Opinion
A120531.
2-9-2009
CERTIFIED COATINGS OF CALIFORNIA, INC., Plaintiff and Respondent, v. SHIMMICK CONSTRUCTION COMPANY, INC./OBAYASHI CORPORATION et al., Defendants and Appellants.
Not to be Published in Official Reports
The trial court denied a general contractors motion to compel arbitration of a subcontractors claims against it, ruling that the claims were not within the scope of the arbitration clause of the parties contract. We affirm.
BACKGROUND
Following the 1989 Loma Prieta Earthquake, the Golden Gate Bridge Highway and Transportation District (the District) undertook a three-phase seismic retrofit project for the Golden Gate Bridge. Phase II of the retrofit project was awarded to Shimmick Construction Company, Inc./Obayashi Corporation, a joint venture (SOJV). SOJV and the District entered into a contract (Prime Contract), and construction on Phase II (the project) began in June 2001. On May 15, 2006, SOJV subcontracted (Subcontract) with Certified Coatings of California, Inc. (Certified) to paint areas of the bridge.
Many of the facts in this background section are taken from the allegations of the first amended complaint filed in the trial court.
In this action, Certified alleges that it was required to perform work on the project that had not been disclosed during the bidding process and therefore was not taken into consideration when Certified submitted its bid. Specifically, a substantial amount of pack rust had to be removed before paint could be applied and full stripe coating was required. The additional work caused Certified to incur thousands of hours of additional labor costs.
Certified names only SOJV and its constituent companies (hereafter, SOJV), not the District, as defendants in its complaint. However, Certified alleges substantial wrongdoing by the District as well as SOJV. Certified sues SOJV for breach of contract, breach of the implied covenant of good faith and fair dealing, in quantum meruit, fraud and negligent misrepresentation.
The complaint alleges that both the District and SOJV knew that pack rust would have to be removed and deliberately did not disclose that information during the bidding process. Moreover, an SOJV representative conducted a pre-bid tour of the project in a manner that prevented Certifieds representative from discovering the pack rust conditions and, after Certifieds bid was accepted, the District representatives (including inspectors) insisted that Certified perform the work in a manner that was inconsistent with the bidding documents. Certified also alleges the coating system required by the District was seriously flawed and in direct conflict with the manufacturers product data sheets; both the District and SOJV were aware of this flaw, yet they failed to notify Certified during the bidding process; and both SOJV and the District directed Certified to perform extensive stripe coating that was not required by the Subcontract. The manner in which the District inspected Certifieds work exacerbated the additional workload caused by the aforementioned problems.
Dispute Resolution Procedures in the Prime Contract
The Prime Contract includes an extensive dispute resolution procedure which, as explained further below, is incorporated into the Subcontract as to certain claims. Section SP9-1.04, "Dispute Resolution," of the Prime Contract requires SOJV, as express conditions precedent to filing litigation against the District, to (a) submit a notice of potential claim to the engineer; (b) if dissatisfied with the engineers final decision, submit a claim to the District; (c) if dissatisfied with the Districts evaluation of the claim, meet and confer with the District about the claim; and (d) if still dissatisfied, submit the matter to a Disputes Review Board (DRB) for a nonbinding resolution if the claim is a monetary claim for up to $500,000 or a claim for additional time to complete work on the project. If the claim is still unresolved, SOJV may then resort to litigation.
The DRB is governed by section SP9-1.12, "Disputes Review Board," which contains the language: "any and all claims solely between Contractor and its subcontractors or suppliers shall not be actionable against the District and shall not be heard by the [Board]." (Italics added.) Section SP9-1.12 includes a subsection entitled, "[Disputes Review Board] Procedure Re Subcontractor Claims," which provides: "For purposes of this section, a `subcontractor claim shall include any claim by a subcontractor (including also any pass-through claims by a lower tier subcontractor or supplier) against the Contractor that is actionable by the Contractor against the District which arises from the work, services, or materials provided or to be provided in connection with the Contract. If the Contractor determines to pursue a claim against the District that includes a subcontractor claim, the dispute shall be processed and resolved in accordance with the provisions of the Contract." (Italics added.) The Prime Contract required SOJV to "include in all subcontracts under this Contract that subcontractors and suppliers of any tier (a) agree to submit subcontractor claims to the Contractor in a proper form and in sufficient time to allow processing by the Contractor in accordance with these provisions herein to the extent applicable to subcontractor claims; (b) agree that, to the extent a subcontractor claim is involved, completion of all steps required under the provisions concerning the Disputes Review Board shall be a condition precedent to pursuit by the subcontractor of any other remedies permitted by law, including without limitation of a lawsuit against the Contractor; and (c) agree that the existence of a dispute resolution process for disputes involving subcontractor claims shall not be deemed to create any claim, right, or cause of action by any subcontractor or supplier against the District." This section also provided that if SOJV failed to declare a subcontractor claim on behalf of its subcontractor at the time of submission of a claim, it would forfeit any claim it might have against the District on account of the subcontractor claim.
