Judge: Ashfaq G. Chowdhury, Case: 24NNCV03686, Date: 2025-05-15 Tentative Ruling

Hearing Date: 03/20/2025 – 8:30am
Case No. 24NNCV03633
Trial Date: UNSET
Case Name: GUISHENG XU, an individual, v. JIAQI HAN, an individual; FUZHOU LIU, an individual; YINMING LIU, an individual; FIRST STOP AUTO LLC, a California limited liability company; and DOES 1 to 10, inclusive

 

TENTATIVE RULING ON MOTION TO VACATE AND SET ASIDE DEFAULT AND DEFAULT JUDGMENT

 

RELIEF REQUESTED¿¿¿
“Defendant YINMING LIU will and hereby does move this court for an order vacating and setting aside the default entered on October 11, 2024, and subsequent default judgment entered on February 4, 2025, on the grounds:

a) the Summons and Complaint purportedly served on him by substituted service on August 27, 2024, were not properly served on him and hence the default and default judgment are void;

b) alternatively, on the grounds set forth in Code of Civil Procedure section 473.5.

A copy of Defendant’s proposed Demurrer is attached to this Motion as Exhibit “C.”

The relief requested by this Motion is based upon this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, the declarations of Defendant Yinming Liu and Eugene R. Long, all pleadings and documents currently on file with the Court as well as such other oral or documentary evidence as may be presented at the time of hearing on this Motion.”

(Def. Mot. p. 2.)

PROCEDURAL

Moving Party: Defendant, Yinming Liu (Defendant or Movant)

 

Opposing Party: Plaintiff, Guisheng Xu

 

Proof of Service Timely Filed (CRC, Rule 3.1300(c)): Ok
16/21 Court Days Lapsed (CCP § 1005(b)): Ok
Proper Address (CCP § 1013, § 1013a, § 1013b): Ok

Moving Papers: Notice/Motion [filed 2/10/2025]; Amended Notice/Motion [filed 2/24/2025];

 

Opposition Papers: Opposition

 

Reply Papers: Reply

 

 

 

//

BACKGROUND

Plaintiff, Guisheng Xu, filed the instant action on 8/19/2024 against Defendants – (1) Jiaqi Han, an individual, (2) Fuzhou Liu, an individual, (3) Yinming Liu, an individual, (4) First Stop Auto LLC, a California limited liability company, and (5) Does 1 to 10, inclusive.

 

Entry of default was entered against all of the non-Doe Defendants on 10/11/2024.

 

Does 1 to 10 were dismissed from the Complaint on 10/29/2024.

 

On 02/04/2025, default judgment was entered against (1) Jiaqi Han, an individual, (2) Fuzhou Liu, an individual, (3) Yinming Liu, an individual, and (4) First Stop Auto LLC, a California limited liability company.

 

For purposes of this hearing, the Court considers Defendant, Yinming Liu’s, amended notice/motion filed on 2/24/2025 and not the earlier filed notice/motion that was filed on 2/10/2025.

 

ANALYSIS
Preliminary Matter

In the instant action, Plaintiff filed four proofs of substituted service on 8/29/2024 for all of the named Defendants in this action.

 

Moving Defendant, Yinming Liu, moves for an order to vacate and set aside the default and default judgments entered against him on the basis that he was not properly served.

 

Movant appears to move pursuant to CCP § 473(d), and in the alternative, § 473.5.

 

The Court notes that neither party’s papers is a model of clarity. For example, neither party makes clear why § 473(d) or § 473.5 is or is not the appropriate statute to move under to vacate the default/default judgment. Generally speaking, Defendant argues that service upon him was improper, and Plaintiff argues that service upon Defendant was proper. To the Court, this motion appears to be akin to a motion to quash service of summons. Either way, since Defendant’s motion does not make clear why § 473(d) or § 473.5 is the appropriate statute, and since Plaintiff did not oppose Defendant’s motion on the grounds that those two statutes are not the proper statutes, the Court will assume Defendant moved under the proper statute.

 

Substantive

On 8/29/2024, Plaintiff filed a proof of service of summons that alleged substituted service on Defendant, Yinming Liu, on 8/27/2024.

Defendant, Yinming Liu, argues that service upon him was not proper.

 

Compliance with the statutory procedures for service of process is essential to establish personal jurisdiction. (American Express Centurion Bank v. Zara (2011) 199 Cal.App.4th 383, 387.)

 

As to how Defendant believes that service upon him was improper is not entirely clear. Many times Defendant asserts arguments without citing legal authority. Or at times, Defendant will make reference to legal authority, but in no clear manner does Defendant explain how his argument is tied to the legal authority that he cited.

 

For example, Defendant first appears to argue that service upon him was not valid because Plaintiff did not personally serve him.

 

The argument that service was improper because Defendant was not personally served appears to be unavailing for several reasons.

 

First, Plaintiff’s proof of service lists service upon Defendant via substituted service; it does not list service upon Defendant via personal service.

 

Second, it does not appear that Defendant has to be personally served, because substituted service is an alternative to personal service.

 

As explained in American Express Centurion Bank v. Zara:

 

The Code of Civil Procedure specifies the various methods by which service may be made upon defendants who are sued as individuals.

 

The method described as “personal service” means service that is accomplished “by personal delivery of a copy of the summons and of the complaint to the person to be served.” (§ 415.10.) If the complaint and summons were personally delivered to, i.e., handed to, defendant then he could be said to have been “personally served.”

 

A defendant may also be “personally” served by delivering a copy of the summons and complaint to an agent authorized to accept service on behalf of that defendant. (§ 416.90; see Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶¶ 4:128 to 4:132, pp. 4–19 to 4–21; (rev. # 1, 2010) ¶ 4:184, p. 4–27 (rev. # 1, 2004) (hereafter Weil & Brown, Civil Procedure Before Trial).) An authorized agent might include, for example, an attorney who has been expressly authorized to accept service, or a sheriff or jailer having custody of a prisoner. (Weil & Brown, Civil Procedure Before Trial, supra, ¶ 4:128, p. 4–19, ¶¶ 4:130.2, 4:132, pp. 4–20 to 4–21.)

