*1076 Opinion
J(1) Arbitration has become highly favored as an economical, efficient alternative to traditional litigation in law courts. (See, e.g.,
Moncharsh
v.
Heily & Blase
(1992)
The “very essence” of arbitration is finality.
(Moncharsh
v.
Heily & Blase, supra,
The present case concerns an arbitration agreement between a doctor and a patient in which there is virtually no conclusiveness when the patient wins the arbitration. A trial de novo clause within the arbitration agreement purportedly allows either party to disregard the results of the arbitration and litigate in the courts when the arbitration award exceeds $25,000, but, as we explain, the practical effect of the clause is to tilt the playing field in favor of the doctor. By making arbitration virtually illusory as far as one side is concerned, the clause contravenes the strong public *1077 policy favoring arbitration. Accordingly, we conclude the trial de novo clause is not enforceable in equity. It was error for the trial court to deny the patient’s petition to confirm the arbitration award in this case.
I
After Carol Lynn Saika received a chemical skin peel of her face, she sued Dr. Robert Barton Gold for malpractice, claiming she was severely burned by the process. Gold answered the complaint, denied the allegations and claimed Saika had executed an arbitration agreement. He filed a motion to compel arbitration and stay all proceedings.
Gold’s requests were granted, but the arbitration resulted in a large award, $325,000, in favor of Saika. However, the arbitration agreement also contained a trial de novo clause which permitted either party to request a trial with the superior court in the event any arbitration award exceeded $25,000.
Here is the exact language of the trial de novo clause: “In the event that an arbitration award made pursuant to the terms of this agreement is equal to or greater than Twenty Five Thousand Dollars ($25,000.00), either the Doctor or myself |>zc] may request a ‘trial de novo,’ which means new trial, by filing a civil action within sixty (60) days from the date of the arbitration award in a court of law having jurisdiction. Upon the filing of a civil action, the arbitration award that was made under the terms of the Patient-Physician Arbitration Agreement will be null and void and may not be used for any purpose thereafter. An award which is equal to or greater than Twenty Five Thousand Dollars ($25,000.00) shall become binding sixty (60) days after such award is made, provided neither party has filed suit as provided herein, within those sixty (60) days. Neither party to this agreement shall move to have such an arbitration award confirmed by a court of law until the sixty (60) day time period has elapsed.”
Gold filed a request for a trial de novo, citing the clause. Saika responded by filing a motion to strike it and by filing a petition to confirm the arbitration award. The court granted Gold’s request, and denied both the motion to strike and the petition to confirm. Saika now appeals from the order dismissing the petition to confirm. 1
In the trial court the parties disputed whether Saika ever signed the arbitration agreement. The details of the dispute are irrelevant for our purposes here; suffice to say the trial court impliedly found, by denying Saika’s petition, that she did indeed sign the agreement and even knew of the *1078 trial de novo clause. Accordingly we assume that to be the case in reviewing the trial court’s order.
II
We begin with the seminal decision in this area of the law,
Beynon
v.
Garden Grove Medical Group
(1980)
In Beynon, the plaintiff was the employee of a company which had a prepaid health care service plan. The master policy had a provision making arbitration, under three arbitrators, the exclusive remedy for resolving any controversy under the plan, but a subsection of that provision allowed the health care provider to reject without cause an arbitration decision and require resubmission of the controversy to a second arbitration panel, this one made up of three doctors. (See 100 Cal.App.3d at pp. 701-703.)
A dispute arose over alleged surgical malpractice committed by a doctor who was a member of a medical group used by the plan. After learning of the arbitration clause in the master policy, the plaintiff proceeded to arbitration before a panel of attorneys who unanimously returned a $60,000 award. The doctor and the medical group then gave notice of their rejection of the arbitrators’ decision and their intention to require resubmission of the dispute to the second panel. The plaintiff countered with a petition to confirm the $60,000 award. The trial court denied the petition, but the appellate court reversed, holding that the award should have been confirmed. (100 Cal.App.3d at pp. 702-704.) In essence, the Beynon court reasoned that the clause allowing the health care providers to reject the first arbitration could not be enforced in light of the unilateral advantage it conferred on the stronger party, combined with the absence of any evidence the clause was ever “called” to the plaintiff’s attention. (See id. at pp. 707-708 [“The provisions of paragraph B are . . . ‘especially disadvantageous’ for the beneficiary. A subscriber to a health care service plan cannot be bound by such provisions where they were not called to his or her attention at the time of enrollment or at least before the cause of action arose.”].)
The two threads of lack of notice and unfairness run through the
Beynon
opinion. With regard to the former, the court noted that the master policy was a classic adhesion contract, where the party with the superior bargaining power offered the deal on “essentially a ‘take it or leave it’ basis without opportunity for individual bargaining.” (
The case before us differs with Beynon in three respects. First, Beynon involved a prepaid health plan, with a rejection clause which was never called to the attention of the employee covered by the plan. Here, we must accept the implied finding by the trial court that Saika did know of the trial de novo clause and specifically signed the arbitration agreement.
Second, Beynon’s rejection provision was wholly unilateral. Only one side—the health care providers—could escape the result of the first arbitration. By contrast, the trial de novo clause in the present case affords an ostensible modicum of bilaterality. Once a $25,000 threshold is cleared, either the patient or the doctor can reject the arbitration and litigate.
