Parties Moving to Compel Arbitration Were Unable to Take Advantage of Nonsignatory’s Admissions Where Moving Parties Denied Existence of Agreement Between Themselves and Nonsignatory

     Our next case is an odd one in which each of the adversaries took seemingly inconsistent positions.  PMCI and Gregory, a contractor and its principal, were moving parties seeking to compel arbitration of a construction defects lawsuit with Quattro, a nonsignatory to a construction contract.  While moving to compel arbitration, PMCI and Gregory claimed that the nonsignatory Quattro lacked standing to sue and was not a party to the agreement.  The nonsignatory claimed that he had standing to sue under the agreement to construct a house, but that as a nonsignatory, he was not bound by the contract’s arbitration provision.  In another related lawsuit, Quattro had filed a declaration stating that another person, Truppi, was the record owner of the property, and that Quattro “had only a prospective beneficial interest in the property. . . “  

     The arbitration clause provided that it bound signatories, and the trial court denied the petition to compel arbitration on the simple basis that signatures were lacking (Gregory had also failed to sign in his individual capacity).  Truppi v. Pasco Engineering, Inc. and Quattro v. Property Management Contractors, Inc., Case No. D059494 (Dist. 1 Div. 1 October 22, 2012) (Nares, Acting P.J.) (unpublished). 

     Several arguments were advanced by appellants in favor of compelling arbitration, including estoppel and third-party beneficiary arguments, all to no avail.

      The chief stumbling block for appellants appears to have been that they were not allowed to take advantage of Quattro’s admissions that the contract was for his benefit and that he had performed the contract – admissions that might have supported an estoppel argument.  Why couldn’t appellants take advantage of their opponent’s admissions?  Because “in both their demurrers, general denial, and indeed in their petition to compel arbitration, PMCI and Gregory denied the existence of an agreement between themselves and Quattro . . . “  See Brodke v. Alphatec Spine, Inc., 160 Cal.App.4th 1569, 1575 (2008) (“While plaintiffs’ admissions are an appropriate means by which the existence of an agreement may be proved, there is simply no reason to prove anything until the moving party alleges the existence of that which is to be proved.”).

Above:  Engine for drawing the fuse out of a shell and cross-section of a Petard. 1779.  Library of Congress.

     If you seek to compel arbitration under a contract,yet deny that there is a binding contract, well, that could be a problem.  It was here for appellants.  See the diagram above referring to a “Petard”, and see the Wikipedia article for the origin of the expression, “hoist with his own petard.”

     Order affirmed.