Procedural Posture

Procedural Posture

Petitioner employers sought mandate relief from an order of respondent Superior Court of Los Angeles County (California) compelling arbitration of their breach of contract and related claims against real parties in interest, the third party administrator for their workers’ compensation insurance claims and the insurers.

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Overview

Deductible agreements relating to the workers’ compensation insurance policies included an arbitration clause. The administrator was not a signatory to these agreements, and there was no arbitration clause in the employers’ contracts with the administrator. The insurers initiated arbitration proceedings against the employers seeking to recover premium payments and deductibles. The employers filed suit against the administrator, contending that it had mishandled claims, and asserted a cause of action for declaratory relief against the insurers. The court held that the administrator could not compel arbitration under the doctrine of equitable estoppel because the employers’ claims against the administrator were not founded in, or inextricably intertwined with, the deductible agreements. Even if both actions might involve interpretation of the deductible or policy agreements, such commonality of issues did not mean the actions were necessarily intertwined. The options provided by Code Civ. Proc., § 1281.2, subd. (c), did not include compelling arbitration when a party had not agreed to it. As to the insurers, there was no reason to disturb the superior court’s order to arbitrate.

Outcome

The court issued a peremptory writ of mandate directing the superior court to vacate the portion of its order that had granted the motion to compel arbitration as to the administrator, to enter a new order denying that motion as to the administrator, and to conduct further proceedings.

Author: Michle Smith