WILLIAM KOCH v. RUDY KURNIAWAN

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Court of Appeal, Second District, California.

WILLIAM I. KOCH, Plaintiff and Respondent, v. RUDY KURNIAWAN, Defendant and Appellant.

B222464

Decided: February 24, 2011

Munger, Tolles & Olson, Henry Weissmann, and Elisabeth J. Neubauer for Defendant and Appellant. Irell and Manella, Layn R. Phillips, Bruce A. Wessel, and Melissa R. McCormick for Plaintiff and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Defendant appeals the trial court's order denying his petition to compel arbitration.   Finding no error, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff William I. Koch, a Florida resident, purchased five bottles of wine from defendant Rudy Kurniawan, a resident of Los Angeles County, through the Acker, Merall & Condit Company (AMC) auction house for a combined cost of more than $75,000.   The purchases were as follows:

1. April 23, 2005 auction:  bottle represented to be a 1949 Chateau Lafleur, purchase price $10,575.

2. May 2005 private sale:  bottle represented to be a 1947 Chateau Petrus, purchase price $30,000.

3. July 2005 private sale:  bottle represented to be a 1945 Comte Georges de Vogue Musigny, Cuvee Vielles Vignes, purchase price $11,500.

4. January 27, 2006 auction:  two bottles represented to be 1934 DRC Romanee-Conti, purchase price $25,850.

In 2008, Koch filed a complaint against AMC in New York state court, alleging that the five bottles of wine were counterfeit and that AMC knowingly made false representations of their authenticity to him and other potential buyers.   He asserted causes of action for common law fraud, violations of the New York General Business Law, breach of contract, and violations of Florida's Unfair and Deceptive Trade Practices Act. The trial court dismissed the claims for fraud and violations of Florida law;  on appeal, the claims for violations of New York General Business Law were also dismissed.  (Koch v. Acker, Merrall & Condit Co. (2010) 73 A.D.3d 661 [901 N.Y.S.2d 271].)

Koch filed the present action against Kurniawan for fraud, negligent misrepresentation, and violation of California's unfair competition law on September 10, 2009.   The operative complaint alleges that each of the five bottles of wine is counterfeit and that Koch reasonably relied on Kurniawan's representations in AMC's auction catalog as to the producer and vintage in purchasing the wine.

Koch opposed the motion to compel arbitration and objected to the paragraph of Newbauer's declaration that purported to authenticate Exhibit F. He asserted that Exhibit F was not admissible because it was “an unauthenticated printout from an auction house website dated many years after the events at issue in this case.”   Alternatively, Koch urged that the provision of Exhibit F that Kurniawan identified as the applicable arbitration clause “is not, as a matter of law, an arbitration clause.   Arbitration requires a neutral decision maker to make an impartial decision.   The language from the Website Agreement cited by Kurniawan appoints the seller's (here, Kurniawan's) agent as the decision maker as relates to the ability to return purchases.   That is not arbitration as a matter of law, and the document does not refer to the process as arbitration.”   Finally, Koch contended that if the relevant provision was an arbitration clause, it was unenforceable.

The trial court denied the petition to compel arbitration.   In oral comments from the bench, it explained that the alleged arbitration clause “does not necessarily provide for a third party decision maker as Acker is a party to the ‘Conditions of Sale’ and is the decision maker.   There is no mechanism for ensuring neutrality with respect to the rendering of the decision as Acker may make the decision by any means it see[s] fit.   The one means stated in the provision, inspection, does not provide the seller and buyer with an opportunity to be heard.   Although this has some language common to an arbitration agreement, ․ it is not an arbitration agreement.”   The court further found that “[d]efendant has argued that New York law applies.   Defendant has not provided the minimum elements for an agreement to be construed as an arbitration agreement under New York law.”   Finally, the court sustained plaintiff's objection to the Neubauer declaration.

Notice of entry of the ruling was served on February 3, 2010, and Kurniawan timely appealed from the order on February 19, 2010.

