Brodke v. Alphatec Spine Inc

In Brodke v. Alphatec Spine Inc. (2008) 160 Cal.App.4th 1569, "defendants did not affirmatively allege the existence of a written agreement to arbitrate. They did the opposite. They 'contested the existence or validity of any such agreements' with plaintiffs. Thus, defendants failed to satisfy the most basic statutory prerequisite to granting the petition--to allege the existence of a written agreement to arbitrate." (Id. at p. 1574.) The Brodke court rejected the notion "that a party petitioning to enforce an arbitration clause may simultaneously deny the existence of the very contract sought to be enforced." (Id. at p. 1575.) And it discerned no public policy reason to "compel the enforcement of a contract on behalf of a party who denies the very existence of the contract sought to be enforced." (Id. at p. 1577.) The court observed: "In seeking enforcement of the contract, defendants have the burden under section 1281.2 to allege the existence of a written agreement to arbitrate. Their petition serves the function of a complaint for specific performance. Absent an allegation of the existence of an agreement to arbitrate, the petition fails to state a cause of action for specific performance." (Id. at p. 1575) Distinguishing between pleading and proof of the agreement to arbitrate, Brodke held: "Defendants cannot rely on the allegations in the complaint to meet their pleading burden. While plaintiffs' admissions are an appropriate means by which the existence of an agreement may be proved, there is simply no reason to prove anything until the moving party alleges the existence of that which is to be proved." (Brodke, at p. 1575.) The Court concluded Code of Civil Procedure section 1281.2's plain language requires a party moving to compel arbitration to affirmatively allege an agreement to arbitrate exists between the parties. The Court explained a defendant moving to compel arbitration cannot meet this burden by simply arguing the plaintiff either admitted an arbitration agreement existed or cannot deny its existence because the plaintiff's claims are based on a contract that included an arbitration provision. Arbitration is a matter of contract and a motion to compel arbitration essentially is an action in equity to specifically enforce an arbitration agreement. Accordingly, a party cannot specifically enforce an arbitration agreement and simultaneously deny it has any contractual relationship with the party it seeks to compel into arbitration. In Brodke, the Court examined section 1281.2's requirement that a party allege and prove the existence of a valid arbitration agreement before it may compel arbitration. There, four plaintiffs sued a medical device manufacturer to recover royalties under a product development agreement, and the manufacturer moved to compel arbitration based on an arbitration provision in the agreement. In doing so, the manufacturer expressly "'contested the existence or validity'" of any written agreement with the plaintiffs, but nonetheless argued the plaintiffs must arbitrate their claims because the plaintiffs based their claims on an agreement that included an arbitration provision. (Brodke, supra, 160 Cal.App.4th at pp. 1572-1573, italics omitted.) The trial court denied the motion because the manufacturer failed to "'"allege the existence of a written agreement to arbitrate a controversy"'" as required by section 1281.2. (Brodke, at p. 1573.) Section 1281.2 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 a defense to enforcement exists." The Brodke court affirmed, concluding a party could not simultaneously seek to enforce a contract's arbitration provision and deny that contract's existence. (Brodke, supra, 160 Cal.App.4th at pp. 1571, 1575.) As we explained, section 1281.2's plain language requires a party moving to compel arbitration to affirmatively "'allege the existence of a written agreement to arbitrate'" because a motion to compel arbitration is "'is in essence a suit in equity to compel specific performance of a contract.'" (Brodke, at pp. 1571, 1574.) The motion therefore serves the function of a complaint for specific performance, and the moving party fails to state a cause of action unless it alleges the existence of an agreement to arbitrate. (Id. at p. 1575.) By contesting "'the existence or validity'" of any written agreement with the plaintiffs, the manufacturer "failed to satisfy the most basic statutory prerequisite to granting the motion to compel arbitration--to allege the existence of a written agreement to arbitrate." (Id. at p. 1574.) In reaching this conclusion, we rejected the manufacturer's contention it was not required to allege the existence of a written arbitration agreement because the allegations of the plaintiffs' complaint admitted the agreement existed. We explained the allegations in one party's pleading cannot satisfy the burden of another party to allege every element of its claim. Moreover, although the "plaintiffs' admissions in their complaint are an appropriate means by which the existence of an agreement may be proved, there is simply no reason to prove anything until the moving party alleges the existence of that which is to be proved." (Brodke, supra, 160 Cal.App.4th at p. 1575.) Indeed, regardless of the basis for a plaintiff's claims, a motion to compel arbitration must be denied if the moving party fails to affirmatively allege an arbitration agreement exists between the plaintiff and the defendant. (Id. at p. 1571.)