Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. SC073599. Paul G. Flynn and Linda K. Lefkowitz, Judges.
Law Offices of Barry K. Rothman and Kristal Marie Gunn for Plaintiffs and Appellants.
The Phillips Firm, Thomas M. Phillips, and Timothy E. Kearns for Defendants and Respondents Westlan Construction, Inc., Mark Sausser, and Craig Staley.
Fulbright & Jaworski, James R. Evans, Jr., and Martin L. Pitha for Defendant and Respondent Tracy Price.
ASHMANN-GERST, J.
Appellants Joseph Francis (Francis), Ventcom Realty, Inc. (Ventcom), and Mantra Films, Inc. (Mantra) challenge a trial court order granting a petition to compel arbitration and the subsequent judgment entered following confirmation of the arbitration award in favor of respondents Westlan Construction, Inc. (Westlan), Mark Sausser (Sausser), Craig Staley (Staley), and Tracy Price (Price). In essence, appellants assert that the trial court erred in granting the motion to compel arbitration because (1) the parties did not have an enforceable agreement to arbitrate; and (2) even if there were an enforceable agreement to arbitrate, respondents waived their right to arbitration. Appellants further argue that even if arbitration was appropriate, the trial court erred in confirming the arbitration award because (1) the arbitrator exceeded his authority by refusing to postpone the arbitration hearing; and (2) the trial court held the hearing on the petition to confirm the arbitration award on less than 10 days notice, as required by Code of Civil Procedure section 1290.2.
Westlan, Sausser, and Staley are referred to collectively as the Westlan parties.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
We affirm. The trial court correctly determined that the parties had an enforceable arbitration agreement and that respondents did not waive their right to arbitration. Additionally, the arbitrator did not err in refusing appellants’ unsubstantiated request for a continuance of the arbitration proceeding. Finally, even though the trial court heard Price’s petition to confirm the arbitration award on less than 10 days notice, that error does not amount to reversible error.
FACTUAL AND PROCEDURAL BACKGROUND
Factual background
This litigation arises out of the construction of a home. Appellants purchased a house in Pacific Palisades, and Francis intended to remodel it. He contacted Price, an architect, and subsequently entered into a written agreement with Price: AIA Document B151-1997, abbreviated standard form of agreement between owner and architect (the owner-architect agreement). The owner-architect agreement contains an arbitration provision that provides, in relevant part: “Any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to arbitration.”
Appellants later entered into an agreement with Westlan, a contractor, for construction of the home: AIA Document A111-1997, standard form of agreement between owner and contractor (the construction contract). On its first page, the construction contract expressly incorporates the general conditions of the contract for construction. Moreover, on its second page, at article 1, the construction contract indicates that the “Contract Documents” consist of the construction contract and the general conditions of the contract. In fact, the general conditions are referenced in the construction contract in at least 19 other places. The general conditions contain an arbitration clause: “Any Claim arising out of or related to the Contract . . . shall . . . be subject to arbitration.”
A dispute arose, and on July 16, 2002, Francis terminated Westlan. On July 22, 2002, Price terminated his owner-architect agreement with Francis as he was unwilling to continue a project without a licensed contractor performing the construction. At that time, both Price and Westlan were owed substantial monies.
Appellants initiated this lawsuit
On August 20, 2002, appellants filed their complaint against respondents, alleging 14 causes of action all arising out of the construction of Francis’s home. Appellants allege, inter alia, that respondents breached the construction contract and the owner-architect agreement. Appellants purport to attach a copy of the construction contract and the owner-architect agreement to their complaint.
Actually attached to the pleading is B511 Guide for Amendments to AIA Owner-Architect Agreements, although, based upon the allegations of the complaint, it is evident that appellants intended to attach and incorporate a copy of the owner-architect agreement.
In response, the Westlan parties filed a demurrer and motion to strike portions of the complaint.
Appellants’ counsel represents that the trial court sustained the Westlan parties’ demurrer to the original complaint in part. It is unclear from the appellate record whether the trial court ever ruled on the motion to strike.
Price’s motion to compel arbitration
On October 3, 2002, Price moved to compel arbitration. Appellants opposed the motion. On November 2, 2002, the trial court denied Price’s motion because of the possibility of conflicting rulings. In so finding, the trial court relied upon the misinformation that the construction contract did not have an arbitration provision.
The Westlan parties did not join in Price’s motion, did not file any papers in connection with Price’s motion, and did not appear at the hearing on Price’s motion.
Appellants’ first amended complaint
On December 9, 2002, appellants filed their first amended complaint, again alleging 14 causes of action based upon respondents’ alleged breach of the construction contract and the owner-architect agreement. Both the construction contract and the owner-architect agreement are attached to the pleading.
