Judge: Armen Tamzarian, Case: 22STCV23561, Date: 2022-10-25 Tentative Ruling
Case Number: 22STCV23561 Hearing Date: October 25, 2022 Dept: 52
Tentative Ruling:
Plaintiffs WLA Legal Services, Inc.
and Steven Zelig’s Motion to Compel Binding Arbitration and Stay Action
Plaintiffs
WLA Legal Services, Inc. and Steven Zelig move to compel arbitration of their
action against defendant Saray Romero-Vazquez.
Unconscionability
Defendant
argues the arbitration provision is unconscionable. Unconscionability
requires both procedural and substantive unconscionability using a sliding
scale. (Serafin v. Balco Properties
Ltd., LLC (2015) 235 Cal.App.4th 165, 185.)
Defendant does not show any procedural
unconscionability. “Procedural
unconscionability focuses on oppression or surprise due to unequal bargaining
power.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83, 114, internal quotes omitted.)
“Procedural unconscionability occurs when the stronger party drafts the
contract and presents it to the weaker party on a ‘take it or leave it basis.’
” (Trivedi
v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 393, disapproved of
on other grounds by Baltazar v. Forever
21, Inc. (2016) 62 Cal.4th 1237.)
Defendant
shows no surprise. The fee agreement is
three pages with 19 numbered paragraphs.
(Zelig Decl., Ex. 1.) Paragraph
12 provides: “The parties agree to submit any fee dispute arising from this
agreement to nonbinding mediation. Client is informed that WLA does not carry
malpractice insurance. If the parties
fail to settle such dispute to non-binding mediation, the parties agree to
submit such dispute to non-binding arbitration in accordance with provisions of
Business and Professions code Section 6200. If the parties fail to settle such dispute at
non-binding arbitration, the parties agree to submit such dispute to binding
arbitration. Each side will bear its own
costs and attorney fees relative to said proceedings.” (Id., p. 2.) Defendant initialed the agreement directly
below that paragraph. (Ibid.)
On
the next page, paragraph 13 of the agreement provides: “The parties agree to
submit all other disputes arising from this agreement, including, but not
limited to claims fur legal malpractice, actions or proceedings to enforce,
construe, or interpret any rights granted hereunder to non-binding mediation. If the parties fail to settle such dispute at
non-binding mediation, the parties agree to submit such dispute to binding
arbitration. Each side will bear its own
costs and attorneys fees relative to said proceedings. Client is hereby notified that by doing so,
Client is relinquishing the right to a jury trial.” (Zelig Decl., Ex. 1, p. 3.)
Defendant
argues the arbitration provision “was not pointed out in large font or
specially indicated in any other way.”
(Opp., p. 4.) That is not
required. The arbitration provision is
not hidden. It is written in plain
language in a short agreement. Defendant
cannot escape it simply because she did not read it. (See Ramos v. Westlake Services LLC
(2015) 242 Cal.App.4th 674, 686 [“one who accepts or signs an instrument, which
on its face is a contract, is deemed to assent to all its terms, and cannot
escape liability on the ground that he has not read it”].)
Defendant
also fails to show oppression. The
retainer agreement was not an adhesion contract. Defendant states, “I understood the agreement
to be presented on a take it or leave it basis.” (Romero Vazquez Decl., ¶ 7.) But the agreement itself provides, “I
understand that this fee and all other aspects of this agreement are
negotiable.” (Zelig Decl., Ex. 1, ¶ 18.) Moreover, the agreement was for legal
representation in a personal injury case.
Defendant could have hired one of numerous other attorneys.
Defendant
also argues the agreement was procedurally unconscionable because she was
bedridden and seriously injured when she signed it. (Romero-Vazquez Decl., ¶ 4.) Those circumstances do not make the agreement
oppressive. Plaintiffs did not pressure her
into signing it. Defendant states, “Attorney
Zelig was referred to my mother and dealt with her during this time. He never spoke to me about the retainer
agreement prior to signing it.” (Id.,
¶ 5.)
Instead
of directly presenting the agreement to defendant, Zelig emailed it to defendant’s
mother, Lidia Freeman. (Zelig Reply
Decl., ¶ 15.a., Ex. 3.) Zelig wrote, “As
we discussed today, attached is the proposed fee agreement for your review. If it is acceptable, you, Carl and Saray
should sign and return it.” (Ibid.) He did not impose any deadline to sign it.
Defendant
had ample time to consider the agreement and attempt to negotiate with
plaintiffs or find a different attorney.
The agreement was for claims “relating to an automobile accident of May
16, 2018.” (Zelig Decl., Ex. 1, ¶ 1.) Zelig sent it to defendant’s mother on May
23, 2018. (Zelig Reply Decl., ¶ 15.a.,
Ex. 3.) The statute of limitations on
defendant’s personal injury claims had barely started to run.
Any
pressure on defendant to sign the agreement while seriously injured did not come
from plaintiffs. Defendant states, “At
some point while I was bedridden, my stepfather printed out the retainer agreement
and handed it to me in bed.” (Romero
Vazquez Decl., ¶ 6.)
The
court finds no procedural unconscionability.
The agreement is enforceable.
The Pending
Anti-SLAPP Motion
Defendant
also argues granting this motion would undermine her fundamental rights by annulling
her pending anti-SLAPP motion. As
plaintiff acknowledges, there is no authority “resolving the issue of whether a
motion to compel arbitration can be granted while an anti-SLAPP motion is pending.” (Opp., p. 7.)
