Ambulnz Health v. Summers CA2/7

CourtCalifornia Court of Appeal
DecidedMarch 10, 2022
DocketB307874
StatusUnpublished

This text of Ambulnz Health v. Summers CA2/7 (Ambulnz Health v. Summers CA2/7) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ambulnz Health v. Summers CA2/7, (Cal. Ct. App. 2022).

Opinion

Filed 3/10/22 Ambulnz Health v. Summers CA2/7 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

AMBULNZ HEALTH, LLC, B307874

Plaintiff and Respondent, (Los Angeles County Super. Ct. No. BC682875) v.

MICHAEL S. SUMMERS,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of Los Angeles County, Richard J. Burdge, Judge. Reversed with directions. Law Offices of Lee E. Burrows, Lee E. Burrows, and Linda H. Bennett for Defendant and Appellant. Kawahito Law Group and James K. Kawahito; and David Feuerstein for Plaintiff and Respondent. INTRODUCTION

Ambulnz Health, LLC agreed to buy the assets of Americare Medservices, Inc. Both companies are in the medical transportation business. The asset purchase agreement included a provision requiring Ambulnz and Americare to arbitrate any dispute arising between the parties to the agreement. Americare’s chief executive officer and sole shareholder, Michael S. Summers, separately agreed to and signed, in his individual capacity, two specific provisions of the agreement prohibiting him from negotiating with anyone else to sell Americare’s assets and from competing with Ambulnz or soliciting Ambulnz’s employees and clients after the sale. Summers did not sign, and was not a party to, the arbitration provision. After a dispute arose, Ambulnz filed a lawsuit asserting claims against Americare and Summers. Ambulnz filed a motion to compel both Americare and Summers to arbitrate those claims, which Summers (but not Americare) opposed. The trial court granted Ambulnz’s motion to compel arbitration, an arbitrator issued an award against Americare and Summers, and the trial court confirmed the award. Summers appeals from the judgment confirming the arbitration award, contending the trial court erred in compelling him to arbitrate Ambulnz’s claims against him. Essentially, Ambulnz argues that, although Summers was not a party to the arbitration provision in the asset purchase agreement, Ambulnz can compel Summers to arbitrate its claims against him because he was the sole shareholder of Americare. Summers argues his status as a sole shareholder was not enough for Ambulnz to

2 compel him to arbitrate its claims against him in his individual capacity. Under California law, Summers is correct. Therefore, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

A. Americare Sells Its Assets to Ambulnz In September 2016 Ambulnz and Americare entered into an asset purchase agreement providing that Ambulnz would buy Americare’s assets for $4 million. The agreement provided that any “dispute that arises between the Parties to this Agreement shall be subject to arbitration in accordance with the then current ADR Services, Inc. rules . . . .” Summers signed the signature page of the agreement on behalf of Americare, as its chief executive officer. Summers also signed a separate block on the signature page as an individual and “owner,” but only “[w]ith respect to” two provisions of the agreement: section 5.4 (titled “No Negotiation”) and section 8.6 (titled “Non-Competition/Non-Solicitation”). Section 5.4 prohibited Americare and its “shareholders, directors, [and] officers” (which included Summers) from negotiating with others about selling Americare’s assets. Section 8.6 prohibited Americare and its “Owners” (which again included Summers), for four years after the closing date of the sale, from competing with Ambulnz or hiring or recruiting any of Ambulnz’s employees or independent contractors. The arbitration provision was in section 10 of the agreement.

3 B. Ambulnz Initiates Arbitration Proceedings and Files This Action Against Americare and Summers In September 2017 Ambulnz filed a demand for arbitration against Americare and Summers. Ambulnz alleged Americare and Summers breached the asset purchase agreement by, among other things, making false representations and failing to disclose information about Americare’s assets and business operations and by preventing Ambulnz from accessing Americare’s information technology systems and records. In November 2017 Ambulnz filed a complaint in superior court, asserting causes of action for declaratory relief against Americare and Summers and for conversion and intentional interference with contractual relations against Summers.

C. The Trial Court Grants Ambulnz’s Cross-motion To Compel Arbitration of All Claims Americare filed a motion under Code of Civil Procedure sections 1281.2 and 1281.4 to compel Ambulnz to arbitrate the claims asserted against Americare (but not the claims asserted against Summers) and to stay the action pending completion of the arbitration.1 Ambulnz filed a cross-motion to compel arbitration of all its claims, including those against Summers. Ambulnz argued the trial court should compel Summers to arbitrate Ambulnz’s claims against him because Summers was an “agent-employee” of Americare, Summers was a “third party beneficiary” of the asset purchase agreement, and there was an “‘identity of interest’ between Americare and Mr. Summers.” Ambulnz also argued Summers was estopped from arguing the

1 Statutory references are to the Code of Civil Procedure.

4 arbitration provision in the asset purchase agreement did not apply to him because he “benefitted financially” from the agreement. Summers argued he had not agreed to arbitrate claims against him in his individual capacity. He also argued that signing the agreement as an officer of Americare did not require him to arbitrate the claims against him personally. The trial court granted Ambulnz’s cross-motion and compelled arbitration of all Ambulnz’s claims, including those against Summers. The court ruled Summers was bound by the arbitration provision because he was a third party beneficiary of the asset purchase agreement. The court found that Summers benefited from the agreement because he owned Americare and that he had an identity of interest with Americare, as “further demonstrated by the fact that he personally agreed not to compete with” Ambulnz.

D. The Court Confirms the Arbitration Award and Enters Judgment Ambulnz, Americare, and Summers participated in the arbitration. The arbitrator ultimately issued a $470,326 award in favor of Ambulnz, with Americare liable for the entire $470,326 and Summers jointly and severally liable for $86,896 of the $470,326. The trial court granted Ambulnz’s petition to confirm the award and entered judgment. Summers timely appealed.

5 DISCUSSION

A. Applicable Law and Standard of Review Under section 1281.2 “a trial court shall order arbitration of a controversy if an agreement to arbitrate the controversy exists . . . .” (Gordon v. Atria Management Co., LLC (2021) 70 Cal.App.5th 1020, 1026; accord, Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164 & fn. 2.) But in general, “‘parties can only be compelled to arbitrate when they have agreed to do so. [Citation.] “Arbitration . . . is a matter of consent, not coercion.”’” (Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 858-859 (Cohen); see Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) “While California public policy favors arbitration, ‘“‘there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.’”’” (Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 461; accord, Gamboa, at p. 166; Chambers v.

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Bluebook (online)
Ambulnz Health v. Summers CA2/7, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ambulnz-health-v-summers-ca27-calctapp-2022.