Anderson v. Tri-City Healthcare Dist. CA4/1 (2016) · DecisionDepot
Anderson v. Tri-City Healthcare Dist. CA4/1
California Court of Appeal Aug 29, 2016 No. D068456Unpublished
Filed 8/29/16 Anderson v. Tri-City Healthcare Dist. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
LARRY ANDERSON, D068456
Cross-complainant and Respondent,
v. (Super. Ct. Nos. 37-2014-00009108-CU-BC-NC, TRI-CITY HEALTHCARE DISTRICT et al., 37-2014-00022523-CU-MC-NC)
Cross-defendants and Appellants.
APPEAL from an order of the Superior Court of San Diego County, Earl H. Maas
III, Judge. Reversed and remanded with directions.
Gordon & Rees and Charles V. Berwanger, David K. Leatherberry for Cross-
defendants and Appellants.
Law Offices of George Rikos and George D. Rikos for Cross-complainant and
Respondent.
Appellants and cross-defendants, Tri-City Healthcare District and its board
members Larry Schallock, Cyril F. Kellett, Julie Nygaard, Ramona Finnila, James
Dagostino and Paul V.L. Campo, appeal an order denying their motion to compel
arbitration of respondent Larry Anderson's cross-claim for violation of section 1983 of
title 42 of the United States Code (section 1983). Appellants contend that in light of the
parties' broad arbitration agreement and California's strong public policy favoring
arbitration, the cross-claim is arbitrable. We agree and therefore reverse and remand with
In 2009, Tri-City hired Larry Anderson as its Chief Executive Officer, and in
August 2010, the parties signed an updated employment agreement containing an
arbitration clause. In October 2013, Tri-City terminated Anderson's employment for,
among other things, causing Tri-City to pay bills incurred by Medical Acquisition
Company (MAC) that Tri-City claimed it had no legal obligation to pay. Pursuant to the
arbitration clause, the parties first held a mediation. Anderson later wrote a letter to Tri-
City, expanding the list of matters to be included in the parties' mediation/arbitration,
including, "[i]mproper and illegal civil rights and constitutional violations, such as
violation of due process, liberty and property interests vested in [him] by virtue of the
U.S. and State of California Constitutions."
In July 2014, Tri-City sued MAC in superior court, alleging causes of action for
violation of (1) Government Code section 1090 et seq., (2) the political reform act (Gov.
Code, § 81000 et seq.) and (3) common law prohibitions against conflicts of interest, as
well as (4) breach of a ground lease; (5) common count—money had and received; (6)
declaratory relief and (7) eminent domain. Tri-City alleged Anderson "improperly
convey[ed Tri-City's] assets and enter[ed] into major transactions with MAC to [Tri-
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City's detriment]." MAC cross-complained against Anderson for indemnity, negligence
and declaratory relief.
Anderson, in turn, cross-complained against Tri-City and the individual board
members for express indemnity, respondeat superior, comparative indemnity, violation of
section 1983, writ of mandate, and declaratory relief. Anderson alleged that Tri-City had
wrongfully terminated him and further violated section 1983 and his constitutional right
to procedural due process by depriving him of his property interest in his employment
without informing him of the charges against him until after his termination, or
conducting a hearing. Anderson specified he "had a liberty and property right in and
expectancy of continued employment with Tri-City pursuant to the terms of the
Employment Agreement, and to expect and receive the salary, benefits, deferred
compensation, job security, severance benefits and other rights under the Employment
Agreement, which prescribed only limited conditions or circumstances under which
Anderson's employment with Tri-City could be terminated, or could be terminated
without payment to Anderson of the severance benefits or other vested benefits under the
employment agreement." (Some capitalization omitted.) Anderson alleged that the
individual defendants, "as the board members of Tri-City, had the authority as final
policy maker for Tri-City concerning the actions and acts alleged herein"; alternatively,
"Tri-City ratified the actions and omissions of its board members." (Some capitalization
omitted.)
In December 2014, Tri-City and the individual board members moved in the
superior court to compel arbitration of Anderson's cross-complaint based on the
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arbitration clause, which states: "Any controversy between [Tri-City] and [Anderson]
arising from or relating to this Agreement or the relationship between the parties
including, without limitation, involving the construction or application of any of the
terms, provisions or conditions of this Agreement, shall be submitted to binding
arbitration if one Party sends a written demand for binding arbitration to the other Party.
This Section . . . shall include and apply to all federal and state claims, including, but
not limited to: (i) wrongful termination, (ii) claims sounding in tort or contract, or (iii)
any claim by [Anderson] of employment discrimination under federal or state law. [Tri-
City] and [Anderson] shall be deemed to have waived the right to litigate the claim in any
federal or state court if either party tenders a written request for arbitration of any such
claim(s)." (Italics added.)
The arbitration clause specifies that as a condition of arbitration, the parties must
"first attempt to resolve any dispute before a neutral mediator in a non-binding mediation.
. . . the mediator shall be a California licensed attorney with at least fifteen years[']
experience in and an emphasis in California and Federal Employment Law, or a retired or
former judge of the Superior Court of the State of California or the Court of Appeals of
the State of California."
