BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1065|
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THIRD READING
Bill No: SB 1065
Author: Monning (D)
Amended: 3/28/16
Vote: 21
SENATE JUDICIARY COMMITTEE: 6-1, 4/26/16
AYES: Jackson, Moorlach, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
SUBJECT: Dismissal or denial of petitions to compel
arbitration: appeals
SOURCE: California Advocates for Nursing Home Reform
Congress of California Seniors
Consumer Attorneys of California
DIGEST: This bill precludes a party from taking an immediate
appeal from an order dismissing or denying a petition to compel
arbitration if the opposing party has filed a claim pursuant to
the Elder and Dependent Adult Civil Protection Act and that
opposing party has been granted a trial preference pursuant to
existing law, as specified.
ANALYSIS:
Existing law:
1) Governs arbitrations in California under the California
Arbitration Act (CAA), including the enforcement of
arbitration agreements, rules for neutral arbitrators, the
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conduct of arbitration proceedings, and the enforcement of
arbitration awards.
2) Provides that a written agreement to submit to arbitration
an existing controversy or a controversy thereafter arising
is valid, enforceable and irrevocable, save upon such grounds
as exist for the revocation of any contract.
3) Provides that on a petition of a party to an arbitration
agreement alleging the existence of a written agreement to
arbitrate a controversy, if a party thereto refuses to
arbitrate such controversy, the court shall order arbitration
of the controversy if it determines that an agreement to
arbitrate the controversy exists, unless it determines any of
the following:
a) The right to compel arbitration has been waived by the
petitioner;
b) Grounds exist for the revocation of the agreement; or
c) A party to the arbitration agreement is also a party
to a pending court action or special proceeding with a
third party, arising out of the same transaction or series
of related transactions and there is a possibility of
conflicting rulings on a common issue of law or fact.
4) Provides that an aggrieved party may appeal from the
following:
a) An order dismissing or denying a petition to compel
arbitration;
b) An order dismissing a petition to conform, correct or
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vacate an award;
c) An order vacating an award unless a rehearing in
arbitration is ordered;
d) A judgment entered pursuant to this title; or
e) A special order after final judgment.
5) Provides that a writ of mandate may be issued by any court
to an inferior tribunal, corporation, board, or person, to
compel the performance of an act which the law specially
enjoins, as a duty resulting from an office, trust, or
station, or to compel the admission of a party to the use and
enjoyment of a right or office to which the party is
entitled, and from which the party is unlawfully precluded by
that inferior tribunal, corporation, board, or person.
6) Provides that a party may not appeal an order compelling
arbitration until after final judgment, but may, under
extraordinary circumstances, seek a writ of mandate to
request review of the ruling by the court of appeal in
advance of the arbitration hearing. (Laufman v. Hall-Mack
Co. (1963) 215 Cal.App.2d 87; United Firefighters of Los
Angeles v. City of Los Angeles (1991) 231 Cal.App.3d 1576;
Mid-Wilshire Associates v. O'Leary (1992) 7 Cal.App.4th
1450.)
7) Provides, under Section 36 of the Code of Civil Procedure,
that a party to a civil action who is over 70 years of age
may petition the court for a (trial) preference, which the
court shall grant if the court makes both of the following
findings:
a) The party has a substantial interest in the action as
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a whole; and
b) The health of the party is such that a preference is
necessary to prevent prejudicing the party's interest in
the litigation.
8) Provides that the court, in its discretion, may also grant a
motion for preference that is accompanied by clear and
convincing medical documentation that concludes that one of
the parties suffers from an illness or condition raising
substantial medical doubt of survival of that party beyond
six months, and that satisfies the court that the interests
of justice will be served by granting the preference.
Furthermore, existing law provides that, notwithstanding any
other provision of law, the court may in its discretion grant
a motion for preference that is supported by a showing that
satisfies the court that the interests of justice will be
served by granting this preference.
