Court Opinion

ID: 1085652
Source: CourtListenerOpinion
Date Created: 2013-10-17 17:18:00.993809+00
Date Added: 2024-06-11T12:51:11.297128
License: Public Domain

Filed 10/17/13 Simmons v. Avant Garde Senior Living CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION FIVE

TOBI SIMMONS et al.,                                                 B246967

         Plaintiffs and Respondents,                                 (Los Angeles County
                                                                     Super. Ct. No. BC493106)
         v.

AVANT GARDE SENIOR LIVING,

         Defendant and Appellant.

         APPEAL from an order of the Superior Court of Los Angeles County, William F.
Fahey, Judge. Reversed with directions.
         Bonne, Bridges, Mueller, O’Keefe & Nichols, David J. O’Keefe, William R.
Johnson and Vangi M. Johnson for Defendant and Appellant.
         Law Offices of Maryann P. Gallagher and Maryann P. Gallagher for Plaintiffs and
Respondents.
       Defendant, Avant Garde Senior Living, appeals from an order denying its petition
to compel arbitration. There were two grounds upon which the trial court relied in
denying the petition to compel arbitration. The first was the danger of conflicting rulings
with the results of proceedings pending against codefendants in the judicial forum. The
second ground was the trial court’s express statement that arbitration is not an efficient
means of dispute resolution. We conclude these grounds were not a proper basis for
denying the petition to compel arbitration. Thus, we reverse the order denying the
petition to compel arbitration. There were other grounds for denying the petition that the
trial court never ruled upon. Upon remittitur issuance, the parties remain free to litigate
those questions.
       The following are the pertinent provisions of the arbitration agreement: “10.
Arbitration. By entering into this Agreement, you agree that any and all claims and
disputes arising from or related to this Agreement or to your residency, care or services at
the Community shall be resolved by submission to neutral, binding arbitration, except
that any claim or dispute involving evictions or which is brought in small claims court
shall not be subject to arbitration unless both parties agree to arbitrate such proceedings.
Both parties give up their constitutional right to have any such dispute decided in a court
of law before a jury, and instead accept the use of arbitration. The arbitration shall be
conducted in Orange County, California, by a single neutral arbitrator selected in
accordance with the California Code of Civil Procedure, unless otherwise mutually
agreed. In reaching a decision, the arbitrator shall prepare findings of fact and
conclusions of law. Each party shall bear its own costs and fees in connection with the
arbitration. The arbitrator shall not have jurisdiction to consider evidence regarding or
award punitive damages. This arbitration clause binds all parties to this Agreement and
their spouse, heirs, representatives, executors, administrators, successors, and assigns, as
applicable. After termination of this Agreement, this arbitration clause shall remain in
full effect for the resolution of all claims and disputes that are unresolved as of that date.
[¶] 11. Actions Not Subject to Arbitration. Any action arising out of or related to this
Agreement that is brought by or against the Community for which arbitration is not

