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Filed 3/15/16 Performance Contracting v. Abener Teyma Mojave General Partnership 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication 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

PERFORMANCE CONTRACTING, INC.,

Plaintiff and Respondent,

v.

ABENER TEYMA MOJAVE GENERAL 

PARTNERSHIP et al.,

Defendants and Appellants.

E062939

(Super.Ct.No. CIVDS1413926)

OPINION

APPEAL from the Superior Court of San Bernardino County. Gilbert G. Ochoa, 

Judge. Reversed with directions.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP, Nathan D. O’Malley, and 

Luke N. Eaton for Defendants and Appellants.

Bremer Whyte Brown & O’Meara LLP, Jeremy S. Johnson, and Holly A. 

Bartuska for Plaintiff and Respondent.
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Defendants Abener Teyma Mojave General Partnership, Abeinsa Holdings, Inc., 

Abener North America Construction, L.P., and Mojave Solar, LLC (Mojave)

(collectively, defendants) appeal from the trial court’s order denying their petition to 

compel arbitration of plaintiff Performance Contracting, Inc.’s action against them for 

breach of contract and related claims. The trial court denied the petition on the ground 

that some of the defendants were “third parties” under Code of Civil Procedure section 

1281.2, subdivision (c).1 We conclude that, as a matter of law, none of the defendants 

constitute third parties as that term is used in section 1281.2, subdivision (c), and we 

therefore reverse the trial court’s ruling with directions to grant defendants’ petition to 

compel arbitration.

I

FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint and the Petition to Compel Arbitration

In October 2014, plaintiff entered into a contract with defendant Abener Teyma 

Mojave General Partnership whereby plaintiff agreed to supply and install insulation 

materials on the power plant commonly known as the Mojave Solar Power Plant Project

(the Project). The contract contains an arbitration clause requiring arbitration of “any 

dispute” arising out of the contract.

 

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 All statutory references are to the Code of Civil Procedure.
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In September 2014, plaintiff filed a complaint asserting causes of action for 

foreclosure of mechanics lien, breach of contract, fraudulent and negligent 

misrepresentation, unjust enrichment, and violation of California’s prompt payment 

statutes. (Civ. Code, §§ 3287 et seq., 8800, 8812, 8814, 8816, 8818; Bus. & Prof. Code 

§§ 7108.5, 7108.6.) The gravamen of these claims is the allegation that all defendants are 

parties to the contract and owe plaintiff over $3 million for work plaintiff performed 

under the contract. The complaint alleges that: plaintiff entered into the contract with all

defendants; all defendants “have a unity of interest and are commonly owned and 

represented”; all defendants “commonly owned” the Project; each defendant “was the

agent, employee or joint venturer of each of the other . . . Defendants”; and each 

defendant “benefit[ed] from Plaintiff’s work on the Project and avail[ed] itself to the 

obligations imposed by way of the Agreement and by ownership of the Project.”

Defendants Abener Teyma Mojave General Partnership, Abeinsa Holdings, Inc., 

and Abener North America Construction, L.P. moved to compel arbitration, arguing the 

existence of the valid arbitration clause in the contract triggers arbitration under section 

1281.2.

Plaintiff opposed the petition, arguing that arbitration was inappropriate under 

section 1281.2, subdivision (c) due to the presence of third party defendants not subject to 

arbitration and the possibility of conflicting rulings on common issues of law and fact. 

Plaintiff asserted there was “an obvious risk of inconsistent determinations or rulings” if 
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arbitration were to proceed because Abeinsa Holdings, Inc., Abener North America 

Construction, L.P., and Mojave were nonsignatories to the contract and therefore could 

not be compelled to arbitration. Plaintiff also argued defendants had conceded that 

nonsignatory Mojave was a third party for purposes of section 1281.2, subdivision (c) 

because Mojave had not joined defendants’ petition to compel arbitration.

