1

Filed 7/24/14 Baillie v. Assenzio CA1/3 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS 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 This opinion has not been certified for publication 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. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA 

FIRST APPELLATE DISTRICT 

DIVISION THREE 

AMY LYNNE BAILLIE et al., 

 Plaintiffs and Respondents, 

v. 

THOMAS ASSENZIO, 

 Defendant and Appellant. 

 A139144 

 (Alameda County 

 Super. Ct. No. JCCP004688) 

 ORDER MODIFYING OPINION 

 AND DENYING REHEARING; 

 NO CHANGE IN JUDGMENT 

THE COURT: 

 It is ordered that the opinion filed herein on June 30, 2014 be modified as follows: 

1. In footnote 9, at pages 9 and 10, the date “December 4, 2014” should be 

“December 4, 2013”. 

2. In footnote 11, at page 13, the word “appellant” should be changed to 

“respondent” so that the sentence now reads: 

“As explained above, we fail to understand and respondent fails to explain why a 

substitute arbitrator could not apply the NAF Code in the same straightforward 

manner as a NAF arbitrator.” 

 There is no change in the judgment. Respondents’ petition for rehearing is denied. 

Date: ____________ ____________________________Acting P.J. 
1

Filed 6/30/14 (unmodified version) 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS 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 This opinion has not been certified for publication 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. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA 

FIRST APPELLATE DISTRICT 

DIVISION THREE 

THOMAS ASSENZIO, 

 Defendant and Appellant, 

v. 

AMY LYNNE BAILLIE et al., 

 Plaintiffs and Respondents. 

 A139144 

 (Alameda County 

 Super. Ct. No. JCCP004688) 

 This is an appeal from a trial court order denying appellant Thomas Assenzio’s 

motion to compel arbitration and to stay the proceedings. This motion was brought in 

response to a lawsuit filed against appellant (and others) by respondents Amy Lynne 

Baillie and Kathrine Rosas based on the allegedly illegal lending practices of a number of 

corporations under appellant’s direct ownership, management or control. Appellant 

moved to compel arbitration and to stay the action. The trial court denied the motion 

after finding that an integral part of the parties’ agreement to arbitrate – to wit, its 

designation of the National Arbitration Forum (NAF) as arbitrator and its Code of 

Procedure as the governing rules – could not be enforced given NAF’s unavailability to 

arbitrate consumer disputes, with the result that arbitration under the agreement could not 

be compelled. For reasons discussed below, we reverse the trial court’s decision. 

FACTUAL AND PROCEDURAL BACKGROUND 

 This is a class action lawsuit brought by respondents Baillie and Rosas on behalf 

of “All persons . . . who . . . entered into Instant Cash Agreements with Defendant 
2

Lenders” via the “same standard form agreement.” Among other things, respondents 

seek on behalf of themselves and all other similarly situated persons, damages and 

injunctive relief based on defendants’ allegedly “unfair, unlawful and deceptive 

schemes,” including their charging and collecting of “usurious/unconscionable interest” 

from class members. 

 Defendants, mainly consisting of several corporate entities including Accounts 

Receivable Management of Florida Inc., Processing Solutions, LLC, MTE Financial 

Services, Inc., and Instant Cash USA, and Rio Resources, are involved in marketing 

short-term loans over the internet, processing loan applications and/or servicing these 

loans.1 Respondent Baillie obtained a $300 loan from “USFastCash” on or about July 2, 

2006, as evidenced by a Note identifying as the lender defendant MTE Financial 

Services, Inc. dba Instant Cash USA. Respondent Rosas, in turn, obtained a $300 loan 

from defendant Rio Resources on or about June 19, 2006, as well as a $300 loan from 

Instant Cash USA on or about November 3, 2006. 

 The original complaint, filed by respondent Baillie on May 22, 2007, also 

identified numerous “Doe” defendants. In the third amended complaint, filed on 

November 3, 2010, appellant was first added as one of these “Doe” defendants, and 

respondent Rosas was added as a plaintiff/class representative. The third amended 

complaint alleged that appellant “owned, controlled, managed, and/or directed defendants 

Processing Solutions, LLC, First East Inc., MTE Financial Services, Inc., 

Instantcashloantillpayday.com, Instant Cash USA, and Rio Resources.” Claims were 

thus raised against appellant based upon a theory of “piercing the corporate veil.” 

Appellant initially contested the court’s personal jurisdiction over him based on his 

Florida residency. This jurisdictional challenge was ultimately unsuccessful, and the 

matter moved forward. 

