Judge: Ashfaq G. Chowdhury, Case: 23GDCP00167, Date: 2023-09-29 Tentative Ruling

Case Number: 23GDCP00167    Hearing Date: September 29, 2023    Dept: E

Hearing Date: 09/29/2023 – 8:30am
Case No: 23GDCP00167
Trial Date: UNSET
Case Name: JOHN FRALISH v. DINE BRANDS GLOBAL, INC.

TENTATIVE RULING ON MOTION TO COMPEL ARBITRATION

RELIEF REQUESTED

The Petitioner, John Fralish, is moving to compel arbitration in this matter.

Petitioner’s notice states:

The petition seeks relief, pursuant to Code of Civil Procedure §§ 1281.2, 1281.97, 1281.99, 1290.2, and 9 U.S.C. § 2, on the grounds that the parties’ written agreement calls for arbitration of the dispute at issue, that Respondent has failed and refused to arbitrate the dispute, and that Respondent has failed to pay the fees and costs necessary for the arbitration to proceed.

The Notice of Petition is supported by the attached Petition to Compel Arbitration and Paymnet of Fees and Costs, Memorandum of Points and Authorities, and Declarations of Alexander Darr and John Fralish and upon such other matters as may be presented to the Court in connection with the Petition.

(Petitioner Notice, p.2.)

Because the parties now state that they have already begun the arbitration process, and for the reasons further set out below, the Court’s tentative is to DENY this petition as MOOT.

BACKGROUND

Petitioner seeks to compel Respondent Dine Brands Global, Inc. to arbitrate this matter. Petitioner argues that he entered into a Terms of Use/Arbitration Agreement with Respondent when Petitioner agreed to the Terms of Use in connection with Respondent’s websites, online services, and promotional text messages.

Petitioner alleges that after he was sent a number of telephonic solicitations from Respondent, Petitioner sent several letters asking all telephonic communications to stop, and Petitioner alleges that since Respondent continued to message Petitioner, the parties’ dispute was not resolved, therefore arbitration is appropriate.

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LEGAL STANDARD – MOTION TO COMPEL ARBITRATION

CCP §1281.2, governing orders to arbitrate controversies, provides in pertinent part:

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 recission of the agreement.

(CCP §1281.2(a)-(b).

Under the Federal Arbitration Act, arbitration agreements “shall be valid, irrevocable and enforceable, save upon such grounds that exist at law or in equity for the revocation of a contract.”  (9 U.S.C. § 2.)

There is a strong public policy in favor of arbitration of disputes and any doubts concerning the scope of arbitrable disputes should be resolved in favor of arbitration. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (“courts will ‘indulge every intendment to give effect to such proceedings.’”) (quotation omitted)). (See also AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339.) 

TENTATIVE RULING

Petitioner’s Petition states, “This is a simple and straightforward matter. Petitioner has a written agreement with Dine Brands Global, Inc. (“Respondent” or “Dine Brands”) that Fralish agreed to in order to receive promotional text messages from Respondent. When Fralish sought to arbitrate disputes related to those same text messages, he filed a pre-arbitration Notice of Dispute, received a response from Respondent, was unable to resolve the dispute informally, and so filed a demand for arbitration – all in accordance with the terms of the agreement, the Terms of Use. However, Dine Brands has failed and refused to participate in the arbitration proceeding and has failed and refused to pay the fees and costs required before the arbitration proceeding can commence. Dine Brand is therefore in breach of the arbitration agreement and in default of the arbitration. The Court should compel Dine Brands to arbitrate Petitioner's claims and order Dine Brands to pay Petitioner's reasonable attorney's fees and costs as the law requires.” (Petition, p. 5.)

Further, Petitioner attached the alleged Terms of Use/Arbitration Agreement as Exhibit A to the Fralish Declaration. Section 13 is titled “Binding Arbitration; Class Action Waiver.”

