Judge: Armen Tamzarian, Case: 20STCV21355, Date: 2022-12-13 Tentative Ruling
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Case Number: 20STCV21355 Hearing Date: December 13, 2022 Dept: 52
Plaintiff Eyal Raziel’s Motion to Lift Stay on All Proceedings and
Request for Sanctions
For a second time, plaintiff Eyal Raziel moves
to lift the stay in this action. Plaintiff
argues defendants Farhad Eliasi, Elad Benisti, and Extended
Vision, LLC dba Upper West Restaurant waived their right to compel arbitration
under Code of Civil Procedure section 1281.97 because they did not timely pay
arbitration fees.
Procedural
History
On October 21, 2020, this court granted
defendants’ petition to compel arbitration and stay the case pursuant to the
parties’ arbitration agreement.
Plaintiff filed an arbitration demand with the American Arbitration
Association’s (AAA) employment division.
Plaintiff then moved to lift the stay, arguing that defendants waived their right to compel arbitration.
AAA, relying on Code of Civil Procedure section 1284.3(a), would not
proceed with the arbitration unless both sides agreed to waive the arbitration
agreement’s provision that the prevailing party would recover attorney fees and
arbitration fees. Defendants did not
agree to waive the provision, so AAA closed the matter.
On January 13, 2022, the court ruled defendants
did not waive their right to enforce the arbitration agreement. The court stated, “Although the subject
matter of the dispute is employment, the agreement clearly calls for
application of the Commercial Arbitration Rules.” The order concluded, “Plaintiff fails to
demonstrate waiver and therefore must proceed to arbitration pursuant to the
parties’ contract—which provides for using the Commercial Arbitration Rules of
the American Arbitration Association.
Once plaintiff does so, AAA—not this court—must decide whether the parties
are required to waive any part of the contract.”
Arbitration
with ADR, Inc.
After the court’s ruling on plaintiff’s last
motion, the parties agreed to arbitrate with ADR Services, Inc. instead of AAA. (Lowery Reply Decl., ¶ 9.) They each “reserve[d] the right to have the
arbitrator decide upon certain preliminary issues,” including “whether to apply
the Commercial or Employment Rules, how to split the fees, and the availability
of attorneys’ fees to the prevailing party.”
(Ibid.)
ADR, however, informed the parties that it did
not have that authority absent a written stipulation by the parties. (Lowery Reply Decl., ¶ 10, Ex. M.) ADR’s representative quoted the court’s
January 13, 2022 minute order’s statement that “Once plaintiff [proceeds to
arbitration], AAA—not this court—must decide whether the parties are required
to waive any part of the contract.” (Ibid.) ADR’s representative wrote, “[A[lthough AAA
may have the decision making authority to determine whether the parties are
required to waive any part of the contract, please be advised that ADR
Services, Inc. does not have the same decision making authority.” (Ibid.) In a second email, ADR’s representative
wrote, “Please be advised that a Stipulation by the parties is necessary because the Minute Order dated
January 13, 2022 states that AAA (not the arbitrator) must decide whether the
parties are required to waive any part of the contract.” (Lowery Reply Decl., ¶ X, Ex. N.)
The parties did not agree to any such written
stipulation, and the proceeding with ADR did not go forward.
Plaintiff’s
Second Arbitration Demand with AAA
On August 26, 2022, plaintiff filed
a new arbitration demand with AAA.
(Menges Decl., ¶ 4, Ex. 3.) AAA
sent defendants an invoice for $1,900. (Id.,
5, Ex. 4.) On October 10, AAA closed the
matter because defendants did not pay the fee.
(Id., ¶ 8, Ex. 7.)
Analysis
Plaintiff’s motion fails for two
reasons.
First, plaintiff never served the
latest AAA arbitration demand on defendants. “A
demand for arbitration must be served on the other party.” (Ikerd v. Warren T. Merrill & Sons (1992)
9 Cal.App.4th 1833, 1842.) “A demand for
arbitration is a pleading analogous to a complaint in a civil action.” (Id. at p. 1844, fn. 10.) “Personal jurisdiction” over a respondent
requires “due process and service.” (Id. at p. 1842.) “[A]ctual
knowledge of the proceeding alone is not enough.” (Ibid.)
Defense counsel
states, “[N]either my clients nor my office has ever been served with the AAA
arbitration demand [plaintiff’s counsel] allegedly filed on August 26,
2022.” (Catanzarite Decl., ¶ 9.) When AAA sent defendants an invoice, counsel
“had no knowledge plaintiff had filed any new arbitration claim with AAA.” (Ibid.) When defendants filed the opposition to this
motion, they still had “not ever … been served with the alleged AAA demand for
arbitration” (Id., ¶ 12.)
Plaintiff did not
include a copy of the arbitration demand with his moving papers. He attached a copy as Exhibit A to the
declaration of Nathan T. Lowery in support of the reply. No proof of service of the demand is
attached.
Without service of
the demand, AAA’s invoice to defendants could not trigger the 30-day deadline
under CCP § 1281.97(a). AAA had no
personal jurisdiction over defendants and therefore could not require them to
pay fees.
Plaintiff’s reply
does not acknowledge defendants’ argument about service or attempt to dispute
the facts.
Second, there is
already an arbitration proceeding with ADR Services, Inc. Defendants have not waived their right to
continue with that proceeding. ADR’s
requirement that the parties stipulate to giving it additional decision-making
authority was based on an overly strict reading of the January 13, 2022 minute
order, which resulted in a misunderstanding.
That order referred to “AAA” instead of an arbitrator in general because
plaintiff had already filed an arbitration demand with AAA. At the time, AAA was the arbitrator. The point of the order was that, instead of
the court, the arbitrator—AAA, ADR, or whoever it may be—must decide the issue. Moreover, the arbitrator’s authority to
decide that issue did not come from this court’s order. It came from the parties’ arbitration
agreement.
Disposition
The motion is denied.
Plaintiff Eyal Raziel must proceed with the arbitration with ADR
Services, Inc.