 

1

 Defendant Processing Solutions, LLC is a Delaware company that acts as a 

servicing company for defendant MTE Financial Services, doing business as Instant Cash 

USA (MTE). Processing Solutions assists MTE in marketing loans over the internet and 

processes loan applications submitted electronically to MTE online. 
3

 Before appellant was named as a defendant, however, defendants Processing 

Solutions, LLC, First East Inc., and Instant Cash USA moved to compel arbitration and to 

stay the proceedings. This motion was based on the arbitration agreement included in the 

standard form agreement allegedly entered into by the plaintiff class members entitled 

Agreement to Arbitrate All Disputes (hereinafter, Arbitration Agreement).2

 Among other 

 

2

 The Arbitration Agreement, in its entirety, provides: “AGREEMENT TO 

ARBITRATE ALL DISPUTES: By signing below and to induce us, MTE Financial 

Services dba Instant Cash USA, to process your application for a loan, you and we 

agree that any and all claims, disputes or controversies that we or our servicers or 

agents have against you or you have against us, our servicers, agents, directors, 

officers and employees, that arise out of your application for one or more loans, the 

Loan Agreements that govern your repayment obligations, the loan for which you are 

applying or any other loan we previously made or later make to you, this Agreement 

to Arbitrate All Disputes, collection of the loan or loans, or alleging fraud or 

misrepresentation, whether under the common law or pursuant to federal or state 

statute or regulation, or otherwise, including disputes as to the matter subject to 

arbitration, shall be resolved by binding individual (and not class) arbitration by and 

under the Code of Procedure of the National Arbitration Forum (‘NAF’) in effect at the 

time the claim is filed. THEREFORE, THE ARBITRATOR SHALL NOT CONDUCT 

CLASS ARBITRATION; THAT IS, THE ARBITRATOR SHALL NOT ALLOW YOU 

TO SERVE AS A REPRESENTATIVE, AS A PRIVATE ATTORNEY GENERAL, 

OR IN ANY OTHER REPRESENTATIVE CAPACITY FOR OTHERS IN THE 

ARBITRATION. This Agreement to Arbitrate All Disputes shall apply no matter by 

whom or against whom the claim is filed. Rules and forms of the NAF may be obtained 

and all claims shall be filed at any NAF office, on the World Wide Web at www.arbforum.com, or at ‘National Arbitration Forum, P.O. Box 50191, Minneapolis, Minnesota 

55405.’ If you are unable to pay the costs of arbitration, your arbitration fees may be 

waived by the NAF. The cost of a participatory hearing, if one is held at your or our 

request, will be paid for solely by us if the amount of the claim is $15,000 or less. 

Unless otherwise ordered by the arbitrator, you and we agree to equally share the costs 

of a participatory hearing if the claim is for more than $15,000 or less than $75,000. 

Any participatory hearing will take place at a location near your residence. This 

arbitration agreement is made pursuant to a transaction involving interstate commerce. 

It shall be governed by the Federal Arbitration Act, 9 U.S.C. [§§] 1-16. Judgment upon 

the award may be entered by any party in any court having jurisdiction. This Agreement 

To Arbitrate All Disputes is an independent agreement and shall survive the closing, 

funding, repayment and/or default of the loan for which you are applying. NOTICE: 

YOU AND WE WOULD HAVE HAD A RIGHT OR OPPORTUNITY TO LITIGATE 

DISPUTES THROUGH A COURT AND HAVE A JUDGE OR A JURY DECIDE THE 
4

things, the Arbitration Agreement provided that arbitration among the parties was 

required to be individual and binding, and would be held by and under the NAF Code of 

Procedure in effect at the time the claim(s) was filed, and that any claim should be filed at 

the NAF office or on its website. Further, with respect to covered claims, such as those 

raised in this lawsuit, the Arbitration Agreement set forth the following notice: “YOU 

AND WE WOULD HAVE HAD A RIGHT OR OPPORTUNITY TO LITIGATE 

DISPUTES THROUGH A COURT AND HAVE A JUDGE OR A JURY DECIDE THE 

DISPUTES BUT HAVE AGREED INSTEAD TO RESOLVE DISPUTES THROUGH 

BINDING ARBITRATION.” Finally, the Arbitration Agreement prohibited the 

arbitrator from conducting class or otherwise representative arbitrations. 

 For legal reasons wholly distinct from those implicated in this appeal, the trial 

court denied the other defendants’ motion to compel and to stay proceedings. This court 

thereafter affirmed the trial court’s decision (Baillie v. Processing Solutions, LLC, No. 

