Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. BC428532, Elizabeth Allen White, Judge.
Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer, and Vincent S. Green for Defendants and Appellants.
Brentwood Legal Services and Steven L. Zelig for Plaintiff and Respondent.
SUZUKAWA, J.
Kathryn M. Stanton and the Law Offices of Selvin & Weiner appeal from an order partially denying their petition to compel arbitration of an action against them and three other defendants for legal malpractice and related claims. We conclude that the trial court erred in denying the petition in part and reverse and remand the matter for the entry of a new order granting the petition.
FACTUAL AND PROCEDURAL BACKGROUND
Lisa Marie (plaintiff) filed a complaint with 22 causes of action against attorneys Stanton, the Law Offices of Selvin & Weiner (S&W), Richard H. Gordon, Barry M. Weisz, and Silver & Freedman, a professional corporation (the Silver firm). The allegations of the complaint arose out of defendants’ legal representation of plaintiff.
I. The Chantal Action
One of the cases out of which the legal malpractice claims arose was HRH Marie-Chantal v. Lisa Marie (Super. Ct. L.A. County, No. BC398856, the Chantal action). The following is alleged in the operative pleading, the first amended complaint. HRH Marie-Chantal (Chantal), a Greek princess, filed a lawsuit against plaintiff on September 25, 2008, for failure to return a security deposit for a house in Beverly Hills she had leased from plaintiff. On November 5, 2008, after plaintiff failed to file an answer to the complaint, Chantal filed a request for entry of default and the clerk entered a default against plaintiff. On November 10, 2008, Stanton and S&W, who had been retained by plaintiff, filed a peremptory challenge against the judge assigned to the case. On November 25, 2008, Stanton filed a motion to quash service of the summons. On December 22, 2008, the motion to quash service was denied. Plaintiff then retained Gordon as counsel, and he moved to set aside the default. Gordon requested a continuance of the default hearing in order to procure an affidavit from Stanton attesting to attorney fault as a ground for vacating the default. Gordon filed a declaration from Stanton on plaintiff’s behalf that did not explicitly admit to any fault on Stanton’s part. The court denied plaintiff’s motion to set aside the default and instructed Chantal to prove up the judgment.
Plaintiff then retained the Silver firm and Weisz, but the default judgment was never set aside. Judgment was ultimately entered against plaintiff in the amount of $242,882.69.
II. Stanton’s Retainer Agreement With Plaintiff
Prior to the Chantal action, plaintiff had retained S&W and Stanton to represent her in a lawsuit she had filed against Bob Cohen (Lisa Marie v. Bob Cohen et al., Super. Ct. L.A. County, No. SC092168, the Cohen action). For the Cohen action, she had signed a retainer agreement with S&W dated October 12, 2007. That Agreement provided in pertinent part: “17. ARBITRATION AND WAIVER OF JURY TRIAL: [¶] THIS PARAGRAPH 17 SETS FORTH THE TERMS OF AN ADDITIONAL AGREEMENT BETWEEN U.S. TO ARBITRATE DISPUTES. WE EACH AGREE THAT ANY DISPUTE BETWEEN U.S. (INCLUDING, WITHOUT LIMITATION, BETWEEN YOU AND ANY INDIVIDUAL ATTORNEY AT THE FIRM and/or THE FIRM) SHALL BE SUBJECT TO BINDING ARBITRATION. [¶] A. ARBITRATION OF PROFESSIONAL LIABILITY OR OTHER CLAIMS. IF A DISPUTE ARISES BETWEEN YOU AND S&W OVER ANY OTHER ASPECT OF THE ATTORNEY-CLIENT RELATIONSHIP, INCLUDING WITHOUT LIMITATION, A CLAIM FOR BREACH OF PROFESSIONAL DUTY, THAT DISPUTE WILL BE RESOLVED BY BINDING ARBITRATION.”
When plaintiff retained S&W for the Chantal action in 2008, Stanton, on behalf of S&W wrote a letter to plaintiff on October 13, 2008, stating, “We have agreed to represent you under the same terms and conditions as were set forth in your original engagement agreement with us with regard to Bob Cohen... that you signed on October 12, 2007, a copy of which is enclosed for your convenience.” The letter asked plaintiff to sign a copy of the letter confirming her understanding and agreement to its terms. Plaintiff signed the letter, and wrote under her signature, “At the present time please only file a motion to Quash Marie-Chantal’s suit for improper service. [¶] Thank you. [¶] Lisa Marie.”
III. The Petition to Compel
Plaintiff filed her initial complaint on December 21, 2009, against Stanton, S&W, Gordon, the Silver firm, and Weisz. It does not appear from the record that any of the defendants filed an answer to the complaint.