The Board consists of one member selected by the District, one person selected by the general contractor, and a chairperson jointly selected by both from a list provided by the District and each party bore one-half of its costs. The Board could be terminated "by either party at any time and without cause[.]"
Section SP9-1.12 also excludes disputes between SOJV and the District that do not involve a written demand for either monetary compensation for $500,000 or less and/or additional time to complete work. Monetary claims for more than $500,000 could be submitted to the DRB upon mutual consent of the parties.
The section also specifies, "these provisions concerning the Disputes Review Board shall not apply to, and the DRB shall not have the authority to consider, any claim between a subcontractor or supplier and the Contractor that is not actionable by the Contractor against the District."
Dispute Resolution Procedures in the Subcontract
Section 17 of the Subcontract sets forth a "Dispute Resolution Procedure." Section 17.1.1, entitled "Disputes under Prime Contract," states: "Any dispute resolution procedure in the prime contract shall be deemed incorporated in this Agreement, and shall apply to any disputes arising hereunder, except disputes not involving the acts, omissions or otherwise the responsibility of the Owner under the prime contract . . . ." (Italics added.) Section 4 of the Subcontract, entitled "Payment Schedule," further provides: "If the Subcontractor asserts a claim which involves, in whole or in part, acts or omissions which are the responsibility of the Owner or another party . . . Contractor will present the Subcontractors claim to the Owner or other responsible party. The Subcontractor shall cooperate fully with the Contractor in all steps taken in connection with prosecuting such a claim and shall hold harmless and reimburse the Contractor for all expense, including legal expense, incurred by Contractor which arise out of Contractors submission of Subcontractors claim to Owner or other responsible party. Subcontractor shall be bound by any adjudication or award in any action or proceeding resolving such a claim."
Section 17.1.1 also provides: "Subject to compliance with all applicable laws, including but not limited to those relating to false claims, dispute and claim certifications, and cost and pricing data requirements, Contractors sole obligation is to present any timely-filed claims by Subcontractor to Owner under such procedure and, subject to the other provisions of this Agreement, to pay to Subcontractor the proportionate part of any sums paid by the Owner to which Subcontractor is entitled."
With respect to "disputes not involving the acts, omissions or otherwise the responsibility of the Owner under the prime contract," (italics added) section 17.1.2 of the Subcontract requires the parties first to engage in informal discussions to attempt to resolve the dispute and, if the dispute remains unresolved, section 17.2.1 requires them to "submit any and all disputes arising under or relating to the terms and conditions of the Subcontract to arbitration in accordance with the Construction Industry Rules of the American Arbitration Association."
Certifieds Claims
On March 27, 2007, Certified sent SOJV letters notifying it of potential claims regarding the pack rust and stripe coating work, which Certified claimed was outside the scope of the work quoted on the project. Certified pleads in its complaint that beginning in April 2007 SOJV stopped making monthly payments under the Subcontract, even though SOJV received payments from the District and Certified continued to perform its work on the project.
On July 9, 2007, Certified informed SOJV of its approximate total damages (almost $2 million) due to the pack rust and stripe coating problems as well as the improper specified coating system and the inspection-related problems discussed above. The letter attributed the problems to both the District and SOJV and stated, "[Certified] requests, pursuant to Section 4 of the [Subcontract] that SOJV immediately present [Certifieds] claim to [the District]." Although the letter was addressed solely to SOJV, it concluded: "Unless [the District] provides a satisfactory response to our claim within 10 days of the date of this letter, we shall be left with no choice but to pursue our legal remedies."