A125167 (May 27, 2010)), and the California Supreme Court denied defendants’ petition 

for review (S184194, Aug. 11, 2010).3

 

 Thereafter, on March 25, 2013, appellant filed the motion to compel arbitration 

and to stay court proceedings at issue in this appeal, also based on the above-described 

Arbitration Agreement.4 In his motion, appellant, among other things, called upon the 

 

DISPUTES BUT HAVE AGREED INSTEAD TO RESOLVE DISPUTES THROUGH 

BINDING ARBITRATION.” 

3

 These defendants thereafter filed a renewed motion to compel arbitration based on 

a subsequently-decided United States Supreme Court case, AT&T Mobility LLC v. 

Concepcion (2011) 563 U.S. __, 131 S.Ct. 1740, 179 L.Ed.2d 742. However, this motion 

was denied on procedural grounds. In addition, on September 28, 2012, this case was 

removed to federal court, at which time the defendants again moved to compel, arguing 

the federal court was authorized to revisit earlier state court orders. However, the case 

was ultimately remanded to state court, with the federal court denying the motion without 

prejudice to refiling in state court “to the extent otherwise permissible.” (See Rosas v. 

USFastCash (N.D. Cal. 2012) 2012 U.S. Dist. LEXIS 173453 at *2-*3, fn. 1.) 

4

 Appellant filed separate such motions against respondent Baillie and respondent 

Rosas that were in all material regards identical. The trial court treated them collectively, 

as do we. 
5

trial court to appoint a substitute arbitrator given that NAF, the arbitrator identified in the 

Arbitration Agreement, was no longer accepting consumer disputes such as the dispute in 

this case. 

 Appellant’s motion was heard on June 7, 2013. The trial court preliminarily found 

that appellant had standing to enforce the Arbitration Agreement because he was alleged 

to be the agent or alter ego of a signatory, and that he was not bound by orders denying 

other defendants’ motions to compel arbitration because they were made prior to his 

presence in this litigation. In addition, the trial court found that, under the Arbitration 

Agreement, issues of arbitrability were to be decided by the court rather than the 

arbitrator. The trial court then found the Arbitration Agreement was not enforceable for 

the following reasons. First, the court found the parties’ designation of NAF, which no 

longer arbitrates consumer disputes, was an “integral” part of the Arbitration Agreement. 

In so finding, the trial court found of “particular significance” the fact that the Arbitration 

Agreement not only identified NAF as the arbitral forum, it also designated the NAF 

Code of Procedure as the applicable rules. The trial court then concluded that, because 

NAF is integral to the parties’ agreement and is unavailable to arbitrate consumer 

disputes, “to appoint a substitute arbitrator would constitute a wholesale revision of the 

[Arbitration Agreement],” which the court declined to undertake. As such, the trial court 

denied appellant’s motion to compel arbitration, prompting this appeal pursuant to Code 

of Civil Procedure section 1294, subdivision (a). 

DISCUSSION 

 Appellant challenges the order denying his petition to compel arbitration on the 

ground that the trial court erroneously refused to appoint a substitute arbitrator as 

required by Section 5 of the Federal Arbitration Act, 9 U.S.C. section 1 et seq. 

(hereinafter, FAA). As stated above, the trial court reasoned that the parties’ designation 

of NAF as arbitrator was an integral part of the Arbitration Agreement and, thus, that 

NAF’s unavailability to arbitrate the parties’ consumer dispute precluded its enforcement 

of the Arbitrator Agreement. According to appellant, the trial court’s order and reasoning 

was a misapplication of law. The following legal principles govern appellant’s challenge. 
6

I. Standard of Review. 

 In the trial court, a motion to compel arbitration is subject to the following rules. 

“[Code of Civil Procedure] sections 1281.2 and 1290.2 create a summary proceeding for 

resolving these petitions. [Citation.] The petitioner bears the burden of proving the 

existence of a valid arbitration agreement by the preponderance of the evidence, and a 

party opposing the petition bears the burden of proving by a preponderance of the 

evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the 

trial court sits as a trier of fact, weighing all the affidavits, declarations, and other 

documentary evidence, as well as oral testimony received at the court’s discretion, to 

reach a final determination. [Citation.]” (Engalla v. Permanente Medical Group, Inc.

(1997) 15 Cal.4th 951, 972.) 

 On appeal, where no material facts are in dispute, we review the enforceability of 

the arbitration clause de novo. (NORCAL Mutual Ins. Co. v. Newton (2000) 84 

Cal.App.4th 64, 71; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.) Here, 

the relevant material facts, most of which relate to specific terms of the Arbitration 

Agreement, are undisputed, triggering just such de novo review. And because, like other 

written agreements, the Arbitration Agreement is a matter of contract, California 

substantive law governs. (Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.

