Filed 1/ 6/15 Bachrach v. Compagno CA2/1 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

SHEL BACHRACH et al.,
Plaintiffs and Respondents,

v.
NATALIE COMPAGNO et al.,
Defendants and Appellants. B252454
(Los Angeles County Super. Ct. No. BC511242)

APPEAL from an order of the Superior Court of Los Angeles County, Steven J.
Kleifield , Judge. Affirmed

. Fernald Law Group and Brandon C. Fernald for Defendant s and Appellant s. Law Offices of James T. Duff and James T. Duff for Plaintiff s and Respondent s.

——————————2

Travelers Bookcase, LLC (Travelers) and Natalie Compagno appeal from an order denying their motion to compel arbitration after the trial court found that the equitable
claims at issue were e xcluded from appellants’ contract with respondent s Shel an d Ryan
Bachrach. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND
Travelers is an independent bookstore in Los Angeles previously owned by Compagno. In September 2011, the Bachrach s invested $25,000 each to obtain a collective 25 percent i nterest in Travelers. In conjunction with that transaction, Compagno and the Bachrachs e xecut ed a n o perating a greement , which contains the following arbitration provision :

“

. . . Any action to enforce or interpret this Agreement or to resolve disputes between the Members or by or against any Member shall be settled by arbitration in
accordance w ith the rules of the American Arbitration Association. Any party may commence arbitration by sending a written demand for arbitration to the other parties.
Such demand shall set forth the nature of the matter to be resolved by arbitration. The
substantive law of the St ate of California shall be applied by the arbitrator to the resolution of the dispute. The parties shall share all initial costs of arbitration, provided
that the prevailing party shall subsequently be entitled to reimbursement by the other party or parti es of its attorney’s fees, costs and expenses incurred in connection with the
arbitration. All decisions of the arbitrator shall be final, binding, and conclusive on all parties and shall, except as provided in Section 12.1, constitute the only method of resolving disputes or matters subject to arbitration pursuant to this Agreement. Judgment may be entered upon any such decision in accordance with applicable law in any court having jurisdiction t hereof. Notwithstanding the foregoing, no arbitrator shall have the power to render equitable relief of any kind, and requests for such relief shall be referred to a court of competent jurisdiction

. ” (Italics added.)
In June 2013
, the B achrach s filed this action against Compagno and Travelers
, al leging two clai ms seeking equit able relief against both defendants

— dissol ution of the limited liability company and an accounting

— and three tort claims against Compagno3

alone seeking damages for fraud
, negligent misrepresentation
, and breach of fiduciary duty.
Pursuant to the requirements of the o perating a greement, counsel for appellant s sent the Bachrachs a demand for arbitration. T he Bachrachs refused to proceed with
arbitration and , in July 2013, appellants moved to compel arbitration request ing that the

court dismiss the action or s tay it pending arbitration.
In September 2013, t he Bachrachs dismissed their three tort claims against Compagno

. They o pposed the motion to compel arbitration, arguing that the only remaining claims at issue were equitable and ther efore excluded from the arbitration provision

. The trial agreed, finding that “the language of the arbitration agreement

. . . exempts or excepts equitable issues
, ” and denied the motion to compel arbitration. This timely appeal followed

. DISCUSSION
The sole question on appeal is whether the arbitration provision encompasses the Bachrachs’ equitable claims seeking dissolution of Travelers and an accounting. Whether there is an agreement to arbitrate the present controversy turns on the language of the arbitration provision . There is no dispute here as to the language of th at provision

. Where, as here, t he language of an arbitration provision is not in dispu te , we conduct a de novo review of the trial court’s decision as to arbitra bility

. ( Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684 ( Coast Plaza ) ; Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Ca l.App.4th
76 1, 771 ( Gravillis ) ; E

F und Capital Partners v. P l ess (2007) 150 Cal.App.4th 1311, 1320 ( E F und Capital ) .)
Code of Civil Procedure section 1281.2 provides: “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a

c ontroversy and that a party thereto refuses to arbitrate such 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 . . . .” “ This language is mandatory

