Judge: Gail Killefer, Case: 23STCV06198, Date: 2023-09-27 Tentative Ruling
Case Number: 23STCV06198 Hearing Date: September 27, 2023 Dept: 37
HEARING DATE: Wednesday, September 27, 2023
CASE NUMBER: 23STCV06198
CASE NAME: Golden State Health Centers, Inc. v. Genstar Labs Management, LLC, et
al.
MOVING PARTY: Defendants Synergy Healthcare
Management Solutions Inc.; Synergy Healthcare Resources & Solutions Group; Mildred
DeCastro, Inc.; and Mildred DeCastro (collectively “Synergy Defendants”)
OPPOSING PARTY: Plaintiffs Golden State Health
Centers, Inc.; Santa Anita Convalescent Hospital & Retirement Center, Inc.;
1100 South Alvarado Street, LLC; San Fernando Subacute Rehabilitation Center,
LLC, RG Legacy I, LLC; Two Palms Skilled Care, LLC; and Sylmar Health &
Rehabilitation Center, Inc. (collectively “Plaintiffs”)
Defendants
AK Development & Consulting, Inc.; Genstar Labs Management LLC; Sharpline
Healthcare; Estrella “Star” Choy; and Avigdor Kessler (collectively “Genstar
Defendants”).
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Motion to Compel
Arbitration and Stay Action
OPPOSITION: By Genstar Defendants
filed on 07/20/23; by Plaintiffs filed on 09/13/23
REPLY: 9/19/23
TENTATIVE: Synergy Defendants’ Motion to Compel
Arbitration and Stay Proceedings is denied without prejudice.
Background
On
March 31, 2023, Golden State Health; Santa Anita Convalescent Hospital &
Retirement Center, Inc.; 1100 South Alvarado Street, LLC; San Fernando Subacute
Rehabilitation Center, LLC; RG Legacy I, LLC; Two Palms Skilled Care, LLC; and
Sylmar Health Rehabilitation Center, Inc. (collectively “Plaintiffs”) filed a
Complaint against Genstar Labs Management LLC; AK Development & Consulting,
Inc.; Synergy Healthcare Management Solutions, Inc.; Synergy Healthcare
Resources & Solutions Group; Mildred DeCastro, Inx.; Sharpline Healthcare;
Estrella “Star” Choy; Mildred DeCastro; Avidor Kessler; David Dang
(collectively “Defendants”) and Does 1 to 100.
The
Complaint alleged the following nine causes of action:
1)
Breach of fiduciary duty (against
Defendants Choy, DeCastro, Synergy Management, Synergy resources, DeCastro
Inc., and Does 1 to 100);
2)
Breach of fiduciary duty (against
Defendants Choy, DeCastro, Dang and Does 1 to 100)
3)
Breach of fiduciary duty (against
Defendants Choy and Sharpline and Does 1 to 100);
4)
Aiding and abetting breach of fiduciary
duty (against Defendants Kessler, Genstar, and AK Consulting and Does 1 to
100);
5)
Conversion (against Defendants Choy and
Does 1 to 100);
6)
Violation of Penal Code § 496 (against
Defendants Choy and Does 1 to 100);
7)
Money had and received (against
Defendants Choy and Does 1 to 100);
8)
Accounting (against Defendants Choy and
Does 1 to 100); and
9)
Declaratory relief (against Defendants
DeCastro, Kessler, AK consulting and Does 1 to 100).
On
July 10, 2023, Defendants Synergy Healthcare Management Solutions Inc.; Synergy
Healthcare & Solutions Group; Mildred DeCastro, Inc.; and Mildred DeCastro
(collectively “Synergy Defendants”) filed a Motion to Compel Arbitration and
Stay the Action.
Defendants
AK Development & Consulting, Inc.; Genstar Labs Management LLC; Sharpline
Healthcare; Estrella “Star Choy; and Avigdor Kessler (collectively the “Genstar
Defendants”), filed opposing papers to Synergy’s Motion on July 20, 2023.