STANDARD OF REVIEW

“ ‘A motion to compel arbitration is, in essence, a request for specific performance of a contractual agreement.’ ”  (Duffens v. Valenti (2008) 161 Cal.App.4th 434, 443.)   Accordingly, “ ‘[w]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable.   Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.   If the party opposing the petition raises a defense to enforcement ․ that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.  [Citation.]’  (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413;  accord, Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972;  Olvera v. El Pollo Loco, Inc. (2009) 173 Cal.App.4th 447, 453.)”  (Fisher v. DCH Temecula Imports LLC (2010) 187 Cal.App.4th 601, 612.)

“ ‘[T]here is no uniform standard of review for evaluating an order denying a motion to compel arbitration.  [Citation.]  If the court's order is based on a decision of fact, then we adopt a substantial evidence standard.  [Citations.]  Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed.  [Citations.]’  (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)”  (Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1406.)   In the present case, because the trial court's denial of the petition to compel was based solely on conclusions of law, our review is de novo.

DISCUSSION

Kurniawan relies on two separate documents in support of his claim that the present dispute is arbitrable:  (1) the “Conditions of Sale/Purchaser's Agreement” contained in AMC's April 23, 2005 and January 27-28, 2006 auction catalogs (the 2005-2006 Purchaser's Agreement);  and (2) the “Conditions of Sale/Purchaser's Agreement” claimed to have been in effect when Koch filed the present complaint (the 2008 Purchaser's Agreement).1  For the reasons that follow, we conclude that neither document supports arbitrability.

I. The 2005-2006 Purchaser's Agreement

Kurniawan contends that paragraph 16 of the 2005-2006 Purchaser's Agreement is a mandatory arbitration clause that requires Koch to submit this dispute to binding arbitration.2  That paragraph provides:

“If, within forty-five calendar days after the auction, the Buyer of the Lot notifies AMC in writing that such Lot is short or is unsound or that any statement in the relevant offering of such Lot is not well-founded, AMC, in its sole discretion, may decide such claim as between the Buyer and Seller by inspection or by such other means as it sees fit.   Having decided any such claim, AMC may direct that the sale stand or be rescinded and that the purchase price be refunded in whole or in part.   AMC's decision as aforesaid will be final and binding on the Buyer and no action shall be brought by Buyer against AMC in connection with any such claim.”

Kurniawan further contends that arbitrability is to be determined under New York law pursuant to paragraph 22, which provides:

“This Agreement shall be governed by and construed in accordance with the internal laws (other than the laws governing conflicts of law) of the State of New York.”

We consider both issues below.

A. New York Law Applies

Paragraph 22, which requires that the 2005-2006 Purchaser's Agreement be “governed by and construed in accordance with” the law of New York, is enforceable for purposes of evaluating the meaning and enforceability of paragraph 16.3  In determining the enforceability of contractual choice-of-law provisions, our Supreme Court has held that the law of the state chosen by the parties to govern their contractual rights and duties will be applied unless either “ ‘(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or [¶] (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which ․ would be the state of the applicable law in the absence of an effective choice of law by the parties.’  [Fn. omitted.]”  (Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 465.)   Thus, “if the proponent of the clause ․ demonstrates that the chosen state has a substantial relationship to the parties or their transaction, or that a reasonable basis otherwise exists for the choice of law, the parties' choice generally will be enforced unless the other side can establish both that the chosen law is contrary to a fundamental policy of California and that California has a materially greater interest in the determination of the particular issue.”   (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 917.)

