Filed 10/29/15 Pedes Orange County v. Harris CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

PEDES ORANGE COUNTY, INC.,

 Plaintiff and Respondent,

v.

TODD S. HARRIS,

 Defendant and Appellant.

 G051450

 (Super. Ct. No. 30-2014-00742502)

 O P I N I O N

Appeal from an order of the Superior Court of Orange County, Ronald L. 

Bauer, Judge. Reversed and remanded with directions.

Gordee, Nowicki & Blakeney, Alan J. Gordee and Bryan B. Arnold for 

Defendant and Appellant.

Michelman & Robinson, Stacey L. Zill and Robin James for Plaintiff and 

Respondent.
2

Todd S. Harris appeals from the trial court order denying his motion to 

compel arbitration of a misappropriation of trade secrets cause of action alleged against 

him by Pedes Orange County, Inc. (Pedes). Pedes is a corporation that provides medical 

services and in which Harris, a medical doctor, was a shareholder. The arbitration clause 

was in an agreement between Pedes and Harris by which Pedes had the right to 

repurchase Harris’s shares under specified circumstances, and which contained a 

provision by which Harris agreed to not disclose or misuse Pedes’ trade secret 

information. Harris contends the trade secret cause of action fell within the scope of a 

broadly worded arbitration clause that provided for arbitration of any “controversy or 

claim aris[ing] out of or related to” the share repurchase agreement. We agree. We 

reverse the order and direct the trial court to enter a new order granting Harris’s motion to 

compel arbitration.

FACTS & PROCEDURE

Background

The following background facts are primarily taken from the operative first 

amended complaint (the complaint). Pedes, through its affiliated physicians, provides 

diagnosis and treatment for vascular disorders. Joseph Hewett, a medical doctor, is 

Pedes’ majority shareholder. Harris is also a Pedes shareholder. 

Pacific Medical Innovations (PMI) is a company owned by Hewett, Harris, 

and Michael Arata, another medical doctor. PMI owns the medical building/surgical 

center in Newport Beach (the Property) at which Pedes provides its medical services 

pursuant to a lease with PMI. 

Pacific Interventionalists (PI) is another corporation owed by Hewett, 

Harris, and Arata. It provides professional and administrative services to medical “access 

centers” such as the Property. 
3

Scott Roman is the attorney who provided legal services to Hewett, Harris,

and Arata in creating and operating Pedes, PMI, and PI. He is described in Pedes’

complaint as the “‘everything’ attorney” for each of the companies. 

The Property has three suites including Suite A (surgical facility) and 

Suite B (clinical and administrative offices). Suite C is comprised of physician offices 

and patient care facilities. Roman drafted the 2012 lease between PMI (as landlord) and 

Pedes (as tenant), pursuant to which Pedes was permitted to use Suites A and B for 

specified amounts of time each week to provide medical services for its patients. The 

lease also permitted Pedes to use surgical and diagnostic equipment (the Equipment) 

located within the Property. Staff working at the Property (including one other physician, 

who is not a party to this dispute), were employed by PI but as to some, their salary and 

benefits were paid directly by Pedes for Pedes-related services. 

The Harris/Pedes Share Repurchase Agreements

In 2012, Harris, as a shareholder of Pedes, executed an agreement 

governing Pedes’ repurchase of his shares under specified circumstances (the 2012 Share 

Repurchase Agreement). The recitals of the 2012 Share Repurchase Agreement stated its 

purpose was to “maintain the continuity of [Pedes’] business affairs and management.” 

Accordingly, Pedes and Harris wanted to “provide for the repurchase of [Harris’s] 

shares . . . upon the occurrence of certain events[,]” and to “establish the terms of such 

repurchase,” including establishing the value of the shares. The circumstances triggering 

a mandatory repurchase of Harris’s shares included his death, and the loss of his medical 

license or other legal disqualification. The circumstances allowing Pedes (or other 

shareholders) the option to repurchase Harris’s shares included any breach of the 

agreement. 

Paragraph 23 of the 2012 Share Repurchase Agreement contained the 

following arbitration clause: “If a controversy or claim arises out of or [sic] related to 

this Agreement, the parties agree to negotiate the controversy or claim in good faith for a 
4

period of thirty (30) days after the controversy or claim is presented before legal 

proceedings or arbitration are instituted.” If the parties are unable to resolve the dispute, 

“the controversy or claim, at the request of either party . . . shall be determined by 

binding arbitration” conducted in accordance with the Commercial Arbitration Rules of 

the American Arbitration Association. 

