To continue our blog on Diaz v. Bukey (195 Cal.App.4th 315 (2011)), Marie L. Bukey (trustee, defendant and appellant) appealed the trial court's decision denying the petition to compel arbitration. Bukey asserted that the trial court erred because the Diaz Family Trust's (Trust) has an arbitration provision which is binding upon Paulette Diaz (plaintiff and respondent) as a beneficiary of the Trust under a third party beneficiary or equitable estoppel theory. The California Court of Appeal disagreed stating that "the applicability of the California Arbitration Act requires the existence of a contract. Subject to limited exceptions, only parties to an arbitration contract may enforce it or be required to arbitrate." The Court of Appeal further stated that the Trust does not meet the statutory definition of a contract because there is no evidence that the beneficiaries gave either their consent or consideration to achieve the status of a beneficiary. Accordingly, the Court of Appeal affirmed the probate court's ruling.
It is to be noted however that the Supreme Court, in a related issue in Pinnacle Museum Tower Association v. Pinnacle Market Development, enforced an arbitration provision against members of a condominium association. The Supreme Court then directed the Court of Appeal to vacate its decision on Diaz v. Bukey and to reconsider the cause in light of the Supreme Court's Pinnacle decision. In December 2012, the parties to the case of Diaz v. Bukey requested dismissal of the case in the California Court of Appeal. The case was dismissed without a clear resolution of the issue.
*This blog entry was not written by an Attorney and should not be construed as professional legal advice.