The arbitration clause states: "Arbitration shall comply with and be governed by
the provisions of the California Arbitration Act, unless otherwise precluded by California
or Federal law. The Federal Arbitration Act shall apply only if enforcement of a
particular provision of the California Arbitration Act would undermine the goals and
policies of the Federal Arbitration Act." The arbitration clause requires that the arbitrator
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be "a neutral, single retired or former judge of the Superior Court of the State of
California or of the Court of Appeals of the State of California," or if the parties cannot
agree on one, they may apply to the San Diego Superior Court to appoint one who meets
the above-mentioned requirements.
The arbitration clause provides that the arbitrator "shall have exclusive jurisdiction
over all legal and equitable claims, issues and remedies, so all types of relief available in
a judicial proceeding shall be available to the Parties in the Arbitration." Anderson's
employment agreement provides that following the arbitration, the arbitrator is required
to prepare a written award stating the essential findings and conclusions upon which the
award is based, so as to permit judicial review of the award in the state or federal court in
San Diego County. It further provides that to determine the meaning of or resolve any
ambiguity in the employment agreement, its language "shall be construed with the
understanding both Parties were responsible for, and participated in, its preparation."
Anderson opposed Tri-City's motion to compel arbitration, arguing his cross-
claims for indemnity, respondeat superior, and comparative indemnity arose from a
dispute between Tri-City and MAC over separate contractual agreements to which he was
not a party, and which did not involve his employment agreement. Anderson also argued
that because the individual cross-defendants were not parties to his employment
agreement, they were not proper parties to the arbitration; and Tri-City had waived its
right to arbitration by pursuing litigation in the superior court.
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In March 2015, Anderson sued Tri-City and the board members in federal district
court, alleging a single cause of action for violation of section 1983.1 Anderson repeated
the same allegations as in his cross-claim, reiterating that his rights were violated because
he did not receive a hearing as contemplated in his employment agreement. Anderson
clarified that his references to Tri-City throughout the complaint included Tri-City's
"directors, officers, employees, affiliates, controlling companies or agents" who
managed, directed or controlled Tri-City's affairs.
In May 2015, the superior court granted the motion to compel arbitration of all
Anderson's causes of action except that alleging a section 1983 violation, which it ruled
was not subject to arbitration.
In September 2015, the district court granted Tri-City's motion to compel
arbitration of Anderson's section 1983 cross-claim.2
1 The complaint states: "Whenever this Complaint refers to any act or acts of Defendant, the reference shall also be deemed to mean that the directors, officers, employees, affiliates, controlling companies or agents of Defendant authorized such act while actively engaged in the management, direction or control of the affairs of Defendant, and/or by persons who are the alter ego of Defendant, or while acting within the scope of their agency, affiliation, control or employment."
2 Over Anderson's objection that the district court's order was not before the superior court when it made its own order, we grant appellants' request and take judicial notice of the district court's order because it involves the same section 1983 issue and some of the same parties, and we find it instructive. (Brosterhous v. State Bar of California (1995) 12 Cal.4th 315, 325 ["While the reviewing court may take judicial notice of matters not before the trial court, it need not do so."].) 6
DISCUSSION
Appellants contend that Anderson's section 1983 cross-claim is arbitrable under
the arbitration clause's broad terms. By contrast, Anderson argues that a section 1983
claim is not arbitrable under McDonald v. West Branch, Mich. (1984) 466 U.S. 284, 290
(McDonald). Anderson further contends his cross-claim falls outside the scope of the
arbitration agreement, which is limited to employment matters or the relationship
between the parties. Anderson also argues that as nonsignatories of the employment
agreement, the individual cross-defendants are not subject to its arbitration clause.
Finally, Anderson contends Tri-City waived its right to arbitration by engaging in
litigation, including by filing an "anti-SLAPP" motion and a demurrer.
I. Standard of Review
"There is no uniform standard of review for evaluating an order denying a motion
to compel arbitration." (Robertson v. Health Net of California, Inc. (2005) 132
Cal.App.4th 1419, 1425.) "If the court's order is based on a decision of fact, then we
adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial
rests solely on a decision of law, then a de novo standard of review is employed." (Ibid.)
"Interpreting a written document to determine whether it is an enforceable arbitration
agreement is a question of law subject to de novo review when the parties do not offer
conflicting extrinsic evidence regarding the document's meaning." (Avery v. Integrated
Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 60.)
We apply the de novo standard of review here because the trial court concluded
that, as a matter of law, Anderson's section 1983 cross-claim was not arbitrable. This
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purely legal question requires us to interpret the parties' arbitration agreement, the
meaning of which is not subject to conflicting extrinsic evidence. Accordingly, we may
consider legal arguments that were not raised in the superior court. (E.g., Cal Sierra
Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 851.)
II. General Law Regarding Interpretation of Arbitration Clauses
The state Legislature "has expressed a 'strong public policy in favor of arbitration
as a speedy and relatively inexpensive means of dispute resolution.' " (Moncharsh v.
