Court Opinion

ID: 2682584
Source: CourtListenerOpinion
Date Created: 2014-07-10 21:01:27.851614+00
Date Added: 2024-06-11T09:13:01.029492
License: Public Domain

Filed 7/10/14 Chan v. Delta Dental of California CA1/2
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION TWO

SUSAN CHAN, D.D.S.,
         Plaintiff and Respondent,
                                                                     A138402
v.
DELTA DENTAL OF CALIFORNIA,                                          (San Francisco County
                                                                     Super. Ct. No. CGC 12-523350)
         Defendant and Appellant.

                                              I. INTRODUCTION
         This is an appeal by defendant Delta Dental of California (Delta) from an order of
the trial court denying its petition to compel arbitration of a contract dispute between it
and plaintiff, Susan Chan D.D.S. (Dr. Chan). The trial court found that there was no
written and signed arbitration agreement between the parties, and hence denied Delta’s
petition. Delta’s appeal is based on the fact that there was a later form of provider
agreement, albeit one not executed by Dr. Chan, which did contain an arbitration clause.
The trial court rejected this contention and denied Delta’s petition. We agree and affirm
the court’s order.
                     II. FACTUAL AND PROCEDURAL BACKGROUND
         Dr. Chan is an endodontist who practices in Walnut Creek. She obtained her
Bachelors of Science degree from the University of California, Berkeley and her Dental
Degree in Surgery from the University of California, Los Angeles. She then served as a
general dentist for the U.S. Air Force, and attained the rank of Captain. She was
honorably discharged from the Air Force in 1996. After continuing to practice general

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dentistry for a few years, she obtained a Masters Degree in Medical Science in Biology
along with an endodontic certificate from the Harvard School of Dental Medicine in
2001. She then limited her practice to the endodontic specialty, a specialty involving root
canal therapy, dental trauma, the treatment of cracked teeth, etc.
        According to her complaint, Dr. Chan joined a “network” of dentists when she
joined the “PMI network” in 2001. After PMI merged into Delta, Dr. Chan was
thereafter a member of Delta, which she alleges to be “the largest dental health plan in
California.” When she joined the PMI network in 2001, she was allegedly “PMI’s only
networked endodontic specialty provider in East/Central Contra Costa County.”
        In 2005 Dr. Chan and Delta entered into a standard-form contract under which she
would accept patients referred to her by Delta in exchange, of course, for compensation.
A provision stated that the contract would continue in effect “for additional one-year
terms” unless and until terminated by either party pursuant to its specific termination
provisions. The contract was never terminated by either party. As conceded by Delta,
the 2005 contract contained no arbitration provision. That contract also applied to only
one specific location, i.e., the “location stated on the signature page” and not to any other
offices or facilities used by Dr. Chan. Indeed, the contract specifically provided that the
signatory dentist “desires to become a specialist dentist at the location stated on the
signature page,” which was Walnut Creek. Finally, the 2005 contract contained an
“evergreen provision,” i.e., it specifically provided that it would continue in effect for
one-year terms unless one party or the other provided a notice of termination “at least 90
days prior to the end of the current term, or the Agreement is otherwise terminated as
provided in Section 3.2.”
        Neither happened and, according to Dr. Chan’s arguments, the 2005 contract is
still in effect.
        Under the 2005 contract, Delta referred patients to Dr. Chan either by direct
referral from a general dentist in its network or based on an “assignment list” composed
of general dentists who had links or relationships with Dr. Chan. That list was
maintained by Delta’s Professional Relations Department.

                                              2
       In 2006, Delta issued a new form of contract to its dental provider-members. It
specifically provided, at section 7.4, that disputes arising thereunder were subject to
arbitration under the commercial rules of the American Arbitration Association (AAA).
However, the contract was, per Dr. Chan’s counsel’s phraseology, “location specific.”
Put another way, a signatory-participant dentist had to sign the 2006 version of the
contract for each location where he or she worked. Dr. Chan adopted the 2006 contract
for some other locations where she worked, but never signed such a contract covering her
primary office in Walnut Creek.1 Indeed, Delta’s counsel stated at the hearing before the
court on its motion to compel arbitration, that “we conced[ed] she didn’t sign” the 2006
edition of the contract. This concession is confirmed by the 2006 edition itself, which
states on its first page that the agreement is between Delta and “the undersigned dentist”
and that its provisions are “to be effective on the Effective Date stated on the signature
page . . . .” But the signature page of that contract tendered to the trial court by Delta had
no dates, signatures, or any other writings.
       Apparently, starting in 2009, a dispute arose between the parties regarding the
referrals Delta was (or was not) making to Dr. Chan. Dr. Chan claimed they were being
regularly reduced. She first tried to resolve this dispute by filing a claim under the
provisions of Delta’s dispute resolution procedure and Health and Safety Code section
1367, subdivision (h). Delta apparently rejected these claims, so Dr. Chan offered to
mediate the dispute via AAA, but Delta did not agree. The parties then apparently agreed
to have the dispute between them (i.e., over the reduced referrals to Dr. Chan) resolved
via an arbitration before an AAA arbitrator. Such an arbitration commenced in
September 2010. However, after several months of on-and-off arbitration, and before

