Opinion
E071742
06-09-2020
SAFE SCAFFOLDING, Plaintiff and Respondent, v. MOJAVE SOLAR, LLC, Defendant and Appellant.
Munger, Tolles & Olson, Lisa J. Demsky, and Jeremy A. Lawrence for Defendant and Appellant. Tycko & Zavareei and Sabita J. Soneji; Salek Law Firm and Keith Salek for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. CIVDS1814142) OPINION APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge. Affirmed in part; reversed in part with directions. Munger, Tolles & Olson, Lisa J. Demsky, and Jeremy A. Lawrence for Defendant and Appellant. Tycko & Zavareei and Sabita J. Soneji; Salek Law Firm and Keith Salek for Plaintiff and Respondent.
Defendant and appellant Mojave Solar, LLC (Mojave) is the owner of the Mojave Solar Project (the MSP), a renewable energy generation facility located in the Mojave Desert, about 20 miles northwest of Barstow. To build the MSP, Mojave received a $1.2 billion loan from the United States Department of Energy (DOE). Mojave's affiliate, Abener Teyma Mojave General Partnership (Abener Teyma), was the MSP's general contractor and hired plaintiff and respondent Safe Scaffolding by written contract to perform scaffolding-related services and equipment during the MSP's construction (the subcontract).
In this lawsuit, Safe Scaffolding sued Mojave to recover what it claims Abener Teyma still owes it under the subcontract for its work on the MSP. Safe Scaffolding's complaint asserts two breach of contract claims premised on two different contracts. One claim is based on the subcontract, which Safe Scaffolding alleges Mojave is a party to under an alter ego theory of liability (the alter ego claim). The other claim is based on Mojave's loan agreement with the DOE (the loan agreement). Safe Scaffolding alleges that agreement required Mojave to demonstrate, as a condition precedent to receiving loan advances, that the subcontractors working on the MSP were paid for their services. Safe Scaffolding also alleges it is a third party beneficiary of that condition in the loan agreement (the third party beneficiary claim). The subcontract contains an arbitration clause; the loan agreement does not.
Mojave filed a petition to compel arbitration of both breach of contract claims under the subcontract's arbitration clause. The trial court granted the petition in part, compelling arbitration of the alter ego claim because it was premised on the subcontract. However, it denied the petition as to the third party beneficiary claim on the ground the claim "is based upon a different contract"—the loan agreement—which does not contain an arbitration clause.
Mojave appeals that ruling, arguing the court erred by failing to apply the doctrine of equitable estoppel to require Safe Scaffolding to arbitrate its third party beneficiary claim. We agree. Under the equitable estoppel doctrine as applied in the arbitration context, fairness dictates that a plaintiff must arbitrate their claims against nonsignatories to a contract containing an arbitration clause if those claims are ""'based on the same facts and are inherently inseparable'" from arbitrable claims against signatory defendants."'" (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1287 (Rowe).) As we explain, Safe Scaffolding's third party beneficiary claim, while partially relying on Mojave's loan agreement with the DOE, relies on the subcontract for its theories of liability and damages. Because Safe Scaffolding agreed to arbitrate disputes regarding performance of the subcontract, we conclude the doctrine of equitable estoppel applies. We therefore reverse the trial court's ruling with directions to grant Mojave's petition to compel arbitration in its entirety.
I
FACTS
A. The Agreement to Arbitrate and Safe Scaffolding's Lawsuit
In November 2014, Safe Scaffolding entered into a subcontract with Abener Teyma in which it agreed to supply, erect, and remove scaffolding in connection with the MSP's construction. Under the subcontract, Safe Scaffolding agreed to be paid on a time and material basis "not to exceed Contract price of $400,000." The subcontract established various labor and equipment rates and required Safe Scaffolding to submit monthly progress reports and invoices for Abener Teyma's approval.
