HCF Ins. Agency v. Patriot Underwriters CA2/5

Filed 5/27/15 HCF Ins. Agency v. Patriot Underwriters CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
HCF INSURANCE ANGENCY, B257715
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC521271)
v.
PATRIOT UNDERWRITERS, INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los Angeles County, Richard
Edward Rico, Judge. Affirmed.
Chamberlin Keaster & Brockman, Robert W. Keaster and Michael A. Miller for
Defendant and Appellant.
Winget Spadafora & Schwartzberg, Brandon S. Reif, David Maurer and Rafael
DeAquino Villar for Plaintiff and Respondent.
I. INTRODUCTION
Defendant, Patriot Underwriters, Incorporated, appeals from an order partially
denying its amended motion to compel arbitration against plaintiff, HCF Insurance
Agency. Plaintiff filed a first amended complaint containing multiple causes of action
against defendant and other parties. As to defendant, plaintiff alleges the following
causes of action: contract breach (first); breach of the implied covenant of good faith and
fair dealing (second); fraud (third); intentional interference with economic advantage
(fourth); and unlawful group boycott in violation of Business and Professions Code
section 16720 et seq., also known as the Cartwright Act (ninth). Defendant moved to
compel arbitration pursuant to an agreement signed by plaintiff. The trial court ordered
arbitration as to the contract and implied covenant breach claims because those two
causes of action were within the scope of the arbitration agreement. The trial court
denied the arbitration petition as to the fraud and intentional interference with economic
advantage causes of action. The trial court ruled those two claims did not fall within the
scope of the arbitration agreement. The trial court also denied the arbitration petition as
to the Cartwright Act cause of action. The trial court ruled application of the arbitration
clause’s Florida choice-of-law provision prevented plaintiff from securing any relief.
The trial court found the group boycott claim involved an important public policy
because it is California’s antitrust statute. We affirm the order partially denying
defendant’s motion to compel arbitration.
II. BACKGROUND
A. Plaintiff’s Allegations
On September 12, 2013, plaintiff filed its complaint. Defendant moved to compel
arbitration on October 25, 2013. Plaintiff subsequently filed a first amended complaint
on December 16, 2013, against: defendant; Intercare Specialty Risk Services, its
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fictitious business names and successors in interest; Kevin Hamm, president and chief
shareholder of Intercare Specialty Risk Services; Renee Iaia, president of Phoenix Risk
Management Insurance Services, a related business to Intercare Specialty Risk Services;
and Shomer Insurance Agency, Incorporated. We will focus on plaintiff’s claims against
defendant.
Plaintiff provides brokerage and agency services for casualty, accident and health,
property, life and surplus lines of insurance. Plaintiff is a California corporation with its
principal place of business in Los Angeles. Plaintiff is authorized to conduct business in
California. Shomer Insurance Agency, Incorporated and Intercare Specialty Risk
Services are direct competitors with plaintiff in the insurance market in the greater Los
Angeles area. They specialize in brokering workers’ compensation policies for extended
care facilities. Defendant had a sub-producer agreement with Intercare Specialty Risk
Services and Shomer Insurance Agency, Incorporated.
Defendant is a Delaware corporation with its principal place of business in Fort
Lauderdale, Florida. Defendant is a program administrator and managing general
underwriter servicing regional and national workers’ compensation insurance carriers.
Defendant provides products to insurance agencies and wholesalers with expertise in
workers’ compensation. Defendant also offers services such as claims and risk
management. Defendant is in competition with other managing general underwriters in
California such as Safety National Casualty Company.
Defendant specializes in the creation and management of new individual, agency,
or group captive insurers for workers’ compensation. A captive insurer is a dedicated in-
house subsidiary entity which provides insurance to its owner, a parent corporation.
The parent corporation pays premiums to the captive insurer rather than an outside firm
to insure some business risk. The captive insurer reinvests the premiums it receives and
then pays claims by drawing on the principal and return on its investment. Captive
insurers can lower costs and facilitate coverage for certain hard-to-insure risks that
traditional carriers may not underwrite.
