DUFFENS v. VALENTI
On appeal, Valenti argues the superior court erred when it determined the agreements were illegal under California law, and that in any case, the arbitration clauses within them should have remained enforceable under state or federal law. Our relationship is growing on all levels. To understand whether these agreements are illegal, such that their arbitration clauses can nevertheless be avoided, we next turn to an analysis of the dating service statutory scheme.
Court of Appeal, Fourth District, Division 1, California.
Edit Your Profile Log Out. Where an alleged illegality goes to only a portion of the contract, not including an arbitration agreement, a court will be justified in ruling that the entire controversy, including the issue of illegality, remains arbitrable. Buckeye, supra, U. She is the absolute best at what she does. In our case, the request for a determination of illegality of the contract is made as a defense to arbitrability, similarly based on statutory rights.
Both in their fraud and statutory duty causes of action, respondents essentially plead that fraud in the inducement occurred, because they knew what they were signing, i. However, they claim their consent was induced by fraud, so that even though there was mutual assent and a contract, the contract, by reason of the fraud, is voidable. This could mean that fraud claims such as these, based on fraudulent inducement of an underlying contractual arrangement, normally might be arbitrable, as in a case of disappointed expectations in the performance of the contract.
However, respondents' references to breaches of statutory duty invoke other governing rules of contract interpretation that must be considered here in determining the arbitrability question.
We must examine the rules regarding illegal contracts before deciding if this arbitration provision was severable. Here, respondents' argument is that certain statutorily required language in the contracts was omitted, and the statutory scheme expressly provides that contracts that omit this language are void and unenforceable.
Before we reach that question, we return to the FAA claims newly raised on appeal. Valenti relies on several references in the record that suggest interstate commerce is involved here.
The agreements show that all three respondents have non-California drivers' license numbers. Respondents allege that Valenti advertised widely, including in airline magazines. However, those facts are not dispositive, as will be explained, and were not timely presented and developed in the trial court to establish the dominant presence of interstate commerce in this case.
To support the claim this is merely a legal issue that can be resolved on this appellate record, Valenti relies extensively on Buckeye Check Cashing, Inc. Cardegna U. Buckeye involved a contract governed by the FAA. After Buckeye, federal case law should make no distinction between void and voidable contracts for arbitration enforcement purposes, where the FAA applies.
Ferrer U. Boren 74 Cal. Where different factual bases may exist to support a particular legal theory, it is the duty of the party asserting those facts to bring them to the attention of the trial court. North Coast Business Park v. Failure to do so may be deemed a waiver of the point on appeal.
It is not disputed that these agreements were entered into in California, that the arbitration clauses and related provisions provide for a forum in California, and enforceability of any arbitration award is to be determined under California law. The agreement as a whole is stated to be governed by California law, and in some cases, a choice of forum is stated as the Superior Court for the County of San Diego, California.
Where an arbitration provision contains California choice-of-law language, the parties' intent is inferred that state law will apply for resolving motions to compel arbitration. Coldwell Banker Residential Brokerage Co. Given the lack of factual development of this record and the numerous references to California law in the agreements, we have no basis to rule this is properly an FAA case.
Valenti's failure to raise the FAA argument below deprived the court of the opportunity to develop the record as to facts related to interstate commerce-a critical requirement in determining FAA applicability, on which we decline to speculate. Although the court in Buckeye generally states that its analysis for FAA cases must be applied in both state and federal courts, this should not now be treated as an FAA case.
Buckeye, supra, U. Accordingly, we adhere to the analysis in Rosenthal, supra, 14 Cal. We next seek to outline the operation of the dating service statutes in the context of arbitration, which those statutes do not address. Green, supra, Cal. That is not the only type of allegation here. The Supreme Court in Moncharsh, supra, 3 Cal. Ericksen, supra, at pp. To understand whether these agreements are illegal, such that their arbitration clauses can nevertheless be avoided, we next turn to an analysis of the dating service statutory scheme.
See Moncharsh, supra, p. From this placement of the dating service statutes within the long-standing rules for extinction or release from contractual obligations, we may infer that the Legislature was concerned with regulating the manner in which such dating service contracts were entered into, for the express purpose of providing the consumer with a means of release from them when exploitative contractual practices were followed.
