California Court Refuses to Enforce Arbitration Clause Contained in Rental Agreement

Recently, an appellate court issued a written opinion in a California car accident case dealing with the issue of whether an arbitration agreement signed by the plaintiff’s employer was enforceable against the plaintiff. Ultimately, the court concluded that since the plaintiff was not a signatory to the agreement, and the defendant could show no other compelling reason to enforce the agreement, the arbitration agreement was not enforceable against the plaintiff.

Legal News GavelThe Facts of the Case

The plaintiff was delivering chairs for his employer in a rented truck. The defendant was the company that rented the truck to the plaintiff’s employer. Prior to renting the truck, the plaintiff’s employer signed an agreement to arbitrate any claims that arose through the use of the rented truck. The plaintiff did not sign the agreement.

As the plaintiff was delivering the chairs, a tire on the truck blew out. The truck spun out of control, and the plaintiff was injured. The plaintiff filed a personal injury lawsuit against the rental company, claiming that the company was negligent in maintaining the truck. In response, the rental company claimed that the plaintiff’s case was not properly before the court because it should have been submitted to an arbitration panel pursuant to the agreement between the rental company and the plaintiff’s employer.

The trial court denied the defendant rental company’s motion, and the rental company filed an appeal.

On Appeal, the Case Is Affirmed

The appellate court began its analysis, by noting that the type of accident at issue is within the scope of the arbitration agreement. Thus, if the plaintiff was bound by the arbitration agreement, he should have submitted the claim to arbitration.

The court, however, determined that the plaintiff was not covered by the arbitration agreement. The court explained that the agreement was between the rental company and the plaintiff’s employer. Thus, the plaintiff could only be bound by the agreement if there was some other reason to hold that was the case. The court discussed several possible theories under which a non-signing party can be bound by an arbitration agreement – third-party beneficiary, agency, and estoppel – but ultimately determined that none of the theories applied to this specific situation. As a result, the plaintiff was not required to submit the claim to arbitration, and his case was permitted to proceed toward trial.

Have You Been Injured in a California Car Accident?

If you or a loved one has recently been injured in a car accident, you may be entitled to monetary compensation. The dedicated California personal injury attorneys at Sharifi Firm have extensive experience representing victims in a wide range of personal injury cases, including car accident cases. Arbitration contracts can greatly limit your rights as an accident victim, and we can help you determine if the contract you signed is legally enforceable. Call 866-422-7222 to schedule a free consultation with an attorney today.

More Blog Posts:

The Types of Available Damages in California Injury Claims, Southern California Injury Lawyer Blog, March 6, 2018

Establishing Liability in California Premises Liability Claims, Southern California Injury Lawyer Blog, March 21, 2018

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