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Around July 2012, defendant considered entering into a business relationship with
plaintiff. The enterprise was to involve plaintiff’s healthcare-based workers’
compensation business. Defendant’s former regional vice president, David Duvall,
requested significant proprietary information. The request was made so defendant could
evaluate whether to enter into a group or agency captive insurer agreement. The
proprietary information disclosed included five years of confidential client lists, effective
dates, premiums, payroll figures and loss ratios. On August 27, 2012, plaintiff and
defendant entered into a sub-producer agreement. The August 27, 2012 sub-producer
agreement was a precursor to forming captive insurer agreements. The August 27, 2012
sub-producer agreement allowed plaintiff to access defendant’s products directly without
going through competitors like Intercare Specialty Risk Services or Shomer Insurance
Agency, Incorporated. Plaintiff and defendant expected to execute an agency captive
insurer agreement in November 2012. Within the first few months after the August 27,
2012 sub-producer agreement was entered into, plaintiff submitted substantial “business”
to defendant.
Around late August or early September of 2012, Intercare Specialty Risk Services
and Shomer Insurance Agency, Incorporated employees learned of plaintiff’s anticipated
captive insurer agreement with defendant. Intercare Specialty Risk Services and Shomer
Insurance Agency, Incorporated employees agreed to exert pressure on defendant to
exclude plaintiff as their brokerage market competitor. During or around September or
October 2012, Mr. Hamm telephoned Steve Mariano, defendant’s chief executive officer.
Mr. Hamm threatened to “pull business” from defendant if it did not cancel its sub-
producer agreement with plaintiff. An unidentified employee of Shomer Insurance
Agency, Incorporated also communicated with defendant to cease “doing business” with
plaintiff.
Defendant agreed to cancel the sub-producer agreement because of the threats of
Intercare Security Risk Services’ and Shomer Insurance Agency, Incorporated’s
employees. An unspecified employee of defendant instructed Mr. Duvall not to discuss
these conversations with individuals employed by plaintiff. In November 2012, Jason
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Adelman, plaintiff’s president, asked Mr. Duvall if defendant had approved the captive
insurer agreement. Mr. Duvall reiterated that Mr. Mariano, defendant’s chief executive
officer, had approved it. In December 2012, defendant refused to enter into a captive
insurer agreement with plaintiff. Defendant refused to do so despite numerous
representations the captive insurer agreement was approved and finalized. On or around
January 1, 2013, defendant terminated the sub-producer agreement. As previously noted,
plaintiff alleges the following causes of action against defendant: contract breach (first);
implied covenant breach (second); fraud (third); intentional economic advantage
interference (fourth); and unlawful group boycott in violation of the Cartwright Act under
Business and Professions Code section 16720, et seq. (ninth). Because they are the
relevant factual matters in this appeal, we will discuss the allegations in the third, fourth
and ninth cause of action in detail.
The allegations in the third cause of action for fraud are difficult to follow. But
the following are the relevant allegations. Since 2012, discussions between unspecified
employees of plaintiff and defendant were held about entering into a captive insurer
agreement. As part of that process, plaintiff shared confidential information with
defendant. As noted, Mr. Duvall was defendant’s former regional vice-president. On
August 27, 2012, Mr. Duvall told Mr. Adelman, plaintiff’s president, that defendant had
approved group and agency captive insurer agreements. Thereafter for several weeks,
Mr. Duvall made similar statements. As late as October 19, 2012, Mr. Duvall relayed a
statement by Mr. Mariano, defendant’s chief executive officer, of the approval of the
agency captive insurer agreement with plaintiff. However, Mr. Mariano’s statements
were false and he knew them to be so. The purpose of Mr. Mariano’s false statements
was to: continue negotiation between plaintiff and defendant; maintain the appearance of
good faith; keep plaintiff from securing workers’ compensation insurance for its clients;
continue securing confidential information from plaintiff; and further the boycott’s
objectives. (We will describe the boycott allegations shortly.) Had unidentified
employees of plaintiff known that Mr. Mariano’s statements concerning the agency
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captive insurer agreement were untrue, negotiations would have ceased. Plaintiff would
have pursued other agency opportunities with other companies.