 

Another alternative available for serving individual defendants is what is commonly known as “substitute service.” Substitute service on an individual is accomplished by “leaving a copy of the summons and complaint **103 at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address ..., at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.” (§ 415.20, subd. (b).)

 

However, an individual may be served by substitute service only after a good faith effort at personal service has first been made: the burden is on the plaintiff to show that the summons and complaint “cannot with reasonable diligence be personally delivered” to the individual defendant. (§ 415.20, subd. (b); Evartt v. Superior Court (1979) 89 Cal.App.3d 795, 801, 152 Cal.Rptr. 836.) Two or three attempts to personally serve a defendant at a proper place ordinarily qualifies as “ ‘reasonable diligence.’ ” (Weil & Brown, Civil Procedure Before Trial, supra, ¶ 4:196, p. 4–30.)

 

(American Express Centurion Bank v. Zara (2011) 199 Cal.App.4th 383, 389.)

 

Thus, Defendant’s argument that service was improper because he was not personally served is unavailing.

 

Substituted Service – Usual Place of Business

The proof of service pertaining to Defendant, Yinming Liu, states that Defendant was substitute served at “314 E Garvey Ave Monterey Park, CA 91755.”

 

Further, Plaintiff’s proof of service checks a box for substituted service via business to “a person at least 18 years of age apparently in charge at the office or usual place of business of the person to be served.” The proof of service also indicates that the documents were left with “Jane Doe – Angela, refused last name (Gender: F Age: 35 Height : 6’0” Weight: 120 Race: Asian American Hair: Black Other: Hazel Eyes) Manager.”

 

Under CCP § 415.20(b), substitute service is effectuated when:

 

If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10th day after the mailing.

 

(CCP § 415.20(b).)

 

Defendant appears to be arguing that substitute service was not proper under § 415.20(b) because he was not served at his “usual place of business,” and because service was not left with “a person apparently in charge of his or her office, place of business, or usual mailing address.”

Attached to the motion, the declaration of Defendant Yinming Liu is attached.

 

In relevant part, Liu’s declaration states:

 

2. Plaintiff Guisheng Xu, states that service of a Summons and Complaint was affected [sic] by substitute service on me on August 27, 2024. Plaintiff claims that substitute service was made by serving on one Jane Doe – “Angela” -- who refused to provide her last name, who held a position as a “Manager.” I do not know this individual nor do I have any personal or business relationship with her.

 

3. The address of 314 Garvey Avenue Monterey Park, CA 91755 is a small building with several businesses at that location, and it is not my place of business. The building does not have any front desk person or onsite management office. The corporate defendant First Stop Auto LLC is a dormant entity with no revenue, employees, or operations. It does not have any manager, employees, or representatives at that address.

 

4. I first became aware of this lawsuit on January 2, 2025, upon receipt of a WeChat message from defendant Fuzhou Liu. A review of the lawsuit revealed that it concerns a dispute concerning an unpaid loan of $50,000 between two individuals, Plaintiff and Mr. Fuzhou Liu. It has nothing to do with me as an individual or the corporate defendant, First Stop Auto LLC.

 

5. On February 4, 2025, I appeared at the Court and sought to express my position to the Court. The Court advised me that it cannot give me any legal advice and the only advice to me was to retain a lawyer to file a motion for relief. Accordingly, I have retained the law firm of WHGC, PLC to file this Motion.

 

(Liu Decl. ¶¶ 2-5.)

 

To the extent that Defendant is arguing that substitute service was not proper under § 415.20(b) because he was not served at his “usual place of business,” Defendant’s declaration appears to address this in ¶ 3 of the Liu declaration wherein Liu states, “The address of 314 Garvey Avenue Monterey Park, CA 91755 is a small building with several businesses at that location, and it is not my place of business.” (Liu Decl. ¶ 3.)

 

In Opposition, Plaintiff argues that Defendant Yinming Liu was in fact properly substitute served at his “usual place of business.” Plaintiff argues that Liu is making misrepresentations to the Court and that the 314 Garvey address is in fact Liu’s “usual place of business.”

 

To support this argument, Plaintiff attaches the declaration of Plaintiff’s attorney (Tom F.Y. King), along with Exhibits A-E cited in King’s declaration.

 

King states as follows:

 

2. In or about August 2024, I searched, downloaded, and printed a statement of information filed with California Secretary of State filed by Yinming Liu on behalf First Stop Auto LLC on August 13, 2024. Attached hereto as Exhibit A is a true and correct copy of the statement of information I obtained from California Secretary of State website. It shows Yingming Liu as the CEO, member, manager, and agent for service of process of First Stop Auto LLC, located at 314 E Garvey Ave, Monterey Park, CA 91755.

 

3. Previously, before Yinming Liu filed the August 13, 2024 statement, I also searched and download a statement of information Yinming Liu filed with California Secretary of State the year before on July 5, 2023, which also shows Yinming Liu as the CEO, member, manager, and agent for service of process of First Stop Auto LLC located at 314 E Garvey Ave, Monterey Park, CA 91755. A true and correct copy of said statement is attached hereto as Exhibit B.

 

4. In January 2025, after the three individual defendants appeared in court to try to argue their case on January 16, 2025, I searched, found, and download from California Secretary of State website a statement of information filed by Yinming Liu on January 3, 2025 moving the company address to 797 E Arrow Hwy, Azusa, CA 91702, a copy of which is attached hereto as Exhibit C. I also found and downloaded a statement of information filed on January 16, 2025 by co-defendants Jiaqi Han moving the company address back to 314 E Garvey Ave, Monterey Park, CA 91755 and removing Yinming Liu's name from the company. A true and correct copy of said statement is attached hereto as Exhibit D.

 

5. As a result of the two successively filed statement of information First Stop Auto LLC filed with California Secretary of State in January 2025, all previously filed statement of information were purged from the public record. I inquired on this matter online and discovered that it is the policy of California Secretary of State to only keep the two most recently filed statement of information for an entity for public record. Attached hereto are search results from Google based on the search terms "California Secretary of State purging prior statement of information." The search result shows a general result followed by links to specific webpage results. Attached hereto as Exhibit E is a page from the general search result and a specific search results from California Secretary of State website.

 

(King Decl. ¶¶ 2-5.)