In their reply, defendants argued the nonsignatory defendants did not constitute 

third parties under section 1281.2, subdivision (c) because they were all related and 

commonly owned. Defendants also argued there was no possibility of conflicting rulings 

because “all” of the nonsignatory defendants were willing to participate in arbitration. 

Defendants explained in a footnote that Mojave was also represented by the undersigned 

counsel and had not yet appeared “because it [was] awaiting the outcome of [the petition] 

before incurring the costs and expenses of filing a response to the complaint.”

Two days before the hearing on defendants’ petition, defendants, including 

Mojave, filed a surreply. The surreply explained that defendants had recently retained 

new counsel to represent them in the action and that new counsel had discovered “there 

had been a miscommunication regarding the Defendants’ willingness to participate in 

arbitration.” The surreply was “intended to remove all doubt that all Defendants, 

including MOJAVE, are willing to submit to arbitration in this matter.”
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B. The Trial Court’s Denial of the Petition

At the hearing on the petition, defense counsel announced his appearance on 

behalf of all defendants and reiterated the argument that there was no possibility of 

conflicting rulings because all defendants were willing to arbitrate the dispute. The court 

asked defense counsel why Mojave had not joined the petition, stating: “All I see is 

they’re not here. If they were here, then I would have a different issue that I would have 

to decide.” The court admonished defense counsel for filing a surreply, informed the 

parties that it had not read the surreply, and stated that Mojave had not yet appeared in 

the case.

Defense counsel replied that it was his understanding former counsel and Mojave

had an agreement whereby Mojave could avoid the cost of appearing by not joining the 

petition. Counsel emphasized that despite Mojave’s failure to join in the moving papers, 

“what we’ve represented both in the reply and in our documents is that Mojave wants to 

go to arbitration.” The trial court observed that former defense counsel’s strategy to help 

Mojave “save $395.00 at the risk of their client’s rights” was ill-advised and denied the 

petition.
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II

DISCUSSION

A. California Public Policy Favors Arbitration and California Law Requires 

Enforcement of Valid Arbitration Agreements

In California, “[a] strong public policy favors the arbitration of disputes, and 

doubts should be resolved in favor of deferring to arbitration proceedings.” (Laswell v. 

AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1404-1405 (Laswell), quoting Rowe 

v. Exline (2007) 153 Cal.App.4th 1276, 1282 (Rowe).) “A trial court is required to order 

a dispute to arbitration when the party seeking to compel arbitration proves the existence 

of a valid arbitration agreement covering the dispute. [Citation.] Under Code of Civil 

Procedure section 1281.2, ‘[o]n petition of a party to an arbitration agreement alleging 

the existence of a written agreement to arbitrate a controversy and that a party thereto 

refuses to arbitrate such controversy, the court shall order the petitioner and the 

respondent to arbitrate the controversy if it determines that an agreement to arbitrate the 

controversy exists, unless it determines that’ the case falls into one of three limited 

exceptions.” (Laswell, supra, at pp. 1404-1405.)

One of the limited exceptions to the enforcement of contractual arbitration 

provisions is where “[a] party to the arbitration agreement is also a party to a pending 

court action or special proceeding with a third party, arising out of the same transaction 

or series of related transactions and there is a possibility of conflicting rulings on a 

common issue of law or fact.” (§ 1281.2, subd. (c).) “This exception ‘ “addresses the 
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peculiar situation that arises when a controversy also affects claims by or against other 

parties not bound by the arbitration agreement.” ’ ” (Laswell, supra, 189 Cal.App.4th at 

p. 1405, quoting Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 

393 (Cronus).) “The exception thus does not apply when all defendants, including a 

nonsignatory to the arbitration agreement, have the right to enforce the arbitration 

provision against a signatory plaintiff.” (Laswell, supra, at p. 1405; accord, Molecular 

Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 709; RN 

Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1519; Rowe,

supra, 153 Cal.App.4th at p. 1290.) The exception “ ‘is not a provision designed to limit 

the rights of parties who choose to arbitrate or otherwise to discourage the use of 

arbitration. Rather, it is part of California’s statutory scheme designed to enforce the 

parties’ arbitration agreements.’ ” (Cronus, supra, at p. 393.)

