SAN DIEGO (Legal Newsline) – A California court of appeals has upheld a lower court's ruling against U-Haul, denying its motion to compel arbitration in a negligence lawsuit.
Associate Justice Carol D. Codrington wrote the Dec. 11 opinion for the Fourth District, Division Two, with Acting Presiding Justice Art McKinster and Justice Marsha Slough concurring.
Virgil Jensen and Glenda Jensen filed a lawsuit against U-Haul Co. of California after Virgil Jensen was allegedly injured when a U-Haul truck rented by his employer blew a tire while he was driving it. The Jensens allege that they suffered damages because the truck was not properly maintained.
The opinion states that Virgil Jensen worked for CTS Global Products USA Inc. and was driving a truck rented by his supervisor, Charles Scannell on July 11, 2013. He was transporting equipment to the Sacramento State Fair.
U-Haul maintains that the Jensens are bound by the arbitration agreement in the rental contract, even though the couple are not a part of the agreement.
The Superior Court of San Bernardino County denied U-Haul’s motion to compel arbitration, and the company filed an appeal.
Citing Suh v. Superior Court, Codrington wrote that individuals typically are not “bound by an agreement entered into by a corporation in which they have an interest or are employees.”
According to Suh, arbitration generally depends on a contract and a party can only be forced to agree to arbitration if they have agreed to do so in writing.
U-Haul also alleged that Jenson was a third-party beneficiary of Scannell’s agreement, but court didn’t buy that argument.
“Mr. Jensen is not a third-party beneficiary of the contract between Mr. Scannell and UHCA,” Codrington wrote. “The rental agreement at issue contemplates the possibility that Mr. Scannell might authorize someone other than himself to use the truck.”
The appellate court noted there was no language in the contract that pointed to intent to benefit a third party.