Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG04183334
Reardon, J.
This is the second appeal brought by Keenan & Associates (Keenan), in which it seeks to compel nonsignatory, public entity plaintiffs to arbitrate their claims against Keenan by virtue of their membership in various joint powers agencies (JPA’s). In an unpublished opinion (San Francisco Unified School District v. Keenan & Associates (May 15, 2007, A112106 [Keenan I]), we affirmed orders denying Keenan’s motion to compel arbitration with respect to claims asserted by San Francisco Unified School District (SFUSD) in the first and second amended complaints. The instant appeal pertains to the order denying Keenan’s motions to compel arbitration of the claims asserted by SFUSD, San Francisco Community College District (SFCCD), Tuolumne Joint Powers Authority (TJPA), and the People of the State of California, by and through San Francisco City Attorney Dennis Herrera (Herrera or the People) (collectively the named plaintiffs), in the fourth amended complaint. Once again, Keenan has failed to establish an applicable exception to the general rule that a nonsignatory is not bound by an arbitration agreement. Equally unavailing are Keenan’s assertions that SFCCD is bound to arbitrate its existing claim by virtue of a subsequent arbitration agreement with Keenan, and that the People are required to arbitrate its unfair competition law (UCL) claim. (Bus. & Prof. Code, § 17200.) Accordingly, we affirm the order denying Keenan’s motions to compel arbitration.
A JPA is a legally independent entity created by a joint exercise of powers agreement pursuant to Government Code section 6500 et seq.
Pursuant to Evidence Code section 452, subdivision (d), we take judicial notice of the record in Keenan I.
We shall refer to SFUSD, SFCCD, and TJPA collectively as the “named public entity plaintiffs,” and individually where appropriate.
I. FACTS AND PROCEDURAL HISTORY
A. Background
The facts and procedural history of the underlying action are fully discussed in our opinion in Keenan I, the majority of which do not need to be reiterated here. The gist of the underlying action is that Keenan, while acting on behalf of various JPA’s, of which the public entity plaintiffs are members, abused its position of trust to obtain kickbacks, improper fees, and benefits from insurers to whom they steer insurance business for public entity clients. The JPA’s have contractual agreements (JPA Agreements) with Keenan, in which Keenan agreed to provide various services, including general administration, underwriting administration, claims administration, and risk management services. The JPA Agreements contain arbitration provisions. Although the named public entity plaintiffs are members of the JPA’s, they are not signatories to the agreements between Keenan and the JPA’s. The named public entity plaintiffs seek classwide relief on behalf of all California public entities adversely affected by Keenan’s misconduct. Similarly, the People seek statewide restitution and injunctive relief.
TJPA is a separate JPA, but seeks relief as a member of certain JPA’s that utilized Keenan’s services.
As relevant here, the named public entity plaintiffs are and/or were members of one or more of the following JPA’s: Northern California Regional Liability Excess Fund; Schools Association for Excess Risk; Statewide Association of Community Colleges; Community College Insurance Group; Schools Alliance for Workers’ Compensation Excess; and Benefit Liability Excess Fund.
B. Initial Complaints and Prior Motions to Compel Arbitration
In November 2004, the County of Santa Clara filed a complaint on its own behalf and on behalf of the general public, alleging UCL violations and breaches of fiduciary duty committed by Keenan and various other insurers. In January 2005, SFUSD was added as a plaintiff in the first amended complaint.
Keenan’s first motion to compel arbitration against SFUSD was granted in part and denied in part in June 2005. The trial court determined that SFUSD was not bound to arbitrate its claims against Keenan under the arbitration provisions contained in written contracts with two JPA’s, of which SFUSD was a member. However, the court granted Keenan’s motion to compel arbitration of SFUSD’s claims arising solely in connection with a July 2004 claims administration services agreement (Claims Agreement) between Keenan and SFUSD that contained an arbitration provision. The trial court stayed the arbitration under the Claims Agreement pursuant to Code of Civil Procedure section 1281.2, subdivision (c), pending resolution of the nonarbitrable claims.