9) Provides that upon the granting of such a motion for
preference, the court shall set the matter for trial not more
than 120 days from that date and there shall be no
continuance beyond 120 days from the granting of the motion
for preference except for physical disability of a party or a
party's attorney, or upon a showing of good cause. Any
continuance shall be for no more than 15 days and no more
than one continuance for physical disability may be granted
to any party.
10)Provides, generally, under the Elder Abuse and Dependent
Adult Civil Protection Act (EADACPA), civil protections and
remedies for victims of elder and dependent adult abuse and
neglect.
This bill provides that if a party has filed a claim pursuant to
the EADACPA and has been granted a preference pursuant to this
statute, an opposing party shall not appeal from an order
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dismissing or denying a petition to compel arbitration pursuant
to Section 1294, above, arising from that claim. This bill
creates a limited exception to Section 1294's immediate right of
appeal from the denial of a motion to compel arbitration for
these purposes.
Background
As a general matter, arbitrations provide an alternative method
of dispute resolution, outside of the courts, wherein a neutral
third party, known as the arbitrator, renders a decision after a
hearing to which both parties have had an opportunity to be
heard. Under California law, there are two distinguishable types
of arbitration: judicial arbitration (also known as
court-annexed arbitration, governed under Code of Civil
Procedure Sections 1141.10 -1141.31) and private arbitrations
(also commonly known as "contractual," "voluntary," or
"nonjudicial" arbitrations; governed under the CAA, Code of
Civil Procedure Section 1280 et seq.).
On March 1, 2016, the Senate Judiciary Committee held an
informational hearing on the topic of private or contractual
arbitration agreements, entitled The Federal Arbitration Act,
the U.S. Supreme Court, and the Impact of Mandatory Arbitration
on California Consumers and Employees. In that hearing, many
issues facing consumers and employees who are subject to
arbitration clauses contained in standardized,
take-it-or-leave-it, or "adhesive" contracts were brought to
light. That hearing also brought to light the various
difficulties facing the State in addressing some of the
underlying, fundamental harms faced by consumers and employees
as a result of federal preemption and U.S. Supreme Court
precedent interpreting the Federal Arbitration Act. A package
of arbitration bills, of which this bill is one, arose out of
the hearing, seeking to address various fairness issues
surrounding the rules that govern the conduct and operation of
arbitrators and arbitrations in this state.
Of particular relevance to this bill, California law provides
that, as a general rule, appeals may only be taken from such
judgments or orders as are made appealable by statute. In turn,
Section 904.1 of the Code of Civil Procedure, governing the
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right to appeal in a civil action, generally provides that the
right of appeal exists only upon a judgment, except there may be
an appeal from an interlocutory judgment that is made final and
conclusive. A "judgment," as referenced here, is the final
determination of the rights of the parties in an action or
proceeding. (Code Civ. Proc. Sec. 577.) Accordingly, this
"final judgment rule" seeks to limit the number of appeals
possible in light of the court's interests in expediency,
efficiency, and economy.
Appeals in arbitration matters, however, are specifically
governed under a provision of the CAA, and the CAA diverges from
the above final judgment rule with respect to the appealability
of orders dismissing or denying a petition to compel
arbitration. Under the CAA, if a party to a contractual
arbitration agreement seeks instead to file suit in court or
refuses to submit the dispute to arbitration, disputing either
the validity or applicability of the arbitration agreement, the
other party to the arbitration agreement may seek to enforce the
arbitration by way of a motion to compel arbitration.
Generally, the court must order the parties to arbitration
unless: (1) grounds exist for the revocation of the agreement;
(2) the right to compel arbitration has been waived by the
petitioner; or (3) a party to the arbitration agreement is also
a party to a pending court action or special proceeding with a
third party, arising out of the same transaction or series of
related transactions and there is a possibility of conflicting
rulings on a common issue of law or fact. (Code Civ. Proc. Sec.