For the intentional economic advantage interference cause of action, plaintiff
alleges unidentified employees were having similar discussions regarding captive insurer
agreements with Safety National Insurance. Plaintiff provided National Safety Insurance
with significant confidential information. Defendant knew: of the economic relationship
between plaintiff and National Safety Insurance; plaintiff had a significant and profitable
“book of business” with National Safety Insurance; and the economic relationship
between plaintiff and National Safety Insurance would be interrupted if Mr. Mariano’s
false statements concerning the captive insurer agreement turned out to be true. By its
actions, defendant disrupted and interfered with plaintiff’s economic relationship with
Safety National Insurance. Defendant caused plaintiff to suspend its negotiations
regarding entering a captive insurer agreement with Safety National Insurance.
As to the group boycott antitrust claim, plaintiff alleges, Intercare Specialty Risk
Services and Shomer Insurance Agency Incorporated are horizontal competitors.
Intercare Specialty Risk Services and Shomer Insurance Agency Incorporated entered
into an agreement to threaten defendant. The first amended complaint describes the
relationship between plaintiff, Intercare Specially Risk Services and Shomer Insurance
Agency Incorporated as follows: “At all relevant times, . . . Intercare [Specialty Risk
Services] and Shomer [Insurance Agency Incorporated] provided brokerage services and
sold various lines of specialized commercial insurance products to a significantly
overlapping base of actual or potential customers in direct competition with [plaintiff]. In
some cases, [plaintiff], Intercare [Specially Risk Services] and Shomer [Insurance
Agency Incorporated] were all brokers for defendant.” According to the first amended
complaint, Intercare Specially Risk Services and Shomer Insurance Agency Incorporated
entered into an agreement to threaten defendant. The purpose of the threat was to force
defendant to terminate plaintiff’s existing sub-producer agreement. The threat was
designed to remove plaintiff as a competitor of Intercare Specially Risk Services and
Shomer Insurance Agency Incorporated. The first amended complaint describes the
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threat thusly: “To remove [plaintiff] as a direct competitor for brokering workers’
compensation coverage to extended care facilities, Intercare [Specialty Risk Services]
and Shomer [Insurance Agency Incorporated], as horizontal competitors, entered into an
agreement to threaten [defendant], and demand that, unless [defendant] terminated
[plaintiff’s] existing Producer Agreement and refused to engage in further dealings with
[plaintiff], Intercare [Specialty Risk Services] and Shomer [Insurance Agency
Incorporated] would cease to provide brokerage services and stop doing business with
[defendant]. Intercare [Specialty Risk Services’] and Shomer [Insurance Agency
Incorporated’s] accounts represent a substantial portion of [defendant’s] book of
business.”
In January 2013, defendant terminated the existing sub-producer agreement with
plaintiff. Defendant stopped doing business with plaintiff in furtherance of the unlawful
group boycott. Plaintiff was thereby denied important access to defendant’s unique
captive insurer products. Plaintiff’s ability to compete has been severely impaired by
defendant’s conduct. Plaintiff alleges the foregoing anticompetitive conduct produced an
antitrust injury.
B. Defendant’s Initial and Amended Motion to Compel Arbitration
As noted, on October 25, 2013, defendant moved to compel arbitration. After
plaintiff filed its first amended complaint, defendant filed its amended motion to compel
arbitration on January 21, 2014. Defendant asserted the sub-producer agreement between
plaintiff and defendant contained an arbitration provision.
