Judge: Jon R. Takasugi, Case: 23STCV04530, Date: 2023-04-27 Tentative Ruling

Case Number: 23STCV04530    Hearing Date: August 8, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motions to compel arbitration are GRANTED. This case, and Case No. 23STCV09822, are stayed pending the completion of arbitration proceedings.

The fee-shifting provision is ordered severed from the Arbitration Agreement.

            On 3/1/2023, Plaintiff Jason Diaz (Plaintiff) filed suit against Huntington Reproductive Center Medical Group, Bradford A. Kolb, and Flor Parada, alleging: (1) fraudulent concealment; (2) violation of unfair competition law.

            Now, Defendants move to compel arbitration of Plaintiff’s Complaint, and request a stay of this action pending completion of arbitration proceedings.

            Given the substantial similarities between this motion, and the motion to compel arbitration pending in Related Case No. 23STCV09822, the Court has consolidated its analysis into a single ruling.

Legal Standard

Where the Court has determined that an agreement to arbitrate a controversy exists, the Court shall order the petitioner and the respondent to arbitrate the controversy …unless it determines that…  grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.) Among the grounds which can support rescission are fraud, duress, and unconscionability. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) The Court may also decline to compel arbitration wherein there is possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2 (c).)

Related Claims: Case No. 23STCV09822

            As a preliminary matter, there are two substantially similar motions to compel arbitration filed in this case and in Case No. 23STCV09822. After review, the Court agrees that both claims arise from the same or substantially identical transactions, incidents, or events, require determination of the same or similar legal issues, and should be assigned to the same judge. Indeed, the Court found the cases to be related as of 6/9/2023. As such, the Court has consolidated its analysis of the two pending motions here into a single ruling, and the analysis set forth below applies equally to both motions.

Discussion

The party moving to compel arbitration “bears the burden of proving [the] existence [of an arbitration agreement] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party also bears the burden of demonstrating that the claims fall within the scope of the arbitration agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

A.    Existing Agreement

Defendant submitted evidence that in connection with the professional medical services Plaintiffs sought from HRC Fertility, Plaintiffs executed a two-page stand-alone “Mutual Binding Arbitration Agreement” with HRC Fertility’s authorized representative on December 12, 2018. (See Peterson Decl., Exh. A.) Both Plaintiffs initialed and signed the arbitration agreement, thus agreeing to its terms. (Ibid.) In fact, Plaintiffs expressly acknowledged that they have “fully read and understand this Arbitration Agreement, and freely and voluntarily accept the terms and legal effect thereof, as of the date services were first provided.” (Id. ¶ 7, Ex. A at p. 2.) The arbitration agreement provided, in relevant part, as follows:

Article 2

Pursuant to this Mutual Binding Arbitration Agreement (“Arbitration Agreement”), all disputes, claims or controversies against HRC Fertility and its agents, employees, owners, shareholders, officers, directors, partners, and associates, arising out of the rendering of professional services, as well as the breach, termination, enforcement, interpretation or validity of any written agreement pertaining thereto, and including [sic] claims for negligence, battery, wrongful death, lack of informed consent and loss of consortium, as well as the determination of the scope or applicability of this Agreement, shall be exclusively determined by binding arbitration, before the American Arbitration pursuant to the Commercial Rules of the American Arbitration Association (“AAA”) in Los Angeles, California, and shall be governed in accordance with the laws of the State of California. Said binding arbitration shall be before a single arbitrator with at least 20 years’ experience in the field of medical malpractice. Binding arbitration is an alternative to the civil jury system by which the parties waive the right to file a civil action in the Superior Court, or to have a jury or sitting judge determine the dispute, claim or controversy, in favor of the binding arbitration.

            (Id. at p. 1.)

