TENTATIVE ORDER

Defendants Basel Jamra, Michael Hanasab, Grace Jamra, and Brigitte Malatjalian’s Motion to Compel Arbitration and to Stay Action [CCP § 1281.2] is GRANTED.

The proceedings are hereby STAYED pending the outcome of arbitration.

Defendants Basel Jamra, Michael Hanasab, Grace Jamra, and Brigitte Malatjalian to give notice.

REASONING

Defendants Basel Jamra, Michael Hanasab, Grace Jamra, and Brigitte Malatjalian (“Defendants”) move the Court for an order compelling Plaintiff Jason Morgan (“Plaintiff”) to submit his claims to arbitration and to stay the action until the conclusion of arbitration. Defendant Jamra Jamra & Hanasab LLP (“JJH”) has filed a notice of joinder to Defendants’ motion.

“[I]n considering a . . . petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” (M & M Foods, Inc. v. Pac. Am. Fish Co. (2011) 196 Cal.App.4th 554, 559; see also Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 (Giuliano) [“petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The burden then shifts to the opposing party to prove, by a preponderance of evidence, a defense to enforcement of the agreement. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Code of Civil Procedure section 1281 states, “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 of Civil Procedure section 1281.2 provides, in relevant part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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 the revocation of the agreement.

(c) A party to the arbitration is also a party to a pending court action or special proceeding with a third party . . . .

“The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.” (Eng’rs & Architects Ass’n v. Cmty. Dev. Dep’t (1994) 30 Cal.App.4th 644, 653.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate. (Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640-641 [“The existence of a valid agreement to arbitrate involves general contract principles”].)

On January 17, 2022, Plaintiff electronically signed a Retainer Agreement between him and JJH, stating as follows:

A. You agree that any dispute or controversy between you and JJH regarding the construction, application or performance of any services under this Agreement, and any claim arising out of or relating to this Agreement or its breach, shall be submitted to binding arbitration (and not by a lawsuit or resort to court process except as California law provides for judicial review and/or confirmation of arbitration proceedings) upon the written request of one party after the service of that request on the other party.

(Mot., Hanasab Decl. ¶ 11, Ex. 7.) The agreement then sets forth the terms of the arbitration at length. (Ibid.) The Court notes that the moving parties were not signatories to the agreement. “As a general rule, only a party to an arbitration agreement may enforce the agreement,” but “there are several exceptions that allow a nonsignatory to invoke an agreement to arbitrate,” including “[t]he doctrine of equitable estoppel.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 495.) Under the equitable estoppel theory, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations. By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271-272.) It is proper here to allow Defendants to invoke the arbitration agreement as the claims against them are intimately founded in and intertwined with the agreement to provide legal services, as Plaintiff’s claims arise out of that agreement, and Defendants performed under that agreement. Moreover, Plaintiff does not dispute that he signed this agreement, instead arguing that the agreement is unconscionable.

Plaintiff argues that the agreement is unenforceable because it is both procedurally and substantively unconscionable because it was a contract of adhesion, the sharing of fees and costs violates standing law, Defendant’s ability to collect fees violates law, the agreement has an unenforceable punitive damages waiver, the agreement includes unclear terms, and the agreement is voidable due to Defendant’s conduct. As to unconscionability, it is axiomatic that “a party opposing the petition [to compel arbitration] 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.” (Giuliano v. Inland Empire Personnel, Inc., supra, 149 Cal.App.4th at p. 1284.) “Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability.” (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 (McManus).) “The procedural element of unconscionability focuses on whether the contract is one of adhesion” and “whether there is oppression arising from an inequality of bargaining power or surprise arising from buried terms in a complex printed form.” (Ibid., quotation marks omitted.) “The substantive element addresses the existence of overly harsh or one-sided terms.” (Ibid.) “An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied.” (Ibid.)

“Procedural unconscionability pertains to the making of the agreement; it focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) An arbitration provision is substantively unconscionable where the provision “does not fall within the reasonable expectations of the weaker or ‘adhering’ party,” is “unduly oppressive,” or has “overly harsh or one-sided” terms. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-114 (Armendariz); McManus, supra, 109 Cal.App.4th at p. 87.)

Plaintiff first argues that the arbitration agreement was a contract of adhesion, as it was a standard legal services contract presented to Plaintiffs on a “take it or leave it” basis, such that Plaintiff had no meaningful opportunity to negotiate the terms, and time was of the essence for Defendants to represent Plaintiff. This argument is not well taken. Presentation of an arbitration agreement on a “take it or leave it” basis, even in an employment context or where time is of the essence to sign, does not automatically render the agreement procedurally unconscionable; Plaintiff must also show that there was no opportunity for meaningful negotiation or that he was subjected to oppressive tactics that forced him to sign the agreement. (See Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1127 [“a compulsory predispute arbitration agreement is not rendered unenforceable just because it is required as a condition of employment or offered on a ‘take it or leave it’ basis”].) Plaintiff makes no argument that he was not given the agreement to review and study before signing, and there is no evidence that anyone exerted pressure on Plaintiff. Further, the arbitration agreement is relatively short, in a normal sized typeface and bolded to draw attention, with a heading making clear that the agreement was one to arbitrate claims.

