Judge: Ashfaq G. Chowdhury, Case: 24NNCV02767, Date: 2024-10-17 Tentative Ruling

Case Number: 24NNCV02767    Hearing Date: October 17, 2024    Dept: E

Hearing Date: 10/17/2024 – 8:30am
Case No: 24NNCV02767
Trial Date: UNSET
Case Name: LELAND HAYASHI, by and through his Successors in Interest, Brian Hayashi and Kristen Hayashi; and BRIAN HAYASHI and KRISTEN HAYASHI, as individuals v. OLYMPIC SENIOR CARE, LLC, dba MORNINGSTAR of PASADENA, a limited liability corporation; OLYMPIC SENIOR CARE, LLC, a limited liability corporation; MORNINGSTAR SENIOR MANAGEMENT, LLC, a limited liability corporation; KEN JAEGER, an individual; MATTHEW TURNER, an individual; STEVE H. MARTIN, an individual; and DOES 1-50

TENTATIVE RULING ON MOTION TO COMPEL ARBITRATION

PROCEDURAL

Moving Party: Defendants – (1) Olympic Senior Care, LLC dba Morningstar of Pasadena; (2) Olympic Senior Care, LLC; (3) Morningstar Senior Management, LLC

Responding Party: Plaintiffs – (1) Leland Hayashi, by and Through his Successors in Interest, Brian Hayashi and Kristen Hayashi; (2) Brian Hayashi; (3) Kristen Hayashi.

Moving Papers: Notice/Petition; Graciela Vega Declaration; Proposed Order

Opposing Papers: Opposition

Reply Papers: Reply; Declaration of Robert W. Chapin Jr.

Proof of Service Timely Filed (CRC Rule 3.1300(c)): Ok
16/21 Court Days Lapsed (CCP § 1005(b)): Ok
Correct Address (CCP § 1013, § 1013a, § 1013b): Yes/No – Plaintiffs’ counsel’s email address on eCourt is listed as mail@mcmahanlaw.com. Defendants’ proofs of service indicated service via email; however, Defendants’ proofs of service did not list the email address of mail@mcmahanlaw.com. Defendants’ proofs of service listed several other email addresses. Although Defendants’ counsel did not appear to list the proper email address for Plaintiffs’ counsel, Plaintiffs submitted an Opposition. Therefore, Plaintiffs appear to have received the moving papers.

RELIEF REQUESTED
“Defendants, OLYMPIC SENIOR CARE, LLC dba MORNINGSTAR OF PASADENA; OLYMPIC SENIOR CARE, LLC; MORNINGSTAR SENIOR MANAGEMENT, LLC (hereinafter collectively referred to as “Moving Defendants”) will and do hereby petition the Court, pursuant to the California Arbitration Act, Code of Civil Procedure section 1280, et seq., and for an order compelling Plaintiff LELAND HAYASHI, by and through his Successors-in-Interest, to arbitrate the controversy alleged against these Moving Defendants in Plaintiffs’ Complaint on file herein, based on a valid, irrevocable, and enforceable Arbitration Agreement between the parties.”

(Def. Mot. p. 1-2.)

“WHEREFORE, Moving Defendants pray that: 1. This Court order Plaintiffs to arbitrate the controversy alleged in the Complaint against these Moving Defendants; and 2. This action be removed from the civil active list pending the outcome of arbitration.” (Def. Mot. p. 3.)

“This Petition is made upon the grounds that the controversy alleged by Plaintiffs herein is subject to binding arbitration as against the Moving Defendants.

This Petition is based upon this Notice, the accompanying Petition to Compel Arbitration pursuant to California Code of Civil Procedure §§ 1281, 1281.4, 1295, the Memorandum of Points and Authorities in support, the attached Declaration of Graciela Vega, the attached Declaration of Zahra H. Aziz, the attached exhibits, all pleadings, papers and records on file herein, and upon any oral arguments of counsel at the time of the hearing of this Petition and Motion.”

(Def. Mot. p. 3-4.)

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. section 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.) 

BACKGROUND
There appear to be three Plaintiffs in the instant action – (1) Leland Hayashi (Hayashi), by and through his Successors in Interest, Brian Hayashi and Kristen Hayashi; (2) Kristen Hayashi; and Brian Hayashi.

