1

Filed 3/30/22 Young v. Gash CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

CORINA YOUNG, Plaintiff and Respondent,

v. DAVID GASH et al. , Defendant s and Appellant s . E07657 3 (Super.Ct.No. PSC2003871)
OPINION

APPEAL from the Superior Court of Riverside County. David M. Chapman, Judge. Affirmed. Wolfenzon Rolle, Bruno Wolfenzon, David C. Dorsey and Crystal T. Innabi for
D efendants and A ppellants. No appearance for P laintiff and R espondent.
I. INTRODUCTION Plaintiff and respondent Corina Young (plaintiff) filed two civil complaints alleging various acts of mismanagement and self

- dealing in the operation of a cannabis dispensary known as Southern California Organic Treatment (SCOT). The first2

complaint ( d erivative a ction) was filed in plaintiff’s representative capacity as a shareholder of SCOT and named David Gash (Gash) , Quorum Green Industries, LLC (Q uorum ) , two additional individuals , and five additional limited liability companies as
defendants

. 1 The second complaint ( c ontract a ction) alleged that Gash and Quorum ’s
acts and omissions also constituted a breach of the stock purchase agreement in which plaintiff initially purchased 10 percent of the shares in SCOT. Defendants and appellants Gash and Quorum (collectively, defendant s) moved to compel arbitration of all the claims alleged in the c ontract a ction. However, the trial court concluded that the derivative action constituted a pending court action involving third parties arising out of the same set of transactions within th e meaning of Code of
Civil Procedure 2 section 1281.2, subdivision (c). The trial court further concluded that ordering the contract action to arbitration would create the possibility of conflicting rulings on common issues of fact or law and denied the m otion to compel arbitration. On appeal, defendants do not challenge the trial court’s conclusion that the
d erivative a ction and c ontract a ction arise out of the same set of transactions or its conclusion that ordering the c ontract a ction to arbitration sep arately would create the possibility of conflicting rulings on common issues of fact or law. Instead, defendants argue the trial court erred by (1) finding that the d erivative a ction constituted a “pending action” within the meaning of section 1281.2, sub division (c); (2) finding that the two

1 Other than Gash and Quorum , the other defendants named in the d erivative a ction are not parties to this appeal.

2 Undesignated statutory references are to the Code of Civil Procedure.3

actions involved “third parties” within the meaning of section 1281.2, subdivision (c); and (3) denying arbitration as opposed to selecting one of the alternative statutory remedies under section 1281.2, subdivision ( c). We disagree with each of these contentions on appeal and affirm the order.

II. FACTS AND PROCEDURAL HISTORY Gash is an owner and managing member of Quorum , a limited liability company. In 2019, plaintiff and Gash participated in negotiations related to the acquisition of a cannabis dispensary known as Southern California Organic Treatment (SCOT). The acquisition was ultimately accomplished through an initial transaction in which Quorum obtained 100 percent of the shares in SCOT and a subsequent stoc k purchase agreement ( s tock p urchase a greement) in which plaintiff purchased 10 percent of the shares in
SCOT from Quorum

. On July 16, 2020, plaintiff filed a civil complaint in her capacity as a shareholder against SCOT’s directors and six limited liability companies that were separately owned and operated by the directors ( d erivative a ction). The complaint alleged that the directors misappropriated funds for their own personal benefit and the benefit of their separately owned companies. Gash was one of the directors named as a defendant , and Quorum was named as one of the limited liability companies owned by Gash

. On August 25, 2020, plaintiff filed a separate civil complaint against Gash and Quorum alleging various contract and tort claims ( c ontr act a ction). This suit was based upon some of the same acts or omissions alleged as the basis for liability in the4

shareholder action , but it alleged that such acts or omissions also breached the obligation imposed by the s tock p urchase a greement

. On Octo ber 6, 2020, Gash and Quorum filed a motion to compel arbitration of the

c ontract a ction based upon an arbitration clause in the s tock p urchase a greement

. Plaintiff opposed the motion on multiple grounds, including the ground that section 1281.2, subdivis ion (c) , granted the trial court authority to deny arbitration because the d erivative a ction involved third parties and created the possibility of inconsistent rulings on common issues of fact or law

