Judge: Craig Griffin, Case: Whitworth vs. Coast Motoring, Date: 2022-10-03 Tentative Ruling
Defendants Jason Merrell (“Merrell” individually) and Coast Motoring’s (“Coast” individually; “Defendants” together with Merrell) Motion to Dismiss Action or Alternatively Compel Arbitration and Stay the Matter (“Motion”) is DENIED in part and GRANTED in part.
A) Motion to Dismiss
Defendants move the court to dismiss the action in its entirety pursuant to Bus. & Prof. Code § 6201(a) based on plaintiff Jim O. Whitworth’s (“Plaintiff”) failure to serve Defendants with the required Notice of Right to Arbitrate (“Notice”) regarding a fee dispute in the underlying matter of Merrell v. Ford Motor Company, Orange County Superior Court Case No. 30-2020-01147752-CU-BC-NJC (“Underlying Case” or “UC”). Plaintiff’s opposition provided no evidence showing a Notice had ever been served on Defendants as required under Bus. & Prof. Code § 6201(a).
Bus. & Prof. Code § 6201 and the Mandatory Fee Arbitration Act (“MFAA”) are strictly limited by the subject matter they encompass and can only be applied to fee disagreements. (L. Offs. of Dixon R. Howell v. Valley (2005) 129 Cal. App. 4th 1076, 1086–87 (“Valley”).) Though the present action contains a fee dispute under cause of action (“COA”) number one, there are four other COA that are not solely based on a fee dispute. Thus, it would be an abuse of the court’s discretion to dismiss the action as a whole when there are other issues pending between the parties, nor would this court have the power under the above code to dismiss the non-fee dispute COA.
The request to dismiss the matter is DENIED.
B) Alternative Motion to Stay and Compel Arbitration
Defendants alternatively request the court stay the entire action and order parties to arbitrate under the MFAA pursuant to Bus. & Prof. Code § 6201(b).
Plaintiff argues Defendants waived their right to arbitrate. “In determining waiver, a court can consider ‘(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.’ ” (St. Agnes Med. Ctr. v. PacifiCare of California (2003) 31 Cal. 4th 1187, 1196.)
Plaintiff argues Defendants waived their right to arbitrate by requesting Ford file an interpleader action in the UC. However, Ford filed the interpleader and not Defendants, and Defendants’ “refusal to let the funds be disbursed” shows there is a fee dispute between the parties, which would be proper for arbitration. Again, Plaintiff has provided 1) no evidence of the Notice; 2) no evidence of waiver on the part of Merrell; and 3) insufficient time for Merrell to accept or refuse arbitration prior to filing the present lawsuit if a Notice had theoretically been served on 03/24/22. As to the Valley factors noted above: 1)) Merrell in the UC only asked that the settlement funds be interplead instead of being disbursed to Plaintiff; In the present matter, Defendants have only filed the present Motion requesting dismissal or alternatively arbitration. These actions do not support waiver, nor has the “litigation machinery been substantially invoked;” 3) Trial has not yet been scheduled in this matter and the request for arbitration has not been delayed; 4) No counterclaim has been filed in this matter; 5) No “important intervening steps” appear to have occurred; and 6) There has been no delay on the part of Defendants that “affected, misled, or prejudiced” Plaintiff. The present Motion is also not a waiver of Defendants’ right to arbitrate under the MFAA. (Valley, supra, 129 Cal. App. 4th at 1099.)
There is no evidence of a waiver by Defendants.
Though Plaintiff argues Coast is not entitled to arbitration or a notice of dispute of attorney fees as Coast has allegedly never been a client of Plaintiff’s, the allegations in Plaintiff’s Complaint state otherwise. (Complaint at 5:1-17.) The complaint alleges the quantum meruit COA against both Defendants, alleges both Defendants requested legal services from Plaintiff (Complaint ¶ 29), alleges both Defendants agreed Plaintiff would recover reasonable fees and costs (Complaint ¶ 30), alleges both Defendants prevented Plaintiff’s recovery of, “attorney fees and intentionally prevented the recovery of services rendered in breach of their agreement” [Emphasis added] (Complaint ¶ 32), and alleges both Defendants refused to pay the attorney fees (Complaint ¶ 33). Based on the allegations in the Complaint, Coast may arbitrate the fee dispute under the MFAA pursuant to Bus. & Prof. Code § 6201(b).
The court GRANTS Defendants’ requested alternative relief.
The court hereby stays the entirety of this pending the outcome of MFAA arbitration, and orders parties to participate in MFAA arbitration as to solely the fee dispute issues.
An OSC Re: Status of MFAA Arbitration is set for 12/05/22.
Defendants to give notice.