Best Interiors, Inc. v. Millie & Severson, Inc

In Best Interiors, Inc. v. Millie & Severson, Inc. (2008) 161 Cal.App.4th 1320, the plaintiff was a subcontractor for the construction of a hospital. Claiming it was owed additional payment caused by change orders and interference with its performance of the contract, the plaintiff sued the general contractor, the property owner, and two building inspectors. (Id. at p. 1323.) The plaintiff's contract with the general contractor provided for arbitration of disputes, as did the contract between the general contractor and the property owner. The general contractor petitioned to compel arbitration under the contract. (Ibid.) The plaintiff opposed the petition because arbitration would subject it to a risk of inconsistent results since the inspectors were not party to an arbitration contract and did not stipulate to resolution of the dispute through arbitration. Further, the inspectors had filed cross-complaints for indemnity and declaratory relief. (Id. at p. 1324.) The trial court declined to order any of the claims to arbitration. It concluded arbitration would not serve judicial economy and might lead to inconsistent results since many of the issues of agency and indemnification would have to be litigated both in court and in any arbitration. (Ibid.) The general contractor appealed. The Court of Appeal concluded the trial court did not abuse its discretion. The court concluded that, because of the agency and indemnification claims in the plaintiff's complaint, the general contractor's position that the claims against it could be arbitrated independently without prejudice to the other parties "does not survive analysis. Nor can we say that the trial court exceeded the bounds of reason when it decided, on that basis, to deny the general contractor's petition to compel arbitration." (Best Interiors, Inc. v. Millie & Severson, Inc., supra, 161 Cal.App.4th at p. 1330.)