Judge: Michael E. Whitaker, Case: 22SMCV02576, Date: 2024-01-05 Tentative Ruling

Case Number: 22SMCV02576    Hearing Date: January 5, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from a dispute over home renovation construction Plaintiff Lisa Samore (“Plaintiff”) hired Defendant Water Damage Rescue (“WDR”) to perform on Plaintiff’s condominium.  Plaintiff alleges WDR hired two separate subcontractors, Defendant Alireza Haghighat dba Anahita Construction (“Haghighat”) and Defendant Henry Rodrigo Sandoval Tejada dba All & One Construction (“Tejada”), who each did damage to Plaintiff’s condominium unit, before all three Defendants abandoned the construction.

WDR has filed cross-claims against the subcontractors for indemnity and contribution.

WDR now seeks an order referring Plaintiff’s complaint (but not WDR’s cross-complaint) for Judicial Reference, pursuant to a judicial reference clause in the agreement between Plaintiff and WDR.  Plaintiff opposes primarily on the basis that referring only Plaintiff’s claims against WDR will be duplicative and risk inconsistent rulings.  WDR has replied.

LEGAL STANDARD – JUDICIAL REFERENCE

A referee may be appointed upon the agreement of the parties filed with the clerk, or judge, or entered in the minutes, or upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties:

(a) To hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision.

(b) To ascertain a fact necessary to enable the court to determine an action or proceeding.    

(Code Civ. Proc., § 638, subds. (a)-(b).) 

In the case of a consensual general reference pursuant to Section 638, the decision of the referee or commissioner upon the whole issue must stand as the decision of the court, and upon filing of the statement of decision with the clerk of the court, judgment may be entered thereon in the same manner as if the action had been tried by the court.

(Code Civ. Proc., § 644, subd. (a).)

ANALYSIS

            WDR moves for an order referring the dispute between Plaintiff and WDR to general  judicial referee, based on the parties’ agreement, which provides as follows:

JUDICIAL REFERENCE: If either party to this Agreement commences a lawsuit for a dispute arising out of or related to this Agreement all of the issues in such action whether of fact or law shall be submitted to general judicial reference pursuant to California Code of Civil Procedure Sections 638 and 641, through 645.1, inclusive, or any successor statutes thereto. The parties to this Agreement shall cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding.  Contractor shall not be required to participate in the judicial reference proceeding unless it is satisfied that all necessary and appropriate parties will participate. The Parties shall share equally the fees and costs of the referee, unless the referee orders otherwise. The losing party shall bear the prevailing/winning party's attorney's fees. The general referee shall have the authority to try all issues, whether of fact or law, and to report a statement of decision to the court. The parties shall use the procedures adopted by the Judicial Arbitration and Mediation Services (JAMS ) for judicial reference (or any other entity offering judicial reference dispute resolution procedures as may be mutually acceptable to the parties). It is agreed that the following rules and procedures shall apply in all cases unless the parties agree otherwise and will control should there be any conflict with the rules of JAMS or any other entity offering judicial reference dispute resolution procedures:

(1)   The proceedings shall be heard in the County where the property is located;

(2)   The referee must be a neutral and impartial retired judge or a licensed attorney with substantial experience in the relevant areas of law;

(3)   Any dispute regarding the selection of the referee shall be resolved in accordance with provisions set forth in California Code of Civil Procedure, Section 640(b);

(4)   The referee may require one or more pre-hearing conferences;

(5)   The parties shall be entitled to discovery as provided by California law, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge;

(6)   A stenographic record of the trial shall be made, provided that the record shall remain confidential except as may be necessary for post-hearing motions or any appeal;

(7)   The referee's statement of decision shall contain findings of fact and conclusions of law to the extent applicable; and

(8)   The referee shall have the authority to rule on all post-hearing motions in the same manner as a trial judge. The statement of decision of the referee upon all of the issues considered by the referee is binding upon the parties, and upon filing of the statement of decision with the clerk of the court, or with the judge where there is no clerk, judgment may be entered thereon. The decision of the referee shall be appeal able as if rendered by the court.

(Lazarovits Decl. ¶ 3 and Ex. 1.) 

            Plaintiff opposes on the grounds that (1) WDR waived its right to judicial reference by delaying in asserting the judicial reference clause; and (2) referring only the dispute between Plaintiff and WDR, but not the other two subcontractors who allegedly damaged Plaintiff’s home and against whom WDR has sought indemnity and contribution, will create a possibility of conflicting rulings on common issues of law or fact.  In support of the second point, Plaintiff cites to Civil Procedure Code section 1281.2, subdivision (c), which provides:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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:

[…]

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

(Code Civ. Proc., § 1281.2, subd. (c).)

            WDR has replied, arguing (1) Plaintiff’s late-filed Opposition should be stricken; (2) section 1281.2 applies only to arbitration proceedings, not judicial references, and there is no analogous provision in the judicial reference code sections; (3) Plaintiff has made no evidentiary showing that Haghighat or Tejada are necessary or indispensable parties; and (4) WDR did not waive its right to judicial reference and there has been no prejudice to Plaintiff.