Heily & Blase (1992) 3 Cal.4th 1, 9.) Consequently, it has enacted statutes specifically
authorizing parties to enter arbitration agreements "to avoid the judicial forum altogether"
(Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 955; Code Civ. Proc.,
§ 1281) and limiting the circumstances under which a court properly may decline to
compel arbitration once it determines that a valid "agreement to arbitrate a controversy"
exists (Code Civ. Proc., § 1281.2).
Likewise, courts implement the strong public policy favoring arbitration when
determining whether a valid arbitration agreement exists and whether a particular
disagreement lies within its scope by resolving doubts concerning the scope of arbitrable
issues in favor of arbitration. (Wagner Construction Co. v. Pacific Mechanical Corp.
(2007) 41 Cal.4th 19, 26.) Indeed, the general rule is that "arbitration should be upheld
'unless it can be said with assurance that an arbitration clause is not susceptible to an
interpretation covering the asserted dispute.' " (Coast Plaza Doctors Hospital v. Blue
Cross of California (2000) 83 Cal.App.4th 677, 686.)
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Arbitration is foremost a creature of contract. (See, e.g., Rebolledo v. Tilly's, Inc.
(2014) 228 Cal.App.4th 900, 912-913.) "Arbitration's consensual nature allows the
parties to structure their arbitration agreements as they see fit. They may limit the issues
to be arbitrated, specify the rules and procedures under which they will arbitrate,
designate who will serve as their arbitrator(s), and limit with whom they will arbitrate."
(Network Capital Funding Corporation v. Papke (2014) 230 Cal.App.4th 503, 509.)
Contracting parties also are free to negotiate and restrict the powers of an arbitrator and
the universe of issues that he or she may resolve; " '[t]he powers of an arbitrator derive
from, and are limited by, the agreement to arbitrate.' " (Gueyffier v. Ann Summers, Ltd.
(2008) 43 Cal.4th 1179, 1185.) "As for the requirement that there exist a controversy, it
is sufficient the parties contractually have agreed to resort to a third party to resolve a
Cal.App.4th at p. 1115.) Anderson has not done so here as to his waiver argument.
Nor will we presume prejudice, which Anderson is obligated to demonstrate. (See
Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800-802; Paterno v. State of California
(1999) 74 Cal.App.4th 68, 105-106 ["[O]ur duty to examine the entire cause arises when
and only when the appellant has fulfilled his duty to tender a proper prejudice argument.
Because of the need to consider the particulars of the given case, rather than the type of
error, the appellant bears the duty of spelling out in his brief exactly how the error caused
a miscarriage of justice"]; Vaughn v. Jonas (1948) 31 Cal.2d 586, 601 ["[t]o presume in
favor of error or prejudice would be directly contrary to the policy of this state"].)
Anderson has not sufficiently set forth the applicable law governing this
contention, including the standard of review (see Augusta v. Keehn & Associates (2011)
193 Cal.App.4th 331, 337 [we review for substantial evidence]), or the fact that based on
the public policy favoring arbitration, claims of waiver receive "close judicial scrutiny"
and the "party seeking to establish a waiver bears a heavy burden." (St. Agnes Medical
Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 [courts consider (1)
whether the party's actions are inconsistent with the right to arbitrate; (2) whether the
parties were well into preparation of a lawsuit before the party notified the opposing party
of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close
to the trial date or delayed for a long period before seeking a stay; (4) whether a
defendant seeking arbitration filed a counterclaim without asking for a stay of the
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proceedings; (5) whether important intervening steps like discovery had taken place; and
(6) whether the delay affected, misled or prejudiced the opposing party].) "Both state and
federal law emphasize that no single test delineates the nature of the conduct that will
constitute a waiver of arbitration." (St. Agnes, at pp. 1195-1196.) The deficiencies in
Anderson's appellate briefing preclude Anderson from meeting his heavy burden.
Finally, we reject Anderson's claim that because the board members did not sign
the arbitration agreement, the section 1983 cross-claim is not arbitrable as to them.
Anderson alleged in his cross-complaint that the board members were acting as Tri-City's
agents. Accordingly, "they are entitled to the benefit of the arbitration agreement." (24
Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1210.)
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DISPOSITION
The order denying the motion to compel arbitration is reversed and remanded with
directions to the trial court to grant the motion. The parties are to bear their own costs on
appeal.
O'ROURKE, Acting P. J.
WE CONCUR:
AARON, J.
PRAGER, J.*
* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 17
AI Brief
AI-generated · verify before citing
Holding. The court held that a cross-claim for violation of 42 U.S.C. section 1983 is subject to mandatory arbitration under the parties' broad employment arbitration agreement.
Issues
Whether a section 1983 claim is arbitrable under an employment agreement's arbitration clause.
Whether the arbitration agreement covers claims against non-signatory board members acting as agents.
Whether the appellants waived their right to compel arbitration by engaging in litigation.
Disposition. reversed and remanded
Quotations verified verbatim against the opinion
“Any controversy between [Tri-City] and [Anderson] arising from or relating to this Agreement or the relationship between the parties including, without limitation, involving the construction or application of any of the terms, provisions or conditions of this Agreement, shall be submitted to binding arbitration.”
“We conclude that Anderson's section 1983 cross-claim falls within the ambit of the parties' expansive arbitration clause”