Connective Tissue Imagineering v. Mitts

Filed 5/3/06 Connective Tissue Imagineering v. Mitts CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Tulare County. Patrick J. O'Hara, Judge.

Fitzgerald Abbott & Beardsley, Dawn Newton; Kimble, MacMichael & Upton, Robert H. Scribner, Mary Ann Bluhm; Betts & Wright and James B. Betts for Defendants and Appellants Thomas F. Mitts, Human Matrix Sciences and California Institute of Tissue Engineering & Instrumentation. Damrell, Nelson, Schrimp, Pallios, Pacher & Silva, Clinton P. Walker; Law Office of Alex J. Aretakis, Alex J. Aretakis; Cripe & Graham, Gary E. Cripe; McCormick, Barstow, Sheppard, Wayte & Carruth, Marshall C. Whitney and Randall H. Romero for Plaintiffs and Respondents.

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The trial court denied a motion to compel arbitration based on the discretion granted by subdivision (c) of Code of Civil Procedure section 1281.2^[1] and its finding that allowing arbitration as to some defendants and a trial as to other defendants created the possibility of inconsistent results. The moving party defendants appealed, claiming that the trial court abused its discretion because plaintiffs should have been estopped from asserting that certain defendants did not sign the arbitration provision or, alternatively, that the matter should be remanded on the question whether the nonsignatories were beneficiaries of the arbitration clause.

We conclude that (1) estoppel does not apply in this case, (2) the trial court implicitly determined the nonsignatory defendants were not entitled to the benefit of the arbitration clause, and (3) the evidence presented to the trial court did not compel it to find that all nonsignatory defendants were intended beneficiaries of the arbitration clause. Therefore, the trial court did not abuse its discretion. The order denying the motion to compel arbitration is affirmed.

FACTS AND PROCEEDINGS

In 1997 or 1998, plaintiff Philip J. Roos, M.D. (Roos), plaintiff Lawrence Sandberg, M.D. (Sandberg), and defendant Thomas F. Mitts, M.D. (Mitts) agreed to produce and market a skin care cream which became known as Elastica.

In July 1998, Roos, Sandberg and Mitts's wholly owned limited liability company, defendant California Institute of Tissue Engineering and Instrumentation (Cal Institute), formed plaintiff Connective Tissue Imagineering, a California limited liability company, (which at the time was known as MRS, LLC) for the purpose of conducting a skin care product business. Roos, Sandberg and Cal Institute executed an operating agreement for Connective Tissue Imagineering dated as of July 10, 1998 (Operating Agreement).

Section 14.13 of the Operating Agreement is titled â€