Turner v. Amer. Arb. Assn.

Filed 10/24/07 Turner v. Amer. Arb. Assn. CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION FOUR

Plaintiff Joe D. Turner (Turner) appeals a judgment entered after the trial court sustained without leave to amend the demurrer of defendant American Arbitration Association (the AAA) on the ground that the AAA enjoyed arbitral immunity. We dismiss the appeal as moot.

I. BACKGROUND

We have discussed the facts giving rise to this litigation in an appeal arising from the same case, Turner v. American Arbitration Assn. (Oct. 24, 2007, A112884 [nonpub. opn.]) (Turner I), and so need not repeat them here.[1] We will, however, briefly review, again, the procedural history of this action.

Turner seeks declaratory and injunctive relief against the AAA and three other defendants, Gregory E. Schultz (Schultz), Bruce D. Grenke (Grenke), and Asset Allocation Advisors, Inc. (the company). He alleged in his complaint that Turner, Schultz, and Grenke were the only shareholders in the company. They entered into a Buy/Sell Agreement II (the agreement) that provided a formula for buying out the shares of a shareholder who left the company. The companys board of directors terminated Turners employment in 2004, and Turner was dissatisfied with the amount the company offered him for his shares. According to the complaint, Schultz and Grenke submitted a demand for arbitration of a dispute arising out of the agreement to the AAA in May 2005.

On August 9, 2005, Turner filed a civil action in Turner v. Schultz (Super. Ct. Contra Costa County, 2006, No. C-05-01521) (the Contra Costa action)) against Schultz, Grenke, the company, and another defendant, seeking, among other things, relief related to the agreement. Turner then informed the AAA that because of the pending Contra Costa action, the AAA no longer had jurisdiction over the dispute relating to the agreement, that Turner would therefore not participate in the arbitration, and that the arbitration could not proceed until Schultz or Grenke obtained an order compelling arbitration pursuant to Code of Civil Procedure section 1281.2. The AAA advised Turner that it would proceed with the arbitration. After Turner objected to the arbitrators proposed by the AAA based on lack of jurisdiction, the AAA administratively appointed three arbitrators on August 22, 2005, and later confirmed the appointment.[2]

Turner brought the action that is the subject of this appeal in the San Francisco Superior Court on September 20, 2005 (the San Francisco action), seeking a declaration that defendants could not proceed with the arbitration without first obtaining a court order compelling arbitration, and an injunction requiring the AAA to stay its proceedings until such an order had been issued.

The AAA demurred to the complaint on the grounds that the action was barred by the doctrine of arbitral immunity, that Turner had agreed not to bring suit against the AAA, and that the AAA was not a necessary party to the action. The trial court sustained the demurrer without leave to amend on March 2, 2006, based primarily on the application of the doctrine of arbitral immunity.[3]

Meanwhile, on December 21, 2005, the company, Schultz, and Grenke filed a petition to compel arbitration in the Contra Costa action. Turner opposed the petition, but against the possibility that the petition would be granted, he asked to be allowed to participate in a new selection of the arbitrators. The Contra Costa County Superior Court granted the petition on March 13, 2006, and denied Turners request that the court intervene in the AAAs procedures for selecting an arbitrator.

II. DISCUSSION

At our request, the parties submitted supplemental briefing on the questions of (1) whether the San Francisco action was rendered moot by the March 13, 2006, order in the Contra Costa action granting the petition to compel arbitration, and (2) the effect of the order on this appeal.