. . . .” ( Coast Plaza
, supra , 83 Cal.App.4th at p. 687.)4

P ublic policy in C alifornia strong ly favor s arbitration

. ( Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 9 51 , 971

– 972.) In furtherance o f that policy, arbitration agreements are l iberally interpreted and arbitration must be ordered unless the dispute in question is clearly excluded by the agreement. ( Gravillis
, supra , 143 Cal.App.4th at p. 771.) Nevertheless, “‘ [a] rbitration is . . . a m atter of contract, and the parties may freely delineate the area of its application. The court’s role

. . . must be strictly limited to a determination of whether the party resisting arbitration agreed to arbitrate. ’” ( I

bi d .) Public policy favoring arbitration does not apply if the contractual language cannot be interpreted in favor of arbitration. ( Id . at p. 772.) T here is no policy
that requir es p ersons to arbitrat e a dispute they did not agree t o arbitrate. ( I bi d

. ; E F und Capital
, supra , 150 Cal.App.4th at p. 1320; see Victoria v. Superior Court (1985) 40
Cal.3d 734, 744; see also Civ. Code, § 1648 [ “However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties
in tended to contract” ] .)
The arbitration provision at issue here states that any “ action to enforce or interpret [ the o perating a greement] or to resolve disputes between the Members . . . shall be settled by arbitration . . .

. , ” and the arbitrator’s decis ions are final and “constitute the only method of resolving disputes or matters subject to arbitration . . . .”

“ N otwithstanding the foregoing, ” however, t he parties also expressly agree d that “ no arbitrator shall have the power to render equitable relief of any kind, and request s for such relief shall be referred to a court of competition jurisdiction.” Appellants argue that
the clear and only reasonable meaning of th is provision i s that any action to enfor ce or interpret the o perating a greement or to resolve disputes between members of the LLC
, regardless of the nature of the c laim
, must be settled by arbitration

. O nly after the
substantive issues have been resolved
, a party has p revail ed in arbitration and an arbitrator has determine d that equitable relief is in order , may that party turn to the court

to obtain that r elief. Appellants argue that the equitable claims cannot be resolved without first determining the merits of the Bachrachs’ tort claims wh ich asserted fraud and mismanagement. Accordingly, to read the arbitration provision any differently5

would p ermit the Bachrachs to avoid their obligation to arbitrate merely b ecause they
have plead ed superfluous equitable claims. Not so. The gist of a ppe llants ’ argument is that the Bachrachs dismiss al of t he ir tort claims

was a ruse to avoid arbitration because, to determine whether dissolution is appropriate,
the trial court must necessarily resolve the issue of Compagno’s alleged mismanagement
and fraud p reviously alleged in th ose claims for damages. We reject this assertion.
F raud and mismanagement by a controlling member do constitute grounds for dissolution of a limited liability company

. ( S ee Former Corp. Code, § 17351, subd. (a)(5)

. ) 1
However, a judicial decree of dissolution may also be had upon a finding that, among other things, “[d]issolution is reasonably necessary for the protection of the rights or interests of the complaining members,” or the “management of the

. . . company is

. . . subj ect to internal dissension.” ( Former Corp. Code, § 17351, subds. (a)(2), (4).) The Bachrachs insist they originally alleged and ultimately decided to pursue only equitable claims in order to accomplish their princip a l goal of dissolution of the LLC and

t ermination of the parties’ bus iness relationship.
H ad the Bachrachs persisted in prosecuting tort claims against Compagno, there can be no question those claims would be subject to arbitration. However, the Bachrachs chose to forego and dismissed their claims for damages, leaving for resolution only the originally alleged equitable claims for dissolution and accounting

. Appellants do not contend the arbitration provision is unfairly one

- sided or unconscionable , nor do they

conten d that an arbitrator cou ld not resolve the equitable issues . (See Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 177

– 178 [it is well settled arbitrators commonly provide equitable relief as part of their decision ].) The parties here chose t o reserve for the trial court th e ability to determine any entitlement to equitable relief.

