SULLIVAN & ASSOCIATES, INC. v. CITY OF SOUTH LAKE TAHOE, ET AL.

The subcontract between moving defendant and plaintiff includes an arbitration

provision. (Mtn., Harrison Decl., Ex. A.)

LAW AND MOTION CALENDAR MAY 1, 2026

The complaint alleges moving defendant breached its subcontract with plaintiff by

failing to pay plaintiff monies owed under their subcontract. (Compl., ¶ 15.)

The first and second causes of action for breach of contract and quantum meruit,

respectively, are against moving defendant only. The third and fourth causes of action

for enforcement of stop payment notice and for recovery on prime contractor’s

payment bond, respectively, are against moving defendant, as well as defendants

Roebbelen (third and fourth causes of action), City of South Lake Tahoe (third cause of

action only) and Western Surety (fourth cause of action only). Although the third and

fourth causes of action include other defendants, which are not signatories to the

arbitration agreement at issue, both causes of action are for claims of payment against

the bonding companies of moving defendant, the general contractor, and the bidding

party for any amounts arising from plaintiff’s dispute with moving defendant for unpaid

work.

2. Legal Principles

Code of Civil Procedure section 1281.2 provides 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: [¶] ... [¶] (c) A party to the arbitration agreement is also a

party to a pending court action or special proceeding with a third party, arising out of

the same transaction or series of related transactions and there is a possibility of

conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2,

subd. (c).)

“If the court determines that a party to the arbitration is also a party to litigation in a

pending court action or special proceeding with a third party as set forth under

subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may

LAW AND MOTION CALENDAR MAY 1, 2026

order intervention or joinder of all parties in a single action or special proceeding;

(2) may order intervention or joinder as to all or only certain issues; (3) may order

arbitration among the parties who have agreed to arbitration and stay the pending

court action or special proceeding pending the outcome of the arbitration proceeding;

or (4) may stay arbitration pending the outcome of the court action or special

proceeding.” (Code Civ. Proc., § 1281.2.)

3.

Discussion

Plaintiff does not dispute the validity of its arbitration agreement with moving

defendant. Plaintiff opposes the motion on the grounds that arbitration between only

plaintiff and moving defendant – without the other defendants in this action – would

create a possibility of conflicting rulings on a common issue of law or fact. Plaintiff

points to several of moving defendant’s affirmative defenses, which raise issues of

apportionment, and accord and satisfaction.

However, the court is persuaded by moving defendant’s argument that plaintiff’s

claims against the other defendants are derivative of the first and second causes of

action, both of which are against moving defendant only. (See Federal Ins. Co. v.

Superior Court (1998) 60 Cal.App.4th 1370, 1373 [“In the usual case, a claim against a

surety derives from the primary action.”]; see also Powers Regulator Co. v. Seaboard

Surety Co. of New York (1962) 204 Cal.App.2d 338, 354 [the determination of a

subcontractor’s claim against a prime contractor is a condition precedent to any

recovery on the insurance bond].) Therefore, there is no possibility of conflicting rulings.

The motion to compel is granted. The court orders plaintiff and moving defendant to

arbitration of the first and second causes of action. Pending arbitration, the court will

stay the litigation as to all other defendants and as to the third and fourth causes of

action.

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LAW AND MOTION CALENDAR MAY 1, 2026

TENTATIVE RULING # 5: THE MOTION TO COMPEL IS GRANTED. THE COURT ORDERS

PLAINTIFF SULLIVAN & ASSOCIATES, INC. AND DEFENDANT DIV 15 TECH, INC. TO

ARBITRATE THE FIRST AND SECOND CAUSES OF ACTION IN PLAINTIFF’S COMPLAINT.

PENDING ARBITRATION, THE COURT STAYS THE LITIGATION AS TO ALL OTHER

DEFENDANTS AND AS TO THE THIRD AND FOURTH CAUSES OF ACTION IN PLAINTIFF’S

COMPLAINT.

NO HEARING ON THIS MATTER WILL BE HELD (LEWIS v. SUPERIOR COURT (1999) 19

CAL.4TH 1232, 1247), UNLESS A NOTICE OF INTENT TO APPEAR AND REQUEST FOR

ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S

WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 573-3042 BY 4:00 P.M. ON THE

DAY THE TENTATIVE RULING IS ISSUED. NOTICE TO ALL PARTIES OF AN INTENT TO

APPEAR MUST BE MADE BY TELEPHONE OR IN PERSON. PROOF OF SERVICE OF SAID

NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING.