Judge: Gregory Keosian, Case: 20STCV28012, Date: 2022-09-29 Tentative Ruling
Case Number: 20STCV28012 Hearing Date: September 29, 2022 Dept: 61
Defendant
B&V Enterprises, Inc.’s Motion to Compel Arbitration is DENIED.
I.
MOTION TO
COMPEL ARBITRATION
On petition of a
party to an arbitration agreement to arbitrate a controversy, a court must
order the petitioner and respondent to arbitrate the controversy if it
determines the arbitration agreement exists, unless (1) the petitioner has
waived its right to arbitrate; (2) grounds exist for the revocation of the
agreement; or (3) “[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.” (Code
Civ. Proc., § 1281.2.)
“[T]he party moving
to compel arbitration bears the burden of establishing the existence of a valid
agreement to arbitrate, and the party opposing arbitration bears the burden of
proving by a preponderance of the evidence any fact necessary to its defense.
The role of the trial court is to sit as a trier of fact, weighing any
affidavits, declarations, and other documentary evidence, together with oral
testimony received at the court's discretion, to reach a determination on the
issue of arbitrability.” (Hotels Nevada
v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)
Defendant B&V
Enterprises (Defendant) presents an arbitration agreement executed by Plaintiff
Carla Aguilar (Plaintiff) on July 25, 2019, which designates “binding
individual arbitration as the sole and exclusive means to resolve all disputes
that may arise out of or be related in any way to [Plaintiff’s] employment.”
(Motion Exh. 1.)
Plaintiff in
opposition argues that the agreement is void by virtue of fraud in the
execution. (Opposition at pp. 4–11.) Plaintiff further argues that the
agreement exempts claims that were not subject to arbitration at the time of
its execution — including PAGA claims. (Opposition at pp. 11–13.) And finally,
Plaintiff asks that if the agreement be enforced, that her collective PAGA
claims not be dismissed. (Opposition at pp. 13–15.)
The facts that
Plaintiff presents to show fraud in the execution are as follows. Plaintiff is
a Hispanic woman, born in Guatemala, who can only speak and read Spanish.
(Aguilar Decl. ¶ 2.) Although she initially applied for work with Defendant
using English-language forms, she was only able to fill them out because had
asked her English-speaking neighbor to assist her. (Aguilar Decl. ¶ 5.) On the
date she executed the arbitration agreement, she was called into Defendant’s
offices to sit in a room with six to eight other people, all Hispanic, where a
woman representing Defendant spoke to them in Spanish about a stack of
documents that was then placed before each of them. (Aguilar Decl. ¶ 7.) They
watched a short video, which was mostly in English, and were then told to fill
out the documents. (Aguilar Decl. ¶ 7.) When Plaintiff, along with several
others, said that she could not read English documents, the woman said “we had
to fill them out so we could start working [and] said that she would help us to
fill out the English documents.” (Aguilar Decl. ¶ 7.) The woman did not describe
the documents the applicants were being made to sign, but only said “that they
were forms that we had to sign and to give the company our information so we
could begin working.” (Aguilar Decl. ¶ 9.) Because she knew that Plaintiff
could not read English, “she would hold up the document for me and some of the
others and then tell us where to sign and write our names.” (Aguilar Decl. ¶
9.) The woman did not explain that any of the documents was an arbitration
agreement, or that anyone was waiving their right to jury trial. (Aguilar Decl.
¶ 10.) Plaintiff relied on the woman’s explanation that they “were just forms I
had to sign and give my information in order to begin working for Super King.”
(Aguilar Decl. ¶ 10.)
A contract is void for fraud in the execution
where the fraud goes to the inception or execution of the agreement, so that
the promisor is deceived as to the nature of his act, and actually does not
know what he is signing, or does not intend to enter into a contract at all. In
this instance, mutual assent is lacking, and [the contract] is void. In such a
case it may be disregarded without the necessity of rescission. In a fraud in
the execution case, California law requires that the plaintiff, in failing to
acquaint himself or herself with the contents of a written agreement before
signing it, not have acted in an objectively unreasonable manner. One party's
misrepresentations as to the nature or character of the writing do not negate
the other party's apparent manifestation of assent, if the second party had
reasonable opportunity to know of the character or essential terms of the
proposed contract. Thus, a party's unreasonable reliance on the other's
misrepresentations, resulting in a failure to read a written agreement before
signing it, is an insufficient basis, under the doctrine of fraud in the
execution, for permitting that party to avoid an arbitration agreement
contained in the contract.
(Ramos v. Westlake Services LLC (2015)
242 Cal.App.4th 674, 688–89 [holding arbitration agreement void where defendant
provided Spanish-speaking plaintiff with a Spanish translation of a contract
that omitted the arbitration provision].)
