How To Cite Cronus Investments, Inc. V. Concierge Services, 35 Cal.4th
35 Cal.fourth 376 107 P.3d 217 25 Cal.Rptr.3d 540
Important Paras
- (11) Unlike the Garrity dominion addressed in Mastrobuono, section 1281.2(c) is not a special rule limiting the authority of arbitrators. It is an evenhanded police force that allows the trial court to stay mediation proceedings while the concurrent lawsuit proceeds or stay the lawsuit while arbitration proceeds to avert conflicting rulings on common issues of fact and constabulary amidst interrelated parties. Moreover, "[due south]ection 1281.2(c) is non a provision designed to limit the rights of parties who choose to arbitrate or otherwise to discourage the use of mediation. Rather, information technology is role of California's statutory scheme designed to enforce the parties' arbitration agreements, as the FAA requires. Section 1281.ii(c) addresses the peculiar situation that arises when a controversy likewise affects claims past or against other parties not bound by the arbitration understanding. The California provision giving the court discretion not to enforce the mediation understanding nether such circumstances — in order to avoid potential inconsistency in outcome too as duplication of effort — does not contravene the letter or the spirit of the FAA. That was the explicit belongings in Volt and cypher in Mastrobuono casts doubt on that conclusion." ( Mount Diablo, supra, 101 Cal.App.quaternary at p. 726.) Thus, we demand not construe any ambiguities as to the telescopic of the arbitration provision against the awarding of section 1281.2(c). (12) Our stance does not preclude parties to an mediation agreement to expressly designate that any arbitration proceeding should move forward nether the FAA'due south procedural provisions rather than under state procedural constabulary. We simply hold that the language of the mediation clause in this instance, calling for the application of the FAA "if it would exist applicative," should not be read to preclude the awarding of 1281.two(c), because it does not conflict with the applicative provisions of the FAA and does non undermine or frustrate the FAA's substantive policy favoring arbitration.Go to
- Section 1281.2(c) requires a court to order arbitration upon petition by one of the parties to an arbitration understanding, "unless [the court] determines that: [¶] . . . [¶] (c) A party to the arbitration understanding is also a party to a pending court action . . . with a third party, arising out of the aforementioned transaction or series of related transactions and there is a possibility of alien rulings on a common outcome of law or fact." If the court makes such a determination, information technology "(ane) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action . . .; (2) may club intervention or joinder as to all or only certain problems; (iii) may lodge arbitration among the parties who have agreed to mediation and stay the pending court action . . . awaiting the consequence of the arbitration proceeding; or (four) may stay mediation pending the event of the court activity. . . ."Become to
- Thus, we agree that the choice-of-law provision — which is essentially similar to the provisions in Mount Diablo and Volt — incorporates California's rules of arbitration into the contract. Notwithstanding, the contracts at upshot in Mount Diablo and Volt did not incorporate the arbitration clause hither, which states: "The designation of a situs or specifically a governing police for this understanding or the arbitration shall not be accounted an ballot to preclude application of the [FAA], if it would be applicative." The parties agree that, as specified in the arbitration clause, the telescopic of the pick of law provision is "specifically express by applicative provisions of the FAA" and is nullified "but where the FAA'due south provisions are inconsistent with the CAA." Respondents contend that the procedural rules of section 1281.2(c) do not conflict with the FAA'south procedural provisions — because they exercise not apply in country courtroom — or with its substantive provision ( 9 UsC. § 2). Appellants reply that we need not determine whether section 1281.2(c) conflicts with the procedural provisions of the FAA because awarding of department 1281.2(c) would, withal, contravene the substantive goals and policies of the FAA. Because we disagree with appellant's premise, nosotros first determine whether the procedural provisions of the FAA conflict with section 1281.2(c). (vii) Section three of the FAA concerns the enforcement of arbitration agreements in a pending lawsuit. It requires the "courts of the The states" to grant a party's request for a stay of litigation on an arbitrable effect, awaiting completion of the mediation. ( 9 U.S.C § 3.) (8) Department 4 of the FAA concerns petitions for enforcement of an mediation understanding where one party refuses to arbitrate. It requires a "United States district court" to entertain an awarding to compel mediation. ( 9 U.S.C § 4.)Get to
