Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 07CC06841, Geoffrey T. Glass, Judge.
Morris Plich & Purdy, Marc Katz, Richard H. Nakamura, Jr., Maureen M. Home, and Pamela Mixon for Defendants and Appellants.
Lanzone Law Office, Anthony C. Lanzone; Law Offices of James C. Caviola, Jr., and James C. Caviola for Plaintiffs and Respondents.
OPINION
SILLS, P. J.
In this case the trial judge flatly denied arbitration when the governing statute merely gave him discretion to delay the arbitration if he determined that court proceedings on non-arbitrable issues would make arbitration unnecessary. We are therefore required to reverse the order flatly denying arbitration, and remand the case to give the trial judge the opportunity to exercise his discretion if he determines that arbitration would be rendered unnecessary by court proceedings.
Also, the briefing and oral argument have alluded to various post-appeal events. Let us be clear now that in this decision we do not address these developments, as if the issues in this appeal were a moving target. To quote our Supreme Court in In re Zeth S. (2003) 31 Cal.4th 396, 405: “It has long been the general rule and understanding that ‘an appeal reviews the correctness of a judgment as of the time of its rendition, upon a record of matters which were before the trial court for its consideration.’” (Italics added.) Today’s decision is thus confined to the ambit of the order appealed from, and the record presented by the appellant to this court. The chips may fall where they may as regards to post-appeal amendments to the complaint.
The request for judicial notice of certain post-notice of appeal documents filed by Country Villa is denied.
I. Sorting Out the Parties
The lawyers in this case who by now have read the caption to this appeal on the first page of this opinion -- and, to be sure, most of the time appellate case captions are the stuff that make even attorneys’ eyes glaze over -- will have noticed something different from the caption in the complaint filed in the Superior Court. The Superior Court complaint (at least for purposes of this record) lists the “Plaintiffs” as: “Fred F. Goyette, by and through his Sucessor in Interest, Joan C. Goyette.”
Assuming that the complaint were substantively meritorious, Fred Goyette, requiescat in pace, is, and will be, in no position to benefit from any judgment. Fred Goyette cannot be substantively described as a “third party.” Joan signed the papers, including an independent arbitration agreement, that allowed Fred to be admitted to a skilled nursing facility known as Country Villa after he suffered a stroke. (While he was alive, Fred signed a notarized advance health care directive making Joan his agent for just such an eventuality.) The complaint does not allege that Joan has been appointed as administrator of Fred’s estate, but giving the complaint every reasonable inference, and for purposes of this appeal, we will assume that any claims that Fred’s estate might have or any claims that Joan might have in her own right would be possessed by Joan.
The pleading artifice of listing “Fred through his successor in interest” rather than “Joan as successor in interest” appears to have been designed to take advantage of section 1281.2, subdivision (c) of the Code of Civil Procedure, which lists, as an exception to the rule that courts will enforce arbitration agreements, the case where a party to an arbitration agreement is “also a party to a pending court action or special proceeding with a third party.” The thinking obviously was: (a) Fred Goyette did not sign the arbitration agreement; (b) the lack of a signature makes him a “third party”; hence, (c) the exception would apply.
Because of the structure of the statute, the (c) in “section 1281.2” does not really function as a subdivision, since the statute is otherwise set out as a series of undenominated paragraphs, one of which lists categories (a) through (c)). (The statute contains seven paragraphs, only three of which, following the first paragraph, have letters (a)(b) and (c). Those paragraphs thus are not really “subdivisions” of the statute, and thus the statute is sometimes cited without treating them as subdivisions.) On the other hand, the text of “(c)” refers to itself as a “subdivision.” Given that self-reference and the practice of some appellate courts to treat “(c)” as a subdivision, we will follow suit.
The same thinking appears to have governed the listing of the defendants in the caption. Joan Goyette, as Fred’s agent, signed the arbitration with an entity known as “Country Villa” (it was a form arbitration agreement, so someone simply wrote “Country Villa” in the blank space for the “Name of Facility.”) However, to clone a “third party” from the entity known as “Country Villa,” the complaint lists two defendants in the caption: Country Villa Service Corp. dba County Villa Health Services” and “AG Seal Beach LLC dba County Villa Seal Beach Health Care Center.” (As well as Does.) We note that both entities have a “dba” (doing business as) which includes the words “Country Villa.” More importantly, the substantive allegations of the complaint treat both entities the same, and, in fact, it explicitly alleges that both entities “operated in such a way as to make their individual identities indistinguishable.”
