Court Opinion

ID: 6322045
Source: CourtListenerOpinion
Date Created: 2022-03-10 20:02:16.226124+00
Date Added: 2024-06-11T09:20:33.736244
License: Public Domain

Filed 3/10/22 Foley v. Airtouch Cellular CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

 JAMES P. FOLEY et al.,                                     B312404

           Plaintiffs and Respondents,                      (Los Angeles County
                                                            Super. Ct. No. 19STCV44376)
           v.

 AIRTOUCH CELLULAR, INC.,

           Defendant and Appellant.

     APPEAL from an order of the Superior Court of
Los Angeles County, Thomas D. Long, Judge. Affirmed.
     Wilson Elser Moskowitz Edelman & Dicker, B. Otis Felder,
and Valeria Granata, for Defendant and Appellant.
     David A. Cordier for Plaintiffs and Respondents.
                       INTRODUCTION

       James and Lou Ann Foley filed this action against Airtouch
Cellular Inc. dba Verizon Wireless (Verizon) after their Samsung
Galaxy cell phone exploded, injuring James and damaging
property in the Foleys’ home. Verizon filed a motion to compel
arbitration based on a provision in a customer agreement signed
by Lou Ann. The trial court granted the motion to compel
Lou Ann to arbitrate her claims, but denied the motion to compel
James, who did not sign the agreement, to arbitrate his. Verizon
argues the trial court should have compelled James to arbitrate
his claims because he was the account owner, Lou Ann acted as
his agent when she purchased the phone from Verizon and signed
an arbitration agreement, and James is equitably estopped from
refusing to arbitrate. Because Verizon’s arguments are forfeited
and meritless, we affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

      A.     Lou Ann Buys a Cell Phone, Which Later Explodes
      On June 15, 2014 Lou Ann bought a Samsung Galaxy cell
phone and signed up for a wireless service plan at a Verizon
store. Lou Ann signed, after the words “Customer’s Signature,” a
two-page “Verizon Wireless Customer Agreement” (the June 2014
agreement). Under the words “Customer Information,” the
document listed James’s name, home address, and home phone
number. The June 2014 agreement stated: “I agree to the
current Verizon Wireless Customer Agreement (CA), including
the calling plan . . . and other terms and conditions for services
and selected features I have agreed to purchase as reflected on

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the receipt, and which have been presented to me by the sales
rep, and which I had the opportunity to review. I understand
that I am agreeing to an early termination fee per line as
reflected on this receipt, limitations of liability for service and
equipment, settlement of disputes by arbitration and other
means instead of jury trials and other important terms in the
CA.”
       On January 18, 2018 the phone was resting on a
nightstand when it “suddenly and without warning exploded and
caught fire, injuring [James], who was reading in his bedroom.”
The explosion and fire also damaged the Foleys’ bedding and
carpeting.

      B.     The Foleys Sue Verizon, and Verizon Files a Motion
             To Compel Arbitration
      The Foleys filed this action for personal injury and property
damage against Verizon, Samsung Electronics America, Inc., and
Samsung Electronics, Co., Ltd.1 The Foleys alleged causes of
action for strict liability, negligence, and breach of warranty.
      Verizon moved to compel arbitration, relying on an
arbitration provision in the June 2014 agreement and a 10-page
document titled “My Verizon Wireless Customer Agreement” that
had a footer stating, “Customer Agreement – November 21, 2013”
(the November 2013 agreement). Although the November 2013
agreement was unsigned and made no references to James or Lou
Ann (or any customer for that matter), Verizon asserted the
November 2013 agreement was “accepted by all Verizon
customers upon activating their services” and was incorporated

1     The Samsung entities are not parties to this appeal.

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by reference in the June 2014 agreement signed by Lou Ann. The
November 2013 agreement contained an arbitration provision
that stated: “You and Verizon Wireless both agree to resolve
disputes only by arbitration or in small claims court.” The only
evidence submitted by Verizon was the declaration of LaDonna
Pratt, a senior manager with executive relations and a
“designated corporate representative” for Verizon, whose
statements that the two agreements were “between Plaintiffs and
Verizon” were without foundation and demonstrably false about
both the November 2013 agreement (which Lou Ann did not sign)
and the June 2014 agreement (which James did not sign).
      Verizon argued that Lou Ann had to arbitrate her claims
because she signed the June 2014 agreement, which contained
the arbitration provision, and that, although James did not sign
that agreement, he was listed as the “Verizon account holder.”
Verizon also argued James was a third party beneficiary of the
June 2014 agreement and that the June 2014 agreement
incorporated by reference the November 2013 agreement. The
Foleys argued there was no evidence that Verizon provided a
copy of the November 2013 agreement to Lou Ann (or James) or
that James ever saw the arbitration provision in that document.
They also argued James could not be a third party beneficiary
because the November 2013 agreement contained a provision
stating, “‘This agreement isn’t for the benefit of any third party
except for [Verizon’s] parent companies, affiliates, subsidiaries,
agents, and predecessors and successors in interest.’”2

