Judge: Katherine Chilton, Case: 22STLC01646, Date: 2022-08-16 Tentative Ruling

Case Number: 22STLC01646     Hearing Date: August 16, 2022    Dept: 25

PROCEEDINGS:      MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

MOVING PARTY:   Defendant Osinoff General Contractors, Inc.

RESP. PARTY:         Plaintiff Hollywood Royal Plumbing and Supply, Inc.

MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

(CCP §§ 1281.2)

TENTATIVE RULING:

Plaintiff Osinoff General Contractors’ Motion to Compel Arbitration and Stay Proceedings is GRANTED.

The Court orders Plaintiff’s claims against Defendant Osinoff to be submitted to arbitration.

The Court orders the action stayed with respect to Plaintiff’s claims against Defendant Booth and Defendant Suretec.

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[X] Correct Address (CCP §§ 1013, 1013a)                                                 OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          Filed on August 2, 2022.                                    [   ] Late                      [   ] None

REPLY:                     Filed on August 8, 2022.                                    [   ] Late                      [   ] None

ANALYSIS:

I.                Background

On March 14, 2022, Plaintiff Hollywood Royal Plumbing and Supply, Inc. dba Royale Plumbing (“Plaintiff”) filed an action against Defendants Osinoff General Contractors, Inc. (“Osinoff”), John Lord Booth (“Booth), and Suretec Insurance Company (“Suretec”) (collectively “Defendants”) for (1) breach of contract, (2) common count - reasonable value for services, (3) foreclosure of Mechanic’s Lien, and (4) recovery from Surety on Contractor’s Bond.  The action arose out of a subcontract between Plaintiff and Defendant Osinoff, whereby Plaintiff agreed with General Contractor Osinoff to provide plumbing construction services on the property of Defendant Booth.  (Compl. p. 3.) 

On April 27, 2022, Defendant Osinoff filed the instant Motion to Compel Arbitration, in place of an answer.

On May 10, 2022, Defendant Suretec filed an Answer and on May 17, 2022, Defendant Booth filed an Answer, both parties denying all allegations in the Complaint.

On August 2, 2022, Plaintiff filed an Opposition to Defendant’s Motion and on August 8, 2022, Defendant Osinoff filed a Reply.

II.              Legal Standard

Pursuant to Code of Civil Procedure §1281.2, generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting¿rulings on common issues.

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by prepondernace of evidence.  (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)  It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions.  (Gamboa, 72 Cal.App.5th at 165.)  The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.  (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)  Subsequently, the moving party must establish with the preponderance of admissible evidence a valid arbitration agreement between the parties.  (Ibid.)  The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.  (Ibid.)  “California law, ‘like [federal law], reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims.’”  (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 31.)

If the court orders arbitration, then the court shall stay the action until arbitration is completed.  (See Code Civ. Proc., § 1281.4.)

III.            Discussion

Defendant Osinoff brings the instant Motion seeking to compel Plaintiff to submit to arbitration based on a written subcontract agreement between Plaintiff, on the one hand, and Defendant, on the other hand, entered into on or around June 10, 2020 (“Agreement.”)  (Mot. p. 3.)  Defendant Osinoff argues that the contract has a binding arbitration provision and sets out the language of the provision:

“1. Arbitration: Any controversy or claim arising out of or related to this Master Subcontract, any Work Authorization, or the breach thereof, shall be settled by binding arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. Claims within the monetary limit of the Small Claims Court shall be litigated in such court at the request of either party. any claim filed in Small Claims Court shall not be deemed to be a waiver of the right to arbitrate, and if a counter-claim in excess of the jurisdiction of the Small Claims Court is filed in the Municipal or Superior Court, then the party filing in the Small Claims Court may demand arbitration pursuant to this paragraph.”