On July 19, 2007, SOJV sent Certified a letter acknowledging receipt of its July 9 letter and asking Certified to provide a certification under the California False Claims Act. (Gov. Code, § 12650 et seq.) SOJV also requested a breakdown of Certifieds demand for additional compensation pursuant to section SP9-1.04 of the Prime Contract, incorporated into the Subcontract by way of Subcontract section 17.1.1.
Certified alleges that SOJV never submitted its claims to the District and never made Certified whole for the additional work it was compelled to perform. SOJV Project Manager Herman Young avers that Certified neither provided a certification of its claim under the False Claims Act nor submitted the breakdown calculations SOJV had requested. Consequently, SOJV "could not and did not pursuant to its contract with the Bridge District and False Claims Act pass-through Certifieds claim to the Bridge District."
Trial Court Proceedings
After Certified filed this lawsuit on July 27, 2007, SOJV demurred to the complaint (first demurrer), arguing the court lacked jurisdiction because Certified "failed to exhaust the contractually specified dispute resolution procedures before filing this lawsuit . . . ." It argued, "Certifieds complaint includes some claims that involve the alleged acts, omissions, or responsibility of the District that could be the subject of an action by [SOJV] against the District, as well as some that do not." According to SOJV, the former claims needed to be processed through the Prime Contract dispute resolution procedures (from Notice of Claim through the DRB hearing) and the latter claims needed to be presented to SOJV for informal resolution and, if not resolved timely, submitted to arbitration. SOJV sought dismissal of the complaint because Certified failed to comply with either dispute resolution procedure.
SOJV identified the breach of contract and quantum meruit claims as founded on the acts or omissions of the District and the fraud and negligent misrepresentation claims as not founded on such acts or omissions.
Certifieds opposition to the demurrer maintained that all of its claims involved the acts, omissions or responsibility of the District and the Prime Contract dispute resolution procedure was unenforceable against Certified because it was unconscionable. On the question of unconscionability, Certified relied on Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc./Obayashi Corp., which held that a Disputes Review Board procedure similar to the one in the Prime Contract here was "presumptively biased and unenforceable as a condition precedent to the subcontractor pursuing litigation" where "the interests of the general contractor and the owner are adverse to those of the subcontractor[.]" (Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc./Obayashi Corp. (2003) 111 Cal.App.4th 1328, 1332.)
The trial court sustained the demurrer, but granted Certified leave to amend the complaint to plead unconscionability of the alternative dispute resolution procedures. Certifieds first amended complaint added allegations of unconscionability. SOJV second demurrer contested the unconscionability of the DRB process and again argued that the court lacked jurisdiction over the complaint since Certified had not complied with the contractually mandated alternative dispute resolution procedures. In addition, SOJV urged that Certified agreed to submit its claims to binding arbitration, but had failed to satisfy the [subcontracts] alternate dispute resolution provisions. Moreover, it argued that issues regarding the scope of the arbitration agreement must be arbitrated. In short, the issue of whether the claims were arbitrable under the Subcontracts arbitration provision (which Certified had not challenged as unconscionable) required submission to the arbitrator.
At a hearing on the second demurrer, the trial court explained, "[T]he obligation to participate in the prime contract procedures cant be enforced because those procedures are unconscionable . . . ." Moreover, "as pleaded, the obligation to arbitrate under the subcontract doesnt exist[.]" The court emphasized that it was ruling on a demurrer and suggested it might rule differently on a motion to compel arbitration. A summary written order was issued, which overruled the demurrer but permitted SOJV to file a motion to compel arbitration.
SOJV promptly filed its motion to compel arbitration in which it again maintained that the issue of arbitrability should be decided by the arbitrator, not the trial court, and that Certifieds claims were arbitrable under the terms of the Subcontract.
The trial court denied SOJVs motion to compel arbitration, explaining, "[T]he agreement here was to submit to arbitration as to claims that did not involve the wrongdoing of the principal; and these claims do. [¶] And therefore, there is no agreement to arbitrate and therefore there is no basis to send it to an arbitrator to decide whether any particular parts of the claim should or shouldnt be arbitrated." The court filed a summary order from which SOJV appeals.
