Court Opinion

ID: 9550365
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:34:32.445334+00
Date Added: 2024-06-11T15:21:27.357731
License: Public Domain

RICHARDSON, J.
I respectfully dissent. The majority holds that, despite Blue Cross’ timely demand for arbitration filed in response to plaintiffs’ complaints, Blue Cross waived its right to arbitrate the disputes. The majority reasons that since the arbitration clause was “buried in an obscure provision” of the hospitalization plan agreement (ante, p. 429), Blue Cross was obliged to advise plaintiffs of the contents of the clause as soon as the disputes arose or suffer the consequence of waiving its right to invoke arbitration as a defense to plaintiffs’ actions.
The majority’s novel and unprecedented theory of waiver runs directly counter to the “ ‘strong public policy in favor of arbitrations,’ ” very recently acknowledged by us. (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 706 [131 Cal.Rptr. 882, 552 P.2d 1178].) As we stated in Madden, “. . . arbitration has become an accepted and favored method of resolving disputes [citations], praised by the courts as an expeditious *432and economical method of relieving overburdened civil calendars [citation].” (Pp. 706-707.) Surely we frustrate the goal of relieving our overburdened courts when we concoct a rule which results in a total waiver of arbitration on the dubious ground specified by the majority.
We recently observed that, given the policy favoring arbitration, “the courts have been admonished to ‘closely scrutinize any allegation of waiver of such favored right’ [citation], and to ‘indulge every intendment to give effect to such proceedings’ [citations].” (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 189 [151 Cal.Rptr. 837, 588 P.2d 1261].) It is further well established that the nonaggrieved party (such as Blue Cross in the present case) has no duty to invoke an arbitration clause prior to the commencement of judicial proceedings as a condition precedent to its right to assert arbitration as an affirmative defense.
Thus, a recent case holds that “The party not aggrieved is not obliged to demand arbitration; but he has a right to expect that the aggrieved party will do so before he resorts to litigation.” (International Assn, of Bridge etc. Workers v. Superior Court (1978) 80 Cal.App.3d 346, 357 [145 Cal.Rptr. 592], italics added, fn. omitted.) In the International case, plaintiff employer sued defendant union alleging a breach of a no-strike clause in a collective bargaining contract. The Court of Appeal properly rejected the employer’s contention that union had waived arbitration by delay in demanding it, because the union promptly had raised the defense in its answer once suit was commenced against it. (See also Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 899 [95 Cal.Rptr. 53, 484 P.2d 1397]; Spence v. Omnibus Industries (1975) 46 Cal.App.3d 970, 975 [119 Cal.Rptr. 171]; Gunderson v. Superior Court (1975) 44 Cal.App.3d 138, 144 [120 Cal.Rptr. 35] [defendant’s assertion in its answer of plaintiff’s failure to arbitrate “is a recognized, fully effective and proper means by which a party may force a dispute out of the courts and before an arbitrator”]; Annot., 25 A.L.R.3d 1171, 1187.)
One recognized authority on the subject of commercial arbitration has said, “Often a party challenges the right of the other party to avail itself of arbitration not because of noncompliance with time limits or laches, but because that party did not avail itself of the arbitration, in other words, it took no affirmative action. However, there appears to be no duty to such action. It was said, in this regard, ‘That defendants have not demanded arbitration is no reason for a denial of a stay of the action for plaintiff may institute the arbitration proceedings.’ In practice, a party respondent may wish to see a controversy settled by the arbitration *433agreed upon, but does not wish to proceed when he has no claim to advance himself. [Italics added.] No one appears to be bound to proceed for a finding that he is not obligated to perform certain obligations allegedly due to the other party, in a so-called declaratory action.” (Domke, The Law and Practice of Commercial Arbitration (1968) § 19.01, p. 180, fn. omitted.)
In the present case, Blue Cross promptly filed its petition to arbitrate in response to the filing of plaintiffs’ complaints. As the foregoing authorities indicate, Blue Cross had no duty to initiate, demand or advise arbitration against itself prior to the commencement of those actions. It follows that the majority errs in concluding that Blue Cross waived its right to arbitrate by failing to invoke the same prior to filing its petition.
The majority apparently reasons, however, that since the arbitration clause was “buried in an obscure provision” of the Blue Cross hospitalization agreement, Blue Cross had the affirmative obligation to advise its subscribers, on learning of a potential dispute, regarding the necessity of arbitrating the matter. For some unexplained reason, the majority insists that the failure to give such advice has resulted in forfeiting Blue Cross’ right to assert arbitration as a defense to plaintiffs’ actions.
