Judge Daniel M. Crowley, Case Number: 24STCV12725, Date: 2024-10-22 Tentative Ruling

Defendants Aric Entwistle’s and Maya Entwistle’s motion to compel arbitration of Plaintiff Jayco/Lawson General Engineering, Inc.’s claims in this action is granted. This case is stayed pending arbitration and mediation.

Defendant Sheldon Draimin’s motion is denied on the basis default was entered against him on August 19, 2024.

Defendants Aric Entwistle (“Aric”), Maya Entwistle (“Maya”), and Sheldon Draimin (“Draimin”) (collectively, “Defendants”) move for an order compelling arbitration of all claims asserted by Plaintiff Jayco/Lawson General Engineering, Inc. (“Jayco”) (“Plaintiff”) and to stay the action pending arbitration and mediation before the Contractors State License Board (“CSLPB”). (Notice of Motion, pgs. 2-3; C.C.P. §§1281.2, 1281.4.) Defendants also request sanctions against Plaintiff and its counsel, The Green Firm, PC, in the amount of $5,000.00. (Notice of Motion, pgs. 2-3.)

On May 20, 2024, Plaintiff filed its operative complaint (“Complaint”) against Defendants alleging six causes of action: (1) breach of contract; (2) work, labor, and materials furnished/agreed price; (3) open-book account; (4) account stated; (5) reasonable value/work, labor, and services (quantum meruit); and (6) foreclosure of Mechanics Lien.

Defendants filed the instant motion on August 20, 2024. Plaintiff filed its opposition on October 9, 2024. Defendants filed their reply on October 15, 2024.

As a preliminary matter, the instant motion can only be made by Maya and Aric because default has been entered against Draimin on August 19, 2024. (8/19/24 Request for Entry of Default.)

Once a default is entered against a defendant, they generally cannot file a response or participate in the case until the default is set aside. (See Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381.)

Here, Draimin has not moved to set aside the default; therefore, Draimin cannot move with Defendants on the instant motion.

Federal law provides for enforcement of this Arbitration Agreement. The Federal Arbitration Act, 9 U.S.C. §1, et seq. (“FAA”), establishes a strong federal policy in favor of arbitration of disputes where a written arbitration agreement exists. Section 2 of the FAA provides, in pertinent part that “[a] written provision . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable.” (9 U.S.C. §2.) The purpose of the FAA is to “reverse the longstanding judicial hostility to arbitration agreements.” (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 24.) The FAA places arbitration agreements “on an equal footing with other contracts and [requires courts] to enforce them according to their terms.” (AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339; see also Rent-A-Center West, Inc. v. Jackson (2010) 561 U.S. 63, 67 [“The FAA reflects the fundamental principle that arbitration is a matter of contract.”].) The FAA will preempt not only a state law that “discriminat[es] on its face against arbitration,” but also a state law that “covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” (Kindred Nursing Centers Limited Partnership v. Clark (2017) 137 S.Ct. 1421, 1426.)

The FAA restricts a court’s inquiry related to compelling arbitration to two threshold questions: (1) whether there was an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84.) Here, both criteria are satisfied. First, Plaintiff agreed to arbitration when is agent, contractor Jason Twedell (“Twedell”), entered into the home improvement contract (“Contract”) with Maya, on behalf of Defendants, on February 23, 2024, which contained an arbitration clause (“Arbitration Clause”). (Decl. of Maya ¶3, Exh. A at pgs. 7-8.) Second, the Arbitration Clause expressly covers “[a]ny controversy or claim arising out of or relating to this contract, or breach thereof” between Plaintiff and Defendants. (Decl. of Maya ¶3, Exh. A at pgs. 7-8.)

California law also favors arbitration for dispute resolution. The California Arbitration Act (“CAA”), codified at C.C.P. §1281 et seq., provides, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (C.C.P. §1281; see also Grafton Partners L.P. v. Superior Court (2005) 36 Cal.4th 944, 955 [“[U]nlike predispute jury waivers, predispute arbitration agreements are specifically authorized by statute.”].)