DISCUSSION
SOJV limits its appeal to the question of who should determine arbitrability, the arbitrator or the trial court.
I. Legal Standard
The California Arbitration Act, Code of Civil Procedure section 1280 et seq., requires a court to compel arbitration of a controversy "if it determines that an agreement to arbitrate the controversy exists," unless it determines that the right to compel arbitration has been waived, grounds exist for the revocation of the agreement, or the controversy is related to certain pending court actions. (Code Civ. Proc., § 1281.2.) "The clear purpose and effect of section 1281.2 is to require the superior court to determine in advance whether there is a duty to arbitrate the controversy which has arisen. The performance of this duty necessarily requires the court to examine and, to a limited extent, construe the underlying agreement." (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 480 (Freeman).)
Applying federal law, the United States Supreme Court has held that "[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is `clea[r] and unmistakabl[e] evidence that they did so." (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944 (First Options), quoting AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 649 (AT&T).) "[G]iven the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration, one can understand why courts might hesitate to interpret silence or ambiguity on the `who should decide arbitrability point as giving the arbitrators that power, for doing so might too often force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide." (First Options, at p. 945.)
California Courts of Appeal have adopted this federal standard—that a court decides arbitrability absent clear and unmistakable evidence that the parties intended to submit the question of arbitrability to the arbitrator — without expressly holding that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) applies. (See Engineers & Architects Assn v. Community Development Dept. (1994) 30 Cal.App.4th 644, 652-653 (Engineers) [citing AT&T, supra, 475 U.S. at p. 649]; United Public Employees v. City and County of San Francisco (1997) 53 Cal.App.4th 1021, 1026 (UPE) [citing Engineers, at pp. 652-653]; Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, 551-553 (Dream Theater) [citing UPE, at p. 1026, and federal cases, and commenting that "California courts often look to federal law when deciding arbitration issues under state law"]; cf. Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1117, 1123 (Rodriguez) [applying federal law after expressly holding that the FAA applies to the contract at issue].)
In this opinion, unless otherwise indicated, we use the term "arbitrability" to refer to the question of whether a particular dispute is within the scope of an arbitration provision the parties indisputably agreed to, as distinct from the question of whether an arbitration provision is unenforceable because of (for example) fraud, unconscionability, or lack of agreement by all parties. (See Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1286 [" `arbitrability is an ambiguous term that can encompass multiple distinct concepts"].)
The parties both cite the federal standard as the applicable legal rule, and the FAA appears to apply. Therefore, we shall apply the federal standard in this appeal.
Although Certified cites the federal standard in the section of its brief identifying the "legal standard" applicable to the appeal, it later suggests that federal cases applying this standard are not directly relevant to an analysis of the issue under California law, and it attempts to distinguish a California appellate court decision because it applied federal rather than state law. Because Certified itself essentially relies on federal law in defending the trial courts order, we find these arguments unpersuasive.
The FAA applies inter alia to written contracts involving interstate commerce. (9 U.S.C. §§ 1, 2.)
Under this standard, the determination of whether the parties clearly and unmistakably intended the arbitrator to decide issues of arbitrability is a question of contract interpretation, which is an issue we review de novo. (Dream Theater, supra, 124 Cal.App.4th 547.)
II. The Subcontract Does Not Contain Clear and Unmistakable Evidence that the Parties Intended the Arbitrator to Decide Arbitrability
SOJV argues the Subcontract contains clear and unmistakable evidence that the parties intended the arbitrator to decide arbitrability issues because it expressly incorporates arbitration rules to that effect. Section 17.2.1 of the Subcontract requires the parties to submit "disputes not involving acts, omissions or otherwise the responsibility" of the District "to arbitration in accordance with the Construction Industry Rules of the American Arbitration Association." Rule R-8(a) of those rules provides that the "arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement."
