The opinion
Filed 2/18/14 Brown v. Beverly Hills Surgery Center CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
BETTY A. BROWN, Individually and as B243494
Executor, etc., et al.,
(Los Angeles County
Plaintiffs and Respondents, Super. Ct. No. BC468944)
v.
BEVERLY HILLS SURGERY CENTER,
LLC, et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los Angeles County, Norman P.
Tarle, Judge. Affirmed.
Bonne, Bridges, Mueller, O’Keefe & Nichols, David J. O’Keefe and Vangi M.
Johnson, for Defendants and Appellants Beverly Hills Surgery Center, LLC, Top
Surgeons, LLC, and 1-800-Get-Thin, LLC.
Blumberg Law Corporation, Ave Buchwald and John P. Blumberg, for Plaintiffs
and Respondents Betty A. Brown, Individually and as Executor of the Estate of Tamara
Walter, Ed Pennings and Gamble Lancaster.
__________________
Beverly Hills Surgery Center, LLC, Top Surgeons, LLC, doing business as
Weight Loss Centers, and 1-800-Get-Thin, LLC (collectively the surgery center
defendants) appeal from an order denying their petition to compel arbitration in this
wrongful death action brought by Betty Brown, Ed Pennings and Gamble Lancaster, the
surviving adult siblings of Tamara Walker (collectively the Walker plaintiffs).1 After
spending several months defending the action, the surgery center defendants petitioned to
compel arbitration based on the arbitration provisions in several contracts Walker had
signed prior to undergoing bariatric surgery. The superior court denied the petition,
finding the surgery center defendants had waived any contractual right to arbitrate the
claims against them. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Complaint
On September 2, 2011 the Walker plaintiffs filed this action in Los Angeles
County Superior Court, Central District, alleging 52-year-old Walker had died after
undergoing bariatric surgery on December 23, 2010 and asserting causes of action against
the surgery center defendants and several others for medical malpractice, intentional and
negligent misrepresentation, negligent referral, negligent hiring and negligent
supervision.
2. The Surgery Center Defendants’ Active Motion and Discovery Practice
On November 18, 2011 Top Surgeons and 1-800-Get-Thin demurred to the
complaint and moved to strike allegations relating to punitive damages. On
December 16, 2011 Beverly Hills Surgery Center appeared and demurred to the two
causes of action alleged against it. It also moved to transfer the matter to the superior
court’s Western District (Santa Monica), contending the lawsuit had been improperly
filed in the Central District. None of the demurrers or motions mentioned an arbitration
agreement.
1
Brown filed the lawsuit both in her individual capacity and as executor of
Walker’s estate.
2
Beginning in December 2011 the surgery center defendants served broad ranging
written discovery requests on the Walker plaintiffs, including two sets of form
interrogatories, special interrogatories, requests for admissions and multiple requests for
production of documents. The surgery center defendants also responded to the Walker
plaintiffs’ similarly extensive written discovery requests.
In February 2012 the trial court granted Beverly Hills Surgery Center’s motion to
transfer the lawsuit to the Western District. On April 9, 2012 the surgery center
defendants moved to compel further responses to interrogatories and document requests
and sought discovery sanctions.
The surgery center defendants deposed each of the three Walker plaintiffs for
several days in April 2012. In addition, Beverly Hills Surgery Center jointly noticed
(along with another defendant who is not a party to the appeal) the deposition of
Courtney Brown, Walker’s former ward, and agreed to produce Charles Klasky, the
surgery center defendants’ managing representative, for his noticed deposition once the
depositions of all three Walker plaintiffs had been completed. At no time during this
active discovery process did the surgery center defendants disclose the existence of the
arbitration agreements.
On June 1, 2012 the court sustained the surgery center defendants’ demurrers to
most of the causes of action with leave to amend and denied their motions to strike. On
June 5, 2012 the Walker plaintiffs filed their first amended complaint.
On June 13, 2012 the surgery center defendants participated in the deposition of
Courtney Brown. In a letter dated the same day, the surgery center defendants notified
the Walker plaintiffs of their intent to petition to compel arbitration in accordance with
the arbitration agreements Walker had signed unless the Walker plaintiffs stipulated to
resolving their action in the arbitral forum. The Walker plaintiffs contested the
3
enforceability of the arbitration provision but agreed to stay additional discovery pending
resolution of the arbitration controversy.2
3. The Petition To Compel Arbitration
On June 15, 2012 the surgery center defendants filed their petition to compel
arbitration of the claims against them based on six separate arbitration agreements
Walker had signed prior to her surgery.3 Neither the petition nor the supporting papers
offered any explanation for the delay in seeking arbitration.
