Judge: Andrew E. Cooper, Case: 22CHCV00867, Date: 2024-01-09 Tentative Ruling

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Case Number: 22CHCV00867    Hearing Date: January 9, 2024    Dept: F51

MOTION TO WAIVE ARBITRATION AGREEMENT

Motions Filed: 10/6/23

MOVING PARTY: Plaintiffs Summer Evans and Amani Evans (collectively, “Plaintiffs”)

RESPONDING PARTY: Defendant The Pacific Collection, LLC (“Defendant”)

NOTICE: NOT OK [seeks relief from arbitration provision in lease agreement only – fails to also specify subsequent stipulation containing arb provision.]

RELIEF REQUESTED: An order waiving Plaintiffs’ agreement to arbitrate the instant controversy and resume the litigation of the matter in this Court.

TENTATIVE RULING: The motion is denied. Plaintiffs’ request for judicial notice is denied.

Plaintiffs are reminded that “except in a summary judgment or summary adjudication motion, no opening or responding memorandum may exceed 15 pages.” (Cal. Rules of Ct., rule 3.1113(d).) Plaintiffs are further reminded to review the 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. When e-filing documents, parties must comply with the “TECHNICAL REQUIREMENTS” which are set forth at page 4, line 4 through page 5, line 12 of the Court’s 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil (particularly bookmarking declarations and exhibits). (Cal. Rules of Ct., rule 3.1110(f)(4).) Failure to comply with these requirements in the future may result in papers being rejected, matters being placed off calendar, matters being continued so documents can be resubmitted in compliance with these requirements, documents not being considered and/or the imposition of sanctions.

BACKGROUND

On 3/21/23, the parties filed a stipulation to mediate Plaintiffs’ claims and stay the entire action pending the outcome of mediation. On 9/14/23, Plaintiffs filed the instant motion to waive the arbitration provision contained in the 3/21/23 stipulation. On 10/6/23, Plaintiffs filed their amended motion. On 12/22/23, Defendant filed its opposition. On 12/28/23, Plaintiffs filed their reply.

ANALYSIS

Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

Plaintiffs bring the instant motion to waive the arbitration provisions contained both in the lease agreement and in the stipulation filed on 3/21/23. The relevant arbitration provision contained in the parties’ lease agreement states:

“Any dispute between the parties relating to a claim for personal injury to Tenant(s), damage to Tenant(s)’s personal property, directly or indirectly relating to, or arising from, the conditions of the Premises, or the apartment community, shall be submitted to binding arbitration before a single arbitrator selected by the parties from membership of an alternative dispute resolution service such as JAMS, JudicateWest, or ARC. All demands for arbitration shall be made in writing and must be made within the applicable statute of limitations for such claims. The arbitrator” jurisdiction extends to all punitive damages claims. Each party shall bear their own respective fees and cost relative to the arbitration process, and attorney's fees, if awarded shall not exceed $500.00. All administrative fees and costs, including but not limited to the arbitrators’ fees relative to the arbitration process must be advanced prior to the selection of the arbitration panel and shall be borne equally by all parties. The decision of the arbitrator shall be final, and judgement may be entered on its accordance with applicable law. The parties agree that the venue for any such arbitration is in Los Angeles County, State of California. Claims not subject to arbitration: Nothing in this Section shall be deemed to limit the Owner's rights in the event of Tenant(s)’s breach or default under this Lease, including without limitation Owner's right to bring an action for Unlawful Detainer under the laws of the State of California.” (Ex. A to Pls.’ RJN, p. 9 sec. 3.3 [emphasis added].)

Additionally, the 3/21/23 stipulation filed by the parties states: “in the event that the mediation does not successfully resolve all issues, the parties agree to submit their remaining disputes to binding arbitration. Evans understands and acknowledges that this will result in a waiver of their procedural rights in litigation in this action involving her rights and obligations as a tenant, including the right to a jury trial.” (3/21/23 Stip. 3:20–23 [emphasis added].)

Plaintiffs bring the instant motion because “the efforts to mediate the case were unsuccessful and therefore, according to the stipulation the parties should have moved forward with arbitration. However, it appears that opposing party is delaying the arbitration process with various tactics.” (Pls.’ Mot. 6:16–20.) “Furthermore, given Defendants’ [sic] tactics to delay the process, Plaintiffs, who are a college student and a single mother, are now unable to continue to afford arbitration. At this point, the only solution to move forward would be to litigate the matter in Superior Court.” (Id. at 7:9–11.) The Court addresses each of these arguments below.

A.    Delay in Selecting an Arbitrator

Here, Plaintiffs argue that “Defendant’s failure to engage in an arbitration proceeding, is in breach of the stipulation.” (Id. at 7:7–8.) Plaintiffs contend that following the unsuccessful mediation on 5/23/23, the parties engaged in discussions to select an arbitrator, but were unable to come to an agreement. (Id. at 6:15–17.) Specifically, Plaintiffs provided Defendant with a list of potential arbitrators, from which Defendant selected. Hon. Jay C. Gandhi (Ret.). (Ex. C to Pls.’ RJN.) Thereafter, Plaintiffs submitted their claims for pre-screening with J. Gandhi, but J. Gandhi was unable to accept the appointment. (Ibid.) To date, the parties have not yet commenced their arbitration proceedings. (Pls.’ Mot. 7:3–4.)

