Judge: Layne H. Melzer, Case: 22-01268508, Date: 2022-08-18 Tentative Ruling
Pltf. Jonna Quintana
Motion to Compel Arbitration
Petitioner’s request to impose monetary, terminating, and contempt sanctions against Respondents under Code of Civil Procedure section 1281.99 is DENIED. Petitioner’s alternative request to compel Crown Cove, Licensing Name: Newport Beach CA Senior Housing LLC; Watermark Retirement Community, Watermark Retirement Properties, Inc. RCFE License #306005642, Newport Beach CA Senior Housing JV OPCO, LLC, David Freshwater, Meegan Motisi, Kathleen Olsen, Brenda Ritter, and Kameshi Taylor to arbitration is GRANTED as to Crown Cove but DENIED as to all others.
Pursuant to Code of Civil Procedure section 1281.97, Crown Cove is ORDERED to pay Petitioner’s attorney’s fees and costs for the arbitration, to be determined by the arbitrator and included in the arbitration award, even if Petitioner is not the prevailing party. Petitioner’s request for attorney’s fees and costs in the amount of $64,918.81 is DENIED.
“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) “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.)
In 2019, the Legislature amended and added to the statutes governing arbitration agreements. (Sen. Bill No. 707 (2019-2000 Reg. Sess.) §§ 1-6.) Specifically, the Legislature amended Code of Civil Procedure sections 1280 and 1281.96, and added sections 1281.97, 1281.98, and 1281.99. (Ibid.) Those amendments and additions relate to employment or consumer arbitration agreements and set forth certain requirements for, and penalties against, “drafters” of such agreements, and remedies for employees and consumers. (Ibid.)
Under section 1280, a “drafting party” is defined as “the company or business that included a predispute arbitration provision in a contract with a consumer or employee.” (Code Civ. Proc., § 1280, subds. (c), (e).)
“In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.” (Code Civ. Proc., § 1281.97, subd. (a).) “If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following: [¶] (1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. [¶] (2) Compel arbitration in which the drafting party shall pay reasonable attorney's fees and costs related to the arbitration.” (Id., § 1281.97, subd. (b).) “If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.” (Id., § 1281.97, subd. (d).) Under section 1281.99, the court shall impose monetary sanctions, and may impose evidentiary, terminating, or contempt sanctions. (Id., § 1281.99.)
Petitioner’s request to impose monetary, terminating, and contempt sanctions against Respondents under section 1281.99 is DENIED. Those remedies are only available if Petitioner had chosen to proceed in a court of appropriate jurisdiction. However, Petitioner has not initiated a court action against any of the Respondents.
As an alternative, Petitioner requests to compel arbitration. That request is GRANTED as to Crown Cove, but DENIED as to all others, as explained below.
Petitioner’s arbitration demand named the following as respondents: “Crown Cove, Licensing Name: Newport Beach CA Senior Housing LLC; Watermark Retirement Community, Watermark Retirement Properties, Inc. RCFE License #306005642, Newport Beach CA Senior Housing JV OPCO, LLC, David Freshwater, Meegan Motisi, Kathleen Olsen, Brenda Ritter, [and] Kameshi Taylor.” [Petition, Exh. B]
The demand asserted claims for negligence, fraudulent misrepresentation, negligent infliction of emotional distress, elder abuse, unfair business practices, personal rights violations, and failure to safeguard resident’s valuables in connection with Petitioner’s mother’s care and treatment at Crown Cove. [Id.]
Petitioner provided a copy of the written admissions agreement (“Agreement”). [Petition, Exh. A] The first page of the Agreement states that it is between Petitioner and her mother, Josephine Yonai, on one hand, and “East Coast Senior Care, LLC” as operator and “Watermark Retirement Communities, Inc.” as manager, on the other. The first page also indicated that the name of the facility is “Crown Cove” and refers to it as the “Community.” Paragraph 33.0 of the Agreement contains an arbitration provision. The arbitration provision states that “the Community shall bear the arbitration filing fee and the arbitrator’s fee.” On the signature page of the Agreement, it states, “PARTIES TO THIS AGREEMENT”, and under “Responsible Person,” Petitioner signed her name, and under “Crown Cove,” the Agreement was signed by Kathleen Olson as Executive Director. Those were the only two signatories to the Agreement.
While the first page of the Agreement did not list Crown Cove as a party, Crown Cove signed the Agreement as a party. In opposition, Crown Cove does not deny that it signed the Agreement or otherwise assert that it is not bound by it. It argues that Petitioner failed to properly support the petition with a declaration or an affidavit. That argument lacks merit because Petitioner verified the petition. As such, Petitioner demonstrated that she has a valid arbitration agreement with Crown Cove.
However, as to all the other entities and individuals named in the arbitration demand, Petitioner did not demonstrate that she has an arbitration agreement with them or how they can be otherwise bound to the Agreement as non-signatories. Therefore, to the extent that Petitioner seeks to compel the others named in the arbitration demand to arbitration, that request is denied. Moreover, as to the individuals named in the arbitration demand, Petitioner did not demonstrate that any of them received notice of this petition, as there is no proof of service of the petition for any of the individuals.