(1985) 473 U.S. 614, 626 [Mitsubishi Motors Corp.].) 

 However, the parties also agree that, pursuant to one specific term of the 

Arbitration Agreement, the FAA governs its enforceability.5

 As such, we must also look 

to federal case law for guidance in interpreting and applying the FAA. 

II. The FAA and Relevant Caselaw. 

 As the United States Supreme Court instructs: “While the interpretation of an 

arbitration agreement is generally a matter of state law, [citations], the FAA imposes 

certain rules of fundamental importance . . . .” (Stolt-Nielsen S.A. v. AnimalFeeds Int’l 

 

5

 The Arbitration Agreement provides: “This arbitration agreement is made 

pursuant to a transaction involving interstate commerce. It shall be governed by the 

Federal Arbitration Act, 9 U.S.C. Sections 1-16.” 
7

Corp. (2010) 559 U.S. 662, 681.) Of significance here are two such fundamentally 

important rules – first, “the basic precept that arbitration ‘is a matter of consent, not 

coercion,’ Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior 

Univ., 489 U.S. 468, 479, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989) [Volt Info.]” (StoltNielsen S.A. v. AnimalFeeds Int’l Corp., supra, 559 U.S. at p. 681), and second, the 

strong federal policy favoring arbitration that requires all doubts and ambiguities 

regarding the scope of arbitration agreements to be resolved in favor of the party moving 

to compel arbitration (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 

460 U.S. 1, 24-25 [“questions of arbitrability must be addressed with a healthy regard for 

the federal policy favoring arbitration”]). Indeed, “the policy of enforceability 

established by section 2 of the FAA is binding on state courts as well as federal courts.” 

(Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 380, 383-384; see 

also Code of Civ. Proc., § 1280 et seq. [California Arbitration Act].) 

 Here, in applying these guiding principles, we must determine whether the 

provision in the Arbitration Agreement designating NAF as arbitrator of the parties’ 

disputes, and its Code of Procedure as governing rules, precludes the court from 

appointing a substitute arbitrator in light of the undisputed fact that NAF is no longer 

available to serve as arbitrator of commercial disputes such as the one involved in this 

case. Relying on Section 5 of the FAA (hereinafter, Section 5), appellant argues the trial 

court indeed has authority to appoint a substitute arbitrator under these circumstances. 

As appellant notes, Section 5 sets forth a mechanism for naming a substitute arbitrator 

when the agreement’s designated arbitrator is not available to hear the dispute.6

 

 

6

 Section 5 provides in relevant part as follows: “If in the agreement provision be 

made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such 

method shall be followed; but if no method be provided therein, or if a method be 

provided and any party thereto shall fail to avail himself of such method, or if for any 

other reason there shall be a lapse in the naming of an arbitrator or arbitrators or umpire, 

or in filling a vacancy, then upon the application of either party to the controversy the 

court shall designate and appoint an arbitrator or arbitrators or umpire, as the case may 

require, who shall act under the said agreement with the same force and effect as if he or 
8

 However, respondents, like the trial court, dispute the court’s authority under 

Section 5 to appoint a substitute arbitrator, reasoning that appointing a substitute 

arbitrator in this case would run contrary to the parties’ mutual intent under the 

Arbitration Agreement to designate NAF as exclusive arbitrator. In so arguing, 

respondents, like the trial court, rely on an exception to Section 5 rooted in federal case 

law where arbitrating parties’ designation of a particular arbitrator or arbitral forum is 

deemed “integral” to their agreement to arbitrate. To determine which legal position 

should be adopted for purposes of this case, we take a closer look at this case law.7

 

 The Third Circuit Court of Appeals has succinctly described the so-called 

“integral” test as follows: “In determining the applicability of Section 5 of the FAA 

when an arbitrator is unavailable, courts have focused on whether the designation of the 

arbitrator was ‘integral’ to the arbitration provision or was merely an ancillary 

consideration. See, e.g., Reddam v. KPMG LLP, 457 F.3d 1054, 1061 (9th Cir. 2006) 

[Reddam], abrogated on other grounds by Atlantic Nat’l Trust LLC v. Mt. Hawley Ins. 

Co., 621 F.3d 931 (9th Cir. 2010); Brown [v. ITT Consumer Fin. Corp. (11th Cir. 2000) 

211 F.3d 1217], at 1222. As the Eleventh Circuit has articulated the standard: ‘[o]nly if 

the choice of forum is an integral part of the agreement to arbitrate, rather than an 

“ancillary logistical concern,” will the failure of the chosen forum preclude arbitration.’ 

