Judge: John J. Kralik, Case: 23BBCV00952, Date: 2024-04-12 Tentative Ruling

Case Number: 23BBCV00952    Hearing Date: April 12, 2024    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff Nora Bekerian (“Plaintiff”) alleges that she is the owner of a single-family home located at 10413 Samoa Avenue, Tujunga, CA 91042 and the adoptive mother of two children with disabilities.  Plaintiff alleges that she hired Defendant Mickey Lynn McClinton (“McClinton”) on October 1, 2021, to construct two accessory dwelling units and legalize an already-built ADU on the property.  Plaintiff alleges that the total price of the project was $1,200,000.  Plaintiff alleges that Defendant never disclosed that he was an unlicensed contractor.  Plaintiff alleges that in November 2021, she received news that her mother in Lebanon was gravely ill and McClinton offered to care for her children while she traveled; Plaintiff alleges that during this time, she began to develop an emotional attachment to McClinton.  Plaintiff alleges that McClinton took advantage of her emotional vulnerability and demanded large amounts of money to pay for permits and materials. 

Plaintiff alleges that on December 9, 2021, McClinton introduced Plaintiff to Defendant Charles Anthony Hasbun (“Hasbun”), a representative of Defendant Private Money Lenders, Inc. (“PML”) and notary public Jacqualine Contreras.  She alleges that on December 19, 2021, Hasbun, McClinton, and Contreras met with Plaintiff at her home and Plaintiff signed documents pertaining to a $150,000 loan.  On December 28, 2021, Plaintiff received a wire transfer from PML in the amount of $18,501.64, despite having signed a loan for $150,000.  Plaintiff alleges that she made numerous attempts to contact Hasbun and PML starting in January 2022 to seek more information about the loan, as well as McClinton who abandoned work on the project in March 2022.  Plaintiff alleges that on April 22, 2023, she obtained the loan documents from PML’s office and the Escrow Closing Statement showed that $100,000 of the loan funds were disbursed to “Michael” and $25,000 in funds were held by PML “for permits,” but Plaintiff alleges she did not authorize these disbursements.  Plaintiff alleges that she requested that the $25,000 be disbursed to her since no permits had been pulled, but PML informed her that the funds were returned to the lender Don Friday King, M.D.  On August 3, 2023, in order to avoid foreclosure, Plaintiff made a balloon payment to lender Dr. King in the amount of $121,056.79. 

The first amended complaint (“FAC”), filed August 8, 2023, alleges causes of action for: (1) conspiracy; (2) conversion; (3) money had and received; (4) rescission; (5) violation of Welfare & Institutions Code, § 15610.30; (6) fraud; (7) negligent misrepresentation; (8) breach of contract; (9) breach of the covenant of good faith and fair dealing; (10) negligence; (11) concealment; (12) unfair business practices; and (13) violation of Financial Code, § 17414. 

B.     Motions on Calendar

On February 15, 2024, Defendant PML filed a motion for an order compelling arbitration.  On March 29, 2024, Plaintiff filed an opposition brief.  On April 5, 2024, PML filed a reply brief.

On November 15, 2023, Defendant Charles Hasbun filed a demurrer to each cause of action nalleged in the FAC.  On February 26, 2024, Plaintiff filed an opposition brief.

DISCUSSION RE MOTION TO COMPEL ARBITRATION

            PML moves for an order compelling Plaintiff to arbitrate this matter.         

A.    Terms of the Arbitration Agreement: Is there an enforceable agreement to arbitrate?

PML provides a copy of the December 19, 2021 of the Arbitration Agreement.  (Mot., Ex. A [Arbitration Agreement].)  The Arbitration Agreement is signed by Plaintiff on December 19, 2021 and PML’s vice president.  The Arbitration Agreement states in relevant part:

MUTUAL AGREEMENT TO ARBITRATE DISPUTES: Borrower has or will obtain a mortgage loan (the “Loan”) made or arranged by the undersigned company (the “Company”). Borrower, Company and any lender making the Loan (collectively, the “Lender”) agree that any Dispute involving the Loan, including but not limited to claims arising from the origination, documentation, disclosure, servicing, collection or any other aspect of the Loan transaction or the coverage or enforceability of this Agreement, shall be resolved exclusively by binding arbitration under the terms of this Agreement. This Agreement shall also be binding on the agents, successors and assigns of the parties and the Loan.

“Dispute” shall include, but not be limited, to:

1. Any claimed wrongdoing, such as misrepresentation, negligence, breach of contract, breach of fiduciary duty, unconscionability, fraud in the inducement, rescission, breach of the covenant of good faith and fair dealing and unfair business practices.

2. Any claimed violation of state or federal laws, including, but not limited to consumer credit, truth-in-lending, civil rights, equal opportunity, real estate settlement, housing discrimination laws, fair lending acts, licensing, loan regulation and unfair business practices acts.

…

ARBITRATION OF DISPUTES: Arbitration shall be conducted under the rules of the American Arbitration Association (“AAA”). Arbitration shall be filed at the office of the AAA nearest to the real property securing the Loan. Reasonable discovery shall be permitted pursuant to a written discovery plan determined by the arbitrator(s).  Company shall pay all arbitrator fees and hearing fees to the extent they exceed what Borrower would have had to pay if the matter were tried in court.  Each party shall bear their own attorneys fees, unless a specific claims statute applies.  The arbitrator(s) shall render a statement of the reasons for the award. Judgment on the award may be entered in any court of competent jurisdiction.

