Filed 9/20/13

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

HM DG, INC., et al.,

Plaintiffs and Respondents,

v.

FARZAD ETEMAD AMINI AND 

POUNEH BEIZAI, Individually and as 

Trustees, etc.,

Defendants and Appellants

 B242540

 (Los Angeles County

 Super. Ct. No. BC475302)

Appeal from an order of the Superior Court of Los Angeles County, 

Charles F. Palmer, Judge. Reversed with directions.

Leo A. Schwarz for Defendants and Appellants.

Law Offices of James J. Hevener and James J. Hevener for Plaintiffs and 

Respondents.

_____________________
2

INTRODUCTION

Plaintiffs and Respondents HM DG, Inc. and Hassan Majd doing business as Majd 

Design Group (HMDG) sued Defendants and Appellants Farzad Etemad Amini and 

Pouneh Beizai (Defendants) in the superior court to recover allegedly unpaid progress 

payments under a construction contract for a high-end remodel of Defendants‘ home. 

After HMDG refused Defendants‘ demand to submit the dispute to arbitration, 

Defendants filed a petition to compel arbitration pursuant to an arbitration clause in the 

parties‘ contract. The trial court denied the petition, holding that Defendants failed to 

establish the existence of a valid arbitration agreement on the ground that the ―arbitration 

clause at issue is uncertain in that it does not specify before what agency o[r] person the 

matter will be arbitrated, [or] how the arbitrator will be selected, but merely sets for[th] 

alternative options for these terms.‖ The trial court also awarded HMDG its attorneys 

fees incurred in opposing the petition to compel arbitration. We reverse.

Code of Civil Procedure section 1281.61specifically contemplates the existence of 

an enforceable arbitration agreement even where the ―arbitration agreement does not 

provide a method for appointing an arbitrator . . . .‖ The statute further provides that 

―[i]n the absence of an agreed method, or if the agreed method fails . . . , the court, on 

petition of a party to the arbitration agreement, shall appoint the arbitrator.‖ (Ibid.) As 

we shall explain, because the court has the power to appoint an arbitrator under section 

1281.6 when the parties fail to agree upon a method for appointment, we conclude that 

neither the absence of a definite method, nor the presence of ―alternative options,‖ for 

appointing an arbitrator renders an otherwise valid arbitration agreement unenforceable.

As we find the agreement to arbitrate is valid, and that Defendants demanded 

arbitration in accordance with the subject arbitration clause, we will reverse the trial 

court‘s order. However, because the trial court did not reach the question of whether any 

 

1 Unless otherwise specified, statutory references are to the Code of Civil 

Procedure.
3

other ground for denying the petition under section 1281.2 applies, we will remand the 

matter for the trial court to consider this issue.

FACTUAL SUMMARY

In early 2010, Defendants, husband and wife, approached HMDG about 

remodeling their home. After discussions regarding the project parameters, HMDG 

presented Defendants with a three page ―Project Proposal & Agreement‖ (Agreement).

A clause entitled ―Arbitration Clause‖ located directly above the Agreement‘s 

signature line provides:

―In the event a dispute shall arise between the parties to this contract, it is 

hereby agreed that the dispute shall be referred to [one of the following 

choices: (1) designate a specific USA&M office or alternate service by 

agreement of the parties; (2) provide a method of selecting the arbitrator 

and suits of the hearing, such as ‘from the county wherein the

manufacturing plant is located’; or for multi-jurisdictional disputes 

(3) insert ‘a USA&M office to be designated by USA&M National 

Headquarters’] for arbitration in accordance with the applicable United 

States Arbitration and Mediation Rules of Arbitration. The arbitrator’s 

decision shall be final and legally binding and judgment may be entered 

thereon. 

“Each party shall be responsible for its share of the arbitration fees in 

accordance with the applicable Rules of Arbitration. In the event a party 

fails to proceed with arbitration, unsuccessfully challenges the arbitrator’s 

award, or fails to comply with the arbitrator’s award, the other party is 

entitled to costs of suit, including a reasonable attorney’s fee for having to 

compel arbitration or defend or enforce the award.‖2 (Bracketed text and 

italics in original.)

