Judge Christopher K. Lui, Case Number: 23STCV00313, Date: 2024-04-17 Tentative Ruling

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. Counsel must contact the staff in Department 76 to inform the Court whether they wish to submit on the tentative, or to argue the matter. As required by Rule 3.1308(a), 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.

Per Rule of Court 3.1308, if notice of intention to appear is not given, the Court may adopt the tentative ruling as the final ruling.

The motion to compel arbitration and stay proceedings is GRANTED as to Plaintiff’s individual PAGA claim and Plaintiff’s individual wage and hour claims. Plaintiff’s representative PAGA claim shall remain in court.

However, the litigation is ordered stayed pending arbitration. (Code Civ. Proc., § 1281.4.)

Defendants Silverline Construction, Inc. and Michael D. Murphy move to compel arbitration and stay this action.

Plaintiff argues that Defendants waived the right to arbitrate by failing to plead it as an affirmative defense in the Answer. It is true the Defendants failed to plead this as an affirmative defense. “At a minimum, the failure to plead arbitration as an affirmative defense is an act inconsistent with the later assertion of a right to arbitrate.” (Guess?, Inc. v. Superior Court (2000) 79 Cal. App. 4th 553, 557-58.)

Plaintiff argues that Defendants waived the right to arbitrate by engaging in discovery, forcing Plaintiff to file a motion to compel discovery responses, engaging in case management conferences and participating in setting a trial date. Plaintiff argues that he suffered prejudice in the form of costs for hearing dates and discovery. Plaintiff also argues that Defendants did not bring this motion until a year after being served with the summons and complaint in April 2023.

In assessing waiver of a contractual right to arbitration, the court may consider the following factors when determining waiver: “‘“(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.”’” (Citations omitted.)

(Desert Regional Medical Center, Inc. v. Miller (2022) 87 Cal. App. 5th 295, 315-16 [bold emphasis and underlining added].)

Here, Plaintiff amended the Complaint before Defendants even appeared in this action. Defendants answered the operative First Amended Complaint on May 11, 2023 without having demurred to the First Amended Complaint filed on March 14, 2023. On August 7, 2023, the Court set a March 3, 2025 trial date. Notably, as the August 7, 2023 case management conference, the Court ordered the parties to schedule and participate in a mediation, with a mediation completion date of December 9, 2024—which is still about 8 months away. Defendant did not file a counterclaim.

Thereafter, on December 20, 2023, Plaintiff filed motions to compel further discovery responses from Defendant Silverline Construction Inc. However, Defendant’s service of responses to discovery propounded by Plaintiff did not give Defendant an unfair advantage, nor did it constitute substantial invocation of the litigation machinery, such as would justify a finding of waiver. As noted, trial is not set to begin until 10 months away.

With regard to the sixth factor—whether the nonmoving party has been prejudiced—the California Supreme Court has stated that:

[C]ourts assess prejudice with the recognition that California’s arbitration statutes reflect “‘a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution’” and are intended ‘“to encourage persons who wish to avoid delays incident to a civil action to obtain an adjustment of their differences by a tribunal of their own choosing.’” [Citation.] Prejudice typically is found only where the petitioning party’s conduct has substantially undermined this important public policy or substantially impaired the other side’s ability to take advantage of the benefits and efficiencies of arbitration.

For example, courts have found prejudice where the petitioning party used the judicial discovery processes to gain information about the other side’s case that could not have been gained in arbitration [citations]; where a party unduly delayed and waited until the eve of trial to seek arbitration [citation]; or where the lengthy nature of the delays associated with the petitioning party’s attempts to litigate resulted in lost evidence . . . .

