Judge: Armen Tamzarian, Case: 24STCV23662, Date: 2024-12-10 Tentative Ruling

Case Number: 24STCV23662    Hearing Date: December 10, 2024    Dept: 52

Defendant Sharewell’s Motion to Compel Arbitration and Stay Action

Defendant Sharewell, d/b/a Cayton Children’s Museum, moves to compel arbitration of this action by plaintiffs Gabriel Chiu and Christine Chiu.

Evidentiary Objections

Plaintiffs make one objection to the declaration of Esther Netter in support of defendant’s motion.  They object to this testimony: “On June 11, 2019, I sent an email to Ms. Chiu regarding her and her husband’s proposed agreement to make a substantial pledge to the Cayton in exchange for hosting a private party and private VIP/Media/Press launch.”  (Netter Decl., ¶ 5, p. 2:19-21.)  The beginning of that sentence is admissible.  It merely states Netter’s foundation for authentication of the email attached as exhibit 1. 

The remainder of that sentence is inadmissible under the secondary evidence rule.  Generally, “oral testimony is not admissible to prove the content of a writing.”  (Evid. Code, § 1523, subd. (a).)  Netter’s declaration describes the contents of the email.  The document speaks for itself.  Netter’s extrinsic description of the email is inadmissible.

Plaintiffs’ objection is sustained only as to the following portion of Netter’s declaration: “regarding her husband’s proposed agreement to make a substantial pledge to the Cayton in exchange for hosting a private party and private VIP/Media/Press launch.”  (Netter Decl., ¶ 5.)

Discussion

Defendant’s motion to compel arbitration turns on two documents plaintiffs signed in 2019: a “pledge form” and a “charitable event agreement.”  On June 19, 2019, plaintiffs signed a pledge form promising to donate $1,000,000 to defendant’s museum.  (Comp., Ex. 1.)  On June 24, 2019, the parties entered the charitable event agreement.  (Netter Decl., Ex. 3.)  Defendant contends that, by doing so, plaintiffs entered a binding contract requiring them to pay the money and owe a substantial balance.  (Comp., ¶ 28.) 

Defendant moves to enforce the arbitration provision in the parties’ charitable event agreement.  (Netter Decl., Ex. 3, § 8.)  The agreement provides, “If, after the Parties have made a good faith effort to resolve any dispute, such dispute continues to exist, the Parties will submit all such disputes relating to this [Charitable Event] Agreement (whether in contract, tort, or both) to binding arbitration, in accordance with the laws of the State of California.  The Parties understand that they are waiving their rights to a jury trial.”  (Ibid.) 

Plaintiffs oppose this motion on the basis that the charitable event agreement’s arbitration clause does not apply to this action.  Plaintiffs’ complaint asserts a single cause of action for declaratory relief.  Code of Civil Procedure 1060 provides, “Any person interested under a written instrument … or under a contract … may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties … including a determination of any question of construction or validity arising under the instrument or contract.”  Plaintiffs brought this action seeking a judicial declaration that their pledge is an unenforceable gift.  (Comp., ¶¶ 36-40.)   

Plaintiffs frame this action as a dispute over the enforceability of the $1,000,000 pledge.  Plaintiffs’ complaint alleges that, after they signed the pledge, “Defendant advised that it wished to host a three-hour-long reception in Plaintiffs’ honor at the museum.”  (Comp., ¶ 16.)  It further alleges, “The Chius worked out written terms with Defendant Cayton Children’s Museum to host and film the reception so that segments of the same might be featured on [a reality TV] show.  On or around June 24, 2019, the Chius and Defendant Cayton Children’s Museum entered into a separate written agreement relating to this Event in which they confirmed the foregoing event-related terms (the ‘Event Agreement’).”  (Id., ¶ 17.)  Plaintiffs allege, “[T]he Event Agreement expressly referenced the Chius’ pledge to gift money to Defendant as having already occurred and having already been memorialized in a separate writing, i.e. the above-referenced ‘Pledge Form,’ within the Recitals section of the Event Agreement.”  (Id., ¶ 18.) 