In the arbitration statutes, Code of Civil Procedure section All these distinctions and terminology are important here, because we are tasked with determining whether this form of illegality provides a specific basis for revocation of the arbitration provision. If a contract never existed, due to fraud in the execution or inception, no arbitration can be ordered under it. However, if a contract once existed, but was fraudulently induced, arbitration in some cases can be ordered, such as where disappointed expectations are involved, in that performance did not match the promised result.
We next seek to determine whether a contract that clearly was created and existed for some time, but was entered into under fraudulent circumstances, can be deemed void on statutory grounds for purposes of the requested enforcement of any arbitration clause contained therein.
We first focus upon the mandatory language of section Next, under section Statutory reasonable attorney fees are allowed to a prevailing party. Where an alleged illegality goes to only a portion of the contract, not including an arbitration agreement, a court will be justified in ruling that the entire controversy, including the issue of illegality, remains arbitrable.
Moncharsh, supra, 3 Cal. In the case before us, not only does the basic agreement fail to contain the mandatory provisions of section Such illegality voids the entire contract, including the arbitration clause. This particular omission cannot be deemed to be only a peripheral or minor illegality of the contract, because it goes to a major policy promoted by the statutory scheme.
How does this affect any right to arbitration under a different clause of the agreement? This legislation provides that a dating service contract that fails to meet these standards is void and unenforceable, but without clarifying the rules that apply to an arbitration clause within that contract or agreement.
We may find guidance in a comparable situation described in 14 Cal. These rules apply to those situations:. Where the statute prescribes the only mode by which the power to contract is to be exercised, that mode is the measure of the power. The adoption of the prescribed mode is a jurisdictional prerequisite to the exercise of the power to contract at all, and that power can be exercised in no other manner. That parallel authority suggests that if a statute prescribes the only method in which a valid contract can be made, a contract that fails to follow that method is void.
Omitting required provisions, as here, does not follow the requirements of statute. Blick 33 Cal. We emphasize that this matter is before us solely upon a petition to compel arbitration. The ruling on arbitrability does not further determine the merits of all issues about the agreements' legality under the dating service statutes.
Nevertheless, when we read the agreements together with the statutes, and consider these parallel authorities, we conclude that because of the particular manner in which fraud in the inducement is alleged within the context of these statutorily insufficient and illegal agreements, the agreements do not belong within the general category allowing severable arbitration clauses, because of the importance of the omitted provisions.
We are aware that even voidable contracts may contain enforceable arbitration clauses. There, the authors cite as authority for this proposition Abramson v. We cannot find the arbitration provisions in this case to be severable from these contracts under these authorities.
The dating service statutes represent the Legislature's intent to regulate in a particular manner such contracts for dating services, and the statutes operate to exclude such contracts for dating services from the scope of the general rule that a court will refrain from determining the legality of voidable contracts that contain an arbitration clause, and will instead allow an arbitrator to do so.
The defects in these agreements are central to the policy of the statutes, and the express language of the statutes regarding unenforceability applies to the arbitration clauses as well. Thus, these agreements fail to meet the requirements of the dating service statutes and were appropriately deemed by the superior court, in its preliminary determination made for purposes of resolving the motion to compel arbitration, to be void and unenforceable.
The court also properly made a preliminary factual determination that misleading circumstances existed and led to the entry into the agreements, supporting a conclusion the agreements are void.
These conclusions apply to void the arbitration clauses contained within the agreements. We accordingly need not reach the arguments concerning unconscionability of the arbitration clauses.
We affirm the trial court's order denying Valenti's motion to compel arbitration. All further statutory references are to the Civil Code unless otherwise noted. The arbitration clauses required a panel of three arbitrators. Although the parties continue to discuss this permeation theory, the better approach utilized in Rosenthal, supra, 14 Cal.
According to Green, supra, Cal. Blick, supra, 33 Cal. Green, supra, at pp. Not a Legal Professional? Visit our consumer site. Edit Your Profile Log Out. Reset A A Font size: Clark, San Diego, for Defendants and Appellants. Gilliland, San Diego, for Plaintiffs and Respondents. Valenti appeals the order. A woman who is warm and genuine, in both her presence and her outlook on life. Watch my video and follow the arrows below to get started.
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See Moncharsh, supra, 3 Cal. Accordingly, we adhere to the analysis in Rosenthal, supra, 14 Cal. Boren 74 Cal.
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