In the case Rosenthal
v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394,
the court examined several claims to fraud in the execution for arbitration
agreements included with certain security-purchase arrangements. The plaintiffs
were multiple individuals, mostly depositors at a certain bank, who claimed to
have been induced to invest in mutual funds that they believed were insured by
and affiliated with the bank, but which were in reality riskier investments affiliated
with a separate company. (Rosenthal, supra, 14 Cal.4th
at p. 403.) Where some plaintiffs claimed that the representatives who induced
them to sign client agreements told them that the agreements “were unimportant,
or that the plaintiffs need not read them,” or that they were “just a
formality,” the court held that no fraud in the execution had occurred, because
“it is generally unreasonable, in reliance on such assurances, to neglect to
read a written agreement before signing it.” (Id. at p. 424.)
However, the Rosenthal
court found that other plaintiffs in the same case had made a case for fraud in
the execution. One plaintiff, an Italian immigrant who could not speak or read
English, declared that her representative had claimed he would describe the
documents through a translator, but merely described an investment opportunity,
and never mentioned arbitration. (Id. at p. 427.) He further claimed
that the plaintiff “just need[ed] to sign this [document] to open the account,”
and that the documents “just repeat what I told you.” (Ibid.) The court
held these facts sufficient to show reasonable reliance for the purposes of
fraud in the execution, since the plaintiff “would not have been negligent in
relying on the . . . representatives instead of reading the agreements
themselves.” (Ibid.) The court went on to find another similar account
sufficient to state reasonable reliance, this time involving a woman who was
legally blind, who was informed that she would be investing in a safe account,
and then told to sign documents that “just repeat what I [the representative]
have told you.” (Id. at p. 429.)
Another case, Najarro
v. Superior Court (2021) 70 Cal.App.5th 871, is similarly
instructive. In that case, certain plaintiff-employees claimed that arbitration
agreements executed upon gaining employment were invalid for fraud in the
execution. One plaintiff, who could not speak English and could not read Spanish,
was presented with a stack of documents, without explanation as to what they
meant, and was told that she could not take the documents home. (Najarro,
supra, 70 Cal.App.5th at p. 887.) When she said that she
could not read the documents, she was told, “if you don’t know how to read,
then just sign them,” and also that the documents were “nothing important.” (Ibid.)
The court found that these facts supported a finding of fraud in the execution.
(Ibid.)
The same court found
fraud for another plaintiff, who could read Spanish, but who could not
understand the English documents. She testified that she went up to a glass
window, was given a packet of documents to sign, and when she said that she did
not understand the documents, nobody answered her. (Ibid.) When she
approached the window again, she was handed another document to sign — which,
unbeknownst to her, was an arbitration agreement — and was told to “sign here.”
(Ibid.) She was given no opportunity to read the document, and the
employee attending the window flipped immediately to the signature page, covered
the rest of the document with their hand, and told the plaintiff that it was
“just a requirement to work for the company.” (Ibid.) The court held
these facts were sufficient to show fraud in the execution. (Ibid.)
Here, Plaintiff’s
account of events describes fraud in the execution of the arbitration
agreement. Plaintiff informed Defendant that she could not read the documents,
and was told in turn that the documents were merely to provide information to
the company so she could begin work. (Aguilar Decl. ¶ 9.) This is akin to the
misrepresentations provided to the clients in Rosenthal, or the
employees in Najarro, who were told the agreements were necessary to
begin work. What’s more, being unable to read the documents herself, and
given that they were presented as a condition of employment, it was reasonable
for Plaintiff to rely on the characterization given to the documents by
Defendant’s employee. The minimization of the documents’ importance is also
consistent with the explanations given to the employees in Najarro, who
were told the documents were “nothing important” and “just a requirement to
work for the company.” (Najarro, supra, 70 Cal.App.5th
at pp. 887.) Being unable to independently verify similar false assurances,
Plaintiff’s reliance upon them was reasonable.
Defendant in reply presents
no evidence to rebut Plaintiff’s account, but argues that Plaintiff could have
simply asked about the documents if she had any questions. (Reply at pp. 4–5.)
But this argument simply ignores Plaintiff’s declaration, where she states that
she specifically told Defendant’s representative that she could not read the
documents, and the representative told her that she had to sign the documents
to begin working, that they were “to give the company our information,” and
merely pointed out where to sign. (Aguilar Decl. ¶¶ 7–9.) Plaintiff asked about
the documents, and Defendant’s representative gave her a false explanation that
minimized the documents’ importance, which Plaintiff lacked independent means
of verifying. This is in line with Rosenthal and Najarro, and the
agreement here is void for fraud in the execution.
Accordingly, the
motion to compel arbitration is DENIED.