As we note in our opinion in Turner I, supra, A112884, at page 4:   It is well settled that an appellate court will decide only actual controversies. Consistent therewith, it has been said that an action which originally was based upon a justiciable controversy cannot be maintained on appeal if the questions raised therein have become moot by subsequent acts or events. . . . [T]he appellate court cannot render opinions   . . . upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it. It necessarily follows that when, pending an appeal from the judgment of a lower court, and without any fault of the defendant, an event occurs which renders it impossible for this court, if it should decide the case in favor of plaintiff, to grant him any effectual relief whatever, the court will not proceed to a formal judgment, but will dismiss the appeal.  [Citations.] [Citation.] As the Court of Appeal stated in Wilson v. L. A. County Civil Service Com. (1952) 112 Cal.App.2d 450, 453 . . . ,  although a case may originally present an existing controversy, if before decision it has, through act of the parties or other cause, occurring after the commencement of the action, lost that essential character, it becomes a moot case or question which will not be considered by the court.  [] This rule has been regularly employed where injunctive relief is sought and, pending appeal, the act sought to be enjoined has been performed. (Giles v. Horn (2002) 100 Cal.App.4th 206, 226-227.)

The relief Turner seeks in this action is a declaration that the defendants may not proceed with the arbitration without first obtaining a court order compelling arbitration, and an injunction requiring the AAA to stay its proceedings until such an order has been issued. The court in the Contra Costa action has now made such an order.

Turner argues, however, that effective relief is possible because if the court rules in his favor in the San Francisco action, the arbitration will start again from the beginning. He argues that he did not participate in selection of the arbitrators because he took the position that the AAA lacked jurisdiction, and he has lost the opportunity to file a cross-demand as of right because under the AAAs rules, once the arbitrators are appointed a new claim may be filed only if they consent. He contends a reversal on appeal would mean that the proceedings that have already taken place in the arbitration are void, and that in new proceedings he would have the right to object to proposed arbitrators and file a cross-demand.[4]

As we did in our opinion in Turner I, we reject Turners contention. His action does not ask the trial court to vacate any proceedings that had already taken placeincluding the selection of arbitratorsbut only to prevent the defendants from proceeding with the arbitration without first obtaining a court order. Such an order now exists.

The peculiar procedural posture of this case reinforces our conclusion. This appeal arises from a judgment after demurrer in the San Francisco action. However, the action giving rise to the arbitration was filed in the Contra Costa Superior Court. The order compelling arbitration was made in the Contra Costa action. In opposing the motion to compel arbitration, Turner asked to be allowed to participate afresh in the arbitration, particularly in the selection of the arbitrators. The trial court in the Contra Costa action denied that request.[5] Any attempt in the San Francisco action to begin the arbitration anew would in effect be a collateral attack on the Contra Costa courts order. Such an attack is properly left to an appeal, if any, in the Contra Costa action, after a full record has been developed there. In the circumstances, and for the reasons expressed in our opinion in Turner I, we decline Turners request that we exercise our discretion to review the merits of this moot appeal.

III. DISPOSITION

The appeal is dismissed.

________________________

RIVERA, J.

We concur:

___________________________

RUVOLO, P.J.

___________________________

REARDON, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line attorney.

[1] We take judicial notice of the record on appeal in Turner I, as well as all documents judicially noticed in that appeal.

[2] According to the AAAs letter to the parties, the parties were required to raise any factual objections to the appointment of the three arbitrators within five business days. The letter confirming the arbitrators is dated October 7, 2005.

[3] In the meantime, the court had issued an order denying Turners request for a temporary restraining order and preliminary injunction. That order is the subject of the appeal in Turner I.

[4] Although the arbitrators have been selected, no hearings have yet taken place. The company, Schultz, and Grenke state in their supplemental brief that none will take place until after this appeal has been resolved. They also state that they will not oppose a request by Turner to file a late counterclaim.

[5] In the tentative ruling, the Contra Costa court stated that it had no power to grant such relief, citing Titan/Value Equities Group, Inc. v. Superior Court (1994) 29 Cal.App.4th 482, 487-489, which states: The arbitrator, and not the court, decides questions of procedure . . . . The order granting the petition to compel arbitration stated with respect to this issue: Plaintiffs request that the Court intervene in the AAA procedures for selecting an arbitrator is denied.