Judge: Gail Killefer, Case: 21STCV24298, Date: 2024-02-09 Tentative Ruling
Case Number: 21STCV24298 Hearing Date: February 9, 2024 Dept: 37
HEARING DATE: Friday, February 9, 2024
CASE NUMBER: 21STCV24298
CASE NAME: Cinmark Company, LP v. Industrial
Electronic Engineers, Inc.
MOVING PARTY: Plaintiff Cinmark Company, LP
OPPOSING PARTY: Defendant, Industrial
Electronic Engineers, Inc.
TRIAL DATE: N/A
PROOF
OF SERVICE: OK
PROCEEDING: (1) Motion to Dismiss
Arbitration due to Failure to Prosecute and Participate in Arbitration; (2)
Vacate the Order Compelling Arbitration and Remand the Action Back to court;
and (3) Impose Sanction against Industrial Electronic
Engineers, Inc.
OPPOSITION: 9 January 2024
SUR-REPLY: 29 January 2024
REPLY: 24 January
2024
TENTATIVE:
Plaintiff’s Motion
to Dismiss Arbitration due to Failure to Prosecute and Participate in
Arbitration; (2) Vacate the Order Compelling Arbitration and Remand the Action
Back to court; and (3) Impose Sanction against Industrial Electronic
Engineers, Inc. is denied. Plaintiff to provide notice.
Background
This
action arises in connection with a lease for the property located at 7765-7775
Kester Avenue, Van Nuys, California (the “Property”). According to the Complaint,
Industrial Electronic Engineers, Inc. (“Defendant” or “IEE”) has leased
commercial properties including the Property.
Cinmark Company, LP (“Plaintiff”) has entered several leases with
Defendant with respect to the Property. Specifically, the parties entered into
the operative written lease agreement for the Property (the “Lease”) on
February 3, 2005. The Lease has been on a month-to-month basis since September
2019. Plaintiff alleges that at some point in the last two years, Defendant
abandoned or vacated the Property without notice or Plaintiff’s consent in
violation of the Lease. Plaintiff additionally alleges that Defendant has
failed to comply with other state and local regulations governing the Property
and has failed to take any steps to remedy its alleged noncompliance despite
Plaintiff’s demands.
Plaintiff’s
complaint alleges four causes of action: (1) breach of Lease, (2) declaratory
relief, (3) injunctive relief, (4) intentional waste.
On
February 9, 2022, the court granted Defendant’s Motion to Compel Arbitration
and stayed the action pending arbitration.
On April 28, 2023, Plaintiff filed a Motion to Disqualify
the Arbitrator. The court denied this
motion on July 24, 2023.
On
December 22, 2023, Plaintiff filed a Motion to (1) Dismiss Arbitration due to
Failure to Prosecute and Participate in Arbitration; (2) Vacate the Order
Compelling Arbitration and Remand the Action Back to Court; and (3) Impose
Sanctions against Defendant IEE. Defendant IEE opposes
the Motion.
I. Legal
Standard
CCP § 583.410(a) states:
(a) The court may in its discretion
dismiss an action for delay in prosecution pursuant to this article on its own
motion or on motion of the defendant if to do so appears to the court
appropriate under the circumstances of the case.
(b) Dismissal shall be pursuant to the
procedure and in accordance with the criteria prescribed by rules adopted by
the Judicial Council.
CCCP § 663 states:
A judgment or decree, when based upon a
decision by the court, or the special verdict of a jury, may, upon motion of
the party aggrieved, be set aside and vacated by the same court, and another
and different judgment entered, for either of the following causes, materially
affecting the substantial rights of the party and entitling the party to a
different judgment:
1. Incorrect or erroneous legal basis for
the decision, not consistent with or not supported by the facts; and in such
case when the judgment is set aside, the statement of decision shall be amended
and corrected.
2. A judgment or decree not consistent
with or not supported by the special verdict.
II. Discussion
A. Request to
Dismiss Arbitration and Vacate Arbitration and Remand the Action Back to Court
On July 24, 2023, the court denied Plaintiff’s request to
disqualify the arbitrator because Plaintiff failed to cite any authority to
support the proposition that the court had such authority while the action was
in arbitration. The court determined that the only remedy available would be to
vacate the arbitration award after an award had been rendered. (CCP § 1281.91.)
