Judge Daniel M. Crowley, Case Number: 21STCV18485, Date: 2023-10-30 Tentative Ruling

Plaintiff Carla Rosen-Vacher’s motion to vacate the C.C.P. §1281.4 stay that has been placed on this action since May 13, 2022, is granted.

Plaintiff’s request for sanctions in the amount of $56,153.34 against all Defendants, jointly and severally, except as to Cohen Gardner, pursuant to C.C.P. §§1281.98(c)(1) and 1281.99(a), is granted.

Plaintiff Carla Rosen-Vacher (“Rosen-Vacher”) (“Plaintiff”) moves to vacate the C.C.P. §1281.4 stay that has been placed on this action since May 13, 2022, upon this Court ordering this case to arbitration. (Notice of Motion, pgs. 1-2.) Plaintiff also requests sanctions totaling $56,153.34 against all defendants, jointly and severally, for attorneys’ fees of $47,820 and costs of $8,333.34 that defendants forced plaintiff to take on when they moved to compel arbitration and then would not do what the arbitral body required for them to participate therein. (Notice of Motion, pg. 2; C.C.P. §§1281.98, 1291.99.)

On May 17, 2021, Plaintiff filed her initial complaint this action individually and derivatively on behalf of and for the benefit of Royal Road Entertainment, LLC (“Royal LLC”). On June 3, 2021, Plaintiff filed the operative first amended complaint (“FAC”) against Defendants Filip Jan Rymsza (“Rymsza”), Valley of the Gods, Inc., a California Corporation (“Valley California”), Valley of the Gods, Inc., a Delaware Corporation (“Valley Delaware”), Royal LLC, Royal Road Entertainment Sp. z.o.o. (“Royal Poland”), and Cohen Gardner LLP (“Cohen Gardner”) (collectively, “Defendants”). On May 13, 2022, this Court granted Defendants’ motion to compel arbitration.

Plaintiff filed the instant motion on January 11, 2024. Cohen Gardner filed an opposition on February 6, 2024. Plaintiff filed her reply on February 14, 2024. On February 20, 2024, Rymsza, in pro per, filed a response to Plaintiff’s motion. As of the date of this hearing no opposition has been filed by Valley California, Valley Delaware, or Royal Poland.

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.

(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.

The postponement of an arbitration as result of a party failing to pay the arbitration fee and costs is prohibited. (Weil & Brown et al., Cal. Prac. Guide: Civ. Pro. Before Trial (The Rutter Group 2023), §9:408.47.) If the costs are not paid within 30 days of the due date, the drafting party is in breach of the arbitration agreement, waives arbitration, and the consumer or employee may either withdraw the arbitration claim and proceed in court, or compel arbitration and have the defaulting party pay attorney fees and costs related to the arbitration. (C.C.P. §§1280, 1281.96, 1281.97, 1281.98, 1281.99; De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 745, 757-758, [concluding trial court properly vacated order compelling arbitration for defendant who failed to pay timely and allowing arbitration to continue for one who timely paid].)

The Arbitration Agreement in the Production Financing Agreement at issue states the following:

This Agreement shall be governed by the laws of the State of California. The parties agree that any and all disputes or controversies of any nature between them arising at any time (whether or not relating to the Picture) shall be determined by binding arbitration in accordance with the rule of JAMS before a single neutral arbitrator (who shall be an attorney with at least ten (10) years experience in the motion picture industry or a retired judge) in Los Angeles , California. All arbitration proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed, except as necessary to obtain court confirmation of the arbitration award. The Federal Rules of Evidence shall be applicable to any such proceedings.

Plaintiff’s counsel declares that on June 23, 2023, Plaintiff paid a filing fee of $3,000 to JAMS. (Decl. of Genga ¶4, Exh. B.) Plaintiff’s counsel declares Plaintiff later made a deposit of $5,333.34 to cover her share of the arbitrator’s expected fees in the early stages of the case, as reflected in the JAMS invoice history. (Decl. of Genga ¶4, Exh. C.) Plaintiff’s counsel declares Plaintiff also made a further deposit of $20,000 toward her $38,000+ share of the expected fees of the arbitrator to conduct a hearing on the merits, which was set for May 22-31, 2023. (Decl. of Genga ¶5, Exh. C.) Plaintiff’s counsel declares that sometime before then, the parties agreed to mediate their dispute and requested and obtained a continuance of the arbitration hearings to July 6-11, 2023. (Decl. of Genga ¶5.) Plaintiff’s counsel declares the parties participated in a mediation, but no settlement resulted from it. (Decl. of Genga ¶5.)