Following the filing of the second amended complaint, which included causes of action for breach of contract and breach of fiduciary duty, Keenan, based on SFUSD’s assertion of third party beneficiary status, moved to compel arbitration and for reconsideration of the June 2005 order. However, before those motions were heard, a third amended complaint was filed in November 2005, which withdrew the contract cause of action and third party beneficiary assertions, and added SFCCD and TJPA as plaintiffs.
In November 2005, the trial court denied Keenan’s motion for reconsideration and second motion to compel arbitration of SFUSD’s claims. Once again, the trial court ordered that arbitration under the Claims Agreement be stayed (Code Civ. Proc., § 1281.2, subd. (c)), pending resolution of SFUSD’s nonarbitrable claims.
In June 2006, SFCCD entered into a service agreement with Keenan for a “web-based application named BenefitBridge,” which provides services “to manage, view and control various aspects of employee benefits programs” (BenefitBridge Agreement). The BenefitBridge Agreement contains an arbitration provision.
C. Fourth Amended Complaint and Current Motions to Compel Arbitration
In July 2006, while the appeal in Keenan I was pending, a fourth amended complaint was filed, which added the People as a plaintiff. The named public entity plaintiffs asserted causes of action for breach of fiduciary duty and Cartwright Act (Bus. & Prof. Code, § 16700 et seq.) violations. The People asserted a UCL claim based on Keenan’s unfair business practices. Keenan then filed four separate motions seeking to compel SFUSD, SFCCD, TJPA, and the People to arbitrate the claims asserted in the fourth amended complaint.
The trial court sustained, without leave to amend, Keenan’s demurrer to the Cartwright Act cause of action.
In October 2006, the trial court denied the motions to compel. In so ruling, the trial court explained that the named public entity plaintiffs were not bound by the arbitration agreements between Keenan and the JPA’s. With respect to SFUSD, the trial court reaffirmed the portion of the June 2005 order, staying the arbitration under the Claims Agreement.
Additionally, the trial court ruled that the recent (June 2006) BenefitBridge Agreement between SFCCD and Keenan did not compel arbitration of SFCCD’s claims under the fourth amended complaint. The court explained that the BenefitBridge Agreement was unrelated to the instant action, which was commenced before the arbitration clause was executed.
The court further explained that since the named public entity plaintiffs were not bound by the arbitration agreements, there was no basis upon which to order the People to arbitration. As a separate basis for denying Keenan’s motion as to the People, the trial court ruled that the injunctive relief claims were not arbitrable under Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 320 (Cruz).
This appeal followed.
II. DISCUSSION
A. Standard of Review and Applicable Law
1. Standard of Review
The issues presented on appeal turn on the interpretation of arbitration agreements and statutes. As they are all questions of law, we review them de novo. (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 241(County of Contra Costa.) To the extent the issues on appeal present factual questions (see, e.g., Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1716 [estoppel] (Metalclad); Inglewood Teachers Assn. v. Public Employment Relations Bd. (1991) 227 Cal.App.3d 767, 780 [agency]), which might require a review for substantial evidence, here there is no conflicting evidence, so the issues remain questions of law to which we apply de novo review (van’t Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 562; NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 71-72 (NORCAL)).
2. Applicability of the Federal Arbitration Act
The Federal Arbitration Act (FAA) applies to contractual arbitration in written agreements that involve interstate or foreign commerce. (9 U.S.C. §§ 1, 2.) Choice of law provisions are given effect provided there is no conflict with the policies underlying federal law. (See Volt Info. Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468, 476.) Here, Keenan’s declaration in support of the motions to compel arbitration provides that, as part of its claims and administration services, Keenan interacts with out-of-state insurers. (See Basura v. U.S. Home Corp. (2002) 98 Cal.App.4th 1205, 1213-1214 [FAA applies to contracts relating to interstate commerce]; see also Allied-Bruce Terminex Cos. v. Dobson (1995) 513 U.S. 265, 274.) Thus, inasmuch as the JPA Agreements involve interstate commerce, they are subject to the FAA. (See Basura v. U.S. Home Corp., supra, at pp. 1213-1214.) However, various JPA Agreements provide that they are governed by California law. The Claims Agreement similarly contains a choice of California law provision. In any event, the FAA and California state law overlap and the difference between the two bodies of law does not impact our analysis, unless otherwise noted. (See Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 406-407; Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 651; Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1120-1121.)