At Section XVIII, entitled, “ARBITRATION,” the sub-producer agreement
provides, “(A) If any dispute, claim or difference arises out of or relates in any fashion or
manner to this Agreement (referred to herein after as a ‘dispute’, including a dispute for
which a party seeks specific performance, such Dispute shall be [submitted] to
arbitration.” At Section XIX, entitled, “APPLICABLE LAW,” the sub-producer
agreement provides: “If any question arises at any time as to the validity, construction,
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interpretation or performance of this Agreement, the law of the State of Florida shall
govern and control, without regard to its conflicts of law principles. The laws of the State
of Florida shall be the exclusive law governing any dispute arising under this contract to
the exclusion of the laws of any other state or jurisdiction.” Under the choice-of-law
provision, defendant asserted its motion to compel arbitration pursuant to the Revised
Florida Arbitration Code. (Fla. Stats., § 682.01 et seq.) On March 20, 2014, plaintiff
filed its opposition. Plaintiff argued the arbitration clause was unconscionable. Plaintiff
asserted California law must apply because the choice of law provision violates
fundamental public policy. Plaintiff contended that its antitrust cause of action would be
de facto waived if Florida law applied.
C. Order Denying in Part Defendant’s Amended Motion to Compel Arbitration
On May 22, 2014, following a hearing, the trial court granted in part defendant’s
amended motion to compel arbitration. The amended motion to compel arbitration was
granted as to plaintiff’s first and second causes of action for contract and implied
covenant breach respectively. The trial court ruled the first and second causes of action
clearly arise from and relate to the sub-producer agreement. The amended motion to
compel arbitration was denied as to the third, fourth and ninth causes of action. The trial
court concluded the third and fourth causes of action did not arise from or relate to the
sub-producer agreement under Florida law. The trial court found that enforcing the
choice of law provision for the ninth cause of action would create a fundamental conflict
with California law and denied the motion to compel arbitration. Proceedings concerning
the third, fourth and ninth causes of action were stayed pending resolution of arbitration
as to the first and second causes of action. Defendant timely appealed the partial denial
of its amended motion to compel arbitration.
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III. DISCUSSION
A. The Amended Motion to Compel Arbitration is Not Equivalent to Demurrer or
Answer
Defendant argues plaintiff should have sought leave of court to file its first
amended complaint. Defendant has failed to identify any provision of Florida law that
supports this contention. But even if California law applies, defendant’s contention has
no merit. Defendant relies on Code of Civil Procedure section 472, which provides,
“Any pleading may be amended once by the party of course, and without costs, at any
time before the answer or demurrer is filed, or after demurrer and before the trial of the
issue of law thereon . . . .” Defendant also relies upon Code of Civil Procedure section
1281.7, which provides, “A petition pursuant to Section 1281.2 [to compel arbitration]
may be filed in lieu of filing an answer to a complaint.” Defendant argues that under
these two sections, a petition to compel arbitration is a proper responsive pleading.
Under defendant’s reasoning, since the petition to compel arbitration is like an answer,
plaintiff should have been required to seek leave of court before amending its complaint.
Plaintiff contends defendant failed to preserve this issue on appeal by not raising it
before the trial court and thus waiving it. We agree. Defendant never objected to the
filing of plaintiff’s first amended complaint. Defendant cites to a declaration from its
counsel, who declared: “Plaintiff’s First Amended Complaint was filed without leave of
Court after [defendant] filed its original Motion to Compel Arbitration.” This is neither
an objection nor is it an argument. It is undisputed plaintiff did not seek leave of the trial
court to file the first amended complaint. Nowhere in the declaration nor in any of
defendant’s papers filed in the trial court does defendant complain that plaintiff’s
amendment was improper.
Even if this issue was properly raised, we disagree with defendant’s argument.
Code of Civil Procedure section 422.10 provides, “The pleadings allowed in civil actions
are complaints, demurrers, answers, and cross-complaints.” Code of Civil Procedure
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section 422.10 unambiguously defines what pleadings are. Motions, such as the petition
to compel arbitration, are not listed therein. No California statute states a motion to
compel arbitration is the equivalent of an answer or a demurrer. Defendant relies on
Simmons v. Allstate Insurance Co. (2001) 92 Cal.App.4th 1068, 1073 (Simmons) and
argues litigants may not “amend[] around” well-taken motions. In Simmons, the
defendant, at the hearing on a section 425.16 special motion to strike, was denied leave to
amend his cross-complaint. (Id. at p. 1072.) Here, no such facts are present. The
concerns raised by the special motion to strike are inapplicable here. No error occurred
in connection with the filing of the first amended complaint without the trial court’s
permission.
