Explain Yourself

When requested, the court must issue a statement of decision when it denies a petition to compel arbitration, said the First District Court of Appeal in Metis Development LLC v. Bohacek (Sept. 28, 2011, A129650), __ Cal.App.4th __ [2011 DJDAR 14784].

In its tentative ruling the trial court indicated its intention to deny cross-defendants' petition to compel arbitration on the ground that they waived their right to arbitration by engaging in litigation activity and there was a possibility of conflicting rulings on common issues of law or fact if the matter were sent to arbitration.  At the hearing counsel requested a statement of decision on the issues set forth in the tentative ruling.  Concluding that the proceeding was a law and motion matter and not a trial, the court declined the request.

The appellate court found that although Code of Civil Procedure §632 states that, upon request, a court shall issue a statement of decision in "the trial of a question of fact by the court," C.C.P. §1291 provides that a statement must be made "if requested pursuant to Section 632, whenever an order or judgment ... is made that is appealable under this title."  An order denying a petition to compel arbitration is appealable.  Harmonizing the two statutes, the court concluded that whenever there is an adjudication of a question of fact in deciding a petition to compel arbitration, the court is obligated to issue a statement of decision if a request is made in the manner required by §632.  Since the hearing took less than one day, and the appellant made an oral request on the record before the matter was submitted, and specified the controverted issues, a statement of decision was required.

The court of appeal then considered whether the written order issued by the court satisfied the requirements of a statement of decision, and found that it did not.  Although a statement of decision "need only fairly disclose its determinations as to the ultimate facts and material issues in the case," the trial court did not make all the findings necessary to support its decision.  To deny arbitration due to waiver, the court must find not only that there has been litigation activity, but also that there was prejudice, and there was no finding as to prejudice.  The trial court also did not state that the possibility of conflicting rulings called for the denial of arbitration, rather than for one of the other alternatives set forth in C.C.P. §1281.2, subd. (c).  After considering the merits of the arbitration petition in the unpublished portion of the opinion, the appellate court remanded the matter so the trial court could decide whether the risk of conflicting rulings warranted the denial of arbitration under the circumstances.