Abou-Khalil v. Miles

Filed 6/4/07 Abou-Khalil v. Miles CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed.

Fisher & Phillips, James J. McDonald, Jr., and Christopher J. Boman for Defendant and Appellant

Finlayson, Augustini & Williams, Michael R. Williams and Sharyl Bilas Garza for Plaintiff and Respondent.

Douglas Miles, the managing partner of a law firm, appeals from the trial courts order denying his motion to compel arbitration of Diana Abou-Khalils third through seventh causes of action. The court determined Abou-Khalil, the firms executive assistant, did not have to arbitrate her claims brought against Miles in his individual capacity for assault, battery, intentional infliction of emotional distress, and violations of Civil Code sections 51.7 and 52.4. Finding none of Miless contentions on appeal have merit, we affirm the order.

I

Miles is the managing partner of Miles, Bauer, Bergstrom & Winters (hereafter, the Firm). In October 2005, the firm hired Abou-Khalil as an executive assistant. She signed an Employee Acknowledgement and Agreement which contained an arbitration provision, stating, I further agree and acknowledge that the Firm and I will utilize binding arbitration to resolve all disputes that may arise out of the employment context. Both the Firm and I agree that any claim, dispute, and/or controversy that either I may have against the Firm (or it owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health pans) or the Firm may have against me, arising from, relating to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Firm shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act. . . . Included within the scope of this agreement are all disputes, whether based on tort, contract, statute . . . equitable law, or otherwise . . . .

Eight months later, Abou-Khalil filed a complaint for damages against Miles alleging sexual harassment, retaliation, intentional infliction of emotional distress, assault, battery, and violations of Civil Code sections 51.7 and 52.4. Abou-Khalil also demanded arbitration of her claims against the Firm, and its head of human resources, Heidi Griffin, alleging the same causes of action with the exception of the Civil Code violations. In her arbitration demand, Abou-Khalil also added several new claims:

(1) the Firm failed to prevent harassment (Gov. Code,  12940); (2) wrongful termination; and (3) violation of Business and Professions Code section 17200.

Miles filed a motion to compel binding arbitration, relying on the arbitration agreement Abou-Khalil signed when she began employment at the Firm. Abou-Khalil opposed the motion, arguing the agreement cannot be enforced because it is unconscionable, and alternatively, Miles cannot enforce the agreement because he was not a signatory.

After considering oral argument, the court issued a minute order rejecting Abou-Khalils argument Miles could not enforce the agreement. It stated, The Firm and [Abou-Khalil] were both bound by the agreement and that is all the mutuality required. There is no requirement that there be mutuality with a third party beneficiary of the agreement, like the defendant.

However, the court provided Abou-Khalil 15 days to amend her complaint, explaining, The court . . . interprets the arbitration agreement to mean that claims against defendant arising out of the employment context must be arbitrated. This means that claims not arising out of the employment context do not have to be arbitrated. [] The first and second causes of action in the complaint are for having to work in a hostile environment and for retaliatory actions at work due to [Abou-Khalils] assertion of her rights. Both these causes of action obviously relate to the employment context and should be arbitrated. That is the order of the court. [] On the other hand, the rest of plaintiffs complaint claims intentional infliction of emotional distress, assault, battery and violation of Civil Code sections 51.7 and 52.4. These claims do not normally arise out of the employment context, in that they would be actionable even if plaintiff did not work with defendant. Further, the law is clear that sexual assault is not normally within the course and scope of employment. Therefore, the court is leaning toward allowing those causes of action to go forward without arbitration. [Abou-Khalil], however, has alleged at [paragraph four] of her complaint that all of defendants actions were done within the scope of his employment. To the extent that allegation is true, these claims should be arbitrated; to the extent that the actions were not connected with the employment, the claims should proceed without arbitration. [] The plaintiff has 15 days from this ruling to notify [the] court and opposing counsel if she continues to claim the [third] through [seventh] causes of action were done within the scope of defendants employment. The court will then complete its ruling.

Abou-Khalil amended her complaint to reflect the third through seventh causes of action were not done within the scope of Miles employment by deleting the fourth paragraph. No other allegations from the original complaint were changed. She advised the court that after it ruled, she would amend her arbitration demand in accordance with the courts ruling. Miles filed a reply, pointing out that allegations in the complaint still indicated the causes of action arose from Abou-Khalils employment and thus were subject to arbitration. Miles asserted the scope of his employment should not be a determining factor. The court disagreed and denied Miless motion with respect to the second through seventh causes of action, and granted the motion with respect to the first and second causes of action.