B. Legal Standard for Arbitration
1. Florida’s appellate standard of review of arbitration issues
We apply the following standard of review under Florida law to the issue of
whether the parties agreed to arbitrate the fraud and economic interference causes of
action: “The question of whether a disputed issue is subject to arbitration is a matter of
contract interpretation, and our review is de novo. Ocwen Fed. Bank FSB v. LVWD, Ltd.,
766 So.2d 248, 249 (Fla. 4th DCA 2000). In Citigroup, Inc. v. Boles, 914 So.2d 23 (Fla.
4th DCA 2005), this court discussed the application of arbitration provisions: [¶]
Notwithstanding that arbitration is favored in the law, construction of an arbitration
clause remains subject to the contract law requirement ‘that the court discern the intent of
the parties from the language used in their agreement.’ Citigroup, Inc. v. Amodio, 894
So.2d 296, 298 (Fla. 4th DCA 2005). ‘[A]rbitration is mandatory only where the subject
matter of the controversy falls within what the parties have agreed will be submitted to
arbitration.’ Ocwen Fed. Bank FSB v. LVWD, Ltd., 766 So.2d 248, 249 (Fla. 4th DCA
2000). ‘[I]t is the language of the agreement that defines the scope of an arbitration
agreement.’ Amodio, 894 So.2d at 298.” (Florida Environmental Services, Inc. v.
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Rentoumis (Fla.Dist.Ct.App. 2007) 950 So.2d 466, 470.) Under Florida law, in
determining whether a cause of action is within the scope of an arbitration agreement, we
examine the factual allegations of the first amended complaint. (Ibid.; Singer v. Gaines
(Fla.Dist.Ct.App. 2005) 896 So.2d 851, 854.)
In addition, the Federal Arbitration Act applies to this action. “Section 2 of the
[Federal Arbitration Act] . . . declares that a written agreement to arbitrate in any contract
involving interstate commerce or a maritime transaction ‘shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract[]’ . . . .” (Volt Information Services, Inc. v. Board of Trustees of Leland Stanford
Junior University (1989) 489 U.S. 468, 474 (Volt), citing 9 U.S.C. § 2.) As previously
stated, plaintiff is a California corporation with its principle place of business in Los
Angeles, California. Defendant is a Delaware corporation with its principle place of
business in Fort Lauderdale, Florida. Our case arises from a contract evidencing a
transaction involving commerce.
The United States Supreme Court held: “The [Federal Arbitration Act] was
designed ‘to overrule the judiciary’s longstanding refusal to enforce agreements to
arbitrate,’ [citation], and place such agreements ‘“upon the same footing as other
contracts,”’ [citations].” (Volt, supra, 489 U.S. at p. 478.) “Arbitration under the Act is
a matter of consent, not coercion, and parties are generally free to structure their
arbitration agreements as they see fit. Just as they may limit by contract the issues which
they will arbitrate, [citation], so too may they specify by contract the rules under which
that arbitration will be conducted. Where, as here, the parties have agreed to abide by
state rules of arbitration, enforcing those rules according to the terms of the agreement is
fully consistent with the goals of the [Federal Arbitration Act] . . . .” (Id. at p. 479.)
Unless subject to the limited preemptive effect of the Federal Arbitration Act, it is
undisputed that the arbitration provision at issue is subject to Florida law.
