HARRIS v. SUPERIOR COURT

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Docket Number

Docket No. B024184.

Attorney(S)

COUNSEL Alfred Breckler for Petitioners. No appearance for Respondent. Joel Bruce Douglas, Bonne, Jones, Bridges, Mueller O'Keefe, Robert C. Powers and Rushfeldt, Shelley McCurdy for Real Parties in Interest.

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Smart Summary

Factual and Procedural Background

This proceeding involves a plaintiff mother and daughter (petitioners) who filed a medical malpractice lawsuit against a physician (Dr. Mirsaidi), a hospital corporation, and a holding company related to a prepaid health services program. The plaintiffs were enrolled in the Maxicare prepaid health plan through the father's employment, who signed an enrollment form containing an arbitration clause covering claims against Maxicare, Hawthorne Community Medical Group, Inc. (the professional corporation through which Dr. Mirsaidi practiced), and associated health professionals.

The physician and holding company raised binding arbitration as an affirmative defense, seeking to stay the court action pending arbitration. The hospital corporation moved to compel arbitration and was granted the motion. Plaintiffs then sought to compel Dr. Mirsaidi and the holding company to arbitrate. The holding company agreed to arbitration, but Dr. Mirsaidi opposed it. The trial court compelled arbitration against the holding company but denied the motion as to Dr. Mirsaidi, reasoning he was not a party to the arbitration agreement. Petitioners filed this writ petition to compel arbitration by Dr. Mirsaidi.

Legal Issues Presented

Whether Dr. Mirsaidi, who did not sign the arbitration agreement but was an employee of the professional corporation named in the agreement, is bound by the arbitration clause signed by the plaintiff's father when enrolling in the health plan.
Whether a nonsignatory party (Dr. Mirsaidi) can be compelled to arbitrate a dispute under the arbitration agreement signed by another party.

Arguments of the Parties

Petitioners' Arguments

The arbitration clause in the enrollment form, which named Hawthorne and its contracting health professionals, grants the right to compel arbitration of malpractice claims against Dr. Mirsaidi.
Dr. Mirsaidi, as an employee of Hawthorne, is bound by the arbitration agreement despite not signing it personally.
Dr. Mirsaidi accepted the benefits of the Maxicare health plan and thus consented to arbitration obligations.

Respondent's Arguments (Dr. Mirsaidi)

Dr. Mirsaidi contended he was not a party to the arbitration agreement because he did not sign the enrollment form.
He opposed being compelled to arbitrate, preferring trial by jury.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Meyer v. Carnow (1986) 185 Cal.App.3d 169	An action to compel arbitration is an action to enforce a contractual arbitration agreement.	Supported the principle that the enrollment form arbitration clause gave Dr. Mirsaidi the right to compel arbitration.
Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406	A nonsignatory beneficiary of an arbitration clause may require arbitration.	Helped establish that nonsignatories can compel arbitration; court found Dr. Mirsaidi bound similarly.
Berman v. Dean Witter Co., Inc. (1975) 44 Cal.App.3d 999	An agent or third party beneficiary can be bound by an arbitration agreement signed by another party.	Applied analogy that Dr. Mirsaidi, as Hawthorne's employee, was bound to arbitration like the husband acting as agent in Berman.
Frame v. Merrill Lynch, Pierce, Fenner Smith, Inc. (1971) 20 Cal.App.3d 668	Concerns about imposing arbitration contrary to reasonable expectations or unfair imposition.	Court found no unfair imposition or contrary reasonable expectations here.
Zahn v. Canadian Indem. Co. (1976) 57 Cal.App.3d 509	A third party beneficiary cannot have greater rights under a contract than the contracting parties.	Supported that Dr. Mirsaidi's rights are no greater than those of Maxicare and Hawthorne, who waived trial rights.
Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171	Issuance of a peremptory writ in the first instance is appropriate when fully briefed and clear.	Supported the court's decision to issue a peremptory writ without an alternative writ.

Court's Reasoning and Analysis

The court analyzed whether Dr. Mirsaidi, a nonsignatory to the arbitration agreement, could be compelled to arbitrate. It found that the enrollment form's arbitration clause explicitly included Hawthorne Community Medical Group, Inc. and its contracting health professionals, which encompassed Dr. Mirsaidi as an employee. The court rejected the physician's argument that only signatories could be bound, noting that nonsignatory beneficiaries can require arbitration and, under these facts, nonsignatories may also be compelled.