For example, in addition to the labor and equipment rates, the subcontract established additional 15 percent markups for scaffolding materials that were already onsite; 15 percent markups for additional materials; 6 percent markups for subcontractors' services; 6 percent markups for third-party equipment rentals; and additional labor-related charges of $55 per person per day, $35 per person for travel time, and $165 per hour for engineering services.
The subcontract also contained a broad arbitration clause, requiring arbitration before the International Chamber of Commerce of "any dispute . . . or claim of any kind arising between the Parties in connection with or arising out of this Contract, including, but not limited to, any question regarding the existence, validity, interpretation, scope or termination of this Contract or the performance (or failure to perform) the Work, whether during the performance of the Work or after its completion and whether before or after the abandonment or breach of this Contract." The subcontract's choice of law clause provided that California law would govern the "application and interpretation" of the agreement.
By December 2014, the MSP began commercial operations. Although Safe Scaffolding billed Abener Teyma $551,035.62 for its services and equipment, Safe Scaffolding alleges Abener Teyma failed to pay $210,759.29 of that amount. Safe Scaffolding filed a mechanic's lien lawsuit to recover the amount outstanding but ultimately dismissed the suit. In 2016, Abener Teyma filed for bankruptcy.
In June 2018, Safe Scaffolding filed this lawsuit against Mojave to recover the amount still due under the subcontract. Safe Scaffolding styled its complaint as a class action brought on behalf of itself and other contractors and suppliers who have not been fully paid under their subcontracts with Abener Teyma for their work on the MSP.
As of the time of this appeal, Safe Scaffolding has not moved for class certification.
The complaint alleged the following. Mojave and Abener Teyma are subsidiaries of Abengoa S.A. (Abengoa), a Spanish engineering and clean technology company. Abener Teyma operates as a "shell company" for, or alter ego of, Mojave.
In September 2011, Mojave entered into a $1.2 million loan guarantee agreement with the DOE for the construction of the MSP. According to Safe Scaffolding, the loan agreement "specifically contemplated that [Mojave] would hire a general contractor and, through that contractor, hire and pay subcontractors and suppliers to build the solar farm." The loan agreement also contained various conditions precedent to Mojave receiving advances from the DOE. One of those conditions required Mojave to demonstrate to DOE's satisfaction that "all balances that have become due and payable or unsettled claims with the [general contractor] or any subcontractor or material supplier, if any, have been fully paid or will be paid with the proceeds of the requested [loan] Advance." Safe Scaffolding alleged that it performed its work to Abener Teyma's satisfaction, as is required in order for it to receive payment under the subcontract, but that Abener Teyma owed it $210,759.29 in compensation for that work.
Safe Scaffolding's complaint asserts four causes of action against Mojave—(1) breach of the loan agreement (the third party beneficiary claim); (2) breach of the subcontract (the alter ego claim); (3) unjust enrichment; and (4) unfair business practices in violation of California's Unfair Competition Law (Cal. Bus. & Prof. Code, § 1720 et seq.). To support its alter ego claim, Safe Scaffolding alleged Mojave is liable for Abener Teyma's debts under the subcontract because the two companies operate as alter egos of one another. To support its unjust enrichment claim, Safe Scaffolding alleged Mojave had been unjustly enriched by "participating in and benefiting from the improper diversion of assets from" Abener Teyma that could have been used to pay subcontractors like Safe Scaffolding. As for its unfair business practices claim, Safe Scaffolding alleged Mojave caused its affiliate Abener Teyma to breach its subcontracts by "failing to ensure that the [DOE] loan funds were used to compensate subcontractors and material suppliers" and "undercapitaliz[ing] and/or divert[ing] funds from" Abener Teyma, causing the MSP's general contractor to be unable to pay its subcontractors.