 

However, even assuming the truth of King’s declaration and the attached exhibits, Plaintiff’s argument is not on point and appears to miss the mark.

 

For example, to the extent that the California Secretary of State lists Yinming Liu as manager, member, CEO, and agent for service of process at the 314 E Garvey address, that information is applicable to First Stop Auto LLC. That information says nothing about the Defendant as an individual that is filing the instant motion. The instant proof of service that Defendant is arguing is improper is the proof of service as to the individual, Yinming Liu. Yinming Liu is arguing that the 314 address is not his usual place of business. At best, the information attached from the California Secretary of State would maybe seem to indicate that Yinming Liu could accept service at the 314 E Garvey address for First Stop Auto LLC since he was listed as agent of service of process for First Stop Auto LLC. However, to reiterate, that information says nothing about where Yinming Liu, the individual’s usual place of business is. At best, it may show where First Stop Auto LLC’s usual place of business is. Ultimately, First Stop Auto LLC is not moving to vacate default/quash service of summons. Here, moving Defendant is Yinming Liu the individual.

 

At best, maybe the successive filings with the Secretary of State tests Liu’s credibility for changing the address of First Stop Auto LLC and changing the name of the agent for service of process. However, again, even assuming there were bad faith, the Court fails to see how Plaintiff’s arguments addresses the usual place of business of the moving Defendant, Yinming Liu, the individual.

 

Despite all this, in Defendant’s Reply Defendant confusingly argues that even if 314 E Garvey were Liu’s place of business, service was not proper because the crucial question is whether service was proper where Plaintiff served an unknown individual at a location that housed several other businesses where there is no indication that the individual ever informed Liu of service.

 

Therefore, the Court will hear argument from the parties about the “usual place of business” of Defendant.

 

Substituted Service – Person Apparently in Charge of his or her office, place of business

The proof of service pertaining to Defendant, Yinming Liu, states that Defendant was substitute served at “314 E Garvey Ave Monterey Park, CA 91755.”

 

Further, Plaintiff’s proof of service checks a box for substituted service via business to “a person at least 18 years of age apparently in charge at the office or usual place of business of the person to be served.” The proof of service also indicates that the documents were left with “Jane Doe – Angela, refused last name (Gender: F Age: 35 Height : 6’0” Weight: 120 Race: Asian American Hair: Black Other: Hazel Eyes) Manager.”

 

Under CCP § 415.20(b), substitute service is effectuated when:

 

If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10th day after the mailing.

 

(CCP § 415.20(b).)

 

Defendant argues that the individual who was served on Defendant’s behalf is not an individual with whom Liu had any personal or business relationship.

 

Further, in relevant part, Liu’s declaration states:

 

2. Plaintiff Guisheng Xu, states that service of a Summons and Complaint was affected [sic]by substitute service on me on August 27, 2024. Plaintiff claims that substitute service was made by serving on one Jane Doe – “Angela” -- who refused to provide her last name, who held a position as a “Manager.” I do not know this individual nor do I have any personal or business relationship with her.

 

3. The address of 314 Garvey Avenue Monterey Park, CA 91755 is a small building with several businesses at that location, and it is not my place of business. The building does not have any front desk person or onsite management office. The corporate defendant First Stop Auto LLC is a dormant entity with no revenue, employees, or operations. It does not have any manager, employees, or representatives at that address.

 

4. I first became aware of this lawsuit on January 2, 2025, upon receipt of a WeChat message from defendant Fuzhou Liu. A review of the lawsuit revealed that it concerns a dispute concerning an unpaid loan of $50,000 between two individuals, Plaintiff and Mr. Fuzhou Liu. It has nothing to do with me as an individual or the corporate defendant, First Stop Auto LLC.

 

5. On February 4, 2025, I appeared at the Court and sought to express my position to the Court. The Court advised me that it cannot give me any legal advice and the only advice to me was to retain a lawyer to file a motion for relief. Accordingly, I have retained the law firm of WHGC, PLC to file this Motion.

 

(Liu Decl. ¶¶ 2-5.)

 

Defendant’s argument – that the individual who was served on Defendant’s behalf is not an individual with whom Liu had any personal or business relationship – is confusing because it isn’t entirely clear what portion of § 415.20(b) Defendant is arguing that Plaintiff did not comply with.

 

Presumably, Defendant is trying to argue that “Jane Doe – Angela” was not “a person apparently in charge of his or her office, place of business,” and thus service was improper. Defendant’s declaration does not state that Jane Does/Angela was not “a person apparently in charge of his or her office or place of business” in any explicit terms. Instead, the Liu declaration states in relevant part, “I do not know this individual nor do I have any personal or business relationship with her.” (Liu Decl. ¶ 2.)

 

In Opposition, Plaintiff does not address Defendant’s argument regarding the individual that was allegedly served in any clear manner. Plaintiff’s Opposition seems to mainly contest that 314 E Garvey was in fact the usual place of business of Defendant. It seems like Plaintiff attempts to argue that Defendant is not credible based on the filing with the secretary of state because Defendant would know the people at the 314 E Garvey address because it is his address.

 

In Reply, Defendant argues that the key issue here is that Plaintiff served an unknown individual that housed several other businesses where there is no indication that the individual ever informed Liu of the service.

 

Here, the Court will hear argument. Defendant appears to be arguing, although not explicitly stated in Defendant’s motion or Defendant’s declaration, that “Jane Doe – Angela” was not a person apparently in charge of his or her office, or place of business. Opposition does not do much to contest this argument. Plaintiff’s Opposition seems to just be implying that Defendant would in fact know who Angela is because the 314 Garvey address is Defendant’s business. The Reply reiterates that Defendant has no idea who Angela is and that there is no evidence to suggest that she worked with or for Liu.

 

473.5

Under CCP § 473.5(a):

 

When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.

 

(CCP § 473.5(a).)

 

Defendant argues that the Summons and Complaint did not result in actual notice to Liu for Liu to defend the action.

 

However, the Court notes that neither party’s arguments regarding § 473.5 adds any further substance to their arguments. Plaintiff’s arguments that Defendant did in fact have notice are based on the same arguments previously discussed, i.e., Plaintiff argues that Defendant is lying and in fact had notice because Defendant is/was CEO of First Stop Auto LLC which is located at 314 E Garvey.