Plaintiff now moves to dismiss the action for lack of
prosecution under CCP § 583.410(a) and seeks to vacate the order compelling
arbitration and remand this action back to the court under CCP § 663.
After Plaintiff’s counsel discovered that the appointed
arbitrator, Timothy Gallagher, had engaged in ex parte communications with Defendant,
Mr. Gallagher withdrew as arbitrator on or about September 19, 2023. (Groveman
Decl. ¶ 15, filed 1/24/24.) Plaintiff maintains that discussions about possible
mediation or selecting a new arbitrator have been ignored by Defendant IEE,
such that the arbitration proceedings have stalled. (Id. ¶ 18.) Accordingly,
Plaintiff now requests that the court dismiss the arbitration proceeding due to
lack of prosecution under CCP § 583.410(a).
“Once the trial court stayed plaintiff's
civil action, it was stayed for all purposes during the arbitration
proceedings. Defendants' only avenue for redress when
plaintiff failed to timely prosecute the arbitration was in the
arbitration proceeding. [Citation.]” (Blake v. Ecker
(2001) 93 Cal.App.4th 728, 737 (Blake) disapproved on other grounds by
Le Francois v. Goel (2005) 35 Cal.4th 1094.) Similarly,
in Brock v. Kaiser Foundation Hospitals (1992) 10
Cal.App.4th 1790, the appellate court concluded
“the trial court has no jurisdiction to dismiss an arbitration proceeding for
failure to prosecute it in a reasonably diligent fashion.” (Id. at p.
1793 (Brock).) Therefore, only the arbitrator has the authority to
dismiss the arbitration proceeding due to a failure to prosecute. “Thus, rather
than seek relief from the trial court for plaintiff's
failure to proceed, defendants should have sought relief in the arbitration
proceeding, by pursuing the remedies available under the arbitration
agreement and the rules of the arbitration association designated therein.” (Blake
at p. 1094.)
While Plaintiff may argue
that Defendant IEE has failed to comply in selecting a new neutral arbitrator
and that the court should step in and dismiss the action, Plaintiff fails to
cite any legal authority to support this proposition. Because this action was ordered
to arbitration, the action at law is stayed and the court only has “vestigial
jurisdiction,” meaning the court is only empowered to “
‘appoint arbitrators
if the method selected by the parties fails (§ 1281.6); grant a provisional
remedy ‘but only upon the ground that the award to which an applicant may be
entitled may be rendered ineffectual without provisional relief’ (§ 1281.8(b))
and confirm, correct or vacate the arbitration award (§ 1285). Absent an agreement to
withdraw the controversy from arbitration, however, no other judicial act is
authorized. [Citation.]’” (Optimal Markets, Inc. v. Salant
(2013) 221 Cal.App.4th 912, 923–924 (Optimal Markets) citing Titan/Value Equities Group,
Inc. v. Superior Court (1994) 29 Cal.App.4th 482, 487 (Titan/Value
Equities).) “Absent an agreement [[by the parties] to withdraw the
controversy from arbitration, however, no other judicial act is authorized.” (Titan/Value
Equities at p. 487.) Therefore, “[i]t is also up to the
arbitrator, and not the court, to grant relief for delay in bringing an
arbitration to a resolution.” (Id. at p. 488.)
If Defendant IEE
failed to agree or refused to participate in the appointment of a new
arbitrator, the proper remedy is for Plaintiff to seek an order from the court
to appoint a new arbitrator under CCP § 1281.6. Although “a party could indefinitely stall arbitration proceedings by
refusing to appoint a ‘partisan’ arbitrator . . . section 1281.6 specifically
provides, ‘if the agreed method [for
appointing an arbitrator] fails or for any reason cannot be followed, ... the
court, on petition of a party to the arbitration agreement, shall appoint the
arbitrator.’ While this was designed for an impasse on appointment of a ‘neutral’ arbitrator
[citation], we see no
prohibition in the statute's language against using the mechanism to force the
recalcitrant party to select an arbitrator from a list provided by the court;