Finally, to support its third party beneficiary claim, Safe Scaffolding alleged Mojave breached the loan agreement by failing to satisfy the condition requiring it to ensure all subcontractors working on the MSP were fully paid. Specifically, Safe Scaffolding alleged that Mojave "breached [the condition precedent] by undercapitalizing and/or diverting loan proceeds from its affiliate, [Abener Teyma], instead of ensuring that they were used to pay subcontractors and material suppliers." Safe Scaffolding alleged that although it is not a signatory to the loan agreement, it is a third party beneficiary of the relevant condition precedent and thus may sue to enforce it. It alleged it suffered damages under the loan agreement "in the amount of those [loan] funds advanced but never paid [to the subcontractors] for work performed."
Safe Scaffolding did not allege that it entered into any agreements directly with Mojave, and it did not identify any contracts other than the subcontract that provided the terms and conditions of its work and payment.
B. The Petition to Compel Arbitration
Citing the arbitration clause in the subcontract, Mojave filed a petition to compel arbitration and stay the court proceedings pending arbitration. Mojave argued arbitration was required under the "alter ego" and "equitable estoppel" doctrines recognized in Rowe and other cases. Safe Scaffolding countered that federal law, not California law applied, that arbitration was improper because the lawsuit was a putative class action and because the subcontract's arbitration clause was unconstitutional, that the trial court was required to make factual findings as to whether Mojave was an alter ego of Abener Teyma before ordering arbitration, and that its claims—all except the alter ego claim—were not sufficiently related to the subcontract to require arbitration.
After a hearing, the court granted Mojave's petition in part and denied it in part. The court concluded the alter ego, unjust enrichment, and unfair business practices claims were arbitrable because Safe Scaffolding alleged Mojave was the alter ego of Abener Teyma and Abener Teyma was a signatory of the subcontract, which contained a valid arbitration clause. However, the court found the third party beneficiary claim was "based upon a different contract," which contains "no agreement to arbitrate," and as a result denied Mojave's petition as to that claim. The third party beneficiary claim is the only claim at issue in this appeal. Safe Scaffolding dismissed its three other claims after the trial court ordered them to be arbitrated. Mojave filed this timely appeal.
II
ANALYSIS
Whether the subcontract's arbitration clause applies to Safe Scaffolding's third party beneficiary claim is an issue we consider de novo because it requires the application of law to undisputed facts and allegations. (Rowe, supra, 153 Cal.App.4th at p. 1283 [independently reviewing whether doctrine of equitable estoppel applied to allow nonsignatory to enforce an arbitration agreement]; Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 267 (Boucher) [same]; Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 708 (Molecular) ["'Although equitable estoppel is generally a question of fact, it is a question of law when the facts are undisputed and only one reasonable conclusion can be drawn from them'"].) And because the subcontract containing the arbitration clause also contains a choice-of-law provision selecting California law, we will decide this issue applying California law.
Our state has "[a] strong public policy [that] favors the arbitration of disputes, and doubts should be resolved in favor of deferring to arbitration proceedings." (Rowe, supra, 153 Cal.App.4th at p. 1282.) Code of Civil Procedure section 1281.2 generally requires arbitration of all claims that are subject to an enforceable arbitration agreement. The statute reads 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" the petitioner has previously waived the right to compel arbitration or the arbitration agreement is subject to rescission. (Code Civ. Proc., § 1281.2.)
"As a general matter, only signatories to an arbitration agreement may enforce it." (Rowe, supra, 153 Cal.App.4th at p. 1284.) However, two exceptions to this general rule are relevant here—the alter ego exception and the exception based on the doctrine of equitable estoppel. (Ibid.) Under the alter ego exception, a nonsignatory to an arbitration agreement may invoke that agreement if they are sued as the alter ego of a party who has signed the agreement. Here, the trial court applied the alter ego exception when it ordered arbitration of the alter ego, unjust enrichment, and unfair business practices claims. (See Rowe, at p. 1285 [nonsignatories were "'entitled to the benefit of the arbitration provisions'" because the plaintiff alleged they were the signatory's alter ego].) This appeal concerns the other exception, equitable estoppel.
