Judge: Elaine W. Mandel, Case: 23SMCV04861, Date: 2025-02-06 Tentative Ruling

Case Number: 23SMCV04861    Hearing Date: February 6, 2025    Dept: P

Tentative Ruling

Harris v. Wilshire Capital Group, Case no. 23SMCV04861

Hearing date February 6, 2025

Plaintiffs’ Motion to Compel Arbitration

Defendant’s Motion for Summary Judgment

Plaintiffs Ronald and Mary Harris sue defendant Wilshire Capital Group for fraud, negligence, negligent misrepresentation, §17200 and unjust enrichment arising from plaintiffs’ investment of approximately $226,000 in bullion coins via defendant. The complaint was filed 10/16/23. Default was entered 2/1/24 and set aside via stipulation on 2/13/24. Min. Order 2/13/24. The answer was filed 6/25/24. The parties unsuccessfully mediated on 8/30/24. Status Report 10/31/24.

Plaintiffs filed a notice of arbitration 1/7/25 and motion to compel arbitration 1/10/25. Defendant filed a notice of objection to that notice, but not an opposition.

Defendant moved for summary judgment 11/1/24. At hearing on 1/14/25 the court ordered the motion to compel arbitration to precede the motion for summary judgment. Min. Order 1/14/25.

Requests for Judicial Notice

Defendant requests judicial notice of 11 exhibits A-K, 3 of which are documents of this court and 8 of which are contracts between the parties. The court previously denied judicial notice of contracts between the parties. The court again denies judicial notice of said contracts. Wilshire fails to cite authority that would allow the court to take judicial notice of the terms of private parties’ contracts. Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145. Judicial notice of records of this court is proper under Cal. Evid. Code §452(d). Judicial notice of exhibits A, H-I GRANTED.

Plaintiffs request judicial notice of a (1) a complaint and demand for arbitration dated 1/9/25; and (2) a JAMS confirmation of demand for arbitration submission dated 1/10/25. Judicial notice of records of this court and acts of the state of California’s legislative, executive or judicial branches is proper per Cal. Evid Code §§452(d), 452(g), 452(h) and 453. GRANTED.

Plaintiffs’ Motion to Compel Arbitration

California public policy strongly favors arbitration as an efficient alternative to litigation. Cal. Code Civ. Proc. §1280 et seq., Madden v. Kaiser Found. Hosps. (1976) 17 Cal.3d 699, 706. A party waives its right to arbitrate when it “substantially invokes” the litigation machinery before moving to arbitrate, resulting in prejudice to the opposing party. Hoover v. American Income Life Ins. Co. (2012) 20 Cal.App.4th 1193, 1204. Responding to discovery, rather than propounding it, does not constitute invocation of the litigation machinery. Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 217. Unreasonable delay in moving to compel arbitration can lead to a waiver of arbitration rights. Spear v. California State Auto Ass’n. (1992) 2 Cal.4th 1035, 1043.

Plaintiffs filed a notice of arbitration 1/7/25. Defendant objected, arguing plaintiffs waived the right to arbitrate, that arbitration would prejudice defendant and plaintiffs’ notice was procedurally deficient. Plaintiffs moved to compel arbitration 1/10/25, curing the procedural deficiencies of the 1/7/25 notice.

Defendant argues plaintiffs waived the right to arbitrate via their “extensive litigation conduct,” including attending CMCs, engaging in meet-and-confer efforts, opposing motions, responding to discovery and participating in court-sponsored mediation. None of these is held by case law to be actions that waive the right to arbitration. Davis, supra. Defendant offers no case authority that such actions constitute a waiver of arbitration rights.

The Court “shall” order parties to arbitrate “if it determines that an agreement to arbitrate exists, unless it finds (a) the right to compel arbitration has been waived by petitioner; or (b) grounds exist for rescission of the agreement; (c) a party to the arbitration agreement is also a party to a pending court action … arising out of the same transaction …” Code Civ. Proc. §1281.2.

A valid agreement to arbitrate exists per section 10B of the parties’ contract. Decl. Gustafson para. 14; UMF 14. Defendant does not dispute existence of the arbitration agreement’s existence but argues plaintiffs unreasonably delayed the request for arbitration. The court notes defendant drafted the contract, which included the arbitration provision, but now argues against arbitration.

The complaint was filed 10/16/23; defendant answered 6/25/24. The mediation on 8/30/24 was not successful. Decl. Gustafson para. 13. The parties continued settlement discussions, during which plaintiffs began pursuing arbitration, per the agreement. Id. Plaintiffs assert defendant failed to respond to these arbitration inquiries and filed the motion for summary judgment. Decl. Gustafson para. 14.

Bringing the matter to issue, engaging in court-sponsored ADR and attempting to settle do not constitute unreasonable delay per Spear, supra. Plaintiffs have not waived their arbitration rights, which were instigated by the contract drafted by defendant. No trial has been set. The parties agreed to arbitration. GRANTED. The parties are ordered to JAMS arbitration pursuant to the purchase agreement, section 10B; the matter is stayed pending the outcome of arbitration.

Defendant’s Motion for Summary Judgment

MOOT, per the above ruling.