On 08/03/2017 MESHAK MOORE filed a Personal Injury - Other Personal Injury lawsuit against BAMBOO RETREATS LLC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are MARC D. GROSS and MARK V. MOONEY. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
MARC D. GROSS
MARK V. MOONEY
DOES 1 TO 20
BAMBOO RETREATS LLC
NORRIS ROBERT C.
VIRAG BRIAN J. ESQ.
VIRAG BRIAN JEFFREY ESQ.
OSHER JEREMY J. ESQ.
5/31/2019: Amendment to Complaint (Fictitious/Incorrect Name)
8/9/2019: Minute Order
7/23/2018: DECLARATION OF AARON M. GLADSTEIN FOR STATUS CONFERENCE RE: STATUS OF ARBITRATION
7/25/2018: Minute Order
4/15/2019: Minute Order
1/30/2018: NOTICE OF RULING RE: DEFENDANT'S NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION, AND DISMISS COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS
1/19/2018: DEFENDANT BAMBOO RETREATS LLC'S REPLY TO OPPOSITION TO MOTION TO COMPEL ARBITRATION AND DISMISS ACTION
1/19/2018: DECLARATION OF MARK BERKOWITZ IN SUPPORT OF DEFENDANT BAMBOO RETREATS LLC'S REPLY TO OPPOSITION TO MOTION TO COMPEL ARBITRATION AND DISMISS ACTION
1/25/2018: CASE MANAGEMENT STATEMENT
10/31/2017: EVIDENTIARY OBJECTIONS TO DECLARATION OF BRIAN VIRAG IN SUPPORT OF OPPOSITION TO MOTION TO COMPEL ARBITRATION
10/31/2017: DEFENDANT BAMBOO RETREATS LLC'S REPLY TO OPPOSITION TO MOTION TO COMPEL ARBITRATION AND DISMISS ACTION
10/31/2017: Minute Order
10/31/2017: ORDER TRANSFERRING PERSONAL INJURY (PI) CASE TO INDEPENDENT CALENDAR (IC) COURT
8/3/2017: COMPLAINT FOR DAMAGES: 1. BREACH OF WARRANTY OF HABITABILITY (VIOLATION OF CIVIL CODES SECTIONA 1941 ANS 1941.1); ETC
Hearingat 08:30 AM in Department 68 at 111 North Hill Street, Los Angeles, CA 90012; Status ConferenceRead MoreRead Less
Hearingat 08:30 AM in Department 68 at 111 North Hill Street, Los Angeles, CA 90012; Trial Setting ConferenceRead MoreRead Less
Hearingat 08:30 AM in Department 68 at 111 North Hill Street, Los Angeles, CA 90012; Case Management ConferenceRead MoreRead Less
Docketat 08:30 AM in Department 68, Mark V. Mooney, Presiding; Hearing on Ex Parte Application ( to Advise the Court of the Arbitrator's Order Remanding the Matter to Trial Court) - HeldRead MoreRead Less
DocketMinute Order ( (Hearing on Ex Parte Application to Advise the Court of the A...)); Filed by ClerkRead MoreRead Less
DocketProof of Service by Substituted Service; Filed by Meshak Moore (Plaintiff)Read MoreRead Less
DocketOpposition (to Plaintiff's Ex Parte Application 1) to Advise the Court of the Arbitrator's Order Remanding the Matter Back to the Trial Court, 2) Request to Lift the Stay Indefinitely, 3) Request to Set a Trial Setting Conference); Filed by BAMBOO RETREATS LLC (Defendant)Read MoreRead Less
DocketEx Parte Application (to Advise the Court of the Arbitrator's Order Remanding the Matter to Trial Court); Filed by Meshak Moore (Plaintiff)Read MoreRead Less
DocketNotice (of Ex-Parte Application to Advise the Court of the Arbitrator's order Remanding the Matter to Trial Court); Filed by Meshak Moore (Plaintiff)Read MoreRead Less
DocketProof of Service by Substituted Service; Filed by Meshak Moore (Plaintiff)Read MoreRead Less
DocketEVIDENTIARY OBJECTIONS TO DECLARATION OF BRIAN VIRAG IN SUPPORT OF OPPOSITION TO MOTION TO COMPEL ARBITRATIONRead MoreRead Less
DocketMinute order entered: 2017-10-31 00:00:00; Filed by ClerkRead MoreRead Less
DocketOpposition Document; Filed by Meshak Moore (Plaintiff)Read MoreRead Less
DocketOpposition Document; Filed by Plaintiff/PetitionerRead MoreRead Less
DocketOPPOSITION TO DEFENDANT BAMBOO RETREATS LLC'S MOTION TO COMPEL ARBITRATION AND PROCEED TO JURY TRIAL; ETC.Read MoreRead Less
