Douglass v. Serenivision, Inc.
20 Cal. App. 5th 376
| Cal. Ct. App. 5th | 2018Background
- Vivera signed a one-page Insertion Order that expressly incorporated a Master Advertiser Agreement (Master Agreement) by web link; the Master Agreement contained a broad arbitration clause and an award-of-fees provision and stated payments were personally guaranteed by the individual executing the Insertion Order.
- Serenivision (doing business as Pinnacle Dream Media) demanded arbitration to collect about $816,530; Douglass (who signed the Insertion Order for Vivera) answered, denied liability, and asserted he never agreed to the Master Agreement.
- For ~10 months Douglass participated in arbitration conferences and told the arbitrator he was appearing "voluntarily" to avoid federal litigation; he asked the arbitrator to order Serenivision to post a bond and, after that request was denied shortly before the hearing, withdrew and did not attend the evidentiary hearing.
- The arbitrator found Douglass had consented to let the arbitrator decide jurisdiction, concluded the Insertion Order incorporated the Master Agreement, held Douglass liable as guarantor, and issued an award for about $1.75 million plus interest and fees.
- Douglass filed to vacate the award 125 days after service (beyond the 100-day statutory limit); the trial court confirmed the award, finding Douglass had clearly and unmistakably consented to arbitrability being decided by the arbitrator and that the arbitrator did not exceed his powers.
Issues
| Issue | Douglass's Argument | Serenivision's Argument | Held |
|---|---|---|---|
| Timeliness of challenge to award | Petition to vacate timely because jurisdiction can be raised anytime; service defective | Petition was filed after the 100-day statutory deadline; served May 30 | Untimely — filed after 100 days; prior admission of service barred contradiction |
| Whether parties clearly and unmistakably agreed that arbitrator decides arbitrability | Douglass did not consent; any participation was conditional on bond that wasn’t posted | Douglass's prolonged, unconditional participation and tactical use of arbitration constituted clear, unmistakable consent | Held for Serenivision — Douglass's conduct constituted clear and unmistakable consent to arbitrator deciding arbitrability |
| Whether arbitrator correctly concluded arbitration clause applies (incorporation) | Douglass: did not sign Master Agreement or Insertion Order; no incorporation | Insertion Order expressly incorporated Master Agreement by link; Douglass admitted signing the Insertion Order | Held for Serenivision — incorporation valid; dispute falls within arbitration clause |
| Whether arbitrator exceeded powers in holding Douglass liable as guarantor | Douglass: not signatory; cannot be bound by arbitration or guaranty | Insertion Order acceptance + Master Agreement guaranty clause bind signer as guarantor | Held for Serenivision — arbitrator did not exceed powers; findings sustained |
Key Cases Cited
- Sandquist v. Lebo Automotive, Inc., 1 Cal.5th 233 (Cal. 2016) (strong presumption that courts decide arbitrability absent clear and unmistakable agreement otherwise)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (parties may assign questions of arbitrability to arbitrators if agreement is "clear and unmistakable")
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitration is a matter of contract; courts apply ordinary contract principles to arbitrability)
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (California precedent deferring to arbitrator's decision on matters parties agreed to submit)
- National Union Fire Ins. Co. v. Stites Prof. Law Corp., 235 Cal.App.3d 1718 (Cal. Ct. App. 1991) (distinguishable language on arbitrator subject-matter jurisdiction tied to statute rather than contract)
- Christensen v. Dewor Developments, 33 Cal.3d 778 (Cal. 1983) (tests for waiver by conduct in arbitration context)