Sindler v. Brennan

Filed 11/30/05 Sindler v. Brennan CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

PATRICIA SINDLER, Plaintiff and Respondent, v. H. GEORGE BRENNAN et al., Defendant and Appellant.

G033389 (Super. Ct. No. 765507) O P I N I O N

Appeal from an order judgment of the Superior Court of Orange County, Gregory H. Lewis, Judge. Affirmed.

Zuetel & Torigian and Kenneth R. Zuetel, Jr., for Defendants and Appellants.

Silverstein & Huston, Steven A. Silverstein and Mark W. Huston for Plaintiff and Respondent.

* * *

H. George Brennan appeals from the denial of his motion to compel arbitration of the complaint filed against him for medical malpractice by Patricia Sindler. Brennan claims because he is engaged in interstate commerce, his motion should have been granted under federal law. Alternatively, Brennan contends the trial court erred under state law by denying the motion on the grounds of waiver and unconscionability. We hold the trial court correctly found that Brennan waived his right to arbitration; accordingly, we affirm.

FACTS

In June 1996, Patricia Sindler filed a medical malpractice action against her plastic surgeon, H. George Brennan, following an allegedly unsatisfactory procedure. Brennan answered in late July, pleading a general denial and thirteen affirmative defenses. The thirteenth defense stated that “plaintiff agreed with defendant that any legal claim or civil action would be settled by arbitration, and that, therefore, this claim is subject to such arbitration agreement.” A mandatory settlement conference and trial were set for July 1997.

Brennan propounded contention interrogatories, form interrogatories, and requests for admission in December 1996; Sindler responded in January 1997. Also in January, Brennan served a demand for production of documents. In the meantime, Sindler was unable to schedule the deposition of the person most knowledgeable at Brennan’s medical corporation and of Brennan himself because “Defendants failed to provide dates and generally were uncooperative in response to this discovery demand.” Sindler made two separate motions to compel the depositions; Brennan opposed the first one but not the second. The motions were granted, and Brennan was ordered to appear for his deposition in early March.

In February, Sindler sought leave to amend her complaint to add a cause of action for battery and allegations to support punitive damages. Brennan opposed the motion. The court granted leave to amend to add the battery cause of action but denied the punitive damages amendment because it was “untimely.” Brennan answered the first amended complaint in March, again pleading the affirmative defense of an arbitration agreement.

Brennan failed to appear for his court-ordered deposition in March. Sindler filed a motion for sanctions, but before it could be heard, Brennan filed bankruptcy proceedings and a notice of automatic stay.

The case was in bankruptcy court until November 1997, when it was removed to the federal district court. In January 1998, the superior court mistakenly dismissed the case. A year later, the federal district court remanded the action to the superior court. Sindler discovered the court files had been destroyed, and, in November 2000, Sindler sought an order setting aside the superior court dismissal and reconstructing the court files from the parties’ litigation files. The superior court denied her motion. This court reversed on appeal and remanded the case to the superior court for “appropriate proceedings to reconstruct the file.” (Sindler v. Brennan (2003) 105 Cal.App.4th 1350, 1354.) Following the denial of Brennan’s petition for review to the Supreme Court, the remittitur issued in May 2003.

In September 2003, the parties reconstructed the court file at a status conference, and the court set a case management conference for November 24. On November 18, Brennan filed a motion to compel arbitration, claiming Sindler had signed an arbitration agreement in which she “voluntarily agree[d] to submit to arbitration all disputes between myself and the Doctor and all health care personnel associated with him in my treatment arising from medical care and treatment by the Doctor of me, whether these claims are in tort, contract or otherwise. . . .” The agreement provided for full rights of discovery under the Code of Civil Procedure, and further provided that either party could request a trial de novo if the award was over $10,000.

The trial court denied the motion to compel arbitration, adopting its tentative ruling as its final order. The tentative ruling indicated the following bases for the denial of the motion: (1) The Federal Arbitration Act did not apply because Brennan had not established that he engaged in interstate commerce; (2) the arbitration clause is not enforceable because it is illusory; and (3) Brennan waived the right to compel arbitration because he waited over seven years from the time the complaint was filed and propounded discovery.

DISCUSSION

Code of Civil Procedure section 1281.2 provides that the trial court shall grant a petition to compel arbitration unless it finds, inter alia, “[t]he right to compel arbitration has been waived by the petitioner. . . .” (§ 1281.2, subd. (a).) Brennan first claims the issue of waiver should have been determined by the arbitrator rather than the trial court because their agreement was subject to the Federal Arbitration Act (FAA), which, Brennan argues, provides that the issue of waiver should be decided by the arbitrator. We disagree.