Plaintiffs’ Complaint was filed on 7/8/2024 alleging three causes of action for: (1) Elder and Dependent Adult Abuse, Neglect and Abandonment (Welfare and Institutions Code § 15600 et seq.), (2) Negligence, and (3) Wrongful Death.

The first cause of action is brought by Plaintiff Hayashi and is alleged against all Defendants.

The second cause of action is brought by Plaintiff Hayashi and is alleged against all Defendants.

Thee third cause of action is brought by Plaintiffs Kristen Hayashi and Brian Hayashi and is alleged against all Defendants.

Further, the Court notes that it appears that Plaintiffs named six different Defendants – (1) Olympic Senior Care, LLC, dba MorningStar of Pasadena, a limited liability corporation, (2) Olympic Senior Care, LLC, a limited liability corporation, (3) MorningStar Senior Management, LLC, a limited liability corporation, (4) Ken Jaeger, an individual, (5) Matthew Turner, an individual, and (6) Steve H. Martin, an individual.

Moving Defendants (Movants) – (1) Olympic Senior Care, LLC, dba MorningStar of Pasadena, a limited liability corporation, (2) Olympic Senior Care, LLC, a limited liability corporation, (3) MorningStar Senior Management, LLC, a limited liability corporation – now seek to compel Plaintiffs to arbitration.

ANALYSIS
Movants seeks to compel arbitration of the Plaintiffs by submitting the declaration of Graciela Vega, which includes Exhibit A.

Exhibit A is a “Resident-Facility Arbitration Agreement.”

As stated in Jenks v. DLA Piper Rudnick Gray Cary US LLP:

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) A party seeking to compel arbitration of a dispute “bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217.)

“Code of Civil Procedure section 1281.2 allows a party to an arbitration agreement **243 to petition to compel arbitration. By stating that a party to an arbitration agreement may petition to compel arbitration, the statute assumes that a proceeding to compel arbitration will be between the signatories to the agreement.” (Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1416, 183 Cal.Rptr.3d 587 (Marenco ).)

(Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015) 243 Cal.App.4th 1, 8.)

Here, none of the named Movants in the Complaint are listed as parties to the arbitration agreement attached at Exhibit A.

Exhibit A is signed by Plaintiff, Leland Hayashi (Resident).

The other signature on exhibit A, according to the declaration of Vega, is allegedly the signature of the “Facility,” although Exhibit A does not define who the “Facility” is. The declaration of Vega implies that Regency Park Fair Oaks was the “Facility” in Exhibit A.

In relevant part of the declaration, Vega states that Leland Hayashi signed the arbitration agreement, that she (Vega) signed the agreement, that Vega witnessed Leland Hayashi sign the agreement, and that Vega is the Business Office Manager of Morningstar Pasadena.  Vega states that she was the Business Services Director of Regency Park Fair Oaks and that Regency Park Fair Oaks was sold and is now called Morningstar of Pasadena. Vega also states she was the Business Services Director for Regency Park Fair Oaks during the time that Leland Hayashi was a resident at Regency Park Fair Oaks.

Plaintiffs argue in Opposition that the only arbitration agreement submitted is signed between Leland Hayashi and Regency Park Fair Oaks, and not with any of the Moving Defendants. Plaintiffs argue that Movants simply argued that Regency Park Fair Oaks is “now Morningstar” but that Movants failed to provide any evidence of how that happened or that any of the Defendants are valid successors or assigns to the agreement.

“The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability. [Citation.]” (Marenco v. DirectTV LLC (2015) 233 Cal.App.4th 1409, 1416.)

Here, the Court does not find that Movants have met their burden in proving the existence of an arbitration agreement between the Plaintiffs and Movants.

Here, no moving Defendants are listed in Exhibit A; therefore, it would appear that Movants would have to somehow successfully argue under some theory as to how a non-signatory defendant can enforce an arbitration agreement.