2      Although this issue is not relevant to this appeal (because
Verizon no longer argues James was a third party beneficiary),
the Foleys may have had the agreements confused. The issue in
the trial court was not whether the November 2013 agreement

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       The trial court granted Verizon’s motion to compel
arbitration of Lou Ann’s claims, but denied the motion to compel
arbitration of James’s claims. The court ruled that, although
“Verizon contends James is the account holder under the
[June 2014] agreement, the agreement is signed only by Lou Ann,
and Verizon provides no evidence of how the agreement was
intended to benefit James as a third-party.” The court also ruled
that, although “nonsignatories may be bound . . . by an
arbitration agreement in certain circumstances, Verizon fails to
show any of these circumstances apply in this action.” When
counsel for Verizon expressed concern at the hearing that the
court had a “doubt as to what relation exists between James . . .
and Verizon,” the court stated, “I don’t have a doubt. There is no
relationship,” and “The court’s not in doubt about the
relationship. The court believes there isn’t one.” The court
ordered James’s action to proceed and stayed the arbitration of
Lou Ann’s action pending the outcome of the court action.
Verizon timely appealed.

                         DISCUSSION

      Verizon argues the trial court erred in denying its motion
to compel James to arbitrate his claims because (1) James, as the
account owner, was bound by the arbitration provision in the
November 2013 agreement; (2) Lou Ann acted as James’s agent
when she purchased the phone and signed the June 2014
agreement; and (3) James is equitably estopped from refusing to

precluded third party beneficiaries, but whether the June 2014
agreement did.

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arbitrate because his claims are based on the November 2013 and
June 2014 agreements. Verizon, however, forfeited all three of
these arguments by not making them in the trial court, where
Verizon argued instead that James was a third party beneficiary
of the June 2014 agreement. (See Johnson v. Greenelsh (2009)
47 Cal.4th 598, 603; Curtis v. Superior Court (2021)
62 Cal.App.5th 453, 474, fn. 15.) All three arguments also lack
merit.

        A.   Applicable Law and Standard of Review
        Under Code of Civil Procedure section 1281.2,3 “a trial
court must grant a motion or petition to compel arbitration only
‘if it determines that an agreement to arbitrate the controversy
exists.’” (Gamboa v. Northeast Community Clinic (2021)
72 Cal.App.5th 158, 164, fn. omitted.) But “‘parties can only be
compelled to arbitrate when they have agreed to do so.
[Citation.] “Arbitration . . . is a matter of consent, not coercion.”’”
(Cohen v. TNP 2008 Participating Notes Program, LLC (2019)
31 Cal.App.5th 840, 858-859 (Cohen); see Pinnacle Museum
Tower Assn. v. Pinnacle Market Development (US), LLC (2012)
55 Cal.4th 223, 236.) The “threshold questions presented by
every motion or petition to compel arbitration are whether an
agreement to arbitrate exists [citations] and, if so, whether the
parties’ dispute falls within the scope of that agreement.” (Ahern
v. Asset Management Consultants, Inc. (2022) 74 Cal.App.5th
675, 687.) “‘The party seeking to compel arbitration bears the

3     Statutory references are to the Code of Civil Procedure.

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burden of proving the existence of a valid arbitration
agreement.’” (Cohen, at p. 859.)
        “‘“There are circumstances in which nonsignatories to an
agreement containing an arbitration clause can be compelled to
arbitrate under that agreement. As one authority has stated,
there are six theories by which a nonsignatory may be bound to
arbitrate: ‘(a) incorporation by reference; (b) assumption;
(c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-
party beneficiary.’”’” (Cohen, supra, 31 Cal.App.5th at p. 859.)
“‘“Whether an arbitration agreement is binding on a third party
(e.g., a nonsignatory) is a question of law subject to de novo
review.”’” (Ibid.; see Benaroya v. Willis (2018) 23 Cal.App.5th
462, 468.) “Nevertheless, we presume the court found every fact
and drew every permissible inference necessary to support its
judgment or order, and we defer to the court’s determination of
credibility of the witnesses and weight of the evidence in
resolving disputed facts.” (Cohen, at p. 859.)

