An open question in California case law is when a petition to compel arbitration
should occur. The California Arbitration Act provides, under Code of Civil Procedure
Section 1281.2, that a petition to compel arbitration will be granted unless the "right to
compel arbitration has been waived", but does not express a deadline. Case law on point,
largely expressed in the California Supreme Court decision in Saint Agnes Medical Center
v. PacifiCare of California (2003) 31 Ca1.4th1187 ('Saint Agnes"),generally holds that there
will be no waiver of the right to arbitration absent a finding that the petitioning party's
conduct in pursuing litigation of a dispute has substantially undermined the important
public policy favoring arbitration or where the petitioning party's conduct substantially
impaired the other side's ability to take advantage of the benefits and efficiencies of
arbitration.
Two cases on point, Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980
("Sobremonte") and Groom v. Health Net (2000) 82 Cal.App.4th 1189 ("Groom")- both of
which were cited in Saint Agnes, arrived at substantially different conclusions based on
similar fact patterns using the same fact based criteria.
In Sobremonte, the Court of Appeal set forth six factors to consider in whether a
waiver has taken place:
"(1) whether the party's actions are inconsistent with the right to
arbitrate;
(2)whether 'the litigation machinery has been substantially invoked'
and the parties 'were well into preparation of a lawsuit' before the
party notified the opposing party of an intent to arbitrate;
(3)whether a party either requested arbitration enforcement close to
the trial date or delayed for a long period before seeking a stay;
(4)whether a defendant seeking arbitration filed a counterclaim
without asking for a stay of the proceedings;
(5) 'whether important intervening steps [e.g., taking advantage of
judicial discovery procedures not available in arbitration] had taken
place'; and
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(6) whether the delay 'affected, misled, or prejudiced' the opposing
party."
Sobremonte, supra, 61 Cal.App.4th at 992. Based on that criteria, the Court of Appeal in
Sobremonte found that a bank defendant waived its rights to arbitrate a dispute with its
customers by waiting to demand arbitration until its customers spent 10months preparing
their case for a full trial at a considerable expenditure of time and money, including over
200hours in trial preparation. However, in Groom, which was decided after Sobremonte,
the Court of Appeal reversed an order denying a petition to compel arbitration even
though the petitioning party did not file a motion to sompel until 11months after the filing
of the complaint and after the petitioning party demurred four times to the original and
amended complaints. The Court of Appeal in Groom found no waiver" simply from the
time and expense of opposing [the petitioning party's] demurrers and drafting amended
pleadings." Groom, supra, 82 Cal.App.4th at 1197.
In Saint Agnes, the California Supreme Court analyzed both Sobremonte and
Groom, and without over turning either decision, confirmed that the Sobremonte factors
were "relevant" and "proper" in considering waiver claims. The Court in Saint Agnes also
acknowledged that the issue of waiver is a question of fact and the trial court's finding, if
supported by substantial evidence, is binding.
A difficulty for practitioners has been the application of the Sobremonte factors in
light of the disparate holdings in Sobremonte and Groom. In that regard, some light
appears to have been shed on this contradiction by the recent decision in Burton v. Cruise
(2010) DJDAR18393 ("Burton").In Burton, an action concerning a medical malpractice case
involving a liposuction procedure, the plaintiff filed a Complaint in April 2008,filed a Case
Management Statement in July 2008 without requesting arbitration and then attended a
Case Management Conference where the trial court set a trial date in April 2009. The
parties then went through discovery and designated experts. In February 2009, the
plaintiff, for the first time, sought arbitration. A Petition to Compel was then filed in
March 2009,which was denied. The trial court, in its decision, found that the defendant
doctor's claim of prejudice, i.e. that experts which were retained were for a jury trial and
not an arbitration panel, and the passage of time, demonstrated sufficient prejudice. On
appeal, the Court of Appeal acknowledged the obvious dichotomy in the Sobremonte and
Groom cases but ruled that the Sobramonte holding should control. Quoting the Court in
Burton:
"[o]n a closer, policy-based analysis, St. Agnes seems more wedded to
Sobremonte than to Groom. Although we believe the cases are not necessarily
inconsistent, to the extent there is a conflict, it is Groom which is the odd man
out."
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