Standard of Review Was Crucial To Affirmance of Trial Court’s Order Denying Motion to Compel Arbitration

     What a difference the standard of review can make. 

     Plaintiff Thiel, an investor, sued MKA Real Estate Qualified Fund I, LLC for investment mismanagement.  Several investment advisors, as well as real estate developers, were named as co-defendants.  MKA moved to compel arbitration with it, and the trial court denied the motion on grounds that Thiel had not agreed to arbitrate, and that third party signatories, who could not be compelled to arbitrate, created the possibility of conflicting rulings.  MKA appealed. Thiel v. MKA Real Estate Qualified Fund I, LLC, Case No.A131683 (1st Dist. Div. 4 November 9, 2012) (Ruvolo, P.J.) (unpublished).

     Evidence cut both ways as to whether there was an agreement to arbitrate.  However, the Plaintiff stated he was not shown a copy of an arbitration agreement, and he never agreed to arbitrate, and his wife backed him up.  If the court’s order to deny a motion to compel arbitration is based on a decision of fact, then a substantial evidence standard governs.  And here, though the evidence was disputed, Thiel’s denials amounted to substantial evidence. 

     Cal. Code of Civ. Proc. section 1281.2(c) authorizes the court to deny a request to arbitrate when arbitration may result in conflicting rulings on a common issue of law or fact.  Applying a de novo standard of review, the Court of Appeal concluded that Plaintiffs’ allegations of agency and conspiracy “would necessarily require presenting evidence and determining the culpability of the codefendants as well as that of MKA,” as a result of which, “there exists a possibility of conflicting rulings on common issues of law and fact . . . warranting the denial of MKA’s motion to compel arbitration.”

     The Court of Appeal’s path to affirmance was made easier by its subsidiary rulings that MKA had forfeited various arguments along the way.

      Affirmed.