The Walker plaintiffs opposed the petition, arguing (1) the arbitration agreements
executed prior to December 23, 2010, the day of Walker’s bariatric surgery, were
improperly authenticated and inadmissible; (2) the agreement to arbitrate signed on
December 23, 2010 was unenforceable because Walker had died within the agreement’s
30-day rescission period; (3) only Beverly Hills Surgery Center had standing to enforce
the agreements; and (4) the surgery center defendants had waived any right to compel
arbitration.
In their reply papers the surgery center defendants insisted, among other things,
they had not waived their right to compel arbitration. Emphasizing the trial court had
only ruled on their demurrers and motions to strike on June 1, 2012, they argued “[t]he
2
The surgery center defendants’ motions to compel were taken off calendar at that
time.
3
Each of the six agreements provided, “It is understood that any dispute as to
medical malpractice, that is as to whether any medical services rendered under this
contract was [sic] unnecessary or unauthorized or were improperly, negligently or
incompetently rendered, will be determined by submission to arbitration as provided by
California law, and not by a lawsuit or resort to court process except as California law
provides for judicial review of arbitration proceedings. Both parties to this contract, by
entering into it, are giving up their constitutional right to have any such dispute decided
in a court of law before a jury, and instead are accepting the use of arbitration. [¶] It is
the intention of the parties that this Agreement bind all parties whose claims may arise
out of or relate to the treatment or services provided . . . . [¶] All claims against the
health care provider, physician, surgeon, and/or any partners, associates, associations,
corporations or partnerships, and the employees, agents, independent contractors and/or
estates of any of them, must be arbitrated, including without limitation, claims for loss of
consortium, wrongful death, wrongful life, emotional distress or punitive damages . . . .”
4
lengthy [nine-month] gap between the filing of the initial [c]omplaint and [the surgery
center] defendants’ demand to compel arbitration [wa]s due primarily to the inability of
defendants to have their [demurrers and motions to strike] heard quickly. This was not in
control of the [surgery center] defendants.” They did not offer any other explanation for
their delay in seeking arbitration.4
After hearing argument and taking the matter under submission, the trial court
denied the petition. Assuming without deciding there was a valid arbitration agreement
enforceable by each of the surgery center defendants and all claims fell within the scope
of that agreement, the court found the surgery center defendants had waived (forfeited)
their contractual right to arbitrate. In its August 21, 2012 order the court explained:
“Defendants argue it’s ‘not their fault’ so much time elapsed, as it was due in large part to
the court’s inability to hear the demurrers earlier. This is not the point. The point is that,
if Defendants wanted to compel arbitration, they should have done that first, not after
filing demurrers and motions to strike. The Court finds Defendants waived their right to
move to compel arbitration by filing demurrers and motions to strike, propounding and
responding to discovery, and failing to file this motion until [June 15, 2012], more than
six months after they initially appeared in connection with the case.”
4
At the hearing on the petition to compel arbitration, the court expressed doubt
about the surgery center defendants’ purported lack of knowledge of the arbitration
agreements. Counsel for the surgery center defendants explained she, as well as her
predecessor counsel, had been unaware of the arbitration agreements due to staff turnover
in the surgery center defendants’ general counsel’s office; and she had acted promptly to
compel arbitration once she learned of them. When counsel for the Walker plaintiffs
appeared to question those representations, the court interjected, making clear it took
counsel at her word with regard to her own actions and those of her predecessor counsel,
but distinguished between counsel’s ignorance of the arbitration agreements and that of
her clients.
5
DISCUSSION
1. Governing Law and Standard of Review
California’s strong public policy favors arbitration as a relatively quick and cost-
effective means to resolve disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9;
St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 (St.
Agnes); Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.)
Absent certain limited exceptions, California law requires the trial court to enforce a valid
written agreement to arbitrate any controversy that falls within the scope of the
agreement unless “the right to compel arbitration has been waived” by the moving party.
(Code Civ. Proc., § 1281.2, subd. (a).)5
“In the arbitration context, ‘[t]he term “waiver” [is] used as a shorthand statement
for the conclusion that a contractual right to arbitration has been lost.’” (St. Agnes, supra,
31 Cal.4th at p. 1195, fn. 4; accord, Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307,
315.) “This does not require a voluntary relinquishment of a known right; to the
contrary, a party may be said to have ‘waived’ its right to arbitrate by an untimely
demand, even without intending to give up the remedy. In this context, waiver is more
like a forfeiture arising from the nonperformance of a required act.” (Burton v. Cruise
(2010) 190 Cal.App.4th 939, 944; accord, Platt Pacific, Inc., at pp. 314-315.)
