Court Opinion

ID: 4667715
Source: CourtListenerOpinion
Date Created: 2021-03-15 18:03:12.077215+00
Date Added: 2024-06-11T08:02:58.752347
License: Public Domain

Filed 3/15/21 Singh v. Santa Barbara Cottage Hospital CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX

ONKAR SINGH,                                                  2d Civ. No. B304343
                                                          (Super. Ct. No. 18CV05946)
     Plaintiff and Respondent,                              (Santa Barbara County)

v.

SANTA BARBARA COTTAGE
HOSPITAL,

     Defendant and Appellant.

      Defendant appeals an order denying its petition to compel
arbitration. The trial court denied the petition on the ground
that plaintiff is suing on a contract different than the contract
containing the arbitration agreement. We affirm.
                               FACTS
      Onkar Singh is a profusionist, a person who uses devices
outside the body to keep a patient alive during cardiac surgery.
Originally Singh was an employee of Santa Barbara Cottage
Hospital (Cottage).
                     Allied and Cottage Contract
       In October 2015, Cottage and Allied Health Resources, Inc.
(Allied) entered into a contract requiring Allied to provide all
cardiac profusion services at Cottage. The contract provides that
all profusionists would be the staff of Allied and not Cottage. The
contract also provides that Allied would hire Singh as a
profusionist on its staff and he would no longer be an employee of
Cottage.
       The contract provides that the relationship between Allied
and Cottage is nothing other than independent entities, and that
neither is the agent, employee, or representative of the other.
                      Allied and Singh Contract
       In November 2015, Singh signed a contract with Allied for
himself and for his corporation, Mesa Health Services, Inc. The
president of Allied, Kevin Saiki, signed on behalf of Allied.
       The contract provides that Singh is an independent
contractor and will not become an employee, agent, or principal of
Allied.
       The agreement contains a dispute resolution provision as
follows:
       (a) Covenant to Mediate. The Parties hereby agree and
covenant to submit all claims, controversies, differences,
demands or causes of action relating to or arising out of this
Agreement to mediation to be conducted by a mediator mutually
agreed upon by the Parties, prior to commencing an action or
arbitration of the dispute. . . .
       “(b) Arbitration. If the Parties have been unable to resolve
any claim, controversy, difference, demand or cause of action
relating to or arising out of this Agreement through the
mediation as provided by subparagraph (a), either Party may

                                2.
submit the matter to arbitration. The arbitration shall be
administered by the American Arbitration Association in
accordance with its commercial arbitration rules. Judgment on
the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
      “(c) Enforcement of Covenant to Mediate/Arbitrate. This
paragraph, including the provision for mandatory mediation, is
deemed an arbitration clause for the purpose of enforcing
compliance therewith. Any Party may seek compliance with the
provision by petition to any California court of general
jurisdiction. The prevailing Party in any proceeding to enforce
this paragraph is entitled to the court’s order for payment of
attorney fees and costs in connection with the proceeding.”
                         Original Complaint
      In December 2018, Singh filed a complaint alleging labor
law violations against Allied and Cottage and breach of contract
against Allied and Saiki. The parties, including Cottage, went
into mediation.
      Singh and Allied were able to settle most of Singh’s claims.
Singh filed a partial dismissal of his complaint. Singh and
Cottage were unable to settle any of Singh’s claims.
                     First Amended Complaint
      Singh filed a first amended complaint against only Cottage,
and not Allied or Saiki, alleging labor law violations, breach of
oral contract, fraud, negligent misrepresentation, and wrongful
termination. The first amended complaint alleges:
      In November 2017, Singh learned that Cottage would be
terminating its contact with Allied and hiring three new
profusionists who would be Cottage employees. Cottage told
Singh that it did not want Saiki being called for emergencies.