       1
          In the “Introduction” to its opening brief, Delta effectively concedes this,
stating: “The contract was ‘location specific,’ that is to say, if a dentist practiced at
multiple locations, multiple copies of the contract had to be signed by the dentist and a
representative of Delta, one for each location where the dentist worked. There is no
evidence that this contract was signed by Dr. Chan for her primary location in Walnut
Creek . . . .” And at oral argument before the trial court Delta’s counsel conceded “that
there is no signed 2006 contract.”

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any hearing on the merits before the arbitrator or any ruling from him, he was
disqualified and the AAA found that he had a conflict of interest.
       Dr. Chan then withdrew her arbitration claim and, on August 17, 2012, filed the
present action in San Francisco Superior Court for breach of contract and unfair business
practices. Among the alleged unfair business practices were improperly removing
dentists from her referral list. Delta filed a petition seeking to, again, arbitrate their
dispute. Dr. Chan opposed the petition and, on November 15, 2012, the trial court denied
it without prejudice to Delta refiling it, on the ground that Delta had improperly included
new alleged evidence in its reply to Dr. Chan’s opposition to the petition to arbitrate. On
December 14, 2012, Delta petitioned the court to, again, compel arbitration. Again, Dr.
Chan opposed the motion, this time pointing out that the 2005 agreement between the
parties did not contain a clause compelling arbitration.
       On March 21, 2013, the trial court denied the motion, finding that “there was no
signed written agreement to arbitrate (i.e., the 2006 version of the contract).” The court
also specifically found that Delta had “not shown that Dr. Chan was estopped by her
voluntary participation in arbitration with AAA” in so contending to the court.2
       On April 16, 2013, Delta filed a timely notice of appeal.
                                      III. DISCUSSION
A. Our Standard of Review.
       The parties begin by disagreeing regarding the applicable standard of review.
Appellant Delta contends that it is de novo because the core issue is “whether an
arbitration agreement applies to a controversy” and “[d]isputed extrinsic evidence not
relevant to the interpretation of the agreement does not change the standard of review
from de novo.”

       2
          This ruling was contrary to the trial court’s tentative decision, in which it had
concluded that Dr. Chan “knew of the existence of the 2006 contract (with its arbitration
clause) and that she signed it.” In its March 21 order to the contrary, the court found that
(1) “there was no signed written agreement to arbitrate (i.e., the 2006 version of the
contract”, and (2) Dr. Chan was not “estopped by her voluntary participation in
arbitration with AAA.”

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       Dr. Chan disagrees, arguing that if “a party’s motion to compel arbitration turns on
conflicting evidence concerning whether the parties actually agreed to arbitrate, the
question is one of fact, and is reviewed on appeal for substantial evidence.”
       Our colleagues in the Fourth District recently summarized when and how either a
substantial evidence or de novo standard of review applies in a suit to compel arbitration.
In Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 60, they
stated: “ ‘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.] Interpreting a written document to determine
whether it is an enforceable arbitration agreement is a question of law subject to de novo
review when the parties do not offer conflicting extrinsic evidence regarding the
document’s meaning. [Citation.] Here, both the substantial evidence and de novo
standards apply.
       “Integrated’s motion to compel Cade to arbitrate her claims is governed by the
substantial evidence standard because the motion turned on conflicting evidence
regarding whether Cade received and agreed to Integrated’s arbitration policy.
[Citations.]” (See also Banner Entertainment, Inc. v. Superior Court (1998) 62
Cal.App.4th 348, 356-357 (Banner), and cases cited therein; Engineers & Architects
Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 652-653.)
       Under this statement of the law, the standard of review applicable to this case is
substantial evidence, i.e., whether there was substantial evidence that Dr. Chan did not
agree to Delta’s arbitration policy as articulated in the 2006 agreement form.
B. The Applicable Law.
       Code of Civil Procedure section 1281 provides: “A written agreement to submit
to arbitration an existing controversy or a controversy thereafter arising is valid,
enforceable and irrevocable, save upon such grounds as exist for the revocation of any
contract.”