 

Overall

 

Dill v. Berquist Construction Co. states:

 

It has been held that the filing of a proof of service creates a rebuttable presumption that the service was proper. (M. Lowenstein & Sons, Inc. v. Superior Court (1978) 80 Cal.App.3d 762, 770 [145 Cal.Rptr. 814], quoting from Judicial Council Rep., supra, com. to § 417.10, p. 56; but see Johnson & Johnson v. Superior Court (1985) 38 Cal.3d 243, 255, fn. 7 [211 Cal.Rptr. 517, 695 P.2d 1058], overruling Lowenstein on a related issue.) However, that presumption arises only if the proof of service complies with the statutory requirements regarding such proofs.

 

(Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1441-1442.)

 

Here, Defendant appears to have shown how Plaintiff’s proof of service as to moving Defendant did not comply with the statutory requirements for proof of substituted service. Defendant appears to have shown this by showing that the location served was not his usual place of business. Plaintiff’s argument in Opposition appeared to be unavailing because at best Plaintiff may have shown that the address served was First Stop Auto LLC’s usual place of business; however, First Stop Auto LLC is not seeking to vacate the default/default judgment. Here, moving Defendant is Yinming Liu. Plaintiff did not submit proof or evidence about Yinming Liu, the individual’s, usual place of business. Even setting aside the issue of “usual place of business” and focusing on whether or not a “person apparently in charge of his or her office or  place of business” was served, Defendant seems to argue that he had no idea who the person is that Plaintiff served. In Opposition, Plaintiff simply seems to argue that Defendant is lying and Defendant would know who was served because the location served was where Defendant’s business was located.

Dill v. Berquist Construction Co. states, “In the absence of a voluntary submission to the authority of the court, compliance with the statutes governing service of process is essential to establish that court’s personal jurisdiction over a defendant. When a defendant challenges that jurisdiction by bringing a motion to quash, the burden is on the plaintiff to prove the existence of jurisdiction by proving, inter alia, the facts requisite to an effective service.” (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1439-1440.)

Tentatively, the Court plans to GRANT, Defendant Yinming Liu’s motion to vacate the default and default judgment entered against Yinming Liu. The Court notes that this order does not apply to the other Defendants, as no other Defendants moved to vacate default/judgment.

 



Case Number: 24NNCV03686    Hearing Date: May 15, 2025    Dept: E

Hearing Date: 05/15/2025 – 8:30am
Case No: 24NNCV03686
Trial Date: UNSET
Case Name: PERLA MAGENA v. KANG DU, INC., A CALIFORNIA CORPORATION

TENTATIVE RULING ON MOTION TO COMPEL ARBITRATION

BACKGROUND

 

Plaintiff, Perla Mageno, filed the instant action on 8/20/2024 against Defendants, Kang Du, Inc., and Does 1-10.

 

Plaintiff’s Complaint alleges one cause of action for “Violations of the Unruh Civil Rights Act, California Civil Code § 51 et seq.”

 

Plaintiff, a visually-impaired and legally blind person, brings this action against Kang Du, Inc., for its alleged failure to design, construct, maintain, and operate its website (www.bmcphoexpress.com) to be fully accessible to and independently usable by Plaintiff and other blind or visually impaired people. (See Compl. ¶¶ 1-2.)

 

On 11/13/2024, Plaintiff named Defendant Doe 1 as Azusa Ave Eatery, Inc. (Azusa).

 

On 11/14/2024, Plaintiff dismissed Defendant, Kang Du, Inc.

 

On 12/30/2024, Defendant, Azusa, filed an Answer to the Complaint.

 

On 12/30/2024, Defendant, Azusa, filed a Cross-Complaint against Cross-Defendant, MENUFY.COM LLC and ROES 1 – 10.

 

On 3/13/2025, Defendant, Azusa, filed a First Amended Cross-Complaint (FACC) against Cross-Defendants, MENUFY.COM LLC and ROES 1-10, for: (1) Equitable Indemnity and (2) Intentional Misrepresentation.

 

Defendant/Cross-Complainant, Azusa, alleges in its FACC that Cross-Defendant, MENUFY.COM LLC (Menufy) provides website platform services for the restaurant industry. (FACC ¶ 8.)

 

Azusa alleges that it utilized Menufy’s website platform and that Menufy represented to Azusa that its website platform services were fully compliant with all disability laws in the State of California and in full compliance with all requirements and protections for the visually impaired under the Unruh Civil Rights Act, California Civil Code § 51 et seq. (See FACC ¶¶ 9-10.)

 

On 4/1/2025, Plaintiff dismissed the Complaint with prejudice.

 

On hearing for 5/15/2025 is Cross-Defendant, Menufy’s, motion to compel Cross-Complainant, Azusa, to arbitration.

 

PROCEDURAL

 

Moving Party: Cross-Defendant, Menufy.com, LLC (Menufy or Cross-Defendant)

 

Responding Party: Cross-Complainant, Azusa Ave Eatery, Inc. (Azusa or Cross-Complainant)

 

Moving Papers: Notice/Motion; Laura Penaranda Declaration; Jason Abraham Declaration; Proposed Order; Request for Judicial Notice

 

Opposing Papers: Opposition; Kien C. Tiet Declaration

 

Reply Papers: Reply

 

Proof of Service Timely Filed (CRC, Rule 3.1300(c)): Ok
10 Days’ Notice under CCP § 1290.2 : Ok

 

RELIEF REQUESTED

 

“Cross-Defendant Menufy.com, LLC (“Menufy” or “Cross-Defendant”) will and hereby does move for an order to: (1) compel Cross-Complainant Azusa Ave Eatery, Inc.’s (“Cross-Complainant”) claims to arbitration on an individual basis, and (2) stay this case as to Azusa Ave Eatery, Inc.’s complaint against Cross-Defendant.

 

Cross-Defendant makes its motion to compel arbitration pursuant to the Federal Arbitration Act, California Code of Civil Procedure § 1281, and California’s strong public policy favoring resolution of disputes by arbitration, on the grounds that Cross-Complainant agreed to arbitrate its claims against Cross-Defendant.

