Opinion ID: 2519923
Heading Depth: 2
Heading Rank: 2

Heading: PacifiCare's Initiation of the Los Angeles Lawsuit

Text: Doers, supra, 23 Cal.3d 180, 151 Cal.Rptr. 837, 588 P.2d 1261, held that the mere filing of a lawsuit does not waive contractual arbitration rights. ( Doers, at pp. 185-188, 151 Cal.Rptr. 837, 588 P.2d 1261; see also Kalai v. Gray (2003) 109 Cal.App.4th 768, 774, 135 Cal.Rptr.2d 449; Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1099, 101 Cal.Rptr.2d 412; accord, Merrill Lynch, Pierce, Fenner & Smith v. Lecopulos (2d Cir.1977) 553 F.2d 842, 845; Chatham Shipping Co. v. Fertex Steamship Corp. (2d Cir.1965) 352 F.2d 291, 293; Realco Enterprises, Inc. v. Merrill Lynch, Pierce, Fenner & Smith (S.D.Ga.1990) 738 F.Supp. 515, 518-519, and cases cited therein.) Although Doers phrased the issue as one of waiver, we more recently characterized the critical issue there as whether a party's filing of a lawsuit in the face of an agreement to arbitrate was conduct so inconsistent with the exercise of the right to arbitration as to constitute an abandonment of that right. ( Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th at p. 318, 24 Cal.Rptr.2d 597, 862 P.2d 158.) In finding that the filing of a lawsuit, without more, does not result in a waiver (and is not so inconsistent with the exercise of the right to arbitration as to constitute an abandonment of that right), Doers disapproved several Court of Appeal decisions that had misinterpreted other precedents holding only that waiver occurs when the parties have litigated the merits of the arbitrable dispute. ( Doers, supra, 23 Cal.3d at pp. 185-188, 151 Cal.Rptr. 837, 588 P.2d 1261.) Doers reiterated the rule that a waiver generally does not occur where the arbitrable issues have not been litigated to judgment. ( Id. at p. 188, 151 Cal.Rptr. 837, 588 P.2d 1261.) Here, PacifiCare did not initiate the instant Fresno action, in which it seeks to compel arbitration. PacifiCare did, however, initiate the Los Angeles action to have the June 2000 HSA declared void ab initio and to enforce its rights under the 1994 HSA, a contract that contains no arbitration clause and that allegedly governs the parties' rights and obligations if the June 2000 HSA were to be found unenforceable. Significantly, Saint Agnes's arbitrable causes of action have not been litigated to judgment or judicially addressed on their merits. Consistent with Doers, we conclude that PacifiCare's mere filing of the Los Angeles action did not constitute a waiver of its right under the June 2000 HSA to seek arbitration in this Fresno action. (Accord, American Recovery Corp. v. Computerized Thermal Imaging, Inc. (4th Cir.1996) 96 F.3d 88, 95-96; Lawrence v. Comprehensive Business Services Co. (5th Cir.1987) 833 F.2d 1159, 1164-1165; cf. Christensen v. Dewor Developments, supra, 33 Cal.3d at pp. 783-784, 191 Cal.Rptr. 8, 661 P.2d 1088 [waiver found where plaintiff knew of existence of arbitration clause and arbitrability of its claims, but filed suit without first demanding arbitration and pursued litigation through several demurrers for admitted purpose of obtaining verified pleadings from defendants that would reveal their legal theories, resulting in lost evidence].) Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 95 Cal.Rptr. 53, 484 P.2d 1397 ( Charles J. Rounds ) does not compel us to hold otherwise. In that case, the trial court had dismissed a plaintiff employer's contract action against a defendant union on the ground that the dispute at issue was covered by an arbitration clause in the agreement. As relevant here, the issue presented was whether the relief granted was proper in this case  dismissal of the action  or whether a stay of judicial proceedings pending arbitration should have been granted. ( Charles J. Rounds, supra, 4 Cal.3d at p. 894, 95 Cal.Rptr. 53, 484 P.2d 1397.) We upheld the dismissal, observing that the only matter in dispute came within the scope of the arbitration clause, that the plaintiff had never attempted to pursue its arbitration remedy despite the defendant's efforts to obtain arbitration, and that because the plaintiff sought relief that traditionally was within an arbitrator's power to award, dismissal of the action, rather than a mere stay of proceedings, was proper. ( Id. at p. 899, 95 Cal.Rptr. 53, 484 P.2d 1397.) Saint Agnes appears to read Charles J. Rounds as precluding any party who repudiates arbitration by filing a lawsuit from ever enforcing its contractual arbitration rights. In particular, Saint Agnes relies on a passage in Charles J. Rounds stating that where the only issue litigated is covered by the arbitration clause, and where plaintiff has not first pursued or attempted to pursue his arbitration remedy, it should be held that ... plaintiff has impliedly waived his right to arbitrate. ( Charles J. Rounds Co., supra, 4 Cal.3d at p. 899, 95 Cal.Rptr. 53, 484 P.2d 1397.) Preliminarily we observe that, to the extent the foregoing passage can be read to suggest that a party may waive its right to arbitration merely by filing a lawsuit without first requesting arbitration, our holding to the contrary in Doers, supra, 23 Cal.3d 180, 151 Cal.Rptr. 837, 588 P.2d 1261, controls. (See Kalai v. Gray, supra, 109 Cal.App.4th at p. 774, 135 Cal.Rptr.2d 449.) But Charles J. Rounds held only that dismissing the judicial action there, as opposed to staying it, was appropriate because the sole issue in dispute was properly subject to arbitration. Viewed in context, Charles J. Rounds provides no support for denying arbitration of arbitrable claims in an action where, as here, the party seeking arbitration did not file the lawsuit in which arbitration is sought, but had initiated a separate lawsuit containing nonarbitrable causes of action. [5] (See Charles J. Rounds, supra, 4 Cal.3d at pp. 898-899, 95 Cal.Rptr. 53, 484 P.2d 1397.) Nor can Saint Agnes credibly claim that PacifiCare waived its contractual right to arbitration by unequivocally refusing to arbitrate. (See Local 659, I.A.T.S.E. v. Color Corp. of Amer. (1956) 47 Cal.2d 189, 302 P.2d 294 [waiver and repudiation found where plaintiff refused defendant's repeated demands to comply with a contractual arbitration clause].) As the record discloses, Saint Agnes never requested arbitration of the Fresno and the Los Angeles actions; Saint Agnes, in fact, rebuffed PacifiCare's informal request and offer to arbitrate before the instant petition to compel arbitration was filed.