Plaintiff also argues that the sharing of fees and costs violates standing law, but Plaintiff fails to cite the provision of the arbitration agreement requiring the sharing of fees and costs. The agreement states that the parties “are agreeing to pay an equal portion of the arbitrator’s fees,” but such a provision is not generally improper in a non-employment case. Rather, Plaintiff must show that he is unable to pay such fees, and the resulting inability to pay fees and costs can render the agreement unconscionable by imposing forum fees that are prohibitively high. (Sanchez v. Superior Court (2025) 108 Cal.App.5th 615, 624.) “If a party is unable to pay the fees and costs, the other party can elect to either pay that party’s share of the arbitration cost and remain in arbitration or waive its right to arbitrate that party’s claim.” (Ibid., quotation marks and brackets omitted.) Nonetheless, Plaintiff provides only a conclusory statement that he is unable to pay arbitration fees. (Opp’n, Morgan Decl. ¶ 13.) Without specific evidence to support this statement, the Court cannot conclude that Plaintiff is unable to pay the required fees and costs. Plaintiff may renew any such argument with the arbitrator.

Plaintiff also takes issue with Defendants’ ability to collect attorney fees while representing themselves. While the agreement states that Defendants are entitled to recover attorney fees (Mot., Hanasab Decl. ¶ 11, Ex. 7, at ¶ 17), this is not improper if Defendants use outside counsel to represent them. The law regarding recovery of attorney fees by a self-represented party remains in effect (see Trope v. Katz (1995) 11 Cal.4th 274, 292 [“an attorney who chooses to litigate in propria persona and therefore does not pay or become liable to pay consideration in exchange for legal representation” cannot recover attorney fees]), and the Court will leave any applicability of that law to the arbitrator.

Plaintiff further contends that the agreement has an unenforceable punitive damages waiver. Defendants contend that punitive damages cannot be waived in an employment context, but this does not extend to other types of agreements. The Court is not so convinced, as other non-employment cases have stated that “an arbitration agreement may not limit statutorily imposed remedies such as punitive damages and attorney fees.” (Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 106, quotation marks omitted.) Nonetheless, severability of this provision is particularly appropriate here where this is the only noticeably objectionable term, and it is not clear at this juncture that Plaintiff is even entitled to punitive damages. (See Civ. Code, § 1670.5, subd. (a) [“If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made 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”].)

Plaintiff also argues that the agreement includes unclear payment terms, but this references the terms of the agreement to provide legal services, not the arbitration agreement itself. Thus, this argument has no bearing on whether arbitration is proper.

Plaintiff also argues that the agreement is voidable due to Defendants’ conduct, i.e., JJH violated Business and Professions Code section 6148, subdivision (b), by failing to provide timely invoices relating to the representation. This argument is irrelevant to the disposition of a motion to compel arbitration, and Plaintiff provides no legal authority to compel the conclusion that any failure to provide timely bills would render an arbitration provision unenforceable.

Finally, Plaintiff contends that Defendants have waived their right to compel arbitration by filing a motion to strike Plaintiff’s punitive damages claims. Code of Civil Procedure section 1281.2, subdivision (a), provides, that an otherwise arbitrable controversy may not be submitted to arbitration if the Court finds the right to compel arbitration has been waived by the moving party. “[W]hile there is no single test for establishing waiver, the relevant factors include whether the party seeking arbitration (1) has previously taken steps inconsistent with an intent to invoke arbitration, (2) has unreasonably delayed in seeking arbitration, (3) or has acted in bad faith or with [willful] misconduct.” (Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 782, quotation marks omitted.) “[T]he burden of proof” for one arguing waiver of the right to arbitration “is heavy and rests on the party seeking to establish waiver[,] which is not to be lightly inferred.” (Ibid., quotation marks omitted.) Notably, “[w]aiver does not occur by mere participation in litigation; there must be judicial litigation of the merits of arbitrable issues.” (Ibid., quotation marks and italics omitted.) The Court is not inclined to find waiver where Plaintiff is attempting to invoke a waiver argument against parties who did not move to strike any portion of the complaint, as the motion shows it was filed by JJH alone, and prejudice is not apparent given this case is less than one year old. (Christensen v. Dewor Developments, supra, 33 Cal.3d at p. 782 [“we stressed the significance of the presence or absence of prejudice”].)

For these reasons, Defendants Basel Jamra, Michael Hanasab, Grace Jamra, and Brigitte Malatjalian’s Motion to Compel Arbitration and to Stay Action [CCP § 1281.2] is GRANTED. The proceedings are hereby STAYED pending the outcome of arbitration.