Id. In other words, a court will decline to appoint a substitute arbitrator, as provided in 

the FAA, only if the parties’ choice of forum is ‘so central to the arbitration agreement 

that the unavailability of that arbitrator [brings] the agreement to an end.’ Reddam, 457 

F.3d at 1061. In this light, the parties must have unambiguously expressed their intent 

 

they had been specifically named therein; and unless otherwise provided in the agreement 

the arbitration shall be by a single arbitrator.” (9 U.S.C.S. § 5.) 

7

 Neither party challenges the general proposition that Section 5 permits the 

appointment of a substitute arbitrator where, as here, the arbitrator or arbitral forum 

designated in the underlying arbitration agreement is unavailable to hear the dispute. 

(See, e.g., Khan v. Dell Inc. (3d Cir. 2012) 669 F.3d 350, 356-358 [concluding “the 

unavailability of NAF to hear the disputes between Khan and Dell constitutes a ‘lapse’ 

within the meaning of Section 5”].) 
9

not to arbitrate their disputes in the event that the designated arbitral forum is 

unavailable.” (Khan v. Dell Inc. (3d Cir. 2012) 669 F.3d 350, 354.) 

 Thus, applying this standard to the case at hand, we must determine whether the 

Arbitration Agreement and, more specifically, its references to NAF, are an “integral” 

part of the parties’ agreement such that appellant cannot compel arbitration in the face of 

NAF’s unavailability.8

 The trial court found the “integral” standard met due primarily to 

two facts. First, as noted above, the Arbitration Agreement identifies NAF as the arbitral 

forum. Second, the Arbitration Agreement provides that the NAF Code of Procedure 

“shall” govern any arbitration among the parties.9 The precise language of the 

 

8

 We reject appellant’s suggestion that we should decline to apply the “integral” test 

on the ground that it conflicts with Section 5, which, he says “always requires a court to 

appoint an arbitrator” when the designated arbitrator is unavailable. Despite language 

questioning the wisdom of the judicially-crafted “integral” exception to appointment of 

an arbitrator under Section 5 found in appellant’s authority, Green v. U.S. Cash Advance 

Illinois, LLC (7th Cir. 2013) 724 F.3d 787, 790-793, numerous courts across the United 

States have recognized and applied this legal standard when deciding whether Section 5 

provides a basis, under a particular arbitration agreement, to appoint an arbitrator other 

than the one identified in the agreement. (E.g., Reddam, supra, 457 F.3d at p. 1061; 

Brown, supra, 211 F.3d at p. 1222; Khan v. Dell Inc., supra, 669 F.3d at p. 356.) In 

doing so, these courts have found the “integral” or “ancillary concern” test consistent 

with well-established state principles of contract law requiring courts to effectuate the 

intent of the parties when deciding whether to enforce all or part of an arbitration 

agreement. (Eg., Rivera v. Am. Gen. Fin. Servs. (2011 N.M.) 259 P.3d 803, 812 [“[the 

integral test] . . . best complies with the admonition of the United States Supreme Court 

that a fundamental purpose of the FAA is to require that courts enforce arbitration 

agreements ‘according to their terms.’ Volt Info., 489 U.S. 479.”]; Khan v. Dell Inc., 

supra, 669 F.3d at p. 354 [“the FAA respects the ‘fundamental principle that arbitration is 

a matter of contract,’ [citation], and that ‘arbitration “is a matter of consent, not 

coercion” ’ ”].) We agree with these decisions. (Compare Green v. U.S. Cash Advance 

Illinois, supra, 724 F.3d at p. 791 [“When a court declares that one or another part of an 

arbitration clause is ‘integral’ and that the clause is therefore unenforceable as a matter of 

federal common law, it is effectively disagreeing with Congress, which provided that a 

judge can appoint an arbitrator when for ‘any’ reason something has gone wrong”].) 

