Once parties invoke California rules of arbitration by reference within their agreement, a court has jurisdiction to consider issues of waiver before parties are compelled to arbitration, according to a California Court of Appeal.

In Warburton v. Superior Court, No. D051619, 2008 WL 1735379 (Cal. Ct. App. Apr. 16, 2008), Warburton purchased a home from Zinner through agents Vuytowecz and Priority One. The purchase contract contained an arbitration agreement and provided that arbitration would be conducted in accordance with Title 9 of part III of the California Code of Civil Procedure.

Warburton later filed a complaint against Zinner, Vuytowecz, and Priority One, alleging fraud and breach of contract. Zinner moved to compel arbitration and stay proceedings, and Vuytowicz and Priority One sought to join. Zinner argued that the right to arbitrate was waived by Zinner's unreasonable delay. The trial court determined that it was without jurisdiction to decide the issue of waiver under the controlling Federal Arbitration Act (FAA), and compelled arbitration of the dispute. The court also allowed the joinder of the third-parties without explanation.

The Court looked to the plain language of the arbitration agreement, finding that the parties had specifically invoked California law by referring to its arbitration provisions within its Code of Procedure. According to the Court, California's rules of arbitration grant courts the authority to determine whether "[t]he right to compel arbitration has been waived by the petitioner." See Cal. Code Civ. P. § 1282.1(a).

The Court found this result was consistent with the U.S. Supreme Court's holding that where "the parties have agreed by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA." Volt Info. Sciences v. Leland Stanford Jr. U., 489 U.S. 468, 479 (1989).

Finally, the Court remanded the issue of joinder to the trial court because the record did not set forth the necessary facts to support its decision to permit joinder.