Judge Gary I. Micon, Case Number: 23CHCV03241, Date: 2024-05-08 Tentative Ruling

Judge: Gary I. Micon, Case: 23CHCV03241, Date: 2024-05-08 Tentative Ruling

Case Number: 23CHCV03241 Hearing Date: May 8, 2024 Dept: F43

Dept. F43

Date: 5-8-24

Case #23CHCV03241, Margo Miller Hudson, et al. vs. Oakmont Senior Living of Valencia OPCO, LLC, et al.

Trial Date: N/A

PETITION TO COMPEL ARBITRATION

MOVING PARTY: Defendants Oakmont Senior Living Of Valenica OPCO, LLC, dba Oakmont Of Valencia, and OMG II Inc.

RESPONDING PARTY: Plaintiff Margo Miller Hudson, by and through her successors in interest Steve Deseve and Lisa Konorosky; Steve Deseve, individually; and Lisa Konorosky, individually

RELIEF REQUESTED

Defendants are requesting that the Court compel the case to arbitration and stay the action.

RULING: Petition is denied without prejudice due to lack of evidentiary support. Alternatively, the petition is denied because Defendants have failed to demonstrate that an agreement exists.

SUMMARY OF ACTION

Plaintiffs filed this action against Defendants on October 24, 2023. Individual Plaintiffs are the successors in interest to Plaintiff Margo Miller Hudson, who died while in Defendants’ care. Plaintiffs have alleged three causes of action against Defendants for elder abuse/neglect, negligence, and wrongful death.

On December 6, 2023, Defendants Oakmont Senior Living Of Valencia and OMG II Inc. (Defendants) filed this petition to compel arbitration based on an alleged agreement between the parties to arbitrate. However, the document attached to the petition as Exhibit A is only two pages of a larger document, is not dated, and has no signature attached besides some initials under the arbitration agreement. The alleged agreement reads as follows:

“By initialing below, you agree that any and all claims and disputes arising from or related to this Agreement or to your residency, care or services at Oakmont of Valencia, whether made against us or any other individual or entity, including, without limitation, personal injury claims, shall be resolved by submission to neutral, binding arbitration In accordance with the Federal Arbitration Act; except that any claim or dispute involving unlawful detainer proceedings (eviction) or any claims that can be brought in small claims court shall not be subject to arbitration unless both parties agree to arbitrate such proceedings. Both parties give up their constitutional rights to have any such dispute decided In a court of law before a Jury, and instead accept the use of arbitration. The arbitration shall be administered by the Judicial Arbitration and Mediation Services ("JAMS") and shall be conducted in Valencia, California by a single neutral arbitrator selected by JAMS, unless otherwise mutually agreed. In reaching a decision, the arbitrator shall prepare a written decision that includes findings of fact, the reasons underlying the decision, and conclusions of law. Each party shall bear Its own costs and fees in connection with the arbitration with the exception of a claim brought on an elder abuse case. You may withdraw your agreement to arbitrate within thirty (30) days after signing this Agreement by giving written notice of your withdrawal to us. After termination of this Agreement, this arbitration clause shall remain In effect for the resolution of all claims and disputes that are unresolved __ as of that date. In the event that any part of this arbitration clause is determined to be unenforceable, the remaining portions of the clause shall remain valid and shall be enforced by the parties. If JAMS is unable to administer the arbitration in accordance with the terms of this clause, the parties shall select another arbitration administrator that is able to do so, and If no such arbitration administrator Is available, the parties shall select an arbitrator In accordance with the Federal Arbitration Act. If the Federal Arbitration Act does not permit arbitration. In accordance with this clause, then the matter shall be arbitrated in accordance with state law.

By initialing below, you warrant that this paragraph has been explained to you, that you understand Its significance, that you voluntarily agree to be bound by It, and that you understand that agreeing to arbitration is not a condition of admission to Oakmont of Valencia.”

(Petition to Compel Arbitration, Ramos Decl., Ex. A.)

Plaintiffs oppose Defendants’ petition. Plaintiffs argue that there is no agreement to arbitrate; that arbitration provisions contained within residential service agreements are void; the agreement, if it exists, would not be binding on wrongful death claimants; and there is a risk of conflicting rulings.

Defendants argue in their reply that an agreement exists; the agreement is legally enforceable; that the agreement is governed by the FAA; and that the wrongful death claim should be stayed pending arbitration.

Plaintiffs’ Evidentiary Objections:

Plaintiffs have objected to the arbitration agreement attached as Exhibit A to the Declaration of Defendants’ attorney, Nicholas S. Ramos. Plaintiffs object to the Exhibit on the basis that it is hearsay, lacks authentication, and lacks foundation or personal knowledge. The Court sustains Plaintiffs’ objections. Defendants’ attorney provides no foundation for the authenticity of this document. Ramos’ declaration states that his office obtained it from his client who maintains the documents in their ordinary course and scope of business (Ramos Decl., ¶ 2), but considering that he is neither a party to the agreement or otherwise affiliated with Defendant Oakmont, it is unclear how he could lay foundation for this agreement. Nor could Ramos testify as to the authenticity of the contract because he did not draft it or sign it.