 

2

―USA&M‖ is an acronym for United States Arbitration and Mediation. The 

clause‘s reference to ―suits of the hearing‖ is an apparent typographical error. The 

parties agree that the clause should read ―situs of the hearing.‖
4

After reviewing the Agreement, which was prepared by HMDG, Defendants 

executed the Agreement without requesting any changes to the Arbitration Clause. Mr. 

Majd executed the Agreement on behalf of HMDG.

In mid-2011, a dispute arose between HMDG and Defendants regarding the 

quality of the remodeling work, Defendants‘ requests to make substantial changes to the 

project‘s scope, and Defendants‘ alleged failure to make prompt progress payments as

required by the Agreement. On July 9, 2011, HMDG made a proposal to resolve the 

dispute by having Defendants place funds sufficient to complete the remaining project 

items into an escrow account. Although HMDG‘s proposal contained numerous 

references to arbitration, no formal demand for arbitration was made. When Defendants 

refused the proposal, HMDG served a 10-day stop work order and recorded a mechanic‘s 

lien on the property.

On December 15, 2011, HMDG filed a complaint against Defendants in the 

superior court, asserting claims for breach of contract, a common count for money due 

under the contract, foreclosure of mechanics lien, unjust enrichment, and violation of the 

prompt payment statute—Civil Code section 3260.1.

On February 21, 2012, Defendants‘ counsel, Leo A. Schwarz, sent a letter to 

counsel for HMDG, James J. Hevener. Mr. Schwarz‘s letter reads, in pertinent part:

―Please accept this letter as defendants‘ demand that all of the claims 

raised by plaintiffs in their complaint in the Action, as well as the claims to 

be made by defendants, be arbitrated per the  ̳Arbitration Clause‘ found on 

Page 3 of the June 24, 2010  ̳Project Proposal and Agreement‘. As 

USA&M, one of the designated potential arbitration providers, does not 

have a presence in Los Angeles County or the State of California, we 

propose that the parties avail themselves to Option No. 2 of the Arbitration 

Clause, where a method of selecting the arbitrator is provided. Defendants 

propose that: (1) the matter be heard by a retired judge with substantial 

construction and home improvement contract experience; (2) each party 

select two neutral such judges, with each party allowed to strike one of the 
5

other party‘s selections; (3) the arbitrator is then randomly selected from 

the remaining two judges; (4) the California arbitration rules (C.C.P. 

[§] 1281 et seq.) be adopted as the rules of arbitration; (5) the terms set 

forth in the second paragraph of the Arbitration Clause remain in effect; 

and (6) the Action will be stayed pending the Arbitrator‘s award, however, 

defendants‘ right to seek expungement of the mechanic‘s lien prior to the 

arbitration hearing shall not be stayed.‖ (Underscoring omitted.)

The next day, February 22, 2012, Mr. Hevener wrote back to Mr. Schwarz that 

HMDG found ―[the] proposal unreasonable and not required by the Project Proposal and 

Agreement.‖ Mr. Hevener‘s letter continued: ―Please proceed with filing your 

responsive pleading today. [¶] My client remains open to discussing settlement of this 

dispute including a reasonable process for alternative dispute resolution.‖

On February 22, 2012, Defendants filed a petition to compel arbitration pursuant 

to the Agreement‘s Arbitration Clause. The petition was supported by Defendants‘ 

declarations and a declaration by their attorney, attaching the Agreement, Mr. Schwarz‘s 

letter demanding arbitration, and Mr. Hevener‘s response.

On June 13, 2012, after a hearing on Defendants‘ petition, the trial court issued an 

order denying the petition and awarding HMDG attorney fees in the amount of $2,430. 

