On September 27, 2021, the Court of Appeal of the State of California, Second Appellate District, handed down a unanimous decision granting a petition for a writ of mandate brought by our client, Banc of California, directing the Superior Court to vacate an order compelling a dispute to arbitration and ordering the Superior Court to enter a new order denying the petition to compel arbitration. The ruling, which is certified for publication, marks a critical limitation in California to the U.S. Supreme Court’s decision in Henry Schein, Inc. v. Archer and White Sales, Inc. (2019) ___ U.S. ___ [139 S.Ct. 524, 529], addressing whether threshold questions of arbitrability should be decided by courts or arbitrators.
The case concerns a borrower’s default under certain loan agreements, none of which contained arbitration clauses, that were related to the purchase of a private jet. The bank and the borrower separately had entered into a chartering agreement for the aircraft that contained an arbitration clause, but which was not part of the lawsuit. The defaulting borrower moved to compel the entire dispute to arbitration and the Superior Court granted the motion, holding that under the U.S. Supreme Court’s decision in Schein, the threshold question of arbitrability under the loan agreements was for an arbitrator, not the court, to decide. The Court of Appeal reversed, holding “that where a party seeks to arbitrate a dispute that arises from a contract without an arbitration clause, the court is not required under Schein to defer to the arbitrator on the threshold determination of arbitrability. . .. Rather, where the party moving to compel arbitration asserts a different contract with an arbitration provision shows the parties’ intent to arbitrate, the question of the parties’ intent is for the court to resolve.”
Our Banc of California team is comprised of Partners Mike Kibler and Matt Cave, Senior Associate Adam Pullano, and Senior Litigation Paralegal Samantha Ahlheim. We were joined in the appeal by appellate co-counsel from the Grignon Law Firm LLP, including Partners Margaret M. Grignon (who argued) and Anne M. Grignon.
The Court of Appeal’s decision can be found here.Back To All News