- The California Courtroom of Appeal affirmed the trial court's ruling, terminal that the choice-of-law provision incorporated California's rules of arbitration into the contract. ( Volt, supra, 489 U.S. at pp. 471-472.) Later acknowledging that "the interpretation of individual contracts is ordinarily a question of state law, which this Court does not sit to review," the high courtroom accepted the Court of Entreatment's construction that the pick-of-law provision incorporated the state arbitration laws, including section 1281.ii(c). ( Volt, supra, 489 U.S. at pp. 474-476.) The court held that application of the California statute to stay mediation would not undermine the goals and policies of, and is not preempted by, the FAA in a instance where the parties accept agreed that their arbitration agreement will be governed past the law of California. ( Volt, supra, 489 U.S. at pp. 470, 477-479.) "At that place is no federal policy favoring arbitration under a sure fix of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate." ( Id. at p. 476.) Go to
- (one) Code of Civil Procedure section 1281.2, subdivision (c) permits a trial courtroom, under specified circumstances, to stay arbitration pending the outcome of related litigation. In Volt Info. Sciences five. Leland Stanford Jr. U. (1989) 489 U.Southward. 468 [ 103 L.Ed.second 488, 109 S.Ct. 1248] ( Volt), the United States Supreme Court held that the Federal Arbitration Act (FAA), 9 Usa Code department 1 et seq., which applies to and favors the enforcement of arbitration agreements affecting interstate commerce, does not preempt the application of department 1281.2, subdivision (c) where the parties have agreed that their arbitration agreement would be governed by the police of California. In this example, the parties agreed that their arbitration agreement would exist governed by California law, but they further agreed that the designation of California police "shall not exist deemed an election to preclude application of the [FAA], if it would be applicative." Every bit explained below, we conclude that, in this situation, the FAA also does non preempt the application of section 1281.2, subdivision (c).Go to
- Defendants, in plow, moved to stay the arbitration awaiting the event of litigation and to consolidate the mediation proceeding with the underlying action under department 1281.ii, subdivision (c) (section 1281.2 (c)). The trial court determined that (1) some of the causes of activity and controversies in the underlying activity were non subject to mediation; (2) only 3 of the viii cantankerous-claims were arbitrable; (3) some of the litigants were not parties to agreements containing an mediation agreement; and (4) the lawsuit and mediation proceedings contained overlapping issues of fact and law. To avoid the possibility of contradictory outcomes and promote efficiency in the resolution of disputes, the court denied the petition to stay litigation and compel mediation, granted the motility to stay the arbitration proceedings pending outcome of the litigation, and consolidated the 3 arbitrable cross-claims with the action "for all purposes."Go to
- (5) To ensure that arbitration agreements are enforced according to their terms, the FAA preempts all state laws that utilise of their own force to limit those agreements against the parties' will or to withdraw the power to enforce them. (See, e.g., Perry v. Thomas (1987) 482 U.S. 483, 490-491 [ 96 L.Ed.2d 426, 107 South.Ct. 2520] [FAA preempted California statute that rendered private agreements to intervene wage drove claims unenforceable by requiring judicial forum for resolution of those claims]; Keating, supra, 465 U.South. at p. 16 fn. 10 [FAA preempted California statute that rendered agreements to arbitrate sure franchise claims unenforceable by requiring judicial forum for resolution of those claims].) Although state police force may be practical to regulate contracts, including mediation clauses, "` if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts more often than not[,]' [citation]" courts may non invalidate arbitration agreements under state law contract principles applicative only to arbitration provisions, and that therefore disfavor such contracts, or unmarried them out for "suspect status." ( Doc'due south Associates, supra, 517 U.S. at pp. 686-687.) For example, the high courtroom constitute that a Montana statute that made arbitration clauses unenforceable unless the contract provided notice of the mediation clause "`in underlined capital letters on the start page of the contract'" directly conflicted with the FAA; the land law conditioned the enforceability of arbitration agreements on a discover requirement not applicable to contracts generally. ( Physician's Associates, supra, 517 U.S. at pp. 684, 687-688.) Only "more often than not applicative contract defenses, such every bit fraud, duress, or unconscionability, may exist practical to invalidate mediation agreements without contravening § ii" of the FAA. ( Doctor's Associates, supra, 517 U.South. at p. 687.) (6) In addition, the FAA establishes a prophylactic rule governing ambiguities in arbitration clauses. Section ii of the FAA ( 9 The statesC. § 2), applicable to any arbitration agreement within the coverage of the Human action, requires that "questions of arbitrability . . . be addressed with a healthy regard for the federal policy favoring arbitration." ( Moses H. Cone, supra, 460 U.S. at p. 24.) Any doubts or ambiguities every bit to the scope of the mediation clause itself should be resolved in favor of arbitration. ( Id. at pp. 24-25; see also Volt, supra, 489 U.S. at pp. 475-476.)Get to