The trial court found the FAA did not apply because Brennan was not engaged in interstate commerce: “[T]he fact that he purchases equipment from out of state and has patients from out of state does not establish that he does business in any other state but California, where he is licensed to practice medicine.” Whether the court was correct makes no difference because even agreements governed by the FAA are subject to California procedural statutes. “[T]he California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA]. Sections 1281.1 and 1290.2 are neutral as between state and federal law claims for enforcement of arbitration agreements. They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 409.) In particular, California’s “waiver rules are in accord” with federal law and should be followed when a federal arbitration claim is being adjudicated in state court. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.)

Brennan contends even if the waiver issue was properly before the trial court, its determination that a waiver existed is not supported by the record. “Generally, the determination of waiver is a question of fact, and the trial court’s finding, if supported by sufficient evidence, is binding on the appellate court.” (St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p.1196.) We will reverse only if the absence of waiver appears as a matter of law. Here, it does not.

“‘In the past, California courts have found a waiver of the right to demand arbitration in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure. [Citations.] The decisions likewise hold that the “bad faith” or “willful misconduct” of a party may constitute a waiver and thus justify a refusal to compel arbitration. [Citation.] [¶] Although a number of authorities properly caution that a waiver of arbitration is not to be lightly inferred [citation], our cases establish that no single test delineates the nature of the

conduct of a party that will constitute such a waiver.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 983, quoting Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418, 425-426.)

Here, there is evidence from which the trial court could have concluded that Brennan’s conduct was dilatory, in bad faith, and inconsistent with the intent to arbitrate. During the eight months after the complaint was filed, Brennan propounded discovery, to which Sindler responded, but he refused to allow Sindler to conduct effective discovery. He failed to appear at depositions, even when ordered to do so by the trial court, and Sindler was obliged to bring discovery enforcement motions with trial only four months away. Brennan still did not request arbitration.

Brennan declared bankruptcy in March 1997. A delay of almost six years ensued before the case was reinstated in the superior court and litigation could continue. We disagree with the trial court’s implicit conclusion that this delay should be held against Brennan when evaluating his waiver of arbitration; there is no suggestion in our prior opinion that any of the delays were his fault. (Sindler v. Brennan, supra, 105 Cal.App.4th 1350.) Once the case was reinstated, however, in May 2003, Brennan again gave no hint that he was interested in arbitration until shortly before the case management conference, six months later. Twice, Brennan allowed the case to approach the eve of trial without requesting arbitration.

Brennan points out he raised the arbitration agreement as an affirmative defense twice in his answers, thus indicating his intent to arbitrate. But “mere assertion of this affirmative defense, without more, does not preclude a finding that subsequent conduct may cause a waiver of that right.” (Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 993.)

Brennan’s delay in seeking arbitration cannot support a waiver without a showing of some prejudice to Sindler. (Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 212.) But prejudice can be shown here by the length of the delay in demanding arbitration and the expense incurred from participating in litigation. (Sobremonte v. Superior Court, supra, 61 Cal.App.4th at p. 995.) We recognize that “courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses.” (St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1203; see also Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1197.) But in Saint Agnes Medical Center, the litigation was related to a change of venue; in Groom, it was a series of demurrers. Sindler, on the other hand, was subjected to discovery without the reciprocal advantage of conducting her own. Instead, she was forced to bear the expense of bringing two motions while attempting to secure Brennan’s attendance at depositions. This bad faith conduct, coupled with the delays in seeking arbitration, supports the conclusion that Sindler suffered prejudice. “Arbitration is an expedient, efficient and cost-effective method to resolve disputes. If we consider the amount of time and money [Sindler has] already spent in the judicial system, any benefits [she] may have achieved from arbitration have been lost.” (Sobremonte v. Superior Court, supra, 61 Cal.App.4th at p. 996.)

Brennan concedes the provision providing for a trial de novo if an arbitration award exceeds $10,000 is unconscionable, resulting in a lack of mutuality between him and Sindler. (See Saika v. Gold (1996) 49 Cal.App.4th 1074.) He contends, however, the trial court erred in failing to sever the objectionable provision. Because we have upheld the trial court’s finding that Brennan waived his right to arbitration, we need not discuss this issue.

DISPOSITION

The order denying the motion to compel arbitration is affirmed. Respondent is entitled to costs on appeal.

SILLS, P. J.

WE CONCUR:

BEDSWORTH, J.

FYBEL, J.

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