In pertinent part, the court‘s order states: ―[D]efendants have failed to meet their burden 

of proving the existence of a valid arbitration agreement. Specifically, the arbitration 

clause at issue is uncertain in that it does not specify before what agency o[r] person the 

matter will be arbitrated, [or] how the arbitrator will be selected, but merely sets for[th] 

alternative options for these terms. At most the agreement provides that these questions 

are to be resolved in the future which . . .  ̳gives rise to no legal obligation until such 

future agreement.[‘] Moreover, defendants‘ demand for arbitration itself reflects that 

there was a lack of mutual consent insofar as it proposes terms nowhere set forth in the 

putative arbitration agreement.‖ The trial court‘s order states no other ground for 

denying Defendants‘ petition.
6

ISSUES PRESENTED

In this appeal, we must decide whether the subject Arbitration Clause constitutes a 

valid arbitration agreement, notwithstanding the presence of multiple alternative methods 

for selecting an arbitrator in the clause. We also will address HMDG‘s contention that 

the presence of these alternatives in the Arbitration Clause establishes that there was no 

mutual consent to arbitrate. Finally, we will address HMDG‘s contention that 

Defendants‘ demand for arbitration was defective because it included proposals that did 

not strictly conform to the terms of the Arbitration Clause.

Based on a plain reading of section 1281.6, we conclude that the Arbitration 

Clause is both valid and establishes the parties‘ mutual consent to arbitrate, 

notwithstanding the clause‘s various options for selecting an arbitrator. We also 

conclude that Defendants‘ demand for arbitration was consistent with the terms of the

Arbitration Clause. Accordingly, we will reverse the order denying Defendant‘s petition. 

However, because the trial court did not reach other potential grounds for denying the 

petition under section 1281.2, we will remand the matter for the court to consider these 

issues.

DISCUSSION

A. Section 1281.6 Makes Clear that the Parties Need Not Agree Upon a 

Specific Method for Appointing an Arbitrator to Form a Binding 

Arbitration Agreement 

In denying Defendants‘ petition to compel arbitration, the trial court determined 

that the Arbitration Clause was not ―a valid arbitration agreement‖ because the clause 

―does not specify before what agency o[r] person the matter will be arbitrated, [or] how 

the arbitrator will be selected, but merely sets for[th] alternative options for these terms.‖ 

The court‘s conclusion assumes the premise that an arbitration agreement must identify a 

specific arbitrator or specify a single method for selecting an arbitrator in order to be 

valid. That premise, as we shall explain, is contrary to a plain reading of section 1281.6 

and, thus, cannot support the trial court‘s denial of Defendants‘ petition to compel 

arbitration.
7

As our resolution of this issue rests on the interpretation of a statute and the 

application of that statute to undisputed facts—in this case, section 1281.6 and the terms 

of the written Arbitration Clause—the issue is subject to this court‘s independent or de 

novo review. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 

432; International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611; City 

of Saratoga v. Hinz (2004) 115 Cal.App.4th 1202, 2012.)

We begin with the well-settled canons of statutory construction. ―In statutory 

construction cases, our fundamental task is to ascertain the intent of the lawmakers so as 

to effectuate the purpose of the statute. [Citation.]  ̳We begin by examining the statutory 

language, giving the words their usual and ordinary meaning.‘ [Citations.] If the terms 

of the statute are unambiguous, we presume the lawmakers meant what they said, and the 

plain meaning of the language governs. [Citations.]‖ (Estate of Griswold (2001) 

25 Cal.4th 904, 910–911 (Estate of Griswold), quoting Day v. City of Fontana (2001) 

25 Cal.4th 268, 272.)

Section 1281.6 states: ―If the arbitration agreement provides a method of 

appointing an arbitrator, that method shall be followed. If the arbitration agreement does 

not provide a method for appointing an arbitrator, the parties to the agreement who seek 

arbitration and against whom arbitration is sought may agree on a method of appointing 

an arbitrator and that method shall be followed. In the absence of an agreed method, or if 

the agreed method fails or for any reason cannot be followed, or when an arbitrator 

appointed fails to act and his or her successor has not been appointed, the court, on 

petition of a party to the arbitration agreement, shall appoint the arbitrator.‖ (Italics 

added.)

A plain reading of section 1281.6 yields only one reasonable interpretation—that 

the validity of an arbitration agreement is not contingent upon the agreement identifying 

a specific arbitrator or specifying a particular method for appointing an arbitrator. 

