Judge: Mark A. Young, Case: 23SMCV04836, Date: 2024-03-21 Tentative Ruling
Case Number: 23SMCV04836 Hearing Date: March 27, 2024 Dept: M
CASE NAME: Local
Development LLC, v. 308 N. Oxford LLC, et al.
CASE NO.: 23SMCV04836
MOTION: Petitions/Motions
to Compel Arbitration
HEARING DATE: 3/27/2024
Legal
Standard
Under California and federal law,
public policy favors arbitration as an efficient and less expensive means of
resolving private disputes. (Moncharsh
v. Heily & Blase (1992)
3 Cal.4th 1, 8-9; AT&T Mobility
LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an
agreement is governed by the California Arbitration Act (“CAA”) or the Federal
Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s
scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at 9;
Comedy Club, Inc. v. Improv West
Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc.
(1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability [citation] and a requirement that an
arbitration agreement must be enforced on the basis of state law standards that
apply to contracts in general”].) “[U]nder both the FAA and California law,
‘arbitration agreements are valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.)
“Code of
Civil Procedure section 1281.2 requires a trial court to grant a petition to
compel arbitration if the court determines that an agreement to arbitrate the
controversy exists.” (Avery v.
Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59,
quotations omitted.) Accordingly, “when presented with a petition to compel
arbitration, the court’s first task is to determine whether the parties have in
fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity
to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a
party seeking to enforce an arbitration agreement must show the agreement’s
terms are sufficiently definite to enable the court to know what it is to
enforce.” (Ibid. [internal citations omitted].) “Only
the valid and binding agreement of the parties, including all material terms
well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give
effect to the mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful.” (Civ. Code, §
1636.) The language of the contract governs its interpretation if it is clear
and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a
contract should be interpreted most strongly against the party who caused the
uncertainty to exist.” (Civ. Code, § 1654.)
The party
seeking to compel arbitration bears the burden of proving the existence of a
valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing
the motion, to prove by a preponderance of the evidence any fact necessary to her
opposition. (See Ibid.) “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.” (Ibid.)
Analysis
Defendants 308 N. Oxford LLC, 801 Alvarado
LLC, 900 Alvarado LLC, Manhattan West Real Estate LLC, and Lorenzo Esparza (collectively,
“Defendants”) each move to compel Plaintiff Local Development LLC’s claims to
arbitration.
There is no dispute that there are
valid, separate arbitration agreements between Plaintiff and each Defendant
encompassing Plaintiff’s claims. Plaintiff only opposes the motion to the
extent that Defendants demand that the three contracts be arbitrated in three
separate proceedings. Plaintiff requests
that the Court order that all three contracts are to be arbitrated in a single
consolidated proceeding pursuant to Code of Civil Procedure section 1281.3. This
section provides:
“A party
to an arbitration agreement may petition the court to consolidate separate
arbitration proceedings, and the court may order consolidation of separate
arbitration proceedings when:
(1)
Separate arbitration agreements or proceedings exist between the same parties;
or one party is a party to a separate arbitration agreement or proceeding with
a third party; and
(2) The
disputes arise from the same transactions or series of related transactions;
and
(3) There
is common issue or issues of law or fact creating the possibility of
conflicting rulings by more than one arbitrator or panel of arbitrators.”
This case meets the criteria set by CCP
section 1281.3. Examining the contracts at issue, they are substantially
identical and involve factually identical breaches. Each contract pertains to
the respective development project by the contracting LLC, but otherwise sets out
the same relevant terms regarding the projects. All three of the contracting
LLC’s are owned and managed by MWRE and Esparza. (Shem-Tov Decl., ¶¶ 3-5)
MWRE and Esparza allegedly
breached each contract by terminating all the contracts at once and refusing to
pay Plaintiff pursuant to the termination provisions found in paragraph 10 of
each contract. Therefore, there are interrelated issues of law and fact which
risk inconsistent rulings if tried separately.
Defendants argue that the Court cannot
order the cases consolidated because the contracts vest authority to decide
“any dispute” between the parties with an arbitrator, and not the Court. “[T]he
court decides whether the matter should be referred to arbitration, but ‘once a
matter has been referred to arbitration, the court's involvement is strictly
limited until the arbitration is completed.’ (Yuen v. Superior Ct., (2004)
121 Cal. App. 4th 1133, 1138.) Where a broad arbitration clause states that
“all disputes” relating to the contract would be submitted to arbitration, the
issue of consolidation of arbitration proceedings is properly brought before
the arbitrator. (Id. [vacating order under CCP § 1281.3 consolidating
separate arbitration proceedings; Second District instead mandated that the issue
was to be submitted to the arbitrator].)
The contracts at issue provide that
“[a]ny dispute, controversy, or claim arising out of or related to this
Agreement… shall be submitted to and decided by binding arbitration.” (Exs. A,
B, C at ¶ 15.1.) Further, “[t]he arbitrator, not any court, shall have
exclusive authority to resolve any dispute relating to the enforceability or
formation of this Agreement and the arbitrability of any dispute between the
Parties…” (Id., at ¶ 15.2.) In light of the broad arbitration and arbitrability clauses, the Arbitrator
has exclusive authority to decide any dispute regarding the joinder of parties
or consolidation of arbitration proceedings. Thus, the Court cannot make any
order on this issue one way or the other.
Accordingly, Defendants’ motions are
GRANTED. Plaintiff’s claims are ordered to arbitration pursuant to the terms of
the arbitration agreements. The entire action is STAYED pending the completion
of the arbitration. (CCP § 1281.4.) The Court
sets a Status Conference re Arbitration for March 13, 2025, at 8:30 a.m.