Judge: Joel R Wohlfeil, Case: 37-2023-00029836-CU-PT-CTL, Date: 2023-09-29 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - September 26, 2023

09/29/2023  09:00:00 AM  C-73 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Joel R. Wohlfeil

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Civil - Unlimited  Petitions - Other Motion Hearing (Civil) 37-2023-00029836-CU-PT-CTL GARMO VS NAFSO [IMAGED] CAUSAL DOCUMENT/DATE FILED: Petition - Other, 07/14/2023

The Petition (ROA #s 1 and 10) of Petitioners NIDHAL GARMO and HANI GARMO ('Petitioner') to compel arbitration and stay these proceedings against Respondents TERRY NAFSO and ALPINE TWISTERS INC. ('Respondents'), is DENIED.

Petitioners' Request (ROA # 18) for judicial notice is DENIED.

The reply brief argues that service of the opposition briefs was not timely. However, as Respondents had not yet appeared in this action, they had thirty (30) days after personal service of the Petition to serve their oppositions. See Code Civ. Proc. 1290.6 and 1290.4(b)(1). Therefore, this argument is not persuasive.

The Court can order the parties to arbitrate a controversy if it determines an agreement to arbitrate the controversy exists, unless it determines that the right to compel arbitration has been waived or grounds exist for rescission. Code Civ. Proc. 1281.2(a).

California statutes create a summary proceeding for resolving petitions or motions to compel arbitration.

Chambers v. Crown Asset Management, LLC (2021) 71 Cal. App. 5th 583, 590 (citing Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 972).

Petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. Id. In these summary proceedings, the Court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination. Id. Before granting a petition to compel arbitration, the Court must determine the factual issue of the existence or validity of the arbitration agreement. Id. Although there is a strong policy in favor of enforcing agreements to arbitrate, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate. Id. The 'STOCK PURCHASE AND SALE AGREEMENT -- ALPINE TWISTERS INC. -- A CALIFORNIA CORPORATION' is attached to the declarations of Petitioners Nidhal Garmo and Hani Garmo. This Calendar No.: Event ID:  TENTATIVE RULINGS

2999031 CASE NUMBER: CASE TITLE:  GARMO VS NAFSO [IMAGED]  37-2023-00029836-CU-PT-CTL agreement is dated August 25, 2021, and was signed on October 11, 2021. It lists the following parties to the agreement: Nidhal Garmo and Hani Garmo (the 'Sellers'); Alpine Twisters Inc. (the 'Company'); and Terry Nafso (the 'Buyer'). The agreement explains that the Garmos and Nafso each own 50% of the outstanding shares of the corporation. As agreed, the Garmos sold their shares to Nafso such that Nafso is currently the owner of 100% of the outstanding shares. Section 10.11 of the agreement states: 'Any dispute arising from, or relating to, this Agreement shall be resolved at the request of any party through binding arbitration.' Petitioners' declarations explain the basis for the claim they seek to arbitrate against Respondents. As stated, after the stock sale was completed, Respondent Nafso applied for the Employee Retention Credit on behalf of the company. The credit for which Nafso applied was for tax years 2020 and 2021, which was during the time when the Garmos still owned a 50% interest in the company. However, the Garmos have not received their share of the credit, and are also 'concerned' about their potential liability for unpaid taxes.

The facts summarized above do not appear to give rise to a claim that is subject to arbitration. The warranties and covenants set forth within the agreement do not include or address the payment of taxes or the ability to profit from tax credits. It appears that Respondent Nafso could have committed the alleged misappropriation of the tax credit whether or not the stock sale had even been consummated.

The tax credit issue is separate from the integrated stock purchase agreement. The agreement makes no reference to an obligation to provide reconciliations or accountings. The Petition is denied on this basis and the Court does not address whether Alpine Twisters is a proper party to an arbitration between the parties.

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