B. The Trial Court Did Not Err in Denying the Motions to Compel Arbitration of the Breach of Fiduciary Duty Claims Set Forth in the Fourth Amended Complaint
1. Introduction
In Keenan I, we held that Keenan failed to establish that SFUSD should be bound to arbitrate its claims by reason of SFUSD’s purported third party beneficiary status. We similarly held that Keenan failed to demonstrate that equitable estoppel, agency law, or Government Code section 6508.1 compelled SFUSD to arbitrate its claims.
In the instant appeal, Keenan raises substantially the same arguments that we rejected in Keenan I. The gist of the instant appeal is that because the breach of fiduciary duty claims arise out of Keenan’s performance under the JPA Agreements, which benefit the named public entity plaintiffs, the named plaintiffs are bound to arbitrate their claims as third party beneficiaries. In a related equitable estoppel argument, Keenan contends that the named plaintiffs cannot accept the benefits of the JPA Agreements and simultaneously avoid the burden of those agreements. Finally, Keenan again argues that Government Code section 6508.1 mandates arbitration of the named plaintiffs’ claims. Nothing in the instant appeal compels this court to change its original conclusion that the trial court properly denied the motions to compel.
“Public policy favors arbitration as an expedient and economical method of resolving disputes, thus relieving crowded civil courts. However, arbitration assumes that the parties have elected to use it as an alternative to the judicial process. [Citation.] Arbitration is consensual in nature. The fundamental assumption of arbitration is that it may be invoked as an alternative to the settlement of disputes by means other than the judicial process solely because all parties have chosen to arbitrate them. [Citations.] Even the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing such an agreement. ‘The right to arbitration depends on a contract.’ [Citations.]” (County of Contra Costa, supra, 47 Cal.App.4th at pp. 244-245.)
As we discussed in detail in Keenan I, a nonsignatory is not bound by an arbitration agreement, except in very limited circumstances. (See Westra v. Marcus & Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763; Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990; County of Contra Costa, supra, 47 Cal.App.4th at pp. 242-245; see also Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 268 (Boucher); E.I. DuPont de Nemours v. Rhone Poulenc Fiber (3d Cir. 2001) 269 F.3d 187, 194-195 (DuPont); Letizia v. Prudential Bache Securities, Inc. (9th Cir. 1986) 802 F.2d 1185, 1187.)
2. Third Party Beneficiary
“Whether a third party is an intended beneficiary or merely an incidental beneficiary to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered.” (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1725.) Although numerous agreements are at issue in the instant appeal, the JPA Agreements are identical in all material respects.
As before, Keenan fails to identify any language in the JPA Agreements disclosing an intent of the JPA’s and Keenan to benefit the named plaintiffs. Rather, Keenan argues that the parties’ intent to bind the JPA members is irrelevant because the named plaintiffs are seeking to exploit the benefits of the JPA Agreements and simultaneously avoid the burdens under those contracts.
In fact, three of the JPA Agreements expressly disclaim the creation of third party beneficiary rights or remedies.
Contrary to Keenan’s assertion, the absence of an intent to bind the named plaintiffs in the JPA Agreements is relevant. “A third party beneficiary may enforce a contract made for its benefit. (Civ. Code, § 1559.) However, ‘[a] putative third party’s rights under a contract are predicated upon the contracting parties’ intent to benefit’ it. [Citation.] . . . ‘[T]he circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement.’ [Citation.]” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524, italics added.) “In other words, a benefitting third party is not necessarily a third-party beneficiary.” (InterGen N.V. v. Grina (1st Cir. 2003) 344 F.3d 134, 147 (InterGen).) Here, all that has been established is that the named public entity plaintiffs are members in the JPA’s that separately contracted for Keenan’s services.
