Judge Armen Tamzarian, Case Number: 24STCV22887, Date: 2024-12-06 Tentative Ruling

Judge: Armen Tamzarian, Case: 24STCV22887, Date: 2024-12-06 Tentative Ruling

Case Number: 24STCV22887 Hearing Date: December 6, 2024 Dept: 52

Defendants OriginPoint, LLC and Guaranteed Rate, Inc.’s Motion to Stay Action

Defendants OriginPoint, LLC and Guaranteed Rate, Inc. move to stay this action by plaintiff Felix Shiels.

Request for Judicial Notice

Defendants request judicial notice of two documents. Both are court records whose existence and legal effects are subject to judicial notice under Evidence Code section 452, subdivision (d). (Steed v. Department of Consumer Affairs (2012) 204 Cal.App.4th 112, 120.) Defendants’ request for judicial notice is granted.

Background

On September 3, 2024, OriginPoint filed a petition in United States District Court for the Central District of California to compel arbitration under the Federal Arbitration Act (FAA) against Shiels. (RJN, Ex. 1.) The petition asserts that Shiels and OriginPoint agreed to arbitrate claims arising from their employment relationship. (Id., ¶¶ 7-11.) It further asserts OriginPoint terminated Shiels for cause within two years of hiring (id., ¶ 24), so he must repay his $135,000 signing bonus (id., ¶¶ 26-29). OriginPoint thus seeks to compel arbitration of its claims against Shiels for breach of contract. (Id., ¶ 29.)

On September 5, 2024, Shiels filed this action against defendants OriginPoint, LLC, Guaranteed Rate, Inc., and Justin Purpero. Plaintiff alleges 13 causes of action arising from his employment, including whistleblower retaliation, wrongful termination, and violations of the Fair Employment and Housing Act and the Labor Code. He specifically alleges, “Months after the termination, Defendants demanded that Plaintiff repay his ‘signing bonus’ plus interest and fees, notwithstanding that he did not leave voluntarily and they did not have cause to terminate him.” (Comp., ¶ 20.)

Stay of Action

This court has inherent authority to stay the action. “It is black letter law that, when a Federal action has been filed covering the same subject matter as is involved in a California action, the California court has the discretion but not the obligation to stay the state court action.” (Caiafa Prof. Law Corp. v. State Farm Fire & Cas. Co. (1993) 15 Cal.App.4th 800, 804.) “ ‘In exercising its discretion the court should consider the importance of discouraging multiple litigation designed solely to harass an adverse party, and of avoiding unseemly conflicts with the courts of other jurisdictions. It should also consider whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other court have already advanced.’ ” (Ibid.) “The California Supreme Court also has isolated another critical factor favoring a stay of the state court action in favor of the Federal action, a factor which happens to be present in this case—the Federal action is pending in California not some other state.” (Ibid.)

Before Shiels filed this action, OriginPoint filed a petition in federal court in California. Both proceedings include a common, critical issue: whether OriginPoint properly fired Shiels for cause. In the federal proceeding, OriginPoint seeks to arbitrate its claims that it fired Shiels for cause and is therefore entitled to recover the signing bonus. In this action, Shiels alleges he was terminated for retaliatory and discriminatory reasons—i.e., not for cause.

The two proceedings will also likely include another overlapping issue: enforceability of the parties’ arbitration agreement. The federal proceeding is a petition to compel Shiels to participate in arbitration of OriginPoint’s claims against him. In this action, defendants assert they reserve the right to move to compel arbitration of Shiels’s claims if the court denies this motion. (Memo., p. 2, fn. 1.)

Litigating this action during the pending federal proceeding will be inefficient and could result in inconsistent rulings on the same issues. The Central District of California can adequately determine the parties’ rights. Staying this action serves the interests of justice.

This court also has authority to stay this action under the California Arbitration Act. Code of Civil Procedure section 1281.4 provides, “If an application has been made to a court of competent jurisdiction, whether in this State or not, for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined.”

OriginPoint, LLC petitioned the United States District Court for the Central District of California for an order to arbitrate controversies between it and Shiels. (RJN, Ex. 1.) That controversy includes issues involved in this action for the reasons discussed above.

Disposition

Defendants OriginPoint, LLC and Guaranteed Rate, Inc.’s motion to stay action is granted. The court hereby stays the entire action pending resolution of OriginPoint, LLC’s petition to compel arbitration in the Central District of California, case No. 8:24-cv-01909.