Moreover, if an arbitration agreement that ―does not provide a method for appointing an 

arbitrator‖ is valid [§ 1281.6], then it follows that an agreement which provides multiple 

alternative methods for appointing an arbitrator also is valid, even though it does not 
8

specify a particular method for appointment. Indeed, even where the parties are unable to 

agree upon a specific method for appointing an arbitrator, section 1281.6 provides a 

solution to ensure a party‘s contractual right to arbitrate is enforced. In such instances, 

section 1281.6 provides that ―the court, on petition of a party to the arbitration agreement, 

shall appoint the arbitrator.‖

Consistent with our plain reading of section 1281.6, we hold that the presence of 

multiple alternative methods for selecting an arbitrator in the Arbitration Clause does not 

render the clause invalid or unenforceable.3 The trial court erred in finding that 

Defendants failed to meet their burden of establishing the existence of a valid arbitration 

agreement.

B. The Arbitration Clause Establishes the Parties’ Mutual Consent to 

Arbitrate

HMDG contends that the presence of ―options for key terms such as selection of 

the specific Office of USA&M [that] would administer the arbitration and provide the 

associated arbitration rules, how the arbitrator would be selected, and the location for the 

arbitration hearing‖ demonstrates that there was ―no meeting of the minds‖ or mutual 

 

3 We hold this interpretation follows from a plain reading of section 1281.6. But 

even were we to view the statutory language as ambiguous with respect to an arbitration 

agreement that provides numerous options for appointing an arbitrator, we would reach 

the same conclusion. Where statutory language is susceptible of more than one possible 

interpretation, ―we  ̳ ―  ̳select the construction that comports most closely with the 

apparent intent of the Legislature, with a view to promoting rather than defeating the 

general purpose of the statute, and avoid an interpretation that would lead to absurd 

consequences.‘ ‖ ‘ [Citation.]‖ (Estate of Griswold, supra, 25 Cal.4th at p. 911.) Section 

1281.6 is part of a ―detailed statutory scheme,‖ through which ―the Legislature has 

expressed a  ̳strong public policy in favor of arbitration as a speedy and relatively 

inexpensive means of dispute resolution.‘ [Citations.]‖ (Moncharsh v. Heily & Blase 

(1992) 3 Cal.4th 1, 9.) The statute plainly contemplates a valid and enforceable 

arbitration agreement, even where the parties have failed to specify a method for 

appointing an arbitrator. Given the strong public policy favoring arbitration, it would be 

an absurd consequence to hold that an agreement that provides no method for appointing 

an arbitrator is valid, while an agreement that provides multiple alternative methods for 

appointing an arbitrator is invalid.
9

consent to arbitrate. We disagree. Contrary to HMDG‘s contention, the plain language 

of the Arbitration Clause, combined with the parties‘ signatures directly under the clause, 

establishes the parties‘ mutual consent to submit their disputes to ―arbitration in 

accordance with the applicable United States Arbitration and Mediation Rules of 

Arbitration‖ and to be bound by the ―arbitrator‘s decision.‖~(CT 38)~ The presence of 

options regarding the method for selecting an arbitrator or the location of the arbitration 

hearing do not negate that clear intention.

―Contract formation requires mutual consent, which cannot exist unless the parties 

 ̳agree upon the same thing in the same sense.‘ ‖ (Bustamante v. Intuit, Inc. (2006) 

141 Cal.App.4th 199, 208 (Bustamante), quoting Civ. Code, § 1580; see also Civ. Code, 

§§ 1550, 1565.) ―  ̳Mutual assent is determined under an objective standard applied to 

the outward manifestations or expressions of the parties, i.e., the reasonable meaning of 

their words and acts, and not their unexpressed intentions or understandings.‘ 

[Citations.]‖ (Bustamante, at p. 208.) ―Where the existence of a contract is at issue and 

the evidence is conflicting or admits of more than one inference, it is for the trier of fact 

to determine whether the contract actually existed. But if the material facts are certain or 

undisputed, the existence of a contract is a question for the court to decide.‖ (Ibid.; 

Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 407 [―the question whether 

the contract . . . is sufficiently definite and certain in its essential terms to give rise to a 

legal obligation is a question of law‖].) Because HMDG‘s contention rests on the 

language of the Arbitration Clause, and the presence of ―options for key terms‖ in the 

clause, we review the issue as a question of law, without deference to purported factual 

determinations made by the trial court.4

 