Plaintiff’s counsel declares Defendants’ deadline to remit their respective $38,000+ portions of the arbitrator’s anticipated fees to conduct arbitration came and went with no payment from any of them. (Decl. of Genga ¶5.) Plaintiff’s counsel declares that he, on behalf of Plaintiff, requested that JAMS close the case if Defendants’ nonpayment persisted, and to refund Plaintiff’s partial deposit. (Decl. of Genga ¶5.) Plaintiff’s counsel declares JAMS gave notice to Defendants and waited a period of time for their payment in accordance with its procedures, but when none came it closed the case and refunded Plaintiff her $20,000 deposit. (Decl. of Genga ¶5.) Plaintiff’s counsel declares Plaintiff remains out of pocket in the amount of $8,333.34 for her filing fee and her share of the time the arbitrator spent early in the case, which she seeks to recover on this motion. (Decl. of Genga ¶5.)

Cohen Gardner states in its opposition that once this case was submitted to JAMS, Cohen Gardner and the Rymsza Defendants paid Cohen Gardner’s initial filing fees of $5,333.33, and the Rymsza Defendants also paid their own fees of $5,333.33. (Opposition, pg. 4; Decl. of Ring ¶13, Exh. C.) Counsel for Cohen Gardner states at or about the time of mediation, the Rymsza Defendants’ former counsel informed Plaintiff’s counsel and Cohen Gardner’s counsel that the Rymsza Defendants did not have the funds to pay the JAMS arbitration fees. (Decl. of Ring ¶16.) Cohen Gardner’s counsel declares that on May 18, 2023, the day before their payment to JAMS was due, Plaintiff’s counsel sent an email to all counsel stating that although he was prepared to pay the balance of his fees, he understood the Rymsza Defendants would not, that he would proceed forward if they did, but seek a refund if they did not. (Decl. of Ring ¶17, Exh. E.) Cohen Gardner’s counsel declares his client did not pay the additional $38,266.67 that had been requested by JAMS on May 19, 2023, because Cohen Gardner knew the arbitration would not be going forward. (Decl. of Ring ¶18.) Cohen Gardner’s counsel declares his client was ready and willing to proceed to arbitration and

pay the fees if the other parties were willing to proceed as well. (Decl. of Ring ¶20.) Cohen Gardner’s counsel declares his client simply believed that this matter should not be tried piecemeal and that there would be savings of time and money if both Plaintiff’s claims against the Rymsza Defendants and against Cohen Gardner were heard together. (Decl. of Ring ¶20.)

Cohen Gardner’s opposition states that it does not oppose this Court’s issuance of an order vacating the stay. (Opposition, pg. 3.) Further, Cohen Gardner concedes it did not pay the additional $38,266.67 that had been requested by JAMS on May 19, 2023. (Decl. of Ring ¶18.) Nonetheless, Cohen Gardner it was apparent by the time Cohen Gardner’s payment was due, the other defendants were going to default on their obligation to pay the arbitration fees.

Based on the foregoing, Plaintiff’s motion to vacate this Court’s May 13, 2022, Ruling granting Defendants’ motion to vacate the C.C.P. §1281.4 stay is granted.

C.C.P. §§1281.98(c)(1) and 1281.99(a) provide that the Court shall impose sanctions against a party that materially breaches an arbitration clause.

Plaintiff’s counsel declares his hourly billing rate is $600. (Decl. of Genga ¶6.) Based on the Court’s experience, Plaintiff’s counsel’s hourly rate is reasonable in his community of practice. Plaintiff’s counsel declares he incurred 79.7 hours opposing Defendants’ motion to compel arbitration, the motion to stay Plaintiff’s discovery pending the motion to compel arbitration, and the arbitration proceedings that were ultimately abandoned, or a total of $47,820.00. (Decl. of Genga ¶¶5-6.) Plaintiff’s counsel declares Plaintiff incurred $8,333.34 in costs related to the abandoned arbitration: the JAMS filing fee ($3,000), and the deposit to cover the arbitrator’s expected fees in the early stages of arbitration ($5,333.34). (Decl. of Genga ¶4, Exh. C.)

The Court grants Plaintiff’s request for reasonable attorneys’ fees and costs incurred on the instant motion for a total of $56,153.34 against all Defendants, except Cohen Gardner, pursuant to C.C.P. §§1281.98(c)(1) and 1281.99(a).

In light of this Court’s award of sanctions C.C.P. §§1281.98(c)(1) and 1281.99(a), the Court declines to award C.C.P. §128.5 sanctions against Defendants.

Plaintiff’s motion to vacate the C.C.P. §1281.4 stay that has been placed on this action since May 13, 2022, is granted.

Plaintiff’s request for sanctions in the amount of $56,153.34 against all Defendants pursuant to C.C.P. §§1281.98(c)(1) and 1281.99(a), is granted except as to Cohen Gardner.

Hon. Daniel M. Crowley

Judge of the Superior Court