Despite the lack of objective evidence indicating the JPA’s and Keenan intended to confer special legal rights on the named plaintiffs, Keenan nonetheless contends the claims asserted in the fourth amended complaint are arbitrable under the arbitration clauses in the JPA Agreements. Keenan relies on the principle that contracts providing for arbitration of “ ‘ “any controversy . . . arising out of or relating to the contract . . .” ’ [are] sufficiently broad to include tort, as well as contractual, liabilities so long as the tort claims ‘have their roots in the relationship between the parties which was created by the contract.’ [Citations.]” (Bos Material Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 105-106, italics added; see also Marsch v. Williams (1994) 23 Cal.App.4th 250, 255.) According to Keenan, the public entity plaintiffs’ breach of fiduciary claims have their “roots” in the relationship created by the JPA Agreements. However, in this misguided attempt to apply the “roots in the relationships” theory to the instant case, Keenan overlooks the obvious: The named public entity plaintiffs and the People are not parties to the JPA Agreements. Keenan offers no case holding that the named plaintiffs can be required to arbitrate simply because their claims arise out of contractual relationships in which they were not parties.
It is unclear whether Keenan is pursuing an agency theory. However, to the extent one is raised, that argument similarly fails. The authority cited by Keenan is inapposite, and does not support a finding of an agency relationship compelling arbitration in the instant case. (See, e.g., Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 702-709 [statutes granted state employers implied authority to contract for medical benefit plan on employees’ behalf]; Keller Construction Co. v. Kashani (1990) 220 Cal.App.3d 222, 229 [general partner of limited partnership bound by arbitration agreement between partnership and third party].)
In sum, Keenan has not produced any evidence that the JPA’s and Keenan intended to give every beneficiary under the JPA Agreements, such as the named public entity plaintiffs, the right to sue under those agreements. It follows that the named plaintiffs cannot be bound to terms of contracts they did not sign and are not even entitled to enforce.
3. Equitable Estoppel
We are not persuaded by Keenan’s renewed assertion that the named plaintiffs are bound to arbitrate their claims under a theory of equitable estoppel. Civil Code section 1589 provides, “A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.” Civil Code section 3521 similarly provides, “He who takes the benefit must bear the burden.”
“ ‘Equitable estoppel precludes a party from asserting rights “he otherwise would have had against another” when his own conduct renders assertion of those rights contrary to equity.’ ([Inter. Paper v. Schwabedissen Maschinen & Anlagen ([4th Cir. 2000]) 206 F.3d [411,] 417-418 [International Paper].) In the arbitration context, a party who has not signed a contract containing an arbitration clause may nonetheless be compelled to arbitrate when he seeks enforcement of other provisions of the same contract that benefit him. (Id. at p. 418; NORCAL[,supra,] 84 Cal.App.4th [at p.] 81 [].)” (Metalclad, supra, 109 Cal.App.4th at p. 1713.) “Restated, the doctrine of estoppel prevents a party from ‘having it both ways.’ [Citation.]” (Washington Mut. Finance Group, LLC v. Bailey (5th Cir. 2004) 364 F.3d 260, 268.)
“The federal circuits that have considered the doctrine of equitable estoppel have uniformly accepted it, in appropriate factual circumstances, as a basis for compelling signatories to a contract containing an arbitration clause to arbitrate their claims against nonsignatories. [Citations.]” (Metalclad, supra, 109 Cal.App.4th at p. 1714, italics added; see MS Dealer Service Corp. v. Franklin (11th Cir. 1999) 177 F.3d 942, 947; Grigson v. Creative Artists Agency (5th Cir. 2000) 210 F.3d 524, 527.) “[U]nder 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.]” (Boucher, supra, 127 Cal.App.4th at pp. 271-272.)