The next issue is whether Petitioner demonstrated that Crown Cove refused to arbitrate. The arbitration provision in the Agreement states that “[t]he arbitration shall be administered by the Judicial Arbitration and Mediation Services (‘JAMS’) under the JAMS Comprehensive Arbitration Rules and Procedures…” [Petition, Exh. A, ¶ 33] Petitioner submitted an arbitration demand to JAMS and Crown Cove on February 1, 2022. [Id., Exh. B] Petitioner emailed and mailed that demand to Crown Cove’s counsel the same day. [Id.] JAMS corresponded with the parties and billed Crown Cove for the filing fee, but subsequently closed the file because Crown Cove did not pay. [Id., Exhs. D-H]
Crown Cove asserts that it did not refuse to arbitrate because Petitioner did not properly serve it with an arbitration demand. It contends that Petitioner had to serve the demand in the same manner as service of a summons and complaint.
An arbitration agreement may incorporate a body of rules to be followed. (See, e.g., Maggio v. Windward Capital Mgmt. Co. (2000) 80 Cal.App.4th 1210, 1213-1215 [clause providing arbitration in accordance with AAA commercial rules].) As noted, the Agreement stated that “arbitration shall be administered by the Judicial Arbitration and Mediation Services (‘JAMS’) under the JAMS Comprehensive Arbitration Rules and Procedures…” The Agreement did not otherwise provide for how an arbitration demand was to be made. Neither side provided a copy of JAMS’ rules and procedures to show whether they set forth how an arbitration demand is to be served.
Crown Cove cited to Ikerd v. Warren T. Merril & Sons (1992) 9 Cal.App.4th 1833 (Ikerd) for the proposition that Petitioner had to serve the arbitration demand in the same manner as a summons and compliant. Ikerd stated that an arbitration demand is analogous to civil complaint and had to be served, (Ikerd, supra, 9 Cal.App.4th at p. 1843 and 1844 fn. 10) but did not state that the demand had to be served under the statutes governing service of a summons and complaint. Regardless, Petitioner has shown that the arbitration was properly served.
Crown Cove is the dba of a LLC. Limited liability companies may be served be serving a person authorized to receive service of process. (Code Civ. Proc., § 416.90; Corp. Code, § 17701.13, subd. (a)(2).) In early October 2020, Petitioner sent a letter to Crown Cove regarding the care and treatment of Yonai. [Opposition, ROA 15, Loy decl., ¶ 2 and Exh. A] On October 22, 2020, Beach sent a letter to Petitioner, stating it represented Crown Cove and asked Petitioner to “direct all future correspondence and pleadings to [it.]” [Reply, ROA 40; Wasylenko decl., ¶ 9, Exh. H; see Opposition, ROA 15, Loy decl., ¶ 3] For over a year, Petitioner’s counsel and Beach corresponded and exchanged records in an attempt to reach a settlement. [Loy decl., ¶ 3] On February 1, 2022, Petitioner submitted a written demand for arbitration and statement of claim to JAMS and served it on Crown Cove by emailing Beach. [Petition, Exhs. B and C] Beach received the arbitration demand and was aware that JAMS opened a file. [Loy decl., ¶ 8]
Although Beach claims that it told Petitioner in March 2022 that it was not authorized to accept the arbitration demand on behalf of Crown Cove, Petitioner’s counsel asserts that Beach stated over the phone on February 15, 2022 that it could accept on behalf Crown Cove. [Compare Loy decl., ¶ 6 with Reply Wasylenko decl., ¶ 14]. The other documents Petitioner provided support her version of events. Between February 15, 2022 and May 24, 2022, JAMS corresponded with Petitioner and Crown Cove five times regarding the arbitration. [Petition, Exh. D-H] During that same time period, Beach and Petitioner corresponded six times regarding the arbitration, which included Beach’s acknowledgment of notice from JAMS re non-payment of the filing fee. [Reply Wasylenko decl., ¶ 15, 18, 19, 21, 22,24 and Exhs K, M, T, W, X and Y] Beach never indicated to JAMS or Petitioner in those written communications that Crown Cove was not properly served with the arbitration demand or that Beach was not Crown Cove’s actual agent for that purpose.
Beach told Petitioner that it represented Crown Cove and asked her to direct all pleadings to it. It is patently disingenuous of Crown Cove and Beach to now suddenly claim that the arbitration demand was not properly served.
In sum, Petitioner demonstrated that she has a valid arbitration agreement with Crown Cove, that the claims are related to Crown Cove’s care and treatment of Yonai, and that Crown Cove has refused to arbitrate.
In addition, Petitioner has demonstrated that Crown Cove materially breached the Agreement by failing to pay the fees to initiate the arbitration proceeding within 30 days after they were due. (Code Civ. Proc., § 1281.97, subd. (a).) As such, Crown Cove is to pay “reasonable attorney's fees and costs related to the arbitration.” (Id., § 1281.97, subd. (b).)
Petitioner claims that she has incurred $53,418.81 in legal fees and costs related to this arbitration and expects to incur another $11,500 in attorney’s fees for this petition, for a total of $64,918.81. Petitioner’s counsel did not set forth in the petition how the $53,418.81 in fees and costs were incurred and merely makes a blanket statement for that amount. [See Petition, ROA 2, Wasylenko decl., ¶ 2]
Because arbitration has not commenced, Petitioner failed to show that section 1281.97, subdivision (b) includes pre-arbitration negotiations, and Petitioner failed to properly support the fees and costs request, the request for $53,418.81 is DENIED. As for the request for fees in connection with the petition to compel, the statute does not provide for the recovery of such fees so the request for the additional $11,500 in fees is also DENIED.
Petitioner to give notice of ruling.