ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, February 28, 2018

A ruling that claims are outside the scope of an arbitration provision isn't hostile to arbitration

In this recent case out of California, Darien Ephram, Inc. v. Yashar, B279827, the lower court denied a motion to compel arbitration, finding that the plaintiff's claims were outside the scope of the arbitration provision. The defendant took issue with that determination, arguing on appeal that the lower court should have required the plaintiff to prove its claims, instead of merely relying on the allegations made in the complaint. This ruling, according to the defendant, showed a "hostility" to arbitration in violation of the policy favoring it. 

The appellate court, however, disagreed, nothing that the defendant was "misunderstanding" the lower court's rulings. There was no reason for the lower court to take evidence because there were no factual disputes that the arbitration provision depended upon: None of the parties disputed the interpretation of the scope of the arbitration provision, and there was no factual defense that would have altered the character of the plaintiff's claims or the scope of the arbitration provision. Therefore, the court was entitled to legally determine that the claims in the complaint were not within that scope; no factual determination was necessary. The proving of the allegations in the complaint were for the next phase in the litigation, not for the motion to compel arbitration stage.

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