Under Florida’s arbitration statutes, the following are the controlling principles
which apply to plaintiff’s fraud and economic interference claims: “[T]here are three
elements for courts to consider in ruling on a motion to compel arbitration of a given
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dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an
arbitrable issue exists; and (3) whether the right to arbitration was waived. (See
Terminix Int’l Co., LP v. Ponzio (Fla.Dist.Ct.App. 1997) 693 So.2d 104, 106.)” (Seifert
v. U.S. Home Corp. (Fla. 1999) 750 So.2d 633, 636 (Seifert).) The parties do not dispute
the existence of a valid arbitration agreement, nor do they argue waiver of the right to
arbitrate has occurred. As to whether an arbitrable issue exists, the Florida Supreme
Court held: “[T]he determination of whether an arbitration clause requires arbitration of
a particular dispute necessarily ‘rests on the intent of the parties.’ [Citations.] A natural
corollary of this rule is that no party may be forced to submit a dispute to arbitration that
the party did not intend and agree to arbitrate. [Citations.]” (Id. at p. 636; see Seaboard
Coast Line R.R. Co. v. Trailer Train Co. (11th Cir. 1982) 690 F.2d 1343, 1352.) The
Florida Supreme Court concluded in the context of “arising out of or relating to”
agreements: “[E]ven in contracts containing broad arbitration provisions, the
determination of whether a particular claim must be submitted to arbitration necessarily
depends on the existence of some nexus between the dispute and the contract containing
the arbitration clause. [¶] Disputes arise in many and varied contexts and the mere
coincidence that the parties in dispute have a contractual relationship will ordinarily not
be enough to mandate arbitration of the dispute. In other words, the mere fact that the
dispute would have arisen but for the existence of the contract and consequent
relationship between the parties is insufficient by itself to transform a dispute into one
‘arising out of or relating to’ the agreement. [Citations.] These cases hold that for a tort
claim to be considered ‘arising out of or relating to’ an agreement, it must, at a minimum,
raise some issue the resolution of which requires reference to or construction of some
portion of the contract itself. [Citations.]” (Seifert, supra, 750 So.2d at p. 638; see
Hersman, Inc. v. Fleming Cos., Inc. (M.D.Ala. 1998) 19 F.Supp.2d 1282, 1286-1287.)
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2. Fraud cause of action
Here, the arbitration clause applied to “any dispute, claim, or difference aris[ing]
out of or relat[ing] in any fashion or manner to” the sub-producer agreement. The third
cause of action alleges defendant made false representations regarding entering into an
agency captive insurer agreement. The proposed agency captive insurer contract is
different from the sub-producer agreement. The alleged misrepresentations caused
plaintiff to forego other agency captive insurer or similar agreements. The third cause of
action concerns issues with defendant’s conduct as to the proposed agency captive insurer
agreement. This does not arise out of or relate to the sub-producer agreement.
Defendant contends that plaintiff cannot distinguish Florida cases that have held
fraud claims fall within the broad scope of the arbitration clause at issue here.
Defendant’s argument is unmeritorious. Florida courts have held that fraud claims are
related to broad arbitration clauses because the deceit allegedly induced the contract
formation or actually involved interpretation of the agreement. (See Jackson v.
Shakespeare Foundation, Inc. (Fla. 2013) 108 So.3d 587, 595 [party’s fraud claim within
scope of arbitration provision and inextricably intertwined with contract]; Beazer Homes
Corp. v. Bailey (Fla.Dist.Ct.App. 2006) 940 So.2d 453, 459 [fraud in inducement claim
was within broad arbitration clause as it could have been restated as contract breach
claim]; Passerrello v. Robert L. Lipton, Inc. (Fla.Dist.Ct.App. 1997) 690 So.2d 610, 611
[fraud in inducement claim as to entire contract was within broadly stated arbitration
clause].) Here, no such contractual nexus exists between the alleged fraud and the sub-
producer agreement. Under Florida law, plaintiff’s fraud claim does not “raise some
issue the resolution of which requires reference to or construction of some portion of” the
sub-producer agreement. (Seifert, supra, 750 So.2d at 638; see Vernett v. American-
Indian Enterprises, Inc. (Fla.Dist.Ct.App. 2014) 152 So.3d 856, 858.)
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3. Intentional Prospective Economic Advantage Interference Cause of Action
The fourth cause of action alleges defendant interfered with plaintiff’s economic
relationship with Safety National Insurance. As previously recounted, plaintiff was also
discussing entering into a captive insurer agreement with Safety National Insurance.
