Banc of California, NA v. Superior CourtAnnotate this Case
After Holdings defaulted on a loan to purchase a commercial aircraft, Banc filed suit alleging that Holdings breached the terms of the loan documents in various respects. Banc also alleged it had a right to sell the aircraft in the possession of Jet Edge as collateral for the loan and to recover money owed by Jet Edge to Holdings based on a subordination agreement. Furthermore, Banc asserted claims for breach of the aircraft usage agreement and conversion. The trial court granted Holdings and Jet Edge's petition to compel arbitration, finding that the American Arbitration Association (AAA) rules provided for delegation of the determination of whether the parties' dispute arose out of the arbitration clause and thus the arbitrator should decide whether Banc's claims were arbitrable.
The Court of Appeal granted Banc's petition for writ of mandate compelling the trial court to vacate its order granting Holdings's petition to compel arbitration. The court agreed with Banc that the trial court erred in relying on the Supreme Court's decision in Henry Schein, Inc. v. Archer and White Sales, Inc. (2019) ___ U.S. ___ [139 S.Ct. 524, 529]. The court explained that the court, in Schein, considered who should decide whether the parties' dispute arising from a specific contract with an arbitration clause was arbitrable. In this case, however, the question on Holdings's petition to compel arbitration was whether the parties agreed to arbitrate their dispute over the loan documents, which did not have arbitration clauses, a question the court must decide in the first instance.