“‘ Arbitration is

. . . a matter of contract and the parties [ are free to fully ] delineate the

1 Former Corp. Code section 17351, subdivision (a) was repealed and reenacted without substantive changes as section 17707.03, subdivision (b), which became effective

on January 1, 2014 , after the motion at issue was resolved

.6

area of its application. ’” ( Gravillis
, supra , 143 Cal.App.4th at p. 771. ) Arbitration
should not be ordered where the arbitration provision excludes the dispute in question. ( Ibid

. ) It bears repeating that there is no public policy that r e quir es arbitrat ion of disputes

c ontracting parties did not agreed to arbitrate. ( Id . at p. 772; EFund Capital
, su pra , 150 Cal.App.4th at p. 1320

. )
A ppellants ’ contention that an arbitrator m ust resolve the substantive equitable issues ignores explicit contractual language s tat ing that “ no arbitrator shall have the power to render equitable relief of any kind ,” and that “ request s for such relief shall be referred to a court of competition jurisdiction. ” The provision further states that “[a] ll
decisions of the arbitrator shall be final, binding, and conclusive on all parties and shall, except as provided in [the pro vision for indemnification] , constitute the only method of resolving disputes or matters subject to arbitration pursuant to this Agreement. Judgment may be entered u pon any such decision in accordance with applicable law in any court having jurisdiction t hereof. ” The clear meaning of this language is that an arbitrator lacks jurisdiction to render a decision as to equitable issues , and equitable claim s may only be pursued in court

. Appellants’ interpretation of the o perating a greement , under which only an arbitrator is empowered to decide equitable issues
, would render the equitable relief language of the arbitration provision surplusage . Under this view, the phrase “ request s for [equitable] relief shall be referred to a court of competent jurisdiction
, ” leads to a tortured conclusion that the trial court has the power only to perform the ministerial act of
rubber

- stamping an arbitrator’s conclusive ruling

. This conclusion violate s the principle that, w hen interpreting contracts, the language used controls if it is clear and explicit and the court should avoid any interpret ation that render s any part of an agreement surplusage. ( Segal v. Silberstein (2007) 156 Ca l .App.4 th 627, 633 [ W e view the language of a contract as a whole and
, i f possible, “ gi ve effect to every provision and avoid rendering any part of an agreement surplusage ”] .) Bearing th ese principle s in mind, we consider that the phrase “[n] otwithstanding the foregoing ” precedes the equitable relief language of the arbitration provision

.7

“ [ F ] oregoing ” refers to powers expressly reserved to an a rbitrator

. Read as a whole, t he phrase means that, excep t for a determination as to equitable issues and any co ncomitant
entitlement to equitable remed ies

— as to which jurisdiction is explicitly re ser ved for the
trial court

— the arbitrator ’ s decision is b inding . It is clear from the l anguage of the

contract that the parties did not intend for an arbitrator to resolve the merits of equitable
claims or to formulate an appropriate remedy

. Th ose de termination s are f or the court

. The arbitration provision reveals t he parties agreed to a rbitrate any action to enforce or interpret the o perating a greement or to resolve any dispute between members except for claims in equity. When “ interpreting an unam biguous contractual provision we [ must ] give effect to the plain and ordinary meaning of the language used by the parties. ” ( EFund Capital
, supra , 150 Cal.App.4th at p. 1322 , citing Bank of the West v. Superior
Court (1992) 2 Cal.4th 1254, 1264 , and Civ. Code, §§ 1636, 1638 & 1644.) The contractual language here is clear, plain and broad. The trial court did not err in denying the motion to compel arbitration.8 DISPOSITION
The order is affirmed. Shel and Ryan Bachrach are to recover their c osts o n appeal

. NOT TO BE PUBLISHED.

JOHNSON, J.

We concur:

CHANEY, Acting P. J.

BENDIX, J. *

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.