In their reply, Defendants cite Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218-219 in support of the proposition that a petitioner need only provide the terms of the arbitration agreement to show its existence, that no authentication or determination of validity is necessary. However, as pointed out in Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1219, the California Supreme Court has “clearly stated that a court, before granting a petition to compel arbitration, must determine the factual issue of ‘the existence or validity of the arbitration agreement.’” (Emphasis in original; quoting Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 402, 414.) Furthermore, the Toal Court noted that to the extent that Condee conflicts with Rosenthal, the Supreme Court’s decision is controlling. (Toal, 178 Cal.App.4th at 1219, fn. 8.) It is also worth noting that Condee itself cites Rosenthal, stating that “facts necessary for a determination of [an arbitration agreement’s] enforceability are proven by affidavits or declarations.” (Condee, 88 Cal.App.4th at 218.) Additionally, in Condee, authenticity was not raised as an issue and the signatures were never challenged. (See Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 845-846.)

The Court interprets this to mean that authenticating an agreement to arbitrate through declarations or affidavits is a necessary step in providing evidence of its existence. Ramos is unable to authenticate the arbitration agreement, as he was not a party to the agreement, nor did he sign or draft it. Therefore, Defendants have not established the existence of an arbitration agreement.

ANALYSIS

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate that there should be no enforcement of the agreement, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.) The Court is empowered by CCP § 1281.2 to compel parties to arbitrate disputes pursuant to an agreement to do so.

CCP § 1281.2 states that:

“The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.” (CCP § 1281.2.)

The party petitioning to compel arbitration under written arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. The trial court acts as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence. (CCP § 1281.2.)

Existence of an Agreement

Under California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (CCP § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (CRC Rule 3.1330.) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC¿(2017) 13 Cal.App.5th 1152, 1160.)

Defendants have not established an evidentiary basis for the existence of the arbitration agreement because the Court sustained Plaintiffs’ objections to the arbitration agreement as discussed above. The petition is denied for lack of evidentiary support.

The Court also notes that the document attached as Exhibit A to the Ramos Declaration are pages 15 and 16 of some larger document. Other than initials that are purportedly Decedent Plaintiff’s initials, there are no other distinguishing characteristics such as name, age, or date of birth. There is also no signature page or date for the agreement. General contract law principles still apply to arbitration agreements, and the document provided to the Court would not be a valid contract, even if it were authenticated. Therefore, Defendants have also not proven the existence of an agreement.

Additionally, Decedent Plaintiff’s children, individual Plaintiffs Steve DeSeve and Lisa Konorosky, have provided sworn declarations that the initials under the arbitration agreement are not their mother’s initials. (DeSeve Decl., ¶¶ 2-4; Konorosky Decl., ¶¶ 2-4.) Defendants do not address these declarations in their reply.

Next, Plaintiffs argue that arbitration provisions in a resident services agreement are void as contrary to public policy pursuant to Civ. Code § 1953. Plaintiffs cite Harris v. University Village Thousand Oaks, CCRC, LLC (2020) 49 Cal.App.5th 847 in support of this argument. Harris held that Civ. Code § 1953(a)(4) applied to tenancy provisions in a contract with a continuing care retirement community. However, as Defendants point out in their reply, Harris applied to tenancy provisions for continuing care facilities, not the care services provided, as is at issue in this case. The Court agrees with Defendants’ arguments that the arbitration provision would not be void as to the care-related claims.

As for Plaintiffs’ argument that the agreement cannot be enforced against the non-signatory wrongful death claimants, Defendants appear to agree, as they argue in their reply that the wrongful death claims could be stayed pending arbitration of the other claims.

Finally, Plaintiffs argue that because of the risk for inconsistent verdicts and conflicting rulings on common issues of law and fact between the wrongful death claims and the potentially arbitrable claims, then the Court should use its discretion to deny this petition under CCP § 1281.2(c). That sections states that a petition to compel may be denied if “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (CCP § 1281.2(c).)

Defendants argue that the Court cannot use its discretion pursuant to this section because the purported arbitration agreement states that the FAA will apply. “[T]he [FAA] requires the arbitration of all claims within the scope of an arbitration provision even if the action includes nonarbitrable claims by or against third parties.” (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 157.) Going by that, Plaintiffs’ arbitrable claims should be arbitrated regardless of whether the wrongful death claims were arbitrable. If the Court were required to address Plaintiffs’ arguments related to CCP § 1281.2(c), the Court would find that Plaintiffs’ other claims should still be arbitrated.

Defendants’ Petition to Compel Arbitration is denied without prejudice based on lack of evidentiary support. Alternatively, the petition is denied on the basis that Defendants have failed to demonstrate that an arbitration agreement exists.

Moving party to give notice.