Judge Ashfaq G. Chowdhury, Case Number: 24NNCV05986, Date: 2025-02-14 Tentative Ruling

Judge: Ashfaq G. Chowdhury, Case: 24NNCV05986, Date: 2025-02-14 Tentative Ruling

Case Number: 24NNCV05986 Hearing Date: February 14, 2025 Dept: E

Hearing Date: 02/14/2025 – 8:30am
Case No: 24NNCV05986
Trial Date: UNSET
Case Name: PLAZA HOME CARE PHARMACY, a California corporation v. CLE ELECTRIC, INC. a California corporation, and DOES 1-50

TENTATIVE RULING MOTION TO COMPEL ARBITRATION

Moving Party: Defendant, CLE Electric, Inc. (Defendant or CLE)

Responding Party: Plaintiff, Plaza Home Care Pharmacy (Plaintiff or Plaza)

Moving Papers: Notice/Motion; J. Michael Schiff Declaration; Request for Judicial Notice; Proposed Order

Opposing Papers: Opposition; Charles D.L. James Declaration

Reply Papers: Reply

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): Ok

RELIEF REQUESTED
Defendant, CLE Electric, Inc., moves for an order compelling Plaza Home Care Pharmacy to submit its claims to arbitration and an order staying the litigation.

Defendant moves pursuant to CCP §§ 1281.2 and 1281.4, and the Court’s inherent authority to compel arbitration based on the Parties’ written agreement.

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.)

ANALYSIS
On 11/21/2024, Plaintiff, Plaza Home Care Pharmacy filed an action alleging causes of action for (1) Declaratory Relief and (2) Preliminary Injunction and Permanent Injunction.

Plaintiff alleges that the real property and construction work of improvement, which is the subject of this action, is commonly known as Plaza Home Care Pharmacy. (Compl. ¶ 5.) Plaintiff alleges that on or about June 14, 2023, Defendant was engaged by Plaintiff, the owner of the project, as owner/contractor to purchase switch gear and a generator for the project. (Compl. ¶ 6.)

Plaintiff alleges that Defendant has not performed the work in connection with the electrical switchgear and/or generator for which Plaza paid CLE. (Compl. ¶ 9.)

Plaintiff alleges that prior to Defendant performing any construction work at the project, on or about November 2, 2023, Defendant forwarded Plaintiff a modification to the initial contract that would change the arbitration clause in the initial contract to litigation in the event of a dispute. (See Compl. ¶ 8.)

In this motion, Defendant argues that the modification (amendment) to the initial contract that it sent Plaintiff was never signed by Plaintiff. Thus, Defendant argues that the initial contract containing the arbitration clause controls, and Plaintiff should be compelled to arbitration.

Plaintiff argues that it did in fact sign the modification, and because the modification to the initial contract provided for disputes to go to litigation, this dispute cannot be compelled to arbitration.

Existence of Arbitration Agreement
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.) 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.)

Here, Defendant requested judicial notice of Plaintiff’s Complaint and attached Plaintiff’s Complaint as Exhibit A in Defendant’s request for judicial notice. Plaintiff’s Complaint contains the initial contract that contains the arbitration clause that Defendant bases its motion off of.

In opposition, Plaintiff does not attack the initial contract which contains the arbitration provision. Plaintiff instead argues that it signed the modification (which would allow for litigation instead of arbitration); therefore, Plaintiff argues that there is a defense to enforcement of arbitration.

Because Plaintiff did not attack the scope or existence of the initial contract with the arbitration clause, Defendant met its burden in demonstrating the existence of the arbitration agreement.

Defense to Arbitration
Plaintiff’s main argument as to why arbitration should not be compelled is because Plaintiff signed a modification (amendment) on November 2, 2023 which changed the dispute resolution from arbitration (in the initial contract) to litigation.

The Court does not find Plaintiff’s argument availing for several reasons.

“If the party opposing the petition raises a defense to enforcement – either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see § 1281.2, subds. (a), (b)) – that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

Although Plaintiff did not submit any documents for the Court to consider, Plaintiff appears to be relying on the modification that is attached to the Complaint as Exhibit B that allegedly contains Plaintiff’s signature of the modification on November 2, 2023.

For the reasons explained below, the Court does not find that Plaintiff met its burden in proving, by a preponderance of the evidence, that Plaintiff has a defense to Defendant compelling arbitration.

In Defendant’s moving papers, Defendant argues that Plaintiff did not in fact sign the modification, but instead rejected the modification.

The Court finds Defendant’s argument availing.

Defendant attached an email from Janelle Ursic, an employee of Defendant, that was sent to Plaintiff on Friday, November 3, 2023 at 11:21 a.m. that contained the modification (amendment) for Plaintiff to sign.

Defendant also attached emails with Plaza’s response to Defendant’s emails.

Plaza responded on November 3, 2023 at 5:45 pm. with:

1-The last article has consequential damage ( article 21.9 plus 17.3.3)

Also, the whole contract tis for Plaza Home Care Pharmacy and CLE contractor

which Plaza Home Care is also another tenant

it should be changed to BF1 Properties LLC

Is 18% mark up fair?