Paragraph 24 of the 2012 Share Repurchase Agreement contained the 

following provision concerning trade secrets: “[Harris] acknowledges that the trade 

secrets of [Pedes], including its patients lists, are valuable and unique assets, and [Harris] 

agrees never, without the prior written consent of [Pedes], to disclose to any entity or use 

for any purpose whatsoever, except in connection with [Pedes’] business . . . or as 

required by law, any trade secret of [Pedes] while [Harris] is a shareholder of [Pedes] or 

at any time thereafter.”

Harris’s declaration in support of his motion to compel arbitration stated 

that in 2014 Pedes presented him with an amended repurchase agreement (the 2014 Share 

Repurchase Agreement). Pedes advised Harris he did not need to sign the document 

because it was effective without his signature. Pedes does not dispute this assertion and 

in its respondent’s brief concedes the two versions of the agreement are largely the same 

with regard to the provisions at issue. 

As relevant here, the 2014 Share Repurchase Agreement contained the 

same recitals as to the purpose of the agreement. The trade secrets provision was 

renumbered as paragraph 23. It included the same language as the trade secrets clause in 

the 2012 Share Repurchase Agreement, and elaborated that Harris “agrees to keep 

confidential and to refrain from disclosing trade secrets, professional and business 

practices, or other confidential or privileged information of [Pedes] or . . . any 

management services organization that provides management services to [Pedes].” It set 

forth a more comprehensive list of what was considered confidential or privileged 

information including, “the terms of any third party payor agreements, the contents of the 
5

patient medical records, business methods, business plans, the names and addresses of 

patients, the contents of financial statements, and the procedures or protocols relating to 

the performance of professional services, or any phase thereof.” 

Paragraph 24 of the 2014 Share Repurchase Agreement added a provision 

precluding Harris from competing with Pedes for five years following a share repurchase. 

And paragraph 27 contained the same arbitration provision as the 2012 Share Repurchase 

Agreement, requiring binding arbitration of any “controversy or claim aris[ing] out of or 

related to this Agreement” at the request of either party. (Hereafter, the 2012 Share 

Repurchase Agreement and the 2014 Share Repurchase Agreement will be referred to 

collectively as the Share Purchase Agreements unless otherwise indicated.)

The Complaint

Sometime in 2014 Pedes and Harris had a “falling out” and Pedes filed its 

complaint naming as defendants PMI, Harris, Arata, and attorney Roman. The complaint 

alleged that as Pedes’ business increased it required more use of the Property and the 

Equipment, for which it had been paying PMI. But after Pedes’ and Harris’s “unrelated 

‘fallout’” Harris, aided by Arata and Roman, seized control of PMI and began interfering 

with Pedes’ use of the Property and the Equipment and with its relationships with patients 

and employees. The complaint alleged 11 breach of contract and tort causes of action 

against the defendants including: against PMI for breach of contract and breach of the 

implied covenant of good faith and fair dealing; against Roman for breach of contract, 

negligence, breach of fiduciary duty, and fraud; against Harris, Arata, and PMI for 

defamation; and against all defendants for intentional interference with contractual 

relations and prospective economic advantage, and unfair business practices. 

The complaint also alleged a cause of action against Harris alone for 

misappropriation of trade secrets (the complaint’s 10th cause of action, hereafter the trade 

secrets cause of action). In that cause of action, Pedes alleged the following: “[It] has 

incurred considerable expense, and dedicated substantial effort, in developing the Pedes 
6

name, patient lists and referral sources. Pedes’ trade secret information has economic 

value given that the information was developed by Pedes and was not known to Pedes’

competitors. Pedes has made reasonable efforts to ensure that the trade secrets and 

confidential and proprietary information remained secret by, inter alia, entering into 

confidentially agreements.” Pedes alleged “Harris is in possession of Pedes’

confidential, proprietary and trade secret information concerning Pedes’ marketing, 

strategies, practices, procedures, policies, management, contracts, pricing, clients, 

organization and referral sources. Some of this information has been shared with Harris 

in confidence as a result of his status as a shareholder of Pedes and/or his work on behalf 

of Pedes. Pedes is informed and believes, and based thereon alleges, that some of this 

information has been obtained by Harris through false pretenses, e.g., by Harris 

contacting the Pedes billing company and requesting the information under the guise that 

he is entitled to receive the information and/or by accessing, without permission, Pedes’

financial accounts and information.” Pedes also alleged Harris obtained a fictitious name 

permit for “‘Pedes Los Angeles’” so as to capitalize on Pedes’ business goodwill and 

deceive patients and referral sources. And it alleged Pedes had been injured by Harris’s 

misappropriation of its proprietary, confidential, and trade secret information. 

