Judge: Katherine Chilton, Case: 22STLC03567, Date: 2022-10-03 Tentative Ruling

Case Number: 22STLC03567    Hearing Date: October 3, 2022    Dept: 25

PROCEEDINGS:      MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

 

MOVING PARTY:   Defendant Montana Marketing and Sales, Inc.

RESP. PARTY:         Plaintiff Old Republic Surety Company

 

MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS

(CCP §§ 1281 et seq.)

 

TENTATIVE RULING:

 

Defendant Montana Marketing’s Motion to Compel Plaintiff Old Republic to Arbitration and Stay Proceedings is DENIED.

 

Defendant Montana Marketing’s Motion to Compel all Defendants/claimants to Arbitration and Stay Proceedings is DENIED.

 

SERVICE:[1]

 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 NOT OK

[X] Correct Address (CCP §§ 1013, 1013a)                                                 NOT OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     NOT OK

 

OPPOSITION:          Filed on August 19, 2022.                                    [   ] Late                      [   ] None

REPLY:                     None filed as of September 28, 2022.                     [   ] Late                      [X] None

 

ANALYSIS:

 

I.                Background

 

On May 26, 2022, Plaintiff Old Republic Surety Company (“Plaintiff” or “Old Republic”) filed an action in interpleader against Defendants Montana Marketing and Sales, Inc., dba AAA Green Builders (“Montana Marketing”), Alicia Whitman (“Alicia”), Jorge Ocedgueda (“Jorge”), Marlene Ocedgueda (“Marlene”), Damien Oregel (“Damien”), Sharinga Oregel (“Sharinga”), Christopher Taublee (“Christopher”), and Gricelda Escobar (“Gricelda”), (collectively “Defendants”).

 

Since filing the initial Complaint, Plaintiff has amended the Complaint to add the following Defendants Steve Walleman (“Steve”) and Tereza Walleman (“Tereza”) (on June 10, 2022); April Davison (“April”), Barbara Hurr (“Barbara”), and Jack Hurr (“Jack”) (on June 21, 2022); and Rosa Saenz Kollar (“Rosa”) and Bertha Saenz (“Bertha”) (on July 27, 2022).

 

Plaintiff has also requested dismissal of several Defendants.  Pursuant to Plaintiff’s requests, the Court has dismissed the following Defendants: Alicia Whitman and Christopher Taulbee (on June 23, 2022); April Davison (on July 25, 2022); and Barbara Hurr and Jack Hurr (on August 10, 2022).  (6-17-22 Request for Dismissal; 7-21-22 Request for Dismissal; 8-2-22 Request for Dismissal.)

 

On July 29, 2022, Defendants Damien and Sharina Oregel, in propria persona, filed a General Denial. Other defendants have been named, but not served.  Others have been served but have not filed answers and Plaintiff has not requested a default be entered.

 

On July 5, 2022, Defendant Montana Marketing filed the instant Motion to Compel Arbitration and Stay Proceedings (the “Motion”).  On August 19, 2022, Plaintiff filed a Limited Opposition to Defendant’s Motion (“Opposition”).  No reply has been filed.

 

On September 20, 2022, the Court noted that due to a clerical error, the hearing on the instant Motion and Non-Jury Trial were inadvertently taken off calendar.  (9-20-22 Minute Order.)  The hearing on the Motion was rescheduled to October 3, 2022, and Non-Jury Trial was rescheduled to November 27, 2023.