Finally, the rejection clause in
Beynon
provided for a second arbitration; when the second arbitration was over, at least the results of that arbitration were binding. (See
We address this last difference first, because that difference, if anything, only emphasizes how the trial de novo clause here thwarts the salutary aims of arbitration. In Beynon, if the doctor did not like the result of the arbitration, the patient had to run but one more gauntlet, another arbitration. In the present case, by contrast, the trial de novo clause means, in practical effect, that the patient must enter a whole new world—litigation in the courts. Rather than facing simply another round of a process that is speedy, simple and efficient, the patient must begin at square one in the courts, with the potential, for example, of an appeal which might even (if some federal question were involved) make its way to the United States Supreme Court. Thus, on the third point, Beynon applies to the present case a fortiori. If the rejection clause meant incrementally increased expense and delay in Beynon, a trial de novo clause such as the one here means increased expense and delay on a substantially increased order of magnitude.
The second difference—the modicum of bilaterality present here but not in Beynon—is inconsequential. In practical reality, the trial de novo clause is virtually meaningless to the patient.
*1080
True, there is a theoretical class of cases where the trial de novo clause could arguably benefit a patient—namely, situations where the initial arbitration award
exceeds
$25,000 but is
still so low
that it represents an injustice. (Cf.
Moncharsh
v.
Heily & Blase, supra,
But, in the vernacular of late 20th century America, let us “get real.” As a practical matter, the benefit which the trial de novo clause confers on patients is nothing more than a chimera. The odds that an award will both (a) clear the $25,000 threshold but (b) still be so low that the patient would want to have a trial de novo are so small as to be negligible. Unless we are to assume that arbitrators in medical malpractice cases regularly and capriciously make awards substantially below what justice requires—and that is an assumption which we will not indulge—the cases where the trial de novo clause could possibly benefit the patient are going to be rare indeed.
In sum, while the trial de novo clause in the present case purports to apply to both parties, it is the same “heads I win, tails you lose” proposition that the court condemned in
Beynon.
(See
Beynon
v.
Garden Grove Medical Group, supra,
We now come to the only real basis on which
Beynon
might be distinguished, the question of whether the arbitration clause was ever “called to [the] attention” of the patient. (See
While the difference does represent a real factual difference in the two cases, it is not dispositive on the question of whether public policy countenances the trial de novo provision at hand.
The
Beynon
court may not have actually used the word “illusory” in its discussion, but the illusory nature of the rejection clause acted as a kind of basso continuo for the court’s discussion on the one-sided, unilateral nature of the rejection clause. In
Beynon,
the rejection clause “unreasonably Unfitted]” the obligations of the health plan. (
In other words, the rejection clause meant the arbitration agreement really did not function as an arbitration agreement. The promise of an inexpensive, speedy resolution to the claim evaporated with one party’s unilateral ability to avoid results it did not like.
We have already referred to the strong public policy favoring arbitration. That policy is manifestly undermined by provisions in arbitration clauses which seek to make the arbitration process itself an offensive weapon in one party’s arsenal.
Moreover, public confidence in arbitration in large part depends on the idea that arbitration provides a fair alternative to the courts. That confidence is manifestly undermined when provisions in arbitration clauses provide that when one side wins the game doesn’t count. To uphold this clause would only encourage lawyers for health care providers to find ways in which arbitration agreements could be structured to, in effect, load the dice in favor of their clients. Alternative dispute resolution must be a genuine alternative to litigation in the courts, not a sham process by which one party to an agreement can increase the total costs of making a claim against it.
In this regard, our conclusion is dictated by the principles of equity which ultimately underlie the enforcement of arbitration agreements. It is well settled that a proceeding to compel arbitration is a suit
in equity
to compel the specific performance of a contract. (E.g.,
Freeman
v.
State Farm Mut. Auto Ins. Co.
(1975)
It is equally well settled that specific performance cannot be enforced against a party to a contract which is not, as to that party, “just and reasonable.” (Civ. Code, § 3391 [“Specific performance cannot be enforced against a party to a contract in any of the following cases: [f ... [1 2. If it is not, as to him, just and reasonable.”]; see also
MacFadden
v.
Walker
(1971)
In the present case, we are concerned with the effect of a trial de novo clause on an arbitration agreement, not strictly an arbitration agreement per se. But that makes no difference. If equitable principles govern the specific performance of arbitration agreements, they govern clauses within arbitration agreements which purport to limit the favored remedy of arbitration. As we have shown, the trial de novo clause here is most inequitable in its impact on “the other party.” The net effect, after all, of enforcing the trial de novo clause is to deny the remedy of arbitration to that party. There is no reason in equity to enforce it.
Ill
Because it renders arbitration an illusory remedy for one party, the trial de novo clause here contravenes the strong public policy in favor of arbitration despite the fact that the patient signed the agreement and may be presumed to have known of the clause. Equity will not enforce this clause. Accordingly, the order denying Saika’s petition to confirm the arbitration award is reversed. The case is remanded with directions to the trial court to enter a new order confirming the $325,000 arbitration award. Saika is to recover her costs on appeal as well.
Crosby, J., and Rylaarsdam, J., concurred.
Notes
The order is appealable. (Code Civ. Proc., § 1294, subd. (b).)