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       This court has summarized the principles applicable to a determination of whether
there is a binding agreement to arbitrate. In Cheng-Canindin v. Renaissance Hotel
Associates (1996) 50 Cal.App.4th 676, 683, we wrote: “Under both federal and state law,
the threshold question presented by a petition to compel arbitration is whether there is an
agreement to arbitrate. The United States Supreme Court has stated that ‘. . . the first
task of a court asked to compel arbitration of a dispute is to determine whether the parties
agreed to arbitrate that dispute.’ [Citation.] Similarly, under California law,
‘ “[a]rbitration is recognized as a matter of contract, and a party cannot be forced to
arbitrate something in the absence of an agreement to do so.” ’ [Citations.] [¶] The
question of whether the parties agreed to arbitrate is answered by applying state contract
law even when it is alleged that the agreement is covered by the FAA. [Citations.]”
       Two years later, one of our sister courts enlarged upon these principles. In
Banner, supra, 62 Cal.App.4th 348, the court overturned a trial court decision which had
granted a petition to compel arbitration on the ground that there was no substantial
evidence to support the trial court’s finding that the parties had agreed to arbitration. The
Banner court wrote: “When it is clear, both from a provision that the proposed written
contract would become operative only when signed by the parties as well as from any
other evidence presented by the parties that both parties contemplated that acceptance of
the contract’s terms would be signified by signing it, the failure to sign the agreement
means no binding contract was created. [Citations.]” (Id. at p. 358; see also Magness
Petroleum Co. v. Warren Resources of Cal., Inc. (2002) 103 Cal.App.4th 901, 907.)
       More recently, a panel of the Sixth District wrote: “ ‘The party seeking to compel
arbitration bears the burden of proving the existence of a valid arbitration agreement.’
[Citations.] ‘Although California has a strong policy favoring arbitration [citations], our
courts also recognize that the right to pursue claims in a judicial forum is a substantial
right and one not lightly to be deemed waived. [Citations.] Because the parties to an
arbitration clause surrender this substantial right, the general policy favoring arbitration
cannot replace an agreement to arbitrate.’ [Citation.] Courts therefore recognize that the
right to arbitration depends on a contract. ‘Even the strong public policy in favor of

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arbitration does not extend to those who are not parties to an arbitration agreement or
who have not authorized anyone to act for them in executing such an agreement.’
[Citations.]” (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128 (Young);
see also Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1176.)
       In view of the undisputed evidence that (1) the 2005 agreement contained no
provision requiring arbitration of disputes between the parties, and (2) Dr. Chan never
executed the 2006 agreement for Walnut Creek, there was clearly no contract between the
parties requiring Dr. Chan to arbitrate her dispute with Delta.
C. Equitable Estoppel Does Not Require Dr. Chan to Arbitrate with Delta.
       Delta’s alternative theory of why Dr. Chan was required to submit to binding
arbitration is that she was equitably estopped from resisting that procedure. Thus, Delta
contends that Dr. Chan “sought the benefits of the 2006 agreement when she instituted
binding arbitration against Delta” and that, therefore, under the doctrine of equitable
estoppel, she may not now reject the application of that agreement to her. (Capitalization
omitted.)
       “A valid claim for equitable estoppel requires: (a) a representation or concealment
of material facts; (b) made with knowledge, actual or virtual, of the facts; (c) to a party
ignorant, actually and permissibly, of the truth; (d) with the intention, actual or virtual,
that the ignorant party act on it; and (e) that party was induced to act on it. [Citation.]
There can be no estoppel if one of these elements is missing.” (Simmons v. Ghaderi
(2008) 44 Cal.4th 570, 584 (Simmons); see also Young, supra, 220 Cal.App.4th at p.
1131; Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1505-1506 (Gorlach);
Brown v. Chiang (2011) 198 Cal.App.4th 1203, 1227; Futrell v. Payday California, Inc.
(2010) 190 Cal.App.4th 1419, 1436-1437; Southern Cal. Edison Co. v. Public Utilities
Com. (2000) 85 Cal.App.4th 1086, 1110; Jovine v. FHP, Inc. (1998) 64 Cal.App.4th
1506, 1528.)
       In its briefs to us, Delta overlooks this clear—and controlling—statement of the
law. Indeed, in a footnote in its reply brief, Delta contends than Dr. Chan’s brief, by
citing the elements comprising equitable estoppel set forth in Gorlach and Young,

