUND
In May 2018, Blue Cross filed this lawsuit against Equaltox, Inc. (Equaltox), a company that provides laboratory services, such as blood testing. As amended, the complaint asserts claims against Equaltox and other individuals and entities allegedly involved in a billing scheme to defraud Blue Cross. Specifically, the complaint alleges that Equaltox rerouted the billing for its laboratory services through various pass-through entities, which would then submit false claims to Blue Cross indicating that they had rendered services that were actually performed by Equaltox. This scheme allegedly allowed Equaltox to bypass Blue Cross's prepayment review process and prevented Blue Cross from verifying the accuracy of the claims.
The operative complaint alleges claims for fraud (intentional misrepresentation &concealment), violations of Business &Professions Code section 17200 et seq., declaratory relief, breach of contract, open book account, and tortious interference with contract. The contract claim is based on provider agreements between Blue Cross and defendants Cranford L. Scott, M.D., Cranford L. Scott, M.D., Inc., and Smensa Medical Group, P.C.
The tortious interference claim alleges interference with these same provider agreements.
The ACL parties are not named as defendants in this action. None of the claims asserted in this action are based on ACL's provider agreements with Blue Cross.
In April 2021, Blue Cross filed a separate demand for arbitration against the ACL parties with the American Arbitration Association (AAA). The demand asserted that the ACL parties participated as coconspirators with Equaltox by acting as pass-through billers in the same fraudulent billing scheme at issue in this action. It further alleged that they were parties to provider agreements with Blue Cross, and the claims against them were subject to arbitration under the arbitration clauses in their provider agreements.
Blue Cross's demand for arbitration asserted claims against the ACL parties for breach of contract, fraud (intentional misrepresentation &concealment), violations of Business &Professions Code section 17200 et seq., and declaratory relief. The breach of contract claim was for alleged breaches of the ACL parties' provider agreements with Blue Cross.
In June 2021, the ACL parties filed a motion for an order (1) allowing them to intervene in this action; and (2) abating the AAA arbitration proceeding. As to intervention, they asserted that they were entitled to intervene because they had an "interest relating to the property or transaction that is the subject of the action," they were "so situated that the disposition of the action may impair or impede [their] ability to protect that interest," and their interest was not "adequately represented by one or more of the existing parties." (Code Civ. Proc., § 387, subd. (d)(1)(B)). As to abatement, ACL asserted that the court had authority to abate the AAA arbitration proceeding under section 1281.2. ACL's memorandum in support of its motion cited no case authorities on either of these two issues.
Further statutory references are to the Code of Civil Procedure.
Section 1281.2 provides in relevant part: "On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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, unless it determines that [¶] . . . [¶] (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact."
In opposition, Blue Cross argued in relevant part that: (1) the ACL parties did not have a sufficient interest for either mandatory or permissive intervention; (2) permitting intervention would enlarge the issues in the case by adding three new defendants (the ACL parties) and injecting new contract claims under the ACL parties' provider agreements with Blue Cross; and (3) section 1281.2 only gives a court authority to deny a petition to compel arbitration; it does not allow a court to abate arbitration proceedings already initiated under a self-executing arbitration provision.
In reply, ACL accused Blue Cross of "focusing on inapposite issues of whether mandatory and permissive intervention under Code of Civil Procedure section 387 is proper[,] while failing to address the primary statutory authority at issue: Code of Civil Procedure section 1281.2." ACL did not otherwise respond to Blue Cross's arguments regarding intervention.
After hearing oral arguments at an unreported hearing, the trial court denied ACL's motion by minute order on August 6, 2021. The court first found that the ACL parties had "not shown that they have an unconditional right to intervene" under section 387, subdivision (d)(1). Next, the court considered "whether to exercise its discretion to permit them to intervene" under section 387, subdivision (d)(2). For permissive intervention, the court stated that the ACL parties "must show that (1) they have a direct and immediate interest in the litigation; (2) the intervention would not enlarge the issues in the case; and (3) the reasons for intervention outweigh any opposition by the existing parties."
The court concluded that the ACL parties had not satisfied these conditions for permissive intervention. First, they had "not shown that they stand to gain or lose by direct operation of the judgment." "Rather, based upon the demand for arbitration, it appears that they allegedly carried out a similar pass-through billing scheme with Equaltox as alleged in this case.... The similarity does not necessarily show a direct and immediate interest in the litigation." Second, "intervention would enlarge the issues in this case." Third, the reasons favoring intervention did not outweigh Blue Cross's opposition "given the age of this case." The court explained: "The case was initiated in May 2018. While trial was continued to May 9, 2022, the Court specifically indicated that it was not continuing discovery."