Here, New York has a substantial relationship to the transaction because the auction at which Koch purchased three of the alleged counterfeit bottles of wine took place in New York. The other bottles were sold privately with the assistance of AMC. (E.g., ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 835 [state in which contract is performed has substantial relationship].)   We will apply New York law to interpret paragraph 16 because neither party suggested that doing so is contrary to a fundamental policy of California.4

B. Under Principles of New York Contract Law, Paragraph 16 Does Not Compel Arbitration

“Under the two-prong inquiry governing arbitrability of disputes, courts must ascertain whether the parties may arbitrate their dispute and, if so, whether they agreed to do so [citation].”  (Matter of N.Y. State Correctional Officers and Police Benevolent Association (2009) 70 A.D.3d 240, 243 [892 N.Y.S.2d 614, 616].)  “Because arbitrability is a threshold question going to the arbitrator's power to resolve the dispute, a party can seek judicial intervention to determine whether the dispute is arbitrable before consenting to arbitration.”  (Matter of United Federation of Teachers, Local 2, AFT, AFL-CIO v. Board of Education of the City School District of the City of N.Y. (2003) 1 N.Y.3d 72, 79 [801 N.E.2d 827, 832;  769 N.Y.S.2d 451, 456];  see also Gilbert Street Developers, LLC v. La Quinta Homes, LLC (2009) 174 Cal.App.4th 1185, 1190 [“ ‘Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.’ ”].)

Because arbitration is “a creature of contract” (Intercontinental Packaging Co. v. China National Cereals, Oils & Foodstuffs Import & Export Corp. (1990) 159 A.D.2d 190, 195 [559 N.Y.S.2d 302, 305];  see also Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787-788 [“Under both federal and California state law, arbitration is a matter of contract between the parties”] ), we look to ordinary rules of contract interpretation to decide whether the present dispute is arbitrable.   Under New York law, as under California law, “agreements are construed in accord with the parties' intent.”  (Greenfield v. Philles Records, Inc. (2002) 98 N.Y.2d 562, 569 [780 N.E.2d 166, 170;  750 N.Y.S.2d 565, 569];  Crawford v. Weather Shield Mfg. Inc. (2008) 44 Cal.4th 541, 552 [“Effect is to be given to the parties' mutual intent.”].) “[A]n enforceable contract requires mutual assent to its essential terms and conditions.   If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract [citations].”  (Edelman v. Poster (2010) 72 A.D.3d 182, 184 [894 N.Y.S.2d 398, 400];  see also Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623 [“Under California law, a contract will be enforced if it is sufficiently definite ․ for the court to ascertain the parties' obligations and to determine whether those obligations have been performed or breached.”].)

“Although no particular wording is required to constitute a valid, binding arbitration agreement, nor even the inclusion of the words ‘arbitrate’ or ‘arbitrator’ [citation], the language used must be clear and unambiguous [citation].”  (Lovisa Construction Co., Inc. v. County of Suffolk (1985) 108 A.D.2d 791, 792 [485 N.Y.S.2d 309, 310] (Lovisa ).)   Accordingly, “ ‘[a] court will not order a party to submit to arbitration absent evidence of that party's unequivocal intent to arbitrate the relevant dispute and unless the dispute falls clearly within that class of claims which the parties agreed to refer to arbitration.’ ”  (Edelman v. Poster, supra, 72 A.D.2d at p. 184, italics added;  see also Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 704 [“ ‘ “ ‘a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration’ ” ' ”];  Badie v. Bank of America, supra, 67 Cal.App.4th at p. 788 [“ ‘[a]lthough “[t]he law favors contracts for arbitration of disputes between parties” [citation], “ ‘there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate․’ ” ' ”].) 5

In the present case, paragraph 16 of the 2005-2006 Purchaser's Agreement does not express the “unequivocal intent” to arbitrate required by New York law.   Significantly, nothing in paragraph 16 advises a buyer that he or she “must” or “shall” submit a dispute to AMC for resolution;  it merely states that if a buyer elects within 45 days of an auction to advise AMC of a problem with a purchase (i.e., that a purchase “is short or is unsound or that any statement in the relevant offering of such Lot is not well-founded”), then AMC “may decide such claim ․ by inspection or by such other means as it sees fit.”   (Italics added.)   In other words, although paragraph 16 purports to give buyers an option to have disputes of certain kinds decided by AMC, it does not require disgruntled buyers to do so.

