Judge Curtis A. Kin, Case 22STCV09901 2023-05-11 Tentative Ruling

Judge: Curtis A. Kin, Case: 22STCV09901, Date: 2023-05-11 Tentative Ruling

Case Number: 22STCV09901 Hearing Date: May 11, 2023 Dept: 72

APPLICATION FOR RELIEF

PURSUANT TO CODE OF CIVIL PROCEDURE § 473(B)

Date: 5/11/23 (8:30 AM)

Case: Diane Canales v. Penney OpCo LLC et al. (22STCV09901)

TENTATIVE RULING:

Defendant Penney OpCo LLC’s Application for Relief Pursuant to Code of Civil Procedure § 473(b) is DENIED.

Defendant Penney OpCo LLC applies for relief from the March 14, 2023 order terminating a previously ordered arbitration pursuant to CCP § 1281.98. Defendant maintains that its failure to pay an invoice by the due date of January 12, 2023 was the result of an internet outage that occurred on the due date. (Mellett Decl. ¶ 5.) Defendant seeks discretionary relief under CCP § 473(b) on the grounds of mistake, inadvertence, surprise, or excusable neglect.

The Court of Appeal held in Espinoza v. Superior Court (2022) 83 Cal.App.5th 761 that CCP § 1281.98 is applied strictly. “Under the plain language of the statute…the triggering event is nothing more than nonpayment of fees within the 30-day period—the statute specifies no other required findings, such as whether the nonpayment was deliberate or inadvertent, or whether the delay prejudiced the nondrafting party. The plain language therefore indicates the Legislature intended the statute to be strictly applied whenever a drafting party failed to pay by the statutory deadline.” (Espinoza, 83 Cal.App.5th at 776 [concerning similarly worded CCP § 1281.97].)

Whether CCP § 473(b) can be applied to orders issued under CCP § 1281.98 is an undecided question. Defendant correctly that Espinoza did not address the applicability of CCP § 473(b) to CCP §§ 1281.97 or 1281.98. Defendant also notes correctly that there is no language in CCP §§ 473(b) or 1281.98 that precludes the application of CCP § 473(b). Nonetheless, what the appellate courts have made clear is that CCP § 1281.98 “establishes a clear-cut rule for determining if a drafting party is in material breach of an arbitration agreement.” (De Leon v. Juanita's Foods (2022) 85 Cal.App.5th 740, 755, citing Espinoza, 83 Cal.App.5th at 776.) Consequently, factors such as prejudice, delay in the arbitration proceedings, or inadvertence are not considered in determining whether an employee or consumer can withdraw from arbitration under CCP § 1281.98. (De Leon, 85 Cal.App.5th at 754-55; see also Espinoza, 83 Cal.App.5th at 777 [“Although strict application may in some cases impose costs on drafting parties for innocent mistakes, the Legislature could have concluded a brightline rule is preferable to requiring the nondrafting party to incur further delay and expense establishing the nonpayment was intentional and prejudicial”].) Considering the Court of Appeal’s clear pronouncement that CCP § 1281.98 contains no exceptions for inadvertence or “innocent mistakes” (Espinoza, 83 Cal.App.5th at 777), it has hard to see how relief for “mistake” and the like under CCP § 473(b) is available for a violation of CCP § 1281.98.

Nonetheless, even if discretionary relief were available under CCP § 473(b), the Court would not exercise such discretion here. The court does not find sufficient excuse for defendant’s failure to timely pay the invoice. Defendant received the invoice at issue on December 13, 2023. (Winter Decl. ¶ 5.) Defendant avers that its payment system assigns a 30-day due date for payment of any invoice. (Mellett Decl. ¶ 4.) A payment due date of January 12, 2023 was assigned. (Mellett Decl. ¶ 4.) Defendant did not begin arranging for payment of the invoice until January 9, 2023. (Winter Decl. ¶ 6.) Defendant takes for granted that waiting until close to the due date, as opposed to paying the invoice immediately upon receipt, is reasonable. CCP § 1281.98 provides: “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.” The arbitration provider stated that balance on the December 12, 2022 was due upon receipt. (Setyan 2/15/23 Decl. ¶ 11 & Ex. 7.) Had defendant arranged for immediate payment, the internet outage occurring on January 12, 2023 would not have been an issue. Indeed, while not dispositive here, it is hard to overlook that defendant’s counsel (Fisher & Phillips) is the same firm that learned the harsh lesson in Espinoza v. Superior Court, 83 Cal.App.5th at 769 that failure to pay arbitration fees by the statutory deadline may not be excused by inadvertence, clerical error, substantial compliance with payment obligations, or lack of prejudice.

The motion is DENIED.