Judge: Mark H. Epstein, Case: 22SMCV01497, Date: 2023-11-07 Tentative Ruling

Case Number: 22SMCV01497    Hearing Date: November 21, 2023    Dept: I

This is a motion for sanctions.  The court had earlier granted defendant’s motion to compel arbitration.  Under the applicable contract, the arbitration was to be done by JAMS.  Consistent with the court’s order, plaintiff initiated arbitration with JAMS.  JAMS sent an invoice to the defendant.  However, defendant failed to pay the invoice.  After the time to pay had expired, JAMS wrote to defendant and stated that the matter would be closed if no payment was made soon thereafter.  Plaintiff, however, sent JAMS a letter stating that it was withdrawing from the arbitration.  Defendant did attempt to pay the fee, albeit belatedly.  JAMS closed the file.

Plaintiff seeks sanctions for defendant’s failure to go forward with the arbitration properly.  Specifically, he seeks the fees had paid JAMS but that were not refunded as well as his attorneys’ fees to return to court.  In response, defendant makes the confusing argument that the statute, which states that the court “shall” impose sanctions, is permissive not mandatory.  Defendant is just wrong as to the established meaning of “shall.”

Turning to the merits, it is plain that defendant accidentally did not pay the fee but did want to go forward with the arbitration.  However, the law is also clear that defendant, to secure the right, had to make that payment in a timely way—that is, within the 30 days allowed by the original JAMS invoice—or the right to arbitrate was lost.  One might agree or disagree with that rule, but the rule is clear.  Defendant had the right to arbitrate, but it had to pay the fee within the initial time provided.  When defendant failed to do so, plaintiff had the right to withdraw from the arbitration. 

Given that, the only question is the amount of the sanction.  Defendant does not really contest the JAMS filing fee.  Defendant does contest the legal fees, though.  The court must side with plaintiff, at least in large part.  The fees necessary to initiate the JAMS proceeding are recoverable, and even the defense does not really contest that.  But the court also believes that fees associated with plaintiff’s research as to whether it had the right to withdraw from the arbitration are recoverable as well and plaintiff is entitled to fees for the instant motion.  The court will not, however, award fees incurred by plaintiff in opposing the motion to compel arbitration.  That motion was granted.  While it is true that we are in a position where the arbitration did not go forward, the court does not believe that sanctions are appropriate for that even so.  The statute permits an award of fees and costs “incurred by the employee or consumer as a result of the material breach” of the arbitration agreement.  (Code Civ. Proc. § 1281.99.)  The breach was not bringing the motion to compel; the breach was not timely paying the fee.  Plaintiff’s counsel did not incur the fees opposing the motion to compel as a result of the later breach.

Other than the fees not permitted above, the court will GRANT the motion for sanctions.  The hourly rate is reasonable.  And the court will take counsel’s representations as to the amount of time worked on its face in the absence of contrary evidence.  Plaintiff will submit a proposed order reducing the amount of fees as set forth in this order and ordering that the remainder be paid within 30 days of notice of entry of the order.  Plaintiff will seek defendant’s approval as to form only.  Plaintiff will submit its draft order to the defense within 10 court days and to the court within 20 court days.