(St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1204 (citations omitted).) Plaintiff indicates that the costs of jury fees and motion fees, as well as expenditure of attorneys’ fees and the time lost to delay are substantial forms of prejudice. However, St. Agnes suggests that a party’s costs and expenses of litigation would not support a finding of waiver or prejudice, unless the expenditures are associated with conduct by the moving party that would itself support a finding of waiver. (St. Agnes, supra, 31 Cal.4th at 1205.) In this case, Defendants’ participation in case management conferences and meet and confer discussions regarding Defendants’ responses to discovery propounded by Plaintiff are not acts that inherently lend themselves to a finding of prejudice, and Defendants’ explanation for several months’ delay in seeking arbitration—that the arbitration agreement was not immediately found—is plausible and does not appear to have caused prejudice.

When weighing the factors to be considered in a waiver analysis, as set forth above in Desert Regional Medical Center, the Court finds Defendants have not waived the right to compel arbitration.

California favors arbitration. (Haworth v. Superior Court (2010) 50 Cal.4^th 372, 380.) Civ. Proc. Code, §1281.2 provides:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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 the revocation of the agreement.

Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1343; Code Civ. Proc., § 1281.) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving by a preponderance of evidence any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356.) The court may weigh the evidence by considering affidavits, declarations, documents and oral testimony. (Id. at 357.)

Defendants present the following arbitration agreement which Plaintiff signed on January 4, 2021 (Declaration of Richard Ernst, ¶ 6; Exhs. A & B):

2. I, and SILVERLINE CONSTRUCTION INC. agree to utilize binding individual arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation. SILVERLINE CONSTRUCTION INC. and I each specifically waive and relinquish our respective rights to bring a claim against the other in a

court of law. SILVERLINE CONSTRUCTION INC. and I agree that any claim, dispute, and/or controversy that I may have against SILVERLINE CONSTRUCTION INC. (or their respective owners, directors, officers, managers, employees, or agents), or SILVERLINE CONSTRUCTION

INC. may have against me, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (“FAA"), in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. sec I280 et seq., including section 1283.05 and all of the Act's other mandatory and permissive rights to discovery). The FAA applies to this Agreement because SILVERLINE CONSTRUCTION INC.'s business involves interstate commerce. Included within the scope of this Agreement are all disputes, whether based on tort, contract, statute (including, but not limited to, any claims of discrimination, harassment and/or retaliation, whether they be based on the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of I964, as amended, or any other state or federal law or regulation), equitable law, or otherwise. The only exception to the requirement of binding arbitration shall be for claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers’ Compensation Act, Employment Development Department claims, or other claims that are not subject to arbitration under current law. However, nothing herein shall prevent me from filing and pursuing proceedings before the California Department of Fair Employment and Housing, or the United States Equal Employment Opportunity Commission (although if I choose to pursue a claim following the exhaustion of such administrative remedies, that claim would be subject to the provisions of this Agreement). By this binding arbitration provision, I acknowledge and agree that SILVERLINE CONSTRUCTION |NC., and I give up our respective rights to trial by jury of any claim I, or SILVERLINE CONSTRUCTION INC. may have against the other.

in the individual capacity of myself, or SILVERLINE CONSTRUCTION INC. This binding arbitration Agreement shall not be construed to allow or permit the consolidation or joinder of other claims or controversies involving any other employees or parties, or permit such claims or controversies to proceed as a class action, collective action or any similar representative action. No arbitrator shall have the authority under this agreement to order any such class, collective or representative action. By signing this agreement, I am agreeing to waive any substantive or procedural rights that I may have to bring an action on a class, collective, representative, or other similar basis.

selected to hear claims under this Agreement shall be a retired California Superior Court Judge, or an otherwise qualified individual to whom the parties mutually agree, and shall be subject to disqualification on the same grounds as would apply to a judge of such court. All rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure Section 631.8 shall apply and be observed. The arbitrator shall have the immunity of a judicial officer from civil liability when acting in the capacity of an arbitrator, which immunity supplements any other existing

immunity. Likewise, all communications during or in connection with the arbitration proceedings are privileged in accordance with Cal. Civil Code Section 47(b). As reasonably required to allow full use and benefit of this agreement’s modifications to the Act’s procedures, the arbitrator shall extend the times set by the Act for the giving of notices and setting of hearings. Awards shall include the arbitrator's written reasoned opinion. Resolution of all disputes shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including but not limited to, notions of ”just cause") other than such controlling law.