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99.) The public policy in favor of arbitration is so strong that California courts have held that an employee is “bound by the provisions of the [arbitration] agreement regardless of whether [he] read it or [was] aware of the arbitration clause when [he] signed the document.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, citing Macaulay v. Norlander (1992) 12 Cal.App.4th 1.) The only prerequisite for a court to order arbitration is a determination that the parties have entered into an agreement to arbitrate the dispute. (United Transportation Union v. Southern California Rapid Transit District (1992) 7 Cal.App.4th 804, 808.) Thus, arbitration must be ordered “unless the agreement clearly does not apply to the dispute in question.” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.)

Defendants proved the existence of an arbitration agreement with Plaintiff. Defendants submitted evidence that on February 23, 2024, Plaintiff executed the Contract containing the Arbitration Clause. (Decl. of Maya ¶3, Exh. A.)

Plaintiff argues in opposition that Draimin and Aric are not signatories to the Contract and therefore cannot be considered parties to the provisions of the Arbitration Clause. Plaintiff’s argument is unavailing. Plaintiff’s Complaint explicitly alleges:

On or about February 23, 2024, Plaintiff, by and through Jason Twedell, and Defendant SHELDON DRAIMIN, an individual (“DRAIMIN”), Defendant ARIC ENTWISTLE (“ARIC”), an individual, and Defendant MAYA ENTWISTLE (“MAYA”), and DOES 1 through 50 (hereafter, “Defendants”) by and through Defendants DRAIMIN and MAYA, entered into a written agreement (the “Agreement”) under which Plaintiff agreed to and did provide work, labor, services, equipment, and materials for Defendants’ real property located at 3123 Johnston Street, Los Angeles, CA 90031 (hereinafter the “Subject Property”), and for which Defendants agreed to pay Plaintiff for their services in accordance with the terms of the Agreement. A true and correct copy of the Agreement is included herewith and incorporated by reference as Exhibit “1.”

California law holds that broadly worded arbitration clauses using the phrases “arising out of” or related to,” cover the widest possible range of disputes, including extracontractual disputes such as (but not limited to) tort claims. (See, e.g., Howard v. Goldbloom (2018) 30 Cal.App.5th 659, 663-664; Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651, 660.) “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.” (United Transportation Union v. Southern California Rapid Transit District (1992) 7 Cal.App.4th 804, 808.)

Here, the Contract states that Plaintiff submitted its “proposal for material and labors to be supplied at the sole request and order of . . . Sheldon Draimin [,] . . . Aric@h2odesignllc.com[, and] Maya Entwistle.” (Decl. of Maya ¶3, Exh. A at pg. 1.) A plain reading of the Contract demonstrates that Aric and Draimin are intended to be parties to the Contract.

Moreover, Plaintiff’s own Complaint alleges Maya, Aric, and Draimin entered into the Contract. (Complaint ¶12.) Pleadings set forth “the formal allegations by the parties of their respective claims and defenses.” (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746, quoting C.C.P. §420.) When the pleadings contain allegations of fact in support of a claim, the opposing party may rely on the statements as judicial admissions. (Id., citing St. Paul Mercury Insurance Co. v. Frontier Pacific Insurance Co. (2003) 111 Cal.App.4th 1234, 1248.) “[A] pleader cannot blow hot and cold as to the facts positively stated.” (Brown v. City of Fremont (1978) 75 Cal.App.3d 141, 146.) Plaintiff cannot allege that Maya, Aric, and Draimin entered into the Contract, and then argue on this motion that they cannot be considered parties to the Arbitration Clause in the Contract.

Defendants also submitted evidence that Draimin and Aric authorized Maya to execute the Contract on their behalf, and that they were advised that the Contract included an arbitration clause. (See Decl. of Aric ¶¶4-6; Decl. of Draimin ¶¶4-5.)