DocketDEFENDANT BAMBOO RETREATS LLC'S NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND DISMISS ACTION; DECLARATION OF HENRY HUANG IN SUPPORT THEREOFRead MoreRead Less
DocketMotion to Compel; Filed by BAMBOO RETREATS LLC (Defendant)Read MoreRead Less
DocketCOMPLAINT FOR DAMAGES: 1. BREACH OF WARRANTY OF HABITABILITY (VIOLATION OF CIVIL CODES SECTIONA 1941 ANS 1941.1); ETCRead MoreRead Less
DocketSUMMONSRead MoreRead Less
DocketComplaint; Filed by Meshak Moore (Plaintiff)Read MoreRead Less
Case Number: BC671043 Hearing Date: March 10, 2020 Dept: 76
Motion To Compel Arbitration and Dismiss Action
Doe Defendants Henry Huang and Robert Norris move to compel arbitration and to dismiss the action.
Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. Blake v. Ecker (2001) 93 Cal.App.4th 728, 741 (overruled on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094). A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356-57.
Defendants argue that the subject arbitration agreement is governed by the Federal Arbitration Act because Plaintiff is a resident of the United Kingdom. See Declaration of Henry Huang, ¶¶ 4, 9, 10; Exhs. 2, 6.
The [Supreme] court set forth three categories of activity that Congress may regulate under the commerce power: (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce and persons or things in interstate commerce, and (3) those activities having a substantial relation to interstate commerce. (Id. at pp. 558–559 [131 L. Ed. 2d at p. 637].) The court concluded that the Act could be sustained only under the third category, as one that substantially affected interstate commerce. (514 U.S. at p. 559 [131 L. Ed. 2d at p. 638].) The court determined that the Act was a criminal statute that had nothing to do with commerce or any economic enterprise, thus it did not substantially affect interstate commerce. (514 U.S. at p. 561 [131 L.ed. 2d at pp. 638–639].)
. . .
The Supreme Court held that the Alabama court had been “misguided” in looking for evidence that the transaction was actually in interstate commerce. (Alafabco, supra, 539 U.S. at p. 56 [156 L. Ed. 2d at p. 51].) It held that the commerce clause power could be exercised to preempt contrary state law “ ‘in individual cases without showing any specific effect upon interstate commerce’ if in the aggregate the economic activity in question would represent ‘a general practice … subject to federal control.’ [Citations.] [*1099] Only that general practice need bear on interstate commerce in a substantial way.” (Id. at pp. 56–57 [156 L. Ed. 2d at pp. 51–52].) . . .
. . . [*1101]
. . .
Plaintiff argues defendants' evidence is inadequate because none of the materials from out of state were at issue in this case, with the exception of the carpeting. We are aware of no cases indicating the FAA preempts contrary state law only if the particular dispute is over interstate goods, and plaintiff admitted at oral argument that he was aware of no such authority. On the contrary, the language of section 2 of the FAA indicates the pertinent question is whether the contract evidences a transaction involving interstate commerce, not whether the dispute arises from the particular part of the transaction involving interstate commerce. Moreover, plaintiff's interpretation is directly contrary to the holding in Alafabco, in which the Supreme Court overturned an Alabama decision finding no effect on interstate commerce in a debt restructuring agreement where none of the funds comprising the debt originated out of state. (Alafabco, supra, 539 U.S. at pp. 52, 55 [156 L. Ed. 2d at p. 51].)
Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1098-99, 1101 (bold emphasis added).
Here, renting property to foreign nationals evidence a transaction involving interstate commerce. Accordingly, the Federal Arbitration Act applies.
The subject lease, attached as Exh. 1 to the Complaint, was signed by Plaintiff Chase Fontaine as one of the guests, but does not state the name of the lessor, other than indicating on the letter head “bamboo.” Because moving Defendants Henry Huang and Robert Norris were added as Doe Defendants, the operative Complaint does not specify the basis for holding them liable. However, it can be inferred that the basis is their relationship to Bamboo Retreats LLC. In this regard, Plaintiff’s claims arise out of the lease agreement, and his claims against Doe Defendants Huang and Norris are based this lease relationship. Accordingly, these non-signatory Doe Defendants may assert the arbitration clause contained in the agreement which forms the basis of Plaintiff’s claims. Non-signatory agents of a signatory may enforce an arbitration clause against a signatory plaintiff:
Similarly, California law permits a nonsignatory defendant to compel a signatory plaintiff to arbitrate where there is a connection between the claims alleged against the nonsignatory and its agency relationship with a signatory. [*864] (Citations omitted.) A connection between the causes of action alleged against the nonsignatory and that party's agency relationship to a signatory makes it equitable to allow the nonsignatory to enforce the arbitration provision against a signatory plaintiff. (See County of Contra Costa v. Kaiser Foundation Health Plan, Inc., supra, 47 Cal.App.4th at p. 243; Matthau v. Superior Court, supra, 151 Cal.App.4th at p. 599.)
Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 863-64.
The arbitration clause states in its entirety:
I agree that any dispute between parties arising from or relating to a claim for personal injury which is directly or indirectly related to, or arising from a condition of the leased premises or common areas, or any event there on, shall be resolved solely by arbitration conducted by the American Arbitration Association.
(Bold emphasis and underlining added.)
The arbitrator “remanded” the case to this court to determine the parties to the arbitration agreement and which claims are for other than personal injury, subject to some part, if not all, of the claims being sent back to arbitration. See July 22, 2019 Order, attached as Exh. F to Opposition.
The Court addresses each cause of action:
u First Cause of Action for Breach of Implied Warranty of Habitability—Civil Code §§ 1941 & 1941: This claim involves economic damages consisting of rents due and paid (Complaint, ¶ 66), personal property damages (¶ 69) and costs to repair/clean and for temporary alternative accommodations (¶ 69)—none of which would be within the scope of the arbitration clause—as well as physical and mental distress (¶¶ 67, 70), which are within the scope of the arbitration clause.
u Second Cause of Action—Habitability—Violation of Health and Safety Code § 17920.3: This claim “re-alleges the damage allegations above, and incorporate[s] them by reference as though fully set forth herein. Complaint, ¶ 80. Accordingly, this claim also involves economic damages consisting of rents due and paid, personal property damages, and costs to repair/clean and for temporary alternative accommodations—none of which would be within the scope of the arbitration clause—as well as physical and mental distress, which are within the scope of the arbitration clause.
u Third Cause of Action—Habitability—Violation of Civil Code § 1942.4: This claim seeks damages in an amount equal to rents due and paid by Plaintiff (Complaint, ¶ 85) and statutory special damages (¶ 86). This is not a claim for personal injury damage.
u Fourth Cause of Action–Negligent—Premises Liability—Negligence Per Se: This cause of action seeks to recover costs to investigate the defects (Complaint, ¶ 97), property damage (¶ 95) and personal injuries (¶ 95).
u Fifth Cause of Action—Nuisance: This cause of action seeks to recover damages for personal and emotional injury (¶ 109) and presumable the other “damages alleged” above. ¶ 108.
u Sixth Cause of Action—Intentional Infliction of Emotional Distress: This use of action seeks damages for emotional distress (¶¶ 117, 121) and costs of relocation (¶ 118).
u Seventh Cause of Action—Breach of Contract: This use of action seeks damages for loss of enjoyment of the full premises (restitution of all rents paid). ¶ 129. This is not a claim for personal injury.
u Eighth Cause of Action—Breach of Covenant of Quiet Enjoyment: This cause of action seeks damages in an amount equal to the value of the tenancy (¶ 135), as well as for loss of property (¶ 136) and emotional distress (¶ 136).
