Judge Holly J. Fujie, Case Number: 23STCV31650, Date: 2024-06-03 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 December 27, 2023, Plaintiff filed a complaint (the “Complaint”) alleging: (1) professional negligence; (2) breach of fiduciary duty; (3) breach of contract; (4) recession; (5) fraud in the inducement; (6) misrepresentation of material facts; and (7) intentional infliction of emotional distress.

On March 7, 2024, Defendants filed the instant Petition to Compel Arbitration (the “Petition”). Plaintiff filed an opposition to the Petition and Defendant filed a reply.

Defendants request that the Court take judicial notice of the Court files and records in the action Jill A. Theis v. Mark E. Theis, Case No. B320844, herein labeled as Defendant’s Exhibits A -D. The request is GRANTED under Evidence Code § 452(d), as the exhibits are records of Los Angeles County Superior Court.

Defendants specially appear and pray for an order compelling Plaintiff to submit to binding arbitration pursuant to the parties' written contract, which expressly provides that all complaints or disputes between the parties are to be arbitrated.

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Under Code of Civil Procedure section 1281, 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.”

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, 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:

(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. . . .” (CCP §1281.2.)

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. (Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co. (1998) 68 Cal.App.4th 83, 88.) When presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute. (Id.)

“Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394] explained: ‘[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement—either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see §1281.2(a), (b))—that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.’ (Rosenthal, supra, at 413.) According to Rosenthal, facts relevant to enforcement of the arbitration agreement must be determined ‘in the manner . . . provided by law for the . . . hearing of motions.’ (Rosenthal, supra, at 413, quoting §1290.2.) This ‘ordinarily mean[s] the facts are to be proven by affidavit or declaration and documentary evidence, with oral testimony taken only in the court’s discretion.’ (Rosenthal, supra, at 413–414; . . .).” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761-62.)

Under both the Federal Arbitration Act and 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.) 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.) “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.)

Defendants provide the parties’ Contract for Legal Services which states that:

…any dispute concerning services or billing shall be resolved by binding arbitration. Any independent arbitrator, such as the Judicial Arbitration and Mediation Services (JAMS) maybe used and selected by the client. Binding arbitration shall take place in either Ventura County or Los Angeles County. If such selection is not made within 30 days of the notification of the dispute GUMM &GREEN may select the arbitration service."

(Declaration of Lindsey Green,; Exh. A p. 3.) Ms. Green states that on or about June 11, 2021, she entered into the Contract for Legal Services (the “Agreement”) with Plaintiff on behalf of Defendants Gum & Green, LLP. Plaintiff dated and executed the Agreement on the same day. The agreement bears Plaintiff’s signature. (Id.; Exh. A.) Plaintiff does not dispute that she signed and entered into an agreement. Therefore, the Court finds that there exists an agreement to arbitrate.

The Agreement states that any dispute concerning services shall be resolved by binding arbitration. As pleaded in the Complaint, the dispute arises from the legal services provided by Defendants in connection with the post-judgment action to modify spousal support. Defendants correctly point out that Plaintiff’s complaint specifically calls out the arbitration clause. Plaintiff’s contentions about vagueness and the Agreement applies only to fee disputes is unpersuasive, as the Agreement specifies that it applies to disputes over legal services. Thus, the Court finds the dispute is subject to the Agreement.

In opposition to the Petition, Plaintiff argues that the Agreement is unenforceable on unconscionability grounds.

“Unconscionability” is one of the principal defenses to a request for arbitration. It is a generally applicable contract defense under California law (Civ. Code, § 1670.5). Two elements must be shown: (1) “procedural” unconscionability and (2) “substantive” unconscionability. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 C4th 83, 113-115.) The issue is reviewed in the context of when the contract was signed. (Bakersfield College v. California Comm. College Athletic Ass'n (2019) 41 CA5th 753, 762.) “The procedural element of unconscionability focuses on whether the contract is one of adhesion. Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. The substantive element addresses the existence of overly harsh or one-sided terms. An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied. However…the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87.) (internal quotations and citations omitted).

Plaintiff argues that the Agreement is procedurally unconscionable because the Agreement is a contract of adhesion because the arbitration language was deceptively buried in the “Discharge” section of the Agreement and its terms were never explained to Plaintiff. (Opp’n p. 8-10.) Plaintiff further cites State Bar of California’s Ethics Opinion 1989-116 to support her contention that the agreement is unenforceable. (Id. p. 9-10.)

The Court finds that the Agreement presents low procedural unconscionability, only because it is not clear on the Agreement’s face that Plaintiff has agreed to arbitrate her claims. While the Court agrees that the burying of the arbitration provision within the Agreement presents some procedural unconscionability, Plaintiff’s argument fails for several reasons. Initially, Plaintiff’s reliance on the State Bar’s opinion fails for two critical reasons. First, the opinion only addresses whether such agreements are ethically improper, and the State Bar found nothing to be ethically improper in including an arbitration provision in the initial attorney-client retainer. Second, the opinion is not binding on the Courts.

In addition, the Agreement cannot be held to be a contract of adhesion because Plaintiff was able to reject the Agreement and could have bargained for terms of her choice if she so desired or retained different counsel. This position is supported by the holding in Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1110, as modified (May 23, 1997), where the court found that neither the retainer agreement nor its subsequent amendment was an adhesion contract because the client possessed substantial bargaining strength.

Plaintiff also argues that the Agreement is substantively unconscionable because the Agreement waives her right to a jury trial. (Opp’n p.9.) The Court notes that the Agreement does not contain such a waiver. Although every agreement to arbitrate effectively results in a waiver of a court trial and a jury, this does not make agreements to arbitrate unconscionable. Thus, the Court finds that the Agreement is not substantively unconscionable.

Pursuant to the Agreement, Judicial Arbitration and Mediation Services (“JAMS”) will be the arbitration forum. Thus, the Court finds that the parties' dispute can be sufficiently arbitrated under CCP § 1281.6 through JAMS.

The Court further finds that a stay of the action is appropriate in this case once the Petition is granted. (Code of Civil Procedure § 1281.4.) The Court GRANTS the Defendant’s Motion to Compel Arbitration and STAYS the proceeding pending a final resolution of Plaintiff’s claims through arbitration. A Statue Conference re status of arbitration is set in this Court for January 10, 2025 at 8:30 a.m.

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