LOS ANGELES – California's 2nd District Court of Appeal has ruled that that Applied Underwriters’ appeal of a trial court’s order denying its renewed petition to compel arbitration is not appealable.

The court dismissed the appeal pursuant to Code of Civil Procedure section 1008, subdivision (b).

Applied Underwriters’ decision arose from a lawsuit filed against the company by Chango Coffee Inc., alleging breach of contract, conversion and fraud.

According to the original complaint, Chango Coffee alleged that Applied improperly withdrew funds from the account after it was granted access to the company’s bank account to provide payroll processing services.

An order from Los Angeles Superior Court Judge David Sotelo had rejected Applied Underwriters’ renewed petition for arbitration in the matter.

In the ruling, Sotelo pointed out that a pact signed between the companies did not include the terms of an unsigned document that contained the arbitration clause.

Concurrent with its petition to compel arbitration, Applied filed a motion to change venue pursuant to a contractual forum selection clause. The trial court denied the motion. Applied did not timely petition for review by mandamus.

Ed Karmazin, Applied's accounts settlement manager, declared that in July 2004, Applied and Chango “entered into a written agreement,” under which Applied agreed to provide Chango “payroll processing, human resource support, training, workers’ compensation insurance, and employment- related insurance from authorized insurance companies.”

The purported agreement had “two parts,” which Karmazin described as follows: “First, the customer completes a document entitled, ‘SolutionOne Application and Agreement for Services.’”

Karmazin pointed out that Tad Yenawine, Chango’s corporate secretary, signed the application on July 14, 2004. The signed document, titled SolutionOne Application and Agreement for Service, contains provisions relating to Applied’s services, payroll processing, billing and payment, and authorization to access Chango’s banking account.

The document concludes with the clause, “I (we) accept [Applied’s] standard service agreement terms and conditions.”

According to Karmazin, after receiving Chango’s signed agreement, Applied sent a second document to Chango titled SolutionOne Services Agreement. The SolutionOne Services Agreement contains the subject arbitration clause.

In its petition for arbitration, Applied argued the signed SolutionOne Application and Agreement for Service incorporate the terms of the SolutionOne Services Agreement, including the latter document’s arbitration provision.

Chango opposed the petition to compel arbitration.

Yenawine acknowledged signing the SolutionOne Application and Agreement for Service. However, Yenawine declared that, apart from the SolutionOne Application and Agreement for Service, Chango was “not asked to agree to any additional terms.”

He specifically denied agreeing to arbitrate disputes on behalf of Chango.

On Nov. 18, 2014, the trial court denied Applied’s petition to compel arbitration. In a written order, the court concluded that the critical final clause in the signed SolutionOne Application and Agreement for Service referred to the terms contained in the signed document itself, and not to the terms of the separate SolutionOne Services Agreement.

The critical clause, the court explained, provided for Chango to be bound by the Service Agreement Terms and Conditions, with the word “service” in the singular, as in the signed SolutionOne Application and Agreement for Service.

On June 12, 2015, Applied filed a renewed motion to compel arbitration. The trial court once again denied the renewed motion.

“The alleged new or different facts, Mr. Yenawine’s deposition testimony, does not in any manner alter the court’s legal analysis of [the original order],” the court noted in its opinion.

Applied then filed an appeal of that ruling.

Citing Tate v. Wilburn, the appeals court ruled that it had no jurisdiction to entertain the appeal. The appeal was dismissed and Chango Coffee was awarded its costs on appeal.

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California Second District Court of Appeal
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Los Angeles, CA 90013

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