 

This Motion is based on this Notice of Motion and Motion; the attached Memorandum of Points and Authorities; the accompanying Declarations of Jason Abraham and Laura Penaranda; Request for Judicial Notice; all records and pleadings filed in this action; and such other oral and documentary evidence as may be presented at the hearing or in connection with this Motion”

 

(Mot. p. 2.)

 

ANALYSIS

Code of Civil Procedure § 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 rescission of the agreement.

 

(CCP § 1281.2(a)-(b).)

 

The party seeking arbitration bears the initial burden of demonstrating the existence of an arbitration agreement. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.) Once the Court concludes an arbitration agreement exists, it must then consider whether the agreement covers the claims at issue. (Omar v. Ralphs Grocery (2004) 118 Cal.App.4th 966, 960.) Even when the FAA applies, “interpretation of the arbitration agreement is governed by state law principles.” (Hotels Nevada, LLC v. Bridge Banc, LLC (2005) 130 Cal.App.4th 1431, 1435.)

 

Declaration of Jason Abraham

 

For purposes of providing relevant background context, the Court first includes the declaration submitted by Cross-Defendant, Menufy, that forms the basis of Cross-Defendant moving to compel Cross-Complainant to arbitration:

 

2. I have worked at HungerRush, LLC (“HungerRush”) since September 11, 2023, and am currently employed as Director of Product for Menufy. HungerRush acquired Menufy in 2021. HungerRush and Menufy are headquartered in Kansas. Menufy is a leading online ordering system for restaurants, supporting more than 16,000 independently owned restaurants and small chains in more than 3,000 cities across the United States. Menufy offers services, including managing website design, delivery service, point of sale, and other services for restaurants’ online ordering.

 

3. I manage the Menufy website for restaurants, including defining the strategy and implementing fixes for digital products, which includes Menufy’s “Manager Dashboard” for restaurants to manage their accounts. As Director of Product for Menufy, I have knowledge of and access to Menufy’s restaurant registration and usage records. As part of those records, which Menufy keeps in its regular course of business, Menufy has information regarding when restaurants register and agree to the Terms of Service as well as log-in information to see when restaurants are accessing Menufy’s Manager Dashboard.

 

4. Menufy’s primary service is designing and providing online ordering websites that consumers nationwide can access to find out more information about restaurants in whatever cities they live in or travel to across the United States, as well as allowing consumers to place orders at restaurants for delivery or carryout. I am familiar with Cross-Complainant’s account with Menufy for its eight BMC Pho Express restaurant locations in the Los Angeles area (the “BMC Pho Restaurants”). The website domain for the BMC Pho Restaurants was at all relevant times http://www.bmcphoexpress.com.

 

5. The Menufy registration process can start online through Menufy’s website, by calling a Menufy sales agent, or through a third-party service. Regardless of the sign-up entry point, restaurants are required to provide information to Menufy such as the restaurant’s name, phone number, address, and type of cuisine, as well as the name, phone, and email of the restaurant’s primary contact person and the method to receive online orders.

 

6. After completing the initial intake, a Menufy team member gives the restaurant account manager access to manage the restaurant’s e-commerce and account settings by associating a restaurant-provided email with access permissions in Menufy’s systems. The following screenshot is a true and correct copy of a sample of the e-commerce and account settings displayed to the account manager of a restaurant.

 

[Image Omitted.]

 

7. After setting up a new credential in the e-commerce and account settings, Menufy sends the email address provided by the restaurant an email welcoming the restaurant to Menufy and asking them to sign into their “Manager” account. The following screenshot is a true and correct copy of a sample of the email sent to the account manager of a restaurant.

 

[Image Omitted.]

 

8. Once the restaurant account manager clicks on the “Manager” link provided in the welcome email, the account manager is directed to Menufy.com where it is prompted to log into the restaurant’s account. The following screenshot is a true and correct copy of a sample of the log-in page.

 

[Image Omitted.]

 

9. Once the restaurant account manager signs into the restaurant’s account for the first time, the Terms of Service are displayed to the account manager, and the account manager can access the restaurant’s account on the “Manager Dashboard” on menufy.manager.com once it has clicked on the “I AGREE” button displayed at the bottom of the Terms of Service. The following screenshot is a true and correct copy of a sample screen displaying the Terms of Service.

 

[Image Omitted.]

 

10. As shown above, the initial pop-up containing the Terms of Service that is displayed to the restaurant account manager upon signing into the Manager Dashboard contains a notice, in all caps, that the Terms of Service are subject to an arbitration provision. The following screenshot is a true and correct copy of the sample pop-up screen displaying the Terms of Service’s complete arbitration provision.

 

11. I can attest the sign-up flow process has always included the pop-up with a version of the Terms of Service since at least 2020. Moreover, the Terms of Service’s arbitration provision, including its presence in the Terms of Service, has not changed since at least 2021.

 

12. Restaurants cannot use or access Menufy services unless they agree to the Terms of Service. They cannot view the Manager Dashboard until they click “I AGREE” to commence services. Restaurants can review the Terms of Service for as long as they need before deciding whether to complete the sign-up for their account.

 

13. I reviewed the account records for Cross-Complainant and the BMC Pho Restaurants, which are kept in Menufy’s regular course of business. The BMC Pho Restaurants initially completed the registration process in 2021 by following the process described in paragraphs 4-11 of this declaration. As part of its registration process, BMC Pho Restaurants accepted Menufy’s Terms of Service, by clicking “I AGREE” button at the bottom of the Terms of Service in or around February 2021. Attached hereto as Exhibit A, is a true and correct copy of the Terms of Service the BMC Pho Restaurants agreed to when it signed up with Menufy.

 

14. After it agreed to the Terms of Service, Menufy started providing services for BMC Pho Restaurants, including designing and hosting its website, http://www.bmcphoexpress.com, starting in in 2021.

 

15. I understand that Cross-Complainant took over ownership of the BMC Pho Restaurants in or around December 2023.

 

16. According to Menufy’s business records, the ownership change process started on or around November 28, 2023, when BMC Pho Restaurants’ contact person, Dat Nguyen, called Menufy Support requesting a change of ownership and billing information to Cross-Complainant’s contact person, Kien Tiet, for the following BMC Pho Restaurants locations: El Monte Valley; West Covina; Hacienda Heights; Pico Rivera; Monterey Park; Lower Azusa; Covina; and Lincoln.