SOJV requested the trial court to take judicial notice of the AAA Construction Industry Arbitration Rules and Mediation Procedures amended and effective September 1, 2007, which it printed from the URL address http://www.adr.org/sp.asp?id= 22004&printable=true, apparently on December 21, 2007. The appellate record does not include a trial court ruling on the request. Insofar as the appellate record discloses, Certified did not oppose the request in the trial court. Although SOJV cited to the exhibit on appeal, Certified has not objected to the citation or disputed the authenticity of the exhibit. On our own motion, we take judicial notice of the exhibit pursuant to Evidence Code sections 452, subdivision (h), 453, and 459, subdivision (a).
Both California and federal courts have held that the incorporation of similar arbitration rules constituted clear and unmistakable evidence that the parties intended the arbitrator to decide the issue of arbitrability. In Dream Theater and Rodriguez, the Courts of Appeal so held where the contract incorporated the same or similar rules of the American Arbitration Association (AAA). (Dream Theater, supra, 124 Cal.App.4th at p. 557 [AAA Commercial Arbitration Rules]; Rodriguez, supra, 136 Cal.App.4th at p. 1123 [AAA Construction Industry Arbitration Rules].) The United States Court of Appeals for the Second Circuit has reached a similar conclusion where contracts incorporated similar international arbitration rules. (Shaw Group Inc. v. Triplefine Intern. Corp. (2d Cir. 2003) 322 F.3d 115, 118, 122 (Shaw) [implied incorporation of International Chamber of Commerce Rules, article 6, section 2]; Contec Corp. v. Remote Solution Co., Ltd. (2005) 398 F.3d 205, 208 (Contec) [express incorporation of AAA Commercial Arbitration Rules, rule R-7(a)]; see also Apollo Computer, Inc. v. Berg (1st Cir. 1989) 886 F.2d 469, 472-473 [express incorporation of International Chamber of Commerce Rules, articles 8.3 and 8.4 required arbitrator to decide "arbitrability" issue of whether objecting party was bound to arbitrate dispute with an assignee of the contract].)
All of the aforementioned cases are distinguishable, however, because the contracts at issue in those cases included a broad arbitration provision as the sole dispute resolution procedure for contractual disputes. For instance, in Dream Theater, the contract included "comprehensive dispute resolution provisions . . . [that] used broad language to express their agreement to avoid litigation as a means of dispute resolution." (Dream Theater, supra, 124 Cal.App.4th at p. 550.) Although not drafted as a typical broad form arbitration agreement (see id. at pp. 553-554 & fn. 1), the arbitration provision required the parties to indemnify each other for breaches of representations, warranties or covenants under the contract and required arbitration of all unresolved indemnity claims (see id. at p. 554 & fn. 4). In the courts words, "[I]t is difficult to imagine how parties could state any more comprehensively than they did in the Contract the intent to avoid litigation at every step of the dispute resolution process." (Id. at p. 557.) In Rodriguez, the contract contained the provision "any controversy or claim arising [out] of or related to this Agreement or the breach of any provision thereof shall be settled by arbitration[.]" (Rodriguez, supra, 136 Cal.App.4th at p. 1116.) In Shaw, the contract read, "All disputes between you . . . and us . . . concerning or arising out of this Agreement shall be referred to arbitration[.]" (Shaw, supra, 322 F.3d at p. 120.) And the contract in Contec called for the arbitration of "any controversy arising with respect to this Agreement[.]" (Contec, supra, 398 F.3d at p. 208.)
In contrast, the Subcontract between SOJV and Certified adopts a two-part dispute resolution procedure that is not "comprehensively" designed to "avoid litigation at every step of the dispute resolution process." (See Dream Theater, supra, 124 Cal.App.4th at p. 557.) Under section 17.1.1, "any disputes arising" under the Subcontract "except disputes not involving the acts, omissions or otherwise the responsibility of [the District] under the prime contract" (italics added) (and waived claims and questions regarding the licensure of the subcontractor) must be processed according to the dispute resolution procedure in the Prime Contract. That is, they must be submitted to the nonbinding Disputes Review Board, after which they may be the subject of litigation. In direct contrast, section 17.2.1 of the Subcontract provides, "[f]or claims not involving the acts, omissions or otherwise the responsibility of the [District] under the prime contract, the parties hereto shall submit any and all disputes arising under or relating to the terms and conditions of the Subcontract to arbitration in accordance with the Construction Industry Rules of the American Arbitration Association." The AAA rules are incorporated only with respect to one portion of the two-part dispute resolution procedure. Their incorporation, therefore, is not clear and unmistakable evidence that the arbitrability of disputes arguably subject to the other part of the two-part dispute resolution procedure (the Prime Contract DRB process, which does not even involve binding arbitration) must be submitted to an arbitrator.
