Judge: Helen Zukin, Case: 22SMCV00841, Date: 2022-08-16 Tentative Ruling
Case Number: 22SMCV00841 Hearing Date: August 16, 2022 Dept: 207
Background
This case arises from Defendant Violet QOZB Owner LLC’s
(“Defendant”) retention of Plaintiff Ninyo & Moore Geotechnical
Environmental Sciences Consultants (“Plaintiff”) to perform testing and related
services at a property located at 11777 San Vicente Blvd, Los Angeles,
California. Plaintiff contends Defendant has failed to remit payments due under
the retention agreement. In March 2022, Plaintiff recorded a mechanic’s lien
against the property to collect the unpaid balance owed by Defendant. On June
2, 2022, Plaintiff filed its Complaint in this action seeking to recover its
unpaid fees through enforcement of the mechanic’s lien or on related theories
of breach of contract and services rendered.
Defendant was served with the Complaint on June 13, 2022,
through its registered agent for service of process. Defendant has not answered
the Complaint or otherwise made an appearance in this action. Plaintiff moves
the Court to compel the action to arbitration and stay proceedings pending
conclusion of the arbitration.
Legal Standard for Motions to Compel
Arbitration
Under both
the Title 9 section 2 of the United States Code (known as the Federal
Arbitration Act) and the Title 9 of Part III of the California Code of Civil
Procedure commencing at section 1281 (known as the California Arbitration Act,
hereinafter “CAA”), arbitration agreements are valid, irrevocable, and
enforceable, except on such grounds which exist at law or equity for voiding a
contract. (Winter v. Window Fashions Professions, Inc. (2008) 166
Cal.App.4th 943, 947.)
California
Code of Civil Procedure section 1281.2 permits a party to file a motion to
request the Court order the parties to arbitrate a controversy. (Code Civ.
Proc., § 1281.2.) Under Code of Civil Procedure section 1281.2, the Court must
grant the motion “if the Court determines that an agreement to arbitrate the
controversy exists”, unless one of four limited exceptions apply. (Ibid.) The statutory exceptions arise where: (a) the
right to compel arbitration has been waived by the petitioner; (b) grounds
exist for rescission of the agreement; (c) pending litigation with a third
party creates the possibility of conflicting rulings on common factual or legal
issues; or (d) the petitioner is a state or federally chartered depository
institution seeking to compel arbitration pursuant to a contract whose
agreement was induced by fraud or without respondent’s consent. (Ibid.)
Under Code
of Civil Procedure section 1281.2, the party moving to compel arbitration bears
the burden of demonstration “that an agreement to arbitrate the controversy
exists.” (Code Civ. Proc., § 1281.2.)
“With respect to the moving party’s burden to provide evidence of the
existence of an agreement to arbitrate, it is generally sufficient for that
party to present a copy of the contract to the court.” (Baker v. Italian
Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160 [emphasis in
original].) “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.”
(Ibid.; see also Pinnacle Museum Tower Assn. v. Pinnacle Market
Development (US), LLC (2012) 55 Cal.4th 223, 236 [“The party seeking
arbitration bears the burden of proving the existence of an arbitration
agreement, and the party opposing arbitration bears the burden of proving any
defense, such as unconscionability”].)
Analysis
As Plaintiff brings this action to
enforce a mechanic’s lien, Code of Civ. Proc. § 1281.5 is triggered. Section
1281.5 was enacted by the Legislature specifically to address a holding by the
Court of Appeal which deemed parties to have waived contractual arbitration
provisions by bringing actions to enforce a mechanic’s lien. As the Court
explained in R. Baker, Inc. v. Motel 6, Inc.:
[Prior] to
the enactment of section 1281.5 in 1977, the filing of an action on a contract
without seeking to preserve arbitration constituted a waiver of a contract
provision for arbitration. (Titan Enterprises, Inc. v. Armo Construction,
Inc. (1973) 32 Cal.App.3d 828, 832 . . . .) In Titan, plaintiff, a
subcontractor [,] filed an action against the contractor seeking to enforce a
mechanic's lien. [¶ ] The rule in Titan created a “damned if you do
damned if you don’t” situation for a plaintiff wishing to file a mechanic’s
lien, and to arbitrate his claim. If the time limits for filing a mechanic’s
lien were not followed, an action to enforce the lien could not be maintained.
But, if the action to enforce the mechanic's lien was properly brought, the
materialman would waive any rights to arbitration. Section 1281.5 came to the
rescue. The legislative counsel’s comment to the section points out that the
filing of an action to enforce the lien does not constitute waiver of the right
to arbitrate provided the claimant applies for a stay. (Legis. Counsel's com.;
Stats. 1977, ch. 135, Assem. Bill No. 322.)
