Judge: Christopher K. Lui, Case: 21STCV04299, Date: 2022-10-25 Tentative Ruling

Case Number: 21STCV04299    Hearing Date: October 25, 2022    Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein.  As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.  Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.  If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

            Plaintiffs sue Defendants for failure to bring the subject vehicle into compliance with applicable warranties and negligently repaired the vehicle.  

            Plaintiffs Amanda A. Binns and Eric Gurney move for an order to vacate the order compelling arbitration, remove this matter from arbitration, lift the arbitration stay, proceed in state court, and for monetary sanctions.

TENTATIVE RULING

            Plaintiffs Amanda A. Binns and Eric Gurney’s motion for an order to vacate the order compelling arbitration, remove this matter from arbitration, lift the arbitration stay, proceed in state court, and for monetary sanctions is DENIED.

ANALYSIS

Motion To Vacate Order Compelling Arbitration

Request For Judicial Notice

            Plaintiff’s request that the Court take judicial notice of the published appellate case: Rosa M. Quincosa Espinoza v. Superior Court (Centinela Skilled Nursing et al.) (September 27, 2022) Court of Appeal State of California, Second Appellate District Case No. B314914 (LASC Case No. 20STCV34704) is GRANTED. (Evid. Code, § 452(a)(decisional law).)

Discussion

            While Defendants are correct that this motion was served on insufficient notice, if Defendants need more time to prepare an opposition, the Court will continue the hearing to permit Defendants additional time. Otherwise, the Court will address the motion on the merits.

Pursuant to CCP § 1281.98, Plaintiff moves for an order vacating the April 25, 2022 order compelling this case to arbitration on the ground that Defendants failed to pay the arbitrator’s fees within 30-days of the due date. Although Plaintiff cites CCP § 1281.98, that section applies where fees and costs during the pendency of an arbitration proceeding are required to continue arbitration proceedings. (Civ. Proc. Code, § 1281.98(a)(1). Instead, because arbitration has not yet commenced, CCP § 1281.97 applies.

CCP § 1281.97 provides:

(a)

(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.

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

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

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

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

(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought or that relate back to any claim brought in arbitration shall be tolled as of the date of the first filing of a claim in a court, arbitration forum, or other dispute resolution forum.

(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99[1].

(Civ. Proc. Code § 1281.97 [bold emphasis and underlining added].) 

            The Court finds, however, that CCP § 1281.97 (or CCP § 1281.98 for that matter) does not apply because the parties agreed that no state law concerning arbitration would apply to the arbitration, which would include state procedural law such as CCP § 1281.97.

            The arbitration clause provides at Page 6:

This Lease involves interstate commerce and this Arbitration Clause and any arbitration hereunder shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) and not by any state law concerning arbitration. However, the governing law as to the substantive issues of the Lease and Vehicle shall be the law of the state in which the Lease was executed.

     (Oaks Decl., Exh. A, Page 6 [bold emphasis and underlining added].)

            The Court finds that this is an express incorporation only of general California substantive law, and an express exclusion of California procedural law concerning arbitration, i.e., CCP § 1281.97. 

[T]he FAA's procedural provisions (9 U.S.C. §§ 3, 4, 10, 11) do not apply unless the contract contains a choice-of-law clause expressly incorporating them. . . . [T]he procedural provisions of the CAA apply in California courts by default. “There is no federal policy favoring arbitration under a certain set of procedural rules … .” (Volt, supra, 489 U.S. at p. 476, italics added.) But the parties may “expressly designate that any arbitration proceeding [may] move forward under the FAA's procedural provisions rather than under state procedural law.” (Cronus, supra, 35 Cal.4th at p. 394, original italics.) Absent such an express  designation, however, the FAA's procedural provisions do not apply in state court. (Cf. Security Ins. Co. of Hartford v. TIG Ins. Co. (2d Cir. 2004) 360 F.3d 322, 323, fn. 2, 327–329 [where arbitration agreement stated it was governed by California law, [*175]  CAA's procedural provisions applied, including § 1281.2(c), permitting a stay of arbitration in federal district court pending outcome of litigation involving third parties].)

(Valencia v. Smyth (2010) 185 Cal. pp.4th 153, 173-75 [bold emphasis and underlining added].)

            As such, Plaintiffs may not avail themselves of CCP § 1281.97. The Court does not address the parties’ other arguments.

            The motion for an order to vacate the order compelling arbitration, remove this matter from arbitration, lift the arbitration stay, proceed in state court, and for monetary sanctions is DENIED.