On
August 30, 2023, Plaintiffs dismissed the first and second causes of action
against the Synergy Defendants only and dismissed the ninth cause of action in
its entirety.
On
September 13, 2023, Plaintiffs filed opposing papers to Synergy’s Motion to
Compel Arbitration and Stay the action.
On
September 19, 2023, the Synergy Defendants filed a reply.
request
for JUDICIAL notice
The Court may
take judicial notice of records of any court of record of the United States.
(Evid. Code § 452(d)(2).) However, the court may only judicially notice the
existence of the record, not that its contents are the truth. (Sosinsky v.
Grant (1992) 6 Cal.App.4th 1548, 1565.)
Plaintiffs request
judicial notice of the following:
1)
Declaration
of Mildred DeCastro in Support of Defendants’ Notice of Motion and Motion to
(1) Compel Arbitration of Plaintiffs’ Claims; and (2) Stay Claims Against
Defendants Pending Arbitration.
2)
Notice
of Errata Re Declaration of Mildred DeCastro in Support of Defendants’ Notice
of Motion and Motion to (1) Compel Arbitration of Plaintiffs’ Claims; and (2)
Stay Claims Against Defendants Pending Arbitration.
3)
Declaration
of Ben Steinfeld filed on 08/17/23.
Plaintiffs’ request for judicial notice
is denied because the declarations contain matters that are reasonably subject
to dispute and therefore require formal proof. (See Kilroy
v. State of California (2004) 119 Cal.App.4th 140, 145; Lockley v. Law Office of Cantrell, Green,
Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [“Courts
may not take judicial
notice of allegations in affidavits, declarations and probation reports in
court records because such matters are reasonably subject to dispute and therefore
require formal proof.”].)
I. Legal Standard
Parties may be compelled to arbitrate a dispute upon the
court finding that: (1) there was a valid agreement to arbitrate between the
parties; and (2) said agreement covers the controversy or controversies in the
parties’ dispute.¿(CCP § 1281.2; Omar v. Ralphs Grocery Co. (2004)¿118
Cal.App.4th 955, 961.)¿¿
¿¿¿
A party petitioning to compel arbitration has the burden of
establishing the existence of a valid agreement to arbitrate and the party
opposing the petition has the burden of proving, by a preponderance of the
evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v.
Superior Court¿(1998) 62 Cal.App.4th 348, 356-57.)¿¿¿
¿¿
“If a court of competent jurisdiction, whether in this
State or not, has ordered arbitration of a controversy which is an issue
involved in an action or proceeding pending before a court of this State, the
court in which such action or proceeding is pending shall, upon motion of a
party to such action or proceeding, stay the action or proceeding until an
arbitration is had in accordance with the order to arbitrate or until such
earlier time as the court specifies.” (CCP § 1281.4.)¿¿
II. Motion to Compel Arbitration and Stay Proceeding
The Synergy
Defendants move for an order to compel Plaintiffs to arbitrate its claims
against the Synergy Defendants. The Synergy Defendants assert that they and
Plaintiffs executed a series of service agreements that contained an agreement
to arbitrate “[a]ny disputes, controversies or claims arising under or relating
to” the agreements. (DeCastro Decl. Ex. B-J at § 13.)
In response to
Synergy’s motion to compel arbitration, Plaintiff dismissed the claims against
the Synergy Defendants and the entire ninth cause of action on August 30, 2023.
Plaintiffs’ opposition argues Synergy’s Motion to Compel Arbitration should be
denied because there are no longer any claims subject to arbitration. (Opp., pp.
8-9.) Plaintiffs also argue that the
arbitration agreement between Plaintiffs and the Synergy Defendants expressly
exempts its claims against Synergy from arbitration as they relate to “payment
of money due to [Synergy],” a point the Synergy Defendants dispute. (See
DeCastro Decl. Ex. B-J at § 13.) Finally, Plaintiffs argue that the court
should allow discovery regarding the authenticity and enforceability of
Synergy’s service agreements, including the arbitration clause.
The court does not
reach the second or third points raised in Plaintiffs’ Opposition because the
court finds that Plaintiffs dismissed any arbitrable claims that could be
compelled to arbitration. (See Cardiff Equities, Inc. v.
