Court Opinion

ID: 2812111
Source: CourtListenerOpinion
Date Created: 2015-06-25 23:03:04.229486+00
Date Added: 2024-06-11T09:32:39.052671
License: Public Domain

Filed 6/25/15 Tong v. Orange Coast Mem. Med. Center 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                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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 This opinion has not been certified for publication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 THREE

JONATHAN TONG et al.,

     Plaintiffs and Respondents,                                       G050038

         v.                                                            (Super. Ct. No. 30-2012-00542508)

ORANGE COAST MEMORIAL                                                  OPINION
MEDICAL CENTER,

     Defendant and Appellant.

                   Appeal from an order of the Superior Court of Orange County, Elizabeth K.
Eagleson, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed.
                   Foley & Lardner, Tami S. Smason and Sonia Salinas for Defendant and
Appellant.
                   Younesi & Yoss, John D. Younesi and Jan A. Yoss for Plaintiffs and
Respondents.
                                          *                  *                  *
              Plaintiffs and respondents Jonathan Tong, Wynnson Tom, Thomas Nguyen,
and James Chang (collectively, Plaintiffs) sued defendant and appellant Orange Coast
Memorial Medical Center (Orange Coast) as third party beneficiaries under a contract
Orange Coast entered into with another party. Orange Coast moved to compel Plaintiffs
to arbitrate their breach of contract claim, arguing Plaintiffs are bound by the arbitration
provision in Orange Coast’s contract with the other party “to the extent that Plaintiffs
claim to be third party beneficiaries to this contract.” Orange Coast, however, denied
Plaintiffs were third party beneficiaries under the contract or that it had any contractual
relationship with Plaintiffs. Based on our decision in Brodke v. Alphatec Spine, Inc.
(2008) 160 Cal. App. 4th 1569 (Brodke), the trial court denied the motion because Orange
Coast failed to affirmatively allege an arbitration agreement existed between it and
Plaintiffs.
              In Brodke, this court concluded Code of Civil Procedure section 1281.2’s
plain language requires a party moving to compel arbitration to affirmatively allege an
agreement to arbitrate exists between the parties.1 We explained a defendant moving to
compel arbitration cannot meet this burden by simply arguing the plaintiff either admitted
an arbitration agreement existed or cannot deny its existence because the plaintiff’s
claims are based on a contract that included an arbitration provision. Arbitration is a
matter of contract and a motion to compel arbitration essentially is an action in equity to
specifically enforce an arbitration agreement. Accordingly, a party cannot specifically
enforce an arbitration agreement and simultaneously deny it has any contractual
relationship with the party it seeks to compel into arbitration.
              We also reject Orange Coast’s contention Plaintiffs agreed to arbitration by
signing a separate contract with another party that incorporates the contract containing
the arbitration provision on which Orange Coast relied in making its motion.

       1      All statutory references are to the Code of Civil Procedure.

                                              2
Incorporating a provision from another contract requires a clear and unequivocal
reference to that contractual provision. The contract Plaintiffs signed, however,
ambiguously states it incorporates “pertinent portions” of Orange Coast’s contract
without referring to arbitration or specifying which portions it incorporated. That is
insufficient. We therefore affirm the trial court’s decision to deny arbitration.

                                                I

                               FACTS AND PROCEDURAL HISTORY

                  Orange Coast is a general acute care hospital located in Fountain Valley,
California. In 2000, Magdi Sidhom, M.D., and Orange Coast entered into the “Exclusive
Professional Services Agreement” (Exclusive Services Agreement), making Sidhom the
exclusive provider of anesthesiology services at the hospital. The Exclusive Services
Agreement authorized Sidhom to hire other anesthesiologists to work at Orange Coast,
but required those anesthesiologists to contract with Sidhom. Under the Exclusive
Services Agreement, Sidhom controlled all scheduling, billing, and other administrative
matters concerning anesthesiology services at Orange Coast. The Exclusive Services
Agreement also included an arbitration provision stating, “Any Controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be settled by a
single arbitrator in arbitration at Los Angeles, California, administered by the American
Arbitration Association under its Commercial Arbitration Rules, and judgment on any
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. . . .”
                  Plaintiffs each entered into a separate “Anesthesiology Services
Agreement” (Anesthesiology Agreement) with Sidhom to become a staff member eligible
to provide anesthesiology services at Orange Coast. Under the Anesthesiology
Agreement, each Plaintiff agreed to provide services as an independent contractor and
accept payment from Sidhom based on a “pooled income methodology.” The