Under Marenco v. DirecTV LLC:

Nonsignatory defendants may enforce arbitration agreements “where there is sufficient identity of parties.” (Valley Casework, Inc. v. Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013, 1021, 90 Cal.Rptr.2d 779.) Enforcement is permitted where the nonsignatory is the agent for a party to the arbitration agreement (id. at p. 1021, 90 Cal.Rptr.2d 779, citing Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, 418, 220 Cal.Rptr. 807, 709 P.2d 826), or the nonsignatory is a third party beneficiary of the agreement (Valley Casework, supra, 76 Cal.App.4th at pp. 1021–1022, 90 Cal.Rptr.2d 779). In addition, a nonsignatory may enforce an arbitration agreement under the doctrine of equitable estoppel. The doctrine applies where, for example, a signatory plaintiff sues a nonsignatory defendant for claims that are based on an underlying contract. In such instance, the plaintiff may be equitably estopped to deny the nonsignatory defendant's right to enforce an arbitration clause that is contained within the contract that the plaintiff has placed at issue. (See Molecular Analytical Systems v. Ciphergen Biosystems, Inc., supra, 186 Cal.App.4th at p. 706, 111 Cal.Rptr.3d 876.)

(Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1417.)

The declaration of Vega stated, “Prior to December 16, 2020, I was the Business Services Director of Regency Park Fair Oaks. Regency Park Fair Oaks was sold and is now called Morningstar of Pasadena.” (Vega Decl. ¶ 2.)

This statement does not mention anything about how nonsignatory Movants ((1) Olympic Senior Care, LLC, dba MorningStar of Pasadena, a limited liability corporation, (2) Olympic Senior Care, LLC, a limited liability corporation, (3) MorningStar Senior Management, LLC, a limited liability corporation) are the agents to the party that signed the agreement (Regency Park Fair Oaks), nor does it state that Regency Park Fair Oaks was the agent to nonsignatory Movants. All the Vega declaration stated was that Regency Park Fair Oaks was sold and it is now called Morningstar of Pasadena.

Further, the Reply’s argument that Plaintiffs are equitably estopped from denying the enforcement of the agreement is unavailing. Plaintiffs are not suing a nonsignatory defendant for claims based on an underlying contract that Plaintiffs have placed at issue – Plaintffs are suing for elder abuse, negligence, and wrongful death.

The Reply also points to Article 4 of the Arbitration Agreement which states:

This agreement shall be binding for any dispute except for disputes pertaining to collections or evictions. This agreement is binding on all parties, including their personal representatives, executors, administrators, successors, family, heirs assigns.

(Vega Decl. Ex. A. Article 4.)

It isn’t entirely clear as to why Movants point to Article 4 in Reply, but presumably Movants are trying to argue that Movants are successors to Regency Park Fair Oaks.

Problematic with this argument is that the Vega declaration just says that Regency Park Fair Oaks was sold and is now called Morningstar of Pasadena. This statement says nothing as to whether or not Morningstar of Pasadena is the successor or if it assumed any rights, liabilities, or obligations of Regency Park Fair Oaks.

In Marenco v. DirecTV LLC, a current employer had standing to enforce an arbitration provision of an employment agreement as a successor of employee's prior employer, where the current employer acquired all of the prior employer's assets, employees, rights, and liabilities, and the original terms of employee's employment were not modified, superseded, revoked, canceled, or nullified in any manner. However, in Marenco, DirecTV “submitted the declaration of its assistant secretary Janet Williamson. She attested that during the acquisition of 180 Connect, DirecTV had assumed all of 180 Connect's assets, debts, rights, responsibilities, liabilities and obligations, including “all the rights and obligations arising from 180 Connect, Inc.'s employee relationships.” (Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1414.)

Here, Vega’s declaration is nothing of the sort described in Marenco. The Vega declaration just says that Regency Park Fair Oaks was sold and is now called Morningstar of Pasadena. This statement says nothing as to whether or not Morningstar of Pasadena is the successor or if any of Movants assumed the assets, debts, rights, responsibilities, liabilities, or obligations of Regency Park Fair Oaks.

In Reply, Movants submit the declaration of Robert W. Chapin Jr. with an attached Interim Sublease between Olympic Senior Care, LLC, Pasadena CA Senior Holdings LLC, and Fair Oaks Regency Park LLC on December 16, 2020 regarding the purchase of the premises located at 951 S. Fair Oaks Ave, in Pasadena, California 91105 (“Premises”).