4

The trial court stated in its order that ―defendants‘ demand for arbitration itself 

reflects that there was a lack of mutual consent insofar as it proposes terms nowhere set 

forth in the putative arbitration agreement.‖ HMDG contends this was a ―key factual 

determination[ ]‖ and urges us to review the question of mutual consent under the 

substantial evidence standard. As we have explained, because the trial court‘s purported 

factual determination is, like HMDG‘s mutual consent argument, based entirely upon the 

terms of the Arbitration Clause, the issue is subject to our independent review.
10

HMDG‘s contention regarding the purported lack of mutual consent is largely 

disposed of by our earlier analysis of section 1281.6. As explained, section 1281.6 makes 

clear that the absence of a specified method for appointing an arbitrator neither 

invalidates an arbitration agreement nor negates the parties‘ clearly expressed intent to 

submit their disputes to arbitration. Accordingly, HMDG‘s argument that mutual consent 

is lacking because the Arbitration Clause did not specify ―the specific Office of USA&M 

[that] would administer the arbitration‖ or ―how the arbitrator would be selected‖ is 

without merit.

For much the same reason, we are not persuaded by HMDG‘s contentions 

regarding the purported options related to the ―associated arbitration rules‖ and ―the 

location of the arbitration hearing.‖ We view these matters as part and parcel with the 

appointment of an arbitrator—that is, for example, if the parties were to elect to appoint 

an American Arbitration Association (AAA) arbitrator, that appointment would entail 

arbitration in a AAA forum under AAA rules. Thus, under section 1281.6, the absence of 

a specified forum or set of rules in an arbitration clause does not invalidate the agreement 

to arbitrate. Rather, in the absence of such provisions, ―the parties to the agreement who 

seek arbitration and against whom arbitration is sought may agree on a method of 

appointing an arbitrator‖—including the forum and rules that will govern the 

arbitration—or, if the parties cannot agree, ―the court, on petition of a party to the 

arbitration agreement, shall appoint the arbitrator.‖ (§ 1281.6.)

HMDG contends that ―arbitration rules and forum are material terms of an 

agreement to arbitrate‖ and, thus, must be specified in the agreement to establish mutual 

consent. This contention goes too far and is not supported by the authorities cited by 

HMDG. On the contrary, the authorities HMDG cites implicitly recognize the conclusion 

we reach.
11

In support of its contention, HMDG cites Martinez v. Master Protection Corp.

(2004) 118 Cal.App.4th 107, 121 (Martinez) for the proposition that ―  ̳ ―[a]n agreement 

to arbitrate before a particular forum is as integral a term of a contract as any other, which 

courts must enforce.‖ ‘ [Citations.]‖ The arbitration clause in Martinez ―require[d] that 

the arbitration be conducted in accordance with specific procedures promulgated by the 

AAA . . . .‖ (Id. at p. 120.) The plaintiff ―submitted his claims to the AAA, but [AAA] 

refused to conduct a hearing.‖ (Ibid.) The trial court nevertheless ordered the parties to 

arbitrate, and ―appointed another arbitrator‖ pursuant to section 1281.6. (Martinez, at 

p. 120.) The Martinez court reversed. As the court correctly concluded, ―[s]ection 

1281.6 does not permit the trial court to choose an alternative forum when the chosen 

forum refuses to hear the case.‖ (Id. at p. 121.) That conclusion follows from the plain 

language of section 1281.6: ―If the arbitration agreement provides a method of 

appointing an arbitrator, that method shall be followed.‖ But this does not mean, as 

HMDG contends, that section 1281.6 is inapplicable where the parties have provided a 

list of alternative methods for selecting an arbitrator and forum. Indeed, Martinez 

implicitly recognizes, as we do, that the selection of an arbitral forum is part and parcel 

with the appointment of an arbitrator. (See Martinez, at p. 120 [rejecting contention that 

trial court properly appointed a non-AAA arbitrator with the proviso that AAA rules be 

followed on ground that the ―requirement for resolution of the present dispute  ̳in 

accordance with‘ pertinent AAA procedures means that the arbitration must take place 

before that designated agency, that is, in an AAA forum‖ before an AAA arbitrator].)