                                                3
Anesthesiology Agreement repeatedly referred to the Exclusive Services Agreement and
incorporated by reference the “pertinent portions” that were purportedly attached as
Exhibit “A,” but no portions of the Exclusive Services Agreement are attached to the
copies of the Anesthesiology Agreement included in the record and nothing purports to
identify which portions of the Exclusive Services Agreement were to be attached. The
Anesthesiology Agreement did not include an arbitration provision.
              In 2011, Plaintiffs and others noticed irregularities in the compensation
they received from Sidhom. When Plaintiffs confronted Sidhom, he allegedly
acknowledged he had been taking more than he was entitled from the pool of funds he
received for Plaintiffs’ services. In response, Plaintiffs negotiated with Sidhom and
Orange Coast for repayment of the funds, and for a new compensation structure. When
these negotiations were unsuccessful, Sidhom and Orange Coast either terminated
Plaintiffs’ rights to provide anesthesiology services at Orange Coast or forced them to
relinquish those rights.
              In February 2012, Plaintiffs filed this action against Sidhom, Orange Coast,
Orange Coast’s chief executive officer, and others alleging a conspiracy to steal money
from Plaintiffs and the other anesthesiologists who worked at Orange Coast. After
several rounds of demurrers and summary adjudication motions, the trial court granted
Plaintiffs leave to file a fifth amended complaint to add a breach of contract claim against
Orange Coast. In that claim, Plaintiffs alleged they were third party beneficiaries under
the Exclusive Services Agreement and Orange Coast was a “third party obligor” under
the Anesthesiology Agreement. According to Plaintiffs, Orange Coast breached both
agreements by terminating their rights to work at Orange Coast without cause and in
retaliation for Plaintiffs complaining about Sidhom’s thefts. Plaintiffs seek to recover the
compensation they would have received if they continued to work at Orange Coast and

                                             4
their attorney fees based on the attorney fee clauses in the Exclusive Services Agreement
and the Anesthesiology Agreement.2
              Orange Coast moved to compel Plaintiffs to arbitrate their new breach of
contract cause of action based on the Exclusive Services Agreement’s arbitration
provision. In making the motion, Orange Coast denied Plaintiffs were third party
beneficiaries under the Exclusive Services Agreement and that it was a third party obligor
under the Anesthesiology Agreement. Nonetheless, Orange Coast argued Plaintiffs must
arbitrate their breach of contract claim because they based their claim on the Exclusive
Services Agreement, and therefore equitable estoppel prevented them from refusing to
arbitrate under that agreement’s arbitration provision.
              The trial court denied the motion on two grounds. First, because Orange
Coast denied it had a contractual relationship with Plaintiffs and that Plaintiffs were third
party beneficiaries under the Exclusive Services Agreement, Orange Coast failed to
allege an arbitration agreement existed between Plaintiffs and Orange Coast. Second, the
court found ordering Plaintiffs to arbitrate their breach of contract claim may lead to
conflicting rulings on legal or factual issues common to the claims against the other
defendants.3 (See § 1281.2, subd. (c).) Orange Coast timely appealed.

       2     Plaintiffs remaining causes of action against Orange Coast and the other
defendants are not at issue on this appeal.
       3      We do not address whether the trial court properly denied the motion to
compel arbitration on this second ground because our conclusion Orange Coast failed to
affirmatively allege an arbitration agreement between it and Plaintiffs renders this issue
moot.

