Judge: Latrice A. G. Byrdsong, Case: 23STLC06128, Date: 2024-02-27 Tentative Ruling
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Case Number: 23STLC06128 Hearing Date: February 27, 2024 Dept: 25
Hearing Date: Tuesday, February 27, 2024
Case Name: CREDITORS ADJUSTMENT BUREAU, INC. v. FC MANAGEMENT, LLC aka FC MANAGEMENT LLC dba LEV RESTAURANT GROUP adba LEV GROUP; and DOES 1 through 10, inclusive
Case No.: 23STLC06128
Motion: Petition to Compel Arbitration and Stay Action
Moving Party: Defendant FC Management, LLC
Responding Party: Unopposed
Notice: OK
Tentative Ruling: Defendant’s Petition to Compel Arbitration and Stay Action is GRANTED.
The Court orders this action stayed pending the completion of arbitration. (Code Civ. Proc. § 1281.4.)
Post Arbitration Status Conference is set for 10/29/2024 at 9:30
JOINT Arbitration Status Report is ordered to be electronically filed 5-court days prior to 10/29/2024.
BACKGROUND
On September 21, 2023, Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) filed a complaint against Defendants FC Management, LLC aka FC Management LLC dba Lev Restaurant Group adba Lev Group (“Defendant”) and Does 1 through 10, inclusive (collectively “Defendants”), alleging causes of action for: (1) open book account, (2) account stated, (3) reasonable value, and (4) breach of contract. The complaint arises from the alleged non-payment of debt owed to Plaintiff’s assignor, Blackline Systems, Inc. (“Blackline”). The complaint alleges that Defendants became indebted to Blackline in the amount of $22,260.00 for goods sold and delivered and/or services rendered to Defendants by Blackline at Defendants’ request. (Complaint, ¶¶ 2, 11.) The complaint alleges that Blackline and Defendants entered into a written agreement “wherein [Blackline] agreed to sell and deliver the goods and/or render the services described therein to the Defendant, according to the terms and conditions stated therein, agreed to pay therefore.” (Complaint, ¶ 20; Exhibit 1.) The complaint alleges that “[p]rior to the commencement of this action, the claims herein sued upon were assigned to Plaintiff by [Blackline] for collection purposes only and Plaintiff, as assignee, has not accepted any of the obligations, debts or liabilities of [Blackline].” (Complaint, ¶ 4.)
On December 11, 2023, Defendant FC Management, LLC (“Defendant”) filed and served the instant Petition to Compel Arbitration and Stay Action (the “Petition”).
MOVING PARTY POSITION
Defendant contends that the Court has authority to compel arbitration, Plaintiff’s claims fall within the scope of the arbitration agreement, no grounds exist for revocation of the arbitration agreement, and the Court should dismiss or stay the proceedings pending arbitration.
No opposition brief was filed as of February 22, 2024.
REPLY
No reply brief was filed as of February 22, 2024.
ANALYSIS
I. Compelling Arbitration and Staying the Action
A. Legal Standard
“A party who claims that there is a written agreement to arbitrate may petition the superior court for an order to compel arbitration” pursuant to California Code of Civil Procedure section 1281.2. Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356. “California law, like federal law, favors enforcement of valid arbitration agreements.” Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97. “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for rescission of the agreement.” (Code Civ. Proc. § 1281.2.) Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute. Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.
A party opposing a petition to compel arbitration “bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” Banner Entertainment, Inc. v. Superior Court, supra, 62 Cal.App.4th 348, 356. Where a petition to compel arbitration is granted, a court “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc. § 1281.4.)
B. Discussion
In support of the Petition, counsel for Defendant Todd J. Bloomfield (“Bloomfield”), provides a declaration which attaches a copy of the complaint thereto. (Bloomfield Decl., ¶ 2; Exhibit 1.) Bloomfield states that “Exhibit 1 to the [c]omplaint is a copy of the contract which is the basis of each cause of action in the [c]omplaint.” (Id.)