Alan v. Superior Court (2003) 111 Cal.App.4th 217 (Alan), like Martinez, 

recognizes that a court cannot invoke section 1281.6 to make an appointment that is 

inconsistent with the forum and set of rules required by the parties‘ agreement. The 

arbitration clause at issue in Alan provided: ―  ̳[A]ny arbitration ... shall be conducted 

before an arbitration panel convened by the [NYSE] or the [NASD]. . . . Such arbitration 

shall be governed by the rules of the organization convening the panel.‘ ‖ (Alan, at 

p. 224, italics added by Alan.) Because it viewed the designated arbitral forums and rules 

to be ―an integral part‖ of the parties‘ agreement to arbitrate, the Alan court rejected the 
12

argument that a court could simply appoint another arbitrator under section 1281.6 when 

the designated organizations refused to hear the dispute. (Alan, at p. 224.) However, the 

court did not hold, as HMDG contends, that the presence of choices regarding the forum 

and rules—i.e., ―  ̳an arbitration panel convened by the [NYSE] or the [NASD]‘ ‖ and 

―  ̳governed by the rules of the organization convening the panel‘ ‖—invalidated the 

agreement.

Here, notwithstanding the presence of options for selecting an arbitrator, the 

arbitration forum and the USA&M rules to be applied, a plain reading of the Arbitration 

Clause clearly evidences the parties‘ intention to submit their disputes to arbitration. The 

Arbitration Clause unequivocally states: ―In the event a dispute shall arise between the 

parties to this contract, it is hereby agreed that the dispute shall be referred to [one of 

three choices for appointing an arbitrator] . . . for arbitration in accordance with the 

applicable United States Arbitration and Mediation Rules of Arbitration. The arbitrator‘s 

decision shall be final and legally binding and judgment may be entered thereon.‖ 

(Bracketed text added, italics omitted.) No more was required to form a binding 

agreement to arbitrate. (See Cheng-Canindin v. Renaissance Hotel Associates (1996) 

50 Cal.App.4th 676, 687-688 [―although arbitration can take many procedural forms, a 

dispute resolution procedure is not an arbitration unless there is a third party decision 

maker, a final and binding decision, and a mechanism to assure a minimum level of 

impartiality with respect to the rendering of that decision‖].)

C. Defendants Properly Demanded Arbitration in Accordance with the 

Arbitration Clause and Section 1281.2

Subject to exceptions that are not properly before us,5section 1281.2 provides 

that: ―On petition of a party to an arbitration agreement alleging the existence of a 

 

5 Notwithstanding the existence of an agreement to arbitrate, section 1281.2, 

subdivision (c) authorizes the trial court to refuse to enforce the arbitration agreement 

or stay the arbitration proceeding ―[i]f the court determines that a party to the arbitration 

is also a party to litigation in a pending court action or special proceeding with a third 

party as set forth under subdivision (c) . . . .‖ In its opposition to Defendants‘ petition 

to compel arbitration, HMDG argued that the petition should be denied under 
13

written agreement to arbitrate a controversy 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 . . . .‖ 

The statute does not explicitly require the petitioning party to establish that a proper 

demand for arbitration was made. Nevertheless, a ―necessary implication‖ of the 

language requiring ―  ̳the existence of a written agreement to arbitrate a controversy and 

that a party thereto refuses to arbitrate such controversy‘ . . . is that a request or demand 

for arbitration under the written agreement to arbitrate has been made and refused.‖ 

(Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 641, italics added (Mansouri), 

quoting § 1281.2.)

Having determined that Defendants established the existence of a valid arbitration 

agreement, we turn to HMDG‘s contention that Defendants failed to make a proper 

demand for arbitration. HMDG contends that the February 21, 2012 letter from 

Defendants‘ attorney did not meet the standard articulated in Mansouri because the letter 

included proposed ―terms to which [HMDG] had not agreed.‖ As HMDG‘s contention 

turns upon undisputed evidence—i.e., the contents of the February 21, 2012 letter and the 

written Arbitration Clause—we review the issue de novo. (Mooney v. County of Orange 

(2013) 212 Cal.App.4th 865, 872.)

