Judge: David B. Gelfound, Case: 24CHCV02756, Date: 2025-06-06 Tentative Ruling

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Case Number: 24CHCV02756    Hearing Date: June 6, 2025    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

MOTION TO COMPEL ARBITRATION

Motion filed: 2/3/25

MOVING PARTY: Defendants Demand Construction and Hosep Bahlounian

RESPONDING PARTY: Plaintiff Billy Teinowitz

NOTICE: OK.

RELIEF REQUESTED: An order compelling arbitration of this matter and staying any further proceedings pending the outcome of arbitration

TENTATIVE RULING: The motion is GRANTED.

BACKGROUND

On July 30, 2024, Plaintiff Billy Teinowitz (“Plaintiff” or “Teinowitz”) initiated this action by filing a Complaint. On December 17, 2024, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants Demand Construction, Hosep Bahlounian (“Bahlounian”) (collectively, “Defendants”) and Does 1 to 100, alleging the following causes of action: (1) Breach of Contract, (2) Account Stated, and (3) Common Counts.

On February 3, 2025, Defendants filed the instant Motion to Compel Arbitration (“Motion”). On May 8, 2025, Plaintiff filed an Opposition, and Defendants submitted a Reply on June 2, 2025.

ANALYSIS

Under Code of Civil Procedure section 1281.2, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy ... the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists,” unless the court finds that the right to compel arbitration has been “waived by the petitioner,” or that “grounds exist for rescission” of the arbitration agreement. (Code Civ. Proc., § 1281.2, subds. (a) & (b).)

When seeking to compel arbitration of a plaintiff’s claims, the moving party must allege the existence of an agreement to arbitrate.  (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 (Condee).)  The burden then shifts to the respondent to prove the falsity of the agreement.  (Ibid.)  After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability.  (Ibid.) 

The Court must grant a motion to compel arbitration unless the petitioner has waived the right to compel arbitration or if there are grounds to revoke the arbitration agreement.  (Condee, supra, 88 Cal.App.4th at p. 219; Code Civ. Proc., § 1281.2.)

A.    Existence of a Valid Arbitration Agreement

California law favors arbitration but requires a voluntary agreement. (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50.) The court will first determine whether an agreement exists, applying ordinary contract principles. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223 (Pinnacle).) The law requires the party seeking to compel arbitration meets its burden to demonstrate “the existence of a valid arbitration agreement by the preponderance of evidence.” (Engalla v. Permanente Med. Group., Inc. (1997) 15 Cal.4th 951, 972.)

Here, Defendant Bahlounian was the CEO of Defendant Demand Construction, a licensed California solar contractor. (Mot. at p. 3.) Defendants assert that on or about October 6, 2023, they entered into an Independent Sales Representative Agreement (“Agreement”) with Plaintiff, which contained an express provision to binding arbitration. (Mot. at p. 3.)

Plaintiff does not dispute the existence of the Agreement. Nor does he deny that both parties executed the Agreement and consented to be bound by its terms, including its express arbitration provisions.

Defendants submit a copy of the signed Agreement. (Melkonian Decl. Ex. “1.”) The signature page reflects two signatures – one by Plaintiff and the other by the Director of Sales Expansion for “Demand Solar.” (Ibid.) The Agreement is dated October 6, 2023. (Ibid.) A signed written agreement gives rise to a presumption that the parties intended to be bound by its terms, absent evidence to the contrary. (Marin Storage & Trucking, Inc. v. Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 [“[O]rdinarily one who signs an instrument which on its face is a contract is deemed to assent to all its terms. A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing.”])

In further support, Defendants provide a declaration that quotes the arbitration provision verbatim, in which it provides, in part:

“Independent Contractor's service or compensation under this Agreement, or the cessation of this Agreement or Independent Contractor's service thereunder will be submitted to final and binding arbitration for determination in accordance with the Judicate West Arbitration Rules of Procedure as the exclusive remedy for such controversy, claim or dispute.”

(Melkonian Decl. ¶ 3, emphasis in original.)

The Court finds that the arbitration provision is not vague, illusory, or restricted to specific claims. Rather, it broadly encompasses all claims “arising out of or relating to” the Agreement and the relationship between the parties, which includes the causes of action asserted in the operative FAC.

Based on the undisputed record, the Court finds that Defendants, as the moving party, have met their burden in establishing the existence of a valid arbitration agreement.

B.     Enforceability of the Arbitration Provisions

Plaintiff argues that the arbitration provisions included in the Agreement are unenforceable because they are unreasonable or oppressive. (Opp’n. at pp. 2-4.) Specifically, Plaintiff contends that the Agreement was essentially a contract of adhesion, presented to him on a “take it or leave it” basis upon his hiring by Defendant Demand Construction without any discussion or explanation of the arbitration language. (Opp’n. at p. 2.) Plaintiff further argues that the arbitration provisions impose substantial financial burden by designating Judicate West as the arbitration forum, which requires $1,500 fee – an expense that, according to Plaintiff, may prevent an unpaid independent contractor from accessing a forum for redress. (Opp’n. at p. 4.)