. On December 29, 2020, the trial court denied defendants ’ motion to compel arbitration. In its statement of decision, the trial court stated it was denying the motion solely under the provision of section 1281.2, subdivision (c), finding that both the
d erivative a ction and c ontract a ction ar o se out of the same set of transactions and that there was a possibility of conflicting rulings on issues of fact or law if the c ontract a ction

w as ordered to arbitration. The trial court further declined defendants’ request to order the d erivative a ction st ayed pending arbitration of the c ontract a ction. Gash and Quorum appeal from th at order.
III. DISCUSSION
A. General Legal Principles

“ A party to a contractual arbitration agreement may compel a recalcitrant party to comply with a valid agreement by mean s of a petition pursuant to section 1281.2, which is in essence a suit in equity to compel specific performance of the arbitration agreement. ” ( Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1795.)5

“ Petitions to compel arbitration are r esolved by a summary procedure that allows the parties to submit declaration s and other documentary testimony and, at the trial court ’ s discretion, to provide oral testimony. ” ( Goldman v. Sunbridge Healthcare , LLC (2013) 220 Cal.App.4th 1160, 1169; Rosent hal v. Great Western Fin. Securities Corp . (1996)
14 Cal.4th 394, 413

- 414. ) “Under section 1281.2, subdivision (c), ‘a court may stay or refuse to compel arbitration of all or part of an arbitrable controversy when: (1) “[ a ] party to the arbitration agreement is also a party to a pending court action

. . . with a third party, arising out of the same transaction or series of related transactions, ” and (2) “ there is a possibility of conflicting rulings on a common issue of law or fact. ” [ C itation.]

. . . Section 1281.2(c) “ ‘addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.’ ” ’ ” ( Valentine v. Plum Healthcare Group , LLC (20 19) 37 Cal.App. 5th 1076, 1084.)

“ ‘ “ ‘ “ There is no uniform standard of review for evaluating an order denying a [ petition ] to compel arbitration. [Citation.] If the court’s order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court’s denial rests solely on a decision of law, then a de novo standard of review is employed. ” ’ ” ’ ” ( Williams v. Atria Las Pos a s (2018) 24 Cal.App. 5th 1048, 1051; see Peng v. First Republic Bank (2013) 219 Cal.App. 4th 1462, 146 8 .) Here, the first two issues raised on appeal involve the trial court’s interpretation of section 1281.2, subdivision (c). Sp ecifically, the definition of the phrase s “pending action” and “third party” as used in that statute. Thus, these issues are subject to our6

independent review. ( Diamond Benefits Life Ins. Co. v. Troll (1998) 66 Cal.App. 4th 1, 5 [“ [T] he interpretation of a statute is a question of law to be determined by the reviewing court de novo

. ”] ; Laswell v. AG Seal Beach , LLC (2010) 189 Cal.App. 4th 1399, 1406 [ “ [W] hether a defendant is in fact a third party for purposes of

. . . section 1281.2,
subd ivision (c), is a matter of law subject to de novo review.” ].) The remaining issue of whether the trial court selected the appropriate remedy after concluding that section 1281.2, subdivision (c) , applie d is reviewed for abuse of discretion. ( Laswell , at p. 1406 [ “If the third party exception applies, the trial court’s discretionary decision as to whether to stay or deny arbitration is subject to review for abuse.” ].)
B. The Trial Court Did Not Err in Concluding t he Third Party Exception Applies On appea l, defendants claim the trial court erred in applying section 1281.2, subdivision (c) , because the d erivative a ction is not a “pending action” within the meaning of the statute and because there are no “third parties” within the meaning of the
statute. As we explain, both of these arguments are premised upon a fundamentally incorrect assumption that the two actions involve the same plaintiff.
1. The Derivative Action and Contract Action Involve Different Plaintiffs “[A] derivative suit is one in which the shareholder seeks ‘redress of the wrong to the corporation. [ C itation s .] ’ [Citation.] Thus, an action ‘ “ is derivative, i.e., in the corporate right, if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets. ” ’ ” ( Bader v. Anderson (2009) 179 Cal.App. 4th 775, 793.)7

Such an action is entire ly separate and “ ‘ “ mutually exclusive ” ’ ” from a cause of action held by a shareholder in his or her individual capacity. ( I bi d. ) “When the claim is derivative, the ‘shareholder is merely a nominal plaintiff