 

subdivision (c) because HMDG had filed a cross-complaint in a related superior court 

action filed by one of its subcontractors concerning work performed on Defendants‘ 

home. Because the trial court found that Defendants failed to establish the existence of 

a valid arbitration agreement, the court did not reach this issue. Accordingly, we will 

remand this matter for the trial court to consider the application of subdivision (c), which 

may require the court to make factual determinations and exercise its discretion in 

accordance with section 1281.2. The trial court also may consider other statutory 

defenses raised by HMDG, such as waiver under section 1281.2, subdivision (a). 

(See Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)
14

We conclude the February 21, 2012 letter was a demand ―pursuant to and under 

the terms of [the parties‘] written arbitration agreement‖ as required by section 1281.2. 

(Mansouri, supra, 181 Cal.App.4th at p. 641, italics omitted.) The letter states, in no 

uncertain terms: ―Please accept this letter as defendants‘ demand that all of the claims 

raised by plaintiffs in their complaint in the Action, as well as the claims to be made by 

defendants, be arbitrated per the  ̳Arbitration Clause‘ found on Page 3 of the June 24, 

2010  ̳Project Proposal and Agreement‘.‖

In arguing that the letter improperly demanded arbitration in variance with the 

parties‘ agreement, HMDG focuses on the letter‘s next two sentences, in which 

Defendants ―propose that the parties avail themselves to Option No. 2 of the Arbitration 

Clause‖ and ―propose‖ six additional points concerning the arbitration and pending civil 

action. While it is true, as HMDG contends, that two of the proposed points did not 

―strictly [track] the parties‘ actual agreement,‖ this does not undermine the operative 

demand for arbitration.6 Those points were, as Defendants labeled them, ―proposals,‖ 

and HMDG was invited to negotiate those points consistent with ―Option No. 2 of the 

Arbitration Clause.‖7 The operative demand, however, offered no room for negotiation—

it made specific reference to the Arbitration Clause and demanded that the claims be 

submitted to arbitration pursuant to ―the  ̳Arbitration Clause‘ found on Page 3 of the June 

24, 2010  ̳Project Proposal and Agreement‘.‖

 

6 As quoted in the factual summary, most of Defendants‘ proposed points concerned 

the method for selecting an arbitrator. Defendants, however, also proposed that ―the 

California arbitration rules (C.C.P. [§] 1281 et seq.) be adopted as the rules of 

arbitration‖—a proposal that does not strictly track the Arbitration Clause‘s requirement 

―for arbitration in accordance with the applicable United States Arbitration and 

Mediation Rules of Arbitration.‖ Defendants also proposed that the court action be 

stayed pending the arbitrator‘s award, except with respect to Defendants‘ ―right to seek 

expungement of the mechanic‘s lien.‖ Because the Arbitration Clause does not 

contemplate that there will be a court action, it naturally makes no provision for the trial 

court to retain some aspect of a case that is sent to arbitration.

7 As set forth in the factual summary, Option No. 2 of the Arbitration Clause states 

that the parties may ―provide a method of selecting the arbitrator and [situs] of the 

hearing . . . .‖
15

This clear invocation of the Arbitration Clause, coupled with the negotiable nature 

of the proposed terms, distinguishes Defendants‘ demand for arbitration from the demand 

that the court found to be defective in Mansouri, supra, 181 Cal.App.4th 633. In 

Mansouri, the plaintiff and defendant entered into an arbitration agreement providing for 

arbitration before a three-person panel. (Id. at p. 637.) Prior to filing a petition to compel 

arbitration, the plaintiff wrote a letter to defendant demanding that she agree to submit to 

―binding arbitration before a single arbitrator, unilaterally preselected by the [plaintiff].‖ 

(Ibid.) ―The letter indicated that if [defendant] did not agree, the [plaintiff] would file  ̳a 

court action for injunctive and declaratory relief and attorneys fees to enforce [her] 

compliance.‘ ‖ (Italics omitted.) The Mansouri court held that the plaintiff ―failed to 

show it requested that [defendant] arbitrate pursuant to and under the terms of [their 

written arbitration agreement]‖ as required by section 1281.2. (Id. at p. 642.) The court 

based its conclusion on the following defects in the purported demand for arbitration: 

―The letter made no reference to the arbitration provision of the [parties‘ agreement], did 

not offer the three-person form of arbitration set forth in [the arbitration provision], and 

did not inform [defendant] that a petition to compel arbitration would be filed if she 

refused.‖ (Id. at p. 637.)