“Although federal courts generally ‘have been willing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed,’ [citation], they have been hesitant to estop a nonsignatory seeking to avoid arbitration.” (InterGen, supra, 344 F.3d at pp. 145-146; second italics added.) In such instances, “estoppel has been limited to ‘cases [that] involve non-signatories who, during the life of the contract, have embraced the contract despite their non-signatory status but then, during litigation, attempt to repudiate the arbitration clause in the contract.’ [(DuPont, supra, 269 F.3d at p. 200]; accord Am. Bureau of Shipping v. Tencara Shipyard S.P.A. [(2d Cir. 1999)] 170 F.3d 349, 353 [] (holding a nonsignatory bound by a contract under which it received the direct benefits of lower insurance rates and the ability to sail under the French Flag).” (InterGen, supra, 344 F.3d at p. 146.) Under federal decisional law, “[a] nonsignatory is estopped from refusing to comply with an arbitration clause ‘when it receives a “direct benefit” from a contract containing an arbitration clause.’ [Citations.]” (International Paper, supra, 206 F.3d at p. 418.) “Direct benefits estoppel applies when a nonsignatory ‘knowingly exploits the agreement containing the arbitration clause.’ [Citations.]” (Bridas S.A.P.I.C. v. Government of Turkmenistan (5th Cir. 2003) 345 F.3d 347, 361-362.)
As before, Keenan relies on International Paper, supra, 206 F.3d 411, as requiring arbitration in this case. In International Paper, the Fourth Circuit held that a nonsignatory was estopped from avoiding arbitration where it sued to enforce warranty provisions in a contract. (Id. at pp. 413-414, 418.) There, a buyer of an industrial saw brought suit against the manufacturer of the saw on the basis of a contract between the manufacturer and the distributor of the saw, which contained an arbitration clause. (Id. at pp. 413-414.) The court concluded that “the buyer cannot sue to enforce the guarantees and warranties of the distributor-manufacturer contract without complying with its arbitration provision . . . .” (Ibid.) In so holding, the court reasoned: “The [distributor-manufacturer] contract provides part of the factual foundation for every claim asserted by [buyer] against [manufacturer]. In its amended complaint, [buyer] alleges that [manufacturer] failed to honor the warranties in the [distributor-manufacturer] contract, and it seeks damages, revocation, and rejection ‘in accordance with’ that contract. [Buyer’s] entire case hinges on its asserted rights under the [distributor-manufacturer] contract; it cannot seek to enforce those contractual rights and avoid the contract’s requirement that ‘any dispute arising out of’ the contract be arbitrated.” (Id. at p. 418, italics added.)
Here, Keenan argues that the named plaintiffs are bound by the arbitration clauses in the JPA Agreements because their breach of fiduciary claim arises out Keenan’s services provided to the JPA’s under the JPA Agreements. However, beyond this bare assertion, Keenan does not provide any argument supporting the application of estoppel or Civil Code section 1589 in this case. The breach of fiduciary duty claim against Keenan, while factually related to the JPA Agreements, is not inextricably intertwined with those agreements.
Keenan refers to statements made by plaintiffs’ counsel in the trial court, in which counsel asserted that the fourth amended complaint “has everything to do with Keenan’s contractual relationship with the JPAs.” These statements, contrary to Keenan’s implied assertion, do not transform the named plaintiffs into third party beneficiaries or convert their breach of fiduciary claim into one of breach of contract.
In sum, Keenan has failed to establish that the named plaintiffs’ claims are “intertwined” with the JPA Agreements or that the named plaintiffs have “exploited” those agreements to the degree that requires a finding of a “direct benefit” estoppel. (See Bridas S.A.P.I.C. v. Government of Turkmenistan, supra, 345 F.3d at pp. 361-362.) Accordingly, we conclude that neither the doctrine of equitable estoppel nor Civil Code section 1589 requires the named plaintiffs to arbitrate their claims against Keenan.
4. Government Code Section 6508.1
Keenan again argues that the named public entity plaintiffs are bound to the arbitration provisions by Government Code section 6508.1, by virtue of their membership in the JPA’s. We previously rejected this claim, finding neither section 6508.1 nor Tucker Land Co. v. State of California (2001) 94 Cal.App.4th 1191, 1200-1201 (holding debts of JPA are debts of constituent members unless otherwise agreed), cited by Keenan, compelled arbitration in this case. We reject this argument again, as Keenan provides no authority supporting the proposition that section 6508.1 grants JPA’s the authority (express or implied) to bind its members to arbitration agreements in which they were not signatories.
Government Code section 6508.1, provides, in pertinent part, “If [a JPA] is . . . a public entity . . . constituted pursuant to the agreement, the debts, liabilities, and obligations of the agency shall be debts, liabilities, and obligations of the parties to the agreement . . . .”