                                              5
                                               II

                                         DISCUSSION

A.      Basic Legal Principles on Compelling Arbitration
              California has a strong public policy favoring arbitration as a speedy and
relatively inexpensive means of dispute resolution. Arbitration, however, is a matter of
contract. (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal. App. 4th 50, 59
(Avery).) “The ‘“‘“‘. . . policy favoring arbitration cannot displace the necessity for a
voluntary agreement to arbitrate.’” [Citation.] “Although ‘[t]he law favors contracts for
arbitration of disputes between parties’ [citation], ‘“there is no policy compelling persons
to accept arbitration of controversies which they have not agreed to arbitrate. . . .”’
[Citations.]”’ [Citation.] ‘Absent a clear agreement to submit disputes to arbitration,
courts will not infer that the right to a jury trial has been waived.’”’” (Ibid., original
italics.)
              Section 1281.2 therefore requires a trial court to grant a motion to compel
arbitration “if [the court] determines that an agreement to arbitrate the controversy
exists.” (§ 1281.2.) The party seeking to compel arbitration has the initial burden to
allege and prove the existence of a valid, written arbitration agreement that applies to the
dispute. Once that burden is satisfied, the party opposing arbitration must prove by a
preponderance of the evidence any defense to the arbitration agreement’s enforcement.
(Ibid.; Avery, supra, 218 Cal.App.4th at p. 59; Brodke, supra, 160 Cal.App.4th at
p. 1574.)
              “‘There is no uniform standard of review for evaluating an order denying a
motion to compel arbitration. [Citation.] If the court’s order is based on a decision of
fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the
court’s denial rests solely on a decision of law, then a de novo standard of review is
employed. [Citations.]’ [Citation]” (Avery, supra, 218 Cal.App.4th at p. 60.) Here,

                                               6
there are no disputed factual issues, and therefore we review the trial court’s ruling
de novo. (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003)
109 Cal. App. 4th 1705, 1715-1716 (Metalclad).)

B.     Orange Coast Failed to Affirmatively Allege an Arbitration Agreement Existed
       With Plaintiffs
               Orange Coast contends the trial court erred by concluding Orange Coast
failed to meet its burden to allege the existence of an arbitration agreement. According to
Orange Coast, it satisfied its burden by alleging Plaintiffs based their breach of contract
claim on the Exclusive Services Agreement and that agreement included an arbitration
provision. We disagree because Orange Coast misconstrues its burden as the party
moving to compel arbitration.
               In Brodke, this court examined section 1281.2’s requirement that a party
allege and prove the existence of a valid arbitration agreement before it may compel
arbitration. There, four plaintiffs sued a medical device manufacturer to recover royalties
under a product development agreement, and the manufacturer moved to compel
arbitration based on an arbitration provision in the agreement. In doing so, the
manufacturer expressly “‘contest[ed] the existence or validity’” of any written agreement
with the plaintiffs, but nonetheless argued the plaintiffs must arbitrate their claims
because the plaintiffs based their claims on an agreement that included an arbitration
provision. (Brodke, supra, 160 Cal.App.4th at pp. 1572-1573, italics omitted.) The trial
court denied the motion because the manufacturer failed to “‘“allege the existence of a
written agreement to arbitrate a controversy”’” as required by section 1281.2.4 (Brodke,
at p. 1573.)

       4      Section 1281.2 provides, “On 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

                                              7
              The Brodke court affirmed, concluding a party could not simultaneously
seek to enforce a contract’s arbitration provision and deny that contract’s existence.
(Brodke, supra, 160 Cal.App.4th at pp. 1571, 1575.) As we explained, section 1281.2’s
plain language requires a party moving to compel arbitration to affirmatively “‘allege[]
the existence of a written agreement to arbitrate’” because a motion to compel arbitration
is “‘is in essence a suit in equity to compel specific performance of a contract.’” (Brodke,
at pp. 1571, 1574.) The motion therefore serves the function of a complaint for specific
performance, and the moving party fails to state a cause of action unless it alleges the
existence of an agreement to arbitrate. (Id. at p. 1575.) By contesting “‘the existence or
validity’” of any written agreement with the plaintiffs, the manufacturer “failed to satisfy
the most basic statutory prerequisite to granting the [motion to compel arbitration]—to
allege the existence of a written agreement to arbitrate.” (Id. at p. 1574.)
              In reaching this conclusion, we rejected the manufacturer’s contention it
was not required to allege the existence of a written arbitration agreement because the
allegations of the plaintiffs’ complaint admitted the agreement existed. We explained the
allegations in one party’s pleading cannot satisfy the burden of another party to allege
every element of its claim. Moreover, although the “plaintiffs’ admissions [in their
complaint] are an appropriate means by which the existence of an agreement may be
proved, there is simply no reason to prove anything until the moving party alleges the
existence of that which is to be proved.” (Brodke, supra, 160 Cal.App.4th at p. 1575.)
Indeed, regardless of the basis for a plaintiff’s claims, a motion to compel arbitration
must be denied if the moving party fails to affirmatively allege an arbitration agreement
exists between the plaintiff and the defendant. (Id. at p. 1571.)