Unlike the demand in Mansouri, Defendants‘ February 21, 2012 letter 

(1) demanded arbitration pursuant to ―the  ̳Arbitration Clause‘ found on Page 3 of the 

June 24, 2010  ̳Project Proposal and Agreement‘ ‖; (2) proposed ―that the parties avail 

themselves to Option No. 2 of the Arbitration Clause‖ for selecting an arbitrator; and 

(3) advised that Defendants would ―file [a] motion to compel arbitration‖ if HMDG 

rejected the demand to arbitrate. HMDG rejected the demand and instructed Defendants 

to ―proceed with filing your responsive pleading . . . .‖ There was a ―demand for 

arbitration under the parties‘ arbitration agreement and a refusal to arbitrate under the 

agreement.‖ (Mansouri, supra, 181 Cal.App.4th at p. 640.)
16

Finally, insofar as HMDG refused to negotiate a method for selecting an arbitrator 

pursuant to one of the options set forth in the Arbitration Clause, we observe that the trial 

court was authorized to appoint an arbitrator pursuant to section 1281.6. As discussed, 

section 1281.6 provides that ―[i]n the absence of an agreed method, or if the agreed 

method fails or for any reason cannot be followed, . . . the court, on petition of a party to 

the arbitration agreement, shall appoint the arbitrator.‖ That appointment must be made 

in a manner consistent with one of the options set forth in the Arbitration Clause. (Ibid.

[―If the arbitration agreement provides a method of appointing an arbitrator, that method 

shall be followed.‖].) However, because Option No. 2 allows for essentially any ―method 

of selecting the arbitrator and [situs] of the hearing,‖ this is not a case in which 

appointing an arbitrator in a manner consistent with the parties‘ agreement would be 

impossible if the parties are ultimately unable to agree upon a method.8

Defendants met their burden under section 1281.2 of showing a valid written 

agreement to arbitrate a controversy; a demand to arbitrate such controversy pursuant to 

and under the terms of the written arbitration agreement; and the refusal to arbitrate such 

controversy pursuant to and under the terms of the written arbitration agreement. 

(Mansouri, supra, 181 Cal.App.4th at p. 641.) Accordingly, we will reverse the order 

denying Defendants‘ petition to compel arbitration and remand the matter for the trial 

court to consider whether any defense or exception under section 1281.2 applies.

 

8

The instant case is thus different from Alan, supra, 111 Cal.App.4th 217 and 

Martinez, supra, 118 Cal.App.4th 107 where the appellate courts held that section 1281.6 

did not authorize the trial courts to appoint an arbitrator in a manner inconsistent with the 

parties‘ arbitration agreements. As discussed above, in both Alan and Martinez, the 

parties‘ agreements identified specific arbitration service providers that were to arbitrate 

their disputes. (See Alan, at p. 224 [―  ̳[A]ny arbitration . . . shall be conducted before an 

arbitration panel convened by the [NYSE] or the [NASD]‘ ‖]; Martinez, at p. 120 

[agreement ―require[d] that the arbitration be conducted in accordance with specific 

procedures promulgated by the AAA‖].) In both cases, the specified arbitration service 

providers would not hear the parties‘ disputes and, hence, the trial court was unable to 

follow the ―method of appointing an arbitrator‖ provided by the parties‘ agreements. 

(§ 1281.6.) Given the flexibility of Option No. 2 of the Arbitration Clause, that 

circumstance is not present here.
17

DISPOSITION

The order denying the petition to compel arbitration is reversed. The award of 

$2,430 in attorney fees to HMDG is vacated. The case is remanded with directions to 

conduct additional proceedings, which are consistent with the views expressed herein. 

Defendants shall recover their costs in connection with this appeal.

CERTIFIED FOR PUBLICATION

HEESEMAN, J.

We concur:

CROSKEY, Acting P. J.

KITCHING, J.

 

Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to 

article VI, section 6 of the California Constitution.