By way of comparison, the contract at issue in Vivid Video, Inc. v. Playboy Entertainment Group, Inc. included a broad arbitration clause that incorporated the AAA Commercial Arbitration Rules, coupled with a carve-out provision that permitted one of the parties to proceed directly to litigation in the event of a default under the contract. (Vivid Video, Inc. v. Playboy Entertainment Group, Inc. (2007) 147 Cal.App.4th 434, 437-438.) On the issue of who determined the arbitrability of the parties dispute, the trial court ruled that it had the power to decide. (Id. at pp. 439-440.) "`[T]he plain language of the [contract] clearly circumscribes the arbitrators otherwise broad authority to resolve disputes concerning "interpretation, construction, coverage, [and] scope" of the Agreement. [¶] . . . [T]he [contract] expressly provides for the right to file suit under Section 4.6.5 without any obstruction from any provision articulated in Article 8, including the provision that consigns the arbitrator the authority to resolve disputes concerning the application and interpretation of the Agreement. If defendants position were to be accepted, the court would be forced to effectively read Section 4.6.5 out of the Agreement altogether. . . . [¶] As such, the court cannot conclude that the parties clearly and unmistakably agreed to arbitrate the issue of arbitrability with respect to the claims at issue here." (Ibid.) The Court of Appeal dismissed the appeal for lack of finality and thus did not reach the merits of the trial courts decision. (Id. at p. 437.) Nevertheless, we find the trial courts reasoning persuasive.
If we were to submit the issue of arbitrability to the arbitrator, the requirement that disputes involving the District be processed through the Prime Contract dispute resolution procedure would be significantly undermined. The Prime Contract provides, "The principal objective of the DRB is to assist in the timely resolution of Claims between the parties arising from performance of this Contract." (Italics added.) The Prime Contract dispute resolution procedure includes several preliminary steps with strict deadlines, including a notice of potential claim supported by a five-part factual presentation, which must be submitted within 15 days of the event giving rise to the potential claim. The Contractor is required "to present any timely-filed claims by Subcontractor to [the District] under such procedure." If a dispute involving the District had to be submitted to arbitration to determine whether it was arbitrable before it could be processed through the Prime Contract dispute resolution procedures, the time limits of the DRB process could not be honored.
The Districts Engineer may respond to the notice of potential claim within 30 days; if the Engineer rejects the potential claim or fails to respond within 30 days, the Contractor must submit a claim to the District; the District must provide an evaluation of the claim within 45 days; after receipt of the Districts evaluation, the parties must meet and confer about the claim for at least 30 days; if the Contractor is still dissatisfied, it must submit the claim to the Disputes Review Board within 30 days of expiration of the meet and confer period.
The Subcontract also requires informal prearbitration dispute resolution procedures that would further delay the processing of a dispute through the Prime Contract procedures.
Moreover, Certifieds claims involve the District as well as the general contractor and itself. The District expressly contracted with SOJV to ensure that subcontractor claims actionable against the District be processed through the Prime Contract dispute resolution procedures according to the aforementioned timelines. The District did not agree to arbitrate any issue with SOJV or a subcontractor, much less the issue of whether subcontractor claims that are actionable against the District must be processed through the Prime Contract dispute resolution procedures. To interpret the Subcontract as SOJV suggests would conflict with the terms of the Prime Contract, which are expressly incorporated into the Subcontract.
We conclude the contract does not provide clear and unmistakable evidence that SOJV and Certified agreed to have an arbitrator determine the arbitrability of a dispute arguably subject to the Prime Contract dispute resolution procedure. The trial court correctly ruled that it should decide arbitrability rather than referring that issue to an arbitrator.
DISPOSITION
The order denying the motion to compel arbitration is affirmed. Appellants shall pay respondents costs.
We concur:
JONES, P.J.
SIMONS, J.