She analogizes this issue to two other circumstances. First, a plaintiff “may not seek to subvert
or avoid a ruling on an anti-SLAPP motion by amending the challenged complaint
... in response to the motion.” (JKC3H8
v. Colton (2013) 221 Cal.App.4th 468, 477-478.) Second, if a plaintiff dismisses the action before the
hearing, the court must still rule on the anti-SLAPP motion to determine
whether the defendant is entitled to attorney fees. (Pfeiffer
Venice Properties v. Bernard (2002)
101 Cal.App.4th 211, 218.)
When a
party moves to compel arbitration before the hearing on the opposing party’s
anti-SLAPP motion, the policies behind the two statutes appear to conflict. “The point of the anti-SLAPP statute is that
you have a right not to be dragged through the courts because
you exercised your constitutional rights.”
(People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315,
1317.) On the other hand, the California
Arbitration Act “reflect[s] a strong public policy in favor of arbitration as a
speedy and relatively inexpensive means of dispute resolution.” (Wagner Construction Co. v. Pacific
Mechanical Corp. (2007) 41 Cal.4th 19, 25, internal quotes omitted.)
The
California Arbitration Act, however, explicitly limits the circumstances
permitting a court to deny a motion to compel arbitration:
On petition of a party to an arbitration
agreement alleging the existence of a written agreement to arbitrate a
controversy and that a party to the agreement refuses to arbitrate that 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:
(a) The right to compel arbitration has been waived
by the petitioner; or
(b) Grounds exist for rescission of the agreement.
(c) A party to the arbitration agreement is also a
party to a pending court action or special proceeding with a third party,
arising out of the same transaction or series of related transactions and there
is a possibility of conflicting rulings on a common issue of law or fact. For
purposes of this section, a pending court action or special proceeding includes
an action or proceeding initiated by the party refusing to arbitrate after the
petition to compel arbitration has been filed, but on or before the date of the
hearing on the petition. This subdivision shall not be applicable to an
agreement to arbitrate disputes as to the professional negligence of a health
care provider made pursuant to Section 1295.
(d) The petitioner is a state or federally chartered
depository institution [seeking to enforce an agreement] created by the
petitioner fraudulently without the respondent consumer’s consent … .
(Code Civ. Proc., § 1281.2.)
The
statute does not permit courts to deny a petition to compel arbitration because
the opposing party has filed an anti-SLAPP motion. Ruling on an anti-SLAPP motion requires the
court to consider the action’s merits, which directly conflicts with the policy
in favor of resolving disputes via arbitration instead of the courts.
The
California Arbitration Act also unequivocally provides that a court “shall,
upon motion of a party… stay the action or proceeding until an arbitration is
had” and “until the application for an order to arbitrate is determined.” (Code Civ. Proc., § 1281.4.) Staying the entire action prevents the court
from ruling on an anti-SLAPP motion. Regarding
stays, the anti-SLAPP statute provides only that “[a]ll discovery proceedings
in the action shall be stayed” pending the ruling on the motion. (Code Civ. Proc., § 425.16(g).) Staying discovery does not prevent the court
from ruling on a motion to compel arbitration.
The
court finds that the California Arbitration Act requires enforcing the arbitration
agreement regardless of defendant’s pending anti-SLAPP motion.
Costs
of Arbitration
Finally, defendant argues she cannot
afford the costs of arbitration. When a
party compelled to arbitrate objects that she cannot pay, the court must “determine
if [the party] is unable to pay arbitration costs and, if so, to offer
the [opposing party] two alternatives: elect to either pay that [party’s]
share of the arbitration cost and remain in arbitration or waive its right to
arbitrate.” (Aronow v. Superior Court (2022)
76 Cal.App.5th 865, 874 (Aronow), internal quotes omitted.)
Defendant provides minimal evidence
of her inability to pay. “In response to
a petition to compel arbitration, a litigant who claims financial inability to
pay the arbitrator’s fee could submit the Judicial Council application form and
the financial statement prescribed” to proceed in forma pauperis.” (Aronow, supra, 76 Cal.App.5th at p.
884.) She did not do so. She submitted a declaration stating, “I am
unemployed and have been unemployed since my auto collision. I continue to suffer and am not able be
employed. I have no way to pay for an
arbitration. [¶] My husband earns $72,000 per year before
taxes. We use his income to pay rent, buy
food, pay for the costs of transportation for his work and other costs of
living. I do not have a car.” (Romero Vazquez Decl., ¶¶ 10-11.) Defendant’s attorney estimates defendant’s
half of the arbitration fees could range from $30,000 to $60,000. (Deer Decl., ¶¶ 3-8.)
The court lacks sufficient
information to determine if defendant is unable to pay the costs of
arbitration. The court therefore requires
defendant to follow the “ready template” for requesting a fee waiver under
Government Code section 68630 et seq. (Aronow,
supra, 76 Cal.App.5th at p. 884.)
Disposition
The
motion is granted in part. The
court hereby stays the entire action.
Defendant is ordered to submit a completed copy of Judicial
Council form FW-001, request to waive court fees, within five days.
The hearing on plaintiffs’ motion to
compel arbitration is hereby continued to November 16, 2022, at 9:00 a.m.