. . . . Even though the corporation is joi ned as a nominal defendant

. . . , it is the real party in interest to which any recovery usually belongs. ’ ” ( Schuster v. Gardner (2005) 127 Cal.App. 4th 305, 312.) Here, the d erivative a ction is representative by its very nature, with the corporate entit y considered the real party in interest entitled to recovery. While plaintiff is named in the caption of the complaint , her status in the d erivative a ction is merely nominal. Thus, the d erivative a ction is, in essence, a suit involving claims asserted by SCOT , as the real party in interest, against Gash, Quorum , and the other individuals and corporate
entities named in that action . In contrast, the c ontract a ction is a suit involving plaintiff’s individual contract and tort claims against Gash and Quorum

. The two actions represent two different plaintiffs asserting different claims arising out of the same set of transactions , with Gash and Quorum as the parties common to both actions. Once this distinction is properly understood, it is apparent that the trial court did not err with respect to its conclusion that section 1281.2, subdivision (c) , applies.
2. The Derivative Action Constitutes a “Pending Action” Within the Meaning of Section 1281.2, S ubdivision (c) Defendants contend the trial court erred because the d erivative a ction is not a “pending action” within the meaning of section 1281.2, subdivision (c ). Specifically, defendants claim that the phrase “pending court action” refers only to “the action that is8

created by the Court when it compels certain parties or certain claims to arbitration and

non - arbitrable claims or parties remain in the [superior court] proceeding , ” and that a trial court is not “permitted to look outside of its own action to find a pending court action” for purposes of the statute. We disagree. First, the plain words of the statute do not support defendants’ interpretation. “In interpreting a statute , . . . ‘ [o]ur first step is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning .’ . . . ‘ “ If the words of the statute are clear, the court should not add to or alter them to accomplish a purp ose that does not appear on the face of the statute

. . . . ” ’ ” ( Goodman v. Lozano (2010) 47 Cal. 4th 1327, 1332.) Here, nothing in section 1281.2, subdivision (c) , suggests that the phrase “pending c ourt action” refers only to the nonarbitrable claims a sserted in the same complaint. If anything, the express words of the statute suggest the very opposite. Section 1281.2, subdivision (c) , expressly states , in pertinent part : “For purposes of this section, a pending court action

. . . includes an action or proceeding in i tiated by the party refusing to arbitrate after the petition to compel arbitration has been filed

. . . . ” These words plainly suggest that any court proceeding

— even one initiated after a motion to compel arbitration has been filed

— may co nstitute a “pending court action” within the meaning of the statute. Second, the argument advanced by defendants is identical to that rejected in Whaley v. Sony C omputer Entertainment America , Inc. (2004) 121 Cal.App. 4th 479. In Whaley , different plaintiffs filed separate complaints against the same defendant arising out of the same set of transactions. ( Id. at p. 482.) The trial court declined to compel9

arbitration of the claims asserted in one of the complaints, concluding that the other complaint constituted a pending action involving a third party within the meaning of section 1281.2, subdivision (c). ( Id. at p. 483

. ) T he Court of Appeal affirmed the trial court’s order , reasoning that (1) “ [ t ] he statute is unambiguous” ; (2) “[t] he Legislature

cou ld easily have chosen to specify that the trial court’s authority to deny arbitration

. . . could be exercised only if the party resisting arbitration was also a party to the related litigation with a third party [ ; but] it did not do so” ; and (3) “we may not ‘insert qualifying provisions not included in the statute

. ’ ” ( Id. at p. 486.) Thus, Whaley supports the conclusion that a party resisting arbitration may rely upon a separate complaint filed by a different plaintiff in arguing that section 1281.2, subdivision (c) , permits the trial court to deny a motion to compel arbitration. Defendants have not cited any authority to the contrary in support of their argument on appeal. Here, Gash and Quorum are named defendants in two different c omplaints brought by legally distinct plaintiffs . Under a plain reading of the statute and the reasoning set forth in Whaley , a different complaint filed by a different plaintiff may qualify as a “pending action” within the meaning of section 1281.2, subdivision (c). Thus, the trial court did not err to the extent it considered the d erivative a ction a “pending action”
within t he meaning of section 1281.2, subdivision (c).10