9

 We grant appellant’s motion for judicial notice, dated October 2, 2013, of the NAF 

Code of Procedure, which, as noted above, is designated under the Arbitration Agreement 

to govern any arbitration proceedings arising under the agreement. (Boghos v. Certain 

Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 505 fn. 6, citing Evid. Code 
10

Arbitration Agreement that relates to these facts reads as follows: “[Disputes] shall be 

resolved by binding individual . . . arbitration by and under the Code of Procedure of 

[NAF] in effect at the time the claim filed. . . . Rules and forms of the NAF may be 

obtained and all claims shall be filed at any NAF office, on the World Wide Web at 

www.arb-forum.com, or at ‘National Arbitration Forum, P.O. Box 50191, Minneapolis, 

Minnesota 55405.’ ” In addition, aside from the Arbitration Agreement itself, the parties 

also accept the relevance (albeit for different reasons) of one specific part of the NAF 

Code of Procedure, Rule 1.A, which provides in relevant part: “Parties who contract for 

or agree to arbitration by [NAF] or this Code of Procedure agree that this Code governs 

their arbitration proceedings, unless the Parties agree to other procedures. . . . This Code 

shall be administered only by [NAF] or by any entity or individual providing 

administrative services by agreement with [NAF].” 

 We have carefully reviewed this relevant language within the legal framework 

prescribed by federal law. Having done so, we disagree with the trial court that this 

language is so clear as to establish the parties’ intent that NAF, and only NAF, must 

arbitrate all disputes arising out of the Arbitration Agreement and, that, in the event of 

NAF’s unavailability, the agreement itself should be deemed void. In particular, having 

considered the Arbitration Agreement, as we must, in light of the federal mandate to 

resolve any ambiguities in favor of the party seeking to compel arbitration, we identify 

several circumstances weighing against a conclusion that the NAF designation in this 

case is integral to the parties’ agreement. (See Mitsubishi Motors Corp., supra, 473 U.S. 

at p. 626 (“[A]s with any other contract, the parties’ intentions control, but those 

intentions are generously construed as to issues of arbitrability”].) For example, we, like 

respondents, note that the Agreement’s designation of NAF does not include any 

language of exclusivity, which other courts have deemed significant. (Cf. Carideo v. 

 

§ 452, subd. (h) [authorizing judicial notice of “Facts and propositions that are not 

reasonably subject to dispute and are capable of immediate and accurate determination by 

resort to sources of reasonably indisputable accuracy”].) Appellant’s request to file a 

reply in support of his motion for judicial notice, filed December 4, 2014, is therefore 

moot. 
11

Dell, Inc. (W.D. Wash. 2009) 2009 U.S. Dist. LEXIS 104600, at *5 [finding the 

language, “SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING 

ARBITRATION ADMINISTERED BY [NAF],” indicative that the NAF designation 

was integral to the parties’ agreement]; compare Adler v. Dell (E.D. Mich. 2009) 2009 

U.S. Dist. LEXIS 112204 at *2 [finding the NAF designation was not integral to the 

parties’ agreement despite language in the contract that disputes “SHALL BE 

RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION 

ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF) under its 

Code of Procedure then in effect”].) Also absent from the Arbitration Agreement is 

language stating, or even suggesting, that the parties harbored an intent to forego 

arbitration completely if NAF were unavailable. Quite to the contrary, the Arbitration 

Agreement states that “any and all claims, disputes or controversies . . . including 

disputes as to the subject matter of arbitration, shall be resolved by binding individual 

(and not class) arbitration . . . .” This language requiring all claims to be resolved by 

binding arbitration rather than by a court of law is, we conclude, more clear than the 

language identifying NAF as the arbitral forum and its Code of Procedure as the 

applicable law. 

 We also agree with appellant there is no readily apparent reason why a substitute 

arbitrator could not apply the NAF Code of Procedure to the dispute. As other courts 

have recognized, the NAF Code consists of “common procedural rules” often employed 

in legal proceedings. While respondents are correct that Rule 1.A of the NAF Code 

requires it to be “administered only by [NAF] or any entity or individual providing 

administrative services by agreement with [NAF]”, other courts have not viewed this 

language as a bar to appointment of a substitute arbitrator under Section 5. In fact, the 

Seventh Circuit Court of Appeals just recently acknowledged that “the possibility [exists] 

of arbitration outside the Forum’s auspices, but using its rules of procedure.” (Green v. 

U.S. Cash Advance Illinois, LLC (7th Cir. 2013) 724 F.3d 787, 789. See also Wright v. 