The court's order actually states that "intervention would also outweigh any opposition by Plaintiffs, given the age of the case." It is clear from the context of this statement and the court's subsequent explanation, however, that the court meant to say that the reasons for intervention did not outweigh Blue Cross's opposition.
The court also rejected the ACL parties' argument that it had "authority to allow them to intervene so that they can abate their arbitration with Plaintiffs, based upon Code of Civil Procedure section 1281.2, subdivision (c)." The court reasoned: "This contention is unsupported by the plain meaning of that statute. Code of Civil Procedure section 1281.2 is the statute regarding a petition to compel arbitration. The [ACL parties] have taken that statute out of context."
ACL challenged the order in a petition for writ of mandate. (LA Good Samaritan Pathology Medical Group, Inc. et al. v. Superior Court of Orange County/Blue Cross of California et al. (Sept. 9, 2021, D079387).) We summarily denied the petition. ACL now appeals from the same order.
DISCUSSION
I
ACL first argues that the trial court erred by denying its motion to abate the AAA arbitration proceeding under section 1281.2. Blue Cross contends that this portion of the order is not appealable. We agree that an order refusing to abate an arbitration proceeding is not appealable.
Section 1294 provides that an aggrieved party may appeal from an order dismissing or denying a petition to compel arbitration. (§ 1294, subd. (a).) But "no immediate, direct appeal lies from an order compelling arbitration." (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 648, italics added.) An order compelling arbitration may only be reviewed on appeal from the final judgment entered after the arbitration proceedings. (Ibid.; §§ 1294, subd. (d), 1294.2.)
The rationale behind this rule is that permitting an appeal from an order compelling arbitration would defeat the purpose of the arbitration statute to avoid the delay and expense of litigation. (Westra v. Marcus &Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 768.) Such an appeal would delay the arbitration for the time required to process the appeal and increase the litigation expenses by requiring the parties to incur the costs of the appeal. Moreover, an "order compelling arbitration is interlocutory in nature and works no hardship on the litigant because the party who objects to arbitration may win at the arbitration hearing, and if he does not, the issue is reviewable on appeal from the judgment of confirmation." (State Farm Fire &Casualty v. Hardin (1989) 211 Cal.App.3d 501, 506.)
The same rationale applies to an interlocutory order refusing to enjoin or abate an arbitration proceeding. In International Film Investors v. Arbitration Tribunal of the Directors Guild (1984) 152 Cal.App.3d 699 (International Film Investors), the court considered whether an order denying a petition for writ of prohibition seeking to stay an arbitration proceeding was appealable. (Id. at pp.702-706.) The court acknowledged that a judgment granting or denying a petition for extraordinary writ or injunction is ordinarily appealable. (Id. at p. 703.) But the court found that an order denying a petition to enjoin an arbitration proceeding "is the practical equivalent of an order to compel arbitration and an appeal from the latter does violence to the spirit and purpose of Code of Civil Procedure section 1294." (Id. at p. 704.) Thus, the court ruled that "the judgment is nonappealable and this appeal is dismissed." (Id. at p. 706.)
Likewise, in Melchor Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587 (Melchor), the court considered whether an order denying a request to preliminarily enjoin an arbitration proceeding was appealable. (Id. at pp. 591-592.) The court acknowledged that orders refusing to grant preliminary injunctions are generally appealable under section 904-and noted that some older decisions had found orders refusing to enjoin arbitration proceedings to be appealable. (Melchor, at p. 591, citing American Builder's Assn. v. Au-Yang (1990) 226 Cal.App.3d 170, 173, fn. 1; Lesser Towers, Inc. v. Roscoe-Ajax Constr. Co. (1969) 271 Cal.App.2d 675, 692-693.) But the court concluded that "these decisions did not consider the interplay of the general statute governing appealability, section 904.1, with the special statute governing appealable orders in contractual arbitration proceedings, section 1294." (Melchor, at p. 591, fn. omitted.)
In finding the order to be nonappealable, the Melchor court relied on the holding of International Film Investors. (Melchor, supra, 3 Cal.App.4th at pp. 591-592.) The court explained: "We agree an order refusing to enjoin arbitration is tantamount to an order compelling arbitration. Treating the former as appealable would exalt form over substance (Civ. Code, § 3528) and would encourage an unseemly race to the courthouse between arbitration proponents and opponents.... A court order either compelling arbitration or refusing to enjoin arbitration was apparently necessary to bring [the appellant] to the arbitration table. Neither order is appealable." (Id. at p. 592.)
