Judge: Nathan Vu, Case: 30-2021-01238144, Date: 2022-10-31 Tentative Ruling

Please Note: The hearing on this matter has been changed to 8:30 A.M.

Motion for Judicial Reference

The motion of judicial reference of Plaintiff Woodbury Town Center, LLC is GRANTED.

The Court ORDERS that the parties shall meet and confer no later than 10 days after service of the notice of ruling to discuss the appointment of a referee or referees.

The Court ORDERS that no later than 21 court days after service of the notice of ruling, the parties shall file and serve a stipulation and order that appoints their agreed upon referee(s).

If the parties are unable to agree on the referee(s) by that time, the parties shall instead file a joint statement identifying no more than three nominated referees per party and a [proposed] order by which the court will appoint one or more referee(s).

If a party fails to take part in this process, the other party may file a separate statement and [proposed] order.

Plaintiff Woodbury Town Center, LLC seeks to have this case referred to a referee pursuant to Civil Procedure Code section 638.

On 09/12/2022, the court heard argument on this matter and continued the hearing to allow Plaintiff to file and serve a supplemental brief on issues regarding the jury waiver provision.

The court’s order provided Defendants Yue Da, Inc., dba Yang’s Braised Chicken Rice, Christina Aisingioro, and Xu Guo, the opportunity to file a response or opposition. However, Defendants have not filed an opposition to the original motion nor to the supplemental brief, or made any objections to the declaration in support of the motion.

Standard for Judicial Reference

Civil Procedure Code section 638 authorizes the court to appoint a referee “[t]o 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.” (Civil Proc. Code, § 638, subd. (a); Grafton Partners L.P. v. Superior Court (2005) 36 Cal.4th 944, 960-961.)

The appointment may be made “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.” (Civil Proc. Code, § 638.)

The motion for the appointment of referee is handled much the same way as a motion to compel contractual arbitration, with the Court deciding the threshold issues of enforceability of the agreement and the scope of issues to be resolved by the reference. (O’Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 256-257.)

In this case, Plaintiff asserts that Section 21.12(b) of the Retail Lease dated 11/14/2019 (Lease) and Section N(b) of the Guarantee of Lease dated 11/14/2019 (Guarantee) authorizes a judicial reference in this case. Both provisions mandate that all disputes arising in connection with the Lease or Guarantee are to be resolved by way of a general reference pursuant to Civil Procedure Code section 638. (See Compl., Exh. 1.)

At the same time, both provisions are only effective under a specific condition. Section 21.12(b) of the Lease states, ““In the event that the jury waiver provisions of Section 21.12(a) are not enforceable under California Law, then the provisions of this Section 21.12(b) shall apply.” (Compl., Exh. 1.) Section N(b) of the Guarantee similarly provides that “In the event that the jury waiver provisions of Section III. N.(a) are not enforceable under California Law, then the provisions of this Section III. N. (b) shall apply.” (Ibid.)

Because neither party had made a showing or argument regarding the enforceability of the jury waiver Sections 21.12(a) of the Lease and Section N(a) of the Guarantee, the court continued the hearing and allowed the parties to file briefs addressing the issue.

Jury Waiver

Civil Procedure Code section 631(f) provides the six ways by which a party may waive trial by jury. The Supreme Court has held that a party may only waive its right to a jury trial through one of the six enumerated options. (Grafton Partners v. Superior Ct. (2005) 36 Cal.4th 944, 956.)

All six of the bases for waiver of a jury trial can occur only once a lawsuit has been filed. Therefore, predispute jury trial waivers are unenforceable, as a waiver may only occur once an action is pending. (Grafton Partners v. Superior Ct., supra, 36 Cal.4th at pp. 957-959.) Predispute waivers providing for mandatory arbitration or judicial reference, on the other hand, are enforceable because those provisions are specifically authorized by statute. (Id. at pp. 955 & 960-961; see also Woodside Homes of Cal., Inc. v. Superior Ct. (2006) 142 Cal.App.4th 99, 103-104.)

Thus, the jury waiver provisions in Section 21.12(a) of the Lease and Section III.N(a) of the Guarantee are not enforceable, and Section 21.12(b) of the Lease and Section III. N.(b) of the Guarantee apply. Those provisions require that “any disputes arising in connection with this Lease [or Guarantee]” must be decided by judicial reference.

Plaintiff’s claims in this case are based on allegations that Defendant Da beached the Lease by failing to provide preliminary drawings, to complete the tenant’s work, and to make rental payments, (Compl. ¶¶ 15-16), and that Defendant Guarantors breached the Guarantee by failing to pay the money due and owing under the Lease, (Compl. ¶ 26).

Procedure for Judicial Reference

Code of Civil Procedure Section 640 governs the process by which the referee(s) is appointed: “[t]he court shall appoint as referee or referees the person or persons, not exceeding three, agreed upon by the parties.” If the parties do not agree on the referee or referees, the parties must nominate up to three referees each and the court shall appoint the referee(s) from among those nominees. (Civil Proc. Cde, § 640, subd. (b).)

If no nominations are received, the court must appoint one or more referees, not exceeding three, against whom there is no legal objection, or the court may appoint a court commissioner of the county where the cause is pending as a referee. (Civil Proc. Code, § 640, subd. (c).) If a party fails to take part in this process, the court may be consider that failure to constitute a waiver of any objection to the appointed referee.

The parties must therefore meet and confer to determine if they can agree on a referee, and if they cannot, they must submit to the court up to three nominees each, for the court to appoint one or more referee(s).

Defendant shall give notice of this ruling.