From plaintiffs’ perspective, their action for declaratory relief arises solely from the pledge form.  From a bird’s eye view, however, this action seeks declaratory relief about whether plaintiffs owe the balance of the $1 million they pledged.  And from defendant’s perspective, plaintiffs owe that money because their pledge is part of the charitable event agreement or because defendant’s obligations in the charitable event agreement otherwise constitute consideration for plaintiffs’ pledge.  The dispute over whether plaintiffs owe nearly $1 million to defendant therefore does constitute a “dispute[] relating to this Agreement” as provided in the charitable event agreement.  (Netter Decl., Ex. 3, § 8.)       

Plaintiffs’ reliance on Marsch v. Williams (1994) 23 Cal.App.4th 250 is misplaced.  There, the court stated, “Where … the parties have separate contractual relationships, which involve separate enterprises and most importantly separate commercial risks, an arbitration clause which governs one contractual relationship cannot be imposed in the other relationship without undermining the parties’ reasonable expectations.”  (Id. at p. 256.)  The case involved three agreements about two businesses: two agreements in 1973 and 1979 forming partnerships that “built and managed a commercial building in La Jolla” (id. at p. 252), and one agreement in 1986 to create a partnership to develop property in Rancho Santa Fe (ibid.).  Only the latter agreement included an arbitration clause.  (Ibid.)    

Here, the pledge form was signed less than a week before the event agreement.  The event agreement’s recitals include, “Whereas, the Chiu’s [sic] have pledged a substantial unrestricted gift to the Museum (the ‘Charitable Gift’), as set forth in the Pledge Form attached hereto as Exhibit A.”  (Netter Decl., Ex. 3, p. 1.)  The event agreement further provides, “The Museum shall use best efforts to ensure that physical acknowledgements in recognition of the Chiu’s [sic] charitable gift are installed and/or displayed by or before June 28, 2019, which include, but are not limited to” specified locations.  (Id., § 1.6.)  Regardless of whether the pledge is enforceable, the two documents do not involve wholly separate enterprises.  They are not so distinct that compelling arbitration of this dispute would undermine the parties’ reasonable expectations.

Plaintiffs also rely on Titan Group, Inc. v. Sonoma Valley County Sanitation Dist. (1985) 164 Cal.App.3d 1122.  The court reasoned, “In light of the importance of the jury trial in our system of jurisprudence, any waiver thereof should appear in clear and unmistakeable form.  This agreement does not present such a waiver.”  (Id. at p. 1129.)  The court held a provision “that disputes ‘may be subject’ to arbitration” did not constitute a binding agreement that parties must arbitrate disputes.  (Id. at p. 1128.)

Here, the parties agree they entered a binding contract to arbitrate some disputes.  The event agreement includes a clear and unmistakeable waiver of the right to a jury trial regarding some disputes: “The Parties understand that they are waiving their rights to a jury trial.”  (Netter Decl., Ex. 3, § 8.)  The question concerns the scope of the arbitration provision: does it apply to plaintiffs’ action for declaratory relief?  In contrast with disputes over the existence of an arbitration, “doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration.”  (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.)  “The party opposing arbitration has the burden of showing that the agreement, as properly interpreted, does not apply to the dispute.”  (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 705.)  Plaintiffs do not meet that burden. 

Selection of Arbitrator

Defendant requests that the court order arbitration with JAMS.  Code of Civil Procedure section 1281.6 provides a procedure to select an arbitrator when “the arbitration agreement does not provide a method for appointing an arbitrator.”  Defendant acknowledges the event agreement does not do so.  The parties therefore must follow the procedure under section 1281.6. 

Disposition

Defendant Sharewell’s motion to compel arbitration and stay the action is granted.  The court hereby orders plaintiffs Gabriel Chiu and Christine Chiu to arbitrate their claim for declaratory relief against defendant Sharewell.  The court hereby stays the entire action pending resolution of the arbitration proceeding. 

            The parties shall meet and confer within 15 days regarding a method of appointing an arbitrator under Code of Civil Procedure section 1281.6.  If the parties do not agree, any party may petition the court to appoint an arbitrator.