Opinion ID: 1160537
Heading Depth: 3
Heading Rank: 2

Heading: Jury Trial Under the California Constitution

Text: (4) Plaintiffs contend that if, as we hold above, section 4 of the USAA does not apply in California courts, then the California statutes (sections 1281.2 and 1290.2) must be construed to mandate the trial court make only a preliminary determination of sufficiency of evidence to void the arbitration agreement, with a jury trial of the issue to follow if the evidence of fraud is deemed sufficient. Plaintiffs maintain that allowing the court finally to decide whether the arbitration agreement is void for fraud would deprive them of their state constitutional rights to due process and a jury trial. (Cal. Const., art. I, §§ 7, 16.) We find no violation of state constitutional rights in the summary procedure for decision, without a jury, of whether a valid arbitration agreement exists. A petition to compel arbitration `is in essence a suit in equity to compel specific performance of a contract.' ( Spear v. California State Auto. Assn. (1992) 2 Cal.4th 1035, 1040 [9 Cal. Rptr.2d 381, 831 P.2d 821]; Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479 [121 Cal. Rptr. 477, 535 P.2d 341]; Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, 347 [182 P.2d 182].) Because actions for specific performance were not recognized at common law, the California Constitution does not guarantee the parties to such a proceeding a jury trial. ( Hastings v. Matlock (1985) 171 Cal. App.3d 826, 835 [217 Cal. Rptr. 856].) Moreover, [t]he fact that in an action for specific performance of an agreement the court must determine the existence of the agreement does not itself transform the action into one at law. ( Ibid. ; Walton v. Walton (1995) 31 Cal. App.4th 277, 288 [36 Cal. Rptr.2d 901].) Under these principles, plaintiffs are not constitutionally entitled to a jury trial on whether the arbitration agreements should be specifically enforced, including the question whether they are void for fraud. The petition for an order of arbitration here was not a new, independent action; rather, it was filed in response to a complaint seeking, among other forms of relief, money damages, and was coupled with a request that litigation of the complaint be stayed pending completion of the arbitration. Plaintiffs therefore compare this case to those in which a plaintiff's release of liability is raised as a defense in an action for damages from personal injury. In such cases courts have held the issue of fraud in the inception or inducement of the release is for the jury in the underlying action. ( Palmquist v. Mercer (1954) 43 Cal.2d 92, 100 [272 P.2d 26]; Frusetta v. Hauben (1990) 217 Cal. App.3d 551, 558-560 [266 Cal. Rptr. 62].) Neither of the cited decisions, however, considered any constitutional issue; the question was simply whether, under the particular facts of the case, the trial court properly removed an issue of fraud from the jury by an order for nonsuit ( Palmquist ) or summary judgment ( Frusetta ). Neither stands for the proposition the Legislature is constitutionally barred from establishing a nonjury procedure for deciding whether to order specific enforcement of a particular type of contractual agreement. Plaintiffs also compare sections 1281.2 and 1290.2 to various statutes creating barriers to pleading specific causes of action or claims for damages. (E.g., Code Civ. Proc., §§ 425.13 [punitive damages against health care provider], 425.14 [punitive damages against religious corporation], 425.16 [SLAPP (strategic lawsuits against public participation) suits], Civ. Code, § 1714.10 [action for civil conspiracy against attorney for conspiring with client to contest or compromise dispute].) This court and the Courts of Appeal, noting the potential deprivation of jury trial that might result were these statutes construed to require the plaintiff first to prove the specified claim to the trial court, have instead read the statutes as requiring the court to determine only if the plaintiff has stated and substantiated a legally sufficient claim. (See, e.g., College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 719 [34 Cal. Rptr.2d 898, 882 P.2d 894] [Code Civ. Proc., § 425.13]; Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal. App.4th 855, 866-867 [44 Cal. Rptr.2d 46] [Code Civ. Proc., § 425.16]; Hung v. Wang (1992) 8 Cal. App.4th 908, 926-934 [11 Cal. Rptr.2d 113] [Civ. Code, § 1714.10].) Plaintiffs' reliance on these decisions is misplaced. Under the cited statutes, the trial court is charged with making a preliminary determination as to the merit of the plaintiff's proposed cause of action or claim for punitive damages. In deciding an application to compel, in contrast, the superior court does not decide whether the plaintiff's causes of action have merit, although some factual questions considered in deciding the application may overlap those raised by the plaintiff's claims for relief. The only question implicated by the petition to compel arbitration is whether the arbitration agreements should be specifically enforced. As we have already seen, plaintiffs are not constitutionally entitled to a jury trial on that question. The plaintiff is not impermissibly denied a jury trial when the superior court decides only the facts necessary to determine specific enforceability of an arbitration agreement, an equitable question as to which no jury trial right exists. In support of their claim the summary procedure of sections 1281.2 and 1290.2 deprives them of due process, plaintiffs asset the hearing and determination of a petition to compel could take place early on in the proceedings, without the opportunity for discovery. Plaintiffs do not, however, assert they actually had insufficient time to conduct discovery before hearing of the petition, or that they sought and were refused discovery of any matter pertinent to the enforceability of the arbitration clause. Plaintiffs, of course, have full access to, and have made full use of, their own recollections of the transactions, the principal evidence upon which their claim of fraud in inception of the arbitration agreement is based. GWFSC has provided pertinent written evidence (the client agreements and other account forms), as well as declarations of its representatives, in support of its petition. These circumstances do not establish plaintiffs have been unfairly denied discovery of anything they need to oppose the petition to compel arbitration. We therefore conclude the summary procedure established by sections 1281.2 and 1290.2 does not violate the cited provisions of the California Constitution. A party opposing contractual arbitration of a dispute does not have the right to a jury trial of the existence or validity of the arbitration agreement. (5) Instead, when a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement  either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see § 1281.2, subds. (a), (b))  that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense. ( Strauch v. Eyring, supra, 30 Cal. App.4th at p. 186.) Defendants urge us to hold a party opposing arbitration must show fraud not only by a preponderance of evidence, but by clear and convincing evidence. We are not persuaded such a rule does or should exist. Except as the law otherwise provides, the burden of proof is by a preponderance of the evidence. (Evid. Code, § 115.) Section 1281.2, which sets forth the bases for granting or denying an application to compel, neither states nor suggests any other burden of proof. We have, moreover, previously rejected the suggestion that allegations of fraud, in a civil action, must be proven by clear and convincing evidence. ( Liodas v. Sahadi (1977) 19 Cal.3d 278, 286-291 [137 Cal. Rptr. 635, 562 P.2d 316].) Defendants' invocation of the general policy favoring enforcement of valid arbitration agreements is insufficient to warrant imposing a higher burden on a party opposing arbitration, especially when the existence and enforceability of the agreement to arbitrate is the very issue before the trial court.