- In 1925, Congress passed the FAA to "overrule the judiciary's longstanding refusal to enforce agreements to arbitrate" and to identify such agreements "`upon the same footing equally other contracts, where information technology belongs.' [Citation.]" ( Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 219-220 [ 84 Fifty.Ed.2d 158, 105 Due south.Ct. 1238]) ( Byrd)). The federal statute rests on the authority of Congress to enact noun rules under the commerce clause, requiring courts to enforce mediation agreements in contracts involving interstate commerce. ( Southland Corp. v. Keating (1984) 465 U.S. ane, 10-11 [ 79 L.Ed.2d i, 104 S.Ct. 852] ( Keating).) Here, the parties agree that the contracts at issue involve interstate commerce and, thus, fall within the coverage of the FAA.Go to
- The Courtroom of Entreatment affirmed the trial court's ruling. Get-go, as a affair of contract interpretation, the Courtroom of Appeal found that the "not . . . forbid" language of the mediation clause superseded the broader and more general choice-of-constabulary provision and concluded that the parties intended that the FAA apply to the "fullest extent" and "without limitation" in those contracts containing arbitration agreements. Second, the Courtroom of Appeal analogized a trial court's potency to stay mediation proceedings (§ 1281.two(c)) to a court's authority to stay lawsuits when resolving bug of multiple litigation (§ 526, subd. (a)(six)) and found that section 1281.2(c) is a neutral law derived from equitable principles applicative to all contracts. The court thus determined that, because department 1281.2(c) on its face is "an evenhanded application of state principles addressing the general problem of multiple litigation," the FAA does not preempt its application.Go to
- The parties practice non dispute that this case comes within the exception to the full general rule of arbitration enforcement specified in section 1281.2(c). 3 of the 10 parties to the court activity (Concierge, Colman, and Cronus) are parties to arbitrable agreements and the arbitration proceeding. But the other seven parties to the courtroom action (Westrec, Westrec Contracting, Sachs, Anderson, Robbins, Nelson Colman, and Desert) are not parties to whatever arbitration understanding and thus are not amenable to arbitration. None of the parties announced to dispute that many of the claims in the lawsuit are nonarbitrable. On the other hand, the parties do dispute whether they intended that section 1281.2(c) procedures would govern the enforcement of those contracts that contain the mediation provisions.Go to
- (10) Farther, the United States Supreme Court does not read the FAA'southward procedural provisions to utilise to land courtroom proceedings. "[West]e exercise not concur that §§ 3 and 4 of the Arbitration Act utilize to proceedings in state courts. Section 4, for example, provides that the Federal Rules of Civil Process utilise in proceedings to compel arbitration. The Federal Rules do not apply in such state court proceedings." ( Keating, supra, 465 U.S. at p. 16, fn. 10.) In Volt, the high court later confirmed that, "While we have held the FAA'due south `substantive' provisions — §§ 1 and ii — are applicable in land as well as federal courtroom [citation], we have never held that §§ iii and 4, which by their terms appear to use only to proceedings in federal court [citations], are nevertheless applicable in state court." ( Volt, supra, 489 U.S. at p. 477, fn. 6.) Reaffirming Volt'due south distinction between the procedural and substantive aspects of the FAA, the courtroom further described section 1281.ii(c) every bit "determin[ing] merely the efficient order of proceedings [and] not affect[ing] the enforceability of the arbitration understanding itself." ( Doctor's Associates, supra, 517 U.South at p. 688.)Get to
- Similarly, in Byrd and Moses H. Cone (federal variety cases), the procedural rules of the FAA clearly applied to those federal courtroom proceedings. Byrd required a federal commune court to grant a party's move to compel mediation of the pendant country arbitrable claims, pursuant to sections 3 and 4 of the FAA ( 9 U.S.C. §§ 3, 4). ( Byrd, supra, 470 U.S. at pp. 217-218, 223-224.) Noting the legislative history of the FAA, the court commented that the human activity "`declares merely that such agreements for arbitration shall be enforced, and provides a procedure in the Federal courts for their enforcement.' H.R. Rep. No. 96, 68th Cong., 1st Sess., 1-two (1924)." ( Byrd, supra, 470 U.S. at p. 220, fn. 6.) Also relying on the procedural rules of the FAA, Moses H. Cone held that the federal district court erred in staying the federal court activity seeking an gild compelling arbitration, pending resolution of a concurrent state court adapt. ( Moses H. Cone, supra, 460 U.S. at pp. 21-26.) Thus, Byrd and Moses H. Cone do not address the appropriate procedure in state courts.Go to