                                3.
Singh agreed to be the on-call profusionist. Saiki told Singh that
his on-call arrangement with Cottage would not be compensated
by Allied.
       On November 22, 2018, Cottage promised to hire Singh for
one of three profusionist employee positions at Cottage. Because
Singh would need to go through the formal application process,
Cottage said that it would take a few months before he could be
officially hired.
       In January 2018, Cottage hired two profusionists. Cottage
asked Singh to allow the new profusionists to shadow him and to
train them. The training was not part of Allied’s agreement with
Cottage, and Saiki informed Singh that he would not be paid for
it.
       In January or February 2018, Singh voiced concerns to
Cottage that the new profusionists were not properly trained and
were not ready to perform services without supervision. Cottage
told Singh that it expected him to train the new employees so
that there would be a smooth transition when Allied’s contract
with Cottage ended. Saiki informed Cottage that Allied would
not pay Singh for training Cottage employee profusionists.
       In February 2018, Singh complained to Cottage that he was
not being paid for the work he was doing for Cottage.
       In March 2018, Saiki met with Singh in the Cottage
employee locker room. A Cottage security guard was present.
Saiki told Singh to clear out his locker and leave Cottage escorted
by the security guard. Saiki was acting at Cottage’s direction.
       In May 2018, Cottage notified Singh that he would not be
hired as a profusionist.
       Singh alleges his employment at Cottage was terminated
and he was not hired by Cottage as a profusionist in retaliation

                                4.
for complaining about not being paid and complaining about the
competence of the new employee profusionists.
                   Petition to Compel Arbitration
      Cottage petitioned to compel arbitration. Cottage brought
the petition under the dispute resolution provision of the contract
between Allied and Singh, a contract to which Cottage is not a
signatory. Cottage argued it could compel arbitration as a
nonsignatory because (1) Singh’s causes of action against Cottage
were covered by the contract between Singh and Allied; (2)
Cottage had the right to compel arbitration as an alleged agent of
a signatory to the contract; and (3) Cottage can compel
arbitration under the doctrine of equitable estoppel.
      Singh opposed the petition on the grounds that his claims
did not relate to the agreement between Allied and himself;
Cottage and Allied were not agents of one another; and that
Singh is not equitably estopped.
      In support of Singh’s opposition, Allied’s president Saiki
provided an affidavit. Saiki declared that the arbitration
provision contained in the contract between Allied and Singh is
not intended for the benefit of Cottage; that Cottage is not a
party to the contract; and that “[Allied] does not invoke the
arbitration provision for [Singh’s] claims in this action and
disavows the arbitration provision contained in the [contract].”
                                Ruling
      The trial court concluded that Singh’s claims are not within
the contract between Allied and Singh. The court denied
Cottage’s petition to compel arbitration. Neither party requested
a statement of decision.

                                5.
                             DISCUSSION
                                    I
                           Standard of Review
       The standard of review on the scope of an arbitration
agreement in the absence of conflicting extrinsic evidence is de
novo. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1283.) The
standard of review on whether and to what extent nonsignatories
can enforce an arbitration clause is also de novo. (Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186
Cal.App.4th 696, 708.) The standard of review on questions of
fact is substantial evidence. (Robertson v. Health Net of
California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)
                                   II
          Applicability of the Federal Arbitration Act (FAA)
       Cottage contends that because the parties were engaged in
interstate commerce, the FAA applies.
       The FAA applies to arbitration agreements in transactions
involving interstate commerce. (Shepard v. Edward Mackay
Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1097.) It provides
that such agreements “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist as law or in equity
for the revocation of any contract.” (9 U.S.C. § 2.) The FAA
preempts conflicting state law. (Shepard, at p. 1097.)
       Cottage argues that it is engaged in interstate commerce.
Assuming that to be so, Cottage makes no effort in its opening
brief to show how the FAA is any different from the California
Arbitration Act (Code Civ. Proc., § 1280 et seq.) as applied to this
case. In fact, Cottage relied on California law, not the FAA, in its
briefs. It is not at all clear why Cottage raised the issue.

