Judge: Michael Small, Case: 23STCV30778, Date: 2024-08-21 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Case Number: 23STCV30778    Hearing Date: August 21, 2024    Dept: 57

The Court is granting the motion of Defendant HPT IGH-2 Properties Trust ("HPT")  to compel arbitration of the claims in Plaintiff 5959, LLC's ("5959") First Amended Complaint for declaratory relief against HPT.  

In the Court's view, 5959's claims in the FAC fall within the ambit of the arbitration provision in the parties' License Agreement that was the product of a mediated settlement of a prior dispute between the parties.   In the License Agreement, the parties agreed to have an arbitrator determine whether, as HPT contends, 5959 is violating the License Agreement.  The License Agreement contains a clause that sets forth the penalties for such violations, which the parties acknowledge is a liquidated damage provision.  It also contains a separate clause that requires 5959 to take certain "diversionary tactics" to avoid violating the License Agreement. In the FAC, 5959 seeks orders declaring that the penalty clause is void and unenforceable and that 5959 has complied with the diversionary tactics clause.  Both of those requests for relief are bound up with HPT's contention that 5959 is violating the License Agreement --  a contention that is plainly for the arbitrator to resolve.  Accordingly, it is also for the arbitrator to determine the enforceability of the penalty clause and whether 5959 has complied with the diversionary tactics clause. 

5959's argument that the arbitration provision in the License Agreement is both procedurally and substantively unconscionable and therefore unenforceable is unavailing.  As the party claiming the arbitration provision is unconscionable, 5959 has the burden of showing that it is.  5959 has fallen far short of carrying that burden.

Because the Court has determined that 5959's claims in the FAC must be arbitrated pursuant to the arbitration provision in the License Agreement, proceedings in this Court as to those claims  are stayed pending the outcome of the arbitration.   The Court is setting a hearing on the status of the arbitration for April 25, 2025 at 8:30 a.m.  

HPT's separate petition to compel arbitration, which it filed in action that it initiated against 5959 in this Court, is denied as moot in light  of the Court's decision to grant HPT's motion to compel arbitration of 5959's claims in the FAC.