"Equitable estoppel precludes a party from asserting rights 'he otherwise would have had against another' when his own conduct renders assertion of those rights contrary to equity." (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713 (Metalclad).) "In the arbitration context, . . . the equitable estoppel doctrine applies when a party has signed an agreement to arbitrate but attempts to avoid arbitration by suing nonsignatory defendants for claims that are "'based on the same facts and are inherently inseparable'" from arbitrable claims against signatory defendants." (Ibid.) In other words, the doctrine applies when the claims the plaintiff asserts against the nonsignatory are "'dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.'" (Molecular, supra, 186 Cal.App.4th at p. 715, italics added, quoting Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 217-218.)
The doctrine exists under both federal and California law, and when it applies, "the nonsignatory has a right to enforce the arbitration agreement." (Molecular, supra, 186 Cal.App.4th at p. 706.) The doctrine's purpose is "to prevent a party from using the terms or obligations of an agreement as the basis for his claims against a nonsignatory, while at the same time refusing to arbitrate with the nonsignatory under another clause of that same agreement." (Id. at p. 715.)
The following cases are instructive to our analysis. In Rowe, the plaintiff entered into a purchase agreement with a corporation he cofounded whereby he agreed to sell his ownership interest back to the company. (Rowe, supra, 153 Cal.App.4th at p. 1280.) The purchase agreement contained an arbitration clause. (Ibid.) When the company failed to make the final installment payment, the plaintiff sued the company and two of its directors to recover the outstanding purchase amount. (Id. at p. 1279.) The plaintiff asserted a claim for breach of contract, as well as three statutory claims based on the directors' alleged breaches of their obligations under the Corporations Code—such as their failure to provide proper notice to the plaintiff about the company's dissolution, their participation in the improper distribution of the company's assets, and their improper receipt of those assets from the company. (Rowe, at p. 1281.) Each claim sought to recover as damages the final installment payment under the purchase agreement. (Ibid.) The court held that because the statutory claims "rely upon, make reference to, presume the existence of, and are intertwined with" the purchase agreement, the plaintiff was equitably estopped from avoiding arbitration under that agreement. (Id. at p. 1287.) Also relevant to the court's conclusion was the fact the statutory claims sought damages based on the amount owed under the purchase agreement. (Ibid.)
In Metalclad, the plaintiff agreed to sell one of its subsidiaries to another company by way of a purchase agreement that contained an arbitration clause. (Metalclad, supra, 109 Cal.App.4th at pp. 1709-1710.) The plaintiff claimed it also entered into an oral agreement with the buyer's parent company whereby the parent company essentially guaranteed the buyer's payment obligations by agreeing to invest funds in the acquired company so the plaintiff would eventually receive the full purchase price. (Id. at p. 1709.) When the buyer failed to make the full payment under the purchase agreement, the plaintiff sued the parent company for breaching its oral agreement to invest in the acquired company and for defrauding the plaintiff. (Id. at p. 1710.) The court held the doctrine of equitable estoppel required the plaintiff to arbitrate its claims against the parent company even though the parent was not a party to the arbitration agreement. (Id. at p. 1717.) The court concluded the plaintiff's claims were "'intimately founded in and intertwined with' the underlying [sale] contract" because they alleged that the parent company's failure to satisfy its own obligations "caused [the buyer] to breach the underlying contract" to pay the full purchase price to the plaintiff. (Ibid.) As the court described it, although the plaintiff signed a contract containing an arbitration clause, it "now, in effect, seeks the benefit of that contract in the form of damages from [the parent company] while avoiding its arbitration provision. Estoppel prevents this." (Ibid.; cf. Cooper Industries, LLC v. Pepsi-Cola Metro. Bottling Co. (Tex. App. 2015) 475 S.W.3d 436, 444 [compiling decisions from various jurisdictions confirming "that a guarantor or surety of a party's obligation under a contract containing an arbitration clause may invoke or be bound by that clause in a suit regarding the obligation"].)