Our discussion of the parties is required because it appears to have been the basis on which the trial court flat out denied Country Villa’s motion to compel arbitration. The trial judge rejected Joan Goyette’s various arguments involving her supposed lack of authority to sign the arbitration agreement on behalf of Fred Goyette (unlike the spouse in Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, Joan here did have a power of attorney to act for her spouse). However, the trial court exercised its discretion under section 1281.2, subdivision (c) to deny the petition to arbitrate, reasoning that there was there was “a possibility of conflicting rulings on common issues of [f]act and law between the arbitrable claim and non-arbitrable claims.”
II. A Statute to Avoid
Inconsistent Results
The Teapot Dome scandal generated a number of trials; two of the more remarkable were the prosecution of former Interior Secretary Albert Fall for having accepted a bribe from wealthy oil man Edward Doheny and an independent prosecution of Doheny for having given that same bribe. Hearing almost the same evidence, one jury convicted Fall for having accepted the bribe while another acquitted Doheny for having given it.
Inconsistent results based on the same evidence are a rather embarrassing state of affairs for any self-respecting judicial system, so it is not surprising that there are procedural rules to avoid just such an embarrassment. Section 1281.2, mentioned in this very context by the trial judge, is California’s attempt to avoid inconsistent results in the context of petitions for arbitration. We now quote the entirety of the text of section 1281.2:
“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:
“(a) The right to compel arbitration has been waived by the petitioner; or
“(b) Grounds exist for the revocation of the agreement.
“(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.
“If the court determines that a written agreement to arbitrate a controversy exists, an order to arbitrate such controversy may not be refused on the ground that the petitioner’s contentions lack substantive merit.
“If the court determines that there are other issues between the petitioner and the respondent which are not subject to arbitration and which are the subject of a pending action or special proceeding between the petitioner and the respondent and that a determination of such issues may make the arbitration unnecessary, the court may delay its order to arbitrate until the determination of such other issues or until such earlier time as the court specifies.
“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”
III. Four Really Means Two
Readers will note that the operative phrase in section 1281.2, subdivision (c) is “third party.” Without a third party, 1281.2 subdivision (c) simply does not apply. That is, section 1281.2, subdivision (c) will not be triggered unless there is a third party.
In the present case, though, as we have explained above, there really are no third parties. Joan Goyette has tried to assert rights which she must necessarily now possess against two defendants who are alter egos of each other and are, according to the complaint, “indistinguishable.” Looking to the substance of the parties, this case (at least on the record before us) involves only two parties, both of whom signed the arbitration agreement: Joan Goyette and Country Villa, regardless of how many dbas and other parties who are manufactured cloned from it. The trial court’s order cannot be sustained under section 1281.2, subdivision (c).
A digression is in order: Country Villa spends much of its brief tilting at a windmill in the form of Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479. That is, Country Villa asserts that Whaley was wrongly decided in holding that section 1281.2, subdivision (c) is not limited to situations where a party to an arbitration agreement is caught in the middle between arbitration and a lawsuit involving a third party. That is, if the party resisting arbitration and invoking section 1281.2(c) is not involved in litigation with a third party, the statute cannot apply. (Whaley, supra, 121 Cal.App.4th at p. 484.)
Not so. Whaley was correctly decided in rejecting the “opposer must be caught in the middle” theory of section 1281.2, subdivision (c). The text of 1281.2, subdivision (c) is, if one diagrams it, part of one long sentence that begins the statute. The subject of that sentence is the court (as in “the court shall order . . . .”).