PMI filed a cross-complaint against Pedes for declaratory relief concerning 

the terms and enforceability of the lease between PMI and Pedes. 

Harris’s Motion to Compel Arbitration 

Harris filed a motion to sever the trade secrets cause of action and compel 

arbitration of it in accordance with the arbitration clauses in the Share Repurchase 

Agreements, or in the alternative to stay the arbitration of the trade secrets cause of action 

pending resolution of the other causes of action in the complaint and cross-complaint. In 

his motion, Harris argued the trade secrets cause of action could easily be severed as it 

was against him only and did not involve the same issues as the other causes of action. 
7

Pedes opposed the motion to compel arbitration arguing the trade secrets 

cause of action did not fall within the scope of the arbitration clauses because it did not 

arise out of, and was not related to, the Share Repurchase Agreements. Pedes’ counsel 

provided a declaration stating Pedes and Harris were submitting their dispute over Pedes’

right to repurchase Harris’s shares under the Share Repurchase Agreements to arbitration. 

Following an unreported hearing, the trial court issued its minute order stating only, 

“Harris’s [m]otion for [s]everance is denied.”

DISCUSSION

Harris contends the trial court erred by denying his motion to compel 

arbitration of the trade secrets cause of action. We agree.

“‘There is a strong public policy in favor of arbitration. [Citations.] 

[¶] Under both the [Federal Arbitration Act] . . . and the California Arbitration 

Act . . . arbitration agreements are valid, irrevocable and enforceable except upon 

grounds that exist for revocation of the contract generally. [Citations.]’ [Citation.] 

‘“[A]rbitration is a matter of contract and a party cannot be required to submit to 

arbitration any dispute which he has not agreed so to submit.” [Citations.]’ ( . . . see 

Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 

1518 . . . [‘[b]ecause arbitration is a contractual matter, a party that has not agreed to 

arbitrate a controversy cannot be compelled to do so’].)” (Mendez v. Mid-Wilshire 

Health Care Center (2013) 220 Cal.App.4th 534, 540-541, fn. omitted (Mendez).)

A trial court must grant a petition to compel arbitration if it determines that 

an agreement to arbitrate the controversy exists. (Code Civ. Proc., § 1281.2; EFund 

Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 (EFund).) “There is, 

however, ‘no public policy in favor of forcing arbitration of issues the parties have not 

agreed to arbitrate.’ [Citation.] Thus, in ruling on a motion to compel arbitration, the 

court must first determine whether the parties actually agreed to arbitrate the dispute. 

[Citations.] General principles of California contract law guide the court in making this 
8

determination. [Citations.]” (Mendez, supra, 220 Cal.App.4th at p. 541.) And “where 

the trial court’s denial of a petition to arbitrate presents a pure question of law, we review 

the order de novo. [Citation.]’ [Citations.]” (Ibid.)

In this case, the trial court’s minute order gives no insight into its reasons 

for denying Harris’s motion to compel arbitration. Pedes conceded in its briefing, and at 

oral argument, that it offered no evidence or argument, concerning waiver, enforceability, 

or any potential for inconsistent rulings on facts or law if the trade secrets cause of action 

was severed. Accordingly, there is no basis for concluding any of Code of Civil 

Procedure section 1281.2’s exceptions to compelling arbitration apply. 

The parties agree the sole issue on this appeal is one of contract 

interpretation, i.e., whether the trade secrets cause of action alleged in the complaint 

constitutes a “controversy or claim aris[ing] out of or related to [the Share Repurchase 

Agreements].” The court’s ruling did not hinge on the credibility of any extrinsic 

evidence because Pedes did not dispute the assertions in Harris’s declaration. 

Accordingly, as the ruling was based on the trial court’s legal interpretation of the 

arbitration agreements, our review is de novo.

1

We agree with Harris the trade secrets cause of action alleged against him is 

within the scope of the arbitration clauses in the Share Repurchase Agreements. The 

agreements provide for binding arbitration of any “controversy or claim aris[ing] out of 

 

1

Throughout its respondent’s brief, Pedes makes repeated references to 

insurance coverage disputes Harris discussed in a motion he filed in the trial court to stay 

the trial court proceedings pending this appeal. The motion was included in Harris’s 

appellant’s appendix, although there is nothing further as to the outcome of that motion. 