Metalclad and Boucher, which we discuss next, were decided under the Federal Arbitration Act, but we find them persuasive authority on the application of the equitable estoppel doctrine in the arbitration context. (See Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, 553 ["California courts often look to federal law when deciding arbitration issues under state law"].)
In Boucher, the plaintiff had an employment agreement (containing an arbitration clause) with his employer when another company acquired the employer's business and changed the terms of his employment. (Boucher, supra, 127 Cal.App.4th at p. 265.) The plaintiff sued both companies, claiming they owed him compensation under the employment agreement and the Labor Code. He also sought penalties under the Labor Code and asserted unfair competition claims based on the companies' failure to pay that compensation. (Boucher, at p. 272.) In addition, the plaintiff claimed that the more recent employer had interfered with his performance of his contractual obligations under his employment agreement with his original employer. (Ibid.) The court held that because the plaintiff's claims, including the statutory and tort claims, relied on the employment contract—"even if not exclusively"—the doctrine of equitable estoppel applied to allow the nonsignatory employer to compel arbitration. (Ibid.) The court found that the alleged breaches of the employment contract served as a predicate for the companies' alleged liability and damages under the various claims, including the statutory and tort claims. The court reasoned that "a party may not make use of a contract containing an arbitration clause and then attempt to avoid the duty to arbitrate." (Ibid.)
These cases illustrate that equitable estoppel applies when a plaintiff agrees to arbitrate disputes arising out of a contract and then asserts claims against a nonsignatory defendant that rely on the terms of that contract for their theories of liability and damages. Such is the case here.
The allegations in Safe Scaffolding's complaint demonstrate that the theories of liability and theory of damages for the third party beneficiary claim are based on the obligations in its subcontract with Abener Teyma. Safe Scaffolding alleges that the loan agreement imposed a contractual obligation on Mojave to "ensure that 'all balances that have become due and payable or unsettled claims'" were "'fully paid or will be paid with the proceeds of the [loan].'" Safe Scaffolding alleges that it provided labor and materials for the MSP pursuant to its subcontract with Abener Teyma and that it has a right to be paid under that agreement. It further alleges that Abener Teyma "paid only a portion of the money owed to [it]" and "failed to pay [it] $210,759.29." Next, it alleges that Mojave breached its obligations under the loan agreement by "failing to ensure that all subcontractors and material suppliers," such as itself, "were fully paid." Thus, the gravamen of Safe Scaffolding's third party beneficiary claim is this: Abener Teyma hired it to perform work on the MSP under the subcontract, Abener Teyma failed to pay it the entire amount due under the subcontract, Mojave is legally responsible for that failure by way of the condition precedent in the loan agreement, and therefore Mojave is liable to Safe Scaffolding for the outstanding balance that remains unpaid.
Under Safe Scaffolding's theory of liability, it can recover on its third party beneficiary claim only if Abener Teyma breached its payment obligations and only if Safe Scaffolding is entitled to additional payment under the subcontract. Put differently, Safe Scaffolding has no claim against Mojave if Abener Teyma performed its payment obligation in full. As such, the third party beneficiary claim fundamentally relies upon "the obligations imposed by the agreement containing the arbitration clause." (Goldman, supra, 173 Cal.App.4th at p. 219, italics omitted.)
Safe Scaffolding's theory of damages similarly relies on the subcontract. The complaint identifies the subcontract as the source of Safe Scaffolding's right to be paid, alleges Safe Scaffolding suffered injury because it was not "fully paid" under that agreement, and alleges the specific amount still outstanding under the agreement is $210,759.29. Thus, if Mojave is ultimately found liable under Safe Scaffolding's third party beneficiary claim, the damages are the "balances . . . due" to Safe Scaffolding under the subcontract. As noted, the subcontract provides a specific formula for calculating what Abener Teyma (and by extension Mojave) owes Safe Scaffolding for unpaid work on the MSP. The allegations in Safe Scaffolding's complaint make clear that this a classic case of equitable estoppel.
