John Williams v. Atria Las Posas

Atria Las Posas (Atria) appeals from an order

denying its petition to compel arbitration. The trial court denied

the petition because of an integration clause in an agreement the

parties signed. It determined that the clause precluded Atria

from relying on a separate agreement containing an arbitration

clause. We reverse the order because the integration clause does

not preclude proof of the arbitration agreement, and we remand

to the trial court with directions to consider other objections

raised by respondents to the arbitration agreement.

FACTUAL AND PROCEDURAL HISTORY

John Williams, M.D., suffered major injuries,

including a traumatic brain injury, in a bicycle accident.

Vicktoriya Marina-Williams is his wife.

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Atria is an entity which owns and operates a

residential care facility for elder or dependent adults. After his

bicycle accident, Williams was admitted to Atria’s facility. At

that time, Marina-Williams explained to Atria’s representatives

that her husband had previously been placed in a locked

“Memory Unit” due to his cognitive impairments.

Atria personnel asked Williams to sign a “Residency

Agreement,” and he did so. Marina-Williams did not sign the

agreement. The agreement contains an integration clause which

reads in relevant part as follows: “This Residency Agreement

and all of the Attachments and documents referenced in this

Residency Agreement constitute the entire agreement between

you and us regarding your stay in our Community and

super[s]edes all prior agreements regarding your residency.” The

Residency Agreement does not contain an arbitration clause.

Immediately after signing the Residency Agreement,

Williams signed a separate “Agreement to Arbitrate Disputes.”

“Article I: Arbitration” provides in relevant part as follows: “It is

understood that any and all legal claims or civil actions arising

out of or relating to care or services provided to you at [Atria] . . .

or relating to the validity or enforceability of the Residency

Agreement for [Atria], will be determined by submission to

arbitration as provided by: (1) the Federal Arbitration Act (FAA),

9 U.S.C., Sections 1-16, or (2) CA law, in the event a court

determines that the FAA does not apply.” Again, MarinaWilliams

did not sign this agreement.

Shortly after his admission to Atria, Williams walked

away from the facility. When last observed at 5:00 a.m., he had

not yet had his breakfast or his morning medications. Several

hours later, paramedics found him lying in a ditch five miles

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away. He suffered kidney failure, respiratory arrest, heat stroke,

and a second traumatic brain injury.

Williams and Marina-Williams sued Atria and

Williams’s primary care physician, Steven Barr, M.D. In one

cause of action, they alleged that both Atria and Barr were

negligent. In another, Marina-Williams sued both Atria and Barr

for loss of consortium.

Atria petitioned to compel arbitration based upon the

arbitration agreement. Williams and Marina-Williams opposed

the petition. They argued that the integration clause in the

Residency Agreement bars proof of the arbitration agreement;

that the third party litigation exception to arbitration in Code of

Civil Procedure section 1281.2, subdivision (c) (hereafter section

1281.2(c)) applies; that the arbitration agreement is

unconscionable; and that Marina-Williams is not a party to nor

bound by the arbitration agreement.1 The trial court denied the

petition after concluding that the integration clause of the

Residency Agreement is “dispositive.”

DISCUSSION

1. The Integration Clause

Atria contends that the trial court erred when it

concluded that the integration clause in the Residency

Agreement precludes it from relying on the arbitration

agreement. We agree and reverse.

“‘“‘There is no uniform standard of review for

evaluating an order denying a [petition] to compel arbitration.

[Citation.] If the court’s order is based on a decision of fact, then

we adopt a substantial evidence standard. [Citations.]



1 Although not relevant to this appeal, they also argued

that Williams lacked capacity to sign the agreements.

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Alternatively, if the court’s denial rests solely on a decision of

law, then a de novo standard of review is employed. [Citations.]’”’

[Citation.]” (Avila v. Southern California Specialty Care, Inc.

(2018) 20 Cal.App.5th 835, 839-840 (Avila).) When the parties to

an agreement express their intention that it is the final and

complete expression of their agreement, an integration occurs.

Such a contract may not be contradicted by evidence of other

agreements. Whether an agreement is an integration, i.e.,

intended as the final and complete expression of the parties’

agreement, is a question of law for de novo review. (Hayter

Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th

1, 14-15.)

Here the trial court concluded that the Residency

Agreement was intended by the parties as the complete and final

expression of their agreement. In doing so, it relied on Grey v.

