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District Court of Appeal, Fourth District, Division 1, California.

Application of Emily E. Sawday, For an Order Compelling Arbitration. Emily E. SAWDAY, Appellant, v. VISTA IRRIGATION DISTRICT, Respondent.

VISTA IRRIGATION DISTRICT, Plaintiff and Respondent, v. Emily E. SAWDAY, Defendant and Appellant.

Civ. 7455, 7456.

Decided: February 01, 1966

Luce, Forward, Hamilton & Scripps and Jack W. Crumley, San Diego, for petitioner and appellant. Glenn & Wright and Leroy A. Wright, San Diego, for respondent.

A land lease provided that if the lessee were damaged by the lessor's removal of water from the land, the rent was to be reduced by agreement of the parties or, failing this, by arbitration. The lessee claimed damage; the parties did not agree to a rent reduction; the lessee demanded arbitration and arbitrators were appointed by both parties. After the lessor petitioned the trial court to terminate arbitration, the lessee petitioned to compel it.

The trial court found: (1) ‘* * * [T]he lease and the situation of the parties' ‘impliedly required’ a claim for adjustment of rent to be made within a year after occurrence of damage; (2) the lessee's (a) assertion of damage in the fourth year of a five-year term, (b) failure to press the claim for reduction of rent, and (c) exercise of an option the next year to extend the lease, constituted a waiver of her ‘right to have any claim for rent reduction arbitrated’ excepting the last two years of the period; and (3) the lessee was ‘guilty of laches operating to the prejudice of District as lessor, so as to waive the right to compel arbitration’ except for the last two years. The trial court concluded the lessee was guilty of laches and had waived her right to compel arbitration.

The trial court ordered arbitration terminated for the first eight years of the ten-year period in question; it denied the lessee's petition to compel arbitration except for the last two years of the period. The appeals from both orders are consolidated.

Section 1281.2 of the Code of Civil Procedure provides:

‘On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for revocation of the agreement. * * *' [Emphasis added.]

Regardless of possible assertion of the defenses of laches and waiver to a claim put before the arbitrators, the issue before this court is whether there was a waiver of the right to compel arbitration under Code of Civl Procedure, section 1281.2. The statute does not include laches or estoppel as a defense to a petition to order arbitration.

In Aetna Cas. & Surety Co. v. Superior Court, 233 Cal.App.2d 333, 339, 43 Cal.Rptr. 476, the court found a failure to act within the time limit specified by statute for arbitration of uninsured motorist claims constituted a waiver of the right to arbitrate. And the court said in Berman v. Renart Sportswear Corp., 222 Cal.App.2d 385, 389, 35 Cal.Rptr. 218, 221:

‘A right to arbitration may be waived. (Code Civ.Proc. § 1281.2, subd. (a).) It is waived by bringing suit on the basic contract itself without seeking arbitration. (Case v. Kadota Fig Ass'n. (1950) 35 Cal.2d 596, 220 p.2d 912); and it is waived by a repudiation or denial of the contract in which the arbitration clause is contained. (Bertero v. Superior Court (1963) 216 Cal.App.2d 213, 30 Cal.Rptr. 719.)’

The lease contains no limitation of time in which to demand arbitration. The lessee did not bring suit on the lease itself without seeking arbitration, nor did she repudiate or deny the lease or relinquish her rights granted by the lease. We hold, therefore, the lessee did not waive her right to compel arbitration and is entitled to her day in arbitration. Legislative policy favors arbitration. (Cf. Zak v. State Farm Mrt. Liab. Ins. Co., 232 Cal.App.2d 500, 508, 42 Cal.Rptr. 908; Jordan v. Pacific Auto Ins. Co., 232 Cal.App.2d 127, 132, 42 Cal.Rptr. 556.) The merits of her claim for damages should be decided in that forum.

Both orders are reversed insofar as they deny arbitration; they are affirmed insofar as they grant arbitration; appellant to recover costs.

GERALD BROWN, Presiding Justice.

COUGHLIN and FINLEY,* JJ., concur.