Judge: Donald F. Gaffney, Case: "Fineline Woodworking, Inc. v. Jeremy Harnish Designer Finishes, Inc.", Date: 2022-08-03 Tentative Ruling

TENTATIVE RULING 

Cross-Defendant Dugally Oberfeld, Inc.’s Motion to Compel Arbitration is DENIED. The court finds that Dugally Oberfeld, Inc. waived its right to arbitrate.

This action commenced on 10/21/20. The trial is set two years later on 10/10/22, which is slightly over two months away. One year ago, on 7/20/21, Dugally filed an Answer to the Complaint and a Cross-complaint. On 9/5/21, Faith 5 filed a Cross-complaint against Dugally. Dugally waited until 5/20/22 to move to compel arbitration.

Waiver: “Code of Civil Procedure section 1281.2, subdivision (a), however, provides grounds for denying a petition to compel arbitration, including when ‘[t]he right to compel arbitration has been waived by the petitioner.’” (Quach v. California Commerce Club, Inc. (2022) 78 Cal.App.5th 470, 477.)

“Waiver of the right to arbitrate is assessed through a number of factors, including: ‘(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced the opposing party.’” [Citation.]” (Iskanian v. CLS Transportation (2014) 59 Cal.4th 348, 375 quoting St. Agnes Medical  Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196.) (Quach v. California Commerce Club, Inc. 78 Cal.App.5th at 477.)

 “’No one of these factors predominates and each case must be examined in context.’. . . The question of prejudice, however, ‘is critical in waiver determinations.’” (Quach v. California Commerce Club, Inc. (2022) 78 Cal.App.5th 470, 477–478.)

Dugally failed to promptly demand arbitration and waited until the eve of trial to request it. Dugally’s delay in moving for arbitration has caused substantial prejudice to Faith 5 Property Owner. “By litigating rather than arbitrating until the time of trial, [Dugally] has circumvented the expected benefits to be achieved from a speedy and relatively inexpensive arbitral forum. Depriving a party of the benefits of his or her bargain is the epitome of prejudice. Here, arbitration delayed is arbitration denied.” (Burton v. Cruise (2010) 190 Cal.App.4th 939, 949.) A prompt request for arbitration would have avoided this prejudice.

Moving party to give notice.