Lerner v. Masterson CA2/5
B297323
| Cal. Ct. App. | Jul 27, 2021Background
- Kimberly Lerner signed identical physician-patient arbitration agreements with Drs. Masterson and Bochner; the parties stipulated to binding arbitration in a 2008 malpractice action (Lerner I) and the court stayed the action pending arbitration.
- Parties selected party arbitrators and a neutral; arbitration proceeded intermittently (depositions, IME) but experienced long delays and two neutral arbitrator withdrawals.
- After neutral Arbitrator Horton disclosed a potential conflict in 2016, the parties could not agree on a successor; the doctors filed a §1281.6 petition in Lerner I but the trial court denied it for lack of jurisdiction because Lerner I had been dismissed.
- The doctors thereafter refused further participation in arbitration; the Lerners filed a new action (Lerner III) seeking specific performance and a court appointment of a neutral arbitrator.
- The trial court denied the petition in Lerner III and granted the doctors’ summary judgment, finding the Lerners had unreasonably delayed prosecution; the Court of Appeal reversed and directed the trial court to appoint an arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §1281.6 require the court to appoint an arbitrator when the agreed method fails? | §1281.6 is mandatory — the court must appoint a neutral if the selection method fails. | The court may deny appointment if the petitioner unreasonably delayed arbitration (waiver/failure to prosecute). | Court: §1281.6 is mandatory; when the agreed method fails the court must nominate and appoint; it cannot deny appointment based on alleged unreasonable delay. |
| Can a trial court deny relief on the ground arbitration should be dismissed for unreasonable delay? | Any dismissal for delay is for the arbitrator (once appointed) to decide, not the court. | Dismissal for failure to prosecute is appropriate and justifies denying appointment or suit. | Court: Dismissal for unreasonable delay is an arbitral remedy; the trial court lacks authority under the CAA to dismiss arbitration for delay and should not refuse to appoint an arbitrator for that reason. |
| Was the trial-court order denying the petition to appoint an arbitrator directly appealable? | Lerners: denial of petition in Lerner I was not finally appealable and may be reviewed with the later final judgment. | Doctors: the denial was a final, appealable order (functional equivalent of denying a petition to compel arbitration) and the appeal is untimely. | Court: The order denying appointment was not directly appealable under §1294; it was an intermediate ruling reviewable on appeal from the final judgment. |
| Could the court refuse to consider the Lerner III petition because prior petitions or procedural defects existed (jurisdiction, timeliness, adequacy)? | Lerner: petition in Lerner III was proper; prior jurisdictional denial in Lerner I was not a merits decision and did not bar new petition; any procedural defects were curable and did not justify denying mandatory appointment. | Doctors: petition was improper (reconsideration), untimely, inadequate (failed to supply lists), and barred by dismissal or statutes of limitation. | Court: Rejected defendants’ procedural objections; §1281.6 allows the court to obtain nominee lists from agencies if parties fail to supply them; prior jurisdictional ruling in Lerner I did not preclude relief in Lerner III. |
Key Cases Cited
- Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc., 6 Cal.5th 59 (Cal. 2018) (California policy strongly favors arbitration).
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (Cal. 1997) (trial court may find waiver of right to compel arbitration in limited circumstances; waiver requires substantial unreasonable delay).
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187 (Cal. 2003) (factors to assess waiver of arbitration).
- Brock v. Kaiser Foundation Hospitals, 10 Cal.App.4th 1790 (Cal. Ct. App. 1992) (trial court lacks power to dismiss arbitration for unreasonable delay; arbitrator decides).
- Burgess v. Kaiser Foundation Hospitals, 16 Cal.App.4th 1077 (Cal. Ct. App. 1993) (arbitrator may dismiss for failure to prosecute; five-year import into arbitration diligence).
- Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (Cal. Ct. App. 2012) (petition to compel arbitration may be filed as an independent action when no court proceeding is pending).
- Gaines v. Fidelity National Title Ins. Co., 62 Cal.4th 1081 (Cal. 2016) (stay and interaction between arbitration and court proceedings).
- Dodd v. Ford, 153 Cal.App.3d 426 (Cal. Ct. App. 1984) (dismissal of the action at law does not terminate an independent arbitration proceeding).