The Court also finds that, with respect to the foregoing claims, the claims for recovery of rent paid, personal property damage and costs such as cleaning/investigation/remediation/temporary accommodations are not “relating to a claim for personal injury” because they do not relate to physical or emotional injury to a person. As such, these claims are ordered severed from the arbitrable personal injury claims. Only the personal injury claim portions of the foregoing causes of action will be ordered to arbitration, unless Plaintiff demonstrates that the arbitration agreement should not be enforced.
As reflected both in statutory provisions and in case law, which we discuss below, trial courts have the power to sever arbitrable claims from [*1099] inarbitrable ones and to stay either the arbitration or the judicial proceedings pending the outcome of the other. (Code Civ. Proc., § 1281.2; RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1521 [81 Cal. Rptr. 3d 892].) . . . .
Doan v. State Farm General Ins. Co. (2011) 195 Cal.App.4th 1082, 1098-1099.
u In opposition, Plaintiff makes the following arguments:
Re: Failure To Authenticate Arbitration Agreement.
Plaintiff argues that Defendant fails to present sufficient evidence that Plaintiff entered into this agreement. However, unless Plaintiff has not presented a denial under oath that his signature appears on the Lease Agreement attached as Exhibit 1 to the Complaint he filed on August 3, 2017. Indeed, by attaching that document to his Complaint as the basis for his claims, he is deemed to have admitted that he signed the agreement containing the arbitration clause.
Re: Moving Defendants Huang and Norris Are Not Parties To the Arbitration Agreement and Are Not Signatories.
This argument is not persuasive for the reasons discussed above.
Re: Defendants Should Be Estopped From Claiming There Is An Arbitration Agreement Because In The Prior Arbitration Defendant Bamboo Argued That Only The Names Which Appear On The Document Are Parties To The Arbitration Agreement.
There is no reason to apply estoppel to Doe Defendants Huang and Norris when they were not formally named as parties to the arbitration. This argument is not persuasive.
Re: The Alleged Arbitration Clause Only Applies To Personal Injury Claims.
This argument is persuasive in part and is addressed above.
Re: Plaintiff brings a PAGA Claim Under the Attorney General Doctrine.
Case law prohibiting arbitration of PAGA claims refer to claims for civil penalties pursuant to the “Labor Code Private Attorneys General Act” codified at Labor Code § 2698 et seq. arising out of wage and hour violations. See, e.g., Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 620-25. Plaintiff does not cite case law that the PAGA statute applies to the fact pled in the Complaint. This argument is not persuasive.
This argument is not persuasive.
Re: Bamboo Retreats LLC Never Initiated Arbitration Following This Court’s Order Compelling Arbitration.
There is no persuasive reason to preclude Doe Defendants Huang and Norris from asserting a right to compel arbitration when they were not named as parties to the arbitration agreement.
Re: Arbitrator Stamm Granted Plaintiff’s Motion To Remand In Its Entirety.
As discussed above, the arbitration wanted the Court to determine which claims were for personal injury, and contemplated that the case would be sent back to arbitration in whole or in part.
This argument is not persuasive.
Re: Evidence Will Be Lost Due to Defendants’ Delay.
This is not a recognized basis for refusing to enforce an arbitration agreement.
Re: Compelling Arbitration Would Violate Civil Code § 1953(a)(4).
The Court notes that because claims relating to habitability are not within the scope of the arbitration agreement, it does not violation Civil Code §§ 1953 and 1942.1.
(a) Any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive any of the following rights shall be void as contrary to public policy:
(1) His rights or remedies under Section 1950.5 or 1954.
(2) His right to assert a cause of action against the lessor which may arise in the future.
(3) His right to a notice or hearing required by law.
(4) His procedural rights in litigation in any action involving his rights and obligations as a tenant.