1281.2.) If, however, the court does ultimately deny the motion
to compel arbitration, the CAA provides for a statutory right to
immediately appeal that decision by the party seeking to force
arbitration (usually the defendant), thus staying the trial
until the appeal of the order denying or dismissing the
arbitration can be heard and decided. (Code Civ. Proc. Sec.
1294(a).) The CAA does not provide a similar right of immediate
appeal to a plaintiff if the court grants the defendant's motion
to compel arbitration.
This bill precludes a party from taking an immediate right of
appeal when a motion to compel arbitration has been denied, if:
(1) the case involves a claim under the EADACPA; and (2) the
senior has received a trial preference under existing law due to
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age and health.
Comments
As stated by the author:
SB 1065 eliminates the automatic right of appeal that a
defendant has when it loses a motion to compel arbitration,
but only (1) in Elder Abuse and Dependent Adult Civil
Protection Act cases and (2) only where the senior has
received a trial preference under [Code of Civil Procedure
Section] 36 due to age and health.
California's elder abuse statute, the Elder Abuse and
Dependent Adult Civil Protection Act (EADACPA), was enacted to
protect elderly and dependent adults from abuse. [ . . . ] It
defines civil elder abuse to mean physical abuse, neglect,
financial abuse, abandonment, isolation, abduction, or other
treatment resulting in physical harm or pain or mental
suffering. (Welfare & Institutions Code [Sec.] 15610.07).
Other than financial elder abuse, these claims all require the
higher standard of "clear and convincing" proof and are thus
difficult to pursue.
Under current law, trial courts may grant victims of elder
abuse a speedy trial in light of their age and failing health.
(Code Civ. Proc. Sec. 36(a).) [ . . . ] Although the exact
number of [Section] 36 preferences granted to victims of elder
abuse each year is unknown, practitioners report that the
number is small as not many elders meet the onerous
requirements of Section 36.
Additionally, under current law, [ . . . if] the court denies
[a defendant's] motion to compel the case to arbitration
because the arbitration agreement is found to be
unconscionable, [Code of Civil Procedure] Section 1294(c)
gives the defendant the automatic right to appeal that
decision, even if the elderly plaintiff has already been
granted the right to a speedy trial under [Code of Civil
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Procedure] Section 36(a).
Therefore, under the current law, a defendant who tries (and
fails) to force these elderly victims into arbitration can
nonetheless override the court's order for a preferential
trial date and delay the elder's trial another 1-3 years by
filing an appeal. The elderly victims have no similar
rights-if a defendant succeeds in forcing them into
arbitration, the victims may not delay and must proceed
straight to arbitration.
The author asserts that "[t]he delay caused by the appeal is
done in the hope that the elder will not survive long enough for
the appeal to be decided, thereby reducing the defendant's
liability if the victim dies before trial" and provides several
examples of appeals that successfully delayed the trial by over
a year. In one case, the author cites, a 90-year-old stroke
victim brought an elder abuse action against the defendant
nursing home after she was sexually assaulted at the facility
and contracted a sexually transmitted disease. The victim
succeeded both in obtaining a trial preference and in
challenging the defendant's motion to compel arbitration, but
the nursing home appealed the denial. The Sixth Circuit Court
of Appeal ultimately heard and ruled 3-0 for the victim, finding
that the arbitration agreement could not be enforced against
her. (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122).
The author notes that the appeal "took almost a year and a half,
and that was even an expedited process (after the court of
appeal granted preference). Fortunately, Mrs. Young outlived
this tactic, and was able to get her case resolved. Many others
in her position do not live to see a resolution of the case."