                                               2
allowed by law or that is excluded from arbitration under Section II.I.10 above, shall be
brought in the appropriate court before a judge.”
       There are three codefendants in this case: Adleman Tarzana Investments LLC;
Tarzana Royale LLC; and Country Villa East L.P., doing business as a Country Villa
Sheraton Nursing & Rehab Center. Two of those defendants are currently subject to
litigation in the trial court. At the hearing on the petition to compel arbitration, the trial
court began by announcing its tentative ruling: “Start with the petition to compel
arbitration brought by Avant Garde. I’m sure the parties are aware of the court’s prior
ruling on November 29th, where I declined a similar petition. I don’t think the facts are
different here. [¶] In particular, there is a substantial likelihood of conflicting factual
determinations should a piece of this case go into arbitration and the balance remain in
this court. So I’ve considered the papers. That’s my tentative. I’ll hear from counsel.”
After hearing from all counsel, the trial court ruled: “The court: I think Ms. Gallagher’s
got a right, Mr. Miletic. I’m not going to change my tentative. I think this case, more
than many than as I’ve seen, in fact – perhaps this is as much as in any case, I’ve seen
really cries out for having the resolution of this continuum of facts resolved in one forum.
And I think that it would be a recipe for the disaster, and certainly, for conflicting rulings
to have something go into arbitration, which by the way, in my experience, is now taking
a couple of years. [¶] Arbitration at one time, it was supposed to be a prompt and
expeditious way of dissolving disputes. As it turns out, that’s not the case. The cases
that, on occasion, I have sent to arbitration seem to percolate along on a three-year plan.
We get cases to trial much quicker here in this – in this courthouse, so I appreciate your
arguments, but I’m going to stick with the tentatives and the motion and/or petition to
compel arbitration will be denied.” There were other grounds asserted for invalidating
the duty to arbitrate but the trial court did not rule upon them.
       The first stated reason for denying the petition to compel arbitration is the risk of
conflicting rulings and the need for litigation to be conducted in a single forum. This
ground may not be relied upon by a state court to deny a request to arbitrate. In KPMG
LLP v. Cocchi (2011) 565 U.S. ___, ___-___ [132 S.Ct. 23, 24-26], a complaint

                                               3
contained both arbitrable and nonarbitrable claims. The Florida trial court denied the
petition to compel arbitration. The Florida appellate court affirmed finding that only two
of the four claims in the complaint were arbitrable.
       The United States Supreme Court vacated the Florida appellate court decision and
held: “In Dean Witter [Reynolds Inc. v Bird (1985) 470 U.S. 213], the Court noted that
the [Federal Arbitration] Act ‘provides that written agreements to arbitrate controversies
arising out of an existing contract “shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 470 U.S., at
218 (quoting 9 U.S.C. § 2). The Court found that by its terms, ‘the Act leaves no place
for the exercise of discretion by a district court, but instead mandates that district courts
shall direct the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed.’ 470 U.S., at 218, 105 S.Ct. 1238 (emphasis in original).
Thus, when a complaint contains both arbitrable and nonarbitrable claims, the Act
requires courts to ‘compel arbitration of pendent arbitrable claims when one of the parties
files a motion to compel, even where the result would be the possibly inefficient
maintenance of separate proceedings in different forums.’ Id., at 217.” (KPMG LLP v.
Cocchi, supra, 565 U.S. at p. ___ [132 S.Ct. at pp. 25-26]; accord Moses H. Cone
Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 20 [“the relevant federal
law requires piecemeal resolution when necessary to give effect to an arbitration
agreement”]; Allstate Ins. Co. v. Elzanaty (E.D.N.Y. 2013) ___ F.Supp.2d ___, ___ [2013
U.S. Dist. Lexis 33309, *31-32]; Askenazy v. KMPG LLP (Mass.App. 2013) 988 N.E.2d
463, 469; KPMG LLP v. Cocchi (Fla.App. 2012) 88 So.3d 327, 330; Perdido Key Island
Resort Development v. Regions Bank (Fla.App. 2012) 102 So.3d 1, 6-7.) Earlier in its
opinion, the high court stated, “The Act has been interpreted to require that if a dispute
presents multiple claims, some arbitrable and some not, the former must be sent to
arbitration even if this will lead to piecemeal litigation.” (KPMG LLP v. Cocchi, supra,
565 U.S. at p. ___ [132 S.Ct. at p. 24]; Simmons v. Morgan Stanley Smith Barney,
LLC (S.D.N.Y. 2012) 872 F.Supp.2d 1002, 1020; Waskevich v. Herold Law, P.A.

