Pioneer Take Out Corp. v. Bhavsar

Opinion

HOLLENHORST, J.

This matter was commenced as an unlawful detainer in the trial court. Based upon certain provisions in a franchise agreement calling for arbitration where a “controversy or claim” arose, defendant moved for an order compelling arbitration. The trial court denied the request and defendant now appeals.

Facts

Plaintiff and defendant have entered a license agreement for the sales of plaintiff’s food products. Plaintiff has also subleased the location of the

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restaurant in Rialto, California. The license agreement or franchise agreement is a separate document from the sublease although the license agreement is incorporated into the sublease by reference. The sublease provides in part that if the license agreement is terminated, the plaintiff has the option of terminating the sublease.

In the license agreement, there is an arbitration clause which provides that controversies “relating to this Agreement, or any breach thereof’ must be arbitrated. Plaintiff is permitted to go to court to apply for a writ of possession, but only “with respect to [defendant’s] default in the payment of money.”

1

On December 23, 1986, defendant received a letter from plaintiff notifying him he was delinquent in reporting and payments of rent, royalties, advertising charges and other miscellaneous charges. Subsequently, defendant received another letter from plaintiff informing him that because of his failure to cure all the deficiencies outlined in the December 23 letter, plaintiff had elected to terminate his license agreement. Based upon the decision to terminate defendant’s license, plaintiff served upon defendant a five-day notice to quit. Plaintiff attached as the reason for the notice to quit, the letter outlining alleged breaches of the license agreement and the letter terminating the license. The unlawful detainer complaint was then filed on January 23, 1987.

In defendant’s answer to the unlawful detainer complaint, defendant asserted several affirmative defenses to the underlying termination of the license. Included in these defenses was a request to enforce the mandatory arbitration provision of the license agreement. After several law and motion matters were heard on this matter, the court ruled on the issue of whether the arbitration clause of the license agreement required arbitration in this unlawful detainer action. The court found that the arbitration clause of the license agreement did control notwithstanding the nature of the action since the notice to quit was based upon alleged breaches of the license agreement. The court also found that a class action lawsuit involving the parties to the instant action as well as other licensees was pending in Los Angeles Superi- or Court, and that lawsuit relates to the same series of transactions as the instant matter.