- "Section 2 is a congressional declaration of a liberal federal policy favoring mediation agreements, notwithstanding whatsoever state noun or procedural policies to the opposite. The effect of the section is to create a body of federal substantive law of arbitrability, applicative to any mediation agreement within the coverage of the Deed." ( Moses H. Cone Memorial Hospital five. Mercury Constr. Corp. (1983) 460 U.S. one, 24 [ 74 Fifty.Ed.2d 765, 103 S.Ct. 927] ( Moses H. Cone).) Thus, the FAA "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of mediation, whether the problem at manus is the construction of the contract language itself or an accusation of waiver, delay, or a like defense to arbitrability." ( Moses H. Cone, supra, 460 U.Southward. at pp. 24-25.) The policy of enforceability established past section two of the FAA is bounden on state courts as well every bit federal courts. ( Rosenthal v. Dandy Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 405 [ 58 Cal.Rptr.2d 875, 926 P.2d 1061] ( Rosenthal).)Go to
- The petitioners argued that the FAA preempted the Garrity dominion, while the respondents relied on Volt, arguing that the option-of-constabulary provision incorporated state arbitration rules, including the Garrity rule. The high court responded: "At most, the choice-of-police clause introduces an ambiguity into an mediation agreement that would otherwise allow punitive damage awards. Every bit we pointed out in Volt, when a court interprets such provisions in an agreement covered by the FAA, `due regard must be given to the federal policy favoring arbitration, and ambiguities every bit to the scope of the arbitration clause itself resolved in favor of arbitration.' [Citations.]" ( Mastrobuono, supra, 514 U.S at p. 62.) "We think the all-time fashion to harmonize the choice-of-law provision with the mediation provision is to read `the laws of the Country of New York' to cover substantive principles that New York courts would apply, but not to include special rules limiting the potency of arbitrators. Thus, the choice-of-law provision covers the rights and duties of the parties, while the mediation clause covers arbitration; neither sentence intrudes upon the other." ( Id. at pp. 63-64, italics added.)Go to
- (2) Withal, the FAA's purpose is not to provide special status for mediation agreements, just simply "to brand arbitration agreements equally enforceable every bit other contracts, but not more and then." ( Prima Paint Corp. five. Flood Conklin Mfg. Co. (1967) 388 U.S. 395, 404, fn. 12 [ 18 L.Ed.2d 1270, 87 South.Ct. 1801].) In accord with this purpose, the loftier court has stated that land contract rules generally govern the construction of arbitration agreements. (See, e.g., Md'due south Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 685 [ 134 L.Ed.2d 902, 116 South.Ct. 1652] ( Doc's Assembly) ["`[s]tate police, whether of legislative or judicial origin, is applicable if that police force arose to govern bug concerning the validity, revocability, and enforceability of contracts generally'"]; Starting time Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944 [ 131 L.Ed.second 985, 115 S.Ct. 1920] [state law principles governing formation of contracts generally apply in deciding arbitrability issue]; Centrolineal-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, 281 [ 130 50.Ed.2nd 753, 115 S.Ct. 834] ["States may regulate contracts, including mediation clauses, under general contract law principles. . . ."].) "[T]he federal policy is simply to ensure the enforceability, co-ordinate to their terms, of private agreements to intervene." ( Volt, supra, 489 U.Due south. at p. 476.) Thus, the FAA does non force parties to arbitrate when they have not agreed to do so (run into Byrd, supra, 470 U.S. at pp. 219-220) or crave them to practise then under any specific set up of procedural rules ( Volt, supra, 489 U.S. at pp. 476, 479). "Arbitration nether the Deed is a affair of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by contract the issues which they will intervene [commendation], so also may they specify past contract the rules under which that arbitration will exist conducted." ( Volt, supra, 489 U.S. at p. 479.)Get to
- In this example, the selection-of-law clause provides: "This agreement shall exist construed and enforced in accordance with and governed by the laws of the Country of California, without giving effect to the conflict of laws provisions thereof." The parties seem to concur that the broad option-of-constabulary provision more often than not incorporates California police force, including the California Arbitration Act (CAA) (§ 1280 et seq.), of which department 1281.ii(c) is a role.Become to