Our conclusion that paragraph 16 is not a mandatory arbitration provision is reinforced by paragraph 22, which expressly provides for the filing of legal action in New York state and federal courts.   It says:  “The Buyer, by bidding at auction, whether in person, by agent, by written, absentee bid, telephone, internet, or other means, irrevocably agrees that any legal action may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York, and the Buyer submits to the non-exclusive jurisdiction of each of such courts in personam.   The Buyer waives any objection which he, she, or it may now or hereinafter have to the laying of venue of any such action brought in the aforesaid courts in the Southern District of New York or New York County.”

This paragraph-and specifically its provision that “[t]he Buyer ․ irrevocably agrees that any legal action may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York”-is fundamentally inconsistent with Kurniawan's contention that the present claim must be arbitrated.   That is, if “any ” legal action may be brought in state or federal court, then Koch cannot be required under the terms of the 2005-2006 Purchaser's Agreement to submit his claim to arbitration before the AMC.

Our conclusion that paragraph 16 of the 2005-2006 Purchaser's Agreement is not a mandatory arbitration provision is consistent with the result reached in Lovisa, supra, 108 A.D.2d 791.   There, the plaintiff was hired by the county to construct a waste disposal system.   Years later, plaintiff sued the county, alleging that due to the county's poor supervision, plaintiff had to perform work for which it was not paid.   The county moved to stay the action and compel arbitration, asserting that the parties had agreed under section G.07 of the construction contract to submit disputes to an engineer appointed by the county.  (Ibid.) That section provided:  “ ‘The Engineer shall, in all cases, determine the amount, quality, acceptability, and fitness of the several kinds of work, materials, and equipment which are to be paid for under this contract.   He shall also determine all questions in relation to said work and the performance thereof, and decide every question which may arise relative to the fulfillment of this Contract on the part of the Contractor, except as provided herein.  [¶] All decisions of the Engineer shall be final except in cases where time and/or financial considerations are involved, which, if no agreement in regard thereto is reached shall be subject to appeal to the Owner.’ ”  (Ibid.)

The court agreed with the plaintiff that section G.07 was not a mandatory arbitration provision.   It explained:  “Although no particular wording is required to constitute a valid, binding arbitration agreement, nor even the inclusion of the words ‘arbitrate’ or ‘arbitrator’ [citation], the language used must be clear and unambiguous [citation].”  (Lovisa, supra, 108 A.D.2d at p. 792.)   Here, it was not:  “While the parties clearly agreed to submit all questions ‘except as provided herein’ to the engineer and agreed that the engineer's decision should be binding, the scope of the issues to be thus submitted and the exceptions thereto are far from clear.”  (Ibid.) Accordingly, “[s]ince we find the purported agreement to arbitrate to be ambiguous[,] it is unenforceable.”  (Ibid.)

The court reached a similar result in Prote Contracting Co., Ltd. v. Board of Education of the City of N.Y. (1987) 135 A.D.2d 523 [521 N.Y.S.2d 752] (Prote Contracting ).   There, the plaintiff was a contractor hired by the Board of Education to repair school windows and doors.   A dispute arose regarding whether the plaintiff was required to furnish materials as part of the contract price.   The dispute was submitted to the Board's executive director pursuant to article 6 of the construction contract, which provided that the executive director “shall in all cases determine the amount, quality, acceptability and fitness of the several kinds of work and materials performed and delivered which are to be paid for under the contract.”   It further provided that the director's “estimate and decision shall be final, conclusive and binding upon the contractor.”  (Id. at p. 524.)

After receiving an adverse decision from the executive director, plaintiff commenced a declaratory judgment action.   The appellate court rejected the Board's contention that the dispute had been settled by binding arbitration under article 6 of the construction contract and, thus, could not be submitted to the court.   It explained:  “It is well settled that in the absence of a clear, explicit and unequivocal agreement to arbitrate, a party does not surrender the right to resort to the courts to resolve contractual disputes [citations].   Inasmuch as Articles 65 and 67 of the respective contracts provide, inter alia, for claims for extra work and manifests the parties' intention to reserve certain actions-into which the current dispute arguably fits-for the courts, the purported arbitration clause (article six) of both contracts is ambiguous and, thus, unenforceable [citation].”  (Prote Contracting, supra, 135 A.D.2d at pp. 524-525.)