Superior Court (2008) 166 Cal.App.4th
1541, 1551.) Thus, Synergy’s motion to compel arbitration and stay the
action is denied.
A. No
Controversy Exists between Plaintiffs and the Synergy Defendants that Can Be
Compelled to Arbitration
Section 1292.4
directs that ‘[i]f a controversy referable to arbitration under an alleged
agreement is involved in an action or proceeding pending in a superior court, a
petition for an order to arbitrate shall be filed in such action or
proceeding.’ (§ 1292.4) This procedural requirement does not mean, however,
that the arbitration is a subsidiary proceeding which necessarily falls with
the paramount legal action. Indeed, when no legal action has been filed, a
petition to compel arbitration may nevertheless be filed. (§ 1281.2.) The right
to file a petition to compel arbitration rests on the agreement of the parties
and upon the arbitration statutes, not on the existence of a legal action.
(Brock
v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, n.7.)
That Synergy’s Motion must be
heard does not mean that the Motion must be granted. Both CCP §§ 1292.4 and
1281.2 require that a controversy exist between Synergy and Plaintiffs that is
subject to an agreement to arbitrate. The Synergy Defendants fail to show that
a controversy exists between the parties after Plaintiffs dismissed the Synergy
Defendants and the ninth cause of action. (See Heritage Provider Network,
Inc. v. Superior Court (2008) 158 Cal.App.4th 1146, 1152–1153 [“A
controversy can be a single question of law or fact, and a stay shall be
issued upon proper motion if the court has ordered arbitration of a controversy
that is also an issue involved in an action or proceeding pending before it.
[Citation.] Thus, a single overlapping issue is sufficient to require
imposition of a stay.”].)
In the absence of a controversy
between the Plaintiffs and the Synergy Defendants, the court cannot order the
parties to arbitrate claims that have been dismissed and are not before the
court.
This point is illustrated in Cardiff
Equities, Inc., supra, 166 Cal.App.4th 1541. There, after the
plaintiff first filed a complaint against multiple defendants, the trial court
ordered the parties to arbitrate their claims and stayed the action pending the
completion of the arbitration. (Id. at 1545.) The plaintiff sought to
lift the stay to file an amended complaint that dismissed the claims subject to
arbitration, but before the hearing, the plaintiff dismissed the entire action
without prejudice (Case No. 1) and subsequently filed a second case (Case No.
2) that restated some of the same claims as Case No. 1 but omitted the claims
subject to arbitration. (Id. at 1556-1557.)
The appellate court held that the
plaintiff had the absolute right “to dismiss a case voluntarily and without
prejudice [as] set forth in section 581, subdivision (b)(1) and subdivision
(c), both of which provide that a plaintiff may voluntarily dismiss his or her
complaint at any time before the ‘actual commencement of trial.’” (Cardiff
Equities, Inc., supra, 166 Cal.App.4th at 1549.) “Thus, subject to
the statute of limitations, Cardiff had the right to file a new action
eliminating all but one of the defendants named in the original action and
containing some, but not all, of the claims previously set forth in Case No. 1.
In fact, following its voluntary dismissal of Case No. 1, Cardiff could have
filed an action identical to the one it dismissed.” (Id. at 1550.)
Hence, there was no longer any basis for arbitration. (Id. at 1551.)
“A court cannot force a litigant
to pursue claims it chooses to abandon.” (Cardiff Equities, Inc.,
supra, 166 Cal.App.4th at 1552.) Here, the Plaintiffs have chosen to
voluntarily dismiss their claims against the Synergy Defendants. Even if the court found that an agreement to
arbitrate exists between the parties, Defendants fail to show that a
controversy presently exists between the parties that this court can compel to
arbitration. (CCP, §§ 1281.2, 1292.4.)
Conclusion
For the reasons set forth above, the
court denies the Synergy Defendants’ motion to compel arbitration without
prejudice.
Dated: September __, 2023 _______________________________
Gail
Killefer
Judge,
Los Angeles Superior Court