Judge: Jon R. Takasugi, Case: 24STCV03483, Date: 2024-10-30 Tentative Ruling

Case Number: 24STCV03483    Hearing Date: October 30, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ motion to compel arbitration is GRANTED. This action is stayed pending the completion of arbitration.

            On 2/9/2024, Plaintiff Bear Valley 2005 and Joseph Michael (collectively, Plaintiffs) initiated this action. On 6/26/2024, Plaintiffs filed a first amended complaint (FAC) against Azadegan Law Group, APC, Ramin Azadegan, Douglas Stuart Fabian, Susan Marsha Freedman, and Dimitry Zinovy Tsimberg (collectively, Defendants), alleging: (1) malpractice; (2) breach of fiduciary duty; (3) fraud; (4) negligent misrepresentation; (5) restitution/unjust enrichment; and (6) violation of Business and Professions Code section 17200.

            On 8/26/2024, Defendants moved to compel Plaintiffs to arbitrate their FAC, and stay this action pending the completion of arbitration.

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).)

Discussion

1.      Defendants’ Burden

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

Defendants—who in 2017 represented Plaintiffs in Superior Paving Company, Inc. dba United Paving Company v. Bear Valley 2005, LLC, Imperial County Superior Court Case No. ECU08984—submitted evidence that on May 17, 2017, Azadegan Law and Plaintiffs entered into an Engagement Agreement (the Engagement Agreement) that contains a binding arbitration provision. The Engagement Agreement between Plaintiffs and Azadegan Law contains an arbitration provision requiring that any controversy, claim, or dispute arising out of or relating to the Engagement Agreement, or relating otherwise to Azadegan Law’s representation of Plaintiffs, shall be determined through binding arbitration in accordance with the rules of ADR Services, Inc. and not by court action.

            In opposition, Plaintiffs argue that Defendants’ Engagement Agreement is void for two reasons:

            First, Plaintiffs contend that Azadegan Law did not provide the clients with a written copy of their fully executed contract until after this action was filed. If a fully executed written contract for services between an attorney and client is not provided to the client at the time that the contract is signed by both the attorney and client, then pursuant to California Business & Professions Code section 6148, that contract is voidable at the option of the client.

            However, section 6148 expressly states that this requirement does not apply to corporate clients. Second, Plaintiffs signed a “Client’s Acceptance” page which expressly states that they “have received a duplicate original of this legal services fee letter agreement.” (See Azadegan Decl., Exh. A., p. 10.) 

            Second, Plaintiffs contend that Defendants, who are not all part of the same law firm, did not disclose their fee splitting arrangement in a writing approved and signed by their clients, the Plaintiffs. This is a violation of California Rule of Professional Conduct, Rule 2-220. However, Plaintiffs did not submit caselaw which could show that this violation of the Rules of Professional Conduct is sufficient to void the underlying Engagement Letter as a matter of law. While Plaintiff cited Huskinson & Brown, LLP v. Wolf (2004) 32 Cal.4th 453, 462-463, that case in no way dealt with the question of arbitrability. Rather, Huskinson addressed whether an attorney could still recover monetarily for legal services where there was a violation of Rule 2-200, with the Court there concluding that they could though only under a theory of quantum meruit. Given that the question before the Court does not concern the collection of fees but rather the arbitrability of Plaintiffs’ claims, the Court finds an insufficient basis to conclude that the arbitration provision cannot be enforced based on a violation of Rule 2-200.  

Given that Defendants have established by a preponderance of the evidence that an arbitration agreement exists, and that Plaintiffs’ claims are covered by that agreement, the burden shifts to the Plaintiffs 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. (Pinnacle).)

2.      Plaintiff’s Burden

The party opposing arbitration bears the burden of proving, by a preponderance of the evidence any defense, such as unconscionability or duress. (Pinnacle, supra, 55 Cal.4th at p. 236.)

“Unconscionability has both procedural and substantive elements. Although both must appear for a court to invalidate a contract or one of its individual terms, they need not be present in the same degree: ‘[T]he 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.’”  (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469. (“Roman”).) Where the degree of procedural unconscionability is low, “the agreement will be enforceable unless the degree of substantive unconscionability is high.” (Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796 (Ajamian”).)

Plaintiffs did not advance any argument of unconscionability, and thus have not set forth any persuasive basis for the unenforceability of the arbitration provision.

Based on the foregoing, Defendants’ motion to compel arbitration is granted. This action is stayed pending the completion of arbitration.

It is so ordered.

Dated:  October    , 2024

   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.