(Mot. p. 3; Osinoff Decl. ¶ 2; Ex. A.)  Defendant Osinoff argues that the claims made by Plaintiff are related to the Agreement and therefore, subject to arbitration.  (Mot. pp. 5-6; Osinoff Decl. ¶ 4.)  He also argues that the proceedings should be stayed pending the arbitration and, since the “liability on the mechanic’s lien or on the license bond are entirely dependent on whether there is an amount due under the subcontract,” the proceedings against Defendants Booth and Suretec should also be stayed.  Defendant requests that the Court compel Plaintiff to submit to arbitration in accordance with the Construction Industry Rules of the American Arbitration Association in Los Angeles County and the Agreement and to stay the action pending the arbitration.  (Mot. p. 7.)

            In its Opposition, Plaintiff argues that there are “additional and related claims against third parties, not part of an arbitration agreement, for Foreclosure of Mechanic’s Lien and Claim against a Surety Bond,” which preclude arbitration of the proceedings.  (Oppos. pp. 2, 4-7.)  These claims are “completely derivative from the claim against Defendant Osinoff” and arise from the same transaction.  (Ibid. at p. 6.)  Thus, if Plaintiff is compelled to arbitrate the case with Defendant Osinoff only, “there is no collateral estoppel against John Lord Booth or Suretec Insurance Company” and “no matter what result may occur in arbitration,” Plaintiff will have to re-litigate the entire case and possibly create conflicting rulings.  (Oppos. pp. 2-3, 6-7.)

In its Reply, Defendant Osinoff refutes Plaintiff’s argument that there may be inconsistent rulings.  (Reply p. 2.)  He states that the only claim against Defendant Booth is a Mechanic’s Lien, which “is an equitable remedy where the amount due under the lien is fixed by a determination of how much the Plaintiff is entitled to recover from the contractor.”  (Ibid. at pp. 2-3 (citing Civil Code section 8430.))  Similarly, the only claim against Suretec also requires liability of Defendant Osinoff to be decided “before it can be determined that the surety is liable to Plaintiff for anything.”  (Ibid. at p. 3.)  Furthermore, Defendant Osinoff argues that the fact that the claims arise out of the same transaction is not dispositive and Plaintiff has not provided any facts to support the possibility of conflicting rulings.  (Ibid. at 3.)  Thus, “there is no possibility of conflicting determinations where the lien claim and surety claim are dependent on the liability of OGC.”  (Ibid. at p. 4.)

The Court finds that there is no dispute regarding the existence of an arbitration agreement.  Although Defendant Osinoff has not authenticated the agreement, he has set forth the contents of the agreement in the Motion.  (Mot. p. 3; Osinoff Decl. ¶ 2.)

Furthermore, Defendant Osinoff has not attached proof that he made a demand to Plaintiff to arbitrate the claims against him and Plaintiff refused.  (Code of Civ. Proc. § 1281.2.)  However, the opposing party’s refusal to arbitrate may be demonstrated by filing an action in court.  (Hyundai Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577.)

The only dispute that exists is regarding pending litigation and whether arbitration may create conflicting rulings on common issues.  Code of Civ. Proc. §1281.2, sets out that the court shall order arbitration, on petition of one of the parties, unless:

(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. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

(d)…

If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.

Here, Plaintiff has claims against Defendants Booth and Suretec, who are not parties to the arbitration provision of the Agreement.  Given that these claims arise out of the same Agreement for plumbing services, the Court finds that there is a possibility of conflicting rulings.  However, even in the case that there is a possibility of conflicting rulings, the court “may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding.”  (Code of Civ. Proc. § 1281.2; Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 383, 393; Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1116.)  Since the Mechanic’s Lien and Surety’s liability depend on Defendant Osinoff’s liability, the Court orders Plaintiff to arbitrate the claims with Defendant Osinoff and stays the proceedings pending the outcome of the arbitration.

IV.           Conclusion & Order

For the reasons discussed above, Plaintiff Osinoff General Contractors’ Motion to Compel Arbitration and Stay Proceedings is GRANTED.

The Court orders Plaintiff’s claims against Defendant Osinoff to be submitted to arbitration.

The Court orders the action stayed with respect to Plaintiff’s claims against Defendant Booth and Defendant Suretec.

The Court set a Post-Arbitration Status Conference for January 26, 2023 at 9:30 a.m. in Department 25, Spring Street Courthouse.

Moving party is ordered to give notice.