S&W and Stanton filed a petition to compel arbitration on May 12, 2010. The petition set forth the terms of the retainer agreement in the Cohen action and the letter retainer agreement for the Chantal suit. The hearing on the petition was set for August 17, 2010.
On May 24, 2010, the Silver firm and Weisz also filed a petition to compel arbitration, set for hearing on August 20, 2010, based upon a retainer agreement signed by plaintiff.
Gordon, who did not have a retainer agreement with plaintiff that contained an arbitration clause, filed a response to S&W and Stanton’s petition, stating that he was willing to stipulate to binding arbitration as long as all defendants participated.
On August 17, 2010, at a hearing on the S&W/Stanton petition, the trial court found that there was a binding arbitration agreement between plaintiff and S&W and Stanton, but due to the pending Silver/Weisz petition and Gordon’s involvement, it recognized that there was the possibility of conflicting rulings. It continued the matter so that it could be heard together with the Silver/Weisz petition.
IV. The First Amended Complaint
On August 17, 2010, plaintiff filed a first amended complaint against S&W, Stanton, the Silver firm, Weisz, and Gordon. In the first seven causes of action against Stanton and S&W, she alleged fraud in the inducement and in performance, negligent misrepresentation, breach of oral and implied contract, breach of fiduciary duty, negligence, intentional infliction of emotional distress, and unjust enrichment in the Chantal lawsuit. She separately asserted the same seven legal claims for relief against Gordon, the Silver firm, and Weisz, all with respect to the Chantal lawsuit. Finally, she alleged a cause of action against Stanton and S&W for fraud and breach of fiduciary duty with respect to the Cohen action.
The amended complaint alleged: after plaintiff had retained Stanton and S&W to represent her in the Chantal action, they abandoned her in December 2008 by allowing default to be entered; that plaintiff retained Gordon who mishandled the matter by not properly drafting a motion to set aside the default and charging excessive fees; that Gordon, Stanton, S&W, the Silver firm, and Weisz were agents, employees, partners, and aided and abetted each other; that Gordon failed to obtain a declaration from Stanton and was incapable of drafting an appropriate motion to set aside the default; that Weisz and the Silver firm were hired in the summer of 2009; that Weisz and the Silver firm failed to file a motion for reconsideration or a motion for new trial; that plaintiff relied on defendants to her detriment; that defendants were not experienced; that defendants made misrepresentations and concealed their intent to exploit plaintiff; and that defendants overbilled plaintiff and did not intend to resolve the case in an efficient and cost effective manner.
V. The Ruling
On August 24, 2010, the combined hearing on the petitions to compel was held. The court stated that its tentative ruling was to order plaintiff to arbitrate her claims against Stanton and S&W as they related to the Cohen action and to deny the petitions for arbitration of claims pursuant to the Chantal action. Stanton and S&W’s counsel argued that the case of Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696 (Molecular) applied in this case and that the causes of action against Gordon were inextricably tied to the causes of action of the other defendants and that plaintiff was equitably estopped from refusing to arbitrate with him. The court allowed plaintiff the opportunity to brief the issue and continued the hearing.
On September 3, 2010, the continued hearing took place. Plaintiff’s counsel argued that there were no new facts alleged in the first amended complaint that would bring the Gordon claims within any arbitration agreement. Counsel for Weisz and the Silver firm argued that the allegation in the complaint that each of the law firms and attorneys was the agent and employee of the others and that this resulted in all of them being bound by the arbitration clause. The court stated: “I think you’re stretching the holding of Molecular[.] In that case, it was a question of the third-party Bio-Rad stepping into the shoes of [Ciphergen]. In this case we have no signed arbitration agreement between plaintiff and Gordon. And even though Gordon is willing to arbitrate, plaintiff has clearly indicated plaintiff is not willing to arbitrate. So we don’t have the same situation where you have one party simply stepping into the shoes of another where an arbitration provision exists. We have no arbitration provision. So I think it’s a real stretch to say that the Molecular case controls here.... [¶]... [¶] [I]t’s a simple act of pleading. It’s not an agreement. It’s not a binding agreement. You’re attempting to, in effect, bootstrap somebody into an agreement who wasn’t part of an agreement by virtue of simple allegations on agency.... So the motion to compel is granted with respect to plaintiff and her claims against Stanton and [S&W] [a]s to the Cohen action[.] [D]enied for the claims arising under the Chantal action and denied as to Weisz and [the] Silver [firm].”
The court granted S&W and Stanton’s motion to compel arbitration of the Cohen action. It denied the motion with respect to the Chantal action.