1.      Plaintiff’s Late-Filed Opposition

As a threshold matter, WDR requests that the Court strike and disregard Plaintiff’s late-filed opposition brief. 

Code of Civil Procedure section 1005, subdivision (b) provides, “All papers opposing a motion […] shall be filed with the court and a copy served on each party at least nine court days, and all reply papers at least five court days before the hearing.”  The court has discretion whether to consider late-filed papers.  (California Rules of Court, rule 3.1300(d).)  

Here, the noticed hearing date is January 5, 2024, making the opposition due by December 21, 2023.  According to WDR, Plaintiff did not serve the opposition brief until December 23.  The file stamp indicates the opposition brief was not filed with the Court until December 26.

Although Plaintiff’s opposition is untimely, the Court finds no prejudice here, as WDR was able to draft and timely file a Reply brief on December 28.  Therefore, the Court exercises its discretion and considers the late-filed opposition.

2.      Applicability of Section 1281.2

As a secondary threshold matter, WDR contends that the statute upon which Plaintiff relies for the proposition that a motion for judicial reference may properly be denied on the basis of a risk of inconsistent rulings on the same underlying facts applies only to arbitration proceedings, and not to judicial references.  WDR points out that, by its own language, Section 1281.2 applies only to arbitration proceedings, and that there is no corresponding provision in the statutory authority governing judicial references, Sections 638 through 645.2.

Although the Court agrees that the language of Section 1281.2, on its face, applies only to arbitration, the California Supreme Court has held that a trial court has discretion to deny a judicial reference motion pursuant to an otherwise valid pre-dispute reference agreement, based on concerns about judicial economy or the possibility of conflicting rulings on a common issue of law or fact.  (See Tarrant Bell Property, LLC v. Superior Court (2011) 51 Cal.4th 538.) 

Thus, concerns about judicial economy and/or the risk of inconsistent rulings are valid bases to deny a motion for judicial reference pursuant to an otherwise valid agreement.

3.      Judicial Economy/Risk of Inconsistent Rulings

Plaintiff chiefly argues that the Court should decline to order the dispute between Plaintiff and WDR only to judicial reference, while leaving the disputes among Plaintiff, Tejada, and Haghighat and among WDR, Tejada, and Haghighat pending will be inefficient and risk inconsistent rulings on the same underlying facts.  WDR counters that with respect to Tejada, default was entered in favor of Plaintiff on March 1, 2023 and in favor of WDR on September 5, 2023, and with respect to Haghighat, WDR has requested entry of default, and it is still pending, so there is no risk of inconsistent rulings.

The Court agrees with Plaintiff.  Although default was entered against Tejada in favor of Plaintiff on the complaint and WDR on the cross-complaint, Haghighat is still very much a part of the litigation, having filed an answer to Plaintiff’s complaint in pro per on February 10, 2023.  With respect to WDR’s request for entry of default against Haghighat with respect to the cross-complaint, the Clerk of the Court properly denied that request on September 25, 2023, on the basis that Haghighat’s consent to electronic service has not been filed with the Court.  (See September 25, 2023 Notice of Reject Default/Clerk’s Judgment.)[1]

Moreover, the plain language of the judicial reference clause in the agreement between Plaintiff and WDR highlights Plaintiff’s concern: “Contractor shall not be required to participate in the judicial reference proceeding unless it is satisfied that all necessary and appropriate parties will participate.”  There is no evidence suggesting that Tejada or Haghighat, who are not parties to the agreement containing the judicial reference clause, and are therefore not required to participate in the judicial reference proceeding, would at this juncture waive their right to a jury trial and voluntarily agree to litigate in the judicial reference proceeding.  Moreover, because Tejada has defaulted on both the complaint and the cross-complaint, it appears highly unlikely that Tejada would participate in any such judicial reference proceedings.

As a result, if the Court were to grant WDR’s request, Plaintiff’s claims against WDR would languish in limbo, on the basis that the parties cannot coax or compel Haghighat or Tejada to the judicial reference proceedings.  In the meantime, the claims against the other defendants would proceed, risking inconsistent litigations.  Alternatively, WDR has requested the Court “stay[] the balance of the above-referenced action until the judicial reference process is completed.”  (Notice at ¶ 3.)  It is unclear whether WDR requests that the court stay Plaintiff’s remaining claims against Haghighat or Tejada as to the complaint, or the balance of the entire action, including WDR’s cross-claims.  Either way, the Court sees no valid basis to effectively stay litigation as to non-parties to the judicial reference agreement indefinitely, unless and until those parties decide to voluntarily participate in the judicial reference proceedings.[2]

CONCLUSION

            Therefore, the Court denies without prejudice WDR’s Motion to refer Plaintiff’s claims against WDR to judicial reference and stay the balance of the case. 

            The Court further orders WDR to provide notice of the Court’s order and to provide a proof of service of the same.

DATED: January 5, 2024                                                       ___________________________

Michael E. Whitaker

                                                                                          Judge of the Superior Court