The present case is analogous.   As in Lovisa and Prote Contracting, the contract here neither requires that all disputes be submitted to arbitration nor clearly defines which kinds of disputes are arbitrable.   Indeed, the present contract is significantly more ambiguous than the contracts in Lovisa and Prote Contracting :  While those contracts provided that a decision maker “shall in all cases” decide particular categories of disputes, the contract here contained no such language.   Instead, as we have said, it purported to allow buyers to submit disputes to AMC, but does not require them to do so.   Under these circumstances, the present dispute is not subject to mandatory arbitration under the 2005-2006 Purchaser's Agreement.

II. The 2008 Purchaser's Agreement

Kurniawan alternatively contends that the present dispute is arbitrable pursuant to paragraph 16 of the 2008 Purchaser's Agreement.   Although he has provided no evidence that the 2008 Purchaser's Agreement existed when the wine sales were consummated in 2005 and 2006 or that Koch ever saw the 2008 Purchaser's Agreement, he contends that the agreement nonetheless binds Koch because the 2006-2007 Purchaser's Agreement states “that the form of agreement ‘as published by AMC and in effect from time to time, constitute[s] the terms on which the Buyer may bid and buy at auctions conducted by AMC.” Thus, Kurniawan urges, “[t]he controlling agreement is ․ the form in effect as of the time that plaintiff filed his Complaint.”

We do not agree.   As an initial matter, we agree with Koch that the 2008 Purchaser's Agreement was never properly before the trial court because Kurniawan did not properly authenticate it.   Kurniawan submitted the 2008 Purchaser's Agreement to the trial court as an attachment to the declaration of Attorney Neubauer, which stated in paragraph 7 that “Attached hereto as Exhibit F is a true and correct copy of the Conditions of Sale/Purchaser's Agreement attached as Exhibit F to the June 16, 2008 Affirmation of Stephen B. Meister, filed in the Supreme Court of the State of New York in Koch v. Acker, Merrall & Condit Company, Index No. 601220/2008.”   Koch objected to paragraph 7, noting that Neubauer “does not attach Mr. Meister's June 16, 2008 Affirmation, so there is no evidence as to what Mr. Meister said about Exhibit F. As such, Paragraph 7 does not provide the Court with any information to understand what Exhibit F is.”   Koch continued:  “As a courtesy to the Court and opposing counsel, Plaintiff has pulled the June 16, 2008 Meister Affirmation and will stipulate that what Mr. Meister stated under oath in his April 16, 2008 Affirmation in the New York litigation is:  ‘Attached hereto [as] Exhibit F is a printout of the “Conditions of Sale/Purchaser's Agreement” found at the Defendant's website, www.ackerwines.com/ index.’   Mr. Meister does not say that what he is attaching is a ‘true and correct’ copy of the printout from the website at the time of his Affirmation on June 16, 2008.   In fact, the document is actually dated June 19, 2008, three days after the date of his Affirmation.   More importantly, he does not say that this printout was on the website in 2005 or 2006 when Plaintiff purchased the wine.   It could have been added to the website after the New York case was filed.   Thus, even with this stipulation about what Mr. Meister said about Exhibit F in his Affirmation, the document has no relevance here.   It is not authenticated and it is dated years after Koch purchased the counterfeit wine.”

Koch's objection, which the trial court sustained, was well taken.   Under New York law, the party seeking to compel arbitration has the burden of establishing the existence of a valid arbitration agreement.  (E.g., Gerling Global Reinsurance Corp. v. Home Ins. Co. (2002) 302 A.D.2d 118, 123 [752 N.Y.S.2d 611, 616].)   Kurniawan did not do so:  He did not establish where he obtained the document, the date on which the document was created, or that the document submitted was a “true and correct copy” of the original.   The 2008 Purchaser's Agreement therefore was not properly before the court.