This timely appeal followed.
DISCUSSION
Code of Civil Procedure section 1281.2 provides that a court shall order parties to arbitrate a controversy if it determines that an agreement to arbitrate that controversy exists. Subdivision (c) of that section provides an exception to that rule. The court may refuse to enforce a contractual arbitration provision if one of the parties is also a party to litigation with a third party and there is a possibility of conflicting rulings.
On appeal of an order denying a petition to compel arbitration, the standard of review depends on the basis of the court’s order. If the court’s denial rests solely on a decision of law, we employ a de novo standard of review. (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.) If the trial court’s decision is based upon resolution of disputed facts, we review it for substantial evidence. (NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 71.)
The party filing the petition bears the burden of proving the existence of a valid agreement to arbitrate. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The scope of arbitration is dependent on the nature of the agreement of the parties. (Molecular, supra, 186 Cal.App.4th at p. 705, quoting Larkin v. Williams, Woolley, Cogswell, Nakazawa & Russell (1999) 76 Cal.App.4th 227, 230.) However, public policy favors the arbitration of disputes and any doubts should be resolved in favor of arbitration. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1282.)
In this case, the trial court found there was a valid agreement to arbitrate between plaintiff and Stanton/S&W. However, because Gordon was not a signatory to the agreement to arbitrate, the court believed that it could not compel plaintiff to arbitrate her dispute with him and, for that reason, the possibility of conflicting rulings prevented it from ordering the remaining defendants to arbitration.
In her complaint, plaintiff alleged that Gordon, S&W, Stanton, the Silver firm, and Weisz all were “agents, employees, partners, ostensible partners, partners by estoppel and/or the equivalent, and in doing the things herein alleged were act[ing] within the course, scope of such relationship... [and] aided and abetted each other.” This allegation is incorporated into each of the 22 causes of action.
Plaintiff does not address the effect of her pleading on the motion to compel.
Parties who are not signatories to an agreement containing an arbitration provision, but who are acting as agents for a party to the agreement, may be entitled to enforce arbitration provisions. (Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418.) Despite the trial court’s finding to the contrary, plaintiff is bound by the allegation in her complaint that defendants are agents of one another. (Heater v. Southwood Psychiatric Center (1996) 42 Cal.App.4th 1068, 1079-1080, fn. 10.) With respect to the effect of that allegation, we find instructive the case of Westra v. Marcus & Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759 (Westra).
In that matter, the plaintiffs, individuals and a family trust, entered into an agreement to purchase a gas station from a partnership, Skyline 23 King City, LP (Skyline). The purchase agreement contained an arbitration clause. The real estate agent and broker, Marcus & Millichap Real Estate Investment Brokerage Company, Inc. (MM), was identified in the purchase agreement as the “agent” but was not a signatory to the contract nor did it initial or otherwise consent to the arbitration clause. (Westra, supra, 129 Cal.App.4th at p. 762.) When the plaintiffs filed a lawsuit alleging inter alia, fraud in connection with the purchase of a parcel of real estate, both Skyline and MM filed petitions to compel arbitration. The trial court granted the petition to compel as to Skyline, but denied it as to MM. (Ibid.) On appeal, the order denying MM’s petition was reversed. The Court of Appeal found that MM was entitled to arbitration because it had an agency relationship with the signatory parties to the purchase agreement. MM was identified as an agent in the agreement and plaintiffs specifically pled in their complaint that MM acted as their real estate agent. (Id. at p. 766.) Of particular relevance to this case, the Court of Appeal held that the allegations of agency in the plaintiff’s complaint constituted judicial admissions that MM was acting as the agent of the signatory parties. (Id. at pp. 766-767.)
Here, because plaintiff’s allegation of agency is a binding admission, she cannot seek to avoid arbitration based upon the lack of a signed agreement with Gordon containing an arbitration provision. And since Gordon is willing to arbitrate the matter as long as all defendants participate, there is no danger of the inconsistent rulings that the trial court feared. The trial court’s order denying Stanton and S&W’s petition in part was error.
As there was an agreement to arbitrate between plaintiff and Stanton/S&W and plaintiff cannot avoid arbitration of her dispute with Gordon due to his being an agent of Stanton and S&W, we need not address the other issues discussed by the parties.
DISPOSITION
The portion of the order denying Stanton and S&W’s petition to compel arbitration is reversed. In all other respects, the order is affirmed. The matter is remanded to the trial court with directions to enter a new and different order granting the petition to compel arbitration of the Chantal action. Stanton and S&W shall recover their costs on appeal.
We concur: EPSTEIN, P.J., MANELLA, J.