Judge: Margaret L. Oldendorf, Case: 22BBCV00520, Date: 2023-10-16 Tentative Ruling

Case Number: 22BBCV00520    Hearing Date: October 16, 2023    Dept: P

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

I.        INTRODUCTION

          In this lemon law case, Plaintiff Panos Simonian (Simonian) alleges claims against Defendants BMW of North America, LLC (BMW) and Century West BMW, LLC (Dealer) concerning his leased vehicle. Simonian seeks an order vacating the Court’s February 15, 2023 order compelling Simonian to arbitrate his disputes pursuant to an arbitration provision in the lease agreement. For the reasons that follow, the motion is granted.  Mandatory monetary sanctions are also awarded.

          II. REQUEST FOR JUDICIAL NOTICE

Plaintiff Simonian requests the court take judicial notice of the Laffey matrix pursuant to Evid. Code section 452(h). The Laffey matrix is a table used to calculate attorney’s fees pursuant to years of experience, available on a public website. The Court  declines to take judicial notice of the Laffey matrix.   

          Accordingly, the request for judicial notice is DENIED.

III.     LEGAL STANDARD

Code Civ. Proc. §1281.2 provides that upon petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate and a party’s refusal to submit to arbitration, the court shall order the parties to arbitrate the controversy if it determines that an agreement exists, unless it determines that the right to arbitrate has been waived, that grounds exist for revocation, or that a party to the agreement is also party to a pending litigation arising out of the same facts and there exists a possibility of conflicting rulings on a common issue of fact or law.  In such a situation, the court may (1) refuse to enforce the arbitration agreement and order intervention or joinder of all parties in a single action, (2) order intervention or joinder as to all or only certain issues, (3) order arbitration among the parties who have agreed to arbitration and stay the action pending outcome of arbitration, or (4) stay arbitration pending outcome of the litigation.

“[I]n an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, 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...” (CCP § 1281.97(a).)

Code of Civil Procedure section 1281.98 states that “if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach.” (CCP § 1281.98(a).)

III.     ANALYSIS

          A. Defendants Materially Breached the Arbitration Agreement

Simonian urges that section 1281.97 is met, as is section 1281.98. The arbitration between the parties is a consumer arbitration. (Motion, p.5:10-12, referencing Kiridjian Decl., Ex. A.) The claims brought by Simonian are consumer related. (Motion p. 5:12, referencing Kiridjian Decl., Exh. B.) Third, defendant is the drafting party of the arbitration agreement. (Motion, p.5: 14-25.) Lastly, the arbitration agreement required BMW, as the drafting party, to pay arbitration fees of $250. (Motion, p.6: 10-14, referencing Kiridjian Decl., Exh. F.)

          On opposition, BMW avers that the invoice was approved but not sent out for payment. (Opposition p.2:7-9.) BMW urges that the payment was not sent due to a clerical error. However, in a similar case involving “clerical error” in failing to pay, the Court concluded that Section 1281.97 required strict enforcement. (Espinoza v. Sup. Ct. (2022) 83 Cal.App.5th 761, 775.) In Espinoza, the appellate court issued a preemptory writ of mandate directing the trial court to vacate the motion to compel arbitration. (Id. at 788.)

Additionally, a relevant recent case was decided by the First District Court of Appeal. In Doe v. Sup. Ct. of City and County of San Francisco, Jane Doe sued her former employer on claims of sexual harassment. The employer successfully compelled the case to arbitration. The employer missed the due date to pay the arbitrator by two days as they opted to send a physical check in the mail rather than using an e-check, wire transfer or a credit card. Doe moved to vacate the order to compel arbitration, which the Court granted, ruling that “the proverbial check in the mail [does not] constitute payment.” (Doe v. Superior Court of City and County of San Francisco (2023) 95 Cal.App.5th 346.)

Here, Defendant BMW alleges it did not pay the arbitration fees due to a clerical error, as the accounting department approved the invoice but failed to send it out for payment. (Opposition, p. 2: 6-9.) Payment was due August 20, 2023. Simonian declares that payment has not been made as of the filing of the motion, September 18, 2023. (Motion, p. 6:21-23.)

As such, the Court GRANTS the motion to vacate the order compelling arbitration.

          B. The Stay is Lifted

          Because the Court is hereby granting the motion to vacate the order to compel arbitration, the Court must also lift the stay in this action, as there is no longer an arbitration occurring necessitating the stay pending results of the arbitration.

C. Sanctions

          “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.” (CCP § 1281.97(d).)

 “The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.” (CCP § 1281.99(a).)

Plaintiff’s attorney Mari Kiridjian attested to performing 28.3 hours preparing for and performing work related to the arbitration that did not occur. (Kiridjian Decl. ¶ 20.) Counsel anticipates an additional 1 hour for review of opposition to the motion, 2 hours to draft a Reply and 2 hours to prepare for the hearing, for a sum total of 33.3 hours. Ms. Kiridjian’s hourly rate is 500.

          On opposition, Defendants argue that the imposition of sanctions would be unwarranted and unjust. (Opposition p. 2:26-28.) Defendant BMW argues to the extent it breached the arbitration agreement, it did so when it failed to remit payment. As such, it should only be held liable for costs after the breach. This argument is not well-taken. CCP 1281.99(a) requires the imposition of monetary sanctions of reasonable expenses incurred as a result of the material breach. Here, Plaintiff’s counsel has adequately established, through her Declaration, the number of hours expended in connection with BMW’s efforts to compel arbitration in this case, as well as the time spent seeking enforcement of CCP Section 1281.97 et seq.  The Court finds that Plaintiff’s counsel’s hourly rate of $500 an hour is reasonable; and that the lodestar of 33.3 hours, while somewhat heavy, is within the reasonable range.  Accordingly, the Court grants Plaintiff’s request for monetary sanctions in the sum of $16,991.45.

          The Court declines to impose any other form of sanction.

IV.     CONCLUSION AND ORDER

          Plaintiff Simonian’s motion to vacate the order compelling arbitration is granted. The stay in the case is hereby lifted.  BMW is ordered to pay the monetary sanctions within 30 days of today’s date. 

          Plaintiff is ordered to give notice of this ruling.

Dated: ____________                            ___________________________________

                                                                        MARGARET L. OLDENDORF