Judge Daniel M. Crowley, Case Number: 22STCV31574, Date: 2024-05-15 Tentative Ruling

Plaintiff Thorsten D. Meier’s unopposed motion to vacate this Court’s arbitration stay and reopen this case in Superior Court is granted.

Plaintiff’s request for monetary sanctions against Defendants Triller, Inc., Mahi de Silva, and Paul Kahn, jointly and severally, is granted in the amount of $111,186.80.

Plaintiff Thorsten D. Meier (“Meier”) (“Plaintiff”) moves unopposed to vacate this Court’s arbitration stay, reopen this case in Superior Court, and award monetary sanctions against Defendants Triller, Inc. (“Triller”), Mahi de Silva (“de Silva”), and Paul Kahn (“Kahn”) (collectively, “Defendants”), jointly and severally, on the grounds Defendants materially breached the alleged arbitration agreement by failing to timely pay a JAMS arbitration invoice of August 28, 2023, which was “due upon receipt” but not paid until October 16, 2023. (Notice Motion, pg. 2; C.C.P. §1281.97(a).) Plaintiff moves for sanctions in the form of reasonable attorneys’ fees and costs incurred as a result of the breach in the amount of $111,186.80. (Notice Motion, pg. 2; C.C.P. §§1281.97(a), (d); 1281.99(a).)

On September 27, 2022, Plaintiff filed his operative Complaint in the instant matter against Defendants.

On June 5, 2023, this Court granted Defendants’ motion to compel arbitration of Plaintiff’s claims. (6/5/23 Minute Order.)

Plaintiff filed the instant motion on April 22, 2024. As of the date of this hearing no opposition has been filed.

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.

Under C.C.P. §1281.97, the “arbitration provider [must] ‘immediately provide an invoice for any fees and costs,’ which is ‘due upon receipt’ ‘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.’ (§ 1281.97, subd. (a)(2).) Thus, unless the parties expressly agree to the contrary, the drafting party’s receipt of the invoice triggers the 30-day clock under section 1281.97, subdivision (a)(1).” (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 774.)

Plaintiff’s motion to lift this Court’s stay for arbitration is granted. Plaintiff’s action may proceed before this Court.

Under C.C.P. §§1281.97 and 1281.98, “a company or business pursuing arbitration of a dispute under a predispute arbitration agreement is in material breach and default of that agreement – thereby waiving its right to arbitrate – if it fails to timely pay its share of arbitration fees.” (Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1061-1062.) Thus, a late payment constitutes “a material breach and entitles the claimant to withdraw unilaterally from arbitration.” (Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073, 1077-1078.) There is “no ambiguity” in the requirement that arbitration fees be paid “within 30 days after the due date.” (De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 752.)

Here, On August 28, 2023, JAMS issued an invoice to Defendants in the amount of $1,600.00 in order to initiate the arbitration process, which was “due on receipt.” (Decl. of Hyslop ¶16, Exh. 7.) However, the invoice remained unpaid until October 16, 2023, despite the fact that JAMS sent defense counsel a reminder notice. (Decl. of Hyslop ¶¶16-17, Exhs. 7-8.)

More than 45 days lapsed between the issuance of the invoice by JAMS on August 28, 2023, and the payment of such invoice by Defendants on October 16, 2023. (Decl. of Hyslop ¶19, Exh. 9.) Therefore, Defendants’ $1,600 payment was 18 days past due.

Given the untimely payment by Defendants of the JAMS invoice dated August 28, 2023, Defendants are in “material breach” of the alleged arbitration agreement and have waived their right to arbitration, thereby permitting Plaintiff to withdraw from arbitration. (Espinoza, 83 Cal.App.5th at pgs. 774-775; Cvejic, 92 Cal.App.5th at pgs. 1077-1078; De Leon, 85 Cal.App.5th at pg. 752; Williams, 86 Cal.App.5th at pg. 1071.) Whether the late payment was unintentional, or the result of a clerical error, is irrelevant. (Williams, 86 Cal.App.5th at pgs. 1074-1075; Cvejic, 92 Cal.App.5th at pg. 1078; Espinoza, 83 Cal.App.5th at pgs. 775-778.) Because “the statute does not empower an arbitrator to cure a party’s missed payment,” a late payment is fatal, as “[t]here is no escape hatch for companies that may have an arbitrator’s favor[,] . . . [n]or is there a hatch for an arbitrator eager to keep hold of a matter.” (Cvejic, 92 Cal.App.5th at pg. 1078; see Hohenshelt v. Superior Court of LA County (2024) 99 Cal.App.5th 1319.) Absent agreement of the parties, late payments are not permitted. (Hohenshelt, 99 Cal.App.5th at pg. 1352.)

Thus, a failure to timely pay arbitration fees contravenes public policy (De Leon, 85 Cal.App.5th at pg. 750) and constitutes an abandonment, waiver, or forfeiture of the right to arbitrate (Williams, 86 Cal.App.5th at pg. 1071).

Accordingly, Plaintiff’s motion to vacate the prior order compelling arbitration is granted. Plaintiff’s action may now proceed before this Court.

C.C.P. §1281.97(d) provides, “[i]f the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.” (C.C.P. §1281.97(d), emphasis added.)

The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 . . ., by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.

Plaintiff seeks $111,186.80 against Defendants, jointly and severally, who are the “drafting part[ies]” under C.C.P. §§1280(e), 1281.97, and/or 1281.99(a).

Plaintiff’s counsel declares his hourly rate in this matter is $750. (Decl. of Hyslop ¶24.) Plaintiff’s counsel declares he incurred 146.8 hours, for a total of $110,400.00 in attorneys’ fees, and $786.80 for expenses incurred, for a total of $111,186.80. (Decl. of Hyslop ¶¶30-31, Exh. 13.)

Plaintiff’s request for $111,186.80 in sanctions against Defendants, jointly and severally, is granted.

Plaintiff’s unopposed motion to vacate the arbitration stay and reopen the instant case before this Court is granted.

Plaintiff’s request for sanctions in the amount of $111,186.80 against Defendants, jointly and severally, is granted.

Hon. Daniel M. Crowley

Judge of the Superior Court