Pedes criticizes Harris for injecting his coverage concerns into this appeal, although we 

observe they are not mentioned anywhere in Harris’s opening brief but are raised by 

Pedes in its respondent’s brief, and then mentioned briefly by Harris in his reply to 

Pedes’ criticisms. We agree with Pedes that Harris’s strategic reasons for wanting to 

arbitrate the trade secrets cause of action is irrelevant to the issue on appeal of whether it 

is arbitrable. Accordingly, we disregard both parties’ references to Harris’s insurance 

coverage concerns.
9

or related to” them (italics added). Such a provision is “‘sufficiently broad to include 

tort, as well as contractual, liabilities so long as the tort claims “have their roots in the 

relationship between the parties created by the contract.” [Citations.]’” (Tate v. Saratoga 

Savings and Loan Assn. (1989) 216 Cal.App.3d 843, 855, criticized on other grounds in 

Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376-377; see also 

Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001) 87 Cal.App.4th 534, 543-544; 

Bos Material Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 105.) 

As the party opposing arbitration, Pedes bore the burden of demonstrating 

the trade secret cause of action was “‘wholly independent’” of the Share Repurchase 

Agreements because “any doubts must be resolved in favor of arbitration [citation].” 

(Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401, 1408.) It 

did not. The trade secret cause of action was not “wholly independent” of the Share 

Repurchase Agreements. Both agreements contained provisions by which Harris 

acknowledged certain information, including patient lists, were considered to be Pedes’

trade secrets and prohibiting Harris from disclosing or misusing Pedes’ trade secrets. 

Both agreements provided any breach of the agreements would trigger Pedes’ repurchase 

rights. The trade secrets cause of action against Harris alleged Pedes had developed 

valuable trade secret information and it took efforts to protect that information by

entering into “confidentially agreements.” Pedes’ complaint alleged Harris was in 

possession of that “proprietary, confidential and trade secret information” in part as a 

result of his status as a Pedes’ shareholder, and that he had misappropriated that 

information. Even though Pedes did not sue for breach of the Share Repurchase 

Agreements due to Harris’s alleged misappropriation of trade secrets, the trade secrets 

cause of action at least in part had its roots in the agreements as it was the agreements

that designated the information trade secret and required Harris to maintain the 

confidentiality of the information.
10

Pedes argues the trade secrets cause of action was not related to the Share 

Repurchase Agreements because protection of trade secrets was not the purpose of the 

Share Repurchase Agreements. Rather, it contends the sole purpose of the Share 

Repurchase Agreements was to provide for the repurchase of Harris’s Pedes shares upon 

certain occurrences. Pedes points to the recitals of the Share Repurchase Agreements, 

which stated the purpose of the agreement was to “maintain the continuity of [Pedes’] 

business affairs and management[;]” to provide for repurchase of Pedes’ shares upon 

certain occurrences, and to establish the method for valuing the shares upon repurchase. 

But protecting Pedes’ trade secrets upon repurchase was clearly intended as a necessary 

part of maintaining its business affairs—the agreements specifically required it. 

Pedes argues the trade secrets cause of action does not relate to the Share 

Repurchase Agreements as a “matter of common sense” because the trade secrets clauses

in the agreements is “more akin to a confidentiality provision wherein Pedes and Harris 

acknowledged that Pedes has trade secrets and Harris promised to maintain the secrets in 

confidence.” The argument only underscores the point. It was at least in part via the 

Share Repurchase Agreements that the information was designated to be trade secret and 

Harris was obligated to keep the information confidential. Thus, Pedes cannot 

demonstrate the cause of action was wholly independent of the agreement.

Pedes’ reliance on Medical Staff of Doctors Medical Center in Modesto v. 