GGNSC Holdings, LLC (S.D. 2011) 808 N.W.2d 114, 120 [“although a substitute 

arbitrator may not administer the NAF Code, a competent substitute arbitrator can apply 
12

the NAF’s rules of procedure that public codes cover. See Carr [v. Gateway, Inc. (2011) 

241 Ill. 2d 15] at 31, 944 N.E.2d at 335 (‘[I]t is possible in some cases for a substitute 

arbitrator to use the rules specified in an arbitration agreement and where that is so, the 

mere designation of particular rules to govern an arbitration will not prevent the naming 

of a substitute arbitrator under [S]ection 5.’ (citing Reddam, 457 F.3d at 1060; Brown,

211 F.3d at 1222; Zechman [v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (N.D. Ill. 

1990) 742 F. Supp. 1359] at 1365; see also Adler v. Dell Inc., No. 08-CV-13170, 2009 

U.S. Dist. LEXIS 112204, 2009 WL 4580739, at *5 (E.D. Mich. Dec. 3, 2009) (‘The 

court instructs the parties to confer and agree on an alternative arbitrator who will apply 

the rules of NAF under its Code of Procedure, if possible.’); Levy v. Cain, Watters & 

Assocs., P.L.L.C., No. 2:09-CV-723, 2010 U.S. Dist. LEXIS 9537, 2010 WL 271300, at 

*11 (S.D. Ohio Jan. 15, 2010) (ordering same) [fn. omitted]”].)10 

 The Ninth Circuit has reached a similar result in a case involving designation of 

the parties’ use of the procedural rules of the National Association of Securities Dealers 

(NASD), but not the NASD forum itself. In concluding such designation was not integral 

to the parties’ arbitration agreement, the Ninth Circuit reasoned: “The provision in the 

[arbitration agreement] does select the rules of the NASD, but does not state that the 

arbitration is to take place before the NASD itself. Had the latter been intended, the 

parties could easily have said so. In fact, a more recent version of [the arbitration 

agreement] reads: ‘I agree to arbitrate with you any controversies . . . only before the 

New York Stock Exchange or the National Association of Securities Dealers Regulation, 

Inc. at my election.’ The absence of similar language militates in favor of a decision that 

the provision in question here does not select a forum at all.” (Reddam, supra, 457 F.3d 

at p. 1059.) We find this reasoning persuasive, and relevant to the case at hand. 

 

10 The South Dakota court appears to distinguish the verbs “administer” and “apply,” 

noting that “review of the NAF Code reflects that NAF administration involve[s] what is 

commonly provided by many arbitration services available today,” including other 

general arbitration administrators such as the American Arbitration Association (AAA) 

and the Judicial Arbitration and Mediation Services (JAMS). (Wright v. GGNSC 

Holdings, LLC, supra, 808 N.W.2d at p. 120.) 
13

 Moreover, we also find significant the fact that Rule 1.A expressly permits the 

parties to opt out of the NAF Code of Procedure and to “agree to other procedures.” In 

light of this provision, we disagree with the trial court’s conclusion, or at least the 

significance of its conclusion, that “there are simply no NAF rules currently in effect for 

[consumer] arbitrations” given NAF’s decision to no longer arbitrate such disputes.11 If 

anything, we find this provision adds to the ambiguity surrounding the parties’ intent 

when confronted with the unavailability of NAF.12

 

11 For the same reasons just stated, we disagree with the similar reasoning of 

respondent’s authority, Sunbridge Retirement Care Associates LLC v. Smith (Ga.Ct.App., 

Mar. 26, 2014, A13A2129) 2014 Ga. App. LEXIS 232, page *9, which was produced for 

the first time at oral argument. Specifically, the Georgia Court of Appeals held: “Even if 

a non-NAF arbitrator were appointed, the NAF Code would still apply under the terms of 

the parties’ agreement. And because the NAF Code has in effect been canceled, Rule 48 

of the Code authorizes the parties to pursue other remedies.” (Ibid, italics added.) As 

explained above, we fail to understand and appellant fails to explain why a substitute 

arbitrator could not apply the NAF Code in the same straightforward manner as a NAF 

arbitrator. 

 Moreover, even aside from the procedural rules set forth in the NAF Code of 

Procedure, we note that any arbitrator hearing the parties’ dispute, whether a NAF 

arbitrator or a substitute arbitrator, would nonetheless be called upon to apply the same 

substantive law with respect to the parties’ claims. (Wright v. GGNSC Holdings, LLC, 

supra, 808 N.W.2d at p. 120 [noting that the NAF Code simply requires the arbitrator to 

apply the “applicable substantive law”].) Accordingly, it is far from clear that the 

appointment of a substitute arbitrator would have any effect on the actual outcome of the 

parties’ arbitration. 

