Judge Daniel M. Crowley, Case Number: 21STCV35738, Date: 2023-08-16 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff via the Department's email: SMCdept71@lacourt.org before the set hearing time. See, e.g., CRC Rule 324(b). All parties are otherwise encouraged to appear by LACourtConnect for all matters.

Plaintiff’s request for attorneys’ fees and costs incurred on the instant motion is granted in the amount of $4,781.50.

Plaintiff’s request for evidence, terminating, and contempt sanctions is denied.

Plaintiff Arad Vafaei, (“Vafaei”) (“Plaintiff”) moves to vacate Defendants FCA US LLC’s (“FCA US”) and Fab4 LLC d/b/a Russell Westbrook Chrysler Dodge Jeep Ram of Van Nuys’ (“Fab4”) (collectively, “Defendants”) motion compelling arbitration on the basis Defendants have materially breached the arbitration agreement by failing to pay their arbitration fee, which has precluded arbitration from commencing. (Notice of Motion, pg. 2; C.C.P. §1281.97.) Plaintiff also requests attorneys’ fees, costs, and sanctions. (Notice of Motion, pg. 2; C.C.P. §§1281.98, 1291.99.)

On September 28, 2021, Plaintiff filed the operative Complaint against Defendants alleging three violations of the Song-Beverly Consumer Warranty Act (“Song-Beverly”): (1) breach of express warranty; (2) breach of implied warranty; and (3) Civil Code §1793.2(b), arising from Plaintiff’s purchase of a 2018 Jeep Wrangler Unlimited (“Subject Vehicle”) and delivery of the Subject Vehicle to Plaintiff with alleged defects and nonconformities to warranty. On April 22, 2022, this Court granted Defendants’ motion to compel arbitration of Plaintiff’s claims and stayed the instant case pending arbitration. (4/22/22 Ruling.)

Plaintiff filed the instant motion on April 4, 2023. Defendants filed their opposition on August 3, 2023. Plaintiff filed his reply on August 9, 2023.

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 Retail Installment Sales Contract (“RISC”) at issue states the following:

Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. You expressly waive any right you may have to arbitrate a class action. You may choose the American Arbitration Association, 1633 Broadway, 10th Floor, New York, New York 10019 (www.adr.org), or any other organization to conduct the arbitration subject to our approval. You may get a copy of the rules of an arbitration organization by contacting the organization or visiting its website.

Plaintiff’s counsel declares that on February 3, 2023, he sent Defendants’ counsel corresponding seeking to commence arbitration with JAMS pursuant to this Court’s 4/22/22 Order and the arbitration clause in the RISC, to which Defendants’ counsel did not respond. (Decl. of Mizrahi ¶5, Exh. B.) Plaintiff’s counsel declares that on February 15, 2023, he sent Defendants’ counsel a second letter attempting to proceed with arbitration, to which he did not receive a response. (Decl. of Mizrahi ¶6, Exh. C.) Plaintiff’s counsel declares on February 22, 2023, Plaintiff formally initiated arbitration with JAMS and paid his $250 filing fee. (Decl. of Mizrahi ¶7, Exh. D.) Plaintiff’s counsel declares that on March 1, 2023, JAMS sent an invoice to the parties identifying a $1,700.00 filing fee owed by Defendants dated February 28, 2023, and due upon receipt. (Decl. of Mizrahi ¶8, Exh. E.) Plaintiff’s counsel declares on March 14 and again on March 28, 2023, JAMS sent further correspondence to parties inquiring when Defendants would make their payment to initiate arbitration. (Decl. of Mizrahi ¶9, Exh. F.)

Defendants’ counsel declares Defendants did not approve of JAMS as an arbitrator forum for this matter. (Decl. of Hanson ¶7.) However, Defendants’ counsel declares that they made payment of the JAMS filing fee. (Decl. of Hanson ¶¶5, 6, 8, Exhs. B, C.) Defendants’ counsel’s opposition does not provide an explanation for her (1) failure to respond to Plaintiff’s counsel’s February 3, 2023, and February 15, 2023, emails seeking to commence arbitration with JAMS, (2) failure to respond to correspondence from JAMS dated March 1, 2023, or (3) failure to pay the arbitration fees to JAMS by March 30, 2023. The Court notes Defendants’ counsel’s opposition also offers no explanation for her failure to respond to Plaintiff’s counsel’s email on May 17, 2023, until July 18, 2023. (Decl. of Hanson, Exh. B at pgs. 1-2.) Based on the declarations before the Court, Defendants’ failure to respond to Plaintiff’s efforts to arbitrate appears to be a delay tactic to stall the resolution of Plaintiff’s claims in violation of C.C.P. §1281.97(a). Defendants’ material breach of the arbitration clause in the RISC necessitates this Court to grant Plaintiff’s motion to vacate the 4/22/22 Ruling granting Defendants’ motion to compel arbitration.

Further, Defendants’ argument that C.C.P. §1281.98 is preempted by the Federal Arbitration Act (“FAA”) is unavailing. C.C.P. §1281.97 “set[s] forth procedural requirements to ensure timely payment of arbitration fees, thus ‘further[ing]—rather than frustrat[ing]—the objectives of the FAA to honor the parties’ intent to arbitrate and to preserve arbitration as a speedy and effective alternative forum for resolving disputes.” (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 771, quoting Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 630.) Indeed, C.C.P. §1281.97 is not preempted by the FAA, and Defendants’ dilatory tactics cannot be excused by federal statute.

Based on the foregoing, Plaintiff’s motion to vacate this Court’s 4/22/22 Ruling granting Defendants’ motion to compel Plaintiff’s claims to arbitration 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 $525.00. (Decl. of Mizrahi ¶10.) 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 6.5 hours in preparing the instant motion and anticipates 1.5 hours to review the opposition and prepare a reply, as well as .5 hours to attend the hearing on the instant motion, for a total of 8.5 hours on the instant motion, or $4,462.50 in attorneys’ fees. (Decl. of Mizrahi ¶10.) Plaintiff’s counsel declares he incurred $319.00 in costs related to the initial JAMS filing fee ($250), filing the instant motion ($60), and an estimated filing fee for his reply ($9). (Decl. of Mizrahi ¶10.)

The Court grants Plaintiff’s request for reasonable attorneys’ fees and costs incurred on the instant motion for a total of $4,781.50.

In addition to monetary sanctions, Plaintiff seeks: (1) an evidence sanction by an order prohibiting Defendants from conducting discovery in this civil action; (2) a terminating sanction by an order rendering a judgment by default against Defendants; and (3) a contempt sanction by an order treating Defendants in contempt of court. Plaintiff’s request for evidence, terminating, and contempt sanctions is denied. Plaintiff has failed to demonstrate that granting the instant motion to vacate the Court’s 4/22/22 Ruling and Plaintiff’s requested reasonable attorneys’ fees and costs is insufficient to ensure Defendants’ compliance with the rules of this jurisdiction.

Plaintiff’s motion to vacate this Court’s April 22, 2022, order granting Defendants’ motion compelling arbitration is granted.

Plaintiff’s request for reasonable attorneys’ fees and costs incurred on the instant motion is granted in the amount of $4,781.50.

Plaintiff’s request for evidence, terminating, and contempt sanctions is denied.

The Court will set a trial date at the hearing of this matter.

Hon. Daniel M. Crowley

Judge of the Superior Court