Judge: Armen Tamzarian, Case: 23STCV11143, Date: 2023-08-28 Tentative Ruling

Case Number: 23STCV11143    Hearing Date: November 30, 2023    Dept: 52

Plaintiff Josephine Schreiber’s Motion to Lift Stay and Request for $6,550 in Sanctions

Plaintiff Josephine Schreiber moves to lift the stay of this action under Code of Civil Procedure section 1281.97.  “[I]f the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration.”  (CCP § 1281.97(a)(1).)  If the drafting party does not timely pay, the employee may “[w]ithdraw the claim from arbitration and proceed in” court.  (CCP § 1281.97(a)(2).)

Section 1281.97 does not apply because the parties’ arbitration agreement adopts the procedural rules of the Federal Arbitration Act (FAA).  “[T]he parties may limit the trial court’s authority to stay or deny arbitration under the CAA by adopting the more restrictive procedural provisions of the FAA.”  (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 157.)  “[T]he FAA’s procedural provisions do not apply in state court unless the parties expressly adopt them.”  (Id. at p. 177.)

The Court of Appeal has held that the FAA’s procedural provisions apply instead of the CAA’s where a “contract specifies that claims shall be arbitrated ‘pursuant to the FAA.’ ”  (Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122.)  The court reasoned, “There is no other contract provision suggesting the parties intended to incorporate California arbitration law, nor is there any language suggesting the parties intended to arbitrate ‘in conformance to’ some provisions of the FAA but not others.”  (Ibid.)  The court held the parties “adopted the FAA … to govern their arbitration.”  (Ibid.)  The Court of Appeal reached the same conclusion where a contract provided, “ ‘Enforcement of this agreement to arbitrate shall be governed by the Federal Arbitration Act.’ ” (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 346, italics added (Victrola).)

Here, the parties’ arbitration agreement provides, “This agreement evidences a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.”  (Ameripour Decl., Ex. 2, p. 14, italics added.)  The agreement has no provision incorporating California law nor any provision limiting which parts of the FAA apply.  (Id., pp. 12-14.)  As discussed above, the Court of Appeal has interpreted the term “ ‘governed by the Federal Arbitration Act’ ” to constitute an agreement to use the FAA’s procedural rules.  (Victrola, supra, 46 Cal.App.5th at p. 346.)  The arbitration agreement in this case uses identical language.  The parties thereby expressly agreed to adopt the FAA, including its procedural rules.  Code of Civil Procedure section 1281.97 is a procedural rule of arbitration.  (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 782-783; Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 644.)  The CAA’s procedural rules, including section 1281.97, do not apply.

Even if section 1281.97 applied, defendants did not waive their right to arbitrate.  Plaintiff’s motion relies on the premise that defendants were required to pay the arbitration fee by October 20, 2023.  Their deadline was October 23.  The drafting party waives the right to arbitrate if fees “are not paid within 30 days after the due date.”  (CCP § 1281.97(a)(1).)  JAMS’s “notice of intent to initiate arbitration” and “deposit request” are dated September 20, 2023.  (Davoodi Decl., Ex. B, pp. 1-2.)  The notice of intent to initiate arbitration, however, provides, “Respondent must pay the remaining $1,750.00 of the non-refundable Filing Fee.  Payment is due upon receipt.”  (Id., p. 1.)  JAMS’s email to defendants’ counsel similarly stated, “Please find your Deposit Request attached for the above referenced matter.  Please note that payment is due upon receipt.”  (Tahsildoost Decl., Ex. 1.)  Defendants’ counsel did not receive the deposit request until September 21, 2023.  (Id., ¶ 2, Ex. 1 [showing email sent “Thursday, September 21, 2023 5:12:49 AM”].) 

Thirty days after September 21, 2023, was October 21, 2023—a Saturday.  The payment was therefore due October 23, the following Monday.  “The time in which any act provided by law is to be done is computed by excluding the first day, and including the last, unless the last day is a holiday, and then it is also excluded.”  (CCP § 12.)  “If the last day for the performance of any act provided or required by law to be performed within a specified period of time is a holiday, then that period is hereby extended to and including the next day that is not a holiday.”  (CCP § 12a(a).)  “Holiday” includes Saturdays (ibid.) and Sundays (CCP § 10).  (See also Doe v. Superior Court (2023) 95 Cal.App.5th 346, 355, fn. 4 [noting parties did not dispute that 30-day deadline under CCP § 1281.98 was extended from Saturday to following Monday].)

Defendants paid their fee on October 23, 2023.  (Tahsildoost Decl., ¶ 3, Ex. 2.)  Thus, even if Code of Civil Procedure section 1281.97 applied, defendants did not materially breach the arbitration agreement and did not waive their right to compel arbitration.

Disposition

            Plaintiff Josephine Schreiber’s motion to lift stay and request for sanctions is denied.