American Management Services (2012) 204 Cal.App.4th 803

(Grey). But Grey is inapposite.

In Grey, the plaintiff applied for employment and was

required to sign an “issue resolution agreement” (IRA) as a

condition to having his application considered. (Grey, supra, 204

Cal.App.4th at p. 805.) The IRA included a broad arbitration

provision. (Ibid.) Later, he was hired and signed an employment

agreement. The employment agreement included a more limited

arbitration provision and an integration clause. (Ibid.) When the

plaintiff sued years later for employment discrimination,

harassment, and retaliation, his employer asserted a right to

arbitrate based on the broad arbitration provision of the IRA.

(Id. at p. 806.)

The Grey court concluded that the employment

agreement superseded the IRA, and the employer therefore could

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not rely on the terms of the IRA to compel arbitration, because an

integrated agreement “‘may not be contradicted by evidence of

any prior agreement or of a contemporaneous oral agreement.’

[Citation.]” (Grey, supra, 204 Cal.App.4th at p. 807; see Code

Civ. Proc., § 1856, subd. (a).) “Since the IRA predates the

employment contract, it was superseded by that contract’s

integration clause.” (Grey, at p. 808.)

Here, a review of the timing of the two agreements,

as well as their contents, establishes that the Residency

Agreement was not intended as the final and complete expression

of the parties’ agreement. By its express terms, it superseded

“prior” agreements. But the arbitration agreement was signed

after the Residency Agreement. And the arbitration agreement

expressly provides that it applies to claims regarding “the

validity or enforceability of the Residency Agreement.”2 The trial

court erred in concluding that the integration clause in the

Residency Agreement precludes proof of the later signed

Agreement to Arbitrate Disputes.

2. Other Defenses to Arbitration

Our conclusion that proof of the arbitration

agreement is not barred by the integration clause does not,

however, end our inquiry. Respondents raised other objections to

enforcement of the arbitration clause which were not decided

because the trial court found the integration clause to be

dispositive. Marina-Williams contends that because she did not



2 Although respondents point out that the Residency

Agreement contains a grievance procedure, that procedure only

applies to internal grievances or requests for investigation by a

local or state ombudsman. It does not discuss litigation or

arbitration as a means of dispute resolution.

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sign the arbitration agreement, she is not bound by it. In

addition, the trial court did not decide whether section 1281.2(c)

would apply if the arbitration clause were enforceable. Finally,

the court did not determine if the Agreement to Arbitrate

Disputes is unconscionable and therefore unenforceable.

a. The Loss of Consortium Claim

Atria contends that Marina-Williams’s claim for loss

of consortium “falls within the arbitration agreement,” even

though she did not sign it, because it purports to include claims

arising out of Atria’s care brought by the spouses of injured

parties. We disagree.

Whether a third party is bound by an arbitration

agreement presents a question of law. (Avila, supra, 20

Cal.App.5th at p. 840.) “[P]arties can only be compelled to

arbitrate when they have agreed to do so.” (Id. at p. 843.) But

here, no evidence was presented that Marina-Williams signed the

Agreement to Arbitrate Disputes, or otherwise agreed to its

terms.

And Marina-Williams’s claim is not derivative of her

husband’s cause of action. In California, a claim for loss of

consortium is an independent claim. (Leonard v. John Crane,

Inc. (2012) 206 Cal.App.4th 1274, 1279-1280.) Because MarinaWilliams

is not acting as a representative or heir of her husband,

but is pursuing her own claim based on the alleged misconduct of

others, she is not bound by an arbitration agreement which she

did not sign. (See Bush v. Horizon West (2012) 205 Cal.App.4th

924, 931.)

Accordingly, we conclude the order should be

affirmed as to her cause of action for loss of consortium. (Hoover

v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193,

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1201 [if appealed order is correct on any theory, it must be

affirmed regardless of trial court’s reasoning].)

b. Applicability of Section 1281.2(c)

Atria contends that because the arbitration

agreement provides for the application of the FAA, the procedural

rules of the FAA apply here to the exclusion of section 1281.2(c).

On this point, Atria is mistaken.