The reason for our reference above to the Teapot Dome scandal should now be apparent. Inconsistent results on the same facts are an embarrassment to any system of justice, and the Legislature might readily decide that it didn’t want to make avoiding that untoward state of affairs dependent on which party, if any, tries to avoid it. The syntax of section 1281.2 is written so that the court itself may play a role in determining whether there is a third party action which raises the possibility of inconsistent results. The operative words are: The court shall order arbitration unless the court determines (a) (b) or (c). There is, as the Whaley court correctly noted, nothing in the text of the statute to make the statute’s application dependent upon the status of the party opposing arbitration.
IV. Different Claims, Different Fora
However, just because litigation involving third parties can present the possibility of inconsistent results does not mean that litigation not involving third parties is necessarily free of the possibility of inconsistent results. Joan Goyette’s complaint against Country Villa is a textbook example.
Here are the facts according to the complaint: Fred Goyette, a recent stroke victim, was admitted to Country Villa in mid-July 2006. While a treatment plan was drawn up, he started deteriorating, including his being “comatose with eyes rolled back and having difficulty breathing even with oxygen.” Country Villa took no action. The family requested transfer to an acute hospital across the street, but the transfer was delayed, and when finally implemented, Fred Goyette was found to be suffering from dehydration and a urinary tract infection, from which he died.
From these facts, three causes of action are evoked in the complaint in our record:
-- a first cause of action for elder abuse based on Welfare and Institutions Code sections 15610.57 and 15610.07;
-- a second cause of action for violation of the Patient’s Bills of Rights embodied in section 72527 of title 22 of the California Code of Regulations; and
-- a third cause of action for wrongful death.
While the cause of action for elder abuse is covered by the arbitration agreement (we’ll express no opinion on the wrongful death cause of action), we can say with certainty that the cause of action for violation of the Patient’s Bill of Rights is not. It can’t be. Health and Safety Code section 1599.81 says so. Specifically, subdivision (d) of section 1599.81 expressly provides that all arbitration agreements involving licensed nursing facilities exempt any claims under the Patient’s Bill of Rights.
Section 1599.81, subdivision (d) provides: “(d) In the event the contract contains an arbitration clause, the contract attachment pertaining to arbitration shall contain notice that under Section 1430, the patient may not waive his or her ability to sue for violation of the Patient's Bill of Rights.”
The Patient’s Bill of Rights contains no less than 26 enumerated rights, the last three of which incorporate by reference rights enumerated in statutes. We quote the entire regulation in the margin.
Section 72527 of title 22 of the California Code of Regulations, as of May 2008, provides:
The rights that most readily give rise to civil litigation would appear to be found in title 22, section 72527(a)(9) [freedom “from mental and physical abuse”] and (a)(11) [treatment “with consideration, respect and full recognition of dignity and individuality”] which are so broadly phrased as to encompass many of the claims that foreseeably arise against a skilled nursing facility (for example, insufficient changes of adult diapers, which is a claim here).
Given that breadth, it is perhaps surprising that the Legislature simply hasn’t precluded, as a matter of public policy, all arbitration agreements arising out of care received at a skilled nursing facility. But the Legislature clearly hasn’t gone that far, because the same statute that precludes arbitration agreements from including any claims under the Patient’s Bill of Rights also specifically contemplates viable arbitration agreements for everything else. And, to be sure, it is at least possible to imagine claims for medical malpractice (as such) that might not fit within the catch-all right to be free from “physical abuse.”
The first three subdivisions of section 1599.81 provide:
The upshot is that while the arbitration agreement in this case is not, as the trial court stated, exempt under section 1281.1, subdivision (c), there is at least the possibility of conflicting results in different fora. For example, an arbitrator might rule that Country Villa’s care’s fell below the accepted standard for purposes of an elder abuse claim while a jury might find that there was no physical abuse at all because Country Villa did everything exactly right. It wouldn’t quite be the equivalent of Teapot Dome, where one party was exonerated of taking a bribe that another party was convicted of giving, but it would be close.
V. The Statutory Solution
The trial judge flatly denied the motion to compel arbitration on the assumption (alas, looking more to form than substance) that there were genuine third parties who were involved in litigation with the parties to the arbitration agreement. Option (1) in the last paragraph of section 1281.2 gave him the authority to do that. (“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement . . . .”)
But that option is expressly predicated on a determination that “a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c),” and that predicate determination, as we have shown, is not viable.
