Judge: Elaine W. Mandel, Case: 24SMCV00136, Date: 2024-05-13 Tentative Ruling

Case Number: 24SMCV00136    Hearing Date: May 13, 2024    Dept: P

Tentative Ruling

AMC Fund 24 LLC v. Quantinal Capital Advisors, et al., Case No. 24SMCV00136

Hearing date: May 13, 2024

Defendant Quantinal’s Motion to Compel Arbitration

In this declaratory relief action, plaintiff alleges it signed 23 purchase agreements with defendant Quantinal to buy its membership interest in 23 different limited liability companies. The identical agreements did not include wire instructions for payment. Defendant Quantinal moves to compel arbitration pursuant to the agreements.

California public policy strongly favors arbitration as an efficient alternative to litigation. Code Civ. Proc. §1280, et seq., Madden v. Kaiser Found. Hosps. (1976) 17 Cal.3d 699, 706.

There is a liberal federal policy favoring arbitration, requiring arbitration agreements to be on equal footing with other contracts and requiring courts to resolve doubts as to whether a dispute falls within an arbitration provision in favor of arbitration. AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339; AT&T Tech., Inc. v. Comm. Workers of Am. (1986) 475 U.S. 643, 650. A similar policy has been expressed by California courts. Hayes Children Leasing Co. v. NCR Corp. (1995) 37 Cal.App.4th 775, 788. The public policy in favor of arbitration is founded in the notion that arbitration is a “speedy and relatively inexpensive means of dispute resolution.” Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1452.

Quantinal provides a copy of the parties’ agreement to arbitrate. Kaminker Decl., Exh. A.  Paragraph 7(d) contains a dispute resolution provision that incorporates a reference to the company agreement. Id. ¶ 5. Paragraph 11.12 of the company agreement states “Any dispute among the Company, the Manager or the Members or any one of them relating to or arising out of this Agreement or the rights and obligations of any party pertaining to the investment in the Units and any transaction among one or more of the Company, the Manager or the Members shall be resolved through binding arbitration as set forth in this Section.” Id. ¶ 6; Exh. A.

Plaintiff argues the agreements and arbitration provisions are invalid and not enforceable because the interests in the subject entities were never validly transferred, as the purchase agreements did not provide wire transfer information. Hopper Decl., ¶ 25. Plaintiff also argues Quantinal failed to provide arbitration provisions from each of the 23 incomplete purchase agreement; plaintiff argues each agreement concerns a different property, so each agreement is unique. This is not persuasive, as each agreement appears identical but for the company name and contains identical dispute resolution provisions. Kaminker Decl. ¶ 6.

Plaintiff cites Avalon Products v. Lentini (1950) 98 Cal.App.2d 177, 179, which held a contract is void if essential elements are not agreed upon and the contract does not provide an answer, leaving it open to future negotiation and agreement. The Avalon parties’ agreement failed to make any provisions for how payment would be made. Id. Here, wire instructions were not an essential element of the agreements because plaintiff indicated payment would be made by checks and wire transfer was unnecessary. Kaminker Dec. ¶ 9.c.; Exh. L.

All claims fall within the scope of the arbitration agreements because the claims for declaratory relief, breach of contractual representation warranting rescission and fraud all stem from the interest agreements. Quantinal meets its burden under Code of Civil Procedure §1281.2.

Plaintiff fails to assert any other defense that would bar enforcement of the arbitration agreement. Moreover, the court declines to adjudicate the declaratory relief claim, as the prayer challenges the validity of the contract as a whole. Compl. ¶¶ 101-102. All such challenges can be addressed through arbitration, especially considering that the agreement states that “any disputes arising out of the Agreements” would be resolved there. Hayes, supra, 37 Cal.App.4th at 781.

Since an agreement to arbitrate exists and there are no defenses to enforcement, the motion is GRANTED.