alternatively, the court could appoint the neutral arbitrator and leave it
incumbent upon the recalcitrant party to appoint a ‘partisan’ arbitrator or
risk the arbitration proceeding moving on without one.” (Brock, supra,
10 Cal.App.4th at pp. 1803-1804.)
“[O]nce there
is an arbitrator appointed pursuant to section 1281.6, the party seeking to
expedite the arbitration proceedings can apply to the arbitrator for dismissal
based on delay in discovery, and the arbitrator (once appointed) has
authority to determine whether a party should take nothing because of that
party's unwarranted delay in prosecuting the arbitration proceedings.” (Brock, supra,
10 Cal.App.4th at pp. 1804.) Accordingly, the only remedy the court can
currently provide to the Plaintiff is the appoint a new arbitrator under
section 1281.9.
Based on the above, Plaintiff’s request
to dismiss the arbitration proceeding due to Defendant IEE’s failure to
prosecute and participate in arbitration, pursuant to CCP
§ 583.410(a), is denied.
Moreover,
an order compelling arbitration is an interlocutory order. (Mid-Wilshire Associates v. O'Leary (1992) 7 Cal.App.4th 1450, 1451.) Plaintiff
fails to provide authority to support the proposition that an order compelling
arbitration is a judgment or decree that can be set aside and vacated under CCP
§ 663.
Sections
663 and 663a are not expressly made applicable to interlocutory judgments, and
there is nothing in the language used which indicates that they were so
intended. Section 663 provides for a motion to set aside a judgment and enter a
different judgment based upon the facts already found, where improper
conclusions of law had been drawn from those facts. Such a situation involves
questions of law only, and strongly indicates that the judgment which may be
thus changed is one final in nature and not one which leaves issues still to be
determined.
(Remington v. Davis (1951) 108 Cal.App.2d 251, 253.)
As Plaintiff fails to
show that relief under section 663 is available for an order compelling this
matter to arbitration, the request to vacate the order compelling arbitration
and remand the action back to this court is denied.
B. Plaintiff’s Request for Sanctions
Finally, Plaintiff seeks sanctions against Defendant IEE for
its bad faith and delay tactics in arbitration. However, Plaintiff fails to
state a statutory or legal basis that permits the court to sanction Defendant
IEE for conduct that occurred in the arbitration proceeding.
CCP § 2023.040 provides:
A request for a
sanction shall, in the notice of motion, identify every person, party, and
attorney against whom the sanction is sought, and specify the type of sanction
sought. The notice of motion shall be supported by a memorandum of points and
authorities, and accompanied by a declaration setting forth facts supporting
the amount of any monetary sanction sought.
In Optimal Markets, the appellate court found that
once an action is compelled to arbitration, the court has no authority to
consider sanctions “for conduct occurring while the matter was stayed and
referred to binding contractual arbitration.” (Optimal Markets, supra, Cal.App.4th at
p. 925.) “[T]he fact that the decision concerning the imposition of sanctions is a
discretionary one [citation] strongly militates against the superior court's
authority to impose section 128.7 sanctions for conduct occurring before the
arbitrator. ‘To exercise the power of judicial
discretion all the material facts in evidence must be both known and
considered, together also with the legal principles essential to an informed,
intelligent and just decision.’ [Citations.]” (Id. at pp. 925-926.)
Because Plaintiff is asking the court to sanction
Defendant IEE for conduct occurring in arbitration, the court does not have the
all material facts sufficient to evaluate the Defendant’s conduct and award
sanctions. Moreover, Plaintiff failed to state under what basis it seeks to
impose sanctions against Defendant IEE.
Accordingly, Plaintiff’s request for sanctions is
denied.
Conclusion
Plaintiff’s Motion to Dismiss Arbitration due to Failure to
Prosecute and Participate in Arbitration; (2) Vacate the Order Compelling
Arbitration and Remand the Action Back to court; and (3) Impose Sanction
against Industrial Electronic Engineers, Inc. is denied.
Plaintiff to provide notice.