To the extent that Plaintiffs contend that the delay in arbitration has been caused by Defendant’s bad faith tactics, the Court declines to make such a determination based on the communications attached to Plaintiffs’ Request for Judicial Notice, which the Court denies. Furthermore, Code of Civil Procedure section 1281.6 provides the proper procedural mechanism for Plaintiffs to seek relief under the instant circumstances. “If the [parties’] agreed method [to appoint an arbitrator] 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.” (Code Civ. Proc. § 1281.6.)

Here, to the extent that Plaintiffs argue that Defendant unreasonably delayed the arbitration proceedings, the proper procedure is to seek the Court’s intervention to compel the arbitration or appoint an arbitrator. However, it is apparent to the Court that Plaintiffs do not seek to resume the arbitration proceedings. Therefore, to the extent that Plaintiffs object to Defendant’s conduct, the proper relief is inconsistent with Plaintiffs’ position.

B.     Plaintiffs’ Financial Need

Plaintiffs further argue that the arbitration provisions should be waived because Plaintiffs can no longer afford the costs of arbitration. (Pls.’ Mot. 20:8–21.) Plaintiffs cite to Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87, wherein the Court of Appeal found that if the trial court determined that any of the indigent plaintiffs were financially unable to pay their pro rata share of the arbitration costs, “it must issue an order specifying that [defendant] has the option of either paying that plaintiff’s share of the arbitration cost or waiving its right to arbitrate that plaintiff’s case and allowing the case to proceed in court.” (219 Cal.App.4th at 96.)

In Aronow v. Superior Court (2022) 76 Cal.App.5th 865, the Court of Appeal found that “the trial court should decide the issue of arbitrator fee payment and it should be resolved before commencement of the arbitration. We do not prescribe a singular procedure, but—in response to the trial court's request—suggest various alternatives, recognizing that the circumstances of a case will inform the trial court's decision how to proceed.” (76 Cal.App.5th at 884.) The Aronow court concluded that “the trial court has discretion to decide [plaintiff’s] ability to pay arbitration fees and can do so upon declarations with supporting exhibits or after conducting an evidentiary hearing.” (Id. at 885.)

Here, Plaintiffs support their position with plaintiff Summer Evans’ sworn declaration, stating that “at this point I cannot afford the cost of an arbitration any longer. I paid my share for the mediation, and I have been spending a considerable amount of money in attorney fees to try to settle the case, without success.” (Evans Decl. ¶ 5.) Without additional supporting evidence, the Court declines to make a determination that Plaintiffs are unable to pay their share of the arbitration costs, particularly where they agreed to the arbitration of their claims in the lease agreement, further stipulated to mandatory arbitration, and selected a list of arbitrators for Defendant’s approval. Unlike in Roldan and Hang v. RG Legacy I, LLC (2023) 88 Cal.App.5th 1243, here, Plaintiffs’ financial circumstances are not documented by any other evidence than plaintiff Summer Evans’ own sworn declaration. (219 Cal.App.4th at 95; 88 Cal.App.5th at 1255.)

Moreover, assuming arguendo that the Court found the declaration sufficient to show such financial need, and thus determined that Plaintiffs were in fact unable to pay their share of the arbitration costs, the appropriate relief would be to offer Defendant the choice of either paying Plaintiffs’ share of the arbitration costs or allowing the case to proceed in court. (Roldan, 219 Cal.App.4th at 96.) Therefore, a finding in favor of Plaintiffs, under Roldan, would nevertheless not entitle Plaintiffs to the relief sought in this motion.

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C.    Exemption from Arbitration

Plaintiffs further argue that the instant matter is exempt from arbitration under rule 3.811 of the California Rules of Court. This Court rule exempts from judicial arbitration “cases involving multiple causes of action or a cross-complaint if the court determines that the amount in controversy as to any given cause of action or cross-complaint exceeds $50,000.” (Cal. Rules of Ct., rule 3.811(b)(8).)

Here, Plaintiffs argue that “given the judgment of $100,001.03 signed by the Judge, the Court had determined that this case, which involved multiple causes of action, had an amount in controversy for the causes of action in the complaint that exceeds $50,000.” (Pls.’ Mot. 19:10–14.) However, even if the Court were to accept Plaintiffs’ contentions, rule 3.811 of the California Rules of Court applies to judicial arbitrations, and not contractual arbitrations agreed to the parties. (Cal. Judges Benchbook Civ. Proc. Before Trial § 4.4) Here, the parties’ obligations to arbitrate Plaintiffs’ claims arise from both the lease agreement and the 3/21/23 stipulation between the parties.

Based on the foregoing, the Court finds that rule 3.811 is inapplicable to the facts of the instant case, where the arbitration of Plaintiffs’ claims arises from two written arbitration agreements between the parties. Therefore, the Court finds that the instant action is not exempt from arbitration under rule 3.811 of the California Rules of Court.

D.    Plaintiffs’ Remaining Arguments

¿ 

The Court notes Plaintiffs’ remaining arguments regarding injunctive relief, the Court’s inherent power to ensure the administration of justice, and the enforceability of the subject arbitration provisions, but declines to reach them as they appear ambiguous. Moreover, the Court declines to consider these additional arguments because, as previously noted, Plaintiffs’ motion exceeds the page limit allowed under rule 3.1113(d) of the California Rules of Court.

CONCLUSION¿ 

The motion is denied.