Substantively, Kurniawan's contention that Koch is bound by the 2008 Purchaser's Agreement is also without merit.   Kurniawan relies on a portion of paragraph 1 of the 2005-2006 Purchaser's Agreement, which states:  “These Conditions of Sale/Purchase Agreement (this ‘Purchase Agreement’), together with the instruments captioned (i) Collection and Shipment of Wines, (ii) Bottle Description, and (iii) Absentee Bids, as published by AMC and in effect from time to time, constitute the terms on which the Buyer may bid and buy at auctions conducted by AMC.” According to Kurniawan, this paragraph means that “all instruments that make up the contract governing a wine sale, including the Conditions of Sale/Purchaser's Agreement, can be modified by AMC through future publications of those instruments.”

Kurniawan's contention-that Koch agreed to be bound by any modifications AMC might make unilaterally to the sales contract after the sale was completed-is specious.   The sentence immediately following the one on which Kurniawan relies says:  “These terms may be amended by addendum, errata, posted notices, or oral announcements made before or during any auction.”  (Italics added.)   The italicized language-”made before or during any auction”-makes clear that paragraph 1 cannot mean, as Kurniawan urges, that contractual terms may be amended by a notice posted after auction.  “Under the standard canon of contract construction expressio unius est exclusio alterius, ․ the expression of one thing implies the exclusion of the other (Black's Law Dictionary 602 [7th ed.] ).”  (Matter of N.Y. City Asbestos Litigation (2007) 41 A.D.3d 299, 302 [838 N.Y.S.2d 76, 80].)   Thus, the statement that terms may be amended before or during an auction must be understood to mean that terms may not be otherwise amended-including, as here, by a notice posted two or three years after an auction.

Further, Kurniawan's argument requires concluding that the phrase “as published by AMC” modifies both “Conditions of Sale/Purchase Agreement” and the list of other “instruments.”   The better and more sensible reading is that the phrase “as published by AMC” modifies only the other instruments.

Finally, paragraph 20 of the 2005-2006 Purchaser's Agreement provides:  “This Agreement may not be amended, nor shall any waiver, change, modification, consent, or discharge of any part of this Agreement be granted, except by an instrument in writing executed by both AMC and the Buyer.”  (Italics added.)   On its face, then, the agreement clearly provides that it may be amended only by a writing signed by both parties.   There is no contention that the so-called 2008 Purchaser's Agreement was signed by anyone, including AMC and Koch.

Kurniawan also contends that Koch is collaterally estopped from contesting the applicability of the 2008 Purchaser's Agreement because “in plaintiff's separate lawsuit against AMC, the New York courts found that the AMC Agreement applies to all five bottles at issue in this case.”   He says:  “The applicability of the AMC Agreement to each of the five bottles was raised and decided in the New York case.   In opposing AMC's motion to dismiss, Plaintiff claimed that AMC had not established that the terms set forth in the AMC Agreement ‘apply to any of the transactions alleged in the Complaint.   Acker's motion fails for this reason alone.  [Internal record reference omitted.]   The New York trial court rejected this claim, dismissing Plaintiff's fraud claim in its entirety.   In so doing, the New York court necessarily found that the inspection and disclaimer provisions of the AMC Agreement applied to all five bottles at issue in this case.”

We reject Kurniawan's contention that collateral estoppel applies.   Under New York law,6 “[r]es judicata prevents a party, or one in privity with it, from relitigating issues necessarily determined on the merits by a court of competent jurisdiction in a prior action [citation].   Collateral estoppel, a corollary to the doctrine of res judicata, ‘precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same’ [citations].”  (Matter of N.Y. Site Development Corp. v. N.Y. State Dept. of Environmental Conservation (1995) 217 A.D.2d 699, 700 [630 N.Y.S.2d 335, 336].)