The court relied on Dr. Mirsaidi's status as an employee providing medical services through Hawthorne, a professional corporation bound by the arbitration clause. It analogized to Berman, where an agent was bound by an arbitration agreement signed by a principal. Contract law principles regarding third party beneficiaries and acceptance of benefits further supported binding Dr. Mirsaidi to arbitration.

The court also considered concerns about imposing arbitration against reasonable expectations and found no evidence of unfair imposition here. Finally, procedural rules justified issuing a peremptory writ immediately, given the case was fully briefed and the issues clear.

Holding and Implications

The court held that Dr. Mirsaidi is bound by the arbitration clause contained in the enrollment form signed by the plaintiff's father and must participate in binding arbitration.

The court ordered the trial court to vacate its prior denial of the motion to compel arbitration as to Dr. Mirsaidi and to enter a new order granting that motion. The decision directly affects the parties by compelling arbitration of the malpractice claim against Dr. Mirsaidi. No new legal precedent was created beyond the application of existing contract and arbitration principles to these facts.

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TIFFANY CAROL HARRIS et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; MANSOOR MIRSAIDI et al., Real Parties in Interest.

OPINION THE COURT.

Before Roth, P.J., Gates, J., and Fukoto, J.[†]
[†] Assigned by the Chairperson of the Judicial Council.

This proceeding presents the unusual situation of a plaintiff seeking to compel arbitration of a medical malpractice claim over the defendant physician's objection that he prefers trial by jury. Petitioners seek a writ of mandate directing the trial court to compel the physician to participate in binding arbitration.

Petitioners, a mother and daughter, filed the underlying malpractice action in superior court against a physician (Dr. Mirsaidi), a hospital corporation (Maxicare Medical Centers, Inc.), and a second corporation (Maxicare Health Plans, Inc.) which is the holding company of the hospital corporation and of another corporation (Maxicare) licensed in California to arrange the delivery of prepaid health care services to members. Maxicare was not named as a defendant; neither was Hawthorne Community Medical Group, Inc. (hereinafter Hawthorne), the professional corporation through which Dr. Mirsaidi practiced. The complaint alleges negligence before and during the daughter's birth, resulting in personal injuries.

Plaintiffs were enrollees in the Maxicare prepaid health services program, as a benefit of the father's employment. At the time of enrollment, he was furnished with and signed a membership application form. This application contained the following printed statement: "I agree that any claim asserted by a Member . . . against Maxicare, Hawthorne Community Medical Group, Inc., [three other entities], their employees or other contracting health professionals, pharmacies, or their employees for bodily injury to or death of a member, is subject to binding arbitration." Another document, called a Maxicare Service Agreement (a copy of which, the record shows, is customarily given to members at the time of their enrollment) provides: "[I]f any dispute, controversy or claim shall arise between the Subscriber or Family Unit Member . . . and Maxicare, its employees or contracting providers and their agents or employees . . . the same shall be referred to three arbitrators. . . . [¶] . . . The decision of the majority of the arbitrators shall be final and binding on both parties. . . ." In their answers to the complaint, Dr. Mirsaidi and the holding company — both are represented by the same attorney — raised binding arbitration as affirmative defenses, pleading that "the Superior Court action should be stayed, pending arbitration of the dispute."

Over 20 months after filing its answer, defendant hospital moved to compel arbitration of the controversy between it and plaintiffs. The motion was granted. Plaintiffs then moved for an order compelling Dr. Mirsaidi and the holding company to participate in the arbitration. In response, the holding company put on record its willingness "to voluntarily submit plaintiffs' claims against it to arbitration, along with the arbitration between plaintiff and the hospital." Dr. Mirsaidi, however, opposed the motion.

The trial court granted the motion with respect to the claim against the holding company, based on its expressed willingness to arbitrate. But it denied the motion to compel Dr. Mirsaidi to participate in binding arbitration, reasoning that he was not a party to the arbitration agreement. This petition followed. We hold that Dr. Mirsaidi is bound by the arbitration clause signed by the father when he enrolled in the health plan.

Code of Civil Procedure section 1281.2 requires the trial court to order arbitration of a controversy if it determines that there is an agreement to arbitrate the controversy. (1) An action to compel arbitration is, in essence, an action to compel specific performance of a contractual agreement to arbitrate. ( Meyer v. Carnow (1986) 185 Cal.App.3d 169, 174 [ 229 Cal.Rptr. 617].) We have no doubt that the enrollment form arbitration clause, which specifically named Hawthorne and its contracting health professionals, gave Dr. Mirsaidi the contractual right to compel arbitration of a malpractice claim against him. The issue here is whether there is merit to the doctor's contention that the patient could nonetheless not compel him to arbitrate, because only the patient executed the enrollment form. In effect, under this proposed construction of the arbitration agreement it grants an option to the employees and other contracting professionals of Hawthorne to choose arbitration or litigation and to impose that choice on any plaintiff.