12 Appellant points to another part of the NAF Code, Rule 48.D, which he contends 

could be relied upon as a basis for severing the Rule 1.A requirement that NAF or its 

affiliate administer the NAF Code. Respondents, in turn, contend that a court cannot 

sever any term or condition of an otherwise valid contract unless it first determines that 

the contract is by “its nature and purpose . . . susceptible of division” without 

undermining the parties’ mutual intent. (See Filet Menu, Inc. v. C.C.L. & G., Inc. (2000) 

79 Cal.App.4th 852, 860.) Here, the trial court made no such finding; nor was it asked to. 

We agree with appellant this severance provision, if anything, weighs against finding the 

NAF designation integral to the Arbitration Agreement. While we accept respondents’ 

recitation of the general rules governing severance of a contract, we nonetheless conclude 

the incorporation of Rule 48.D into the Arbitration Agreement, without more, is 

probative of the broader issue of whether the parties mutually intended to arbitrate in the 

event of NAF’s unavailability. (See Jones v. GGNSC Pierre LLC (D. S.D. 2010) 684 
14

 Thus, based on our reading of the Arbitration Agreement as a whole, including the 

provisions relied upon by both parties, we conclude the language identifying NAF as 

arbitrator and its Code of Procedure as the applicable procedural law is at best ambiguous 

as to whether the parties intended to forego their express agreement that all disputes 

“shall be resolved by binding individual arbitration” due to NAF’s unavailability. In 

other words, whether the parties’ designation of NAF was an integral or ancillary 

component of their agreement to arbitrate cannot be definitively determined on this 

record. (See Brown, supra, 211 F.3d at p. 1222; Khan v. Dell Inc., supra, 669 F.3d at 

p. 356.) And, under such circumstances, the United States Supreme Court mandates that 

we resolve this contractual ambiguity in favor of arbitration, not against it. (E.g., Moses 

H. Cone Memorial Hosp. v. Mercury Constr. Corp., supra, 460 U.S. at pp. 24-25.) As 

respondents’ own authority counsels: “[T]he mere fact parties name an arbitral service to 

handle arbitrations and specify rules to be applied does not, standing alone, make that 

designation integral to the agreement. If this were so, section 5 of the Arbitration Act 

would not apply in any case where the parties specify an arbitrator that later becomes 

unwilling or unable to handle the arbitration. Such a construction would encourage 

parties to be as vague as possible in drafting their arbitration agreements to guard against 

a court refusing to apply section 5 of the Act in the event the chosen arbitral forum 

became unavailable. Section 5 anticipates that a named arbitral forum may become 

unavailable and it provides a mechanism to appoint a substitute.” (Cf. Carr v. Gateway, 

Inc., supra, [241 Ill. 2d 15] 944 N.E.2d 327, 335 [concluding the designation of NAF as 

 

F.Supp.2d 1161, 1166-1167 [“The severance provision indicates that the intention was 

not to make the NAF integral, but rather to have a dispute resolution process through 

arbitration”]; Selby v. Deutsche Bank Trust Co. Ams. (S.D. Cal. 2013) 2013 U.S.Dist. 

LEXIS 46101, at p. *38 [“the severability provision contained in the Agreement permits 

the references to NAF and the NAF Code to be removed without invalidating related 

provisions providing for the arbitration of all claims”].) This is particularly true when the 

NAF Code’s severance provision is considered together with, one, the Arbitration 

Agreement’s incorporation of Section 5 and its straightforward mechanism for naming a 

substitute arbitrator and, two, the federal mandate to resolve ambiguities in favor of the 

party compelling arbitration. 
15

the arbitral forum was integral to the arbitration agreement where, in addition to 

provisions designating NAF as the forum and its Code of Procedure as the governing 

rules, a provision within the agreement expressly “penalizes any party for bringing a 

dispute in any forum other than the NAF”]. See also Khan v. Dell Inc., supra, 669 F.3d 

at p. 356 [noting “that the arbitration provision in the [arbitration agreement] specifically 

incorporated the FAA, 9 U.S.C. §§1-16, suggesting that, in the event of the NAF’s 

unavailability, the FAA’s procedures for addressing such a problem should apply”].)

 Accordingly, we hold that, under Section 5, which the parties have specifically 

incorporated into the Arbitration Agreement, the trial court must appoint a substitute 

arbitrator in light of NAF’s unavailability to conduct the arbitration under the NAF Code 

of Procedure in effect at the time the claim was filed unless, pursuant to Rule 1.A of that 

Code, “the parties agree to other procedures.” The trial court’s contrary conclusion thus 

requires us to reverse the subject order and remand for further proceedings consistent 

with our opinion. 

DISPOSITION 

 The order denying appellant’s petition to compel arbitration is reversed, and the 

matter is remanded for further proceedings consistent with the conclusions reached 

herein. 

 _________________________ 

 Jenkins, J. 

We concur: 

_________________________ 

Pollak, Acting P. J. 

_________________________ 

Siggins, J.