Judge: John J. Kralik, Case: 24NNCV06360, Date: 2025-04-25 Tentative Ruling

Case Number: 24NNCV06360    Hearing Date: April 25, 2025    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff American Express National Bank (“Plaintiff”) alleges that it entered into a written business loan with Defendant Roy Katan aka Roy aka Katan (“Defendant”), with the business loan account number ending in 9400.  (Compl., ¶¶6-8, Ex. A.)  Plaintiff alleges that on September 10, 2024, Defendant breached the term of the loan agreement by failing to make payment.  Plaintiff seeks $39,847.03 against Defendant.

The complaint, filed December 6, 2024, alleges a single cause of action for breach of contract.

B.     Relevant Background and Motion on Calendar

On December 21, 2025, Defendant filed a motion to compel mediation.

The Court is not in receipt of an opposition brief.  

DISCUSSION

            Defendant moves to dismiss this case and compel mediation in this action.  Defendant relies on the Kabbage Funding Loan Agreement and Personal Guarantee (“Agreement”), which is attached as Exhibit A to the complaint.  The Agreement is entered between Lender/Plaintiff American Express National Bank and Borrower/Defendant Koy Katan. 

            Section 28 of the Agreement (Claims Resolution) includes the following terms:

For this section, "you" and "us" includes any corporate parents, subsidiaries, affiliates or related persons or entities and "you" also includes Business Representative. "Claim" means any current or future claim, dispute or controversy relating to your Loan(s), this Loan Agreement, or any agreement or relationship you have or had with us, except for the validity, enforceability or scope of the Arbitration provision. Claim includes but is not limited to: (1) initial claims, counterclaims, crossclaims and third-party claims; (2) claims based upon contract, tort, fraud, statute, regulation, common law and equity; (3) claims by or against any third party using or providing any product, service or benefit in connection with any loan; and (4) claims that arise from or relate to (a) any loan created under any of the agreements, or any balances on any such loan, (b) advertisements, promotions or statements related to any loans, goods or services financed under any loans or terms of financing, and (c) your application for any loan. You may not sell, assign or transfer a claim.

Sending a Claim Notice

Before beginning a lawsuit, mediation or arbitration, you and we agree to send a written notice (a claim notice) to each party against whom a claim is asserted, in order to provide an opportunity to resolve the claim informally or through mediation. Go to kabbage.com/claim for a sample claim notice. The claim notice must describe the claim and state the specific relief demanded. Notice to you may be provided by your billing statement or sent to your billing address. Notice to us must include your name, address and Account number and be sent to American Express ADR c/o CT Corporation System, 28 Liberty Street, New York, New York 10005. If the claim proceeds to arbitration, the amount of any relief demanded in a claim notice will not be disclosed to the arbitrator until after the arbitrator rules.

Mediation

In mediation, a neutral mediator helps parties resolve a claim. The mediator does not decide the claim but helps parties reach agreement. Before beginning mediation, you or we must first send a claim notice. Within 30 days after sending or receiving a claim notice, you or we may submit the claim to JAMS (1-800-352-5267, jamsadr.com) or the American Arbitration Association ("AAA") (1-800-778-7879, adr.org) for mediation. We will pay the fees of the mediator. All mediation related communications are confidential, inadmissible in court and not subject to discovery.

All applicable statutes of limitation will be tolled from the date you or we send the claim notice until termination of the mediation. Either you or we may terminate the mediation at any time. The submission or failure to submit a claim to mediation will not affect your or our right to elect arbitration.

(Agreement at § 28.)  Section 28 also includes provisions regarding arbitration.  

            Defendant provides the declaration of his counsel Eliel Chemerinski.  Mr. Chemerinski states that he sent an email to Plaintiff’s counsel informing of Defendant’s election to proceed through mediation pursuant to the Agreement, but he has not heard back from Plaintiff’s counsel.  (Chemerinski Decl., ¶3, Ex. A [1/14/25 Email].) 

             The sole cause of action is for breach of contract based on the Agreement.  Here, Defendant seeks to be bound by the mediation term in the claims resolution provision in Plaintiff’s contract.  Given the unopposed nature of the motion, the Court is inclined to grant the motion.  However, the notice procedure in the Agreement provides the steps for the injured party to commence a lawsuit, mediation, or arbitration.  At this time, it is unclear whether Plaintiff complied with the notice procedure to file a lawsuit against Defendant.  Similarly, it is unclear if Defendant complied with the notice procedure to invoke the mediation provision for Plaintiff’s lawsuit.  The Court will order the parties’ counsel to meet and confer to determine if Plaintiff will submit its case to mediation pursuant to its own Agreement’s terms.  

CONCLUSION AND ORDER

            Defendant Roy Katan’s motion to compel mediation is continued to May 9, 2025 at 8:30 a.m.  The parties are ordered to meet and confer to determine whether Plaintiff will submit to mediation pursuant to its own loan terms.  Defendant is also ordered to serve all necessary parties and non-parties a copy of this motion for the purpose of notice, pursuant to notices provision in the agreement.  Following meet and confer efforts, Defendant is ordered to file with the Court a short declaration of counsel detailing the meet and confer efforts and whether a resolution was reached.  

            Defendant shall provide notice of this order.

DATED:  April 25, 2025                                                        ___________________________

                                                                                          John J. Kralik

                                                                                          Judge of the Superior Court