 

17. After the ownership change to the Cross-Complainant, the account manager role was assigned to the email address racheltran0806@gmail.com (“Restaurant Manager”), who has access to make changes to the above identified restaurants’ websites from the Manager Dashboard.

 

18. As part of the change in ownership process, Cross-Complainant was prompted to, and accepted, Menufy’s Terms of Service when Restaurant Manager clicked “I AGREE” after accessing the Manager Dashboard at manager.menufy.com on December 18, 2023 by following the procedure described in paragraphs 9-12 of this declaration.

 

19. I also reviewed the log-in records for the Cross-Complainant’s Manager Dashboard. I confirmed that Cross-Complainant continued using Menufy services after its agreement to abide by Menufy’s Terms of Service. Based on these records, which Menufy keeps in the regular course of business, Restaurant Manager accessed the Manager Dashboard on the following dates and times (UTC): 12/18/23 2:35 AM; 12/20/23 5:36 PM; 12/31/23 8:54 PM; 1/27/24 6:38 PM; 2/4/24 10:40 PM; 2/10/24 11:16 PM; 2/18/24 6:35 PM; 3/19/24 5:44 PM; 4/5/24 10:11 PM; 4/8/24 4:41 PM; 4/8/24 4:43 PM; 4/15/24 7:04 AM; 5/6/24 8:20 PM; 5/17/24 1:30 AM; 5/17/24 1:33 AM; 6/12/24 9:04 PM; 6/25/24 6:37 PM; 6/30/24 5:42 PM; 7/9/24 11:18 PM; 8/30/24 9:05 PM; 9/6/24 11:49 PM; 9/16/24 9:39 PM; 9/24/24 4:34 PM; 9/25/24 10:38 PM; 10/11/24 3:52 PM; 10/12/24 7:48 AM; 10/13/24 5:07 PM; 11/14/24 5:49 PM; 12/22/24 7:20 PM; 12/31/24 6:01 PM; 1/1/25 6:45 PM; 1/1/25 10:43 PM; 1/21/25 1:44 AM; 1/21/25 1:44 AM; 2/4/25 4:54 PM; 2/15/25 3:16 AM; 2/18/25 7:19 PM; 2/18/25 11:22 PM; 3/14/25 3:43 PM; 3/22/25 2:31 PM.

 

(Abraham Decl. ¶¶ 2-19.)

 

Existence of Agreement – Parties

 

“The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 citing Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

Here, Cross-Defendant met its initial burden in demonstrating, by a preponderance of the evidence, that Cross-Defendant and Cross-Complainant entered into a binding arbitration agreement.

The Declaration of Jason Abraham, Director of Product for Menufy, sufficiently explained how Cross-Complainant became bound by the arbitration provision by clicking “I AGREE” to the Terms of Service.

In Opposition, Kien C. Tiet, Chief Financial Officer of Cross-Complainant, states in relevant part:

1. I am the Chief Financial Officer of Azusa Ave Eatery, Inc. (“Azusa”), Cross-Complainant in this action. Cross-Complainant assumed ownership of the restaurant located at 402 N. Azusa Ave., Covina, California in December, 2023 and continued using the Menufy platform that the prior owners had utilized.

2. When Cross-Complainant assumed ownership and Menufy’s platform it simply changed the linked bank accounts from the prior owner to new ownership for Menufy’s billing. Cross-Complainant never entered into an agreement with Menufy as to the Terms of Service, and the new owner, nor any authorized agent with permission to enter into contractual obligations, ever clicked on “I Agree” to Menufy’s Terms of Service.

3. Not until this action was filed, and at no time before it, had Cross-Complainant’s new ownership ever reviewed the arbitration provision or consented to its terms contained within Menufy’s Terms of Service.

(Tiet Decl. ¶¶ 2-3.)

Although Cross-Complainant argues it did not click “I AGREE,” the Court does not find that Cross-Complainant met its burden in opposition to establish, by a preponderance of the evidence, that Cross-Complainant did not agree to arbitrate.

First off, although the Tiet declaration states that Cross-Complainant never entered into an agreement with Menufy, Tiet only states that “the new owner, nor any authorized agent with permission to enter into contractual obligations” ever clicked “I AGREE.”

The Court points this out because Tiet’s declaration is limited. It does not state that an employee of the new owner never clicked “I AGREE.”

In fact, Cross-Complainant’s Opposition seems to concede that Cross-Complainant used the Menufy website to change billing information:

Here, Cross-Defendant presented the arbitration provision to Cross-Complainant in a pop-up box at a time when Cross-Complainant’s representative, who was not authorized to bind Cross-Complainant contractually, was simply looking to change billing account information from the previous owner of Azusa Ave Eatery, Inc.

(Oppo. p. 5.)

Considering the Abraham declaration at ¶ 12 (“Restaurants cannot use or access Menufy services unless they agree to the Terms of Service.”), and considering the fact that Cross-Complainant’s Opposition on page 5 concedes that the arbitration provision was “presented” to Cross-Complainant’s “representative” when Cross-Complainant was looking to change billing account information from the previous owner of Azusa, it appears as if someone had to have clicked “ I AGREE” for Cross-Complainant.

Further, since the Cross-Complainant has the burden, by a preponderance of the evidence, to establish any facts necessary to establish its defense, it is particularly unhelpful to the Court for Cross-Complainant to argue that the “representative” who was simply looking to change billing account information “was not authorized to bind Cross-Complainant contractually.”

This argument is unhelpful because even though it is Cross-Complainant’s burden to establish its defense, Cross-Complainant does not come forward with any legal authority as to what determines who is “authorized to bind Cross-Complainant contractually[.]”

Further, the Reply points out that the Tiet Declaration is lacking in foundation to establish who purportedly actually has “authority to bind Cross-Complainant contractually.”

With respect to the necessary foundation of the Tiet Declaration, the Court will hear argument. The Court will hear argument because the Court is curious to know how Kien C. Tiet, Chief Financial Officer of Azusa, has the authority to evaluate or determine who can contractually bind Cross-Complainant.