In their Reply, Defendants argue that the Agreement does not constitute a contract of adhesion. (Reply, at p. 3.) They assert that the Agreement was not a boilerplate form, but rather individually drafted for Plaintiff. (Ibid.) Defendants further claim that it is common for other sales representatives to propose “redline” revisions to their agreements, and had Plaintiff requested changes, they would have been reviewed and negotiated as necessary. (Reply, at p. 4.)

(1)   Contract of Adhesion

Under California law, contract of adhesion, “signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 88 (Armendariz); Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817.)

Here, the Agreement appears to bear the hallmarks of a standardized form contract, as evidenced by its structured formatting, boilerplate provisions, and reference to exhibits that apply uniformly to independent contractors. Key contractual terms – such as commission structure, termination clauses, and arbitration provisions – are presented in a pre-set manner. (See Melkonian Decl. Ex. “1.”)

In their Reply, Defendants submit supplemental declarations asserting that the Agreement was “individually drafted” for Plaintiff and not a “boilerplate contract identical for all Sales Representatives.” (Bahlounian Decl. ¶¶ 4-5.) However, this assertion is tempered by Defendants’ admission that the Agreement was “based upon a draft contract.” (Id. ¶ 5.) The absence of specific evidence demonstrating material differences between Plaintiff’s Agreement and those of other contractors renders Defendants’ claim of individualization largely conclusory.

Moreover, Defendants do not directly address the relative bargaining positions of the parties. Instead, they suggest that Plaintiff could have proposed revisions, which “would have been reviewed and negotiated as necessary.” (Bahlounian Decl. ¶ 7.)

Courts consistently infer oppression in employment arbitration agreements due to the employer’s superior bargaining power, requiring minimal evidence of coercion. (Armendariz, supra, 24 Cal.4th at p. 115. [instructing that courts must be “particularly attuned” to this danger in the employment setting, where “economic pressure exerted by employers on all but the most sought-after employee may be particularly acute”])

Here, Defendant Demand Construction, a business entity represented by its Director of Sales Expansion, retained significantly greater resources and control than Plaintiff, an individual independent contractor. Even if negotiation was theoretically possible, the power imbalance persists, as Plaintiff’s ability to negotiate would depend on Defendants’ willingness to accept changes – “reviewed and negotiated as necessary.” (Bahlounian Decl. ¶ 7.)

While both parties signed the Agreement electronically, Defendants offer no evidence regarding the manner in which the Agreement was presented – e.g., whether it was discussed in person, explained, or accompanied by an offer to negotiate. Given the standardized format and the presumptive disparity in bargaining power, the Court finds that the Agreement constitutes a contract of adhesion, subject to scrutiny for unconscionability.

            That said, the mere adhesive nature of an employment or contractor agreement does not, by itself, render an arbitration agreement unenforceable. (See Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 708, 722-723.) As the California Supreme Court has explained, “If the contract is adhesive, a court must then determine whether the other factors are present that, under established legislative or judicial rule, operate to render it unenforceable.” (Armendariz, supra, 24 Cal.4th 83, 88.)

Accordingly, the Court turns to the remaining elements of unconscionability in assessing the enforceability of the arbitration provision.

(2)   Procedural Unconscionability

The arbitration provisions are located in Section 12 of the Agreement. (Melkonian Decl. Ex. “1.”). To determine their enforceability, a court assesses whether they are unconscionable or otherwise violate California law. California courts apply a two-pronged test for unconscionability: procedural unconscionability (oppression or surprise due to unequal bargaining power) and substantive unconscionability (overly harsh or one-sided terms). Both must be present to render a provision unenforceable, though they need not be present to the same degree. (See Armendariz, supra, 24 Cal. 4th at p. 114; Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 910 (2015).

A contract of adhesion inherently raises some degree of procedural unconscionability due to the lack of negotiation. (See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th at 1237, 1244 (Baltazar).)

Regarding the element of surprise, the arbitration provisions are clearly labeled in Section 12 and written in plain language. Notably, the clause includes bold text emphasizing the jury trial waiver and the individual arbitration requirement. (See Melkonian Decl. Ex. “1.”) These formatting features reduce the likelihood of surprise and weigh against a finding of procedural unfairness.

 Furthermore, although Plaintiff argues that the arbitration rules were not discussed or attached, courts have held that the failure to attach a copy of arbitration rules does not render the arbitration agreement procedurally unconscionable – particularly where there is no indication that the rules were inaccessible or that their absence caused confusion or prejudice. (See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 691.)

Accordingly, the Court finds that the Agreement reflects a low degree of procedural unconscionability, stemming primarily from its adhesive nature.

(3)   Substantive Unconscionability

Substantive unconscionability exists when terms are overly harsh, one-sided, or lack mutuality, such that they "shock the conscience." (See Armendariz, supra, 24 Cal.4th at p. 114.) In the arbitration context, Armendariz set forth minimum requirements for arbitration agreements in employment-like relationships, including: (1) a neutral arbitrator, (2) adequate discovery, (3) a written award, (4) availability of all remedies available in court, and (5) no unreasonable costs imposed on the weaker party. (Id. at p. 105.)

