Judge Holly J. Fujie, Case 22STCV22449 2022-10-28 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

On July 12, 2022, Plaintiff filed a complaint (the “Complaint”) alleging: (1) foreclosure of mechanic’s lien. The Complaint named Ramon Espinoza (“Ramon”) as the Defendant. In relevant part, the Complaint alleges: on or about December 27, 2018, Plaintiff and Ramon entered into entered into a home improvement contract (the “Contract”) for Plaintiff to perform a construction project to real property (the “Property”) owned by Ramon. (See Complaint ¶ 7, Exhibit 1.) Ramon breached the Contract by not fully compensating Plaintiff for his work. (See Complaint ¶ 11.) On May 3, 2022, Plaintiff served a mechanic’s lien (the “Lien”), which was recorded with the Los Angeles County Recorder on May 11, 2022. (Complaint ¶ 12, Exhibit 2.)

On July 13, 2022, Plaintiff recorded a lis pendens on the Property. On July 14, 2022, Plaintiff filed an amendment to the Complaint based on a fictitious/incorrect name and identifying Juan as the correct name of the Defendant.

On August 9, 2022, Juan filed a motion to compel arbitration and stay proceedings (the “Motion”) on the grounds that the Contract underlying Plaintiff’s claims contains an arbitration clause that requires that this dispute be adjudicated in binding arbitration.

Juan’s Request for Judicial Notice is GRANTED as to the existence of the document, but not to the truth of the matters stated therein. (See Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.)

The purpose of the Federal Arbitration Act (“FAA”) is to move the parties in an arbitrable dispute out of court and into arbitration as quickly and easily as possible. (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 23.) The FAA is consistent with the federal policy to ensure the enforceability, according to their terms, of private agreements to arbitrate. (Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 57.) CCP section 1281 provides that a written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. California law, like federal law, favors enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.) On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy unless grounds exist not to compel arbitration. (CCP § 1281.2.)

In support of the Motion, Juan cites to the Contract incorporated in the Complaint. The Contract, which is signed by Plaintiff and Ramon, contains a provision (the “Arbitration Agreement”) which provides, in part:

“ARBITRATION OF DISPUTES: Any dispute arising out of or relating to the negotiation, award, construction, performance or non-performance, of any aspect of this agreement, shall be settled by binding arbitration in accordance with the Construction Industry Rules of the American Arbitration Association and judgment upon the award rendered by any such arbitrator may be entered in any court having jurisdiction thereof.”

While the Motion does not address this issue, one of the arguments raised in Plaintiff’s opposition (the “Opposition”) is that Juan may not enforce the Arbitration Agreement since he was not a party to the Contract. The Opposition provides evidence that Ramon died on October 9, 2021 and that Juan received title to the Property through the trustee of Ramon’s living trust. (See Declaration of David L. Prince (“Prince Decl.”) ¶ 3, Exhibits A-B.) Juan’s reply (the “Reply”) confirms, without providing evidence, Ramon is his father and that he inherited the Property after Ramon’s death.[2] The Reply argues that Juan is entitled to enforce the Arbitration Agreement since Plaintiff seeks to enforce the Contract against him.

In general, only a party to an arbitration agreement may enforce the agreement. (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613.) Equitable estoppel is an exception to this general rule. (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236-37.) Equitable estoppel applies when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the non-signatory party. (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 218.) The signatory cannot seek to hold the non-signatory liable pursuant to duties imposed by an agreement containing an arbitration provision and then deny the applicability of arbitration because the defendant is a non-signatory. (Id. at 220.) Under the doctrine of equitable estoppel, a non-signatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the non-signatory are “intimately founded in and intertwined” with the underlying contract obligations. (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.) To determine whether the plaintiff’s claim is founded on or intimately connected with the sales contract, a court examines the facts of the operative complaint. (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 496.)

It is undisputed that Juan is not a party to the Contract. While neither party raises this point, the evidence provided in the Opposition raises concern that Juan is not the proper Defendant to this action because this action involves an alleged debt owed by Ramon, who died before the initiation of the litigation, and that this action would have been properly filed against Ramon’s estate after the filing of a claim against the estate. (See CCP § 377.40.) As such, depending upon the timing of Ramon’s death may be barred as untimely and thus subject to a motion to dismiss or for summary judgment.

To the extent that Juan is intended to be named as a Defendant, however, the Court finds that he is able to enforce the Arbitration Agreement under the doctrine of equitable estoppel, since Plaintiff’s claims arise directly out of the Contract. Although Plaintiff indicates that he is unable to pay for arbitration, the Court finds that he has neither presented evidence that the Contract is unconscionable nor cited to caselaw that is applicable to the facts of this case. The Court GRANTS the Motion, pending a further discussion of these issues during the hearing.

In addition, the Motion also includes a request to expunge the lis pendens recorded against the Property. As Juan did not file a noticed motion to expunge the lis pendens, the Court declines to issue a ruling on the matter. (See CCP § 405.30.)

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] The Court uses first names to distinguish persons with the same last name and does intend any disrespect in so doing.

[2] In law and motion practice, factual evidence is supplied to the court by way of declarations. (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.)