(5) His right to have the landlord exercise a duty of care to prevent personal injury or personal property damage where that duty is imposed by law.
(b) Any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive a statutory right, where the modification or waiver is not void under subdivision (a) or under Section 1942.1, 1942.5, or 1954, shall be void as contrary to public policy unless the lease or rental agreement is presented to the lessee before he takes actual possession of the premises. This subdivision does not apply to any provisions modifying or waiving a statutory right in agreements renewing leases or rental agreements where the same provision was also contained in the lease or rental agreement which is being renewed.
(c) This section shall apply only to leases and rental agreements executed on or after January 1, 1976.
Civ. Code, § 1953 (bold emphasis and underlining added).
Any agreement by a lessee of a dwelling waiving or modifying his rights under Section 1941 or 1942 shall be void as contrary to public policy with respect to any condition which renders the premises untenantable, except that the lessor and the lessee may agree that the lessee shall undertake to improve, repair or maintain all or stipulated portions of the dwelling as part of the consideration for rental.
The lessor and lessee may, if an agreement is in writing, set forth the provisions of Sections 1941 to 1942.1, inclusive, and provide that any controversy relating to a condition of the premises claimed to make them untenantable may by application of either party be submitted to arbitration, pursuant to the provisions of Title 9 (commencing with Section 1280), Part 3 of the Code of Civil Procedure, and that the costs of such arbitration shall be apportioned by the arbitrator between the parties.
Civil Code § 1942.1 (bold emphasis and underlining added).
To the extent that §§ 1942.1 and 1953 might apply to the subject arbitration agreement relating to personal injury claims, such statutes would be preempted under the Federal Arbitration Act as applying to arbitration specifically, rather than “upon such grounds as exist at law or in equity for the revocation of any contract”:
[T]he [United States Supreme Court] has stated that section 2 of the FAA requires courts to [*962] “place arbitration agreements on an equal footing with other contracts [citation] and [to] enforce them according to their terms.” (Concepcion, supra, 563 U.S. at p. 339.) However, the high court has qualified this statement by reference to “[t]he final phrase of § 2,” which is known as the FAA's “saving clause” and which “permits arbitration agreements to be declared unenforceable ‘upon such grounds as exist at law or in equity for the revocation of any contract.’” (Concepcion, at p. 339.) This clause, the high court has stated, “indicates” that Congress's “purpose” in enacting the FAA “was to make arbitration agreements as enforceable as other contracts, but not more so.” (Prima Paint v. Flood & Conklin (1967) 388 U.S. 395, 404, fn. 12 [18 L. Ed. 2d 1270, 87 S. Ct. 1801], italics added (Prima Paint).) Thus, arbitration agreements, “[l]ike other contracts,” “may be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability.’” (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68 [177 L. Ed. 2d 403, 130 S. Ct. 2772].) They may not, however, be invalidated “by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” (Concepcion, at p. 339.)
McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 961-962.
Re: The Arbitration Clause Is Unconscionable.
The doctrine of unconscionability was summarized in Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 645-48 as follows:
“ ‘To briefly recapitulate the principles of unconscionability, the doctrine has “ ‘both a “procedural” and a “substantive” element,’ the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly harsh” ’ … or ‘ “one-sided” ’ results.” [Citation.] The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, “ ‘which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.’ ” … [¶] Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided.’ [Citation.]” (Citation omitted.) “Under this approach, both the procedural and substantive elements must be met before a contract or term will be deemed unconscionable. Both, however, need not be present to the same degree. A sliding scale is applied so that ‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ (Citations omitted.)
(Bold emphasis added.)
“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] Surprise is defined as ‘ “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” ’ [Citation.]” (Citation omitted.) Plaintiffs claim the Agreement is procedurally unconscionable because it is an adhesion contract. An adhesion contract is “a standardized contract … imposed upon the subscribing party without an opportunity to negotiate the terms.” (Citation omitted.) “The term signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. [Citation.]” (Citation omitted.) The California Supreme Court has consistently stated that “ ‘[t]he procedural element of an unconscionable contract generally takes the form of a contract of adhesion … .’ ” (Citations omitted.) “Whether the challenged provision is within a contract of adhesion pertains to the oppression aspect of procedural unconscionability. A contract of adhesion is ‘ “ ‘ “imposed and drafted by the party of superior bargaining strength” ’ ” ’ and ‘ “ ‘ “relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” ’ ” ’ (Citations omitted.) “[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.” (Citation omitted.)