            In opposition, Plaintiffs do not dispute signing the arbitration agreement. Moreover, Plaintiffs, in fact, did submit to arbitration based on the agreement. However, Plaintiffs argue that the futility exception to arbitration applies here, given that “the AAA refused to adjudicate the claims because Defendants’ arbitration agreement included a fee-shifting provision that did not comply with the AAA’s policies, and also because the AAA requested that all parties sign an additional arbitration agreement—which Plaintiffs need not, and would not, execute—to hear the matter.” (Opp., 2: 5-8.)

            After review, the Court finds Plaintiffs’ contentions unpersuasive for several reasons.

            First, while Plaintiffs contend that “compelling this matter to arbitration would be futile” because the AAA would inevitably send a letter stating it lacks authority to administer the arbitration, this argument is entirely speculative, and Plaintiffs provide no foundation for this assertion. The letter from the AAA (See Peterson Decl., Exh. 1) makes clear that the AAA is not declining per se to arbitrate the matter or contending that it cannot be without authority to oversee Plaintiffs claims. Rather, “[a]s the AAA’s letter makes clear, because Plaintiffs themselves refused to sign the mutual consent, the AAA determined it does not have the “authority” to administer the dispute. (Id.) The AAA even contemplated Plaintiffs’ resubmitting their claims at some point in the future, further undercutting Plaintiffs’ wholly unsubstantiated assertion that the AAA has “declined” to arbitrate their claims. (Id.)” (Reply, 7: 1-5.)

            Second, while Plaintiffs contended, without additional detail, that they must sign an additional arbitration agreement, Defendants clarified in reply that there has never been an additional arbitration agreement: “the AAA simply requested Plaintiffs’ signature confirming their consent to proceed with arbitration; there were no new contractual terms. (Petersen Decl., Ex. E.) Regardless, Plaintiffs’ signature confirming consent to proceed in arbitration only applies when a claimant voluntarily submits a dispute to the AAA; the signature is not required where a court directs a dispute to arbitration following a successful motion to compel arbitration .” (Reply, 8: 10-14.) As such, the Court readily finds the facts of Provencio v. WMA Securities, Inc. (2005) 125 Cal. App. 4th 1028--which Plaintiffs cited to in support—to be distinguishable from the facts here.  

Third, the Court finds inadequate evidence that the arbitration agreement has been frustrated and/or is impossible to perform. In order to show frustration of purpose, Plaintiff must show that the “basic purpose of the contract . . . has been destroyed . . . .” (Peoplesoft U.S.A., Inc. v. Softeck, Inc. (2002) 227 F.Supp.2d 1116, 1119.) Here, the purpose of the parties’ “Mutual Binding Arbitration Agreement” is to arbitrate disputes involving medical malpractice claims and claims arising out of the rendering of professional services. The fact that AAA has subsequently requested the parties waive the fee-shifting provision to administer the dispute in accordance with its Consumer Rules, which Defendants agreed to waive, does not “destroy” the contract’s purpose of arbitrating disputes. (See Dorn v. Goetz (1948) 85 Cal.App.2d 407, 411) (“In order that the defense of frustration be applicable it is not sufficient that the purpose or desired object of one of the parties to the contract has been frustrated.”) The Court concludes that the fee-shifting provision can be severed from the agreement without fundamentally altering the parties’ agreement regarding the scope of arbitration and the powers of the arbitrators to provide relief. (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1065.)

Similarly, under California law, impossibility of performance of a contract “must attach to the nature of the thing to be done and not to the inability of the obligor to do it.” (Hensler v. City of Los Angeles (1954) 124 Cal.App.2d 71, 83.) Here, the ‘nature of the thing to be done’ is arbitration, and impossibility does not attach to the procedure by which the arbitration is accomplished.

In sum, Defendant has established by a preponderance of the evidence that an arbitration agreement exists, and that Plaintiff’s claims are covered by that agreement, and Plaintiffs have not met their burden to establish that the arbitration clause should not be enforced. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

Based on the foregoing, Defendant’s motions to compel arbitration are granted, and this matter (in both this case and Related Case No. 23STCV09822)  is stayed pending the completion of arbitration proceedings. The fee-shifting provision is ordered severed from the agreement.

It is so ordered.

Dated:  August    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.