Opinion ID: 1373479
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Heading Rank: 5

Heading: Cases involving the one-year statute

Text: Prior to Orpustan, the Courts of Appeal were unanimous in holding that the application of the one-year statutory time limit was an issue for the court. These cases are: State Farm etc. Ins. Co. v. Superior Court (1965) 232 Cal. App.2d 808 [43 Cal. Rptr. 209]; Aetna Cas. & Surety Co. v. Superior Court, supra, 233 Cal. App.2d 333; Pacific Indem. Co. v. Superior Court, supra, 246 Cal. App.2d 63; Republic Indem. Co. v. Barn Furniture Mart, Inc. (1967) 248 Cal. App.2d 517 [56 Cal. Rptr. 609]; Key Ins. Exch. v. Biagini (1967) 250 Cal. App.2d 143 [58 Cal. Rptr. 408]; Calhoun v. State Farm Mutual Auto. Ins. Co., supra, 254 Cal. App.2d 407, 413; Firemen's Ins. Co. v. Diskin (1967) 255 Cal. App.2d 502 [63 Cal. Rptr. 177]; Allstate Ins. Co. v. Orlando (1968) 262 Cal. App.2d 858 [69 Cal. Rptr. 702]; Pacific Indem. Co. v. Ornellas (1969) 269 Cal. App.2d 875 [75 Cal. Rptr. 608]. The Aetna case, supra, explains the reasons why the application of the one-year statute is an issue for the court: First, it is consistent with the previously established rule that where a contract provides that arbitration may be demanded within a stated time, failure to make demand within that time constitutes a waiver of the right to arbitrate. ( Jordan v. Friedman (1946) 72 Cal. App.2d 726, 727 [165 P.2d 728]; see 3 Cal. Law Revision Com. Rep. (1961) pp. G 7 and G 36.) Second: Code of Civil Procedure section 1281.2 requires the court to determine whether a party has waived his right to arbitrate. (See Sawday v. Vista Irrigation Dist. (1966) 64 Cal.2d 833 [52 Cal. Rptr. 1, 415 P.2d 816].) Third: Insurance Code section 11580.2 provides in subdivision (i) that No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless one of the specified steps is taken within one year from the date of the accident. The Aetna opinion points out: It should not be overlooked that a determination of this issue of waiver (or compliance with conditions precedent, whichever it be called) may be very different if it is tried before an arbitrator rather than a court. A court determines the facts upon the weight of competent evidence, and applies the law as it is laid down by the authorities. Arbitrators, on the other hand, `may base their decision upon broad principles of justice and equity, and in doing so may expressly or impliedly reject a claim that a party might successfully have asserted in a judicial action.' ( Sapp v. Barenfeld, 34 Cal.2d 515, 523 [212 P.2d 233].) Thus, what an arbitrator would find to be compliance could be something other than compliance as measured by the standards of the law. Subdivision (h) [now subdivision (i)] is, in effect, a statute of limitations. Such statutes are intended to set controversies at rest by foreclosing consideration thereafter as to the merits of the claim. To reject a strict application of the law in favor of `broad principles of justice and equity' would make a statute of limitation meaningless. ( Aetna Cas. & Surety Co. v. Superior Court, supra, 233 Cal. App.2d 333 at pp. 339-340.) In Pacific Indem. Co. v. Superior Court, supra , the appellate court issued a writ of mandate commanding the superior court to enjoin an arbitration commenced more than one year after the accident. The opinion [] reviewed the reasoning of the Aetna case, and stated: This conclusion, we think, promotes the fundamental plan and purpose of the statute. The issue of the statute of limitations is not one of the arbitrable issues having to do with the liability of the uninsured motorist to the insured but relates directly to the liability or obligation of the insurer to the insured under the policy and pertinent statute. (§ 11580.2, subds. (a), (e), (h); see Aetna Cas. & Surety Co. v. Superior Court, supra, 233 Cal. App.2d 333, 337; Fisher v. State Farm Mut. Auto. Ins. Co. (1966) 243 Cal. App.2d 749, 751-752 [52 Cal. Rptr. 721].) Furthermore our conclusion appears to be in harmony with Code of Civil Procedure section 1281.2 which provides for an order by the court compelling arbitration `if it [the court] determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; ...' (Italics added.) (246 Cal. App.2d 63, 67-68.) The single case