|
Affirming a trial court's denial of a motion to compel arbitration, a California appellate court held that a purchase agreement's arbitration clause signed by a company president did not bind him to arbitrate a dispute arising from a separate non-competition agreement.
In Bess v. C & B Chrysler-Jeep, Inc., No. E041264, 2007 WL 2258709 (Cal. Ct. App. August 8, 2007), C & B purchased an automobile dealership from Norco. As part of the purchase agreement, C & B, Norco, and Norco president James Bess agreed to enter into a separate non-competition agreement. The non-competition agreement, which the parties signed in November 2004, prohibited Bess from operating a Chrysler Jeep dealership in Riverside, Los Angeles, and San Bernardino for three years in return for C & B providing Bess with a vehicle for three years.
C & B repossessed the car before the three years expired, asserting Bess breached the agreement. Bess sued for conversion. C & B moved to compel arbitration based upon an arbitration agreement contained in its purchase agreement with Norco. The trial court denied the motion.
On appeal, the Court held that the arbitration agreement contained in the purchase agreement did not obligate Bess to arbitrate disputes arising from the non-competition agreement. Although California public policy strongly favors arbitration, the presumption does not extend to those who have not voluntarily chosen to arbitrate.
The Court found that the reference in the purchase agreement to the non-competition agreement merely indicated that the parties had agreed to enter into a separate non-competition agreement and did not extend the purchase agreement's arbitration clause. Further, the non-competition agreement contained an integration clause stating that there were "no written or oral agreements or representations not contained herein or incorporated by reference herein." Finally, the non-competition agreement mandated that the losing party pay court costs, which indicated that the parties did not intend to arbitrate.
Subscribe to a free weekly update on ADR case law and
legislation
|