Francis’s deposition
Following the denial of Price’s motion to compel arbitration, Price sought to depose Francis. Thus, in early December 2002, Price noticed Francis’s deposition. Appellants sought a protective order, apparently to continue Francis’s deposition, which Price opposed. Ultimately, at some point, the trial court ordered Francis to appear for his deposition on March 6, 2003. Francis’s deposition commenced on that date, although it appears that the session was “truncated” and lasted only two hours.
Westlan parties’ motion to compel arbitration
On January 31, 2003, the Westlan parties filed a motion to compel arbitration. Price joined in the motion. Appellants opposed the Westlan parties’ motion.
On March 19, 2003, after entertaining oral argument and taking the matter under submission, the trial court granted the Westlan parties’ motion. It found that the construction contract contained an arbitration provision, and that appellants “failed to convince the [trial court] that they were not aware of nor bound by the General Conditions which required that any dispute over the construction contract be resolved through mediation and arbitration.” Furthermore, the trial court rejected appellants’ assertion that respondents had waived their contractual right to arbitration. Respondents had not “acted in bad faith or with willful misconduct.” Although the Westlan parties “did not pursue their contractual right to . . . arbitrate until some five months after the litigation began, such delay does not constitute a waiver.” Moreover, appellants would not be prejudiced; after all, very little discovery had taken place and trial was not set for many months. The trial court also vacated its prior order of November 7, 2002, denying Price’s motion to compel and entered a new order granting that motion.
Arbitration
The matter proceeded to arbitration. On March 9, 2006, the arbitrator ordered Francis to appear for deposition on April 17, 2006. Francis did not appear.
The arbitration hearing was scheduled to commence May 1, 2006.
On April 28, 2006, the parties participated in a telephone conference with the arbitrator. At that time, Francis’s counsel advised that a business emergency prevented Francis from attending his April 17, 2006, scheduled deposition. She also represented that she received a letter from a doctor indicating that Francis had an upper respiratory infection that prevented him from “participating in any oral presentation prior to May 7, 2006.” On behalf of appellants, she requested a continuance of the arbitration hearing and a rescheduling of Francis’s deposition. Those requests were denied without prejudice. The arbitrator determined that Francis “shall be provided the opportunity to show good cause why he did not appear at his scheduled deposition. The specific circumstances of the business emergency will be heard by the arbitrator upon the proffer of such competent evidence as may be available.” Moreover, if Francis seeks a continuance of the arbitration hearing based upon “medical unavailability, [he] may produce his medical doctor at the arbitration hearing for sworn testimony and cross-examination. An unsworn hearsay letter from the doctor about [Francis’s] condition is insufficient to establish good cause for a continuance.”
The arbitration proceeding began as scheduled on May 1, 2006. Before any evidence was taken, the arbitrator informed appellants’ counsel that if she was prepared to offer evidence of good cause why Francis did not appear for his deposition and/or of his medical availability, he would suspend the arbitration hearing. “At no time during the evidentiary hearing did counsel ever proffer such evidence.” Likewise, appellants never prepared an arbitration brief, as previously ordered by the arbitrator. And, the only evidence appellants intended to offer consisted of (1) documentary evidence produced by respondents, and (2) cross-examination of respondents’ witnesses.
Following three days of hearings, the arbitrator rendered his award in favor of respondents and against appellants.
On May 15, 2006, the parties again participated in a conference call with the arbitrator. Appellants’ counsel indicated that Francis had recovered from his illness and that he was prepared to be examined by a physician. She further represented that Francis was now prepared to show good cause why he did not appear for his scheduled deposition. On behalf of appellants, she asked that the evidentiary hearing be reopened to allow her to present evidence regarding Francis’s medical unavailability and/or good cause for failing to attend his deposition.
The arbitrator denied appellants’ request, finding “no competent evidence of any kind to support [those] requests.” “Having . . . Francis examined by physicians now would be meaningless. His alleged condition was projected to exist from April 30 to May 7 according to the unsworn letter from his doctor. It is unnecessary to examine him now to determine that he is not currently ill. Such an examination would provide no evidence of his condition between April 30 and May 7, 2006. During . . . Francis’[s] alleged illness and prior to the close of the evidentiary hearing on May 3, 2006, not one scintilla of competent evidence was offered to support the existence of the claimed condition.”
The arbitrator continued: “Even assuming that there could be some business emergency that would support good cause for . . . Francis missing his scheduled deposition, no declaration under penalty of perjury by anyone has been submitted to support such a contention.”