However, sometimes it pays to read the whole statute. Two paragraphs after 1281.2, subdivision (c), the Legislature addressed the problem of the possibility of inconsistent results, but without third parties.
To quote that paragraph again: “If the court determines that there are other issues between the petitioner and the respondent [note, no reference to third parties] which are not subject to arbitration and which are the subject of a pending action or special proceeding between the petitioner and the respondent and that a determination of such issues may make the arbitration unnecessary, the court may delay its order to arbitrate until the determination of such other issues or until such earlier time as the court specifies.” (Italics added.)
We note that the test under this paragraph where there are no third parties, which is the possibility that court proceedings may “make the arbitration unnecessary,” is slightly different from the test set out in section 1281.2, subdivision (c), which looks to the possibility of “conflicting rulings on a common issue of law or fact.”
We also note that it is the trial judge’s province to determine -- as distinct from the appellate court’s in the first instance -- whether the court proceedings may “make the arbitration unnecessary.” And even then, whether to delay the arbitration is up to the trial judge’s discretion.
We therefore reverse the court order flatly denying arbitration, and remand the cause to the trial court for further proceedings for it to determine (a) whether Joan Goyette’s civil action for claims under the Patient’s Bill of Rights may make arbitration of her elder abuse and wrongful claims unnecessary, and, if so, (b) whether it should exercise its discretion to delay its order for arbitration until determination of the Patient’s Bills of Rights issues.
Further proceedings will also give the trial judge the opportunity to examine, consistent with this opinion, any relevant events subsequent to the notice of appeal in this case. We reverse only the order that is before us, based on the record that is before us.
Because today’s decision is essentially a split decision, in the interests of justice both sides will bear their own costs on appeal.
WE CONCUR: O’LEARY, J., ARONSON, J.
Also, all otherwise undesignated statutory references in this opinion will be to the Code of Civil Procedure.
“(a) Patients have the rights enumerated in this section and the facility shall ensure that these rights are not violated. The facility shall establish and implement written policies and procedures which include these rights and shall make a copy of these policies available to the patient and to any representative of the patient. The policies shall be accessible to the public upon request. Patients shall have the right:
“(1) To be fully informed, as evidenced by the patient's written acknowledgement prior to or at the time of admission and during stay, of these rights and of all rules and regulations governing patient conduct.
“(2) To be fully informed, prior to or at the time of admission and during stay, of services available in the facility and of related charges, including any charges for services not covered by the facility's basic per diem rate or not covered under Titles XVIII or XIX of the Social Security Act.
“(3) To be fully informed by a physician of his or her total health status and to be afforded the opportunity to participate on an immediate and ongoing basis in the total plan of care including the identification of medical, nursing and psychosocial needs and the planning of related services.
“(4) To consent to or to refuse any treatment or procedure or participation in experimental research.
“(5) To receive all information that is material to an individual patient's decision concerning whether to accept or refuse any proposed treatment or procedure. The disclosure of material information for administration of psychotherapeutic drugs or physical restraints or the prolonged use of a device that may lead to the inability to regain use of a normal bodily function shall include the disclosure of information listed in Section 72528(b).
“(6) To be transferred or discharged only for medical reasons, or the patient's welfare or that of other patients or for nonpayment for his or her stay and to be given reasonable advance notice to ensure orderly transfer or discharge. Such actions shall be documented in the patient's health record.
“(7) To be encouraged and assisted throughout the period of stay to exercise rights as a patient and as a citizen, and to this end to voice grievances and recommend changes in policies and services to facility staff and/or outside representatives of the patient's choice, free from restraint, interference, coercion, discrimination or reprisal.
“(8) To manage personal financial affairs, or to be given at least a quarterly accounting of financial transactions made on the patient's behalf should the facility accept written delegation of this responsibility subject to the provisions of Section 72529.
“(9) To be free from mental and physical abuse.
“(10) To be assured confidential treatment of financial and health records and to approve or refuse their release, except as authorized by law.
“(11) To be treated with consideration, respect and full recognition of dignity and individuality, including privacy in treatment and in care of personal needs.