5. This is the entire agreement between SILVERLINE CONSTRUCTION INC., and me regarding dispute resolution, the length of my employment, and the reasons for termination of my employment, and this agreement supersedes any and all prior agreements regarding these issues. Oral representations or agreements made before or after my employment do not alter this Agreement.

or unenforceable it shall be severed and the remainder of this Agreement shall be fully enforceable.

(Employee Acknowledgement and Agreement, Ernst Decl., Exh. A [bold emphasis added].)

Plaintiff alleges a cause of action for PAGA and wage and hour violations. This comes within the broad scope of the Arbitration Agreement, which includes all disputes based on statute. The arbitration expressly purports to apply to Silverline’s respective owners, directors, officers, managers, employees, or agents. Defendant Michael D. Murphy is alleged to be chief

executive officer, chief financial officer, a director, and secretary of Silverline. (1AC, ¶ 26.) As such, Murphy is entitled to enforce the arbitration agreement against Plaintiff.

In the Opposition Plaintiff does not dispute that he signed the Arbitration Agreement.

Where a party seeks to arbitrate nonwaivable statutory civil rights in the workplace (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711-12), such as the PAGA claim and wage and hour claims involved here, there are:

five minimum requirements for the lawful arbitration of such rights pursuant to a mandatory employment arbitration agreement. Such an arbitration agreement is lawful if it "(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment 'effectively may vindicate [his or her] statutory cause of action in the arbitral forum.' " (Citation omitted.)

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.)

Initially, we see no reason why Armendariz's "particular scrutiny" of arbitration agreements should be confined to claims under FEHA. Rather, under the Supreme Court's analysis, such scrutiny should apply to the enforcement of rights under any statute enacted "for a public reason."

(Mercuro v. Superior Court (2002) 96 Cal. App. 4th 167, 180 [bold emphasis added].)

Armendariz held that to the extent that the arbitration agreement was silent on these issues, these requirements must be implied as a matter of law. (Armendariz, supra, 24 Cal.4th at pp. 106, 107, 113 [interpreted the agreement to provide for adequate discovery, a written arbitration award, and the employer's payment of arbitration costs].) To the extent that the agreement expressly limited these rights, Armendariz held that the agreement was contrary to public policy and unenforceable. (Id. at p. 104 [stated that a provision limiting damages was unlawful].)

(Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 176 [bold emphasis added].)

4. In addition to any other requirements imposed by law, the arbitrator selected to hear claims under this Agreement shall be a retired California Superior Court Judge, or an otherwise qualified individual to whom the parties mutually agree, and shall be subject to disqualification on the same grounds as would apply to a judge of such court.

Plaintiff argues that this does not satisfy Armendariz. However, this is not persuasive, as Plaintiff would have the ability to disqualify an arbitrator and Plaintiff’s mutual agreement is required if the parties cannot agree on a retired Superior Court Judge.

“Adequate discovery is indispensable for the vindication of statutory claims. (Citation omitted.) “ ‘[A]dequate’ discovery does not mean unfettered discovery … .” (Citation omitted.) And parties may “agree to something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Citation omitted.) However, arbitration agreements must “ensure minimum standards of fairness” so employees can vindicate their public rights. (Citation omitted).” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715-16[bold emphasis added].)

Here, the agreement is silent as to discovery. As such, this requirement is implied as a matter of law. (Sanchez, supra, 172 Cal.App.4th at 176.)

¶ 4 requires: “Awards shall include the arbitrator's written reasoned opinion.”

Plaintiff makes the following arguments: First, it does not state that the reasoned opinion shall be written such that it allows for judicial review. However, it is implicit that a written reasoned opinion allows for judicial review.

