Judge: Helen Zukin, Case: 22SMCV01660, Date: 2023-02-02 Tentative Ruling

Case Number: 22SMCV01660    Hearing Date: February 2, 2023    Dept: 207

Background

Plaintiff PCW Contracting Services (“Plaintiff”) brings this action against Doheny West Homeowners Association (“Defendant”) to collect outstanding amounts alleged owed to Plaintiff for construction work performed by Plaintiff on Defendant’s property. Defendant brings this motion to compel Plaintiff’s claims to arbitration. Plaintiff does not oppose Defendant’s motion but asks the Court to impose certain preconditions in granting it.

Legal Standard

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”].)

Section 1281.2 “was intended primarily to prevent conflicting rulings resulting from arbitration proceedings and other related litigation arising out of the same transaction.” (Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 488.) In enacting section 1281.2 “the Legislature has … authorized trial courts to refuse enforcement of an arbitration agreement where, as here, there is a possibility of conflicting rulings” (C.V. Starr & Co. v. Boston Reinsurance Corp. (1987) 190 Cal. App. 3d 1637, 1642.) “[T]he presence of a nonarbitrable cause of action is not sufficient by itself to invoke the trial court’s discretion to deny arbitration under Code of Civil Procedure section 1281.2, subdivision (c).” (Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1409.) “The mere fact that some claims are arbitrable and some are not is surely not the ‘peculiar situation’ meant to be addressed by section 1281.2(c).” (RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1521.)

For section 1281.2(c) to apply, “[a] party to the arbitration agreement” must also be “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 must be “a possibility of conflicting rulings on a common issue of law or fact.” (§ 1281.2(c), italics added.) For purposes of section 1281.2(c), a third party is a party who is not bound by the arbitration agreement. (See, e.g., id. at 1521.) “[C]ourts have routinely relied on the allegations contained in the operative pleading to determine whether there is the possibility of conflicting rulings within the meaning of section 1281.2, subdivision (c).” (Abaya v. Spanish Ranch I, L.P. (2010) 189 Cal.App.4th 1490, 1499 [citations omitted].)

Analysis

Defendant seeks to enforce the arbitration provision contained in the Construction Services Agreement entered into between the parties. In its responsive brief, Plaintiff concedes there is an arbitration agreement between the parties which governs the claims raised by Plaintiff’s Complaint. Plaintiff does not argue the agreement is unenforceable, and indeed has no objection to the arbitration of its claims against Defendant. Plaintiff however argues Defendant has unreasonably delayed in seeking to enforce the arbitration agreement, submitting correspondence with Defendant’s counsel indicating Plaintiff has been willing to proceed by arbitration since the inception of this lawsuit in September 2022. Indeed, Plaintiff’s Complaint contains a demand for arbitration pursuant to the parties’ contract. (Complaint at ¶39.) Plaintiff argues Defendant needlessly delayed in bringing the motion, which itself was unnecessary given Plaintiff was willing to proceed in arbitration.

Plaintiff does not ask the Court to deny Defendant’s motion, but instead asks the Court to require Defendant “to provide evidence that it has applied for Arbitration before JAMS, within no more than ten (10) days from the hearing on the Motion.” (Plaintiff Brief at 3.) The Court understands Plaintiff’s frustration as it certainly appears this issue could have been more swiftly resolved by the stipulation and agreement of the parties rather than a formally noticed motion. However, it does not appear to the Court that it would be necessary or appropriate for the Court to require Defendant to initiate arbitration of Plaintiff’s claims on Plaintiff’s behalf. Accordingly, the Court GRANTS Defendant’s motion to compel arbitration. If Defendant chooses not to participate in the arbitration claim initiated by Plaintiff, it risks an adverse finding being made against it in its absence, which Plaintiff can then apply to this Court to certify.

Conclusion

Defendant’s motion to compel arbitration is GRANTED. This action will be stayed pending resolution of the arbitration proceedings.