controversy exists, unless it determines [a defense to enforcement exists].” (Italics
added.)

                                              8
              Here, Orange Coast failed to satisfy this “most basic statutory prerequisite
to granting [a motion to compel arbitration].” (Brodke, supra, 160 Cal.App.4th at
p. 1574.) Orange Coast alleged that the Exclusive Services Agreement between it and
Sidhom included an arbitration provision. But Orange Coast also alleged Plaintiffs are
not parties to the Exclusive Services Agreement and are not third party beneficiaries
entitled to any benefits under that agreement. Thus, Orange Coast alleged an arbitration
agreement existed, but not between it and Plaintiffs. Like the manufacturer in Brodke,
Orange Coast sought to satisfy its burden by pointing to the allegations Plaintiffs made in
their breach of contract claim and alleging “to the extent that Plaintiffs claim to be third
party beneficiaries to [the Exclusive Services Agreement], they must be similarly bound
by the contract’s arbitration provision.” Reliance on Plaintiffs’ allegations, however,
fails to satisfy Orange Coast’s burden to affirmatively allege it had an arbitration
agreement with Plaintiffs. Simply put, by denying the existence of any contractual
relationship with Plaintiffs, Orange Coast cannot satisfy its burden.
              Orange Coast emphasizes the moving party in Brodke claimed the
agreement that included the arbitration provision was invalid, but here Orange Coast does
not contest the validity of the Exclusive Services Agreement and its arbitration provision.
This argument misconstrues Brodke and the burden section 1281.2 imposes on the
moving party to allege the existence of an agreement to arbitrate. To meet its burden,
Orange Coast must allege the existence of an arbitration agreement between the parties
subject to the arbitration provision. As explained above, arbitration is a matter of
contract (Avery, supra, 218 Cal.App.4th at p. 59), and therefore a party cannot be sent to
arbitration unless there is an arbitration agreement between that party and the party
seeking to compel arbitration. Although Orange Coast alleged an arbitration agreement
existed, it also alleged Plaintiffs are not parties to that agreement and are not third party
beneficiaries under it.

                                               9
              Contrary to Orange Coast’s contention, our interpretation of Brodke does
not require a party to “concede that an arbitrable claim is meritorious in order to succeed
in a motion to compel arbitration.” A defendant seeking to compel arbitration remains
free to deny liability by arguing it did not breach the contract, it did not cause the
plaintiff’s damages, the plaintiff did not suffer any damages, and any other applicable
defense. The only contention the defendant cannot make is that no contractual
relationship exists between the parties because that contention prevents the defendant
from satisfying its burden under section 1281.2 to affirmatively allege an arbitration
agreement existed between the defendant and the plaintiff.
              Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010)
186 Cal. App. 4th 696 (Molecular Analytical), illustrates this distinction. There, the
plaintiff sued two defendants based on a licensing agreement it entered into with one
defendant, who then assigned the agreement to the second defendant. Both defendants
moved to compel arbitration based on an arbitration provision in the licensing agreement.
(Id. at pp. 701-702.) Citing Brodke, the plaintiff opposed the motion by arguing the
defendants failed to meet their burden to allege and prove the existence of an arbitration
agreement because the defendants denied all of the plaintiff’s claims. (Molecular
Analytical, at p. 709.) The Molecular Analytical court rejected this argument, explaining
the defendants in its case did not dispute the existence of the licensing agreement in
moving to compel arbitration. (Id. at p. 710.) Because the Molecular Analytical
defendants simply denied they were liable to the plaintiff, the court concluded the facts in
its case were “entirely dissimilar” to those in Brodke. (Molecular Analytical, at p. 710.)
              Moreover, Brodke points out that requiring a party moving to compel
arbitration to affirmatively allege the existence of an agreement to arbitrate does not
require that party to surrender any defense it may have to the underlying action. (Brodke,
supra, 160 Cal.App.4th at p. 1576.) Indeed, section 1281.2’s pleading requirement does
not prevent a party from challenging the existence of a contractual relationship; it merely