                                 6.
       For the first time in its reply brief, Cottage claims that
under the FAA, where an arbitration provision is broadly worded,
arbitration is required, not only for all claims relating to the
contract, but also for all claims where the underlying factual
allegations touch matters covered by the contract containing the
arbitration provision. (Citing Simula, Inc. v. Autoliv, Inc. (9th
Cir. 1999) 175 F.3d 716, 721.) But here Singh’s claims arise from
a contract entirely separate from the contract containing the
arbitration clause. Whether the FAA or California law applies,
the result is the same.
                                   III
                        Mandatory Arbitration
       Under the California Constitution, a party in a civil action
has the right to a jury trial. (Cal. Const., art. I, § 16; Grafton
Partners v. Superior Court (2005) 36 Cal.4th 944, 951.) Absent a
clear agreement to submit disputes to arbitration, courts will not
infer that the right to a jury trial has been waived. (Sparks v.
Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th
1511, 1518.) Neither California nor federal law compels a party
to arbitrate absent an agreement to do so. (Ibid.)
       Subparagraph (b) of the dispute resolution provision in
Singh’s contract with Allied provides that if the parties are
unable to resolve their dispute through mediation, “either party
may submit the matter to arbitration.” (Italics added.) Singh
argues, without citation to authority, that the use of the word
“may” means that arbitration is entirely voluntary.
       But courts have rejected Singh’s argument in construing
similar arbitration provisions. Those cases have held that “may”
means arbitration is not automatic; but where one party opts for
arbitration, the other party is bound. (See Service Employees

                                7.
Internat. Union, Local 18 v. American Building Maintenance Co.
(1972) 29 Cal.App.3d 356, 358 [“ ‘the issue in dispute may be
submitted to an impartial arbitrator’ ”]; Pacific Gas & Electric
Co. v. Superior Court (1993) 15 Cal.App.4th 576, 595 [dispute
“ ‘may be submitted by either party to arbitration’ ”].)
       The bar to Cottage’s petition to compel arbitration is not
the use of the word “may” in Singh’s contract with Allied.
Instead, the bar is that Singh’s causes of action alleged in the
first amended complaint do not arise from the Allied contract.
                                  IV
                    Enforcement by Nonsignatory
       Cottage contends it can enforce the arbitration agreement
even though it is not a signatory to the contract.
       Cottage concedes that the general rule is one must be a
party to an arbitration agreement in order to enforce it. (Suh v.
Superior Court (2010) 181 Cal.App.4th 1504, 1513.) But courts
have recognized a number of exceptions to the rule. (Ibid.)
                        (a) Equitable Estoppel
       Equitable estoppel is one exception to the rule. “Under this
exception, ‘a nonsignatory defendant may invoke an arbitration
clause to compel a signatory plaintiff to arbitrate its claims when
the causes of action against the nonsignatory are “intimately
founded in and intertwined” with the underlying contract
obligations.’ [Citation.] The doctrine applies where the claims
are ‘ “ ‘based on the same facts and are inherently inseparable’ ”
from the arbitrable claims against signatory defendants.’ ”
(Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 786.)
       Here Singh’s first amended complaint alleges an oral
contract with Cottage that required duties outside the scope of
Singh’s written contract with Allied. The allegations are not

                                8.
“intimately founded in and intertwined with” the obligations
under Singh’s contract with Allied. Nor are they based on the
same facts and are inherently inseparable from the arbitrable
claims. The complaint alleges breach of duties that Cottage alone
had under an oral contract.
       Singh’s contract with Allied provides that Singh is an
independent contractor. Nothing prevented Singh from having
separate contracts with Allied and Cottage during the same time
period. That is what Singh is alleging.
       Cottage’s argument is based on what it sees as the
similarities between the allegations of Singh’s original complaint
against both Cottage and Allied, and the allegations of the first
amended complaint against Cottage. Cottage claims that Singh
is bound by the allegations of the first amended complaint.
       But Singh has the right to amend his complaint at least
once as a matter of course. (Code Civ. Proc., § 472, subd. (a).)
Generally, when an amended pleading has been filed, the original
pleading will be disregarded. (Vallejo Development Co. v. Beck
Development Co. (1994) 24 Cal.App.4th 929, 946.) The exception
to that rule occurs when an amended complaint attempts to avoid
defects in a prior complaint by ignoring them. The court will
examine the amended pleading to ascertain whether it is a sham.
(Ibid.) Thus, in Vallejo, the exhibits attached to the complaint
and the allegations contained in the exhibits under oath showed
the amended complaint to be a sham. (Ibid.)
       Here there is no showing that Singh’s first amended
complaint is a sham. The original complaint was not verified.
Singh has the right to amend his complaint to eliminate a
defendant and to clarify that his claims are against the
remaining defendant.