C. The BenefitBridge Agreement Does Not Require SFCCD to Arbitrate its Claims Asserted in the Fourth Amended Complaint
Keenan insists that the trial court erred in denying its motion to compel SFCCD to arbitrate its claims asserted in the fourth amended complaint because those claims are encompassed within the BenefitBridge Agreement. We disagree.
The arbitration provision in the BenefitBridge Agreement provides: “Any and all disputes that may arise out of or relate to this Agreement, other agreements or any other relationship involving [SFCCD] and Keenan (whether occurring prior to, as part of, or after the signing of this Agreement), shall first be resolved by good faith negotiations between the parties with the assistance of non-binding mediation. In the event either party determines that they are not able to resolve the dispute through negotiation and mediation, then the dispute shall be submitted to, and resolved by, final and binding arbitration . . . . Negotiation, mediation and arbitration shall be the exclusive means of dispute resolution between [SFCCD] and Keenan and their respective agents, employees, officers and members.”
The issue of arbitrability is a matter of contract interpretation, which is a question of law we review de novo in the absence of conflicting evidence. (Balandran v. Labor Ready, Inc. (2004) 124 Cal.App.4th 1522, 1527; Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1670.) Under either federal or state arbitration law, when deciding whether the parties agreed to arbitrate a certain dispute we look to “ordinary state-law principles that govern the formation of contracts. [Citations.]” (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; see In re Tobacco Cases I (2004) 124 Cal.App.4th 1095, 1104.) Accordingly, we apply ordinary rules of California contract interpretation to give effect to the mutual intent of the parties. If the contractual language is clear and explicit, it is determinative. (In re Tobacco Cases I, supra, 124 Cal.App.4th at p. 1104.)
Here, the plain language of the BenefitBridge Agreement establishes that the arbitration requirement applies to “[a]ny and all disputes that may arise out of . . . this Agreement, other agreements or any other relationship involving [SFCCD] and Keenan (whether occurring prior to, as part of, or after the signing of this Agreement) . . . .” (Italics added.) Although the arbitration provision is undeniably broad in its scope, other contractual phrases within that provision limit its application to future claims, rather than preexisting ones. Specifically, the last part of the first sentence provides that any and all disputes “shall first be resolved by good faith negotiations between the parties with the assistance of non-binding mediation.” The second sentence of the provision provides, “In the event either party determines that they are not able to resolve the dispute through negotiation and mediation, then the dispute shall be submitted to, and resolved by, . . . arbitration . . . .” (Italics added.) These phrases logically refer to claims that have not yet been filed. They refer to a progression of alternative dispute resolution mechanisms that prohibit a party from doing something now or in the future, rather than making past conduct improper.
Our interpretation does not mean that parties may not agree to a retroactive arbitration provision. (See 9 U.S.C. § 2 [providing for enforceability of “an agreement in writing to submit to arbitration an existing controversy”]; § 1281 [same]; Coon v. Nicola (1993) 17 Cal.App.4th 1225, 1232 [holding that parties may contract to submit precontract claims to arbitration].) However, to enforce an arbitration provision to litigation already pending, the provision should contain some language reflecting the parties’ intent to do so. (See Coon v. Nicola, supra, 17 Cal.App.4th at p. 1230 [arbitration agreement containing express, but optional, retroactivity clause].) Here, there was no language in the BenefitBridge Agreement reasonably providing that the arbitration agreement would apply to (1) an existing dispute, (2) for which a lawsuit has already been filed; and (3) for which Keenan had already filed motions to compel.