Second, it only requires a written opinion if there is an Award. If Plaintiff does not receive an award at arbitration, no written opinion is needed, preventing judicial review of the arbitration decision not to award Plaintiff anything. This ignores the fact that an Award may be in Defendants’ favor. The argument is frivolous.

Plaintiff also argues that where a dispute is resolved by someone only considering the law governing that dispute and defenses of the Defendant (i.e. no consideration of any evidence or any legal analysis of the parties applying the law to the facts) such a process amounts to substantive unconscionability. Further, it gives significant advantage to the Defendant where the arbitrator only considers the Defendants affirmative defenses in deciding the matter.

This interpretation of the language evidences a lack of reading comprehension by Plaintiff’s counsel. The language upon which Plaintiff bases this unfounded argument is as follows: “Resolution of all disputes shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including but not limited to, notions of ”just cause") other than such controlling law.” The reference to “law governing” means “law governing the claims” and “law governing defenses pleaded.”

The agreement is silent as to the types of relief available. As such, this requirement is implied as a matter of law. (Sanchez, supra, 172 Cal.App.4th at 176.)

(5) Does not require employee to pay unreasonable costs or any arbitrator’s fees or expenses as a condition to access to arbitration:

The agreement is silent as to who will pay the arbitrator’s fees and costs of arbitration. As such, this requirement is implied as a matter of law. (Sanchez, supra, 172 Cal.App.4th at 176.) Defendant employer shall pay all arbitrator’s fees and costs of arbitration.

As such, the Court finds that an agreement exists whereby Plaintiff agreed to submit all of the claims asserted in his Complaint to mandatory arbitration. The burden shifts to Plaintiff to demonstrate that a triable issue of material fact exists.

The doctrine of unconscionability was summarized in Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 645-48 as follows:

“ ‘To briefly recapitulate the principles of unconscionability, the doctrine has “ ‘both a “procedural” and a “substantive” element,’ the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly harsh” ’ … or ‘ “one-sided” ’ results.” [Citation.] The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, “ ‘which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.’ ” … [¶] Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided.’ [Citation.]” (Citation omitted.)

“Under this approach, both the procedural and substantive elements must be met before a contract or term will be deemed unconscionable. Both, however, need not be present to the same degree. A sliding scale is applied so that ‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ (Citations omitted.)

“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] Surprise is defined as ‘ “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” ’ [Citation.]” (Citation omitted.)

Plaintiffs claim the Agreement is procedurally unconscionable because it is an adhesion contract. An adhesion contract is “a standardized contract … imposed upon the subscribing party without an opportunity to negotiate the terms.” (Citation omitted.) “The term signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. [Citation.]” (Citation omitted.)

The California Supreme Court has consistently stated that “ ‘[t]he procedural element of an unconscionable contract generally takes the form of a contract of adhesion … .’ ” (Citations omitted.)

“Whether the challenged provision is within a contract of adhesion pertains to the oppression aspect of procedural unconscionability. A contract of adhesion is ‘ “ ‘ “imposed and drafted by the party of superior bargaining strength” ’ ” ’ and ‘ “ ‘ “relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” ’ ” ’ (Citations omitted.) “[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.” (Citation omitted.)

(Walnut Producers of California, supra, 187 Cal.App.4^th at 645-46 [bold emphasis added].)

Plaintiff argues that the arbitration agreement was a contract of adhesion, that he was given without a chance to bargain or time to read through before signing on the spot as part of the hire process. Plaintiff also argues that it was provided to him in English although he was not a native English speaker, and he did not receive a copy of the agreement in Spanish. The Court agrees with Plaintiff that these circumstances present a significant degree of procedural unconscionability.

However, the fact that Plaintiff could not read the document does not render it unenforceable in itself.