- The language used in sections 3 and 4 and the legislative history of the FAA propose that the sections were intended to apply only in federal court proceedings. Section 4 refers to the "U.s. district court" and provides that it can be invoked simply in a court that has jurisdiction under title 28 of the United States Code. ( nine U.s.a.C. § 4.) This language indicates that Congress intended to limit the application of the department to federal courts. "In 1954, as a purely clerical change, Congress inserted `United States district court' in § 4 as a substitute for `court of the Us.' [Human action of Sept. 3, 1954, ch. 1263, § 19, 68 Stat. 1226, 1233.] Both House and Senate Reports explained: `"United states of america district court" was substituted for "court of the Us" because, amid Federal courts, such a proceeding would exist brought only in a district court.' H.R. Rep. No. 1981, 83d Cong., 2d Sess., 8 (1954); Southward.Rep. No. 2498, 83d Cong., 2d Sess., 9 (1954)." ( Keating, supra, 465 U.S. at p. 29, fn. 18 (dis. opn. of O'Connor, J.).)Go to
- In July 2000, Howard Colman transferred a home-direction business, Dew-All Services, Inc. (Dew-All), to a newly created visitor, Concierge Services, LLC (Concierge). Cronus Investments, Inc. (Cronus), which is wholly owned by Colman, has a 20 percent interest in Concierge, while Westrec Marina Management, Inc. (Westrec) owns the remaining interest. The transactions involved vi agreements: (1) a limited liability visitor (LLC) agreement between Cronus and Westrec, which created Concierge; (2) a stock purchase agreement past which Concierge bought the stock in Colman'southward preexisting visitor, Dew-All; (3) an employment understanding by which Concierge employed Colman as its president; (4) a covenant not to compete and confidentiality agreement betwixt Colman and Concierge; (5) a consulting agreement between Cronus and Concierge; and (six) a guaranty agreement executed by Westrec of a promissory notation payable by Concierge to Colman.Go to
- Four of the half dozen agreements provide for the mediation of any disputes between the parties "arising out of, in connection with, or in relation to the interpretation, performance or breach of this Understanding. . . ." The arbitration clause further specifies that "The designation of a situs or specifically a governing law for this agreement or the arbitration shall not be deemed an election to preclude application of the [FAA], if information technology would exist applicable." The agreements besides contained a option-of-law clause providing that "[t]his understanding shall be construed and enforced in accordance with and governed by the laws of the State of California, without giving effect to the conflict of laws provisions thereof."Go to
- In their petition for review, plaintiff Cronus and cantankerous-defendant Colman (hereafter appellants) claim that the Court of Appeal erred in terminal that the FAA does non preempt the application of section 1281.2(c). Defendants (futurity respondents) filed an answer to the petition, requesting that we determine whether the parties intended to comprise section 1281.2(c) into the mediation agreements and whether the FAA'due south procedural rules employ in California courts. Without limiting the issues, we granted review to make up one's mind, in this case, whether the FAA preempts the application of department 1281.2(c). Go to
- Department two, the primary substantive provision of the FAA, provides: "A written provision in whatever maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising . . . shall be valid, irrevocable, and enforceable, save upon such grounds every bit exist at police or in disinterestedness for the revocation of any contract." ( 9 United statesC. § 2.)Go to
- B. Preemption (iii) "The FAA contains no express pre-emptive provision, nor does it reverberate a congressional intent to occupy the entire field of arbitration. [Commendation.] (4) Simply fifty-fifty when Congress has not completely displaced state regulation in an surface area, state law may nonetheless be pre-empted to the extent that it actually conflicts with federal law — that is, to the extent that it `stands every bit an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' [Citation.]" ( Volt, supra, 489 U.S. at p. 477.)Go to
- Mountain Diablo Medical Heart v. Health Cyberspace of California, Inc. (2002) 101 Cal.App.4th 711 [ 124 Cal.Rptr.2d 607] ( Mount Diablo) — in which the choice-of-police force provision was similar to the 1 hither — supports their estimation. There, the court stated: "The choice-of-law provision in the present case may be `generic' in the sense that it does not mention arbitration or any other specific issue that might get a subject of controversy, only it is withal broad, unqualified and all-encompassing. It provides that `the validity, construction, interpretation and enforcement of this Agreement' shall be governed by California constabulary. The explicit reference to enforcement reasonably includes such matters as whether proceedings to enforce the agreement shall occur in court or before an arbitrator. Chapter 2 (in which § 1281.2 appears) of championship 9 of office Iii of the California Lawmaking of Civil Procedure is captioned `Enforcement of Arbitration Agreements.' An interpretation of the choice-of-law provision to exclude reference to this chapter would exist strained at best." ( Mount Diablo, supra, 101 Cal.App.quaternary at p. 722.)Go to