Because of Mr. Mariano’s alleged misrepresentations concerning a potential agreement,
plaintiff ceased its negotiations with Safety National Insurance. This interference with a
potential agreement with Safety National Insurance does not arise out of or relate to the
sub-producer agreement.
Defendant’s citation to Florida cases is unpersuasive. None of the Florida cases
support defendant’s assertion. (See Xerox Corp. v. Smartech Document Management,
Inc. (Fla.Dist.Ct.App. 2007) 979 So.2d 957, 959-960 [intentional interference with
advantageous business relationship claim fell within broadly stated clause]; Henderson v.
Idowu (Fla.Dist.Ct.App. 2002) 828 So.2d 451, 453 [intentional interference with
advantageous business relationship claim fell within broad arbitration clause because it
related to employment contract containing the agreement to arbitrate].) Here, plaintiff’s
intentional interference with prospective economic advantage cause of action has no
nexus to the sub-producer agreement. It does not require “reference to or construction
of” the sub-producer agreement. (Seifert, supra, 750 So.2d at 638; see Kolsky v. Jackson
(Fla.Dist.Ct.App 2010) 28 So.3d 965, 969.) The trial court did not err by finding this
cause of action not arbitrable.
C. Ninth Cause of Action
The ninth cause of action, violation of the Cartwright Act, raises different issues
than the foregoing analysis concerning the third and fourth causes of action. To begin
with, the ninth cause of action arises out of or relates to the sub-producer agreement.
Plaintiff alleges that defendant terminated the sub-producer agreement under threat from
Intercare Specially Risk Services and Shomer Insurance Agency Incorporated. This
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cause of action thus necessarily requires “reference to or construction of” the sub-
producer agreement as it relates to defendant. (Seifert, supra, 750 So.2d at p. 638; see
BKD Twenty-One Management Co., Inc. v. Delsordo (Fla.Dist.Ct.App. 2012) 127 So.3d
527, 531.) Because the ninth cause of action arises out of or relates to the sub-producer
agreement, under Florida contract law, it potentially is subject to the arbitration
agreement.
Under Florida law, the controlling revision concerning enforcement of arbitration
agreements is Florida Statutes section 682.02, subdivisions (1) and (2) which state: “(1)
An agreement contained in a record to submit to arbitration any existing or subsequent
controversy arising between the parties to the agreement is valid, enforceable, and
irrevocable except upon a ground that exists at law or in equity for the revocation of a
contract. [¶] (2) The court shall decide whether an agreement to arbitrate exists or a
controversy is subject to an agreement to arbitrate.” Any inconsistency between Florida
Statutes section 682.02 and the Federal Arbitration Act must be resolved in favor of the
federal law. (Rewards Hotel Management Company, LLC v. Elite General Contractors,
Inc. (Fla.Dist.Ct.App. 2003) 860 So.2d 1011, 1014; Trojan Horse, Inc. v. Lakeside
Games (Fla.Dist.Ct.App. 1988) 526 So.2d 194, 196.) Under Florida law, any challenge
to the enforceability of an arbitration agreement on public policy grounds is resolved by
the trial court, not the arbitrator. (Shotts v. OP Winter Haven, Inc. (Fla. 2011) 86 So.3d
456, 471 (Shotts); AMS Staff Leasing, Inc. v. Taylor (Fla.Dist.Ct.App. 2015) 158 So.3d
682, 685.)
The Florida Supreme Court has held that an agreement to arbitrate is
unenforceable if it violates public policy. (Gessa v. Manor Care of Florida, Inc. (Fla.
2011) 86 So.3d 484, 493 (Gessa); Shotts, supra, 86 So.3d at p. 465.) Under Florida law,
an arbitration agreement violates public policy if it defeats the purpose of a remedial
statute. (McKenzie Checked Advance of Florida, LLC v. Betts (Fla. 2013) 112 So.3d
1176, 1183; Lacey v. Healthcare & Retirement Corp. of America (Fla.Dist.Ct.App. 2005)
918 So.2d 333, 334.) Similarly, an arbitration agreement that diminishes or circumvents
remedies provided by a remedial statute violates public policy and is thus unenforceable.
