Judge Lee W. Tsao, Case 22NWCV00731 2023-05-04 Tentative Ruling

Judge: Lee W. Tsao, Case: 22NWCV00731, Date: 2023-05-04 Tentative Ruling

Case Number: 22NWCV00731 Hearing Date: May 4, 2023 Dept: C

ORTIZ v. CAPPO MANAGEMENT XLI, LLC

CASE NO.: 22NWCV00731

HEARING: 05/04/23

TENTATIVE ORDER

Defendant CAPPO MANAGEMENT XLI, LLC’s Motion to Compel Arbitration is GRANTED. This action is STAYED pending arbitration.

Moving Party to give notice.

Defendant CAPPO MANAGEMENT XLI, LLC dba Ocean Honda of Whittier (“Defendant”) moves to compel arbitration, arguing that there is a written agreement to arbitrate between the parties that requires arbitration of Plaintiffs’ claims and a stay of this action.

In Opposition, Plaintiff argues that the Motions should be denied because the Agreement was fraudulently induced, and is unconscionable.

Except for specifically enumerated exceptions, the court must order the petitioner and respondent to arbitrate a controversy if the court finds that a written agreement to arbitrate the controversy exists. (See CCP §1281.2.) “In California, [g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “A petition to compel arbitration or stay proceedings pursuant to CCP §§1281.1 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (C.R.C. Rule 3.1330.)

The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951.)

The Agreement containing the subject Arbitration Clause was executed by Plaintiffs, and states: “Any claim or dispute, whether in contract, tort, statute or otherwise…. Between you and us or our employees, agents, successors or assigns… shall, at your or our election, be resolved by neutral binding arbitration and not by a court action.” (Poling Decl., Ex.1.)

The Court finds that Defendant has met the burden of proving the existence of a valid arbitration agreement between the parties. The RISC agreement clearly calls for arbitration as the appropriate procedure for resolving any disputes over the contract.

Plaintiff argues that the Agreement is void because Plaintiff’s were fraudulently induced into signing it. However, claims of fraudulent inducement go to the arbitrator. (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.) “In the absence of a contrary agreement, parties to a predispute arbitration agreement are presumed to have intended arbitration of controversies, including allegations of fraud in the inducement of the contract generally, that may allow rescission or reformation of the contract or part of it.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 417.)

As indicated, Plaintiff also contends that the Arbitration Agreement is unenforceable because it is unconscionable. The party seeking the defense of unconscionability bears the burden of proof. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 911. “[T]he doctrine of unconscionability has both a procedural and substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Id. at 910.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, and surprise occurs where the allegedly unconscionable provision is hidden within a prolix printed form.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247.) “The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.)

“[Procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. [Citation]…. The unconscionability doctrine ensures that contracts [ ] do not impose terms that have been variously described as ‘overly harsh,’ [citation], ‘unduly oppressive,’ [citation], ‘so one-sided as to shock the conscience,’ [citation] or ‘unfairly one-sided.’ [citation]. All of these formulations point to the central idea that unconscionability doctrine is [ ] concerned [ ] with terms that are ‘unreasonably favorable to the more powerful party.’ (Sanchez, supra, 6 Cal.4th at 910-911.) If the Court finds that an agreement to arbitrate or any clause of such an agreement is unconscionable, the Court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (Cal. Civ. Code §1670.5(a).)

Plaintiff argues that the Agreement is procedurally unconscionable. Indeed, the Agreement appears to be a contract of adhesion in that it is, on its face, a form agreement drafted by the Defendant. Plaintiff argues that Decedent had no other choice but to sign it as it was, and was not actually allowed to negotiate its terms. This is sufficient to indicate that the Agreement is a contract of adhesion. (See, e.g., Fitz v. NCR Corporation (2004) 118 Cal.App.4th 702, 721-722; Fittante v. Palms Springs Motors Inc. (2003) 105 Cal.App.4th 708, 721; Armendariz v. Found. Health Psychcare Servs. (2000) 24 Cal.4th 83, 114-115.) A finding that an agreement is a contract of adhesion is normally sufficient to establish procedural unconscionability. (See, e.g., Flores v. Transamerica Homefirst (2001) 93 Cal.App.4th 846, 854 [“A finding of a contract of adhesion is essentially a finding of procedural unconscionability. [Citation.]”].)

Notwithstanding, Plaintiff fails to make any showing that the Agreement is substantively unconscionable. The terms of the Arbitration Agreement appear on its face to be bilateral, reasonable, and not unfairly favorable to either party. As a result, the Court finds that the Arbitration Agreement lacks the “one-sidedness” necessary to be deemed substantively unconscionable. (See e.g., Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 825-826.) The Court does not find that the Agreement is so one-sided as to shock the conscience or that it “unfairly limits discovery”.

The motion to compel arbitration is GRANTED.

Accordingly, the Court will GRANT the Motion, and order arbitration of the dispute. The entire case will be STAYED until conclusion of arbitration. The Arbitrator will determine the arbitrability of Plaintiff’s claims.