When the elements of the exception are present (i.e., there are third parties not 

subject to arbitration on claims arising out of the same transaction or related transactions, 

and a possibility of conflicting rulings on common issues of law or fact), section 1281.2, 

subdivision (c) gives the trial court discretion to deny or stay arbitration. “ ‘The court’s 

discretion under [the exception, however,] does not come into play until it is ascertained 

that the subdivision applies, which requires the threshold determination of whether there 

are nonarbitrable claims against at least one of the parties to the litigation (e.g., a 

nonsignatory).’ ” (Laswell, supra, 189 Cal.App.4th at p. 1405.)
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B. Section 1281.2, Subdivision (c) Does Not Apply and the Trial Court Did 

Not Have Discretion to Deny the Petition

Whether a defendant is in fact a third party for purposes of section 1281.2, 

subdivision (c), is a matter of law subject to de novo review. (Laswell, supra, 189 

Cal.App.4th 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 abuse of 

discretion review. (Ibid.)

The trial court did not state its reasoning for denying the petition, but all of the 

argument at the hearing related to Mojave’s failure to join the petition and the possibility 

of conflicting rulings. The contract between plaintiff and defendant Abener Teyma 

Mojave General Partnership provided for arbitration of “any dispute” arising under the 

contract. The contract defines a dispute as a claim “of any kind arising between the 

Parties in connection with . . . this Contract, including but not limited to, any question 

regarding . . . the performance (or failure to perform) the Work.” The contract defines 

the parties as plaintiff and defendant Abener Teyma Mojave General Partnership. The 

trial court seemingly adopted plaintiff’s argument that the contract covered only Abener 

Teyma Mojave General Partnership and that the presence of Abeinsa Holdings, Inc., 

Abener North America Construction, L.P., and Mojave as defendants in the action 

demonstrated there were third parties not subject to the arbitration agreement. The trial 

court thus at least implicitly concluded that the threshold requirement for application of 

section 1281.2, subdivision (c)—that there were third parties not subject to the arbitration 
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agreement—was satisfied and, as a result, it had discretion to deny arbitration. We 

conclude, however, the threshold requirement for the third party exception was not 

satisfied in this case as a matter of law and, therefore, the trial court had no discretion to 

deny arbitration.

As the Laswell court noted, “ ‘[t]he term “third party” for purposes of [the 

exception to arbitration in section 1281.2, subdivision (c)] must be construed to mean a 

party that is not bound by the arbitration agreement.’ [Citation.] ‘[I]n many cases, 

nonparties to arbitration agreements are allowed to enforce those agreements where there 

is sufficient identity of parties.’ [Citation.] In addition, ‘ “ ‘[t]he equitable estoppel 

doctrine applies when a party has signed an agreement to arbitrate but attempts to avoid 

arbitration by suing nonsignatory defendants for claims that are “ ‘based on the same 

facts and are inherently inseparable’ ” from arbitrable claims against signatory 

defendants.’ ” ’ ” (Laswell, supra, 189 Cal.App.4th at p. 1407, italics added.) “Claims 

that rely upon, make reference to, or are intertwined with claims under the subject 

contract are arbitrable.” (Rowe, supra, 153 Cal.App.4th at p. 1287.)

Here, although plaintiff and Abener Teyma Mojave General Partnership are the 

only signatories to the contract and the contract defines “dispute” as one between plaintiff 

and Abener Teyma Mojave General Partnership, the three nonsignatory defendants are 

equally bound by the contract and thus entitled to enforce it against plaintiff. According 

to plaintiff’s own allegations, all defendants are related entities, all defendants are parties 
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to the contract, and all defendants are responsible for misrepresenting the contract’s 

payment terms and failing to timely pay for a portion of the work plaintiff performed. In 

other words, plaintiff’s own allegations “demonstrate [its] claims against all defendants 

are based on the same facts and theory and are inherently inseparable.” (Laswell, supra, 

189 Cal.App.4th at p. 1407.) Additionally, the contract states that Mojave is the “Owner” 

of the Project and the contract is printed on Abeinsa letterhead. And, defense counsel

represented more than once in connection with the petition to compel arbitration that all 

defendants were represented by the same counsel and would participate in the arbitration 

proceedings.