which holds to the contrary is Allstate Ins. Co. v. Superior Court (1973) 35 Cal. App.3d 137 [110 Cal. Rptr. 622]. That was a proceeding to restrain the superior court from permitting an arbitration which had been demanded almost eight years after the accident. The appellate court denied relief upon the theory that Aetna Cas. & Surety Co. v. Superior Court had been overruled by Orpustan v. State Farm Mut. Auto. Ins. Co., supra, 7 Cal.3d 988. The result of the Allstate decision was, as the court acknowledged, to allow the arbitrator to decide whether eight years of delay amounted to a waiver. That holding takes away from the trial court the responsibility which the Legislature gave it to determine whether the right to compel arbitration had been waived. Under the Allstate decision, the legislative mandate that no cause of action shall accrue ... unless within one year from the date of the accident ... is reduced to a precatory gesture which the arbitrator is free to disregard, by substituting his own concept of justice and equity. The Allstate decision was not based upon anything in the insurance policy or any agreement of the parties to submit the timeliness issue to arbitration. The decision appears to have been based solely upon the court's belief that under Orpustan the entirety of the controversy is to be arbitrated, statutes to the contrary notwithstanding. [] [Our Orpustan decision did not involve the statutory time limitation of section 11580.2, subdivision (i), of the Insurance Code. As we have indicated, the relevant terms of the policy there in question amounted to an agreement to arbitrate the issue of physical contact, and our narrow holding was that those terms were to be honored.] [3] [Unfortunately, our holding was stated in language whose breadth was an invitation to misinterpretation, and the Allstate court, in applying that language to the issue presently before the court, accepted that invitation. We here must correct that misinterpretation. (7) The issue of whether the right to compel arbitration has been waived by failure to comply with the one-year limitation is clearly one for the determination of the court pursuant to the provisions of section 1281.2 of the Code of Civil Procedure. This issue, as opposed to others which we loosely and unfortunately termed jurisdictional in Orpustan and in our later Van Tassel decision, is logically and legally prior to any consideration by the arbitrator of those other issues which, in the circumstances of the particular case, are a part of the entirety of the controversy and whose determination may have the effect of precluding him from reaching the merits of the dispute. It was in this latter sense that we used the term jurisdictional in describing those other issues  i.e., in the sense that the arbitrator's consideration of the merits of the controversy must await his determination of them. In using this terminology, however, we in no way intended to indicate that the prior issue of waiver of the right to compel arbitration, which under the relevant statutes and the long line of decisions we have adverted to is a matter for the determination of the court upon a motion to compel arbitration, was to be swept along with those other issues into the area of arbitrative determination. While as we indicated in Orpustan and Van Tassel we favor full and complete determination by the arbitrator of matters properly submitted to him, we cannot allow our enthusiasm for the expeditious and economical disposition of such matters to intrude upon our responsibility to determine whether the right to compel arbitration has been waived through failure to seek it in a timely manner. Finally, we recognize that in our opinion in Van Tassel v. Superior Court, supra, 12 Cal.3d 624, we quoted certain language from Allstate with approval and disapproved certain contrary language in Aetna Cas. & Surety Co. v. Superior Court, supra, 233 Cal. App.2d 333. However, the issue here before the court was not involved in Van Tassel, and in light of our decision today the indicated quotations and citations cannot be construed to support the overly broad reading of Orpustan and Van Tassel which petitioner has urged upon us. The case of Allstate Ins. Co. v. Superior Court, supra, 35 Cal. App.3d 137, is disapproved.]