Judge: Michael E. Whitaker, Case: 24SMCV02176, Date: 2024-09-12 Tentative Ruling
Case Number: 24SMCV02176 Hearing Date: September 12, 2024 Dept: 207
TENTATIVE
RULING
|
DEPARTMENT |
207 |
|
HEARING DATE |
September
12, 2024 |
|
CASE NUMBER |
24SMCV02176 |
|
MOTION |
Motion
to Compel Arbitration |
|
MOVING PARTY |
Plaintiff
Steven Berglas |
|
OPPOSING PARTY |
Defendants
David Voss; Rachel Silverman; and Voss, Silverman & Braybrooke LLP |
MOTION
Plaintiff Steven Berglas (“Plaintiff”) moves to compel Defendants
David Voss; Rachel Silverman; and Voss, Silverman & Braybrooke LLP
(“Defendants”) to arbitrate Plaintiff’s claims for (1) professional negligence;
(2) breach of fiduciary duty; and (3) breach of contract.
Defendants oppose the motion and Plaintiff replies.
EVIDENTIARY
OBJECTIONS
The Court rules as follows with
respect to Defendants’ Evidentiary Objections:
The Court rules as follows with respect to
Plaintiff’s Evidentiary Objections:
ANALYSIS
1.
MOTION TO COMPEL ARBITRATION – LEGAL STANDARDS
“[T]he advantages of arbitration
include a presumptively less costly, more expeditious manner of resolving
disputes. It follows a party to a valid
arbitration agreement has a contractual right to have its dispute with another
party to the contract resolved quickly and inexpensively.” (Henry v. Alcove Investment, Inc.
(1991) 233 Cal.App.3d 94, 99–100 [cleaned up].)
Thus, “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.” (Code Civ. Proc., § 1281.2; see also
EFund
Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 [the language
in section 1281.2 compelling arbitration is mandatory].) The right to compel
arbitration exists unless the court finds that the right has been waived by a
party’s conduct, other grounds exist for revocation of the agreement, or where
a pending court action arising out of the same transaction creates the possibility
of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2, subds.
(a)-(c).)
“On a petition to compel
arbitration, the trial court must first determine whether an agreement to
arbitrate the controversy exists.
Because the existence of the agreement is a statutory prerequisite to
granting the petition, the petitioner bears the burden of proving its existence
by a preponderance of the evidence. The
party seeking arbitration can meet its initial burden by attaching to the
petition a copy of the arbitration agreement purporting to bear the
respondent's signature.” (Bannister
v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 [cleaned
up].) The party seeking to compel arbitration must also “plead and prove a
prior demand for arbitration and a refusal to arbitrate under the
agreement.” (Mansouri v. Superior
Court (2010) 181 Cal.App.4th 633, 640-641.)
And while the moving party on a
motion to compel arbitration “bears the burden of proving the existence of a
valid arbitration agreement by a preponderance of the evidence, [a] party
opposing the petition bears the burden of proving by a preponderance of the
evidence any fact necessary to its defense. The trial court sits as the
trier of fact, weighing all the affidavits, declarations, and other documentary
evidence, and any oral testimony the court may receive at its discretion, to
reach a final determination.” (Ruiz
v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [cleaned
up]; see also Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“The party
seeking arbitration bears the burden of proving the existence of an arbitration
agreement, and the party opposing arbitration bears the burden of proving any
defense, such as unconscionability”].)
2.
ENFORCEABLE ARBITRATION AGREEMENTS
The Legal Services Agreement between Plaintiff and Defendant Voss,
Silverman & Braybrooke LLP (“VS&B”) provides:
Any controversy and/or dispute between the
parties regarding the construction and/or application of any portion of this
agreement, and all claims for damages or other relief upon or pertaining to
this agreement or its breach, including, without limitation, disputes
concerning fees, costs, malpractice, and/ or professional misconduct, or any
combination thereof, shall be submitted to binding arbitration without right of
appeal (except as specifically provided by law) upon written request of either
party, with all proceedings conducted pursuant to the California Arbitration
Act, California Code of Civil Procedure Section 1280, et seq., before a single
neutral arbitrator. The arbitrator shall be either an attorney with at least
fifteen years of litigation experience in the state of California or a retired
judge, and shall be affiliated with either Judicate West or Alternative Dispute
Resolution Services unless the parties agree in writing to use another
arbitrator.
In the event that the parties for whatever reason
fail to reach an agreement on a designated arbitrator within twenty days
following either party's written request for arbitration, the parties agree
that the selection of arbitrator may be made unilaterally by the administration
office of Judicate West.