“(12) Not to be required to perform services for the facility that are not included for therapeutic purposes in the patient's plan of care.
“(13) To associate and communicate privately with persons of the patient's choice, and to send and receive personal mail unopened.
“(14) To meet with others and participate in activities of social, religious and community groups.
“(15) To retain and use personal clothing and possessions as space permits, unless to do so would infringe upon the health, safety or rights of the patient or other patients.
“(16) If married, to be assured privacy for visits by the patient's spouse and if both are patients in the facility, to be permitted to share a room.
“(17) To have daily visiting hours established.
“(18) To have visits from members of the clergy at any time at the request of the patient or the patient's representative.
“(19) To have visits from persons of the patient's choosing at any time if the patient is critically ill, unless medically contraindicated.
“(20) To be allowed privacy for visits with family, friends, clergy, social workers or for professional or business purposes.
“(21) To have reasonable access to telephones and to make and receive confidential calls.
“(22) To be free from any requirement to purchase drugs or rent or purchase medical supplies or equipment from any particular source in accordance with the provisions of Section 1320 of the Health and Safety Code.
“(23) To be free from psychotherapeutic drugs and physical restraints used for the purpose of patient discipline or staff convenience and to be free from psychotherapeutic drugs used as a chemical restraint as defined in Section 72018, except in an emergency which threatens to bring immediate injury to the patient or others. If a chemical restraint is administered during an emergency, such medication shall be only that which is required to treat the emergency condition and shall be provided in ways that are least restrictive of the personal liberty of the patient and used only for a specified and limited period of time.
“(24) Other rights as specified in Health and Safety Code, Section 1599.1.
“(25) Other rights as specified in Welfare and Institutions Code, Sections 5325 and 5325.1, for persons admitted for psychiatric evaluations or treatment.
“(26) Other rights as specified in Welfare and Institutions Code Sections 4502, 4503 and 4505 for patients who are developmentally disabled as defined in Section 4512 of the Welfare and Institutions Code.
“(b) A patient's rights, as set forth above, may only be denied or limited if such denial or limitation is otherwise authorized by law. Reasons for denial or limitation of such rights shall be documented in the patient's health record.
“(c) If a patient lacks the ability to understand these rights and the nature and consequences of proposed treatment, the patient's representative shall have the rights specified in this section to the extent the right may devolve to another, unless the representative's authority is otherwise limited. The patient's incapacity shall be determined by a court in accordance with state law or by the patient's physician unless the physician's determination is disputed by the patient or patient's representative.
“(d) Persons who may act as the patient's representative include a conservator, as authorized by Parts 3 and 4 of Division 4 of the Probate Code (commencing with Section 1800), a person designated as attorney in fact in the patient's valid durable power of attorney for health care, patient's next of kin, other appropriate surrogate decisionmaker designated consistent with statutory and case law, a person appointed by a court authorizing treatment pursuant to Part 7 (commencing with Section 3200) of Division 4 of the Probate Code, or, if the patient is a minor, a person lawfully authorized to represent the minor.
“(e) Patients' rights policies and procedures established under this section concerning consent, informed consent and refusal of treatments or procedures shall include, but not be limited to the following:
“(1) How the facility will verify that informed consent was obtained or a treatment or procedure was refused pertaining to the administration of psychotherapeutic drugs or physical restraints or the prolonged use of a device that may lead to the inability of the patient to regain the use of a normal bodily function.
“(2) How the facility, in consultation with the patient's physician, will identify consistent with current statutory case law, who may serve as a patient's representative when an incapacitated patient has no conservator or attorney in fact under a valid Durable Power of Attorney for Health Care.”
“(a) All contracts of admission that contain an arbitration clause shall clearly indicate that agreement to arbitration is not a precondition for medical treatment or for admission to the facility.
“(b) All arbitration clauses shall be included on a form separate from the rest of the admission contract. This attachment shall contain space for the signature of any applicant who agrees to arbitration of disputes.
“(c) On the attachments, clauses referring to arbitration of medical malpractice claims, as provided for under Section 1295 of the Code of Civil Procedure, shall be clearly separated from other arbitration clauses, and separate signatures shall be required for each clause.”