Exhibit 1 attached to the complaint is an Order Form and Master Subscription Agreement (“MSA”) between Blackline and Defendant, which is signed by Blackline and Defendant. The MSA provides, in part, that “[u]nless resolved amicably between the parties, any and all disputes, controversies, or differences which may arise between the parties, out of or in relation to or in connection with this Agreement, or the breach thereof, shall be solely and finally settled by binding arbitration pursuant to the then-current rules of JAMS.” (Complaint, Exhibit 1; MSA at ¶ 17.)
Here, the MSA is between Blackline and Defendant. Plaintiff is neither a signatory to the MSA nor is Plaintiff referenced in the MSA. Defendant argues that “[a]n arbitration agreement exists between Plaintiff as assignee, and FC Management.” (Petition, p. 6:3-4.)
“[T]here is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.” DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352. “[G]enerally one must be a party to an arbitration agreement to be bound by it or invoke it.” Ibid. “However, both California and federal courts have recognized limited exceptions to this rule, allowing nonsignatories to an agreement containing an arbitration clause to compel arbitration of, or be compelled to, arbitrate a dispute arising within the scope of that agreement.” Id. a p. 1353. “Even the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing such an agreement.” Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1512. “A nonsignatory can be compelled to arbitrate when a preexisting relationship existed between the nonsignatory and one of the parties to the arbitration agreement, making it equitable to compel the nonsignatory to arbitrate as well.” JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1240. “Additionally, a nonsignatory can be compelled to arbitrate when it is suing as a third-party beneficiary of the contract containing the arbitration clause.” Ibid.
Defendant does not address the fact that Plaintiff is not a signatory to the MSA. The Court, however, finds that there is a basis for compelling Plaintiff to arbitrate the claims at issue in the complaint. There is a pre-existing relationship between Plaintiff and Blackline as the complaint alleges that Blackline assigned the claims alleged in the complaint to Plaintiff. (Complaint, ¶4.) This is a concession as “[t]he complaint’s allegations are a judicial admission that concede the truth of [the] matter and [has] the effect of removing it from the issues.” Shirvanyan v. Los Angeles Community College District (2020) 59 Cal.App.5th 82, 100. Thus, it is equitable to compel Plaintiff to arbitrate under JSM Tuscany, LLC v. Superior Court, supra, 193 Cal.App.4th 1222, 1240 as the allegations of the complaint show a preexisting relationship between Plaintiff and Blackline prior to the initiation of this action. (Complaint, ¶ 4.) The Court therefore finds a basis to compel Plaintiff to arbitrate.
Moreover, the Court finds that the complaint arises from the non-payment of monies owed under the MSA. In fact, the complaint alleges that the MSA is a contract between the parties for the payment for goods and/or the rendering of services. (Complaint, ¶ 20.) The complaint alleges that Defendants have failed to pay the debt owed pursuant to the MSA, and such debt is now due, owing, and unpaid. (Id., ¶ 21.)
Defendant has shown the existence of a valid arbitration agreement and that the claims at issue arise from the MSA, which contains the arbitration agreement. Due to the Petition being unopposed, Plaintiff has not met its burden in showing any fact necessary to its defense.
Plaintiff has failed to oppose the Petition which creates an inference that the Petition is meritorious. Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410. Moreover, the “failure to oppose a motion may be deemed a consent to the granting of the motion.” (Cal. Rules of Court, Rule 8.54, subd. (c).) Accordingly, the Court GRANTS the Petition.
II. Conclusion
The Court GRANTS the Petition to Compel Arbitration and Stay Action. The Court orders this action stayed pending the completion of arbitration. (Code Civ. Proc. § 1281.4.)
Post Arbitration Status Report is set for 10/29/2024 at 9:30 a.m. in Department 25 of the Spring Street Courthouse.
Counsel are ordered to electronically file a JOINT Arbitration Status Report 5-court days prior to 10/29/2024.
Moving party is ordered to give notice.