Discovery under the arbitrator's own rules shall
not apply unless all parties so agree in writing. In any such arbitration, the
arbitrator must award the prevailing party his/her arbitration fees. The
arbitrator is without discretion, and must award these fees. Should the
arbitrator fail to do so, the Los Angeles Superior Court is empowered to review
both the facts and the law as to the arbitrator's denial of arbitration fees to
the prevailing party. For the purposes of this section, the prevailing party is
the party which makes a positive net recovery in any amount.
(Ex.
A to Paluch Decl.)
Defendants argue that Plaintiff knowingly waived the right to
arbitration.
a.
WAIVER
“Waiver of the right to arbitrate
does not require a voluntary relinquishment of a known right. For example, a party may waive the right by
an untimely demand even without any intent to forgo the procedure. In this circumstance, waiver is similar to a
forfeiture arising from the nonperformance of a required act.” (Hoover v. American Income Life Ins. Co.
(2012) 206 Cal.App.4th 1193, 1203 (hereafter Hoover) [cleaned up].) “Although participation in litigation of an
arbitrable claim does not itself waive a party's right later to seek
arbitration, at some point, litigation of the issues in dispute justifies a
finding of waiver.” (Id. at p.
1204.) On the issue of what constitutes
a “reasonable time” to demand arbitration, the Hoover court noted:
There is no fixed stage in a lawsuit beyond which
further litigation waives the right to arbitrate. Rather, the court views the
litigation as a whole in determining whether the parties' conduct is
inconsistent with a desire to arbitrate.
A defendant's removal of a case filed in state court to federal court
does not by itself constitute an implicit waiver of the right to compel
arbitration. But, a
defendant's removal of a case to federal court, coupled with participation in
several months of litigation, waives the right to arbitrate because electing to
proceed in federal court on an arbitrable dispute is presumptive waiver of the
right to arbitrate.
(Ibid.
[cleaned up].) On the issue of
prejudice, the Hoover court stated:
The presence or absence of prejudice from the
litigation is a determinative issue. Because
of the strong policy favoring arbitration, prejudice typically is found only
where the petitioning party has unreasonably delayed seeking arbitration or
substantially impaired an opponent's ability to use the benefits and
efficiencies of arbitration. Prejudice
sufficient for waiver will be found where instead of seeking to compel
arbitration, a party proceeds with extensive discovery that is unavailable in
arbitration proceedings.
(Id.
at p. 1205 [cleaned up].) Similarly, in
finding there was no waiver to arbitrate, the California Supreme Court noted,
in part:
Although we have found no California or United
States Supreme Court decisions on point, other courts that have addressed this
issue hold that a petitioning party does not waive its arbitration rights
merely by seeking to change judicial venue of an action prior to requesting
arbitration. In so holding, those courts reason that a party is not required to
litigate the issue of arbitration in an improper or inconvenient venue, and
that a party's position on venue does not necessarily reflect a position on arbitrability.
We agree with that reasoning, and find it consistent with California and
federal case law holding that a waiver determination requires the consideration
of all circumstances, including the absence or presence of prejudice.
(St.
Agnes Medical Center v. PacifiCare of Cal. (2003) 31 Cal.4th 1187, 1205
(hereafter St. Agnes) [cleaned up].)
In Hoover, the appellate
court held that the defendant waived its right to arbitration by “actively
litigating this action for more than a year and causing prejudice to
Hoover.” (Hoover, supra, 206
Cal.App.4th at p. 1203.) In particular,
the Hoover court determined that the defendant waived its right because
it “[d]id not introduce the question of arbitration for almost a full year and
[the defendant] conducted litigation in a style inconsistent with the right to
arbitrate. The two failed efforts to
remove the case to federal court and [the defendant’s] recalcitrant responses
to discovery suggest its policy has been one of delay rather than seeking a
more prompt and expeditious resolution through arbitration. During that time, [the defendant] availed itself
of discovery mechanisms like depositions not available in arbitration. [The defendant] also solicited putative class
members, in an effort to reduce the size of the class. Hoover was certainly
strongly affected and prejudiced by [the defendant’s] delay, causing
significant legal expenses.”
(Id.
at p. 1205 [cleaned up]; but see St. Agnes, supra, 31 Cal.4th at p. 1201
[“a waiver generally does not occur where the arbitrable issues have not been
litigated to judgment].)
