Opinion
E044949.
2-20-2009
SOUTH CORONA CENTER, L.P. et al., Plaintiffs, Cross-defendants and Appellants, v. BRUCE KEETON et al., Defendants, Cross-complainants and Respondents.
Kirkpatrick & Lockhart Preston Gates Ellis, David P. Schack, Kevin S. Asfour; and Daniel Noveck for Plaintiffs, Cross-defendants and Appellants. Ross, Dixon & Bell, Fletcher W. Paddison and Lindsay J. Reese for Defendants, Cross-complainants and Respondents.
Not to be Published
1. Introduction
Plaintiffs are Lenny Dykstra and South Corona Center, L.P., a California limited partnership, collectively "Dykstra." Defendants are Bruce Keeton and Keeton Construction Co., Inc., collectively "Keeton." Dykstra hired Keeton as a general contractor to build a gas station and retail center. Dykstra sued Keeton for fraud and other causes of action. The trial court granted Keetons motion to compel arbitration and granted Keetons subsequent motion to confirm the arbitration award.
Dykstra appeals from the judgment. He contends there was not an enforceable arbitration agreement and the arbitrators erred by excluding a witness declaration.
We affirm the judgment.
2. Factual and Procedural Background
In late 2003 and early 2004, Keeton and Dykstra executed three Standard American Institute of Architects (AIA) form contracts. The form contracts incorporate AIA Document A201-1997, General Conditions of the Contract for Construction, which includes a mandatory arbitration provision at section 4.6. Dykstras signature is on two of the contracts. His uncle, Wayne Nielson, the construction manager and Dykstras owner representative, signed the third contract.
The agreements state the basis of the contract payment is a stipulated sum. Dykstras civil complaint against Keeton alleged that Keeton misrepresented that the construction would be performed on a cost-plus basis.
When Keeton filed a motion to compel arbitration, Dykstra opposed the motion arguing that the contracts were not properly authenticated. Dykstra claimed he was not familiar with the General Conditions and its arbitration provisions and he did not know he had agreed to arbitration. But he never expressly denied signing the contracts. The court asked Dykstras lawyer if there was any evidence that Dykstra did not sign the documents and the lawyer evaded the question by insisting Keeton had the burden to authenticate the documents.
The trial court compared Dykstras signature on the contracts and on his declaration and concluded Dykstra had signed the contracts and that they were valid. The trial court also determined the contracts incorporated and were governed by the General Conditions and its arbitration provisions. The trial court granted the motion to compel arbitration.
A panel of three arbitrators found that Dykstra, or his authorized representative, had executed the contracts and payment was based on a stipulated sum, not a cost-plus basis. The arbitrators rejected Dykstras claims of fraud against Keeton. The arbitrators found that neither party was entitled to recovery and they should bear the fees and expenses of arbitration equally.
During the arbitration, Dykstra had tried to have admitted the declaration of a former Keeton employee, Melissa Tumale, to support his fraud claims. She had worked for Keeton in 2001 and 2002, in years before the subject contracts were executed. She contended Keeton had falsified construction bid books on other projects. Tumale could not or would not appear as a witness at the arbitration. Dykstra did not obtain Tumales testimony by deposition instead. The arbitrators ruled against the admissibility of her declaration.
Dykstra filed a petition to vacate the arbitration award, arguing that the arbitrators erred by excluding Tumales declaration. The trial court denied the petition on the grounds that the arbitrators had acted within their discretion.
3. Order Compelling Arbitration
Under the circumstances present in this case, we employ a mixed standard of review of an order granting a motion to compel arbitration: "Whether the parties formed a valid agreement to arbitrate is determined under general California contract law. [Citations.] Hence, when ruling on a petition to compel arbitration, the superior court may consider evidence on factual issues such as contract formation bearing on the threshold issue of arbitrability. [Citation.] . . . On appeal we must review the courts factual ruling on arbitrability under the substantial evidence test. [Citation.]" (City of Vista v. Sutro & Co. (1997) 52 Cal.App.4th 401, 407.) The arbitration agreement itself is subject to a de novo review. (NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 71.) As we shall explain, this record lacks substantial evidence to support the conclusion no arbitration agreement was formed under principles of general California contract law. The arbitration agreement itself was enforceable.
Dykstra strenuously argues that the subject contracts were not properly authenticated. Keeton, however, supplied a declaration from the company comptroller about the circumstances of the legitimate formation of the construction contracts. Additionally, the court made its own comparison of Dykstras signatures on the contracts and his declaration. Finally, Dykstra alleged in his complaint that the parties had entered into the three agreements.