“A party invoking either the doctrine of res judicata or collateral estoppel must show that the critical issue in the instant action was necessarily decided in the prior action and that the party against whom estoppel is sought has been afforded a full and fair opportunity to contest that issue [citations].”  (Matter of N.Y. Site Development Corp. v. N.Y. State Dept. of Environmental Conservation, supra, 217 A.D.2d at p. 700.)   Kurniawan has failed to make this essential showing.   He contends that the New York court “necessarily found that the inspection and disclaimer provisions of the [2008 Purchaser's Agreement] applied to all five bottles at issue in this case,” but there is no evidence that this is the case.   Indeed, although the New York court cited to the 2008 Purchaser's Agreement, nothing in its opinion suggests that it either considered or decided whether the 2008 or 2005-2006 version of the agreement applied to the dispute.   Accordingly, the New York decision does not have preclusive effect here.

DISPOSITION

The order denying the petition to compel arbitration is affirmed.   Plaintiff shall recover his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

RUBIN, J.*

FOOTNOTES

FN1. The document that Kurniawan claims was “the form in effect as of the time that plaintiff filed his Complaint” appears to have been printed from AMC's website on June 19, 2008..  FN1. The document that Kurniawan claims was “the form in effect as of the time that plaintiff filed his Complaint” appears to have been printed from AMC's website on June 19, 2008.

FN2. For purposes of this opinion, we assume without deciding that the 2005-2006 Purchaser's Agreement applies as between Kurniawan and Koch..  FN2. For purposes of this opinion, we assume without deciding that the 2005-2006 Purchaser's Agreement applies as between Kurniawan and Koch.

FN3. As the issue is not presented here, we do not consider whether New York law applies to any other issues between the parties..  FN3. As the issue is not presented here, we do not consider whether New York law applies to any other issues between the parties.

FN4. Under the Federal Arbitration Act, states “ ‘may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause “upon such grounds as exist at law or in equity for the revocation of any contract.”  9 U.S.C. § 2 (emphasis added).   What States may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause.   The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal “footing,” directly contrary to the Act's language and Congress's intent.’  [Citation.]”  (Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 686 [116 S.Ct. 1652, 1655].).  FN4. Under the Federal Arbitration Act, states “ ‘may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause “upon such grounds as exist at law or in equity for the revocation of any contract.”  9 U.S.C. § 2 (emphasis added).   What States may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause.   The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal “footing,” directly contrary to the Act's language and Congress's intent.’  [Citation.]”  (Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 686 [116 S.Ct. 1652, 1655].)

FN5. “Although arbitration is favored as a matter of public policy [citation], equally important is the policy that seeks to avoid the unintentional waiver of the benefits and safeguards which a court of law may provide in resolving disputes.   Indeed, unless the parties have subscribed to an arbitration agreement it would be ‘unfair to infer such a significant waiver on the basis of anything less than a clear indication of intent’ [citation].”  (TNS Holdings, Inc. v. MKI Securities Corp. (1998) 92 N.Y.2d 335, 339 [703 N.E.2d 749, 751;  680 N.Y.S.2d 891, 893].).  FN5. “Although arbitration is favored as a matter of public policy [citation], equally important is the policy that seeks to avoid the unintentional waiver of the benefits and safeguards which a court of law may provide in resolving disputes.   Indeed, unless the parties have subscribed to an arbitration agreement it would be ‘unfair to infer such a significant waiver on the basis of anything less than a clear indication of intent’ [citation].”  (TNS Holdings, Inc. v. MKI Securities Corp. (1998) 92 N.Y.2d 335, 339 [703 N.E.2d 749, 751;  680 N.Y.S.2d 891, 893].)

FN6. “[T]he effect of a judicial record of a sister state is the same in this state as in the state where it was made[.]”  (Code Civ. Proc., § 1913.).  FN6. “[T]he effect of a judicial record of a sister state is the same in this state as in the state where it was made[.]”  (Code Civ. Proc., § 1913.)

WILLHITE, Acting P.J.

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