In light of the strong public policy favoring arbitration, claims of waiver are
subject to “close judicial scrutiny,” and the “party seeking to establish a waiver bears a
heavy burden” with all doubts resolved in favor of arbitration. (St. Agnes, supra,
31 Cal.4th at p. 1195; Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th
436, 443.) While “no single test” can delineate all the possible conduct that may
constitute a waiver of arbitration (St. Agnes, at p. 1195), in assessing whether waiver has
5
Federal law, which also recognizes and enforces a strong public policy favoring
arbitration (St. Agnes, supra, 31 Cal.4th at p. 1204; AT&T Mobility LLC v. Concepcion
(2011) 563 U.S. ___ [131 S.Ct. 1740, 1745, 179 L.Ed.2d 742]), similarly acknowledges
the right to arbitrate may be forfeited under certain circumstances. (See St. Agnes, at
p. 1195.) Here, neither party disputes the agreements are governed by California law, not
the Federal Arbitration Act.
6
occurred, the trial court is guided by the six relevant factors identified by the Supreme
Court in St. Agnes: “(1) [W]hether the party’s actions are inconsistent with the right to
arbitrate; (2) whether the litigation machinery has been substantially invoked and the
parties were well into the preparation of a lawsuit before the party notified the opposing
party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement
close to the trial date or delayed for a long period before seeking a stay; (4) whether a
defendant seeking arbitration filed a counterclaim without asking for a stay of the
proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial
discovery procedures not available in arbitration] had taken place; and (6) whether the
delay affected, misled or prejudiced the opposing party.” (Id. at p. 1196 [second set of
brackets in original; internal quotation marks omitted]; accord, Lewis v. Fletcher Jones
Motor Cars, Inc., supra, 205 Cal.App.4th at p. 445; cf. Burton v. Cruise, supra,
190 Cal.App.4th at pp. 944-945 [applying a four factor test when two of the factors
identified in St. Agnes—whether a defendant seeking arbitration had filed a counterclaim
and whether important intervening steps had taken place—were not applicable].)
Waiver does not occur by “mere participation in litigation.” (St. Agnes, supra,
31 Cal.4th at p. 1203.) There must also be prejudice. (Id. at pp. 1203-1204; Hoover v.
American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1205 [prejudice is critical
to the analysis of waiver; absent prejudice, there can be no waiver].) Prejudice,
moreover, is not established merely by showing the nonmoving party has incurred costs
and legal expenses in connection with the litigation. (St. Agnes, at p. 1203; Roman v.
Superior Court (2009) 172 Cal.App.4th 1462, 1479.) Prejudice may arise, however,
when the petitioning party has “unreasonably delayed” in seeking arbitration (St. Agnes,
at pp. 1203-1204; Burton v. Cruise, supra, 190 Cal.App.4th at p. 947) or has substantially
impaired an opponent’s ability to obtain the benefits and efficiencies of arbitration.
(Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 555, 558, fn. 1; Hoover, at
p. 1205; Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1451-1452.)
“Generally, the determination of waiver is a question of fact, and the trial court’s
finding, if supported by sufficient evidence, is binding on the appellate court.”
7
(St. Agnes, supra, 31 Cal.4th at p. 1196; accord, Burton v. Cruise, supra, 190 Cal.App.4th
at p. 946 [“‘“[i]t was the trial court’s duty to determine whether” the petitioners met their
“burden of proof; it is our duty to determine whether there is substantial evidence to
support the trial court’s findings that it did”’”].) “We construe any reasonable inference
in the manner most favorable to the judgment, resolving all ambiguities to support an
affirmance.” (Burton, at p. 946; accord, Adolph v. Coastal Auto Sales, Inc., supra, 184
Cal.App.4th at p. 1452.) It is only when “‘the facts are undisputed and only one
inference may reasonably be drawn’” that the issue is one of law. (St. Agnes, at p. 1196;
accord, Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th at p. 319; Hoover, at p. 1202.)