Kamil (2005) 132 Cal.App.4th 679, 681 (Kamil), Marsch v. Williams (1994) 

23 Cal.App.4th 250 (Marsch), and Lawrence v. Walzer & Gabrielson (1989) 

207 Cal.App.3d 1501 (Lawrence), is misplaced. 

In Kamil, the service agreement between a medical group and its insurer 

provided for arbitration of “‘any problem or dispute concerning the terms of this 

[a]greement.” (Kamil, supra, 132 Cal.App.4th at p. 682, italics added.) After 

terminating the service agreement, the insurer allegedly published defamatory statements 

about the physicians in the medical group. (Ibid.) The court concluded the agreement to 
11

arbitrate disputes “‘concerning the terms of’ the agreement to provide medical care

[could not] reasonably be said to include the alleged malicious destruction of the 

[p]hysicians’ personal and professional reputations. . . . There may be cases where the 

alleged defamation is so intimately bound with the terms of the agreement that arbitration 

is appropriate. But the terms of this agreement do not give [the insurer] carte blanche to 

publicly pillory [the p]hysicians in press releases and newspaper reports as alleged here.

The defamation complained of here no more concerns the terms of the agreement, than 

would a punch in the nose during a dispute over a medical billing.” (Id. at pp. 683-684.) 

But the arbitration clause in Kamil was far narrower than the broad clause here that 

provides for arbitration of any disputes arising out of or related to the Share Repurchase 

Agreements. 

In Marsch, the parties executed two successive agreements involving 

completed separate projects, only one of which contained a provision for arbitration of 

“‘“‘any controversy . . . arising out of or relating to the contract . . . .’”’” (Marsch, supra,

23 Cal.App.4th at p. 256.) The complaint sought damages based only on breach of the 

agreement without the arbitration provision. The appellate court refused to compel 

arbitration agreement because the two agreements “were not closely connected in 

purpose, did not incorporate one another’s terms, were not executed at the same time, and 

the breach of [one] did not necessarily lead to the breach of the [other].” (Ibid.)

“Where . . . the parties have separate contractual relationships, which involve separate 

enterprises and most importantly separate commercial risks, an arbitration clause which 

governs one contractual relationship cannot be imposed in the other relationship without 

undermining the parties’ reasonable expectations.” (Ibid.) The cause of action in Marsch

bore no relation to, and did not have its roots in the contract with the arbitration 

provision. 

In Lawrence, supra, 207 Cal.App.3d 1501, the court held a client’s 

agreement to arbitrate a dispute “‘regarding fees, costs or any other aspect of our 
12

attorney-client relationship’” when read in the context of the contract “devoted almost 

exclusively to financial matters” did not demonstrate a waiver of the right to a jury trial 

on legal malpractice claims. (Id. at pp. 1504-1506.) Pedes suggests Lawrence stands for 

the proposition that even a broadly worded arbitration clause applies only to disputes 

relating to the fundamental purpose of the contract containing the clause, which in this 

case it asserts is simply to provide the mechanism for its repurchase of shares. But as we 

have already explained, unlike the retainer agreement in Lawrence that only concerned 

the parties’ financial affairs, the purpose of the Share Repurchase Agreements was to 

maintain continuity of Pedes’ business affairs. The Share Repurchase Agreements

specifically covered trade secret information and obligated Harris to maintain such 

information in confidence. The Share Repurchase Agreements provided for repurchase 

of Harris’s shares upon certain occurrences including Pedes’ misuse of trade secrets. The 

complaint alleged Harris obtained access to information designated to be trade secrets by 

the confidentiality agreements because he was a shareholder. Thus, it simply cannot be 

said that the trade secret cause of action was not related to the Share Repurchase 

Agreements.

Pedes in passing argues that even if its trade secrets cause of action against 

Harris had its “roots” in the trade secrets clause of the Share Repurchase Agreements, it 

is not subject to the arbitration clause because there is an independent statutory basis for 

the cause of action, i.e., the Trade Secrets Act. (Civ. Code, § 3426 et seq.) Pedes offers 

no legal analysis and cites to no authorities in support of the contention and we treat the 

point as waived. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785, see also 

Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979 [appellate court not required to 

consider points not supported by citation to authorities or record].) 

In sum, the arbitration provisions in the Share Repurchase Agreements

were sufficiently broad to encompass the trade secret cause of action alleged against 

Harris. Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to 
13

compel arbitration if an agreement to arbitrate the controversy exists, and Pedes has 

effectively conceded none of the exceptions to this mandate apply. Accordingly, the trial 

court erred by denying Harris’s petition to compel arbitration of the trade secrets claim. 

DISPOSITION

The order denying arbitration of the trade secrets cause of action is reversed 

and the case is remanded for the trial court to enter a new order granting the motion to 

compel arbitration. Appellant is entitled to his costs on appeal.

O’LEARY, P. J.

WE CONCUR:

RYLAARSDAM, J.

IKOLA, J.