We agree with the reasoning and holdings of International Film Investors and Melchor. The portion of the trial court's order denying ACL's motion to abate the arbitration proceeding is tantamount to an order compelling arbitration, which is not immediately appealable. (Melchor, supra, 3 Cal.App.4th at pp. 591-592; International Film Investors, supra, 152 Cal.App.3d at pp. 702-706.) Permitting such an appeal would do "violence to the spirit and purpose of Code of Civil Procedure section 1294." (International Film Investors, at p. 704.) We therefore conclude that this portion of the order is not appealable.
II
ACL next argues that the trial court erred by denying its motion to intervene under section 387. Blue Cross contends that ACL has forfeited this claim by failing to provide reasoned argument or authority on it in the opening brief. ACL does not respond to this argument in its reply brief. We agree that ACL has forfeited its challenge to the intervention order. Even if the argument were preserved, however, ACL has failed to meet its burden of demonstrating error.
It is the appellant's responsibility to support claims of error with meaningful argument and citation to authority. When meaningful argument with citation to authority is not furnished on a particular point, we may treat it as forfeited. (Blizzard Energy, Inc. v. Schaefers (2021) 71 Cal.App.5th 832, 856.)
ACL has provided no meaningful argument and cited no case authority whatsoever in its briefing of the court's intervention order. For mandatory intervention under section 387, subdivision (d)(1)(B), ACL would have to show: (1) a protectable interest in the subject of the action; (2) that the disposition of the action may impair or impede its ability to protect that interest; and (3) that its interests are not adequately protected by the existing parties. (Carlsbad Police Officers Assn. v. City of Carlsbad (2020) 49 Cal.App.5th 135, 148 (Carlsbad Police Officers Assn.).)
For permissive intervention under section 387, subdivision (d)(2), ACL would also have to show a "direct and immediate interest" in the subject matter of the action, meaning an interest "of such a direct and immediate nature that the moving party' "will either gain or lose by the direct legal operation and effect of the judgment." '" (City and County of San Francisco v. State of California (2005) 128 Cal.App.4th 1030, 1037.) ACL would also have to show that intervention would not enlarge the issues in the litigation, and that the reasons for intervention outweigh Blue Cross's opposition. (Carlsbad Police Officers Assn., supra, 49 Cal.App.5th at p. 148.)
In its opening brief, without citation to any authority, ACL asserts that the trial court erred by finding it had no" 'direct and immediate interest'" in the action, arguing that" 'the exact same scheme and conspiracy is at issue'" in the arbitration proceeding. But ACL provides no explanation why this alone would be sufficient to demonstrate the requisite "interest" in the action for either mandatory or permissive intervention. As the trial court ruled, mere overlapping factual allegations do not demonstrate that ACL has a protectable interest that would be impaired or impeded by this litigation or that it will either gain or lose by the direct legal operation and effect of the judgment in this case. ACL has not attempted to make any such showing. Specifically, ACL provides no argument or authority demonstrating why it would be bound or otherwise harmed by any findings or judgment against the other defendants in this action.
Similarly, ACL does not cite any authority or make any argument to refute the trial court's finding that permitting intervention would enlarge the issues in this action. ACL's opening brief merely asserts: "How would allowing intervention enlarge the issues? The trial court failed to say how." This is not a meaningful legal argument. On appeal, we are required to presume the trial court made all findings necessary to support the order. We must therefore presume that the court found intervention would enlarge the issues for the reasons argued by Blue Cross, i.e., it would inject a new contract claim and add three new defendants into the case based on ACL's provider agreements, which are not at issue in this lawsuit against other defendants who were not parties to ACL's provider agreements. Once again, ACL has made no effort to demonstrate error in this implied finding.
Finally, ACL makes no meaningful argument and cites no authorities to demonstrate that the trial court abused its discretion by finding that the reasons for intervention did not outweigh Blue Cross's opposition. At the time of ACL's motion, the case had been pending for over three years, and the trial date was only two months away. Blue Cross argued in its opposition that adding the ACL parties would require additional discovery, which would necessarily impact the case schedule. In these circumstances, the trial court agreed that the reasons for intervention did not outweigh Blue Cross's opposition. "The trial court has broad discretion to strike this balance." (South Coast Air Quality Management Dist. v. City of Los Angeles (2021) 71 Cal.App.5th 314, 320.) ACL has not shown how this constituted an abuse of discretion.
For these reasons, we conclude that ACL has forfeited its challenge to the intervention order. Even if the issue were preserved, however, we would still find that ACL has demonstrated no error. ACL has not shown any protectable interest sufficient for mandatory intervention, and ACL has not demonstrated that the trial court abused its discretion by denying permissive intervention on the grounds set forth in its order.
DISPOSITION
The appeal from the portion of the order of August 6, 2021 denying ACL's motion to abate the AAA arbitration is dismissed. The order is otherwise affirmed.
WE CONCUR: HUFFMAN, Acting P. J. DO, J.