                                              10
requires the party to do so in court because denying the existence of a contractual
relationship is inconsistent with arbitration’s contractual nature.

C.     Equitable Estoppel Did Not Relieve Orange Coast of Its Burden to Affirmatively
       Allege the Existence of an Arbitration Agreement
              Orange Coast contends the trial court erroneously denied the motion to
compel arbitration because Plaintiffs based their breach of contract claim on a contract
containing an arbitration provision—the Exclusive Services Agreement—and therefore
Plaintiffs were equitably estopped from refusing to arbitrate that claim. We disagree.
Although the equitable estoppel doctrine generally may be applied to enforce arbitration
agreements against nonsignatories, it does not excuse Orange Coast from its statutory
burden to affirmatively allege an arbitration agreement existed between it and Plaintiffs.
              When it applies, the equitable estoppel doctrine provides an exception to
the general rule that “‘one must be a party to an arbitration agreement to be bound by it or
invoke it.’” (Molecular Analytical, supra, 186 Cal.App.4th at p. 706.) Under this
doctrine, “a nonsignatory ‘is estopped from avoiding arbitration if it knowingly seeks the
benefits of the contract containing the arbitration clause.’” (Crowley Maritime Corp. v.
Boston Old Colony Ins. Co. (2008) 158 Cal. App. 4th 1061, 1070.) “‘The fundamental
point . . . is that [a party is] not entitled to make use of the [contract containing an
arbitration clause] as long as it worked to her advantage, then attempt to avoid its
application in defining the forum in which her dispute . . . should be resolved.’
[Citation.] The doctrine thus prevents a party from playing fast and loose with its
commitment to arbitrate, honoring it when advantageous and circumventing it to gain
undue advantage.” (Metalclad Corp., supra, 109 Cal.App.4th at p. 1714.)
              Orange Coast cites several cases acknowledging equitable estoppel may
allow a nonsignatory defendant to enforce an arbitration agreement against a signatory
plaintiff, and a signatory defendant to enforce an arbitration agreement against a
nonsignatory plaintiff. (See, e.g., JSM Tuscany, LLC v. Superior Court (2011)

                                               11
193 Cal. App. 4th 1222, 1236-1241 [acknowledging potential application of equitable
estoppel, but remanding because appellate record lacked sufficient evidence to show
equitable estoppel applied]; Molecular Analytical, supra, 186 Cal.App.4th at pp. 714-717
[allowing nonsignatories to enforce arbitration agreement based on equitable estoppel];
Goldman v. KPMG, LLP (2009) 173 Cal. App. 4th 209, 220-221, 229-234 [acknowledging
equitable estoppel may be relied upon to enforce arbitration agreement against
nonsignatory, but declining to do so on facts of case]; Rowe v. Exline (2007)
153 Cal. App. 4th 1276, 1286-1290 [allowing nonsignatories to enforce arbitration
agreement based on equitable estoppel].)
              None of these cases, however, addressed section 1281.2’s requirement that
the party moving to compel arbitration must affirmatively allege the existence of an
arbitration agreement that applies to the parties. More importantly, none of these cases
involved a moving party who sought to compel arbitration despite denying the party
allegedly subject to arbitration had any contractual relationship with the moving party.
              In contrast, Brodke addressed both section 1281.2’s pleading requirement
and equitable estoppel. As explained above, the Brodke defendant moved to compel
arbitration while simultaneously denying it had any contractual relationship with the
plaintiffs. (Brodke, supra, 160 Cal.App.4th at pp. 1572-1573.) The defendant argued it
did not have to allege the existence of an arbitration agreement between the parties
because the plaintiffs based all their claims on a contract that included an arbitration
clause, and therefore the plaintiffs were equitably estopped from avoiding arbitration.
The trial court denied the motion and this court affirmed because section 1281.2’s
requirement to affirmatively allege the existence of an arbitration agreement between the
parties is a pleading burden the moving party must satisfy to put the motion to compel
arbitration at issue. Without an affirmative allegation that an arbitration agreement exists
between the parties, the court never reaches the question whether the opposing party
either has admitted the agreement’s existence or is equitably estopped from denying its