The arbitrator’s final award was rendered on September 20, 2006.
Petitions to confirm arbitration award
On October 13, 2006, the Westlan parties moved ex parte to shorten time for hearing on their motion to affirm the arbitration award. Their request was granted, and a hearing was set for October 27, 2006.
Price filed a separate notice re intention to file petition re arbitration award. In that document, Price’s counsel represented that a complete petition had not yet been finalized because Price had been ill and unable to approve any such petition. On October 23, 2006, Price filed his petition to confirm arbitration award. The hearing on Price’s petition was set for the same date and time as the Westlan parties’ petition.
Appellants opposed respondents’ petitions.
The trial court granted both petitions and entered judgment in favor of respondents.
Appellants’ timely appeal ensued.
In their respondents’ brief, the Westlan parties ask us to take judicial notice of the fact that Ventcom is not a valid California corporation and thus has no standing to participate in this appeal. In light of our conclusions herein, this argument is moot.
DISCUSSION
I. The trial court properly ordered this dispute to arbitration
A. Standard of review
“Under . . . section 1281.2, upon the petition of a party to an arbitration agreement the court determines whether a written arbitration agreement exists and whether the parties should be ordered to arbitrate their controversy.” (Hartnell Community College Dist. v. Superior Court (2004) 124 Cal.App.4th 1443, 1449.)
“‘“Whether an arbitration agreement applies to a controversy is a question of law to which the appellate court applies its independent judgment where no conflicting extrinsic evidence in aid of interpretation was introduced in the trial court.” [¶] . . . Where the trial court’s decision on arbitrability is based upon resolution of disputed facts, we review the decision for substantial evidence. [Citation.]’ [Citation.]” (Amalgamated Transit Union Local 1277 v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 673, 685.)
B. Analysis
“‘The fundamental canon of interpreting written instruments is the ascertainment of the intent of the parties. [Citations.] As a rule, the language of an instrument must govern its interpretation if the language is clear and explicit.’” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1670–1671.)
Quite simply, the plain language of the owner-architect agreement and the construction contract mandate arbitration. Thus, the trial court properly ordered the parties to resolve this dispute through arbitration.
Appellants raise a host of arguments in an attempt to escape arbitration. Each argument fails. First, they assert that appellants and the Westlan parties did not have an enforceable agreement to arbitrate because the reference to the general conditions, which contain the arbitration provision, is only mentioned in a preprinted notation on the front of the construction contract. According to appellants: “This reference is not contained anywhere within the body of the construction contract signed by the parties.”
This representation by appellants and their counsel is patently false. In addition to the notation on the first page of the construction contract, the agreement contains at least 19 different references to the general conditions.
Regardless, even standing on its own, the reference to the general conditions on the first page of the construction contract is an adequate incorporation of the general conditions, including its arbitration provision. “An agreement need not expressly provide for arbitration, but may do so in a secondary document which is incorporated by reference.” (Boys Club of San Fernando Valley, Inc. v. Fidelity & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271.) “The reference to the incorporated document must be clear and unequivocal and the terms of the incorporated document must be known or easily available to the contracting parties.” (Slaught v. Bencomo Roofing Co. (1994) 25 Cal.App.4th 744, 748.) The reference incorporating the general conditions meets these requirements. It appears in plain print on the front page of the parties’ agreement, in addition to numerous places elsewhere in the agreement. And, appellants offer no evidence that they were unaware of the reference or were unable to review the general conditions.
Second, appellants assert that the Westlan parties cannot enforce the arbitration agreement against appellants because “Plaintiff” did not sign the agreement to arbitrate. Aside from the fact that appellants do not adequately explain as to which “appellant” this theory applies, this argument is not compelling. Appellants’ allegations in both the original complaint and the first amended complaint are based upon the existence of the construction contract between the parties. The construction contract identifies the property owner as Ventcom, with Francis as its vice-president; the project is identified as Mantra. The agreement was signed by Francis as vice-president of Ventcom. Pursuant to the doctrine of equitable estoppel, appellants are bound by all terms of the construction contract, including the arbitration provision.
“In the arbitration context, a party who has not signed a contract containing an arbitration clause may nonetheless be compelled to arbitrate when he seeks enforcement of other provisions of the same contract that benefit him. [Citations.]” (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713.) While courts are hesitant to force nonsignatories to arbitration agreements to arbitrate their claims, they will do so in certain circumstances. For example, a nonsignatory might be ordered to arbitrate its claims (1) if there is evidence of “the existence of an agency or similar relationship between the nonsignatory and one of the parties to the arbitration agreement” (NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 76); or (2) if the nonsignatory is a third party beneficiary of the arbitration contract (Van Tassel v. Superior Court (1974) 12 Cal.3d 624, 626).