In Cronus Investments, Inc. v. Concierge Services

(2005) 35 Cal.4th 376, 394 (Cronus), our Supreme Court held that

language “calling for the application of the FAA ‘if it would be

applicable,’ should not be read to preclude the application of

[section] 1281.2(c), because it does not conflict with the applicable

provisions of the FAA and does not undermine or frustrate the

FAA’s substantive policy favoring arbitration.” This is so, held

the court, because like other federal procedural rules, the

procedural provisions of the FAA are not binding on state courts

“‘“provided applicable state procedures do not defeat the rights

granted by Congress.” [Citation.]’ [Citation.]” (Id. at p. 390.)

And section 1281.2(c) does not defeat rights granted by Congress

because it is “‘part of California’s statutory scheme designed to

enforce the parties’ arbitration agreements, as the FAA

requires.’” (Id. at p. 393.) Nevertheless, our Supreme Court

pointed out that parties to an arbitration agreement can

“expressly designate” that FAA procedural rules rather than

state procedural laws shall apply. (Id. at p. 394, italics omitted.)

That is what occurred in Rodriguez v. American

Technologies, Inc. (2006) 136 Cal.App.4th 1110. In Rodriguez,

the parties expressly designated that FAA procedural rules would

apply when they agreed unconditionally that claims would be

arbitrated “pursuant to the FAA.” (Id. at p. 1122.) The court

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held this language to be “broad and unconditional” because there

was “no other contract provision suggesting the parties intended

to incorporate California arbitration law.” (Ibid.) Nor was there

“any language” suggesting that some provisions of the FAA would

apply but not others. (Ibid.)

But here, the parties agreed to arbitration “as

provided by” the FAA or California law “in the event a court

determines that the FAA does not apply.” Thus, this case is more

like Cronus, which held that conditional language “calling for the

application of the FAA ‘if it would be applicable,’ should not be

read to preclude the application of [section] 1281.2(c).” (Cronus,

supra, 35 Cal.4th at p. 394.)

Respondents on the other hand urge us to find that

section 1281.2(c) applies, and then to apply it to affirm the order

denying arbitration. But that is not our role. The third party

litigation exception set forth in section 1281.2(c) only applies

when the court determines that three conditions are satisfied.

(Acquire II, Ltd. v. Colton Real Estate Group (2013) 213

Cal.App.4th 959, 967-968 [exception applies when: (1) party to

arbitration agreement also a party to a pending court action with

a third party; (2) third party action arises out of the same

transaction or series of transactions; and (3) there is a possibility

of conflicting rulings on a common issue of law or fact].) Once all

three conditions are satisfied, section 1281.2(c) identifies four

options from which the trial court may choose, including denial or

stay of arbitration proceedings, among other things. (Id. at p.

968.) These options are entrusted to the trial court’s discretion.

(Avila, supra, 20 Cal.App.5th at p. 840.)

Accordingly, we will remand to the trial court for it to

determine whether the conditions of section 1281.2(c) have been

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met, and if so, to exercise its discretion on whether to stay or

deny arbitration. (See Avila, supra, 20 Cal.App.5th at p. 840.)

c. Unconscionability

Finally, respondents contend that the arbitration

agreement is unconscionable and urge us to affirm the trial

court’s order on that basis. We decline to do so.

Whether an agreement is unconscionable presents a

question of law which we review de novo. But “factual issues

may bear on that determination. [Citations]. Thus, to the extent

the trial court’s determination that the arbitration agreement

was unconscionable turned on the resolution of conflicts in the

evidence or on factual inferences to be drawn from the evidence,

we consider the evidence in the light most favorable to the trial

court’s ruling and review the trial court’s factual determinations

under the substantial evidence standard.” (Baker v. Osborne

Development Corp. (2008) 159 Cal.App.4th 884, 892.)

Here, the trial court made no findings regarding

either substantive or procedural unconscionability because it

found the integration clause to be dispositive. Accordingly, we

will remand to the trial court for its determination in the first

instance.

The order denying the petition to compel arbitration of Marina-Williams’s cause of action for loss of consortium is affirmed. As to all other causes of action, the order is reversed and the cause remanded with directions to the trial court to

consider and rule on respondents’ objections to enforcement of the Because this is an unqualified reversal, the trial court on remand can also consider respondents’ claim of lack of capacity and other objections to enforcement of the arbitration agreement. arbitration agreement. The parties shall bear their own costs on

appeal.