2. The Trial Court’s Finding of Waiver Is Supported by Substantial Evidence and
Is Not Erroneous As a Matter of Law
In challenging the trial court’s waiver finding, the surgery center defendants focus
their attention on whether “the litigation machinery ha[d] been substantially invoked” and
whether their delay in seeking arbitration prejudiced the Walker plaintiffs. They insist
the answer to both questions is indisputably no, emphasizing the instant litigation is still
in its early stages: No trial date has been set; no responsive pleading to the first amended
complaint has yet been filed; no experts have been designated; and no depositions have
actually been taken by the Walker plaintiffs. The “minimal discovery” that has taken
place—the written discovery propounded and responded to by both sides and the
completed depositions of the three plaintiffs and a plaintiff’s witness—was preliminary in
nature and would have been available in arbitration as well.6 Absent a showing the delay
6
Five of the six arbitration agreements state discovery shall be conducted pursuant
to Code of Civil Procedure section 1283.05, which vests parties to an arbitration
agreement with the same rights as provided in the statutes governing discovery in a
judicial forum except that leave of the arbitrator is required before depositions may be
taken. As to that limiting requirement, however, the five agreements expressly state
leave of the arbitrator is not required to take depositions. The December 23, 2010
agreement is slightly different: It provides “[a]ll laws of California Civil Procedure shall
apply including but not limited to discovery” unless the parties agree to waive such
requirements. It thus appears leave of the arbitrator would be required to conduct
depositions under this agreement unless the parties waived this requirement.
8
has caused any actual prejudice, they argue, the evidence in this case is insufficient as a
matter of law to sustain the court’s findings of waiver. (See St. Agnes, supra, 31 Cal.4th
at p. 1203; Roman v. Superior Court, supra, 172 Cal.App.4th at p. 1479; cf. Burton v.
Cruise, supra, 190 Cal.App.4th at pp. 949, 950 [upholding trial court’s finding of waiver
where defendants participated in litigation for 11 months, filed several demurrers and
motions to compel discovery, a trial date had been set, discovery taken and experts had
been designated with a jury in mind].)7
The surgery center defendants present a solid case for an initial finding of
nonwaiver. However, as discussed, our review is limited to determining whether the
evidence is insufficient as a matter of law to support the trial court’s finding of waiver.
Construing all reasonable inferences in support of the court’s order, as we must, the
record simply does not establish nonwaiver as a matter of law. (See Lewis v. Fletcher
Jones Motor Cars, Inc., supra, 205 Cal.App.4th at p. 453 [“[i]t is not enough the trial
court potentially could have reached a different conclusion; rather, we may reverse the
trial court’s waiver finding only if the record establishes a lack of waiver as a matter of
law”]; Hoover v. American Income Life Ins. Co., supra, 206 Cal.App.4th at p. 1202
[same].)
The surgery center defendants vigorously attacked the pleadings, filing demurrers
and motions to strike; deposed each plaintiff; participated in the deposition of a nonparty
witness; served and responded to extensive written discovery; and filed motions to
compel coupled with requests for discovery sanctions. There can be little question they
actively litigated in the judicial forum in a manner wholly inconsistent with any intent to
arbitrate.
7
The surgery center defendants also argue that not all named defendants have
appeared in the action. However, they fail to specify which nonappearing defendant will
eventually appear in the action. Our review of the record indicates, as to the three named
defendants that are not parties to the appeal, defaults have been entered against two of
them (Dr. Daniel Shin and New Life Surgery Center, LLC) and the third appeared and
answered the complaint on June 22, 2012, two months before the court denied the
petition to compel arbitration.
9
The surgery center defendants attempt to minimize this litigation conduct,
claiming, even if their participation in the litigation was substantial, it was not prejudicial.
They contend, because no trial date had been set and no discovery obtained by any party
that would not have been available in the arbitral forum, there can be no prejudice as a
matter of law. Although both factors are properly considered as part of the waiver
analysis, neither is dispositive. (See Lewis v. Fletcher Jones Motor Cars, Inc., supra,
205 Cal.App.4th at p. 453 [fact no trial date had yet been set is not dispositive on the
question of waiver and prejudice; “numerous cases [have found] waiver in which no trial
date [had been] set”]; Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 844-
845 & fn. 9 [same]; Guess?, Inc. v. Superior Court, supra, 79 Cal.App.4th at p. 558
[waiver found where moving party filed motions and participated in discovery, taking
“full advantage of the opportunity to test the validity of Guess’s claims both legally and
factually” before seeking arbitration].)
