MT DIABLO HOSPITAL DISTRICT v. GREEN

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Court of Appeal, First District, Division 5, California.

MT. DIABLO HOSPITAL DISTRICT, Petitioner, v. The SUPERIOR COURT of Contra Costa County, Respondent, Riley M. GREEN, Jr., et al., and Taxpayers of the Mt. Diablo Hospital District, etc., Real Parties in Interest.

No. A042099.

Decided: July 15, 1988

M. Jeffrey Micklas, Norris and Norris, Richmond, for petitioner. No appearance for respondent. Cynthia Love Marek, Gregory L. McCoy, Thiessen, Gagen & McCoy, Danville, for real parties in interest Riley M. Green, Jr., et al. David Levy, Trembath, McCabe, Schwartz, Evans & Levy, Concord, for real party in interest Taxpayers of the Mt. Diablo Hosp. Dist., etc.

In this case we hold that Code of Civil Procedure section 1281.4 does not mandate an automatic stay pending appeal from an order denying a petition to arbitrate.

In November 1986, Riley Green stepped down as the chief executive officer of the Mt. Diablo Hospital Medical Center.   By a contract approved by a majority of the Board of Directors of the Mt. Diablo Hospital District (District), Green received retirement benefits that may be characterized as lucrative.   After considerable public outcry, the Taxpayers of the Mt. Diablo Hospital District (Taxpayers) filed a declaratory relief action against Green and the District challenging the retirement contract as without consideration and void, as illegal under the Brown Act, and as an unlawful gift of public funds.   Although the suit names both Green and District as defendants, the District's current Board of Directors is opposed to the contract and supports Taxpayers' position.

Green, without filing an answer to Taxpayers' complaint, petitioned for arbitration under an arbitration clause in the retirement package contract.   (Code Civ.Proc., § 1281.2.)   The trial court issued a stay of the judicial proceedings pending determination of the petition for arbitration, under auspices of Code of Civil Procedure section 1281.4:  “If an application ․ to a court of competent jurisdiction, whether in this State or not, for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”  (Emphasis added.)

The superior court denied the petition to arbitrate and lifted the section 1281.4 stay.   Green then appealed from the order denying his petition, and moved to reinstate the stay of judicial proceedings pending resolution of his appeal.   The trial court granted the motion, apparently believing a stay pending appeal was mandated by Code of Civil Procedure section 1281.4.

 District seeks a writ of mandate to set aside the stay order, contending that the court entered the stay on an erroneous reading of the statute.   We agree, and issue the writ.1

 Section 1281.4 requires a trial court to stay judicial proceedings until a related application for arbitration “is determined.”   Green argues that an application is not “determined” until a final decision on appeal.   District argues that for purposes of the statute's stay requirement, the application is “determined” when ruled upon by the trial court.   District proposes the correct interpretation.   By its plain language, section 1281.4 is limited to the trial court's adjudication.   The provisions of the section provide that when confronted with a petition to arbitrate, a trial court is obliged to impose a stay on judicial proceedings until the court determines, i.e., grants or denies, the petition.   If the court grants the petition, the stay remains in effect for the purpose of allowing completion of the arbitration proceedings.

The statute's purpose is to temporarily suspend judicial proceedings until the trial court can determine whether the less costly, more expeditious avenue of arbitration is available, and to maintain the suspension if the court determines arbitration is in fact appropriate.  Section 1281.4 makes no mention of appeals from trial court determinations, and to infer that a stay must continue until finality of appeal essentially rewrites the statute to inject an element not explicitly provided by the Legislature.   Green's reading of the statute would render superfluous the language providing for the continuation of the stay only in those cases wherein a petition is granted.   Furthermore, Green's reading would provide the same remedy, continuation of the judicial stay, to both the successful and the unsuccessful applicant for arbitration.   We do not believe that section 1281.4 contemplates such a result.

The trial court apparently relied on Smith v. Superior Court (1962) 202 Cal.App.2d 128, 131, 20 Cal.Rptr. 512, a per curiam opinion which, in dicta, stated that “until determination upon appeal ‘such application is undetermined’ within the meaning of section 1281.4.”  Smith seems to have overlooked the ordinary plain meaning of “determined,” which means “decided,” not necessarily “decided by the ultimate authority.”   The only authority cited by Smith to support its remark is Code of Civil Procedure section 1049, which defines “pending” actions to include the appeal period.  “Pending,” of course, is not the same term as “determined”;  Smith 's reliance on section 1049 is unpersuasive.2

Green argues he will be irreparably harmed if the judicial proceedings are allowed to go to judgment and he later wins reversal of his arbitration denial.   This argument speculates on the outcome of the appeal and is not persuasive on the issue of statutory interpretation.   Moreover, the contention is not an argument in favor of a mandatory stay imposed by the trial court.   It is a contention which should be presented to an appellate court, on the necessary factual showing of irreparable harm, for the discretionary issuance of a writ of supersedeas.

Because we conclude the stay was erroneously imposed, we need not reach the remaining issue raised by the petition.   We resolve this case after full briefing by the parties, after hearing oral argument on an order to show cause in lieu of an alternative writ, and after informing the parties any affirmative relief would be granted by the issuance of a peremptory writ in the first instance.  (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177–180, 203 Cal.Rptr. 626, 681 P.2d 893.)

Let a peremptory writ of mandate issue commanding respondent superior court to vacate its order staying judicial proceedings pending appeal from the order denying the petition for arbitration, and to enter a new and different order denying said stay.   So as not to frustrate the relief requested, and to prevent any further delay of the judicial proceedings, this decision is final forthwith.  (Cal. Rules of Court, rule 24(d).)

FOOTNOTES

1.   Green claims that District's petition is not timely filed under the 60–day rule of Popelka, Allard, McCowan & Jones v. Superior Court (1980) 107 Cal.App.3d 496, 499, 165 Cal.Rptr. 748.   Although there is considerable logic in the requirement that seekers of extraordinary relief should approach an appellate court within the same 60 days afforded to those requesting the “ordinary” relief of appeal, the Popelka rule was sub silentio overruled in Peterson v. Superior Court (1982) 31 Cal.3d 147, 181 Cal.Rptr. 784, 642 P.2d 1305.  Peterson replaced Popelka with a traditional laches test, under which a petition not subject to a specific statute of limitations (see, e.g., Code Civ.Proc., § 437c) is only untimely if the delay in filing is unreasonable and works prejudice on the real party in interest.  (Peterson v. Superior Court, supra, at p. 163, 181 Cal.Rptr. 784, 642 P.2d 1305;  see People v. Superior Court (Clements) (1988) 200 Cal.App.3d 491, 496, 246 Cal.Rptr. 122, petn. for review pending (S005855).)   We find the petition was not unreasonably delayed;  in any case Green has failed to even allege, much less demonstrate, any prejudice from the late filing.

2.   Interestingly, the same panel which decided Smith later suggested a contrary interpretation of section 1281.4.   In Berman v. Renart Sportswear Corp. (1963) 222 Cal.App.2d 385, 35 Cal.Rptr. 218, the court ruled an order denying arbitration was premature.   In discussing the likely renewal on remand of the petition to arbitrate, the court opined that “[o]bviously” a request for stay “falls with the [trial court's] denial of arbitration.”  (Id., at p. 390, 35 Cal.Rptr. 218.)

LOW, Presiding Justice.

KING and HANING, JJ., concur.