18-CIV-03397 FRANCIS BAGNAROL, ET AL. VS. CAROLINA BAGNAROL, ET AL.

FRANCIS BAGNAROL CAROLINA BAGNAROL
W. GEORGE WAILES ALISON MADDEN

PETITION TO COMPEL MANDATORY ARBITRATION, OR, IN THE ALTERNATIVE, MOTION TO COMPEL, BOTH/EITHER WITH MOTION TO STAY BY NADINE BAGNAROL, CAROLINA BAGNAROL AND A FAMILY AFFAIR, LLC TENTATIVE RULING:

This matter came before the Court for a hearing on January 30, 2019. The Court continued the hearing to allow the parties to submit supplemental briefing on the issue of whether the existence of Defendants, who are necessary parties to Plaintiffs’ claim for partition, but who are non-signatories to the arbitration provision of the Bagnarols’ LLC operating agreement, precludes the Court from determining that Plaintiffs’ claim is subject to arbitration pursuant to the arbitration agreement. Because Plaintiffs have not presented authority indicating that the existence of third parties precludes application of the arbitration agreement under the facts and circumstances of this case, the Court adopts its original tentative ruling, with the modification, as noted below, that the order compelling arbitration is issued without prejudice to the non-signatory Defendants’ right to present any viable claims or objections in these proceedings. Accordingly, the Court modifies its previous tentative ruling to provide that the request for a stay of these proceedings is DENIED. The Motion to Compel Arbitration, however, is GRANTED for the reasons set forth below and in the Court’s original tentative ruling.

First, despite Plaintiffs’ assertion, in its opposition to Defendants’ motion, that “The partition claims are not subject to arbitration and must be resolved by the Court,” and their citation to Bacon v. Wahrhaftig, 97 Cal.App.2d 599, 603 (1950) for the proposition that “The action for partition . . . is a special proceeding regulated by the provisions of the statute,” Plaintiff has provided no authority indicating that partition cannot be accomplished in arbitration. As noted previously, however, there is authority to the contrary. See, e.g. Morris v. Zuckerman, 257 Cal. App. 2d 91, 94 (Ct. App. 1967); Sanker v. Brown, 167 Cal. App. 3d 1144, 1145 (Ct. App. 1985). In their supplemental brief, Plaintiffs attempt to distinguish Morris by noting that “The Morris court was not ordering nonsignatories to arbitrate their dispute.” The Court, however, did not cite Morris for a contrary proposition. In any case, Plaintiffs appear to have abandoned their argument that claims for partition are incapable of resolution in arbitration.

Second, Plaintiffs attempt to distinguish Bos Material Handling, Inc. v. Crown Controls Corp., 137 Cal. App. 3d 99, 112–13 (Ct. App. 1982), which the Court previously cited as support for the determination that any claim that arbitration will result in conflicting rulings is based on mere speculation at this point. Plaintiffs note that, in Bos, the nonsignatory defendants were Doe defendants, and that the Court determined that “[i]f arbitration defenses could be foreclosed simply by naming third party Does, the utility of arbitration agreements would be seriously compromised.” Id, at 112. The logic of Bos, however, applies equally to the facts of the present case.

Plaintiffs rely on the existence of non-signatory Defendants in asserting that the partition claim is “nonarbitrable.” However, as noted in the Court’s previous ruling, the nonsignatory Defendants have submitted no response or objection to the Motion to Compel Arbitration. This silence is particularly noteworthy in light of Plaintiffs’ assertion that the non-signatory Defendants have appeared in this action. In opposing the Motion to Compel Arbitration, Plaintiffs have taken the odd position of asserting the rights they claim are held by the non-signatory Defendants, despite the fact that none of those Defendants have indicated their opposition to arbitration. Accordingly, as in Bos, this Court has no indication that the nonsignatory Defendants do not agree to arbitration. While the Court recognizes that nonsignatories generally may not be compelled to arbitration, Plaintiffs have presented no authority indicating that nonsignatories may not voluntarily agree to arbitration. Ultimately, Plaintiffs fail to indicate that any of the nonsignatory Defendants objects to arbitration. As a result, it is difficult for the Court to see any merit in Plaintiffs’ contentions.

Finally, Plaintiffs assert that the claim for accounting and the claim for partition will require separate accountings and that the possibility of conflicting rulings is presented by a possibility of a discrepancy in those accountings. Because the Court determines that all claims are subject to the arbitration agreement, the Court need not address this issue. However, the Court notes that it is not clear why separate proceedings would require multiple accountings or why the accountings would vary from one another, and Plaintiffs have failed to explain clearly why multiple accountings would be necessary. As a result, the Court is not persuaded that, even in the event that separate proceedings are necessary, a possibility of conflicting rulings exists due to the supposed accounting disparities hypothesized by Plaintiffs.

The Court will address any objections of the nonsignatory Defendants if and when those objections arise.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Defendants shall prepare a written order consistent with the Court’s ruling for the Court’s signature, pursuant to California Rules of Court, Rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.