3. The Derivative Action Involves Third Parties Within the Meaning of Section 1281.2, S ubdivision (c) Defendants also contend the trial court erred in concluding section 1281.2, subdivision (c) , applied becau se there are no “third parties” within the meaning of the statute. Again, we disagree. “For purposes of [section 1281.2, subdivision (c)], a third party is one who is neither bound by nor entitled to enforce the arbitration agreement.” ( Daniels v. Sunris e Senior Living , Inc. (2013) 212 Cal.App. 4th 674, 679 ( Daniels ) , citing Thomas v. Westlake (2012) 204 Cal.App. 4th 605, 612.) Here, the arbitration agreement that defendants seek to enforce is found within the

s tock p urchase a greement. On its face, the onl y parties to the s tock p urchase a greement are plaintiff and Quorum , and t he only signatories are plaintiff, in her individual capacity, and Gash, who executed the agreement on behalf of Quorum

. However, the d erivative

a ction involves two other individuals and five other limited liability companies that do not appear to be parties or signatories to the s tock p urchase a greement . Thus, the additional defendants named in the d erivative a ction are “third parties” within the meaning of section 1281.2 , subdivision (c). Further, as we have already explained, the d erivative a ction is a representative action brought by plaintiff on behalf of SCOT, which is the real party in interest with respect to the claims asserted in that complaint . This court has un ambiguously held that the same individual is considered a different party for purposes of section 1281.2, subdivision (c), when bringing claims in both an individual and representative capacity.11

( Daniels , supra , 212 Cal.App. 4th at pp. 680

- 681 [ The plainti ff was a third party within the meaning of section 1281.2, subdivision (c) , when asserting a wrongful death claim, despite also asserting claims as the personal representative of decedent’s estate that were subject to an arbitration agreement

. ].) The s toc k p urchase a greement also bears no indication that SCOT is a party to the agreement. Thus, plaintiff, asserting claims in a representative capacity on behalf of SCOT in the d erivative a ction, was also a third party within the meaning of section 1281.2, su bdivision (c). Because the d erivative a ction involves a plaintiff (SCOT) and numerous defendants that are not parties to the s tock p urchase a greement containing the arbitration provision defendants seek to enforce, we find no error in the trial court’s conclusion that
there were third parties within the meaning of section 1281.2, subdivision (c).
4. Defendants Have Forfeited Their Argument Based Upon Equitable Estoppel On appeal, defendan ts assert for the first time that the doctrine of equitable estoppel should apply to bar plaintiff from resisting enforcement of the arbitration agreement. We deem this argument forfeited for failure to raise the issue below . Nor do we believe the record is sufficient to permit this court to exercise its discretion to consider the issue for the first time on appeal. “If a party fails to raise an issue or theory in the trial court, we may deem consideration of that issue or theory forfeited on appeal.” ( C abatit v. Sunnova Energy Corp

. (2020) 60 Cal.App. 5th 317, 322.) This principle has been specifically applied to claims of error with respect to a trial court’s order on a motion to compel arbitration. ( Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015) 2 43 Cal.App. 4th 1, 9 [argument12

that party seeking to enforce arbitration was not a signatory to agreement was forfeited for failure to raise issue in trial court]; Swain v. LaserAway Medical Group , Inc. (2020) 57 Cal.App. 5th 59, 76 [argument that arbitratio n agreement was not unconscionable based upon statutory exception was forfeited for failure to raise issue in trial court] .) Here, the theory that plaintiff should be estopped from resisting enforcement of the arbitration agreement based upon principles of equitable estoppel was never raised in the trial court proceedings. Defendant s made no mention of the doctrine of equitable estoppel in their briefs before the trial court; made no mention of th at theory at the time of oral argument; and made no request for a ruling on th at theory when objecting to the proposed statement of decision. Thus, defendants have clearly forfeited th at argument. Defendants openly concede that they failed to raise the issue of equitable estoppel
in the trial court but contend tha t “it is of no consequence” on appeal because this court
has discretion to consider the issue. However, “ ‘ [ m ] erely because an issue is one of law, does not give a party license to raise it for the first time on appeal

. . . . Whether an appellate court will entertain a belatedly raised legal issue always rests within the court’s
discretion. ’ ” ( Meridian Financial Services , Inc. v. Phan (2021) 67 Cal.App. 5th 657,
699

