2014-00158783-CU-PN

Ragingwire Data Centers, Inc. vs. Weckworth Construction Co.

Nature of Proceeding:      Motion to Compel Binding Arbitration and to Stay Pending Litigation

Filed By:   Weiner, Jennifer A.

Defendant Weckworth Construction Co., Inc.’s Motion to Compel Binding Arbitration
and to Stay Pending Litigation is DENIED.

Defendant Weckworth’s request to present oral evidence at the hearing is DENIED.
Evidence received at a law and motion hearing must be by declaration, affidavit, or
request for judicial notice without testimony on cross-examination, except as allowed in
the court’s discretion for good cause shown. Cal Rules of Court, Rule 3.1306.

Code Civ. Proc. § 1281 provides that “A written agreement to submit to arbitration an
existing controversy or a controversy thereafter arising is valid, enforceable and
irrevocable, save upon such grounds as exist for the revocation of any contract.” The
issue presented is whether such a written agreement exists to control the instant case.
“Under both federal and state law, the threshold question presented by a petition to
compel arbitration is whether there is an agreement to arbitrate.”  (Sparks v. Vista Del
Mar Child and Family Svcs. (2012) 207 Cal.App.4th 1511, 1517.)  “Absent a clear
agreement to submit disputes to arbitration, courts will not infer that the right to a jury
trial has been waived.”  (Id. at 1518 [citation and additional quotation marks omitted].)
“A party seeking to compel arbitration has the burden of proving the existence of a
valid agreement to arbitrate.”  (Id.)

Plaintiff Ragingwire Data Centers, Inc.’s Complaint sets forth three causes of action:
st                                                                                      nd
the 1   for breach of contract against Weckworth Construction Co., Inc.; the 2                   for
rd
breach of contract against Taylor Systems Engineering, Inc.; and the 3   for
professional negligence against Weckworth Construction Co., Inc. and Taylor Systems
Engineering, Inc.

Plaintiff’s Request for Judicial Notice is GRANTED.
Plaintiff’s Evidentiary Objections to Weckworth’s evidence are SUSTAINED.

This dispute arises out of a separate and distinct construction project identified, and
commonly referred to, as “Phase 4”. It was one part of a number of related, but
separate, construction projects over the course of many years, each “phase” of which
was treated by the parties as a distinct and separate “construction project” from prior
phases, with different and distinct construction plans and governmental permits.

Phase 3 involved tenant improvements to an already constructed, and nearly “built-
out”, building known as 1200 Striker Avenue. For the last aspect of the Phase 3
construction project at the 1200 Striker Avenue building, Ragingwire and Weckworth
entered into an October 2007 Agreement. Before entering into that agreement,
Weckworth had performed nearly $37.7 million in construction services for Ragingwire
on Phase 2 and the first parts of Phase 3 pursuant to a standard Purchase Order and
Invoice procedure.

Moving party contends that because the 2007 Agreement for Phase 3, signed by
Ragingwire and Weckworth, contained an arbitration clause, plaintiff and co-defendant
Taylor should be compelled to arbitrate this dispute. The sole evidence provided in
support is moving counsel’s declaration purporting to authenticate the 2007 Agreement
for Phase 3 and some emails.  No declaration from the contractor or any of its
employees is provided.

Moving party contends that the 2007 Agreement is a Master Agreement, which by its
terms applies to all subsequent phases of work until cancelled. No written cancellation
was ever provided in compliance with Art. 7, section 2.5.

In opposition, Ragingwire points to the language of Article 2.1 of the 2007 Agreement,
which provides that it specifically pertained only to Phase 3 TIs (tenant improvements).
The express language of that section requires that any expansion of the work under
the 2007 Agreement must be “per subsequent Work Authorization Orders.” Weckworth
has failed to provide evidence of any such subsequent work authorization orders.

In opposition, Ragingwire presents evidence that although in 2009 the parties initially
discussed executing an addendum making the terms of the 2007 Agreement for Phase
3 applicable to the Phase 4 project, they specifically agreed that would not be the
case, and instead they would proceed on a Purchase Order and Invoice process.

The Court finds that based on the evidence presented there was no meeting of the
minds to make the 2007 Agreement applicable to the work performed in Phase 4, thus
the Arbitration clause contained in that 2007 Agreement is inapplicable here.

Weckworth has failed to provide notice and an opportunity to respond to Taylor
Systems engineering, by failing to serve the motion to compel arbitration on it.
Nonetheless, as pointed out in opposition, Taylor was not a signatory to the 2007
Agreement, and Taylor has no written agreement with either Ragingwire or Weckworth
which contains an arbitration clause, nor was any prior demand to arbitrate made to
Taylor. Generally, the right to arbitration is dependent upon contract, and the Court
may not force a nonsignatory to participate in arbitration.  County of Contra Costa v.
Kaiser Foundation Health Plan, Inc. (1996) 47 Cal. App. 4th 237, 245. One cannot be
required to submit a dispute to arbitration unless one has agreed to do so. Goldman v.
KPMG, LLP, (2009) 173 Cal. App. 4th 209, 219. There is no public policy favoring the
arbitration of disputes the parties have not agreed to arbitrate. Engineers & Architects
Assn. v. Community Development Dept . (1994) 30 Cal.App.4th 644, 653. No exception
to the rule is presented by moving party here.

The motion is denied in its entirety.

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.