Applying these principles, appellants cannot escape arbitration by claiming that one or more of them did not sign the arbitration agreement. They were all identified in the construction contract, and they all brought claims based upon that contract. From this, we reasonably infer that they were agents of one another and thus could bind one another to the terms of the construction contract. Additionally, we also conclude that any appellant deemed not to have signed the construction contract was a third party beneficiary of the construction contract. Finally, by deliberately and vaguely grouping themselves together in their allegations against respondents, they cannot be permitted to avoid the arbitration provision on the grounds that one or more may not be a signatory to the agreement. (See, e.g., Holden v. Deloitte and Touche LLP (N.D.Ill. 2005) 390 F.Supp.2d 752, 769, fn. 15 [“The idea of assessing arbitrability based on the allegations in the complaint also makes substantial practical sense. Arbitrability issues must be sorted out sooner rather than later in a case, lest the party seeking to compel arbitration be seen to have waived the issue. As a result, the question of arbitrability would seem to be fairly addressed . . . on the basis of the plaintiff’s allegations and the language of the operative arbitration clause, and not on the basis of issues that might not be resolved until after extensive discovery was completed”].) We will not allow these appellants to “play fast and loose” with the contractual commitment to arbitrate by naming themselves as damaged parties under the terms of the construction contract yet by attempting to avoid the agreement’s arbitration mandate. (Metalclad Corp. v. Ventana Environmental Organizational Partnership, supra, 109 Cal.App.4th at p. 1714.)
Third, appellants claim that Sausser and Staley cannot enforce the arbitration provision because they are not parties to the construction contract. Although Sausser and Staley are not individual signatories to the arbitration agreement entered into by appellants and Westlan, a nonsignatory may compel contractual arbitration in certain circumstances. (Rogers v. Peinado (2000) 85 Cal.App.4th 1, 9–10, fn. 6, overruled on other grounds in Brennan v. Tremco Inc. (2001) 25 Cal.4th 310, 317.) A nonsignatory defendant may enforce an arbitration agreement when there is a sufficient identity of the parties, for example, when the nonsignatory acts as an agent for a defendant who is a party to the arbitration agreement. (Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418; Berman v. Dean Witter & Co., Inc. (1975) 44 Cal.App.3d 999, 1003–1004.) A nonsignatory may also invoke the doctrine of equitable estoppel to compel arbitration when a signatory to the arbitration agreement alleges substantially interdependent and concerted misconduct by the nonsignatory and a signatory to the arbitration agreement. (Rogers v. Peinado, supra, 85 Cal.App.4th at pp. 9–10, fn. 6.)
Those principles apply squarely here. Sausser executed the construction contract on behalf of Westlan. Moreover, appellants allege that all three Westlan parties violated the construction contract. Under these circumstances, Sausser and Staley may enforce the arbitration provision. (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271–272; Metalclad Corp. v. Ventana Environmental Organizational Partnership, supra, 109 Cal.App.4th at pp. 1713–1714.)
Fourth, appellants assert that the construction contract was never authenticated. This argument borders on ridiculous. They attached the construction contract to both their original complaint and their first amended complaint, thereby authenticating it. (Evid. Code, § 1414, subd. (b); 2 Witkin, Cal. Evidence (4th ed. 2000) Documentary Evidence, § 7, p. 139 [a writing may be authenticated via an admission in a pleading].)
II. Substantial evidence supports the trial court’s finding that respondents did not waive their right to compel arbitration
A. Standard of review
We examine the trial court’s ruling that respondents did not waive their right to compel arbitration under the substantial evidence standard of review. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 983.)
B. Analysis
“There is no single test for waiver of the right to compel arbitration, but waiver may be found where the party seeking arbitration has (1) previously taken steps inconsistent with an intent to invoke arbitration, (2) unreasonably delayed in seeking arbitration, or (3) acted in bad faith or with willful misconduct. [Citations.] The moving party’s mere participation in litigation is not enough; the party who seeks to establish waiver must show that some prejudice has resulted from the other party’s delay in seeking arbitration. [Citation.]” (Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 211–212.) Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 992, provides a somewhat longer, more specific list: “In determining waiver, a court can consider ‘(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party. [Citations.]’ [Citation.]”