Abou-Khalils claims are based on the following factual allegations. When Abou-Khalil was hired, Miles was working in the Firms Las Vegas, Nevada office and she only had direct contact with him a few times. She claimed, On many of those occasions, Miles stared at [her] breasts, looked her up and down, and made inappropriate comments to her. At the Firms Christmas party, Miles repeatedly asked her to play pool with him, and Abou-Khalil felt she could not say no, due to his position as a senior partner. In March 2005, Miles moved to the Firms Costa Mesa office. Abou-Khalil claims it was then Miless harassing conduct reached its pinnacle and turned violent. On March 10, Miles saw [her] in the mailroom and stated I really like your outfit today. Shortly thereafter, Miles asked [her] to change his cell phone number . . . . When [Abou-Khalil] informed Miles [she had completed the task] . . . Miles swatted [her] on the buttocks with his hand and told her that she had done a good job. He also commented on her outfit again.

Later that day, Abou-Khalil claims Miles called her at her desk and asked her to go to lunch at Hooters Restaurant with him and the firms Marketing Consultant, Keelee Ruark. Abou-Khalil felt uncomfortable about going, but felt she had no choice. When she arrived at the restaurant, Miles warned her not to tell anyone, stating, Nobody, especially Heidi [Griffin] or Irma. Heidi will give me a speech about fraternizing with co-workers and Irma will tell everyone. Miles asked Abou-Khalil to have a glass of wine, but she ordered an ice tea instead. She claims Miles would not take no for an answer and ordered a glass of wine for [her] anyway.

When Ruark arrived at the restaurant, she greeted Miles with a kiss on the lips. Then a woman named Sarah joined the group, giving both Miles and Ruark a kiss on the lips. Miles then told Sarah to kiss [Abou-Khalil], and she kissed her cheek which made her feel extremely uncomfortable. During lunch, Miles asked Abou-Khalil to join him on his next business trip, and asked her personal questions such as whether she had a boyfriend.

When they returned to the office, Miles asked Abou-Khalil to come into his office and asked her whats going on? As Abou-Khalil began to explain what she was working on, Miles got up from his desk and walked toward [her]. He then reached for her face and tried to kiss her three times, ultimately kissing her on her check as she backed away from him and tried to get out of his grasp. [She] struggled against Miles, who is a very large man at approximately 65 tall, and kept saying Doug, no dont? However, Miles persisted and got [her] in a hug-type hold . . . grabbed [her] left breast and squeezed it. [She] was shocked and loudly said Doug?!! Miles replied ooh, I like that.

Abou-Khalil pulled out of Miless grasp and left his office. She went directly to the Accounting Manager, Nadia Lanes, and told her what happened. She asked Lanes to not report the incident because she feared retaliation. Abou-Khalil then returned to her desk, and Miles called her again, stating, You are so beautiful and we are going to have a special relationship and it will be confidential. Abou-Khalil returned to Laness office because she was afraid to stay at her desk. While she was gone, Miles left a telephone message, stating, I am leaving soon so come down to my office if you get this message; otherwise I will call you later and see you on Monday. He found Abou-Khalil before he left the office. He touched her arm, winked at her, and told her they would see each other on Monday.

On March 17, Abou-Khalil informed Griffin about the sexual harassment and the assault. Griffin responded she was sorry, but not surprised. Griffin initially indicated she would keep the matter confidential, but on March 20 she told Abou-Khalil she would inform Richard Bauer, another partner at the Firm. Griffin then attempted to conduct an investigation regarding Abou-Khalils complaint and placed her on paid administrative leave. Abou-Khalil rejected all the work-place solutions Griffin offered to her as unreasonable. The Firm eventually stopped paying her.

II

We first address the issue of standing. Miles did not sign the agreement containing the arbitration provision. Nonsignatories have the burden of demonstrating why they should be permitted to enforce and benefit from the agreement. (See Vahle v. Barwick (2001) 93 Cal.App.4th 1323; Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 348.) After reviewing the record, we conclude Miles did not meet his burden.

It is well settled, The right to arbitration depends on a contract. [Citations.] Accordingly, a party can be compelled to submit a dispute to arbitration only where he has agreed in writing to do so. [Citation.] While arbitration is a favored method of resolving disputes, the policy favoring arbitration cannot displace the necessity for an agreement to arbitrate [citation] and does not extend to those who are not parties to such an agreement. [Citation.] Whether or not an arbitration agreement is operative against a person who has not signed it involves a question of substantive arbitrability which is to be determined by the court. [Citation.] (Boys Club of San Fernando Valley, Inc. v. Fidelity & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271, fn. omitted.)

Miles cites Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406 (Dryer) and 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199 (24 Hour), for the proposition that nonsignatory defendants are entitled to the benefit of the arbitration clause if they were acting as agents for the signatory defendant.