Finally, Plaintiff’s argument that Defendants waived their right to arbitration is unavailing. To establish waiver under generally applicable contract law, the party opposing enforcement of a contractual agreement must prove by clear and convincing evidence that the waiving party knew of the contractual right and intentionally relinquished or abandoned it. (Lynch v. California Coastal Commission (2017) 3 Cal.5th 470, 475; see Waller v. Truck Insurance Exchange, Inc. (1995) 11 Cal.4th 1, 31, [burden is on party claiming waiver “to prove it by clear and convincing evidence”].) Under the clear and convincing evidence standard, the proponent of a fact must show that it is “highly probable” the fact is true. (Conservatorship of O.B. (2020) 9 Cal.5th 989, 995.) The waiving party’s knowledge of the right may be “actual or constructive.” (Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 41.) Its intentional relinquishment or abandonment of the right may be proved by evidence of words expressing an intent to relinquish the right or of conduct that is so inconsistent with an intent to enforce the contractual right as to lead a reasonable factfinder to conclude that the party had abandoned it. (Lynch, 3 Cal.5th at pg. 475.)

Here, Plaintiff has not met its burden to prove by clear and convincing evidence that Defendants knew of their contractual right to arbitrate and intentionally relinquished or abandoned it. Participation in a Case Management Conference and filing a Case Management Conference Statement is not so inconsistent with an intent to enforce a contractual right to arbitration.[1]

Based on the foregoing, Defendants proved the existence of a valid Arbitration Clause that is enforceable by Defendants.

The Arbitration Clause states that “[a]ny controversy or claim arising out of or relating to this contract, or breach thereof, shall be settled by binding arbitration in accordance with the construction industry arbitration rules of the American Arbitration Association, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.” (Decl. of Maya ¶3, Exh. A at pgs. 7-8.) Plaintiff’s claims arise out of the Contract for home improvement services. (See Complaint ¶12, Exh. 1.) Plaintiff’s argument in opposition that equitable estoppel cannot be applied to require Plaintiff to arbitrate its 5th and 6th Causes of Action for Quantum Meruit and Foreclosure of a Mechanic’s Lien, respectively, against Draimin or Aric is unavailing given the broadly worded claims stated in the Arbitration Clause. (Howard, 30 Cal.App.5th 663-664; Khalatian, 237 Cal.App.4th at pg. 660.) Plaintiff’s Sixth Cause of Action for foreclosure of mechanics lien alleges:

Defendants[] entered into the Agreement with Plaintiff to perform and provide certain construction work, labor, services, equipment, and materials in and upon the Subject Property. Based upon this Agreement, Plaintiff provided work, labor, services, equipment, and materials for an agreed-upon price as herein stated to the Defendants, which is also the reasonable value of services provided by Plaintiff and used in said work of improvement.

Plaintiff’s own pleading states that its causes of action arise out of or relate to the Contract.

Based on the foregoing, Defendants met their burden of establishing the Arbitration Clause covers the causes of action asserted in Plaintiff’s Complaint.

Pursuant to C.C.P. §1281.4, if an application has been made to a court involving order to arbitrate a controversy and such application is undetermined, the court where the application is pending shall, upon motion of a party to the action, stay the action until the application for an order to arbitrate is determined. (C.C.P. §1281.4.)

Defendants’ request for sanctions against Plaintiff does not specify in the notice of motion the statute under which issuance of sanctions is requested. Therefore, Plaintiff is not provided adequate notice regarding the sanctions. Accordingly, Defendants’ request for sanctions is denied.

The case is stayed pending arbitration. The Court sets a non-appearance case review for October 22, 2025, at 8:30 a.m. The parties are directed to submit a joint statement five calendar days in advance, apprising the Court of the status of the arbitration.

Hon. Daniel M. Crowley

Judge of the Superior Court

[1] Plaintiff’s motion regarding waiver addresses facts pertaining to Draimin rather than Maya and Aric, who are the only relevant Defendants to the instant motion.