Walnut Producers of California, supra, 187 Cal.App.4th at 645-46 (bold emphasis added).
Plaintiff argues, without any evidence such as a declaration by Plaintiff himself, that the terms of the Agreement were nonnegotiable, Plaintiff lacked any bargaining power and the rental agreement was a contract of adhesion. The Court does not find this to be persuasive, as this was a short term (2 month), high rent ($4,200 a month) lease. There is no indication that Plaintiff was in dire straits such that he was forced to stay at this particular property or risk being without lodging. Surely, there were other options available to someone of such financial means.
Plaintiff also argues that the arbitration clause was buried in the document and not brought to Plaintiff’s attention. There is minimal merit to this argument.
Plaintiff also argues that the agreement does not mention additional costs associated with arbitration, their amount, or who would bear the costs. However, the clause expressly refers to the American Arbitration Association, and the rules applicable thereto would set forth this information.
[U]nder [CCP] section 1281.6, the absence of a specified forum or set of rules in an arbitration clause does not invalidate the agreement to arbitrate. Rather, in the absence of such provisions, “the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator …”—including the forum and rules that will govern the arbitration—or, if the parties cannot agree, “the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.” (§ 1281.6.)
HM DG, Inc. v. Amini (2013) 219 Cal.App.4th 1100, 1110.
The Court finds a minimal degree of procedural unconscionability.
Given that the contract of adhesion only presents a minimal degree of procedural unconscionability, Plaintiff must demonstrate a great degree of substantive unconscionability under the sliding scale approach to render the agreement unenforceable.
“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to “shock the conscience,” or that impose harsh or oppressive terms.’ [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with ‘unreasonable.’ Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. ‘With a concept as nebulous as “unconscionability” it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.’ [Citations.]” (Citation omitted
Walnut Producers of California, supra, 187 Cal.App.4th at 647-48.
Plaintiff does not address substantive unconscionability. As such, there is no reason to refuse to enforce the agreement under the sliding scale approach to unconscionability.
This argument is not persuasive.
Re: The Arbitration Cause Is Invalid, Because Defendant Breached The Contract Making It Null and Void.
Plaintiff cites no authority for the remarkable proposition that whenever a breach of contract occurs, the entire contract is null and void.
Re: Defendants Waived The Right To Compel Arbitration.
Plaintiff argues that the nine-month delay since the Doe Defendants were brought into this action, coupled with the motion to quash service, motion to say and motion to compel arbitration without filing a demand for arbitration, should be found to be a waiver of the right to arbitrate.
There is an insufficient showing to justify a finding of waiver, which requires that the party arguing that a waiver occurred (Plaintiff) shows that Defendants have previously taken steps inconsistent with an intent to invoke arbitration, has unreasonably delayed in seeking arbitration or has acted in bad faith or with willful misconduct. Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443,1449. None of the indicia of these factors, such as the litigation machinery having been substantially invoked, with the parties well into preparation of the lawsuit, an impending trial date, taking advantage of discovery procedures not available in arbitration, misleading or prejudicial delay, or engaging in considerable law and motion which substantially undermines the benefits and cost savings provided by arbitration. Id. at 1449-52. The Court finds that Defendants have not waived its right to compel arbitration.