Can we rewrite the contract correctly rather than amendment

(Schiff Decl., Ex. 2.)

Additionally, Plaza responded on November 3, 2023 at 5:49 p.m. with:

Also, I am wondering why no where in the contract addressed that payment should be

based on city inspection

why it has constantly mentioned architect only in the light you're not an electronic

engineer and if something is off you would not know

(Schiff Decl. Ex. 2.)

Further, Plaza responded on November 3, 2023 at 6:34 p.m. with:

Dear Jenneal

There is lots of things are wrong in the contract which I also have addressed them to Richard

1- there is no where in the contract

Mentioned that payment should be based on

City inspection which is customary instead ,

It is based on [architect] approval in the light that Herman is not an engineer and if some thing is off,

he would not know

2- the contract is between plaza home care pharmacy and CLE

Legally plaza Home Care is also another tenant and it should be BF1 Properties LLC

3- last section still there is wavier of consequential damage in the light that

Mark promised me that my black out is not more than 1-2 hours

If it is 4-5 hours office hours I do not mind too

But if it is more what [am I] supposed to do ?

Of course I do not mind if it is more if it is not during office hour like at night or early morning

I am happy to pay for overtime

But that section is not fair based on mark promises

4- can we rewrite the contract pls

(Schiff Decl. Ex. 2.)

Although Defendant sent Plaintiff the amendment via email, Plaintiff’s responses via email on November 3, 2023 indicate that Plaintiff never accepted the terms of the amendment (modification).

“A contract can, of course, be subsequently modified with the assent of the parties thereto [citations], provided the same elements essential to the validity of the original contract are present.” (Carlson, Collins, Gordon and Bold v. Banducci (1967) 257 Cal.App.2d 212, 223.)

“It is elementary contract law that in order for there to be a contract there must be a meeting of the minds; mutual assent is necessary. [citations] There is no meeting of the minds of the parties to a contract while they are still negotiating the terms of the agreement.” (Carlson, Collins, Gordon and Bold v. Banducci (1967) 257 Cal.App.2d 212, 222-223.)

“[T]erms proposed in an offer must be met exactly, precisely and unequivocally for its acceptance to result in the formation of a binding contract [citations]; and a qualified acceptance amounts to a new proposal or counteroffer putting an end to the original offer…” (Panagotacos v. Bank of America (1998) 60 Cal.App.4th 851, 855-856.)

“It is hornbook law that un unequivocal rejection by an offeree, communicated to the offeror, terminates the offer, even if the offeror does no further act, the offeree cannot later purport to accept the offer and thereby create enforceable contractual rights against the offeror.” (Beverly Way Associates v. Barham (1990) 226 Cal.App.3d 49, 55.)

In light of Plaintiff’s responsive emails, the Court does not find that Plaintiff accepted the modification that Defendant emailed Plaintiff on November 3, 2023.

Further, although the modification/amendment contains Plaintiff’s signature on November 2, 2023, Defendant pointed out that Plaintiff’s signature on November 2, 2023 would have been backdated to November 2, 2023 in attempts to avoid the fact that Plaintiff first rejected the modification on November 3, 2023.

The Court finds Defendant’s argument – that Plaintiff backdated the signature on the modification to November 2, 2023 to avoid the fact that Plaintiff rejected the modification on November 3, 2023 – to be availing.

Defendant’s Exhibit 1 shows that Defendant sent Plaintiff the modification via email on November 3, 2023. Therefore, Plaintiff’s alleged signature of the modification on November 2, 2023 makes no logical sense, and appears to be an attempt by Plaintiff to avoid the fact that Plaintiff initially rejected the modification on November 3, 2023.

Of particular importance is that in Opposition, Plaintiff does not address the fact that Defendant pointed out that Plaintiff allegedly signed the modification before the modification was sent to Plaintiff. Plaintiff submitted zero evidence in opposition to contest Defendant’s assertion and offer of proof that the modification was not sent until November 3, 2023.

UCC
Plaintiff’s argument about the UCC is incomprehensible.

If Plaintiff is trying to argue that under the UCC a contract can be modified by acting in good faith by signing and returning a modification, Plaintiff’s argument is unavailing.

First, the Court has no idea as to Plaintiff’s theory about how or why the UCC applies.

Second, even if the Court assumed the UCC applied, Plaintiff submitted no evidence that it acted in good faith or that it signed the modification. Defendant’s evidence showed that the modification was not emailed to Plaintiff until November 3, 2023, and that Plaintiff’s signature on November 2, 2023 would make no logical sense. If anything, Plaintiff’s signature indicates bad faith, particularly in light of the fact that Plaintiff did not submit any evidence in Opposition to contest Defendant’s argument.

Trial
Plaintiff’s Opposition argues that the motion to compel arbitration is premature because of the fact that the declaratory relief action requires a full evidentiary hearing.

The Court does not understand Plaintiff’s argument.

A motion to compel arbitration is an evidentiary hearing.

“A party opposing contractual arbitration of a dispute does not have the right to a jury trial of the existence or validity of the arbitration agreement.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 396, 413.)

TENTATIVE RULING
Defendant’s motion to compel arbitration is GRANTED. Defendant’s request for judicial notice is granted.