- Finally, our interpretation that the procedural provisions of the FAA and department 1281.2 do not conflict is consequent with our prior decision in Rosenthal. ( Rosenthal, supra, fourteen Cal.fourth 394.) Rosenthal dealt with the differences between the procedural provisions in section 4 of the FAA ( ix U.S.C. § iv), designating that a jury decides the existence and validity of an arbitration understanding, and sections 1281.two and 1290.two, designating that a court decides that upshot. We determined that (i) the wording of department 4 suggests information technology is limited to federal courts and (ii) the country procedural rules do not frustrate or defeat section 2's policy of enforcement of arbitration agreements. ( Rosenthal, supra, 14 Cal.fourth at pp. 407-410.) Nosotros explained: "[T]he federal policy of ensuring enforcement of private arbitration agreements, centrally embodied in section ii, is not self-implementing; its effectuation requires that courts take available some procedure by which a party seeking arbitration may compel a resisting party to arbitrate. Section four of the [FAA] establishes one such procedure; state law may or may not provide for other equivalent or similar procedures." ( Rosenthal, supra, xiv Cal.4th at p. 408.) "Like other federal procedural rules, therefore, `the procedural provisions of the [FAA] are not binding on state courts . . . provided applicable land procedures practice not defeat the rights granted by Congress.' [Commendation.]" ( Rosenthal, supra, 14 Cal.4th at p. 409, italics added.) "Our statutes exercise establish procedures for determining enforceability not applicable to contracts generally, but they do non thereby run afoul of the [FAA'south] section 2, which states the principle of equal enforceability, but does not dictate the procedures for determining enforceability." ( Rosenthal, supra, 14 Cal.4th at p. 410.)Go to
- Appellants rely on specific language in Volt and on the holdings of Byrd and Moses H. Cone. Volt stated: "Where, equally here, the parties have agreed to abide past land rules of arbitration, enforcing those rules co-ordinate to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that mediation is stayed where the Act would otherwise let it to become forwards." ( Volt, supra, 489 U.S. at p. 479, italics added.) Appellants fence that, in the absenteeism of the all-encompassing state pick-of-police provision in Volt, the Volt court would have found that the FAA preempts section 1281.2(c). However, in Volt, the loftier courtroom, for purposes of argument, simply assumed that the procedural rules of the FAA ( 9 The statesC. §§ 3 and 4) applied in country courts. ( Volt, supra, 489 U.Southward. at p. 477 ["we conclude that even if §§ 3 and iv of the FAA are fully applicative in state courtroom proceedings, they do not prevent application of [Code Civ. Proc.] § 1281.2(c) to stay arbitration where, as here, the parties have agreed to intervene in accord with California law"].)Go to
- Volt answered a like merits. In that location, the contractor argued that the California Court of Entreatment offended the Moses H. Cone principle by interpreting the selection-of-law provision to hateful that the parties intended the California rules of mediation, including the section 1281.ii(c) stay provision, to utilize to their arbitration understanding. In rejecting that claim, the high court responded: "Interpreting a choice-of-law clause to brand applicative country rules governing the comport of arbitration — rules which are obviously designed to encourage resort to the arbitral procedure — simply does not offend the rule of liberal construction set along in Moses H. Cone, nor does information technology offend any other policy embodied in the FAA." ( Volt, supra, 489 U.S. at p. 476, italics added.) The court further stated: "[W]e retrieve the California mediation rules which the parties have incorporated into their contract mostly foster the federal policy favoring arbitration. As indicated, the FAA itself contains no provision designed to deal with the special practical problems that arise in multiparty contractual disputes when some or all of the contracts at issue include agreements to arbitrate. California has taken the lead in fashioning a legislative response to this problem, by giving courts authority to consolidate or stay mediation proceedings in these situations in society to minimize the potential for contradictory judgments. Run into Calif. Civ. Proc. Code Ann. § 1281.ii(c)." ( Id. at p. 476, fn. five.) Because "[t]here is no federal policy favoring arbitration under a sure set of procedural rules" ( id. at p. 476), the Courtroom of Appeal's construction of the arguably cryptic generic choice-of-law clause — as incorporating both the land substantive law and state pro-mediation rules (rather than the FAA) — did not violate the Moses H. Cone principle. ( Volt, at p. 476.)Go to
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