      B.     The Trial Court Did Not Err in Denying Verizon’s
             Motion To Compel James To Arbitrate His Claims

             1.   James Did Not Agree to Arbitration in the
                  November 2013 Agreement
      Verizon argues on appeal that James was bound by the
arbitration provision in the November 2013 agreement because
he was the “owner of the Verizon Account” on which Lou Ann
purchased the Galaxy cell phone in June 2014 and because when
he opened the account he “was presented with and agreed to the
[November 2013] Customer Agreement,” which contained an
arbitration provision. In addition to forfeiting the argument by

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not making it in the trial court, Verizon did not meet its burden
of proving the existence of a valid arbitration agreement by a
preponderance of the evidence. (See Gamboa v. Northeast
Community Clinic, supra, 72 Cal.App.5th at pp. 164-165.) The
November 2013 agreement on which Verizon relies does not
contain James’s (or Lou Ann’s) name or account number, let
alone either of their signatures. Verizon did not submit any
evidence that James was presented with the document, that he
agreed to it, or that he was connected to the document at all.4

            2.     Lou Ann Did Not Sign the June 2014
                   Agreement as James’s Agent
      “An agent . . . may have implied authority to agree to
arbitration on behalf of its principal.” (Matthau v. Superior Court
(2007) 151 Cal.App.4th 593, 599.) “‘Every California case finding
nonsignatories to be bound to arbitrate is based on facts that
demonstrate, in one way or another, the signatory’s implicit
authority to act on behalf of the nonsignatory.’” (Cohen, supra,
31 Cal.App.5th at pp. 859-860.) “An agency is ostensible when
the principal intentionally, or by want of ordinary care, causes a
third person to believe another to be his agent who is not really
employed by him.” (Civ. Code, § 2300; see UFCW & Employers
Benefit Trust v. Sutter Health (2015) 241 Cal.App.4th 909,
931-932 (UFCW).) “‘Ostensible authority must be based on the

4     The November 2013 agreement states “you” can accept the
agreement by, among other things, “[a]ctivating your [s]ervice.”
Verizon submitted no evidence that James activated any service
or that, as discussed, “you” referred to James.

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acts or declarations of the principal and not solely upon the
agent’s conduct.’” (Id. at p. 932.)
       Verizon argues on appeal that, when Lou Ann signed the
June 2014 agreement that identified James as the customer, she
did so as James’s ostensible agent because Lou Ann and James
are married. In addition to forfeiting this argument again by not
making it in the trial court, and even assuming Lou Ann and
James were married (although there is no evidence they were),
Verizon submitted no evidence Lou Ann signed the June 2014
agreement as James’s agent. “[A]gency cannot be implied from
the marriage relationship alone.” (Valentine v. Plum Healthcare
Group, LLC (2019) 37 Cal.App.5th 1076, 1089; see Goldman v.
Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1172
[“the status of marriage cannot substitute for the act of conferring
agency to a spouse”]; Flores v. Evergreen at San Diego, LLC
(2007) 148 Cal.App.4th 581, 589 [a “marital relationship cannot
alone create an agency” (fn. omitted)].)5
       Crowley Maritime Corp. v. Boston Old Colony Ins. Co.
(2008) 158 Cal.App.4th 1061, cited by Verizon, is not to the
contrary. In that case the court stated “a nonsignatory can be

5      Under section 1295, which applies to contracts for medical
services, a nonsignatory spouse may be compelled to arbitrate
causes of action for loss of consortium or wrongful death where
the patient agreed to arbitrate medical malpractice disputes.
(See, e.g, Ruiz v. Podolsky (2010) 50 Cal.4th 838, 853; Gross v.
Recabaren (1988) 206 Cal.App.3d 771, 781.) There are no such
causes of action here. As the trial court recognized at the
hearing, when counsel for Verizon raised this issue: “Here, we’re
not dealing with medical malpractice. We’re just dealing with a
cell phone agreement. And that does not cut in your favor.”