                                               7
“incorrectly” defines what that doctrine means. We think not; the Young decision
specifically cited our Supreme Court’s definition of that doctrine in Simmons and, based
on those decisions and the facts of this case, the trial court was clearly correct in
declining to find that Dr. Chan was equitably estopped from pursuing litigation rather
than arbitration.
       Delta argues Dr. Chan was equitably estopped by initially pursuing arbitration in
her dispute with Delta over its alleged lessening of its referrals to her. But such a
contention raises the inevitable question of what facts did Dr. Chan know and then
conceal from a substantial entity such as Delta, and when and how was Delta actually and
permissibly ignorant of the facts underlying the dispute between the parties? Nowhere in
its briefs to us does Delta cite to any relevant fact that it did not know and Dr. Chan knew
and concealed.
       Delta relies heavily on two cases, which it contends support its argument that Dr.
Chan’s actions during the course of their dispute estopped her from pursuing litigation
rather than arbitration.
       The first is NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64
(NORCAL), another decision of this court. In that case, we reversed the trial court’s
denial of a petition to compel arbitration filed by an insurance company that had issued a
medical malpractice insurance policy to a psychiatrist and his wife, both of whom had
provided “couples therapy” to a man and the plaintiff, the man’s wife. That “couples
therapy” allegedly included sexual relations between the psychiatrist and the plaintiff.
The latter then sued both the psychiatrist and his wife; they tendered defense of the case
to NORCAL, their medical malpractice insurance carrier, because that policy covered
any of the psychiatrist’s “ ‘health care extenders’ ” or employees. (Id. at p. 77.)
Although the psychiatrist’s wife was not a named insured nor an employee or “ ‘health
care extender[]’ ” for her husband, she alleged that she was an “ ‘additional insured.’ ”
The trial court denied the petition to compel arbitration on the ground that there was
insufficient evidence that the wife was a party to the malpractice insurance policy or had
“accepted its benefits.” (Id. at p. 71.) We reversed, holding that the respondent wife had

                                               8
shown her “acceptance of the benefits of the policy” (id. at p. 66) and that her “agreement
to the settlement of the malpractice case was affirmatively demonstrated by her
signature.” (Id. at p. 81; see also id. at pp. 68-69.)
       NORCAL provides no support for Delta. First of all, nowhere in that opinion is the
doctrine of equitable estoppel hinted at or even mentioned. Second, the holding in
NORCAL clearly rested on the premise that the respondent, Ms. Newton, had signed the
relevant agreement of the settlement. Dr. Chan did not sign the 2006 agreement, the one
containing the arbitration clause.
       The other authority Delta relies upon, Metalclad Corp. v. Ventana Environmental
Organizational Partnership (2003) 109 Cal.App.4th 1705 (Metalclad), is also inapposite.
In that case, the parties to a contract involving a purchase of stock in a subsidiary of the
seller company executed a “written agreement [which] included an arbitration clause”
which covered “ ‘[a]ny controversy or claim arising out of or relating to this
contract . . . .’ ” (Id. at p. 1710.) The ensuing litigation did not, however, involve both of
the parties to the original agreement. The defendant was the parent of the signatory
subsidiary and, in the trial court, prevailed in its argument that it could not be required to
arbitrate because it was not a signatory to the sale agreement, which contained an
arbitration clause. But a panel of the Fourth District reversed, holding that the fact that
the defendant-parent company was not a party to the arbitration agreement did not
control, because that company was equitably estopped from avoiding arbitration because
its subsidiary was a signatory party. The court held: “Metalclad agreed to arbitration in
the underlying written contract but now, in effect, seeks the benefit of that contract in the
form of damages from Ventana while avoiding its arbitration provision. Estoppel
prevents this.” (Id. at p. 1717.)
       Once again, this authority does not apply here because of the absence of a signed,
written agreement containing an arbitration clause. As the same court that decided
Metalclad said a few years later: “[N]othing we said in Metalclad purports to excuse the
statutory requirement that a party seeking to compel arbitration must affirmatively allege
the existence of a written arbitration agreement.” (Brodke v. Alphatec Spine, Inc. (2008)

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160 Cal.App.4th 1569, 1575.) To which words, we would add: “meaning a written
agreement signed by the party of whom arbitration is demanded.”
       We conclude by quoting from the trial court at the conclusion of the hearing at
which it denied Delta’s demand for arbitration: “[Delta] has admitted that there is no
signed, written agreement and is seeking to compel arbitration on an estoppel theory.
[¶] Even if that were possible as a basis to compel arbitration, I find that [Delta] has not
shown that Dr. Chan was estopped. [¶] The fact that Dr. Chan voluntarily availed herself
of the right to mediation or arbitration does not mean there was a binding agreement to
arbitrate where under all the evidence that’s before me in this case there’s no evidence
she ever signed the 2006 contract.”
       We could not have summed up the proper result in this case better than that.

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                                 IV. DISPOSITION
      The order appealed from is affirmed.

                                              _________________________
                                              Kline, P.J.

We concur:

_________________________
Richman, J.

_________________________
Brick, 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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