The author cites another case, Bush v. Horizon West (2012) 205
Cal.App.4th 924, where "the victim did not survive the nearly 2
years it took to get the favorable appellate opinion allowing
the case to get back on the Court's trial calendar."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
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SUPPORT: (Verified4/28/16)
California Advocates for Nursing Home Reform (co-source)
Congress of California Seniors (co-source)
Consumer Attorneys of California (co-source)
California Alliance for Retired Americans
Consumer Federation of California
OPPOSITION: (Verified4/28/16)
California Association of Health Facilities
Civil Justice Association of California
ARGUMENTS IN SUPPORT: The Consumer Federation of California
writes in support:
California's elder abuse statute, the Elder Abuse and
Dependent Adult Civil Protection Act, was enacted to protect
elderly and dependent adults from abuse. Unfortunately,
current law creates an incentive for delay by permitting a
defendant who unsuccessfully tries to force an elder abuse
victim into arbitration to file an appeal and delay the
hearing another one to three years. It is routine for
defendant nursing homes who want to avoid a jury trial to file
a motion to enforce an arbitration provision, which the
facility drafted and then coerced the victim into signing at
enrollment. This delay often has the effect of denying the
abused person his or her day in court.
SB 1065 fixes this procedural delay by stating that if a
senior has received a trial court preference because she is
over 70 and in ill health, she has a right to continue to
court instead of waiting years for the alleged abuser to game
the system by filing an automatic appeal.
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As our society ages, it is crucial that legislative policy
address and protect the rights of our seniors who are subject
to abuse.
The California Alliance for Retired Americans also argues in
support that:
Elders who are sign and dying who have an elder abuse case
pending should not be delayed in getting their case heard in
court. The average appellate process of three years or more
to hear these cases is totally unacceptable.
In cases where there is elder abuse by a nursing home or elder
care facility, and an ill or dying elder abuse victim is
granted a speedy trial preference, it is very common for the
defendant nursing home who wants to avoid a jury trial to file
a motion to enforce an arbitration provision which the
facility drafted and then coerce the victim into signing this
upon entering the facility - basically waiving their rights to
a speedy trial if one become necessary.
SB 1065 helps seniors get to trial more quickly in an Elder
Abuse Act claim by stating that if the senior obtains a legal
preference for court because she is sick and dying, she can
continue to court without waiting years for an appeal in the
middle of the case. In sum, it gives both plaintiffs and
defendants equal appellate rights.
ARGUMENTS IN OPPOSITION: The Civil Justice Association of
California (CJAC) writes in opposition to the bill that SB 1065
"is contrary to California's strong public policy favoring
arbitration and the enforcement of valid arbitration agreements.
It is also unnecessary to expedite resolution of the complaint.
California Rules of Court Rule 8.240 allows a party to seek an
expedited appeal schedule on the same grounds that satisfy Code
of Civil Procedure [Section] 36. If a litigant has been granted
a preference by the trial court, she should have no difficulty
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obtaining calendar preference from the appeals court." CJAC
also writes:
In Louise Laswell v. AG Seal Beach LLC., 189 Cal.App.4th 1399,
California's Second District Court of Appeal heard an appeal
of a trial court order denying a petition to compel
arbitration in a case involving allegations of elder abuse and
other misconduct. The court held that the patient's trial
preference due to age and terminal illness did not support
denial of arbitration. One of the reasons cited for the trial
court's denial of the petition to compel arbitration was that
she had been granted a trial preference and the case would
proceed just as expeditiously in court as in arbitration. In
overturning the trial court's decision, the appeals court
wrote that the patient's age and trial court preference had no
relevance as to whether the agreement to arbitrate was
enforceable, but that her advanced age should be considered by
the trial court, the parties and the arbitrator in scheduling
proceedings on remand.
Arbitration is a faster, more cost-effective means of
resolving disputes than litigation in court, and is supported
by statutes requiring the enforcement of valid arbitration
agreements. An order denying enforcement of such an agreement
is appealable under current law and should remain so, even for
litigants who have been granted priority under Code of Civil
Procedure [Section] 36.
Prepared by:Ronak Daylami / JUD. / (916) 651-4113
4/29/16 12:39:23
**** END ****
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