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compelled to arbitrate under two sets of circumstances: (1) where
the nonsignatory is a third party beneficiary of the contract
containing the arbitration agreement;[6] and (2) where ‘a
preexisting relationship existed between the nonsignatory and
one of the parties to the arbitration agreement, making it
equitable to compel the nonsignatory to also be bound to arbitrate
his or her claim.’” (Id. at pp. 1069-1070.) The court also stated:
“The preexisting relationship generally gives the party to the
agreement authority to bind the nonsignatory. Examples of the
preexisting relationship include agency, spousal relationship,
parent-child relationship and the relationship of a general
partner to a limited partnership.” (Id. at p. 1070.) The
statement about spousal relationships in this part of the Crowley
opinion, however, is contrary to the weight of authority and is
dicta. Crowley did not concern spouses; it involved a group of
insurers who sought to compel another group of (nonsignatory)
insurers to arbitrate equitable contribution claims based on an
arbitration agreement with the insured. (Id. at pp. 1065-1066.)
Verizon cites no case where a signatory bound a nonsignatory
spouse to arbitrate as an agent, without some evidence of agency
beyond the fact of marriage.
       Verizon essentially asks us to infer from the fact that
James’s name appears in the “customer information” field of the
June 2014 agreement that Lou Ann had implicit authority to act
on his behalf. But there was no evidence that James directed
Lou Ann to purchase the phone on or using his account or that he

6    As discussed, although Verizon argued in the trial court
James was a third party beneficiary of the June 2014 customer
agreement, Verizon does not make that argument on appeal.

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was involved in the June 2014 transaction in any way. And
absent some act or statement by James, the purported principal,
that led Verizon to believe Lou Ann was authorized to bind him
to an agreement, Lou Ann had no ostensible authority to bind
him to an agreement to arbitrate. (See UFCW, supra,
241 Cal.App.4th at p. 932.)

            3.     James Was Not Equitably Estopped from
                   Refusing To Arbitrate
      “A nonsignatory plaintiff may be estopped from refusing to
arbitrate when he or she asserts claims that are ‘dependent upon,
or inextricably intertwined with’ the underlying contractual
obligations of the agreement containing the arbitration clause.”
(Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295,
306; see JSM Tuscany, LLC v. Superior Court (2011)
193 Cal.App.4th 1222, 1238.) “‘In the arbitration context, a party
who has not signed a contract containing an arbitration clause
may nonetheless be compelled to arbitrate when he seeks
enforcement of other provisions of the same contract that benefit
him.’” (UFCW, supra, 241 Cal.App.4th at p. 928.) “‘“[T]he
linchpin for equitable estoppel is . . . fairness.”’” (Id. at p. 929.)
      Verizon argues James was equitably estopped from
repudiating the arbitration provisions in the November 2013 and
June 2014 agreements because his action against Verizon is
based on those agreements. According to Verizon, “[i]t would be
unfair for Mr. Foley to claim that the [November 2013 and June
2014 agreements] are not applicable to him only when seeking to
enforce an arbitration agreement is at issue, yet allow him to sue
Verizon on the basis that Verizon sold the subject phone for his
use on the Verizon Account he owned.”

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       In addition to again forfeiting this argument, Verizon
overlooks that James’s claims do not rely on or seek to enforce
either agreement. The Foleys seek to recover for personal injury
and property damage caused by an allegedly defective product
sold by Verizon. They allege causes of action for strict liability,
negligence, and breach of an implied warranty. James does not
seek to enforce any provision of the June 2014 agreement, nor are
his claims dependent on or inextricably intertwined with any
provision of that agreement. Although the Foleys allege the
Galaxy phone was purchased at a Verizon store, they do not
mention any agreement. (See Jensen v. U-Haul Co. of California,
supra, 18 Cal.App.5th at p. 306 [“‘[E]ven if a plaintiff’s claims
“touch matters” relating to the arbitration agreement, “the claims
are not arbitrable unless the plaintiff relies on the agreement to
establish its cause of action.”’”]; Pillar Project AG v. Payward
Ventures, Inc. (2021) 64 Cal.App.5th 671, 678 [nonsignatory
plaintiff’s causes of action for negligence and false advertising did
not rely on or refer to an agreement between the defendant and a
third party and were not inextricably intertwined with that
agreement]; UFCW, supra, 241 Cal.App.4th at p. 929
[nonsignatory health care employee benefits trust’s statutory
antitrust and unfair competition causes of action did not seek to
enforce any portion of a provider contract]; Kramer v. Toyota
Motor Corp. (9th Cir. 2013) 705 F.3d 1122, 1132 [plaintiffs’
causes of action for violation of the California Consumers Legal
Remedies Act, unfair competition, false advertising, breach of the
implied warranty of merchantability, and breach of contract
against an auto manufacturer did not rely on plaintiffs’ purchase
agreements with dealerships].)

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                         DISPOSITION

      The order is affirmed. Verizon’s motion to augment the
record is denied. The Foleys are to recover their costs on appeal.

                               SEGAL, Acting P. J.

      We concur:

                   FEUER, J.

                   WISE, J.*

*     Judge of the Alameda County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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