- 700.) Generally, this discretion is exercised only where it involves a legal question determinable from facts that are uncontroverted in the record and could not have been altered by the presentation of additional evidence. ( I bi d. ; American Indian Health & Services Corp

. v. Kent (2018) 24 Cal.App. 5th 772, 789.) As we explain, the question of whether equitable estoppel can be applied to preclude application of section 1281.2, subdivision (c) , in this case cannot be resolved based upon the record before us.13

The doctrine of equitable estoppel is an “exception” to the general rule that “ ‘ one must be a party to an arbitration agreement to be bound by it or invoke it. ’ ” ( JSM Tuscany , LLC v. Superior Court (2011) 193 Cal.App. 4th 1222, 1236 ( JSM Tuscany ) .) Thus, the doctrine is a means to deter mine whether a nonsignatory should be considered bound by or entitled to invoke the arbitration agreement. ( Marenco v. DirecTV LLC (2015) 233 Cal.App. 4th 1409, 141 7 [equitable estoppel may apply to permit a nonsignatory to enforce an arbitration agreement ]; JSM Tuscany , at pp. 1239

- 1240 [equitable estoppel may apply to permit enforcement of arbitration agreement against nonsignatory].) When the doctrine is found to apply , the nonsignatory ceases to be a “third party” for purposes of section 1281.2, subdi vision (c) , because the nonsignatory is considered a party to the arbitration agreement . ( Molecular Analytical Systems v. Ciphergen Biosystems , Inc. (2010) 186 Cal.App. 4th 696, 714 [“[W]here the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement ” and “ is not a ‘third party’ within the meaning of section 1281.2 [ , subdivision (c) ]

. ”].) However, in this case, numerous third parties are not signatories to the arbitration agreement defendan ts seek to enforce

— including SCOT (the real party in interest in the d erivative a ction), as well as at least seven other named defendants in the d erivative

a ction

. Unless all of these nonsignatories could be considered bound by or entitled to enforce the arbitration agreement under principles of equitable estoppel, thereby losing their status as a third party, any one remaining third party could trigger the application of14

section 1281.2, subdivision (c)

. 3 ( S ee JSM Tuscany , supra , 193 Cal.App. 4th at p. 12 44 , fn. 25 [recognizing that while some nonsignatories may be required to arbitrate their claims, the presence of other parties who are “not similarly situated” may still render the action subject to section 1281.2, subdivision (c)].) Here, the record is devoid of any evidence from which this court could determine that SCOT or the additional defendants in the d erivative a ction should be considered bound by or entitled to enforce the arbitration agreement under the doctrine of equitable estoppel

. 4 Simply put, the issue was never briefed, no evidence was presented with respect to the involvement of any of these parties, and these parties are not parties to this appeal. Thus, the record is simply inadequate for this court to determine wh ether equitable estoppel precludes the application of section 1281.2, subdivision (c) , in this

case . 5 Even if an issue involves only a legal question, where the record is insufficient to

3 We observe , however, that the number of parties deemed subject to the arbitration agreement in relation to the number of third parties may be relevant to the selection of the appropriate remedy under section 1281.2, subdivision (d).

4 On appeal, defendants assert that the nonsignatory defendants named in the d erivative a ction “have the right to invoke the arbitration provision and are therefore not third parties,” but provide no authority and no analysis in support of this bare assertion. As we have already expla ined, plaintiff’s status in the d erivative a ction is nominal in nature and SCOT is the real party in interest. The doctrine of equitable estoppel would not permit nonsignatory defendants to enforce an arbitration agreement against a nonsignatory plaintiff

. Further, with the exception of Gash and Quorum , plaintiff has asserted no individual claims against the defendants named in the d erivative a ction

. T hus, there does not appear to be any occasion for the se defendants to seek enforcement of the arbitration agreement against plaintiff as an individual

. 5 Gash and Quorum have requested this court take judicial notice of an order issued by the trial court during the pendency of th eir appeal , granting a motion to compel [footnote continued on next page]15

resolve that question, a reviewing court will not exercise its disc retion to consider it for the first time on appeal.
C. Defendants Have Not Established a n Abuse of Discretion With Respect To the Trial
Court ’ s Selection of a Remedy Under Section 1281.2 , S ubdivision ( c ) The final issue raised in defendants’ appeal involv es the trial court’s decision to deny arbitration upon concluding that section 1281.2, subdivision (c) , applied. Specifically, defendants argue the trial court abused its discretion by (1) denying arbitration without simultaneously ordering consolidation of the d erivative a ction and

c ontract a ction , and (2) refusing to stay the d erivative a ction pending the outcome of arbitration in the c ontract a ction. We disagree. “When [section 1281.2, subdivision (c)] applies, section 1281.2 ‘identifies four options f rom which the trial court may choose, including denial or stay of arbitration proceedings’ [citation], but also a stay of court proceedings and order to arbitrate

. . . .