The majority errs. First, the subject arbitration clause was neither “buried” nor “obscure.” The clause is set out as one of the general provisions of a four-page hospitalization plan certificate issued to all subscribers. The certificate agreement is written in plain English, is easy to understand, and contains subjects of such vital importance to the plaintiffs as the term of coverage under the plan, the services and benefits available, and the limitations imposed by Blue Cross with respect to such coverage. There is simply no basis whatever for concluding that the arbitration clause was “buried” in this uncomplicated, four-page document. The clause was not written in invisible ink. The language of the contract is explicit and it is there to be read.
Nor may we reasonably characterize the arbitration clause as “obscure.” The clause provides that “The initial determination as to whether the limitations set forth herein apply so as to preclude benefits otherwise provided herein shall be made by Blue Cross; however, if the Subscriber does not agree, then such determination shall be made by arbitration under the laws of the State of California. Such arbitration shall be held before a designated and proper committee under the auspices of the local medical association where the hospital services and benefits in dispute were *434provided. In the event that there is no such committee in the area, or the committee declines to act as arbitrator, then and in that event the same shall be submitted to the arbitration of three competent and disinterested Physicians and Surgeons actually engaged in their profession in the said area.” (Italics added.)
Although there may be some uncertainties regarding the precise mechanics of the arbitration procedure, the essential purpose of the clause is clear: Disputes regarding coverage are subject to arbitration. As of the date of trial, there was no prescribed form which agreements to arbitrate must take. By explicit statutory authority “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.” (Code Civ. Proc., § 1281.) The Blue Cross arbitration clause incorporates the “laws of the State of California” on the subject of arbitration, a sufficient reference to the provisions of the state Arbitration Act (Code Civ. Proc., § 1280 et seq.) which sets forth in detail the procedure which governs in the absence of contrary contractual provisions (see §§ 1281.6, 1282, 1282.2; Mitchum, Jones & Templeton, Inc. v. Chronis (1977) 72 Cal.App.3d 596, 601 [140 Cal.Rptr. 160]).
It is incomprehensible to me why Blue Cross should be held to have waived a valid arbitration defense merely because it failed to remind plaintiffs of the unambiguous provisions of their very own agreement. No one suggests that plaintiffs were prejudiced in any way by Blue Cross’ conduct in this case. These plaintiffs managed to find an attorney and filed their complaints; moreover, the complaints on their face acknowledge plaintiffs’ prior awareness of the arbitration clause and attempt to círcúmvent that procedure. That the majority permits them to do so in this case represents to me a complete reversal of our recent statements in Madden, supra, to the effect that arbitration is a highly favored procedure, and that it disadvantages neither party but indeed confers substantial benefits to all by reason of the speed, simplicity and economy of the procedure. (17 Cal.3d at pp. 711-712.)
Significantly, Madden itself rejected the overly paternalistic approach presently adopted by the majority. There, speaking through the same author, we expressly declined to adopt a special rule that no arbitration clause would be enforced in the absence of proof of plaintiff’s actual knowledge of its provisions. As we stated in Madden, this “proposal for a special rule which discriminates against enforcement of arbitration *435clauses would be viable only if arbitration were an extraordinary procedure, and one especially disadvantageous for the [health plan] beneficiary—propositions which we have rejected . . . .” (17 Cal.3d at p. 709, fn. 11, italics added.)
The majority now inexplicably reverses Madden’s enlightened approach and requires affirmative steps to assure such actual knowledge by Blue Cross subscribers, on the odd theory that a failure to do so would amount to a breach of “good faith and fair dealing.” Significantly, the majority does not explain how a failure to advise a subscriber regarding his arbitration rights properly may constitute a waiver of those rights by Blue Cross. Nor does the majority explain why plaintiffs are not bound by the plain language of their contract. If, as the majority concedes (ante, p. 429), the arbitration procedure contains “potentially significant advantages” to the subscribers, surely Blue Cross’ demand for arbitration should be welcomed, not met with protests of “bad faith.”
I would treat plaintiffs with considerably more respect than does the majority and assume, consistent with Madden, that they were fully capable of reading their agreements and abiding by their provisions. Plaintiffs were not misled. Like other contracting parties, they should be bound by the terms of their agreements. Further, we should create no special waiver rule which will prevent arbitration and thereby aggravate rather than relieve our overcrowded court calendars.
I would reverse the judgment denying Blue Cross’ petition for arbitration.
Clark, J., and Manuel, J., concurred.