                                             12
existence. As the Brodke court explained, nothing in the cases relying on equitable
estoppel to enforce an arbitration agreement allows “a party petitioning to enforce an
arbitration clause [to] simultaneously deny the existence of the very contract sought to be
enforced,” or “excuse[s] the statutory requirement that a party seeking to compel
arbitration must affirmatively allege the existence of a written arbitration agreement.”
(Brodke, at p. 1575.)
              We follow Brodke and conclude Orange Coast may not rely on equitable
estoppel to excuse its failure to affirmatively allege the existence of an agreement to
arbitrate between it and Plaintiffs. By definition, equitable estoppel is an equitable
doctrine with fairness as its linchpin. Orange Coast fails to explain how equity or
fairness requires the trial court to enforce the arbitration provision in the Exclusive
Services Agreement against Plaintiffs when Orange Coast alleges Plaintiffs are neither
parties to that agreement nor third party beneficiaries with any rights under it. (See City
of Hope v. Bryan Cave, L.L.P. (2002) 102 Cal. App. 4th 1356, 1370 [declining to apply
equitable estoppel to allow nonsignatory to enforce arbitration agreement because
moving party failed to explain how fairness required enforcement of the agreement].)

D.     Plaintiffs Did Not Agree to Arbitration by Entering Into the Anesthesiology
       Agreement
              Regardless whether it may directly enforce the Exclusive Services
Agreement’s arbitration clause against Plaintiffs, Orange Coast contends the trial court
erred in denying the motion to compel arbitration because Plaintiffs concede they signed
the Anesthesiology Agreement, and that agreement repeatedly refers to and incorporates
by reference the Exclusive Services Agreement and its arbitration clause. According to
Orange Coast, Plaintiffs therefore agreed to arbitrate their claims by signing the
Anesthesiology Agreement. We disagree.
              “[A]n agreement need not expressly provide for arbitration, but may do so
in a secondary document which is incorporated by reference . . . .” (Chan v. Drexel

                                             13
Burnham Lambert, Inc. (1986) 178 Cal. App. 3d 632, 639 (Chan).) “‘“But each case must
turn on its facts. [Citation.] For the terms of another document to be incorporated into
the document executed by the parties the reference must be clear and unequivocal, the
reference must be called to the attention of the other party and he must consent thereto,
and the terms of the incorporated document must be known or easily available to the
contracting parties.”’” (Id. at p. 641, italics omitted; see Troyk v. Farmers Group, Inc.
(2009) 171 Cal. App. 4th 1305, 1331; Baker v. Osborne Development Corp. (2008)
159 Cal. App. 4th 884, 895.)
              In Chan, the defendant was a securities brokerage firm that employed the
plaintiff as a stockbroker. During her employment, the plaintiff signed a uniform
application to register with the National Association of Securities Dealers, the American
Stock Exchange, and the New York Stock Exchange (NYSE). The application stated the
plaintiff “‘agree[d] to abide by the Statute(s), Constitution(s), Rule(s) and By-Laws . . . of
the agency jurisdiction or organization with or to which [she submitted the application].’”
(Chan, supra, 178 Cal.App.3d at p. 636.) The NYSE’s rules required registered
stockbrokers to arbitrate any controversy arising out of their employment with a NYSE
member. (Ibid.) When the plaintiff later sued for wrongful termination, the defendant
moved to compel arbitration based on the NYSE’s arbitration rule. The trial court denied
the motion, rejecting the defendant’s argument the application the plaintiff signed
incorporated the NYSE’s arbitration rule. (Id. at pp. 636-637.)
              The Court of Appeal affirmed, explaining “‘the right to select a judicial
forum, vis-à-vis arbitration, is a “‘substantial right,’” not lightly to be deemed waived.’”
(Chan, supra, 178 Cal.App.3d at p. 643.) The Chan court found the vague reference to
“‘the Statute(s), Constitution(s), Rule(s) and By-Laws’” of any organization to which the
application was submitted did not incorporate the NYSE’s arbitration rule into the
application because the reference “failed to clearly and unequivocally refer to the