The Reply argues that pursuant to the sublease, “The Sublease constitutes an absolute assignment of all existing agreements with residents at the time the Interim Sublease terminated, which occurred at the time a new Residential Care for the Elderly license for the Premises was issued in favor of Olympic Senior Care, LLC on September 23, 2021. (See Exhibit “1,” ¶9(a).)” (Chapin Decl. ¶ 4.)

Here, the Court does not understand the evidence that Movants submitted in Reply.

The Court has several concerns about the evidence submitted in Reply.

First, the Court is uncertain how it proves what Movants allege it to prove.

Second, the Court is concerned as to how a lease is relevant to this arbitration agreement.

Third, the Court is entirely confused as to the legal relationship between all the parties the moving and reply papers refer to.  

Movants are as follows - (1) Olympic Senior Care, LLC, dba MorningStar of Pasadena, a limited liability corporation, (2) Olympic Senior Care, LLC, a limited liability corporation, (3) MorningStar Senior Management, LLC, a limited liability corporation – in the moving declaration of Vega, Vega only attests as to Morningstar of Pasadena but fails to mention how the other Movants are legally related to Morningstar of Pasadena. Vega makes no explanation as to the legal relationship of the moving Defendants, nor does Vega submit documentation of the Movants’ legal/corporate relationship. For example, at times, Movants will refer to Morningstar but fail to explain or provide documentation of how this implicates the other Movants.

In the Reply declaration of Chapin, Chapin was one of the managers of BSH III Holdings LLC – which isn’t a Plaintiff or Defendant in this action.

In the declaration of Chapin, Chapin states, “Attached hereto as Exhibit “1,” is a true and correct copy of the Interim Sublease between Olympic Senior Care, LLC, Pasadena CA Senior Holdings LLC, and Fair Oaks Regency Park LLC on December 16, 2020 regarding the purchase of the premises located at 951 S. Fair Oaks Ave, in Pasadena, California 91105 (“Premises”).” (Chapin Decl. ¶ 2.)

As can be seen by this statement, even though the Vega declaration mentioned how the arbitration agreement was signed by Regency Park Fair Oaks, the Chapin Declaration in Reply is now referring to Fair Oaks Regency Park LLC.

Further, the Chapin Declaration refers to Pasadena CA Senior Holdings LLC. The Court is unclear as to how this entity is related.

Chapin also points to ¶9(a) of the document attached in the reply. However, as stated before, the Court would need further explanation as to how this shows that Movants can take advantage of the arbitration agreement.

Overall, Movants maintain no consistency in naming between defendants, Movants, and non-parties and Movants don’t submit any evidence of the corporate/legal relationship of any of these Movants and non-parties.

At the hearing, the Movants should expect to explain what their Reply declaration of Chapin is attempting to prove and how it proves what Movants allege. Movants should be expected to have proof of the legal relationship between all of these parties if Movants are arguing that Movants assumed rights and liabilities of other parties or successors.

Movants’ argument that Plaintiffs conceded that Morningstar can invoke the arbitration agreement because the Complaint at ¶12 acknowledged that Morningstar was formerly Fair Oaks is unavailing. Paragraph 12 of the Complaint simply states that Hayashi moved into Morningstar (formerly Fair Oaks) in December 2017. This does not demonstrate that Fair Oaks assigned its rights and liabilities to Movants.

TENTATIVE RULING
“The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability. [Citation.]” (Marenco v. DirectTV LLC (2015) 233 Cal.App.4th 1409, 1416.)

Movants did not meet their burden in proving that non-signatory Movants [(1) Olympic Senior Care, LLC, dba MorningStar of Pasadena, a limited liability corporation, (2) Olympic Senior Care, LLC, a limited liability corporation, (3) MorningStar Senior Management, LLC, a limited liability corporation] were parties to the arbitration agreement signed by Leland Hayashi and Regency Park Fair Oaks. Further, Movants did not meet their burden in showing they could enforce the agreement under theories of agency, equitable estoppel, or third party beneficiaries.

The Court will hear argument, but it tentatively plans to DENY Movants’ motion to compel arbitration.