“Waiver does not occur by mere participation in litigation … .” (Citation omitted) “ ‘[A]s an abstract exercise in logic it may appear that it is inconsistent for a party to participate in a lawsuit for breach of a contract, and later to ask the court to stay that litigation pending arbitration. Yet the law is clear that such participation, standing alone, does not constitute a waiver [citations], for there is an overriding federal policy favoring arbitration … . [M]ere delay in seeking a stay of the proceedings without some resultant prejudice to a party [citation], cannot carry the day.’ ” (Id. at pp. 605–606.) [*1451] “California's arbitration statutes reflect ‘ “a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.” ’ ” (Citation omitted.) Accordingly, “[p]rejudice typically is found only where the petitioning party's conduct has substantially undermined this important public policy or substantially impaired the other side's ability to take advantage of the benefits and efficiencies of arbitration. [¶] For example, courts have found prejudice where the petitioning party used the judicial discovery processes to gain information about the other side's case that could not have been gained in arbitration [citations]; where a party unduly delayed and waited until the eve of trial to seek arbitration [citation]; or where the lengthy nature of the delays associated with the petitioning party's attempts to litigate resulted in lost evidence … .” (Ibid.) Here, the trial court's findings well capture our own view of the evidence. We quote the court's findings in full: “[I]t is apparent to the court that defendant's conduct has been inconsistent with an intent to arbitrate. Related to this is the 6 months of delay from the filing of Plaintiff's complaint to the instant petition to compel. In that time period defendant filed two demurrers, accepted and contested discovery request[s], engaged in efforts to schedule discovery, omitted to mark or assert arbitration in its case management statement. “The effect of these inconsistent actions by defendant has resulted in more than merely participating in litigation or expending legal cost[s] but in prejudice to the plaintiff by substantially undermining plaintiff's ability at this late date to take advantage of the benefits and cost savings provided by arbitration. It is clear to the court that defendants intended by their conduct to proceed with their court action. It was only until defendant's second demurrer was overruled that it now request[s] this court that it litigate now in another forum to which all appearances it hopes that it will limit its litigation risk and expense. It will also increase plaintiff's expenses and burdens, having already required plaintiff to expend its efforts and resources in vigorously litigating this case in court. To allow defendant at this time with a trial set for May when it has known of its right to arbitrate this matter since June 2008] yet [*1452] remained silent until it lost its motion to now go to arbitration would in this court's view cause an unnecessary waste of time and effort to all concerned but more importantly is unfair and prejudicial to plaintiff. Simply put as one court stated ‘[t]he courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration.’ ”
Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1449-52.
Actions taken on behalf of Bamboo Retreats LLC will not be imputed as indicia of waiver on behalf of Doe Defendants Huang and Norris.
This argument is not persuasive.
Re: Arbitration Should Be Denied To Avoid Inconsistent Rulings As to Bamboo Retreats, LLC and Doe Defendants Huang and Norris—CCP § 1281.2(c).
On September 30, 2019, Judge Mooney denied Defendant Bamboo Retreats LLC’s motion to return claims to arbitration, finding that Defendant waived its right to pursue arbitration based upon refusal to cause the matter to be arbitrated expeditiously. See September 30, 2019 minute order.
On October 7, 2019, Bamboo Retreats filed a notice of appeal from the September 30, 2019 order. On November 12, 2019, a Notice of Default (Unlimited Civil Appeals) was filed. There is no indication that the appeal has been dismissed, however.
If the September 30, 2019 order is affirmed, then Bamboo Retreats, LLC will litigate the claims in the Complaint. In such instance, CCP § 1281.2(c) may justify this Court exercising its jurisdiction to order Huang and Norris to litigate this action, despite an agreement to arbitration, based upon Bamboo Retreats, LLC litigating their claims as a third party. CCP § 1281.2(c). However, the Court would take supplemental briefing on the applicability of CCP § 1281.2(c), given that Bamboo Retreats, LLC was a party to the arbitration agreement (and thus not a true “third party”) and was deemed to have waived the right to arbitrate.
CCP § 1281.2 provides in pertinent part:
On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:
. . .
. . .
(Bold emphasis added.)
However, the Court will await the determination on appeal from the September 30, 2019 order before it decides the CCP § 1281.2 issue.
Accordingly, the case is ordered STAYED pending the appeal from the September 30, 2019 order. The Court defers its ruling on the motion to compel arbitration until the appeal has been decided. A status conference regarding the status of appeal and re-setting the further hearing on the motion to compel arbitration is set for June 3, 2020.
If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.
When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees.
If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.
CCP § 1281.6.