                                             14
incorporated document [that included the arbitration provision]” and nowhere mentioned
arbitration. (Id. at p. 643.)
               Here, the Anesthesiology Agreement does not bind Plaintiffs to the
Exclusive Services Agreement’s arbitration clause because the Anesthesiology
Agreement fails to clearly and unequivocally incorporate either the entire Exclusive
Services Agreement or its arbitration clause. The Anesthesiology Agreement refers to
the Exclusive Services Agreement six times, repeatedly acknowledging that Sidhom
entered into the Exclusive Services Agreement to provide anesthesiology services at
Orange Coast, that Plaintiffs “desire[]” to become members of the anesthesiology
department at Orange Coast under the Exclusive Services Agreement, and that Plaintiffs
must comply with the terms and conditions of the Exclusive Services Agreement.5 The
Anesthesiology Agreement, however, includes only one reference that purports to
incorporate the Exclusive Services Agreement, but that reference does not incorporate the
entire Exclusive Services Agreement. Instead, the reference incorporates only the
“pertinent portions” attached to the Anesthesiology Agreement. Unfortunately for

       5      The following are the six references to the Exclusive Services Agreement in
the Anesthesiology Agreement: (1) “WHEREAS, [Sidhom] has entered into an
Anesthesia Agreement with [Orange Coast], a true and correct copy of pertinent portions
of which is attached hereto and incorporated by reference as Exhibit ‘A’”;
(2) “WHEREAS, [Plaintiffs] desire[] to be . . . staff member[s] of the Anesthesia
Department of [Orange Coast], under [Sidhom’s] agreement with [Orange Coast]”;
(3) “Such services include, but are not limited to, all of the services and activities which
[Sidhom] is required to perform under the terms of the Anesthesia Agreements,
Exhibit ‘A’ hereto”; (4) “[Plaintiffs] agree[] to act at all times in the manner which
conforms to and is consistent with the spirit, terms and conditions of this Agreement and
the Anesthesia Agreement between [Sidhom] and [Orange Coast], Exhibit ‘A’ hereto”;
(5) “This Agreement may be immediately terminated by either [Sidhom] or by [Plaintiffs]
for cause, which includes, without limitation, [Plaintiffs’] breach of [their] duties under
Exhibit ‘A’”; and (6) “[Plaintiffs], at all times, shall fully comply with the requirements
imposed upon anesthesiologists by [Sidhom’s] Anesthesia Agreement with [Orange
Coast], Exhibit ‘A’ hereto, as amended and/or supplemented from time to time in the
future.”

                                            15
Orange Coast, the copy of the Anesthesiology Agreement included in the record does not
attach any portions of the Exclusive Services Agreement and Orange Coast does not
identify which portions were purportedly attached. The other references to the Exclusive
Services Agreement are not sufficient to incorporate the arbitration provision because
they only generally refer to the standards for performing under the Exclusive Services
Agreement without referring to arbitration or any other form of dispute resolution.
Accordingly, although the Anesthesiology Agreement could have incorporated the
Exclusive Services Agreement’s arbitration clause, it failed to adequately do so and
Plaintiffs therefore are not bound by it.6

                                             III
                                        DISPOSITION

              The order is affirmed. Plaintiffs shall recover their costs on appeal.

                                                   ARONSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

THOMPSON, J.

       6       Because the Anesthesiology Agreement does not adequately incorporate the
Exclusive Services Agreement’s arbitration clause, we need not decide whether that
clause, if adequately incorporated, would require Plaintiffs to arbitrate claims against
Sidhom only or both Sidhom and Orange Coast.

                                             16