Applying these factors, we readily conclude that substantial evidence supports the trial court’s rejection of appellants’ waiver theory. As for Price, he promptly moved to compel arbitration upon being served with appellants’ complaint. He only sought discovery, limited to Francis’s deposition, following the trial court’s denial of his petition to compel arbitration. While that deposition commenced, it did so for only two hours; and, Price proceeded with Francis’s deposition because the trial court had ordered the deposition to go forward.
As for the Westlan parties, they too promptly sought arbitration. While they did not join in Price’s motion, they explained their reason to the trial court: They were unaware of Price’s motion at that time because they had just been served with the complaint. They also needed time to obtain the relevant documents, including the construction contract; once they reviewed the construction contract, they served their motion to compel arbitration. All in all, this timing took no more than five months. During that time, the Westlan parties participated in no discovery whatsoever. Under these circumstances, substantial evidence supports the trial court’s finding that the Westlan parties did not unreasonably delay in seeking arbitration. (Allstate Ins. Co. v. Gonzalez (1995) 38 Cal.App.4th 783, 790, 792.)
Moreover, appellants offer no evidence of prejudice. The mere fact that the Westlan parties filed a responsive pleading before moving to compel arbitration does not constitute prejudice to appellants. And, while Francis’s deposition had commenced, it only proceeded for two hours. Under these circumstances, the trial court’s finding that appellants had not demonstrated waiver is supported by substantial evidence.
III. The trial court properly granted respondents’ petition to confirm the arbitration award
A. Standard of review
“The decision to confirm or vacate an arbitration award lies with the trial court. [Citations.] [¶] Our function as an appellate court is to review the trial court proceedings. In this regard, the applicable standards of appellate review of a judgment based on affidavits or declarations are the same as for a judgment following oral testimony: We must accept the trial court’s resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence. [Citation.]” (Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.)
We review pure questions of law de novo. (Garamendi v. Mission Ins. Co. (2005) 131 Cal.App.4th 30, 40.)
B. Analysis
Appellants assert that the arbitrator exceeded his authority by entering an award on the arbitration even though there was insufficient evidence of an enforceable agreement to arbitrate. As set forth above, ample evidence exists indicating an enforceable arbitration agreement. We thus reject this argument.
Appellants next claim that they were substantially prejudiced by the arbitrator’s refusal to postpone the hearing and hear evidence regarding his medical condition.
Generally, the merits of an arbitrator’s decision are not subject to judicial review. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.) “[S]ection 1286.2 . . . subdivision (a), which sets forth grounds for vacating an arbitration award, is an exception to the general rule precluding judicial review. Section 1286.2, subdivision (a)(5) requires a court to vacate an arbitration award when a postponement request supported by sufficient cause is refused and the moving party suffers substantial prejudice.” (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1196.) “Of course, the decision whether to grant a continuance lies in the first instance with the arbitrator.” (Ibid.)
The arbitrator did not abuse his discretion in denying appellants’ request for a continuance. As expressly noted by the arbitrator, appellants failed to present evidence of “sufficient cause.” Other than unsupported representations regarding some vague business emergency and an unspecified, unsubstantiated illness, appellants offered the arbitrator no basis to continue the arbitration hearing. Even at the time of the request for a postponement, which occurred after the hearing was concluded, appellants provided the arbitrator with no admissible evidence, such as a declaration from Francis’s physician, regarding Francis’s purported illness.
Finally, appellants argue that less than 10 days’ notice was given for the hearing on the petitions to confirm the arbitration award.
Section 1290.2 provides, in relevant part: “A petition under this title shall be heard in a summary way in the manner and upon the notice provided by law for the making and hearing of motions, except not less than 10 days’ notice of the date set for the hearing on the petition shall be given.”
This argument does not apply to the Westlan parties. Upon ex parte application and order, they filed and served their petition to confirm the arbitration award and enter judgment in their favor 14 days before the hearing; their petition was filed and served on October 13, 2006, and the hearing was held on October 27, 2006.
As for Price, his petition was heard on less than 10 days notice. However, it is well-established that absent a showing of prejudice, we do not reverse decisions of the trial court. (See Cal. Const., art. VI, § 13; § 475; Evid. Code, § 354; Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 574; Taylor v. Varga (1995) 37 Cal.App.4th 750, 759, fn. 9.) Here, appellants offer no evidence of prejudice. They were able to, and did, file a response to Price’s petition to confirm the arbitration award. They offer no evidence or argument that they were unable to prepare a complete response as a result of the shortened time. Consequently, we will not reverse the trial court’s order confirming the arbitration award and entering judgment in Price’s favor.
DISPOSITION
The judgment of the trial court is affirmed. Respondents are entitled to costs on appeal.
We concur: BOREN, P. J., CHAVEZ, J.