Not many reported cases have involved arbitrations with persons who did not sign arbitration agreements. (2) It is well established that a nonsignatory beneficiary of an arbitration clause is entitled to require arbitration. ( Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418 [ 220 Cal.Rptr. 807, 709 P.2d 826]; Berman v. Dean Witter Co., Inc. (1975) 44 Cal.App.3d 999 [ 119 Cal.Rptr. 130]; Frame v. Merrill Lynch, Pierce, Fenner Smith, Inc. (1971) 20 Cal.App.3d 668, 671-672 [ 97 Cal.Rptr. 811].) Whether a nonsignatory beneficiary can be forced to arbitrate is a closer question. Under the facts of this case, however, we have no difficulty in concluding Dr. Mirsaidi was bound by the arbitration clause.

(3) According to Dr. Mirsaidi's deposition testimony, Hawthorne was a professional corporation. He became associated with Hawthorne in 1975; at that time he joined eight other physicians with various specialties in a group practice at Hawthorne. The record does not show whether Dr. Mirsaidi was an officer, director, or shareholder of Hawthorne. It does show that he was its employee and that he provided medical care to Hawthorne's patients, including plaintiffs. This relationship is sufficient to bind Dr. Mirsaidi to the arbitration agreement which named Hawthorne.

Our conclusion is supported by the holding of Berman v. Dean Witter Co., Inc., supra, 44 Cal.App.3d 999, 1004. There a husband was compelled to arbitrate his dispute with a securities broker despite his objection that he was not a party to the arbitration agreement signed by his wife when she opened her account with the broker. The husband's claim against the broker arose from a purchase he made for the wife's account; the court held that in making the purchase he was acting as the wife's agent, a status which bound him to the arbitration agreement. Here, plaintiffs were patients of Hawthorne, which, as a professional corporation, could render professional medical services to them only through its employees. (See Corp. Code, § 13405.) Acting as Hawthorne's employee and on its behalf, Dr. Mirsaidi rendered medical care to plaintiffs. In so doing he was subject to Hawthorne's obligations under the arbitration agreement — just as petitioners, also nonsignatories, were bound by the father's agreement to arbitrate.

Familiar principles of contract law also support our decision. A third party beneficiary of a contract can gain no greater rights under that contract than the contracting parties. ( Zahn v. Canadian Indem. Co. (1976) 57 Cal.App.3d 509, 513 [ 129 Cal.Rptr. 286].) Dr. Mirsaidi was a third party beneficiary of the contractual provision requiring arbitration of members' claims against "employees or other contracting health professionals" of Hawthorne. Since Maxicare and Hawthorne, the contracting parties which procured this benefit for him, waived their rights to trial and agreed to arbitration instead, Dr. Mirsaidi's rights are no greater.

We have no doubt Hawthorne was a party to the agreement contained in the enrollment form. The form bore a printed notation that it was a January 1979 revision; the father signed it in July 1980. The evident failure of Hawthorne to procure removal of its name from the form during that span of time sufficiently indicates the apparent authority of the person presenting the form for signature to bind Hawthorne to its contents.

Further, the voluntary acceptance of the benefit of a transaction constitutes consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting. (Civ. Code, § 1589) Here, Dr. Mirsaidi obtained patients through enrollments in the Maxicare health plan. His acceptance of this benefit necessarily entailed acceptance of the agreement that members' claims would be subject to binding arbitration.

(4) Courts have often indicated their concern that binding arbitration should not be imposed if the use of arbitration would be contrary to a party's reasonable expectations or if any loss or unfair imposition would result. (E.g., Frame v. Merrill Lynch, Pierce, Fenner Smith, Inc., supra, 20 Cal.App.3d 668, 672.) We have no fear that this is such a situation.

This is a proper case for issuance of a peremptory writ in the first instance. (Code Civ. Proc., § 1088; Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177-180 [203 Cal.Rptr. 626, 681 P.2d 893].) All parties were informed by order that this court was considering issuing a peremptory writ in the first instance. The case having been fully briefed, issuance of an alternative writ would add nothing to the exposition of the issues.

Let a peremptory writ of mandate issue, directing respondent court to vacate its order of September 3, 1986, denying petitioner's motion to compel defendant Mirsaidi to participate in arbitration, and to enter a new and different order granting the motion.