II. APPEAL NO. A062642

   A. California Law Governs the Issues Raised in This Appeal.

    As a threshold matter, the parties disagree whether our decision on the
petition to compel arbitration is governed by state or federal law.

     Respondents note that the arbitration provision incorporates the service
procedures for California civil actions, the California Code of Civil
Procedure sections pertaining to arbitration, and MICRA.
     Indeed, appellants have specifically relied on sections 1281.2, 1281.4,
1290, and 1292.8, Health and Safety Code sections 1373, subdivision (i), and
1363, subdivision (a)(10), as well as the California Supreme Court decision
in
          Madden v. Kaiser Foundation Hospitals (1976)
          17 Cal.3d 699 [131 Cal.Rptr. 882, 552 P.2d 1178],
as the bases of its petition and its appeal from the denial thereof.
     Nevertheless, citing
          Southland v. Keating (1984)
          465 U.S. 1 [79 L.Ed.2d 1, 104 S.Ct. 852],
Kaiser contends that Federal Arbitration Act preempts application of
California law and that the arbitrability of this controversy is, therefore,
governed by federal law.

     The United States Supreme Court has recently analyzed the rule of
preemption by the Federal Arbitration Act (FAA) of conflicting state statutes
and policies. In
          Allied-Bruce Terminix Cos. v. Dobson (1995)
          513 U.S.  [130 L.Ed.2d 753, 115 S.Ct. 834],
the court held that section 2 of the FAA (9 U.S.C. @ 2) n8 is to be read
broadly as applying--in both state and federal courts--to all written
arbitration provisions in contracts evidencing transactions which, in fact,
involve interstate commerce, whether or not the parties contemplated an
interstate commerce connection.
  (Allied-Bruce Terminix Cos. v. Dobson, supra,
  513 U.S. at p.  [130 L.Ed.2d at pp. 763-769, 115 S.Ct. at pp.839-843].) n9
     Nevertheless, the court acknowledged that state law still plays an
     [sic - rest of sentence?]
     Terminix Companies and guaranteed by Terminix International "involved
interstate commerce," because of the multistate nature of the defendant
corporations and the fact that the termite-treating and house-repairing
materials used by Allied-Bruce came from outside Alabama, where the home was
located.
     The Alabama statute that invalidated the arbitration provision contained
in the termite protection plan was, thus, preempted.
(513 U.S. at p.  [130 L.Ed.2d at pp.763-769, 115 S.Ct. at pp. 839-843].) 
     In addition, the court denied a request by the respondents, with the
support of 20 attorneys general to overrule 
          Southland v. Keating, supra,
          465 U.S. 1.
(Allied-Bruce Terminix Cos. v. Dobson, supra, 513
U.S. at p.  [130 L.Ed.2d at pp. 762-763, 115 S.Ct. at pp. 838-839].) 
 
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     Even where the underlying contract involves interstate commerce,
however, parties to an arbitration agreement remain free to include a
choice-of-law provision under which state law will govern the arbitration of
claims to which the arbitration provision applies
          (Volt Info. Sciences v. Leland Stanford Jr. U.,
          supra, 489 U.S. at p. 479 [103 L.Ed.2d at p. 500] 
          [federal law does not preempt imposition of a stay of arbitration
          pursuant to section 1281.2, subdivision (c), where parties'
          contract provides that their arbitration agreement would be
          governed by California law]),
at least insofar as the state law does not purport to limit the
authority of the arbitrator
          (see Mastrobuono v. Shearson Lehman Hutton, Inc.
          (1995) 514 U.S. , [131 L.Ed.2d 76, 87-88, 115 S.Ct. 1212, 1219]).
     The parties in this case agreed that the California Code of Civil
Procedure would govern the arbitration of claims arising from the Service
Agreement with respect to any matter not expressly provided for therein.
     This choice-of-law provision does not offend any federal policy and is
enforceable.
(Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at
pp. 477-479 [103 L.Ed.2d at pp. 498-501]; but cf. Mastrobuono v. Shearson Lehman
Hutton, Inc., supra, 514 U.S. at p.  [131 L.Ed.2d at pp. 87-88, 115 S.Ct. at p.
1219].) n10 
     Thus, pursuant to the parties' agreement, we conclude that California
law governs the issues presented in this appeal.
 
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     n10 The United States Supreme Court has explained why the FAA does not
prevent enforcement of agreements to arbitrate under different rules than
those set forth in the federal statute: "Indeed, such a result would be quite
inimical to the FAA's primary purpose of ensuring that private agreements to
arbitrate are enforced according to their terms.
     Arbitration under the [FAA] 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."
(Volt Info. Sciences v. Leland Stanford Jr. U.,
supra, 489 U.S. at p. 479 [103 L.Ed.2d at p. 500].) 
 
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