‘ These options are entrusted to the trial court’s discretion. ’ ” ( Nixon v. AmeriHome Mortgage C o. , LLC (2021) 67 Cal. A pp. 5th 934, 951.) The trial court’s selection of one

arbitration filed in the d erivative a ction. However, the only document submitted with that request is a minute order stating that a motion to compel arbitration was granted. None of the papers filed in the trial court or the trial court’s statement of d ecision were part of defendants ’ request for judicial notice . Thus, this court has no indication of whether the motion was premised upon consideration of the same written agreement to arbitrate, whether additional evidence was submitted in support of that motion, whether the order involved only certain claims , or whether the order involved only certain parties to the d erivative a ction. Nor have defendants argued that this subsequent order renders their appeal moot. Thus, we are unable to determine the re levance of the document to the issues presented in this appeal , and we deny the request.16

of the statutorily authorized options will be disturbed only if it “exceed [s] the bounds of reason.” ( Daniels , supra , 212 Cal.App. 4th at p. 686.) On appeal, d efendants do not contest the trial court’s finding that if tried separately, the d erivative a ction and c ontract a ction have the potential to produce inconsistent rulings on common issues of fact or law. Generally, “ ‘ [t] he existence of [the] possibility o f conflicting rulings on a common issue of fact is sufficient grounds

. .

. ’ to deny a motion to compel pursuant to section 1281.2, subdivision (c).” ( Abaya v. Spanish Ranch I , L.P. (2010) 189 Cal.App. 4th 1490, 1499.) Thus, by failing to contest the tria l court’s finding in this regard, defendants have not met their burden to show the trial court exceeded the bounds of reason in denying arbitration. Contrary to defendants’ argument, the statute does not mandate that the trial court
order consolidation or joinder of two actions when denying arbitration. On its face, the statute provides that if 1281.2, subdivision (c) , applies, the trial court “ may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding

. ” ( § 1281.2 , subd. (d), italics added. ) “Ordinarily, the word ‘may’ connotes a discretionary or permissive act

. ” ( Woodbury v. Brown

- Dempsey (2003) 108 Cal.App. 4th 421 , 433.) U nder a plain reading of the statute, the trial court is not required to order intervention or joinder , as that provision is clearly proceeded by the word “may , ” indicating that such action is discretionary

. 6

6 We also note even if the trial court were to order consolidation, it has the discretion to consolidate two cases for all purposes or for trial only. (§ 1048.) Th us, even if consolidation were required to avoid the potential for inconsistent findings on [footnote continued on next page]17

Finally , defendants ’ argument that th e trial court could have eliminated the possibility of inconsistent rulings by ordering the c ontract a ction to arbitration while staying the d erivative a ction is not grounds for reversal on appeal. With respect to the trial court’s selection of a remedy u nder section 1281.2, t he fact that another option might have been more reasonable under the circumstances does not show an abuse of discretion. ( Mercury Ins. Group v. Superior Court (1998) 19 Cal. 4th 332, 351 [“ T he reasonableness of an approach that was n ot selected does not entail the unreasonableness of the one that

was . ”].) Thus, even assuming defendants are correct that another option available under section 1281.2 could , hypothetically , eliminate all possibility of inconsistent rulings on commons iss ues of fact or law, such a showing does not establish an abuse of discretion warranting reversal on appeal.

common issues of fact or law, it would be more than reasonable for the trial court first to deny arbitration and then to wait until an appropriate future proceeding involv ing all parties to both actions before deciding the extent to which the two actions should be consolidated.18 IV. DISPOSITION The order is affirmed. Appellant s to bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

FIELDS J. We concur:

RAMIREZ P. J.

SLOUGH J.