A cardinal rule of contract law is that a party's failure to read a contract, or to carefully read a contract, before signing it is no defense to the contract's enforcement. (Citations omitted.) “To make out a claim of fraud in the execution,” parties seeking to avoid arbitration “must show their apparent assent to the contracts—their signatures on the client agreements—is negated by fraud so fundamental that they were deceived as to the basic character of the documents they signed and had no reasonable opportunity to learn the truth.” ( [*873] Citations omitted.) Accordingly, “[a] necessary element of the defense of fraud in the execution is reasonable reliance,” and “[g]enerally, it is not reasonable to fail to read a contract; this is true even if the plaintiff relied on the defendant's assertion that it was not necessary to read the contract.” (Citation omitted.)

(Desert Outdoor Advertising v. Superior Court (2011) 196 Cal.App.4th 866, 872-73.)

The fact that the arbitration terms and significance were not explained to him adds to the procedural unconscionability, though. (Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 249-50.) Altogether, there is a significant degree of procedural unconscionability.

Under the sliding scale approach, then, Plaintiffs must demonstrate at least a small degree of substantive unconscionability.

“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to “shock the conscience,” or that impose harsh or oppressive terms.’ [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with ‘unreasonable.’ Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. ‘With a concept as nebulous as “unconscionability” it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.’ [Citations.]” (Citation omitted

Plaintiff agues that the agreement is unenforceable because the reference to the “Act” in ¶ 4 does not specify the “Act.” This argument has some merit, but does not render the agreement substantively unconscionable. Reasonably construed, the “Act” applies to either the AAA or CAA, or both, as the AAA and CAA are reference in ¶ 2. This does not present substantive unconscionability.

Plaintiff argues that there is no state specified where the arbitration could take place, and the employer has a financial advantage and locate a retired judge in the Bahamas and have the arbitration proceed there. As noted above, the parties are required to mutually agree on the arbitrator, so Plaintiff could simply refuse to arbitrate in the Bahamas. This does not present substantive unconscionability.

Plaintiff argues that there are no provisions for recovery of attorney’s fees under Labor Code, §1194, §226(e), §2699(g). However, ¶ 4 expressly incorporates the law governing Plaintiff’s claims which would include the right to recover attorney’s fees, as nothing in the arbitration agreement prohibits such an award. This does not present substantive unconscionability.

Plaintiff argues that the arbitration agreement is subject to rescission due to uncertainty as argued above. This argument is without merit for the reasons discussed above.

In light of the foregoing, the Court does not find any degree of substantive unconscionability to render the entire agreement unenforceable under the sliding scale approach.

As for the PAGA claim, on July 17, 2023, the California Supreme Court issued its decision in Adolph v. Uber Techs., Inc. (2023) 14 Cal.5^th 1104, holding that:

Where a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.

Accordingly, Defendant’s motion to compel arbitration is GRANTED as to Plaintiff’s individual PAGA claim and Plaintiff’s individual wage and hour claims. Plaintiff’s representative PAGA claim shall remain in court.

However, the litigation is ordered stayed pending arbitration. (Code Civ. Proc., § 1281.4.) There is no need to force Plaintiff to proceed in two forums simultaneously, especially when discovery pertaining to the PAGA claims will be more expansive than that involved in Plaintiff’s individually arbitrated claims.

The parties are ordered to meet and confer to agree upon the arbitral forum. If the parties are unable to agree, Defendant may request a hearing to resolve the dispute.

[U]nder [CCP] section 1281.6[1], the absence of a specified forum or set of rules in an arbitration clause does not invalidate the agreement to arbitrate. Rather, in the absence of such provisions, “the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator …”—including the forum and rules that will govern the arbitration—or, if the parties cannot agree, “the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.” (§ 1281.6.)

Regardless of the forum, Defendant will bear all costs of arbitration and the arbitrator’s fees.

The Court sets a status conference re: arbitration scheduling for August 19, 2024 at 8:30 a.m.

[1]

If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees.

If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.

(Code Civ. Proc., § 1281.6.)