In Dryer, the plaintiff Fred Dryer, and a professional football team entered into an employment contract having an arbitration clause. When Dryer was later removed from the active roster, he sued the team and four individuals for breach of contract. The complaint specifically alleged each defendant was a party to the contract and each defendant breached it, even though the individual defendants had not signed the contract. (Dryer, supra, 40 Cal.3d at p. 418.) The trial court found each cause of action alleged in the complaint was included in and governed by the contract. (Ibid.) The California Supreme Court held that if, as the complaint alleged, the individual defendants were acting as agents for the football team, then they would be entitled to the benefit of the arbitration clause contained in the contract they allegedly breached. (Ibid.)

In 24 Hour, an employee sued her former employer and other employees for sexual harassment in the workplace. (24 Hour, supra, 66 Cal.App.4th at p. 1204.) The employer and individual employee defendants moved for summary judgment on the ground the alleged victim failed to request arbitration within the one-year limitation period specified in the employment contract. The appellate court determined that although the individual employee defendants were not signatories to the contract between the victim and the defendant employer, they were nevertheless entitled to summary judgment if they established that her claims against them were entirely subject to the arbitration agreement. (Id. at p. 1210.) It explained a business entity can only act through human agents, and therefore, it is reasonable to conclude an arbitration clause covering every kind or type of dispute arising from the plaintiffs employment is intended to benefit other employees acting within the scope of their employment. (Id.

at pp. 1210-1212.)

The court in 24 Hour concluded the complaints allegation the parties were acting in the course and scope of their employment was sufficient to establish they were beneficiaries of the arbitration agreement. (24 Hour, supra, 66 Cal.App.4th at

pp. 1211-1212.) However, the court determined a triable issue of fact existed as to whether one of the individual employee defendants was entitled to the benefit of the arbitration agreement, because he admitted he made statements to [the victim] outside the scope of his employment. (Id. at p. 1212.)

In the case before us, Miles recognizes Abou-Khalil removed the agency allegations contained in the fourth paragraph of her complaint, but asserts there were other allegations regarding his actions in connection with his employment with the Firm. He points to 11 citations in the complaint, but fails to elaborate or explain the significance of those allegations. We have independently reviewed the entire complaint, and conclude the allegations certainly show Abou-Khalils claims arose while she was at work. And, it is undisputed her injuries were caused by a partner at the Firm, on a normal work day, and during a work-related lunch meeting. However, we found no allegations from which it must necessarily be inferred Miles was acting as the Firms agent when he purportedly assaulted, battered, and/or intentionally caused Abou-Khalil emotional distress.

Miles argues on appeal that he wholeheartedly embraces the agency relationship. But what was required was a declaration or ratification from the principal (the Firm). The existence of agency is a question of fact that may be established by evidence of the acts of the parties and their oral and written communications. [Citations.] (Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526, 536.) While the declarations of the principal are admissible to prove the relationship (ibid.), the declarations of an agent are not admissible to prove the fact of his agency or the extent of his power as such agent. [Citations.] (Howell v. Courtesy Chevrolet, Inc. (1971)

16 Cal.App.3d 391, 401.) Only the agents testimony as a witness is admissible to prove either authorization or ratification. (3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, 94, p. 141.)

In both Dryer and 24 Hour, the principal affirmatively accepted the agency relationship. This is a crucial piece of evidence missing in this case, and the reason those cases are distinguishable. There is no supporting declaration from the Firm in this case. Other than the pleadings, there is only Miless declaration discussing three arbitration agreements he believes supports the motion: (1) his agreement with the Firm to arbitrate any dispute arising from his employment; (2) the Firms employee handbook indicating all disputes arising from his employment must be arbitrated; and (3) the Firms revised handbook containing a similar arbitration provision. He does not assert the claims relate to actions within the scope of his employment, or were ratified by the principal (the Firm). There is no persuasive authority to support Miless claim to be acting as an agent for the Firm regarding the events giving rise to Abou-Khalils dispute with him personally.

Certainly, if this case concerned a dispute over Abou-Khalils salary, benefits, or wrongful termination, we would not hesitate to hold Miles was acting as an agent for the Firm in dealing with such matters. However, this case involves a dispute of a much different kind: torts arising from a sexual encounter between two adults. We cannot conclude as a matter of law Miles was the Firms agent for all purposes. There is simply no evidence indicating the Firm intended its partners to sexually assault, batter, or emotionally distress its executive assistants. As noted above, the declarations of the principal, not the agent, are admissible to prove the agency and the scope of that agents power. (Howell v. Courtesy Chevrolet, Inc., supra, 16 Cal.App.3d at p. 401.) Without evidence such conduct fell within the scope of Miless employment, the court correctly concluded he had no entitlement as a nonsignator to the benefit of the arbitration provisions. He lacks standing to enforce the Firms agreement with respect to actions undertaken in his individual capacity.