Likewise, the Opposition papers did not address Cross-Defendant’s argument about acceptance of a contract by implication or manifested conduct. Cross-Complainant’s Opposition also failed to address how ¶ 19 in the Abraham declaration pointed out that Cross-Defendant’s log-in records confirmed Cross-Complainant’s continued use of Menufy.

Further, on page 4 of Cross-Complainant’s Opposition, Cross-Complainant has a section titled “Menufy Made Fraudulent Misrepresentations Inducing Azusa to Enter into its Agreement for Services that Render the Arbitration Provision Unenforceable.”

If Cross-Complainant is arguing that is was fraudulently induced to enter into the agreement here, then that seems to directly undercut any attempt by Cross-Complaint to argue that no one at Azusa clicked “I AGREE.” If anything, if Cross-Complainant is arguing that Azusa is arguing that it was fraudulently induced to enter into the agreement, this would seem to imply that at least someone at Azusa entered into the agreement.

The Court will hear argument, but tentatively it plans to find that the parties entered into an arbitration agreement because Cross-Complainant did not meet its burden in Opposition to demonstrate that it did not consent to arbitration.

Scope

 

Once the Court concludes an arbitration agreement exists, it must then consider whether the agreement covers the claims at issue. (Omar v. Ralphs Grocery (2004) 118 Cal.App.4th 966, 960.)

 

The arbitration provision in the Terms of Service provides:

 

If a dispute arises between Restaurant and Menufy relating to this Agreement, Menufy’s Platform, or the Services provided by Menufy, either party may elect to exclusively resolve the dispute by binding arbitration governed by the Federal Arbitration Act (“FAA”). Any election to arbitrate, at any time, shall be final and binding on the other party. IF EITHER PARTY CHOOSES ARBITRATION, NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL. DISCOVERY AND APPEAL RIGHTS MAY ALSO BE LIMITED IN ARBITRATION. All disputes will be resolved before a neutral arbitrator, whose decision will be final except for a limited right of appeal under the FAA. The arbitrator’s fees and the costs will be shared equally by the parties, unless prohibited by law. Parties are responsible for their own attorneys’ fees. The arbitration proceeding will take place in Overland Park, Kansas, unless otherwise agreed. A Kansas court of competent jurisdiction will have the authority to enter judgment on the arbitrator’s decision and award. The parties may litigate in court to compel arbitration, to stay proceeding pending arbitration, or to confirm, modify, vacate or enter judgment on the award entered by the arbitrator. In addition, we may bring an action for injunctive relief in any court of competent jurisdiction.

 

(Abraham Decl. Ex. A, ¶ 9.)


Cross-Complainant argues that the arbitration provision does not include fraudulent claims or claims regarding equitable indemnification for Menufy’s failure to provide a legally compliant website platform to the public.

 

As a preliminary matter, the Court is unclear why Cross-Complainant’s Opposition puts its argument about whether or not the arbitration provision included claims for fraud or equitable indemnification in the Opposition’s section on substantive unconscionability. This argument appears to pertain to whether or not the claims at issue are within the scope of the arbitration agreement.

 

The Court does not find Cross-Complainant’s argument – that its claims for equitable indemnity and intentional misrepresentation in the Cross-Complaint are not within the scope of the arbitration provision – availing.

 

The Court does not understand Cross-Complainant’s argument on equitable indemnity.

 

Plaintiff filed the Complaint against Defendant/Cross-Complainant for violations of the Unruh Civil Rights Act for Azusa’s website not being accessible to Plaintiff and other blind people.

 

Cross-Complainant/Azusa filed the equitable indemnity claim against Cross-Defendant should Azusa be found liable to Plaintiff in the principal action. (FACC ¶ 17.)

 

However, on 4/1/2025, Plaintiff in the principal action dismissed the Complaint.

 

Therefore, if Azusa’s claim for equitable indemnity in the Cross-Complaint is based on the principal action, which was dismissed, how is the claim for equitable indemnity still at issue?

 

The Court would like the parties to address this at the hearing.

 

Further, even if the equitable indemnity claim is still at issue, then both claims in Azusa’s FACC appear to be within the scope of the arbitration provision.

 

“If a dispute arises between Restaurant and Menufy relating to this Agreement, Menufy’s Platform, or the Services provided by Menufy…”(Abraham Decl. Ex. A, ¶ 9.)

 

Here, both the equitable indemnity claim and the intentional misrepresentation (fraud) claims in the Cross-Complaint relate to Menufy’s Platform or the Services provided by Menufy.

 

For example, the FACC alleges in relevant part, “…Cross-Defendant represented to Cross-Complainant that its website platform services were fully compliant…” (FACC ¶ 20, emph. added.)

 

Therefore, Cross-Complainant’s claims in the FACC appear to fall within the scope of the arbitration provision.

 

Defense to Arbitration – Unconscionability (Procedural and Substantive)

 

“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.)

 

Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) Unconscionability has both a “procedural” and a “substantive” element. (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.)  An agreement to arbitrate is unenforceable only if both procedural and substantive unconscionability is shown. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165.)

 

Procedural Unconscionability

 

“ ‘The procedural element focuses on two factors: oppression and surprise. Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice.... Surprise involves the extent to which the terms of the bargain are hidden in a “prolix printed form” drafted by a party in a superior bargaining position.’ ” (Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th 1159, 1165 quoting Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 621.)

 

Here, Cross-Complainant does not argue that the arbitration agreement is oppressive.

 

Cross-Complainant does argue that the arbitration provision has “surprise,” but Cross-Complainant does not provide any legal authority to support its argument on surprise.

 

Cross-Complainant simply argues that the arbitration provision was hidden within the Terms of Service and could only be discovered if one navigated through the end of the document.

 

Here, while Cross-Complainant is correct to note that one would have to scroll down to see the arbitration provision, the Court does not find that the arbitration provision was hidden because on the first page of the Terms of Service there is a visible section in all caps and underlined that calls attention to the arbitration provision that is located further down in the Terms of Service:

 

IMPORTANT NOTICE

 

PLEASE BE AWARE THAT THE SECTIONS BELOW ENTITLED “BINDING ARBITRATION” AND “CLASS ACTION WAIVER” CONTAIN PROVISIONS GOVERNING HOW CLAIMS THAT YOU MAY HAVE AGAINST MENUFY ARE…

 

(See Abraham Decl. ¶ 9-10, see images.)

