Gloster v. Sonic Automotive, Inc.
226 Cal. App. 4th 438
| Cal. Ct. App. | 2014Background
- Plaintiff Sean Gloster sued his former employer Melody Toyota, Melody’s parent Sonic Automotive, and others alleging employment-related claims; Toyota filed a demurrer and was not a signatory to Gloster’s arbitration agreements.
- Gloster had signed multiple arbitration agreements (2006, several in 2008, and a 2010 agreement) with varying language about applicability of California law and the Federal Arbitration Act (FAA).
- The Melody defendants pleaded arbitration as an affirmative defense and repeatedly told Gloster before suit that arbitration was required, but did not petition to compel arbitration until about a year after the complaint and concurrently moved for summary judgment.
- The trial court denied both the summary judgment motion and the petition to compel arbitration, finding waiver by delay and a risk of conflicting rulings under Code Civ. Proc. § 1281.2(c) because Toyota would remain in court.
- On appeal, the court held the denial of summary judgment was not appealable and reversed the denial of the petition to compel arbitration, ordering the matter remanded for an arbitration order between Gloster and the Melody defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appealability of denial of summary judgment | Not directly addressed by Gloster as dispositive | Denial of summary judgment is appealable because it affects review of arbitration denial | Denial of summary judgment is not appealable; appeal dismissed as to that ruling |
| Applicability of CCP § 1281.2(c) to deny arbitration when a non‑signatory (Toyota) remains in court | § 1281.2(c) applies (use of 2008 agreement permitting California law); claims against Toyota would create conflict | 2010 FAA‑governed agreement controls, so § 1281.2(c) is inapplicable | § 1281.2(c) inapplicable: FAA‑governed agreement bars § 1281.2(c) relief; moreover, 2008 agreements expressly barred application of § 1281.2(c) as written, so trial court erred in denying petition on that basis |
| Waiver of arbitration by delay and litigation participation | Delay and engagement in litigation (discovery, responses, multiple complaint versions) caused prejudice and waived arbitration | Consistent assertions of intent to arbitrate, limited litigation activity, and reasonable delay (awaiting Toyota demurrer) negate waiver; no substantial prejudice shown | No waiver: defendants’ conduct was not sufficiently inconsistent with arbitration and plaintiff failed to show prejudice; denial on waiver grounds reversed |
| Compelling arbitration with a non‑signatory (Toyota) joined over plaintiff’s objection | Toyota is alleged agent and should be compelled/joined in arbitration | Toyota is not a party to the arbitration agreements; no evidence of agency or contractual consent by Gloster | Toyota cannot be compelled to arbitrate absent a contractual basis; court may not force Gloster to arbitrate with Toyota over his objection |
Key Cases Cited
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187 (California Supreme Court) (sets standards for waiver of arbitration under state law)
- Cronus Investments, Inc. v. Concierge Services, 35 Cal.4th 376 (California Supreme Court) (FAA precludes application of certain California statutes like § 1281.2 when agreement mandates FAA)
- Fit Franchising (MKJA, Inc. v. 123 Fit Franchising, LLC), 191 Cal.App.4th 643 (Cal. Ct. App.) (discusses when orders may be functionally equivalent to petition-to-compel denials)
- Barsegian v. Kessler & Kessler, 215 Cal.App.4th 446 (Cal. Ct. App.) (third‑party agency status cannot be established by boilerplate complaint allegations alone)
- Hoover v. American Income Life Ins. Co., 206 Cal.App.4th 1193 (Cal. Ct. App.) (mere participation in litigation does not automatically waive arbitration)
- Lewis v. Fletcher Jones Motor Cars, Inc., 205 Cal.App.4th 436 (Cal. Ct. App.) (prejudice inquiry for waiver requires more than litigation costs)
- Zakarian v. Bekov, 98 Cal.App.4th 316 (Cal. Ct. App.) (arbitration clause allowing joinder/intervention can permit nonparties to be adjudicated in arbitration when contract so provides)