Safe Scaffolding offers various arguments as to why we should not reach this conclusion, none of which we find persuasive. First, it cites the trial court's reason for finding equitable estoppel inapplicable. That is, because the claim is premised on, or arises out of, a different contract than the subcontract—one that does not contain an arbitration clause. But that's not the proper inquiry. The question is not whether a claim involves or arises out of a contract without an arbitration clause, but rather whether the claim also relies or depends on a contract that does contain an arbitration clause for its theories of liability and damages. (Rowe, supra, 153 Cal.App.4th at p. 1287.) Put differently, the fact Safe Scaffolding's claim involves two contracts is not dispositive to our analysis.
In Metalclad, the court rejected the same argument from the plaintiff, who asserted its claim was based not on the written purchase agreement between it and the buyer (which agreement contained an arbitration clause) but instead on an oral contract with the parent company (which did not include an agreement to arbitrate). (Metalclad, supra, 109 Cal.App.4th at p. 1717.) As discussed above, the plaintiff claimed the oral contract obligated the parent company to invest in the acquired company, and those invested funds would provide the capital necessary for the acquired company to generate revenue and meet the performance milestones required for the buyer to pay the purchase price. (Id. at pp. 1709-1710.) The court concluded equitable estoppel applied despite the plaintiff's reliance on a different contract because the allegation that the parent breached the oral contract "could not be more 'intimately founded in and intertwined with' the underlying [purchase] contract." (Id. at p. 1717; accord Meyer v. WMCO-GP, LLC (Tex. 2006) 211 S.W.3d 302, 304 [plaintiff compelled to arbitrate claim against nonsignatory of contract containing an arbitration clause despite alleging claim was premised on a different contract]; Choctaw Generation Ltd. Partnership v. American Home Assurance Co. (2d Cir. 2001) 271 F.3d 403, 408 [same].)
Safe Scaffolding argues Metalclad is distinguishable because it involved the distinguishable circumstance where the nonsignatory defendant caused the signatory to breach the underlying contract with the arbitration clause. But that's precisely what Safe Scaffolding has alleged occurred here. Its complaint claims Mojave "failed to use the DOE loan advances to adequately capitalize [Abener Teyma]" and that Mojave "breached th[e] express contract provision [in the loan agreement] by undercapitalizing and/or diverting loan proceeds from its affiliate, [Abener Teyma], instead of ensuring that they were used to pay subcontractors and material suppliers."
Next, Safe Scaffolding argues equitable estoppel does not apply because the loan agreement doesn't depend on "or even mention" the subcontract. But that is irrelevant. The relevant analysis is whether Safe Scaffolding's claim relies on the subcontract, not whether the loan agreement relies on or references the subcontract.
Safe Scaffolding also takes issue with the idea that its third party beneficiary claim relies on the subcontract for its theory, or measure, of damages. It argues "damages, which will likely be determined based on the value of the work actually performed," not the rates established in the subcontract. But Safe Scaffolding's complaint, and more importantly, the law, states otherwise. In its complaint, Safe Scaffolding alleges $210,759.29 remains outstanding under the subcontract and Mojave is responsible for ensuring it and other similarly situated subcontractors are "fully paid." Other allegations in the complaint demonstrate that Safe Scaffolding's request to be "fully paid" refers to the contract price, not quantum meruit. Safe Scaffolding alleges that it and other putative class members "were never able to recover the full value of their contracts with [Abener Teyma]"; that it and other putative class members were damaged by Mojave's "failure to fully pay the claims of subcontractors"; and that the putative class consists of subcontractors "who entered into subcontracting agreements with [Abener Teyma] for work and/or supplies provided on the MSP but did not receive full payment for the services and material provided." These allegations are consistent with the well-established legal principle that "a surety's liability is commensurate with that of the principal." (Scott Co. v. United States Fidelity & Guaranty Ins. Co. (2003) 107 Cal.App.4th 197, 214, disapproved of on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094.) And in this context, the principal is Abener Teyma and its liability is determined by the contract price. (See, e.g., B. C. Richter Contracting Co. v. Continental Cas. Co. (1964) 230 Cal.App.2d 491, 500 [subcontractor's "measure of damage is the unpaid contract price plus any additional expense attributable to the breach"]; University Casework Systems, Inc. v. Superior Court (1974) 41 Cal.App.3d 263, 266 ["A party to a contract who fully performs his obligation under the contract may recover the value agreed to in the contract; the party may not recover above the contract price"]; Bentz Plumbing & Heating v. Favaloro (1982) 128 Cal.App.3d 145, 152, fn. 9 ["since the work was done pursuant to a contract, its 'reasonable value' is best calculated with reference to the contract price"]; see also Civ. Code, § 3302 ["The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon"].)