"For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication. `[T]he court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists. . . . (§ 1281.2.) The statute does not require the petitioner to introduce the agreement into evidence. A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreements existence, not an evidentiary determination of its validity." (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)
In the present case, Dykstra never seriously disputed the authenticity of the subject agreements or claimed that his signature was a forgery. Instead, he insinuated, without proving or offering to prove, that the agreements were not authentic.
Additionally, Dykstra argues that the trial court erred in concluding the subject contracts incorporated the General Conditions including the arbitration provision. In Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 641-642, footnote 4, the court cited many cases in which "the arbitration provision either appeared on the face of the document, [fn. omitted] or, was properly incorporated by reference. Where the arbitration provision was not set forth on the face of the contract, the contract clearly referred to and identified the incorporated document wherein the arbitration clause appeared."
All three documents executed by Dykstra incorporated the General Conditions and its arbitration provisions. Dykstra claimed that he did not know about the arbitration or understand that it applied to the agreements with Keeton. But, as a matter of law, it is well-settled that, "[a]s a general rule, a party is bound by the provisions of an agreement which he signs, even though he does not read them and signs unaware of their existence." (King v. Larsen Realty, Inc. (1981) 121 Cal.App.3d 349, 358, citing Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710.)
Furthermore, there was evidence in the record about the easy availability of AIA form documents, which are used routinely in construction contracts. As such, substantial evidence showed the arbitration provisions had been incorporated into Dykstras agreements with Keeton. (Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 54.)
Based on the foregoing, the trial court acted within its discretion and substantial evidence supported its legal determination that an enforceable arbitration agreement existed between the parties. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331; Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1146; City of Vista v. Sutro & Co., supra, 52 Cal.App.4th at p. 407.)
4. The Arbitration Award
An arbitration award is generally subject to extremely limited review. "In Moncharsh, the parties arbitration clause included no provision for an expanded scope of judicial review. (Moncharsh [v. Heily & Blase (1992) 3 Cal.4th 1,] 7, fn. 1.) We considered and rejected the appellants claim that the award was nevertheless reviewable for error of law on its face causing substantial injustice, a proposition which had some support in case law. (Id. at p. 28.) We reaffirmed `the general rule that an arbitrators decision is not ordinarily reviewable for error by either the trial or appellate courts (id. at p. 13), and held that the statutory grounds for review were intended to implement that rule (id. at pp. 27-28)." (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1354-1355.)
An exception is provided in Code of Civil Procedure section 1286.2, subdivision (a)(1)(5) (formerly Code Civ. Proc., § 1286.2, subd. (e).) One ground for the superior court vacating an arbitration award is "The rights of the party were substantially prejudiced . . . by the refusal of the arbitrators to hear evidence material to controversy . . . ." (Code Civ. Proc., § 1286.2, subd. (a)(5).) The evidence must be material and its exclusion substantially prejudicial: "Where, as here, a party complains of excluded material evidence, the reviewing court should generally focus first on prejudice, not materiality. To find substantial prejudice the court must accept, for purposes of analysis, the arbitrators legal theory and conclude that the arbitrator might well have made a different award had the evidence been allowed." (Hall v. Superior Court (1993) 18 Cal.App.4th 427, 439.) The appellate court reviews the trial courts ruling for substantial evidence. (Michael v. Aetna Life & Casualty Ins. Co. (2001) 88 Cal.App.4th 925, 933.)
In the present case, Dykstra cannot establish the requisite materiality or prejudice. The Tumale declaration was based on events predating the present contracts and, for that reason, had little relevance. As to the issue of prejudice, the record shows Dykstra made an extensive offer of proof but the arbitrators decided they still would not be persuaded in his favor. (Hall v. Superior Court, supra, 18 Cal.App.4th at p. 439.) In particular, the arbitrators rejected Dykstras theory that the contracts were to be paid on a cost-plus basis and determined the contracts were for a set fee, the stipulated sum. Therefore, Tumales declaration that, in years past, Keeton had falsely inflated the subcontractor bids to misrepresent the cost-plus basis was not an issue which could have affected the arbitrators decision.
4. Disposition
The trial court correctly granted Keetons motion to compel arbitration and then affirmed the arbitration award. We affirm the judgment. As prevailing party, Keeton shall recover his costs on appeal.
We concur:
McKinster, Acting P. J.
MILLER, J.