Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG06269373
Margulies, J.
Louis Cavalcanti sued Silver State Helicopters, LLC, and its employee, Mathias Puhlhofer (collectively, Silver State) for breach of contract and other claims arising from a written contract. Silver State petitioned to compel arbitration of Cavalcanti’s claims based on a clause of the contract that referred to binding arbitration. The trial court denied Silver State’s petition, finding that the clause in question was not in fact an agreement to arbitrate disputes. Silver State contends that the trial court erred in failing to resolve any doubts on that issue in favor of arbitration. We find no error, and affirm the order denying arbitration.
I. BACKGROUND
Silver State provides aviation services and helicopter flight training. In September 2003, Cavalcanti entered into a “Service Contract Agreement” (Service Contract) with Silver State whereby Silver State agreed to provide Cavalcanti with, and Cavalcanti agreed to purchase, helicopter flight training services from Silver State. The Service Contract included the following paragraph referring to both mediation and arbitration of disputes: “7. MEDIATION [¶] Any dispute related to this Agreement will be submitted to mediation. The mediation will be conducted according to Silver State Helicopters, LLC and the laws of the State of Nevada. Both parties agree that arbitration shall be binding.” (Italics added.)
In May 2006, Cavalcanti sued Silver State alleging that he was hired by Silver State as a maintenance manager and flight instructor in June 2005 and was terminated on March 8, 2006. The complaint asserted employment-related causes of action against Silver State arising from an employment agreement that was “partly written, partly oral and partly implied.” The complaint did not reference or rely on Cavalcanti’s September 2003 Service Contract with Silver State. Silver State successfully demurred to Cavalcanti’s complaint on grounds that do not appear in the record.
Cavalcanti filed a first amended complaint in September 2006, which alleged causes of action for breach of contract, misrepresentation, defamation, and unfair business practices against Silver State. The first amended complaint incorporated a copy of the Service Contract as an exhibit and alleged that the 2003 contract was subsequently amended by a series of oral conversations between Cavalcanti and Silver State management in 2004 and 2005 under which Silver State employed Cavalcanti as a mechanic, agreed to provide him with additional flight training and helicopter flight time at reduced cost or no cost, and promoted him to manager of its maintenance department. According to the first amended complaint, Silver State later breached the amended Service Contract by demanding additional money for flight time and then terminating Cavalcanti when he refused to pay it, using as a pretext fabricated allegations that he had defrauded the company by submitting falsified time sheets.
Silver State responded to the first amended complaint by filing a petition to compel arbitration of the claims made in it, in reliance on paragraph 7 of the Service Contract. The trial court denied the petition. The court’s written order stated: “The Service Contract does not reflect an agreement between the parties to arbitrate any disputes related to the agreement. First, the relevant section is entitled ‘Mediation.’ Second, the clause states that any dispute related to this agreement will be submitted to mediation, not arbitration. Third, the one sentence concerning arbitration, ‘Both parties agree that arbitration will be binding’ is ambiguous.”
Silver State timely appealed from the order denying its petition to compel arbitration.
II. DISCUSSION
Silver State contends that the trial court erred in denying its arbitration petition because, even if paragraph 7 of the Service Contract was ambiguous, any doubts regarding arbitrability should have been resolved in favor of arbitration under California law.
It is true that under California law doubts regarding the arbitrability of a dispute are to be resolved in favor of arbitration. (See, e.g., Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686; Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 652.) But that is an incomplete statement of the law applicable to this case. The cases Silver State relies on all involve the issue of whether an arbitration clause to which the parties have agreed does or does not by its terms cover the type of dispute that has arisen between them. While it is sometimes said that doubts about the scope of an arbitration clause are to be resolved in favor of arbitration, it is equally well established under California law that “[t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” (Engineers & Architects Assn., at p. 653, italics added; see also Victoria v. Superior Court (1985) 40 Cal.3d 734, 739 [the policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate].) As stated in County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237 at pages 244–245: “Arbitration is consensual in nature. The fundamental assumption of arbitration is that it may be invoked as an alternative to the settlement of disputes by means other than the judicial process solely because all parties have chosen to arbitrate them. [Citations.] Even the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement . . . . A party can be compelled to arbitration only when he or she has agreed in writing to do so. [Citations.]”
Silver State asserts without citation to the record that “[h]ere, there is no dispute that the Service Contract contained a clause for arbitration.” That assertion is false. Cavalcanti emphatically does dispute whether the Service Contract calls for disputes between the parties to be submitted to arbitration. Cavalcanti maintains that the contract calls for mediation of disputes, not arbitration. Cavalcanti’s interpretation is supported by the heading of paragraph 7 and by the first two sentences of its text. In fact, the operative sentence of paragraph 7 states that “[a]ny dispute related to this Agreement will be submitted to mediation.” After a heading and two sentences referring to mediation, the phrase “arbitration shall be binding” in the last sentence of the paragraph can only be considered ambiguous, as the trial court found it to be.
Whether a valid contract to arbitrate exists is a question to be resolved by state law principles concerning the formation, interpretation, and enforceability of contracts generally. (Bolter v. Superior Court (2001) 87 Cal.App.4th 900, 906.) Cavalcanti correctly calls attention to sections 1653 and 1654 of the Civil Code. Section 1653 states: “Words in a contract which are wholly inconsistent with its nature, or with the main intention of the parties, are to be rejected.” Section 1654 states: “In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.” (See also Victoria v. Superior Court, supra, 40 Cal.3d at p. 739 [ambiguities in an arbitration agreement must be interpreted against the drafting party].)
Applying either of these interpretative principles, Silver State’s motion was properly denied. Either the reference to binding arbitration in the third sentence should be rejected as inconsistent with the intention of the parties as expressed in the rest of the paragraph or, if the third sentence is deemed to create an ambiguity, that ambiguity must be resolved against Silver State, which drafted the arbitration clause and caused the uncertainty to exist. In either case, the paragraph cannot be construed to unambiguously require Cavalcanti to arbitrate his dispute with Silver State. No principle favoring arbitration operates to save the clause from its fatally self-contradictory phrasing. The trial court properly denied Silver State’s petition.
We do not reach Cavalcanti’s further contention that the clause is unconscionable if construed to require arbitration.
III. DISPOSITION
The order appealed from is affirmed.
We concur: Marchiano, P.J., Stein, J.