It appears tot the Court that this dispute falls within the scope of the Terms of Use/Arbitration Agreement.

That said, the Court finds the petition to compel arbitration should be DENIED AS MOOT based on the information provided in Respondent’s Opposition: “Dine Brands humbly requests this Court deny the Petition as the parties have each appeared and paid the appropriate arbitration fees and are set to arbitrate the underlying matter if the matter does not settle.” (Oppo. p.1.)

However, the Court notes that the issues of sanctions and attorney’s fees are not moot.

Attorney’s Fees and Costs

Petitioner argues that Respondent should be ordered to: (1) to pay Petitioner’s reasonable attorneys’ fees and costs in the arbitration, and (2) to pay Petitioners reasonable attorneys’ fees and costs in connection with this petition in the amount of $5,840 plus the costs of filing and serving this petition, and the expense that he incurred as a result of Dine Brands’ breach.

Petitioner appears to be basing its request for attorneys’ fees and costs in the arbitration as well as fees and costs in connection with this petition based on CCP §1281.97(a), 1281.97(b), and 1281.99(a).

Below, the Court cites the statutes mentioned by Petitioner.

CCP §1281.97(a)-(b) states:

(a) (1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if 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 under Section 1281.2.

(2) After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.

(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:

(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.

(2) Compel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.

(CCP §1281.97(a)-(b).)

CCP §1281.99(a) states:

(a) The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.

(CCP §1281.99(a).)

Here, both parties agree that Respondent did not timely pay the fees it was required to pay under 1281.97(a). Therefore, Respondent appears to have committed a material breach according to 1281.97(a). Further, Respondent’s arguments in Opposition as to the excuses as to why the arbitration fee was not timely paid are not persuasive to this Court.

While the Court is inclined to award at least some attorney’s fees and costs for the filing of this petition based on the sanctions portion of 1281.99(a), the Court is uncertain about awarding other fees requested by Petitioner.

For example, the Reply notes the fees Petitioner seeks:

1. An order compelling Dine Brands to timely pay its arbitration fees in the underlying arbitration.

2. An order providing that all attorneys’ fees for Petitioner related to the arbitration be awarded to him.

3. An order granting Petitioner his fees and costs related to the Petition.

(Reply p.3)

At the instant hearing, the parties should be expected to discuss the extent of the attorney’s fees and costs that should be awarded.

As to request 1 in the Reply, it appears that both parties have admitted that Dine Brands paid (belatedly) its arbitration fee.

As to request 2,  for an order providing that all attorney’s fees for Petitioner related to the arbitration be awarded to him, the Court has its doubts on the scope of this requested order. Petitioner appears to argue that the scope of 1281.97(a)-(b) and 1281.99(a) means that Respondent is to pay all attorney’s fees related to the arbitration. However, Petitioner does not bring up, and seems to ignore, the language of Section 13.6 of the Terms of Use/Arbitration Agreement that stated in relevant part, “…The parties are responsible for paying their own attorneys’ fees…For arbitrations within California, the arbitrator shall have the authority to award attorneys’ fees and costs to a claimant who prevails against Dine Brands if such an award is allowed by law.”

Therefore, Petitioner’s argument that the statute allows this Court to award attorney’s fees in the arbitration seems to undercut the premise of this entire motion that the Court should enforce a valid arbitration agreement. Thus, it seems like the Petitioner wants the arbitration agreement enforced to the extent it will benefit Petitioner, but not to the extent it would not benefit Petitioner. Petitioner does not cite any authorities in its Reply that attorney’s fees should be awarded for the entire arbitration simply based on the material breach of Respondent not timely paying the arbitration fee.

As to request 3, as the Court has previously mentioned, the Court will likely order at least some fees and costs related to this petition based on 1281.97(a) and 1281.99(a).

The Court will hear argument at the hearing as to the proper amount of fees and costs that should be awarded.

For the reasons set out above, the Court’s tentative is the DENY the petition to compel arbitration as MOOT.