                                9.
       Cottage also claims Singh is estopped because he
participated in mediation with Cottage. Cottage points out that
mandatory mediation is the first step in the dispute resolution
process contained in Allied’s contract with Singh. Cottage cites
Metalclad Corp. v. Ventana Environmental Organizational
Partnership (2003) 109 Cal.App.4th 1705, 1714, for the
proposition that a plaintiff 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.”
       But here Singh is not trying to make use of a contract
containing an arbitration clause. He is suing under an entirely
separate oral agreement containing no such clause. Even
assuming Singh's mediation with Cottage was pursuant to his
contract with Allied, Cottage cites no authority that would
compel Singh to arbitrate under an entirely separate contract
with Cottage.
                              (b) Agency
       A nonsignatory to an arbitration contract can compel
arbitration where the nonsignatory is an agent of the signatory.
(Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418.) Cottage
bases its claim of agency on the general allegation in the original
complaint that the defendants are the agents of each other.
       Cottage claims that Singh is bound by the allegations of his
original complaint. But the rule is that a plaintiff has the right
to amend his original complaint as long as the amendment is not
shown to be a sham. (Vallejo Development Co. v. Beck
Development Co., supra, 24 Cal.App.4th at p. 946.) Here Singh’s
first amended complaint was not shown to be a sham. In fact,

                                10.
Allied’s contract with Cottage expressly states that they are not
agents of each other.
       In any event, such boilerplate allegations of agency are not
judicial admissions that bind the plaintiff. (Barsegian v. Kessler
& Kessler (2013) 215 Cal.App.4th 446, 451.)
                      (c) Third Party Beneficiary
       Cottage argues that it can enforce the arbitration
agreement as a third-party beneficiary of Singh’s contract with
Allied.
       The trial court rejected the argument on the ground that
Cottage raised it for the first time in its reply papers. Cottage
claims it was responding to Saiki’s affidavit in opposition to the
petition to compel arbitration. Saiki stated that the arbitration
provision is not for the benefit of Cottage.
       Cottage relies on Jacobs v. Coldwell Banker Residential
Brokerage Co. (2017) 14 Cal.App.5th 438, 449-450. Jacobs held
the trial court did not abuse its discretion by allowing the
defendant to provide evidence in response to a new theory raised
by plaintiffs in their opposition. (Ibid.) But here the trial court
acted well within its discretion. Cottage did not raise third party
beneficiary in its petition. Singh’s claim that Cottage is not an
intended beneficiary contradicts nothing in the petition. Cottage
is claiming it is a third-party beneficiary for the first time in its
reply.
       In any event, that Cottage may benefit from the contract
between Singh and Allied does not automatically make it a third-
party beneficiary. To be a third-party beneficiary, the parties to
the contract must intend the claimant to be a third-party
beneficiary. (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524.)

                                 11.
Here Saiki’s uncontradicted affidavit shows that Cottage was not
intended to be a third-party beneficiary.
      Finally, even if Cottage is a third-party beneficiary of
Singh’s contract with Allied, Singh is suing Cottage on a different
contract.
                          DISPOSITION
      The judgment (order) is affirmed. Costs on appeal are
awarded to respondent.
      NOT TO BE PUBLISHED.

                                      GILBERT, P. J.
We concur:

             YEGAN, J.

             TANGEMAN, J.

                                12.
                   Colleen K. Stern, Judge

           Superior Court County of Santa Barbara

               ______________________________

      Sheppard, Mullin, Richter & Hampton, Daniel J. McQueen,
Melissa M. Smith, David A. Alvarez and Nova K. Stilestein for
Defendant and Appellant.
      The Myers Law Group, David P. Myers, Ann Hendrix and
Morgan J. Good for Plaintiff and Respondent.

                             13.