WAIVERS:

THE PARTIES HEREBY WAIVE THE RIGHT TO TRIAL BY JUDGE OR JURY, THE RIGHT TO APPEAL, FULL PRETRIAL DISCOVERY AND APPLICATION OF THE RULES OF EVIDENCE.

(Arbitration Agreement at p.1.) 

            The parties do not appear to dispute that Plaintiff and PML entered into the Arbitration Agreement and that the scope of the Arbitration Agreement covers the causes of action in the FAC.  In the opposition, Plaintiff argues that Arbitration Agreement is unconscionable and thereby unenforceable. 

B.     Unconscionability

Plaintiff argues that the Arbitration Agreement is both procedurally and substantively unconscionable and, therefore, should not be enforced. 

First, Plaintiff argues that the Arbitration Agreement is procedurally unconscionable because it is a contract of adhesion on a pre-printed form agreement without Plaintiff’s ability to negotiate the terms.  Plaintiff states in her declaration that she could not and did not negotiate any of the terms of any agreement with PML, she was not provided a copy of her file despite persistent requests, she was not given any time to review the documents or have an attorney review them, and none of the documents provided to her contained an arbitration agreement.  (Bekerian Decl., ¶¶3-7.)  While Plaintiff vaguely states she could not and did not negotiate the terms of the agreement with PML, she does not state whether she actually attempted to negotiate the Arbitration Agreement’s terms and was denied the opportunity to do so.  (See Bolanos v. Khalatian (1991) 231 Cal.App.3d 1586 [holding that arbitration agreement was enforceable because the plaintiff’s declaration did not say that she could not read or understand the agreement and because she did not offer any evidence that she was forced or tricked into signing the agreement].)  Further, because “it is generally unreasonable ... to neglect to read a written agreement before signing it” (Rosenthal v. Great W. Fin. Securities Corp. (1996) 14 Cal.4th 394,424), the failure to read an arbitration agreement does not prevent the enforcement of the agreement, unless the party shows his or her signature was obtained through fraud or coercion.  (Id at 423; Bolanos v. Khalatian (1991) 231 Cal.App.3d 1590.)  While Plaintiff argues that the loan signing took place at her home and she was not given adequate time to review the documents, she has not shown that her signature to enter into the loan agreement and the Arbitration Agreement were through fraud or coercion.  Thus, there are little to no indications of procedural unconscionability.

Next, Plaintiff argues that the Arbitration Agreement is substantively unconscionable because it is one-sided.  Plaintiff argues that it contemplates that PML will pay all arbitrator and hearing fees to the extent they exceed what Plaintiff would have had to pay if the matter were tried in court, which means she would be on the hook for all arbitration fees.  In reply, PML argues that this provision is not unconscionable and that the provision clearly means that PML would be paying for all arbitration and hearing fees since Plaintiff has a fee waiver in the court-filed action.  (See May 1, 2023 Request to Waive Court Fees Granted.)  The Court finds little to no indications of substantive unconscionability. 

As such, the Court does not find the Arbitration Agreement to be unconscionable.  Thus, the Arbitration Agreement is enforceable. 

C.     McClinton

CCP § 1281.2 states:

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 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. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. …

(CCP § 1281.2(c).) 

Lastly, Plaintiff argues that McClinton is not bound by the Arbitration Agreement such that there is a possibility of conflicting rulings in this action. 

In reply, PML attempts to argue that Plaintiff’s argument fails because McClinton is in default such that there is nothing to arbitrate with respect to McClinton. 

Based on the Court’s review of the case, McClinton was served on February 20, 2024 with the summons and complaint.  (See 2/20/24 Proof of Publication.)  McClinton has not yet filed an answer or appeared in this action.  His default has not been entered as he was only recently served.  (However, the Court notes that McClinton’s default was entered in a LASC Case No. 22BBCV00514 in Bekerian v. McClinton.)  Although McClinton’s default has not been entered here, he has not yet filed appeared or participated in this action.  Further, there is no risk of inconsistent rulings as the matter may proceed to arbitration between PML and Plaintiff, while the remainder of the case is stayed pending the outcome of the arbitration. 

The motion to compel arbitration is granted. 

DISCUSSION RE DEMURRER

            Hasbun demurs to each cause of action alleged in the FAC. 

            In light of the ruling on PML’s motion to compel arbitration, the Court takes the demurrer off-calendar.  Hasbun may refile the demurrer following the resolution of the arbitration proceeding.            

CONCLUSION AND ORDER

Defendant Private Money Lenders, Inc.’s motion to compel arbitration is granted.  The matter shall be ordered to arbitration between Defendant Private Money Lenders, Inc. and Plaintiff Nora Bekerian.  The remainder of the action is stayed pending the resolution of the arbitration.

Defendant Charles Anthony Hasbun’s demurrer is taken off-calendar in light of the stay. 

The Court sets a Status Conference re Arbitration for September 11, 2024 at 8:30 a.m. 

            Defendant shall provide notice of this order.

DATED:  April 12, 2024                                                        ___________________________

                                                                                          John J. Kralik

                                                                                          Judge of the Superior Court