( R. Baker, Inc. v. Motel 6,
Inc. (1986) 180 Cal.App.3d 928, 930-931.)
Section 1281.5(a) requires a party
seeking to preserve their arbitration rights to either state in the complaint
that it “does not intend to waive any right of arbitration, and intends to move
the court, within 30 days after service of the summons and complaint, for an
order to stay further proceedings in the action” or bring an application to
stay concurrently with the filing of the complaint. Plaintiff claims it has
complied with the first option under 1281.5(a) by including the required
language in its Complaint. Paragraph 2 of Plaintiff’s Complaint states “Plaintiff
does not intend to waive any right to arbitration arising from the valid,
enforceable and irrevocable written agreement to arbitrate controversies
arising out of the written agreement that is the subject of this action.
Plaintiff intends to move the court for an order pursuant to C.C.P. §§ 1281.2,
1281.4 to stay further proceedings in this action.” The Court notes Plaintiff’s
Complaint makes no mention of the 30-day period as required by section
1281.5(a). As originally enacted, section 1281.5 did not provide a specific
time in which a party must apply for a stay before being deemed to have waived
arbitration. However, section 1281.5 was amended in 2003 to add the 30-day
period to subdivision (a) and impose a new clear timing requirement now
codified at section 1281.5(b).
Under section 1281.5(b), a party
is deemed to have waived arbitration if it does not file and serve its motion
within 30 days after service of the summons and complaint: “Within 30 days
after service of the summons and complaint, the claimant shall file and serve a
motion and notice of motion pursuant to Section 1281.4 to stay the action
pending the arbitration of any issue, question, or dispute that is claimed to
be arbitrable under the agreement and that is relevant to the action to enforce
the claim of lien. The failure of a claimant to comply with this subdivision is
a waiver of the claimant’s right to compel arbitration.”
Defendant was served with the summons and complaint on June
2, 2022. Plaintiff thus had 30 days, or until July 5, to file and serve its
motion to compel arbitration and stay proceedings. Plaintiff filed its notice
and supporting documents on July 19, and its memorandum of points and
authorities on July 20. Plaintiff’s motion is thus untimely under section
1281.5(b). Further, Plaintiff’s motion does not include a proof of service
showing the motion has been served on Defendant as required by section
1281.5(b). Plaintiff has thus not complied with the timing requirements of
section 1281.5(b) and by the plain language of the statute Plaintiff is deemed
to have waived arbitration.
This waiver applies not only to
Plaintiff’s cause of action seeking foreclosure of the mechanic’s lien, but
also applies to the causes of action for breach of contract and services
rendered. Von Becelaere Ventures, LLC v. Zenovic (2018) 24 Cal.App.5th 243 (“Zenovic”) is
instructive. In Zenovic the plaintiff had contracted
with defendant to construct a single-family residence. A dispute arose between
the parties and defendant filed a mechanics lien against the property. The
plaintiff then filed an action against defendant in state court for breach of
contract, negligence, and other causes of action. Defendant filed a separate
state court action seeking to enforce its mechanic’s lien and moved to compel
arbitration of plaintiff’s claims pursuant to an arbitration clause in the
construction contract. The trial court denied defendant’s motion to compel
arbitration, finding defendant had waived the right to arbitrate plaintiff’s
claims by filing the separate action to enforce the mechanic’s lien without
complying with Code Civ. Proc. § 1281.5.
The Court of
Appeal affirmed, holding section 1281.5 “means what it says” and “In this case, Zenovic did not file the
Orange County action to enforce the mechanics lien until after VBV filed the
San Diego action. VBV's action alleged disputes regarding Zenovic's billing
practices and specifically included allegations related to Zenovic's actions in
recording and attempting to enforce his mechanics lien. In his motion to compel
arbitration, Zenovic agreed that all of VBV's causes of action qualified as
arbitrable construction disputes. Yet, Zenovic neither included an allegation
in the complaint filed in the Orange County action stating he did not intend to
waive any right of arbitration and intended to seek a stay of the Orange County
action (§ 1281.5, subd. (a)(1)), nor filed an application for stay at the time
he filed the complaint in the Orange County action (§ 1281.5, subd. (a)(2)).
His failure to do so waived the right to arbitrate construction disputes under
the terms of the construction contract.” (Zenovic, 24 Cal.App.5th at 250-251.)
The same result follows here. The
Court thus finds Plaintiff has waived the right to arbitrate its claims against
Defendant by failing to comply with the express requirements of Code Civ. Proc.
§ 1281.5. Accordingly, Plaintiff’s motion to compel arbitration and stay
proceedings is DENIED.
Conclusion
Plaintiff’s motion to compel arbitration and stay
proceedings is DENIED.