Finally, Keenan’s attempt to compel arbitration of SFCCD’s claims under the fourth amended complaint by reason of the BenefitBridge Agreement fails for yet another reason. The BenefitBridge Agreement is a collateral services agreement between SFCCD and Keenan that is unrelated to allegations in the fourth amended complaint regarding Keenan’s purported misconduct in the procurement of insurance for its public entity clients. Where, as here, the parties have a separate contractual relationship, an arbitration provision that applies to one contractual relationship cannot be imposed in the other relationship without undermining the parties’ reasonable expectations. (Marsch v. Williams, supra, 23 Cal.App.4th at p. 256.) In other words, the public policy favoring arbitration is not so broad that it compels the arbitration of issues beyond those agreed to by the parties. (Balandran v. Labor Ready, Inc., supra, 124 Cal.App.4th at p. 1528; In re Tobacco Cases I, supra, 124 Cal.App.4th at p. 1104.) Thus, we conclude SFCCD’s breach of fiduciary duty claim against Keenan is not within the scope of the arbitration provision in the BenefitBridge Agreement.
D. Herrera’s UCL Claim Is Not Subject to Arbitration
Keenan argues that Herrera’s UCL claim is subject to arbitration because it is brought on behalf of the named public entity plaintiffs who derive their claims from the services provided to the JPA’s through the JPA Agreements. This argument fails as a matter of fact and law.
As a matter of fact, Herrera seeks an injunction and restitution on behalf of the People of the State of California. Although the named public entity plaintiffs are certainly members of this group, Herrera’s claims are asserted in his sovereign capacity to protect the public. Herrera is neither a party to the JPA Agreements nor a mere proxy for the public entity plaintiffs, but rather a government agent prosecuting the action on the behalf of the People. (See EEOC v. Waffle House, Inc. (2002) 534 U.S. 279, 288-291 [EEOC neither party to arbitration agreement nor mere proxy for employee, but government agency vindicating public interest]; People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17 [injunctive relief and civil penalties sought by People is primarily law enforcement action designed to protect public and not to benefit private parties]; see also City & County, San Francisco v. PG & E Corp. (9th Cir. 2006) 433 F.3d 1115, 1126-1127 [government’s right to prosecute UCL claim is separate from, and not derivative of, the right of an individual victim of said unfair business practices].)
As a matter of law, Herrera’s claim for injunctive relief under the unfair business practices act (Bus. & Prof. Code, § 17200 et seq.) is not arbitrable (Cruz, supra, 30 Cal.4th at pp. 315-316). In Cruz, supra, 30 Cal.4th 303, our Supreme Court held that claims for injunctive relief under the UCL are not arbitrable (id. at pp. 315-316). The court further held that claims for restitution and disgorgement are arbitrable, at least insofar as they are brought by an interested party subject to an arbitration agreement. (Id. at p. 320.)
In so holding, the court reasoned that an action to enjoin deceptive business practices is undertaken for public, rather than private, benefit. (Cruz, supra, 30 Cal.4th at p. 316.) As such, a judicial forum is uniquely better suited to administer an injunction and protect that public benefit. (Id. at pp. 312, 316.) Consequently, there is an “inherent conflict” between the public policy in favor of arbitration and the public policies protected by Business and Professions Code section 17200 injunctions that renders injunctive claims inarbitrable. (Id. at p. 316.)
However, the court rejected the extension of these principles to deny arbitration of UCL restitution and disgorgement claims. “In the UCL context, an order for restitution is an order ‘compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.’ [Citation.]” (Cruz, supra, 30 Cal.4th at p. 317.) While such claims might still be for the public benefit, courts hold no particular “institutional advantages” in deciding and administering money claims. (Id. at p. 318.) Consequently, there is no inherent conflict between issuance of restitution or disgorgement and arbitration. (Ibid.)
Despite Keenan’s summary assertion that Cruz was “wrongly decided” on the issue of injunctive relief, we are obliged to follow the precedent of our Supreme Court. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.) To the extent Keenan relies on Cruz as requiring arbitration of Herrera’s claims for disgorgement and restitution, this reliance is misplaced. Although Cruz holds that claims for restitution are arbitrable, there, unlike here, the plaintiff was a party to an arbitration agreement. (Cruz, supra, 30 Cal.4th at pp. 309, 320.) As discussed, very limited circumstances exist under which a nonparty to an arbitration agreement can be compelled to arbitrate a dispute, and none of those exist here. (See County of Contra Costa, supra, 47 Cal.App.4th at pp. 242-245; Boucher, supra, 127 Cal.App.4th at p. 268.) Nothing in Cruz contradicts this conclusion. If anything, Cruz, in dicta, appears to suggest that a party acting entirely on behalf of the public, such as Herrera in this case, acts beyond the scope of any arbitration agreement. (Cruz, supra, 30 Cal.4th at p. 320 & fn. 6 [discussing EEOC v. Waffle House, Inc., supra, 534 U.S. 279].)