Safe Scaffolding's reliance on Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122 (Kramer) and Nitsch v. DreamWorks Animation SKG Inc. (N.D. Cal. 2015) 100 F.Supp.3d 851 (Nitsch) is unhelpful because those cases are distinguishable. There, the contracts containing arbitration clauses were not critical to the plaintiffs' theories of liability. In Kramer, the plaintiffs were a group of car buyers who asserted various claims against the cars' manufacturer based on alleged product defects and false advertising. (Kramer, at p. 1124.) The defendant manufacturer moved to compel arbitration of the claims based on the arbitration clauses in the plaintiffs' purchase agreements with the car dealerships. (Id. at pp. 1130-1131.) The court denied the request because the plaintiffs' theories of liability were based on express and implied warranties that were completely separate from the terms of the dealers' purchase agreements and because the plaintiffs' theories of damages were based on the diminution of the cars' values, which were only tenuously related to the purchase price in the purchase agreements. (Id. at pp. 1131-1132.) Kramer thus illustrates when equitable estoppel does not apply. The doctrine is not triggered by the sole fact that a contract containing an arbitration clause is the but-for cause of the relationship between the parties. (See Murphy v. DirecTV, Inc. (9th Cir. 2013) 724 F.3d 1218, 1230 [observing that the Kramer court "rejected [the manufacturer's] argument that the plaintiffs' claims were necessarily intertwined with the Purchase Agreements merely because the lawsuit was predicated on the bare fact that a vehicle purchase occurred"].)
In Nitsch, the class of plaintiffs brought antitrust claims against various film companies they alleged had conspired to restrict employee mobility and limit employee compensation. (Nitsch, supra, 100 F.Supp.3d at p. 856.) The court granted the class representative's employer's motion to compel arbitration under the terms of their employment agreement, but refused to apply the equitable estoppel doctrine to allow the other, nonsignatory defendants to compel arbitration under that agreement. (Id. at pp. 864, 870.) The court found Kramer's analysis applicable, concluding the class conspiracy claims "arose independently" of the employment agreement and did "not rely on the existence of any particular contractual term." (Id. at p. 867.) As in Kramer, the plaintiffs were not claiming the contract with the arbitration clause had been breached in any way. (Nitsch, at p. 867.) Thus, the court concluded equitable estoppel did not apply because the claims were "not 'dependent on or inextricably bound up with the' obligations of [his] employment agreements." (Id. at p. 868.) The difference between Kramer and Nitsch and this case is obvious. Here, unlike in those cases, the theories of liability and damages fundamentally rely on the terms of contract with the arbitration clause. Safe Scaffolding's attempt to characterize its claim as wholly independent of the subcontract is simply unavailing; the allegations speak for themselves. (See Molecular, supra, 186 Cal.App.4th at p. 715 [the court "'examine[s] the facts alleged in the complaint,'" not the plaintiff's description of them, to determine if equitable estoppel applies]; see also Boucher, supra, 127 Cal.App.4th at p. 272 ["The focus is on the nature of the claims asserted by the plaintiff against the nonsignatory defendant"].)