Under these circumstances, Abeinsa Holdings, Inc., Abener North America 

Construction, L.P., and Mojave can enforce the contract’s arbitration clause against 

plaintiff and thus are not third parties within the meaning of section 1281.2, subdivision 

(c). (See, e.g., Laswell, supra, 189 Cal.App.4th at pp. 1407-1408 [nonsignatory 

defendants could enforce arbitration agreement against the plaintiff because she alleged

they were related to the signatory defendant and were responsible for the improper care 

she received at the signatory defendant’s hospice care center]; Rowe, supra, 153 

Cal.App.4th at pp. 1284-1290 [nonsignatory defendants could enforce arbitration 

agreement against the plaintiff because he alleged in the breach of contract cause of 

action that the corporation signatory was an alter ego of the nonsignatory defendants and 

equitable estoppel principles applied to the other statutory causes of action].) Because 
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section 1281.2, subdivision (c) does not apply to this case as a matter of law, “we need 

not determine whether the trial court’s selection among the alternative dispositions 

offered by the subdivision was an abuse of discretion.” (Rowe, supra, 153 Cal.App.4th at 

p. 1290.)

Plaintiff’s various arguments as to why we should affirm the trial court’s ruling 

are unpersuasive. There is no support in the record for plaintiff’s assertion that 

defendants waived their argument that they are not third parties under section 1281.2, 

subdivision (c) by failing to raise it below and by conceding they are third parties. In 

their reply brief, defendants explicitly argued that section 1281.2, subdivision (c)’s third 

party exception did not apply because all of the nonsignatory defendants could enforce 

the contract’s arbitration provision and were willing to submit to arbitration. Similarly, 

there is no support for plaintiff’s contention that Mojave’s unwillingness to submit to 

arbitration constitutes a possibility of conflicting rulings. On at least two occasions, 

defense counsel, who represented all defendants including Mojave, stated that Mojave 

would submit to arbitration. While Mojave did not join the initial petition to compel 

arbitration, it joined the surreply and was present at the hearing on the petition.

Lastly, plaintiff’s contention that Mojave is not a proper party to this appeal does 

not change our conclusion that section 1281.2, subdivision (c) does not apply here as a 

matter of law. Regardless of whether Mojave can be said to have formally joined the 

petition to compel arbitration, plaintiff is estopped by the allegations in its complaint 
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from arguing that any of the nonsignatory defendants cannot enforce the contract’s 

arbitration clause.2 (See, e.g., Rowe, supra, 153 Cal.App.4th at p. 1287 [“a signatory to 

an arbitration clause may be compelled to arbitrate against a nonsignatory when the 

relevant causes of action rely on and presume the existence of the contract containing the 

arbitration provision”].)

III

DISPOSITION

The order denying the petition to compel arbitration is reversed and the matter is 

remanded with directions for the trial court to enter a new order granting the petition to 

compel arbitration. Defendants shall recover their costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

 

2 We decline plaintiff’s invitation to dismiss Mojave from this appeal. Any 

“aggrieved” party may file a notice of appeal (§ 902) and we liberally construe the issue 

of standing to resolve doubts in favor of the right to appeal (Apple, Inc. v. Franchise Tax 

Bd. (2011) 199 Cal.App.4th 1, 13). Mojave took steps to become a part of the petition by 

joining the surreply, appearing at the hearing, and representing through its counsel that it 

wanted to submit to arbitration. Along with the other defendants, Mojave was aggrieved 

by the trial court’s denial of the petition.
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CODRINGTON

J.

We concur:

HOLLENHORST

Acting P. J.

MILLER

J.