                                               4
(N.J.Super. 2013) 69 A.3d 127, 130-131; State ex rel. Johnson Controls, Inc. v.
Tucker (W.Va. 2012) 729 S.E.2d 808, 819.)
       The second stated reason for denying the motion was the trial court’s express
finding that arbitration may not be a “prompt and expeditious” way to resolve disputes.
A trial court may not exercise discretion and, as part of its analysis, base its decision on
arbitration as an inefficient means of resolving disputes. (Dean Witter Reynolds Inc. v
Bird, supra, 470 U.S. at p. 218; State ex rel. Johnson Controls, Inc. v. Tucker, supra, 729
S.E.2d at p. 819 [“[T]he FAA requires a court to enforce the bargain of the parties to
arbitrate and ‘not substitute [its] own views of economy and efficiency’ for those of
Congress.”].) Accordingly, the appropriate course is to reverse the order denying the
petition to compel arbitration. Thus, the provisions of Code of Civil Procedure section
1281.2, subdivision (c), which permit a court to deny a petition to compel arbitration, are
preempted by the Federal Arbitration Act.
       Further, this case is subject to the limited preemptive effect of the Federal
Arbitration Act. (9 U.S.C. § 2 [“transaction involving commerce”]; Allied-Bruce
Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 277 [“word ‘involving,’ like
‘affecting,’ signals an intent to exercise Congress’ commerce power to the full”].) The
United States Supreme Court has expressly held a wrongful death suit against a nursing
home was subject to the limited preemptive effect of the Federal Arbitration Act.
(Marmet Health Care Center, Inc. v. Brown (2012) 565 U.S. __, __ [132 S.Ct. 1201,
1203-1204.) Further, the complaint alleges defendant breached its obligations under title
42 United States Code sections 1396r(b)(2) and 1396r(d)(1)(A) as well as title 42 Code of
Federal Regulations section 483.25. In order to be subject to these provisions, a facility
such as defendant must receive Medicare or Medicaid funds. (42 C.F.R. § 483.1 (a)(2),
(b).) Payments of Medicare or Medicaid funds are transactions involving commerce.
(Summit Health, Ltd. v. Pinhas (1991) 500 U.S. 322, 327 [“The provision of
ophthalmological services affects interstate commerce because both physicians and
hospitals serve nonresident patients and receive reimbursement through Medicare
payments.”]; United States v. Girod (2011) 646 F.3d 304, 315 [“Medicaid, which is a

                                              5
federally funded program that indisputably affects interstate commerce.”]; Thi of New
Mexico at Hobbs Center, LLC v. Spradlin (D.N.M. 2012) 893 F.Supp.2d 1172,
1184 [receipt of Medicare funding sufficient to create jurisdiction under Federal
Arbitration Act]; Trevino v. Pechero (S.D.Tex. 2008) 592 F.Supp.2d 939, 946
[“Plaintiffs plead a nexus with interstate commerce through their and their patients’
participation in Medicare and Medicaid.”]; Miller v. Cotter (Mass. 2007) 863 N.E.2d 537,
544 [“[A]ccepting payment from Medicare, a Federal program . . . constitutes an act of
interstate commerce.”].) Thus, KMPG LLP and its progeny and the federal preference for
arbitration require the order denying the arbitration petition be reversed.
       But that does not end matters. Plaintiffs argue that: non-signatories to an
arbitration agreement may not be compelled to arbitrate; the elder abuse claim is not
subject to arbitration; and defendants waived the right to arbitrate. The trial court never
addressed any of these contentions. Upon remittitur issuance, the parties may litigate
these contentions. In addition, the parties may address whether the arbitration may be
stayed; an order which would not, at present, be subject to federal preemption. (Code
Civ. Proc., § 1281.2, subd. (c); Cronus Investments, Inc. v. Concierge Services (2005) 35
Cal.4th 376, 385-390, 394; Gravillis v. Coldwell Banker Residential Brokerage Co.
(2006) 143 Cal.App.4th 761, 784.)
       The order under review is reversed. Defendant, Avant Garde Senior Living, shall
recover its cost incurred on appeal from plaintiffs, Tobi Simmons, Annette Ginsburg and
Elsie Ginsburg individually and as successors in interest to Harold Ginsburg.
                            NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                            TURNER, P. J.

We concur:

       MOSK, J.                                          KRIEGLER, J.

                                              6