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(Gessa, supra, 86 So.3d at p. 493; Shotts, supra, 86 So.3d at p. 474.) A remedial statute
is one that provides redress for a grievance or that confers or changes a remedy. (Capone
v. Philip Morris USA, Inc. (Fla. 2013) 116 So.3d 363, 376; Blankfield v. Richmond
Health Care, Inc. (Fla.Dist.Ct.App. 2005) 902 So.2d 296, 298.) A remedial statute
provides regulations which are conducive to the public good. (Capone v. Philip Morris
USA, Inc., supra, 116 So.3d at p. 376; Lacey v. Healthcare & Retirement Corp. of
America, supra, 918 So.2d at p. 334.)
We now turn to Florida’s antitrust laws to determine if their enforcement will
diminish any of plaintiff’s rights. Florida has its own antitrust statutes. (See MYD
Marine Distributor, Inc. v. Internat. Paint Limited (Fla.Dist.Ct.App. 2011) 76 So.3d 42,
46; Duck Tours Seafari, Inc. v. City of Key West (Fla.Dist.Ct.App. 2004) 875 So.2d 650,
652.) Florida Statutes section 542.18 states, “Every contract, combination, or conspiracy
in restraint of trade or commerce in this state is unlawful.” Florida Statutes section
542.19 states, “It is unlawful for any person to monopolize, attempt to monopolize, or
combine or conspire with any other person or persons to monopolize any part of trade or
commerce in this state.” An unlawful horizontal restraint can occur when competitors
conspire to induce an entity which deals with them to cease dealing with another market
competitor. (Parts Depot Company, L.P. v. Florida Auto Supply, Inc. (Fla.Dist.Ct.App.
1996) 669 So.2d 321, 324; St. Petersburg Yacht Charters, Inc. v. Morgan Yacht, Inc.
(Fla.Dist.Ct.App. 1984) 457 So.2d 1028, 1040.) Plaintiff argues that if Florida antitrust
law applies, it cannot recover for losses incurred outside that state. The only Florida anti-
trust decision expressly on point is Oce Printing Systems USA, Inc. v. Mailers Data
Services, Inc. (Fla.Dist.Ct.App. 2000) 760 So.2d 1037, 1041, which holds: “[I]t appears
from the plain language of the Antitrust Act that it is aimed at regulating trade or
commerce that occurs in Florida, regardless of where the contract, conspiracy, or
monopoly occurs. It is the effect on trade that must occur in Florida, not the actions
giving rise to the effect on trade.”].) Plaintiff’s alleged damages were sustained in
California. Plaintiff alleges it, Intercare Specialty Risk Services and Shomer Insurance
Agency, Incorporated are competitors in the same insurance field in the greater Los
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Angeles area. Plaintiff alleges the misconduct all occurred in Los Angeles County.
Thus, plaintiff would be unable to state a claim under Florida Statutes, sections 542.18
and 542.19. None of the allegations in the first amended complaint allege any effect on
trade or commerce in Florida. Under Florida antitrust law, plaintiff is unable to recover
any damages for any of the conduct occurring in Los Angeles County. Thus, under
Florida law, the agreement to arbitrate plaintiff’s antitrust claims violates that state’s
public policy. Plaintiff cannot recover for any damages sustained in Los Angeles County
arising from the alleged horizontal restraint on trade under Florida law. Thus, as to
plaintiff’s horizontal restraint claims, the arbitration agreement is unenforceable. We
need not address the parties’ alternative arguments concerning a violation of California’s
fundamental public policies.
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IV. DISPOSITION
The order denying in part the amended motion to compel arbitration is affirmed.
Plaintiff, HCF Insurance Agency, may recover its appeal costs from defendant, Patriot
Underwriters, Incorporated.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER, P. J.
We concur:
KRIEGLER, J.
GOODMAN, J.*
*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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