 

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 Montana Marketing brings the instant Motion seeking to compel arbitration of “any and all complaints or claims which arise from the performance of of [sic] a contract subject to an arbitration clause” and to stay proceedings pending the arbitration.  (Mot. p. 1.)  Defendant Montana Marketing explains that each bond claimant signs a written contract with Montana Marketing for services to be performed.  (Ibid. at p. 3.)  Here, Plaintiff Old Republic’s claims arise from “the written contract mutually entered into and executed by the bond claimants (named defendants to this interpleader action) and defendant Montana Marketing and Sales, Inc.”  (Ibid.)  The written contract between one of the claimants and Montana Marketing is redacted and attached as Exhibit A.  Defendant also cites to the arbitration clause of the contract in the body of the Motion:

 

In the event of any dispute or a claim arising out of or relating to this agreement, or the enforcement or interpretation hereof, the parties agree that any such dispute or claim shall be determined exclusively by binding arbitration before the Better Business Bureau if Contractor is a member of the same, or if Contractor is not a member of the BBB, then in accordance with the Construction Industry Rules of the American Arbitration Association, and the judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

 

NOTICE: BY INITIALING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITARTION OF DISPUTES PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN COURT OR JURY TRIAL. BY INTIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE BUSINESS AND PROFESSIONS CODE, OR OTHER APPLICABLE LAWS. YOUR AGREEMENT TO THIS ARBITRATION AGREEMENT IS VOLUNTARY. “WE HAVE READ AND UNDERSTAND THE FOREGOING, AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED “ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION”

 

(Ibid. at pp. 3-4.)

 

Defendant Montana Marketing argues that “[a]ll of the claimants/defendants claims stem from the entry and performance of the contract between the defendants/claimants and defendant Montana Marketing and Sales, Inc.”  (Ibid. at p. 6.)  Defendant states that it has met its burden of showing the existence of an arbitration agreement and claimants/Defendants cannot show grounds “to defeat the validity of the underlying arbitration agreement” because Montana Marketing has not waived its rights to arbitration, there are no grounds for recission of the agreement, and there are no non-arbitrable third-party claims that could result in conflicting rulings.  (Ibid. at pp. 6-7.)  Defendant also requests a stay of the proceedings pending arbitration.  (Ibid. at p. 8.)

 

            Plaintiff submits a Limited Opposition to the Motion and argues that its “sole involvement in this matter was to issue a statutory contractor’s license bond.”  (Oppos. p. 1.)  It was not party to any contract signed by the parties and has not agreed to any arbitration agreement, so it cannot be compelled to arbitration.  (Ibid. at p. 2.)  Furthermore, it is not a third-party beneficiary of the contract.  (Ibid.)  Nevertheless, it does not object to the proceedings being stayed while the claimants arbitrate the controversy.  (Ibid.)

 

            No reply has been filed.

 

First, the Court finds that Defendant Montana Marketing has not met its burden to show that it can compel Plaintiff Old Republic to arbitration.  The Court cannot consider Exhibit A, attached to the Motion, because it has not been authenticated.  (See Evidence Code § 1400 et seq.)  In reviewing the language of the arbitration provision cited by Defendant Montana Marketing, the Court finds that there is no indication that Old Republic, as a surety, is party to the agreement and may be compelled to arbitration.  Furthermore, the Complaint filed in the instant case is an action in interpleader and does not establish any dispute between Plaintiff and Defendant Montana Marketing that would be subject to arbitration.  For this reason, Montana Marketing’s Motion to Compel Old Republic to arbitration is DENIED.

 

Second, Defendant Montana Marketing cannot establish its right to compel arbitration of any claimants/Defendants in this case based on the Complaint in Interpleader filed by Plaintiff.  Montana Marketing has attached a copy of a redacted agreement that is not authenticated and not admissible, and thus cannot demonstrate that any particular Defendant entered into a contract with Montana Marketing.  In order to compel arbitration of any claimant, Montana Marketing must first establish the existence of a dispute through its own cause of action against the Defendant/claimant.  For this reason, Montana Marketing’s Motion to Compel all Defendants/claimants to arbitration is DENIED.

 

 

IV.           Conclusion & Order

 

For the reasons discussed above,

 

Defendant Montana Marketing’s Motion to Compel Plaintiff Old Republic to Arbitration and Stay Proceedings is DENIED.

 

Defendant Montana Marketing’s Motion to Compel all Defendants/claimants to Arbitration and Stay Proceedings is DENIED.

 

Moving party is ordered to give notice.

 


[1] Defendant Montana Marketing has not served any of the Defendants/Claimants in the case.