III

Miles provides this court with two cases to support his claim the tort causes of action arise from the employment context. He misses the mark. Those cases concerned an employer suing the principal for tort claims . . . rooted in the contractual relationship between the parties. (Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401-1402 (Buckhorn); Vianna v. Doctors Management Company (1994) 27 Cal.App.4th 1186 (Vianna).) And, in those cases there is no dispute the employer defendant was a signator, entitled to the benefit of the arbitration agreement.

For example, in Vianna, supra, 27 Cal.App.4th at page 1190, the court determined an employee, Antonio Vianna, must arbitrate his claims against his employer for wrongful termination, breach of the implied covenant of good faith and fair dealing, and negligent infliction of emotional distress. Although the complaint was filed against the employer and three individual employee defendants, only the employer appealed the courts denial of its motion to compel arbitration. The court held all Viannas claims against his employer are rooted in the employment relationship created by their contract. (Ibid.) There was no discussion as to whether the three individual employees were signators to the agreement, or whether as agents they were entitled to compel arbitration.

In Buckhorn, supra, 121 Cal.App.4th at page 1404, an internist sued his former employer medical group for various torts allegedly committed after he was discharged. The internists employment contract with the medical group contained an arbitration provision for disputes arising between the parties concerning the agreement. The court rejected his argument the arbitration provision only covered contract related causes of action. Citing Vianna, the court concluded the internists claims were sufficiently rooted in the employment relationship created by [the] contract[] to compel arbitration. (Id. at p. 1407.)

Abou-Khalil does not dispute her tort claims against the Firm are rooted in the employment relationship and must be resolved by arbitration. The record reflects she filed a petition to resolve her claims against the Firm in arbitration. The court correctly determined the arbitration contract embodied an intent to benefit the Firms agents and employees. It cannot be inferred there was also an intent to benefit intentional tortfeasors not acting within the scope of their employment.

IV

Miles argues Abou-Khalil is equitably estopped from asserting he cannot enforce the arbitration agreement. He argues her claims against him and the Firm are based on the same set of factsi.e., unlawful harassment and retaliation that allegedly occurred throughout [her] employment. He claims the complaint alleges all defendants acted in concert to harm her. We are unpersuaded.

Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, is instructive. In that case, an employee whose employment contract contained an arbitration clause sued his original employer and a separate, sibling corporation of the original employer to which the employees division had been transferred. Both of the defendants sought to compel the employee to arbitrate his claim for breach of the employment contract. The appellate court reversed the trial courts order denying their motion, holding, under both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are intimately founded in and intertwined with the underlying contract obligations. [Citations.] (Id. at pp. 271-272.) The court explained, By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement. [Citations.] (Id. at p. 272.)

It is not enough to simply have claims with some facts in common. We do not find Abou-Khalils claims against the Firm and Miles to be intimately founded in and intertwined with the employment agreement. Contrary to Miless argument,

Abou-Khalil did not allege all the defendants acted in concert to assault, batter, or cause emotional distress. The allegations of joint action related to her first and second cause of action (sexual harassment in the work environment and retaliation), which the court determined were subject to arbitration.

Moreover, as the court explained in Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713, the equitable estoppel doctrine applies when a party has signed an agreement to arbitrate but attempts to avoid arbitration by suing nonsignatory defendants for claims that are based on the same facts and are inherently inseparable from arbitrable claims against signatory defendants. The rule is intended to prevent a party from playing fast and loose with its commitment to arbitrate, honoring it when advantageous and circumventing it to gain undue advantage. (Id. at p. 1714.) There is no reason to suspect Abou-Khalil was attempting to avoid arbitration when she asserted tort claims against Miles, in his individual capacity, knowing he was a nonsignator. Very telling is the fact Abou-Khalil willingly petitioned to arbitrate her claims against the Firm, honoring her contractual arbitration obligation.

V

In her respondents brief, Abou-Khalil states she disagrees with the courts ruling she must arbitrate her first and second causes of action (workplace harassment and retaliation). As a general matter, a respondent who has not appealed from the judgment may not urge error on appeal. [Citation.] Code of Civil Procedure section 906 provides a limited exception to allow a respondent to assert a legal theory which may result in affirmance of the judgment. [Citation.] However, in this instance, [Abou-Khalil] seeks reversal of [an order] and entry of a new [order] more favorable to [her]. Having failed to appeal, [Abou-Khalil] cannot seek such affirmative relief. (Estate of Powell

(2000) 83 Cal.App.4th 1434, 1439.)

VI

The courts order regarding the motion to compel arbitration is affirmed. Respondent shall recover her costs on appeal.

OLEARY, J.

WE CONCUR:

SILLS, P. J.

BEDSWORTH, J.

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