Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County Super. Ct. No. BC 358999. Malcolm H. Mackey, Judge.
Andrews & Hensleigh and Barbara Hensleigh for Defendant and Appellant.
Law Offices of Brandon A. Block and Brandon A. Block; Sol Law Firm, Credence E. Sol and Stacey M. Tidball for Plaintiff and Respondent.
ROTHSCHILD, J.
Defendant John Rotondo appeals from the trial court’s order denying his petition to compel arbitration of an alleged breach of contract claim involving a business loan from plaintiff Arthur Oviedo. Rotondo contends that despite the lack of an arbitration provision in the agreement that is the subject of this lawsuit, the court should have ordered arbitration because another agreement between the parties that does contain an arbitration provision is closely connected to the subject agreement. We disagree and affirm.
BACKGROUND
On or about March 28, 2003, Rotondo borrowed $70,000 from Oviedo so that Rotondo would be able to make his capital contribution to Pacific Imaging, L.L.C. (Company), a company that Oviedo, Rotondo, and others intended to establish in Redondo Beach to acquire and operate medical diagnostic and imaging equipment. The loan was memorialized by a handwritten promissory note (Note) in which Rotondo offered his interest in the Company as collateral and agreed to forfeit his rights and interest in the Company if he did not repay the loan by August 1, 2005. The Note did not contain an arbitration provision.
These facts are taken from the allegations in Oviedo’s unverified complaint and certain statements in his declarations in opposition to the petition to compel arbitration. Rotondo accepts these to be true for purposes of this appeal only.
The full text of the promissory note reads, “I Arthur Oviedo loan John Rotondo 20 thousand dollars beside the 50 thousand dollars I give him in cash for the Imaging center in the south bay[.] [A]s collateral John Rotondo will hand over his shares/Interest [illegible] He pays me back by August 1, 2005[.] If not John Rotondo forfeits all his interest & rights of the Imaging center. (sign) [¶] John Rotondo[.]”
On May 9, 2003, Oviedo, Rotondo, and nine other individuals signed an “Operating Agreement” (Agreement) concerning the Company. Among other terms, the Agreement contained an arbitration provision: “Any action to enforce or interpret this Agreement, or to resolve disputes with respect to this Agreement as between the Company and a Member, or between or among the Members, shall be settled by arbitration in accordance with the rules of the American Arbitration Association.” The Agreement, however, did not expressly incorporate the Note or refer to it or the loan. The Agreement also provided that a member may not encumber or transfer his interest unless the transaction is approved by methods delineated in the Agreement, and that any transfer without such approval shall be void.
On or about March 26, 2004, Rotondo repaid $15,000 of the $70,000 that he owed to Oviedo. In late summer of 2004, in exchange for the original Note, Rotondo gave Oviedo a certificate of Rotondo’s interest in Pacific Imaging. Rotondo never repaid the remaining $55,000.
On September 22, 2006, Oviedo filed suit against Rotondo for breach of contract, seeking repayment of the $55,000 plus interest and attachment of Rotondo’s shares in the Company. In his answer, Rotondo contended the Agreement and the Note were so closely related that the Agreement’s arbitration provision applied to the Note; he also argued that the promissory note was a forgery.
Rotondo filed a petition to compel arbitration, which the court denied. At the hearing, the court inquired whether the parties had agreed to arbitrate the promissory note and whether the Agreement incorporated the Note by reference. Learning the answer to both questions was negative, the court denied Rotondo’s petition, stating, “The Company’s Operating Agreement with its arbitration provision is not implicated here. The terms of the Promissory Note and the Operating Agreement are separate and the terms of each are not incorporated into the other. Therefore, Code of Civil Procedure section 1281 does not apply here.” Rotondo timely appealed. (See Code Civ. Proc., § 1294, subd. (a).)
DISCUSSION
Although California has a strong policy favoring arbitration, this general policy cannot substitute for an actual agreement to arbitrate. (Marsch v. Williams (1994) 23 Cal.App.4th 250, 254 (Marsch).) While “[t]he agreement to arbitrate need not be contained in the contract at issue, but may be contained in a collateral document which is incorporated by reference[,]” “the right to compel arbitration depends upon the contract between the parties,” and “a party can be compelled to submit a dispute to arbitration only where he has agreed in writing to do so.” (See id. at p. 255.)
The Note contains no arbitration clause. The Agreement, which contains an arbitration clause, does not incorporate the Note by reference. Nor does the Note incorporate the Agreement by reference. Rotondo contends, however, that despite the lack of express incorporation, because the two agreements are so closely related, the arbitration provision in the Agreement applies to the Note. We disagree. Rotondo does not cite any authority in which the court ordered arbitration of a claim that was not covered by an arbitration provision contained in the contract at issue or incorporated by reference. His reliance on Marsch and on Pioneer Take Out Corp. v. Bhavsar (1989) 209 Cal.App.3d 1353 (Pioneer) is unavailing. In Marsch, the Court of Appeal affirmed the denial of a motion to compel arbitration in a case involving two contracts, neither of which was incorporated by reference in the other. (Marsch, supra, 23 Cal.App.4th at pp. 252-253, 255.) Any statements in Marsch concerning the possible propriety of compelling arbitration in the absence of incorporation by reference are dicta and cannot support Rotondo’s position in this case. Pioneer, in contrast, involved a contract with an arbitration agreement that was incorporated by reference in a second contract that was the source of the parties’ dispute. (Pioneer, supra, 209 Cal.App.3d at p. 1355.) Because neither the Note nor the Operating Agreement incorporates the other by reference, Pioneer is distinguishable.
Rotondo also cites Lewsadder v. Mitchum, Jones & Templeton, Inc. (1973) 36 Cal.App.3d 255 (Lewsadder), but that case is inapposite. Lewsadder involved only the question of whether the plaintiff’s claims arose out of his employment with the defendant, and therefore it has no bearing on the issues in this case. (Id. at pp. 258-261.) The other authorities that Rotondo cites are similarly inapposite.
Mayhew v. Benninghoff, (1997) 53 Cal.App.4th 1365, held that an attorney’s broadly drafted arbitration clause in a retainer agreement with a client could not be applied to other business dealings between the attorney and client because of the attorney’s special position and power to take advantage of a client. (Id. at pp. 1367, 1369.) Collins v. D. R. Horton, Inc., (D. Ariz. 2003) 252 F.Supp.2d 936, compelled arbitration of all of the plaintiffs’ claims because all claims were covered by the parties’ arbitration agreement, which covered any claim “arising in connection with” the contract. (Id. at pp. 939-940.) This case is distinguishable, because the Agreement’s arbitration provision does not cover all claims “arising in connection with” the Agreement.
DISPOSITION
The order is affirmed. Oviedo shall have his costs on appeal.
We concur: MALLANO, Acting P. J., JACKSON, J.
(Judge of the L. A. S.Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)