We conclude there is no basis to compel arbitration of Herrera’s UCL claim.
E. The Trial Court Did Not Err in Staying the Arbitration under the Claims Agreement Pending Resolution of the Nonarbitrable Claims
In Keenan I, we held that the trial court did not err in applying Code of Civil Procedure section 1281.2, subdivision (c) (section 1281.2(c)), which stayed the arbitration under the Claims Agreement pending resolution of the nonarbitrable claims.
Keenan again argues the trial court erred by applying section 1281.2(c) because the FAA (9 U.S.C. § 3) and California law (Code Civ. Proc., § 1281.4) both mandate a stay of the litigation pending completion of arbitration.
Section 3 of the FAA provides, “If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . . .” (9 U.S.C. § 3.)
However, where, as here, arbitration under a contract containing a choice of California law provision has been ordered, section 1281.2(c) may be applied. Section 1281.2(c) provides, “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] . . . [¶] (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” In this latter circumstance, “the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.” (Ibid.)
“Under section 1281.2(c), the trial court has the discretion to, among other things, stay or deny arbitration if one or more parties to the action is not subject to arbitration, and multiple proceedings might result in conflicting rulings involving the same transaction. [Citation.]” (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 783.) Case law recognizes that section 1281.2(c) is a procedural state rule and thus is not preempted by the FAA if the parties have agreed “to arbitrate in accordance with California law.” (Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at p. 477; Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 385-390; Gravillis v. Coldwell Banker Residential Brokerage Co., supra, 143 Cal.App.4th at p. 784; Mount Diablo Medical Center v. Health Net of California, Inc. (2002) 101 Cal.App.4th 711, 726-727.)
Pursuant section 1281.2(c), “the court may, in its discretion, refuse to compel arbitration or may stay arbitration where ‘there is a possibility of conflicting rulings on a common issue of law or fact.’ ” (Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 100, italics added.) While there is a strong public policy in favor of arbitration, there is an “equally compelling argument that the Legislature has also authorized trial courts to refuse enforcement of an arbitration agreement [or stay the arbitration] when, as here, there is a possibility of conflicting rulings. [Citation.]” (C. V. Starr & Co. v. Boston Reinsurance Corp. (1987) 190 Cal.App.3d 1637, 1642.)
We are unpersuaded by Keenan’s contention that section 1281.2(c) has not been triggered because it is the sole remaining defendant in the action. Nothing in section 1281.2(c) limits its application to actions with multiple defendants. Rather, “[s]ection 1281.2(c) addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.” (Cronus Investments, Inc. v. Concierge Services, supra, 35 Cal.4th at p. 393, italics added; see also Pioneer Take Out Corp. v. Bhavsar (1989) 209 Cal.App.3d 1353, 1354-1355, 1358 [arbitration order stayed pending resolution of class action involving same parties and transaction].) Here, SFCCD, TJPA, and Herrera are other parties not bound by the Claims Agreement between SFUSD and Keenan.
We also reject Keenan’s argument that section 1281.2(c) does not apply because the claims of the named plaintiffs do not arise out of the same transaction and involve no overlap of claims. In the underlying action, the named public entity plaintiffs each assert the same cause of action for breach of fiduciary duty against Keenan based on the allegations that Keenan abused its position of trust to obtain kickbacks, improper fees, and benefits from insurers to whom they steer insurance business for public entity clients. Similarly, Herrera’s unfair business practices claim is premised upon the same type of misconduct. In light of this factual overlap, the trial court did not abuse its discretion in staying the arbitration under the Claims Agreement.
III. DISPOSITION
The October 2006 order denying Keenan’s motions to compel arbitration is affirmed. SFUSD, SFCCD, TJPA, and Herrera are entitled to their costs on appeal.
We concur:
Ruvolo, P.J., Rivera, J.