Hotels Nevada, LLC v. Bridge Banc, LLC

I. INTRODUCTION

Defendant, Bridge Banc, LLC, appeals from an order denying its petition to compel arbitration of a dispute with plaintiff, Hotels Nevada, LLC. Defendant filed its petition to compel arbitration after a pending arbitration was stayed pursuant to the decision of the arbitrator and plaintiff filed the present court action. The trial court denied the petition on the ground it should first determine the legality of the contract as a whole. We hold that no violation of the United States Arbitration Act ( 9 U.S.C. § 1 et seq.) results when an arbitrator, under an arbitration clause requiring the application of California law, allows the trial court to decide the issue of illegality. Accordingly, we affirm the order denying defendant’s petition to compel arbitration.

H. BACKGROUND

Plaintiff and defendant entered into a loan agreement. The contract was executed in May 2003. It contains an arbitration clause. The arbitration clause provides as follows: “Borrower and Lender agree that any controversy, claim or dispute arising out of or relating to this Loan Commitment or the breach, termination, enforcement, interpretation or validity thereof, including the…