The trial court found the surgery defendants’ delay in seeking arbitration and their
proffered explanations for it—the court’s delay in ruling on their demurrers and counsel’s
representation concerning the surgery center defendants’ lack of awareness of the
agreements—patently unreasonable, seemingly designed to take advantage of both the
judicial forum when convenient and the arbitral forum once it appeared that litigation
could be protracted. (See Guess?, Inc. v. Superior Court, supra, 79 Cal.App.4th at p. 558
[four-month delay in seeking arbitration prejudicial when defendant answered complaint,
responded to discovery, participated in depositions and filed an unsuccessful motion to
stay action; “‘“[t]he courtroom may not be used as a convenient vestibule to the
arbitration hall so as to allow a party to create his own unique structure combining
litigation and arbitration”’”].) As a result, it impliedly found, the Walker plaintiffs lost
more than simply time and the expenses and fees incurred in the litigation; they lost the
inherent advantages of the efficiencies of arbitration. (See Burton v. Cruise, supra,
190 Cal.App.4th at p. 949 [“substantial evidence supports the trial court’s implicit
determination that granting Burton’s belated arbitration request deprived Cruise of the
benefits available through arbitration, including a speedy resolution of the dispute”];
10
Lewis v. Fletcher Jones Motor Cars, Inc., supra, 205 Cal.App.4th 436, 449-453
[defendant’s filing of demurrers and motions to strike and participation in discovery
without raising its right to arbitrate resulted in prejudicial delay and waiver of arbitration
right].)
The analysis in Groom v. Health Net (2000) 82 Cal.App.4th 1189, on which the
surgery center defendants rely, does not compel a different result. In Groom the
defendant (Health Net) filed a series of demurrers to the original and amended complaints
and served the plaintiff (Groom) with form and special interrogatories, requests for
admission and requests for production of documents. Eleven months after Health Net
had been served with the original complaint, it petitioned to compel arbitration. The trial
court denied the petition on the ground Health Net had waived arbitration. Our
colleagues in Division Four of this court reversed, concluding there was no substantial
evidence Groom had suffered any prejudice as a result of the delay in seeking arbitration.
(Id. at p. 1196.) In reaching this conclusion Division Four found it significant that no
responses to the written discovery requests had been made, no depositions had been taken
and no motions had been filed. (Ibid.) The court was not persuaded by Groom’s
argument that filing demurrers, a process unavailable in arbitration, had forced her to
articulate in detail the legal theories underlying her causes of action: “This analogy is not
persuasive. One can learn far more about an opponent’s case through discovery than
through demurrer. That is one of the reasons discovery procedures exist. [Citations.] In
all the cases relied upon by Groom, prejudice was shown by the fact that by engaging in
discovery, the defendant learned all the details of the plaintiff’s case before demanding
arbitration.” (Ibid.; accord, St. Agnes, supra, 31 Cal.4th at p. 1204 [insufficient evidence
of waiver when the parties had not litigated the merits of the case and no discovery of the
claims had occurred].) Here, in contrast, the surgery center defendants engaged in the
very kind of extensive discovery and motion practice the court in Groom found lacking.
Similarly inapposite is our decision in Roman v. Superior Court, supra,
172 Cal.App.4th 1462, in which we upheld the trial court’s implied finding that the
defendants’ participation in litigation had not resulted in a waiver. Unlike the instant
11
matter, the petition to compel arbitration in Roman was filed a mere two months after the
complaint; and “[a]t the time, no substantive discovery responses had been served by
either side and no formal hearings had taken place on the discovery issues.” (Id. at
p. 1479.) To be sure, in confronting the far different procedural posture presented by that
case, we observed in Roman the limited discovery that had been served (a single set of
form interrogatories and a single request for production of documents) was authorized
under the rules applicable to the arbitration. (Ibid.) While the far more extensive
discovery already accomplished in this case may also have been available in the arbitral
forum, that is but one factor for consideration in the waiver analysis and, under our
deferential standard of review, does not alone necessarily outweigh the other, substantial
evidence in support of the trial court’s waiver finding. (See Lewis v. Fletcher Jones
Motor Cars, Inc., supra, 205 Cal.App.4th at pp. 449-453.)
In sum, because the record here does not require a finding of no waiver as a matter
of law (St. Agnes, supra, 31 Cal.4th at p. 1196; Lewis v. Fletcher Jones Motor Cars, Inc.,
supra, 205 Cal.App.4th at p. 453), we affirm the trial court’s ruling.
DISPOSITION
The order denying the petition to compel arbitration is affirmed. The Walker
plaintiffs are to recover their costs on appeal.
PERLUSS, P. J.
We concur:
WOODS, J.
ZELON, J.
12