Defendants argue Plaintiff knowingly waived the right to arbitration
because Plaintiff commenced a total of three proceedings around the same time all
based on the same allegations: (1) an arbitration proceeding filed on May 7
with ADR Services; (2) this action, filed May 8; and (3) a fee dispute arbitration
through the Los Angeles County Bar Association filed around the same time, yet Plaintiff
failed to serve the May 7 arbitration demand.
(Saunders Decl. ¶¶ 3-5.)
Defendants further contend Plaintiff failed to serve the May 7
arbitration demand and only sent the summons and complaint for this action with
a notice of acknowledgment and receipt (Saunders Decl. ¶¶ 6-7), although
Defendants concede that on May 8 they received service of the arbitration
demand (Saunders Decl. ¶ 4 and Ex. A).
Plaintiff clarifies on reply that (1) Plaintiff’s counsel served the
May 7 demand for arbitration via email on May 7 and via personal service on May
8 (Paluch Reply Decl. ¶¶ 3, 5 and Exs. B & E); (2) Plaintiff’s counsel
served Defendants an updated copy of the arbitration demand via email on May 8
and via personal service on May 9 (Paluch Reply Decl. ¶¶ 4-5 and Exs. C &
F); and (3) the parties telephonically discussed arbitration on or about May
28, 2024, at which point Defendants took the position that the demand for
arbitration was invalid because Plaintiff did not personally sign it (Paluch
Reply Decl. ¶¶ 6-7 and Ex. D.)
The LA County Bar Association fee arbitration dispute was dismissed on
or about June 18 on the grounds that “any right to proceed to a fee arbitration
under the Mandatory Fee Arbitration Act was waived by the filing of the
Complaint and the filing of the Demand with ADR Services.” (Saunders Decl. ¶ 5 and Ex. B.) On July 9, 2024, Defendants’ counsel sent a
letter to ADR Services, objecting to the arbitration proceedings in light of
the action filed in Los Angeles Superior Court, to which Plaintiff’s counsel
did not respond or object, and on July 10, ADR Services confirmed “they would
not be proceeding further.” (Saunders
Decl. ¶¶ 13-14 and Ex. G.)
Plaintiff’s counsel also met and conferred regarding Defendants’
demurrer and indicated an intent to file an amended complaint, but did not
discuss contemplating moving to compel arbitration before filing the instant
motion. (Saunders Decl. ¶¶ 12, 16 and
Ex. F.) On reply, Plaintiff’s counsel
indicates that on August 26, 2024, Plaintiff filed a case management conference
statement indicating the case is subject to binding arbitration. (Paluch Reply Decl. ¶ 2 and Ex. A.) The Court notes that statement was filed
nearly two weeks after the Motion to Compel Arbitration was filed on August 13.
Ultimately, the Court does not find
on these facts that Plaintiff waived the right to arbitrate. This case was only pending for about three
months before Plaintiff moved to arbitrate. Plaintiff simultaneously filed
arbitration proceedings with this lawsuit, and refused to dismiss the civil
action because Defendants’ counsel refused to agree to a tolling
agreement. (Saunders Decl. ¶ 11.) Plaintiff served the arbitration demand multiple
times between May 7-9, and only sent a notice of acknowledgment and receipt to
Defendants’ counsel on July 9, at counsel’s request. (Saunders Decl. ¶ 11.) It was Defendants’ counsel who contacted ADR
Services that same day, requesting that the arbitration be dismissed, which it
was the following day. (Saunders Decl.
¶¶ 13-14 and Ex. G.) And although
initial sets of form interrogatories and requests for production have been
served, it was Defendants who served the discovery, not Plaintiff. (Saunders Decl. ¶ 15.) Said discovery was served the same day this
motion was filed and served. (See id.)
CONLUSION
In conclusion, Plaintiff has met his
burden to compel arbitration, and the Court specifically finds that the Arbitration
Agreement between Plaintiff and VS&B is valid and enforceable, and
Plaintiff has not waived the right to arbitrate. Therefore, the Court grants Plaintiff’s
motion to compel arbitration.
Further, the Court stays this case,
pending the resolution of arbitration proceedings, and vacates the Case
Management Conference.
Further, the Court sets a Status
Conference regarding the Arbitration on April 23, 2025 at 8:30 A.M. in
Department 207. The parties shall meet
and confer in advance of the Status Conference, and file a Joint Report
regarding the status of the Arbitration no later than 5 court days before the Status
Conference.
Plaintiff
shall provide notice of the Court’s ruling and file the notice with a proof of
service forthwith.
DATED: September 12, 2024 ___________________________
Michael
E. Whitaker
Judge
of the Superior Court