Here, the arbitration provisions satisfy these requirements.

i.                    Neutral Arbitrator

The Agreement designates Judicate West as the arbitration provider. While it does not explicitly describe the method for selecting a neutral arbitrator, Judicate West is a well-regarded provider known for its neutrality. Absent any evidence that Judicate West’s rules bias the selection process, the requirement for a neutral arbitrator is satisfied.

ii.                  Adequate Discovery and Written Award

The Agreement permits discovery “to the same extent as would be permitted in a court of law” and requires the arbitrator to issue a “reasoned written decision.” (Melkonian Decl., Ex. “1,” § 12.) These terms meet Armendariz’s standards.

iii.                Availability of Remedies

The Agreement meets the Armendariz requirement for availability of remedies, by granting the arbitrator “full authority to award all remedies which would be available in court.” (Melkonian Decl. Ex. “1,” § 12.)

iv.                Costs of Fees

The arbitration provisions provide that the parties will “bear the expense of the arbitration proceeding equally unless otherwise agreed” and to bear their own legal fees. This fee-splitting provision is facially neutral and does not, by itself, render the provisions substantively unconscionable. It applies equally to both parties, ensuring mutuality, and aligns with the Federal Arbitration Act’s preference for enforceable arbitration agreements (see AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 341.)

Plaintiff contends that the arbitration process imposes a $1,500 fee to “open a case,” thereby denying access to the arbitration due to affordability. (Opp’n. at p. 4.) However, this fee requirement is not referenced in the Agreement itself, and Plaintiff offers no supporting declaration or evidence – such as a Judicate West fee schedule – demonstrating the actual imposition or allocation of this fee. Without evidence substantiating this claim, the Court cannot conclude that the fees render the arbitration provisions unconscionable.

v.                  Venue clause

Plaintiff also argues that the San Diego venue is unduly burdensome. (Opp’n. at p. 4.)

For venue clauses, substantive unconscionability may arise if the designated location imposes significant burdens (e.g., travel costs, inconvenience) on the weaker party, particularly in an adhesive contract where the party had no opportunity to negotiate. (See Bolter v. Superior Court (2001) 87 Cal. App. 4th 900, 909 (Bolter).) However, a venue clause is not inherently unconscionable if it is reasonable, mutual, and does not unduly hinder access to arbitration, especially under the Federal Arbitration Act (FAA), which governs this agreement. (Melkonian Decl. Ex. “1,” § 12 [“This Agreement is governed by the Federal Arbitration Act and this arbitration provision is to be construed as broadly as is permissible under applicable law.”])

In Bolter, a venue clause requiring arbitration in Utah was found unconscionable for California franchisees due to prohibitive travel costs, particularly in an adhesive contract (Bolter, supra,87 Cal.App.4th at p. 911.)

Here, the venue clause applies equally to both parties, mandating arbitration in San Diego for all disputes, whether initiated by Plaintiff or Defendant Demand Construction. This mutuality reduces the risk of substantive unconscionability, as the clause does not favor one party over the other. Plaintiff has not submitted any evidence, specifying his place of resident or his geographic proximity to the San Diego venue. Thus, the record fails to support a finding of substantive unconscionability based on the venue.

Accordingly, the Court finds that Plaintiff has failed to establish that the arbitration provisions are so one-sided to shock the conscience. (Pinnacle, supra, 55 Cal.4th at p. 246.) The Court therefore concludes that the arbitration provisions are not substantively unconscionable and are enforceable.

(4)   Severance of Unconscionability

The Court does not need to reach the issue of severance because, following the foregoing unconscionability analysis, the arbitration provision are found to be enforceable in their entity.

Nevertheless, even if further evidence or legal arguments were to establish that the venue clause is substantively unconscionable, the Court finds no legal basis to invalidate the entire arbitration agreement. Under California law, a court may sever unconscionable terms and enforce the remainder of the agreement unless the agreement is so permeated by unconscionability that severance would be ineffective or inappropriate. (Armendariz, supra, 24 Cal.4th at pp. 124-125 [“[P]ermeation is indicated by the fact that there is no single provision a court can strike or restrict in order to remove the unconscionable taint from the agreement”]; Bolter, supra, 87 Cal.App.4th at p. 911 [holding that unconscionable venue clauses are clearly severable from the remainder of the arbitration agreement.])

Based on the foregoing, the Court finds that a valid and enforceable arbitration agreement exists. Accordingly, the Court GRANTS the Motion.

C.    Stay of Current Action

Pursuant to Code of Civil Procedure section 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.

Accordingly, this case is stayed pending arbitration.

CONCLUSION

Defendants Demand Construction and Hosep Bahlounian’s Motion to Compel Arbitration is GRANTED. The case is stayed pending arbitration.

Moving party to provide notice.