We also reject Safe Scaffolding's contention that it would be unfair to compel arbitration of its third party beneficiary claim because some of the putative class members "may not have entered into similar arbitration agreements" and our conclusion would therefore "foreclose the[] putative class members' right to pursue their claims in court." No class has been certified at this point, and there is nothing improper about compelling a named plaintiff to arbitrate its claims prior to certification. (See, e.g., Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 242, 261; Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 242, 261.)
Finally, we reject Safe Scaffolding's contention that before we decide if estoppel applies, we must determine whether the trial court correctly concluded Mojave was an alter ego of Abener Teyma. According to Safe Scaffolding, "Mojave's status was a threshold issue that had to be decided by the court not the arbitrator because without that [alter ego] status in the first place there was no claim to arbitrate." Safe Scaffolding argues that federal, not California, law applies in this case and that under federal law the trial court was required to make a factual finding that Mojave is Abener Teyma's alter ego before it allowed Mojave to enforce the subcontract's arbitration agreement. This argument is misguided. The doctrine of equitable estoppel stands on its own and is unrelated to the alter ego theory under which the trial court compelled arbitration of Safe Scaffolding's other claims. As explained above, the doctrine allows a nonsignatory to enforce an arbitration agreement if the plaintiff's claim relies on or is inextricably intertwined with the contract containing that agreement. (Molecular, supra, 186 Cal.App.4th at p. 706 [if the plaintiff fundamentally relies on a contract containing an arbitration clause for its theories of liability and damages, "the nonsignatory has a right to enforce the arbitration agreement"].) Application of the doctrine does not depend on the status of the nonsignatory, and as a result, we need not review that unappealed (indeed, nonappealable) aspect of the trial court's order. (E.g., Miranda v. Anderson Enterprises, Inc. (2015) 241 Cal.App.4th 196, 200 ["'Orders granting motions to compel arbitration are generally not immediately appealable'"].) And, although we have concluded California law applies here because of the subcontract's choice-of-law clause, our analysis would not come out differently under federal law. (See, e.g., Boucher, supra, 127 Cal.App.4th at p. 271 ["under both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are "intimately founded in and intertwined" with the underlying contract obligations"].)
We recognize that "arbitration should not be imposed if it would be contrary to a party's reasonable expectation or result in loss or inequity." (Rowe, supra, 153 Cal.App.4th at pp. 1289-1290.) But under the facts of this case, we conclude that compelling Safe Scaffolding to arbitrate its third party beneficiary claim against Mojave is neither unfair nor a result that Safe Scaffolding could not have reasonably expected. Safe Scaffolding decided the theories on which to sue Mojave. It chose to allege that Abener Teyma breached its payment obligation under the subcontract and that Mojave, by way of its loan agreement with the DOE, was responsible for ensuring Safe Scaffolding was paid for its work on the MSP. We also conclude that compelling arbitration does not "provide a windfall" to Mojave. (Id. at p. 1290.) "[A]lthough they might not have bargained [with Safe Scaffolding] for an arbitration provision in their favor . . . , neither did they bargain for a lawsuit seeking to hold them liable for [Abener Teyma's] breach of [its contractual obligations]." (Ibid.) In sum, our conclusion rests on this equitable principle: if Safe Scaffolding seeks to obtain satisfaction of the subcontract's payment obligation from Mojave, it must also be willing to satisfy the subcontract's obligation to arbitrate all disputes arising out of that agreement.
III
DISPOSITION
We reverse in part the trial court's order denying Mojave's petition to compel arbitration and direct it to grant the petition as to Safe Scaffolding's first cause of action, the third party beneficiary claim; in all other respects, the judgment is affirmed. Mojave is entitled to costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
SLOUGH
J. We concur: RAMIREZ
P. J. RAPHAEL
J.