 

Further, the Abraham Declaration explains that Restaurants cannot use or access Menufy services unless they agree to the Terms of Service and they cannot view the Manager Dashboard until they click “I AGREE.” (Abraham Decl. ¶ 11-12.)

 

Thus here, there does not appear to be procedural unconscionability.

 

Substantive Unconscionability

 

As stated in Serafin

 

Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘‘ ‘ “ ‘overly harsh’ ” ’ or ‘ “ ‘one-sided’ ” results.’ ” (Roman, supra, 172 Cal.App.4th at p. 1469, 92 Cal.Rptr.3d 153.) “Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided’ in favor of the employer without sufficient justification, for example, *178 when ‘the employee's claims against the employer, but not the employer's claims against the employee, are subject to arbitration.’ [Citations.]” (Id. at p. 1469, 92 Cal.Rptr.3d 153.)

 

(Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 177-78.)

 

Cross-Complainant argues there is substantive unconscionability because the requirement that the arbitration take place in Kansas creates a significant undue economic hardship on Cross-Complainant. Cross-Complainant argues that the travel expenses and hotel accommodations necessary to fly from California and stay in Kansas for a multi-week arbitration would create a severe economic hardship on Cross-Complainant.

 

The Court does not find Cross-Complainant’s argument on substantive unconscionability availing.

Cross-Complainant did not cite to any cases that supported its argument that an arbitration clause requiring travel to another state is grounds for finding substantive unconscionability.

Overall, Cross-Complainant did not meet its burden in demonstrating procedural or substantive unconscionability. Cross-Complainant did not root its procedural or substantive unconscionability arguments in legal authority.

Fraud

CCP § 1281.2(b) is construed to mean that the petition to compel arbitration is not to be granted when there are grounds for rescinding the agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973.) “Fraud is one of the grounds on which a contract can be rescinded. (Civ. Code, § 1689, subd. (b)(1).)” (Id.)

As explained in Brown:

 

When a plaintiff alleges fraud in the inducement, the plaintiff is asserting that it understood the contract it was signing, but that its consent to the contract was induced by fraud. In contrast, when a plaintiff alleges fraud in the execution, the plaintiff is asserting that it was deceived as to the very nature of contract execution, and did not know what it was signing. A contract fraudulently induced is voidable; but a contract fraudulently executed is void, because there never was an agreement. (Rosenthal, supra, 14 Cal.4th at p. 415, 58 Cal.Rptr.2d 875, 926 P.2d 1061.)

 

When these theories are asserted with respect to an arbitration clause, different procedures apply. This is because arbitration clauses are considered separable from the agreements in which they appear. (Rosenthal, supra, 14 Cal.4th at p. 416, 58 Cal.Rptr.2d 875, 926 P.2d 1061.) When a party to a contract containing an arbitration clause asserts fraud in the inducement of the contract generally, the assertion is no bar to the arbitration of the contract. The separable arbitration clause is considered valid, and the parties must arbitrate whether the contract was induced by fraud (even though a finding of fraud in the inducement may result in rescission of the contract as a whole).11 (Id. at pp. 415–417, 58 Cal.Rptr.2d 875, 926 P.2d 1061.) However, “claims of fraud in the execution of the entire agreement are not arbitrable under either state or federal law. If the entire contract is void ab initio because of fraud, the parties have not agreed to arbitrate any controversy.” (Id. at p. 416, 58 Cal.Rptr.2d 875, 926 P.2d 1061.) Thus, claims of fraud in the execution are to be resolved by the trial court, not an arbitrator. (Ibid.)

 

(Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 958-959; fn. 11 stating, “If, however, the party is asserting fraud in the inducement of the arbitration clause specifically, the assertion is to be resolved by the trial court, as it goes to the validity of the arbitration clause itself. (Engalla v. Permanente Medical Group, Inc., supra, 15 Cal.4th at pp. 960, 973, 64 Cal.Rptr.2d 843, 938 P.2d 903; Rosenthal, supra, 14 Cal.4th at p. 419, 58 Cal.Rptr.2d 875, 926 P.2d 1061.)”)

 

Cross-Complainant’s arguments as to fraud are less than clear.

 

As a preliminary matter, although Cross-Complainant cites a case about fraud in the execution, Cross-Complainant’s arguments appear to pertain to fraud in the inducement.

 

On page 4 of the Opposition, Azusa has a section titled “Menufy Made Fraudulent Misrepresentations Inducing Azusa to Enter into its Agreement for Services that Render the Arbitration Provision Unenforceable.”

 

On page 7 of the Opposition, Azusa has a section titled “The Contract Between Azusa and Menufy was Induced by Fraudulent Representations that Make the Arbitration Provision Unenforceable.”

Cross-Complainant’s arguments with respect to being fraudulently induced into entering into the Terms of Service that contained the arbitration provision are unavailing.

 

Cross-Complainant’s arguments make no sense to the Court.

 

Azusa argues that on November 8, 2024, Cross-Defendant made misrepresentations about its site being fully compliant with all California disability laws and that Cross-Complainant relied on Cross-Defendant’s misrepresentations.

 

Azusa’s argument makes no sense because Cross-Defendant here is asserting that the Terms of Service with the arbitration provision was agreed to on December 18, 2023 when the Restaurant Manager clicked “ I AGREE.” Or to phrase it differently, it makes no sense for Cross-Complainant to argue it was fraudulently induced to enter into a contract when the alleged fraudulent inducement occurred after the agreement was already entered into.

 

Further, to the extent that Cross-Complainant is arguing that the alleged misrepresentations to induce Cross-Complainant’s predecessor occurred back in June 2022, this also makes no sense because the prior owner already agreed to the Terms of Service back in February 2021. (see Abraham Decl. ¶ 13.)

 

Cross-Complainant’s attempt to assert fraud as a defense is unavailing.

 

TENTATIVE RULING

 

The motion is GRANTED.

Request for Judicial Notice

Cross-Defendant’s request for judicial notice of Plaintiff’s Complaint, Plaintiff’s Amendment to Complaint, and Cross-Complainant’s FACC is GRANTED.




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