Judge: Peter A. Hernandez, Case: 23PSCV01616, Date: 2024-03-04 Tentative Ruling

Case Number: 23PSCV01616    Hearing Date: March 4, 2024    Dept: K

Defendant Yong Qi’s Motion to Compel Arbitration and Stay Court Action is GRANTED. The case is ordered stayed, pending completion of the arbitration.

Background[1]  

Plaintiffs Martin Chinn and Doreen K. Chiu (together, “Plaintiffs”) allege as follows:

On or about October 8, 2022, Plaintiffs, as sellers, entered into written Purchase Agreement with Yong Qi (“Qi”), as buyer, for the sale of real property known as 3438 Fionna Place, West Covina, CA 91792. Qi subsequently sought to renegotiate the purchase price, which Plaintiffs rejected. Following this rejection, Qi refused to deposit monies into escrow and move forward with the sale.

On May 30, 2023, Plaintiffs filed a complaint, asserting causes of action against Qi and Does 1-10 for:

1.                  Breach of Contract

2.                  Breach of Implied Covenant of Good Faith and Fair Dealing

3.                  Common Count

4.                  Intentional Interference with Contractual Relations

On August 14, 2023, Qi filed a cross-complaint, asserting causes of action against Miranda Chen (“Chen”), APEC Enterprises, Inc. (“APEC”) and Roes 1-10 for:

1.                  Negligence

2.                  Equitable Indemnity in Proportion to Fault

On January 24, 2024, Chen and APEC filed a cross-complaint, asserting causes of action against Qi and Does 1-10 for:

1.                  Equitable Indemnity

2.                  Comparative Fault

3.                  Apportionment and Contribution

4.                  Declaratory Relief

A Case Management Conference is set for March 4, 2024.

Legal Standard

“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: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2, subds. (a) and (b).)

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761.) The burden then shifts to the opposing party to prove by a preponderance of the evidence a defense to enforcement (e.g., fraud, unconscionability, etc.) (Id.) “In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

“If a court of competent jurisdiction. . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4).

Discussion

Qi moves the court for orders compelling arbitration of all claims and causes of action between Qi and Plaintiffs and staying all further judicial proceedings in this action pending completion of arbitration.

Merits

1.                  Existence of a Valid Arbitration Agreement

Qi submits that, on or about October 8, 2022, Qi and Plaintiffs entered into a written purchase agreement for the purchase and sale of the real property located at 3438 Fionna Place, West Covina, CA 91792 (“Purchase Agreement”). (Complaint, Exh. 1.) Paragraph 31 of the Purchase Agreement reads as follows:

ARBITRATION OF DISPUTES:

A.                The Parties agree that any dispute or claim in Law or equity arising between

them out of this Agreement or any resulting transaction, which is not settled

through mediation, shall be decided by neutral, binding arbitration. The Parties

also agree to arbitrate any disputes or claims with Agents(s), who, in writing,

agree to such arbitration prior to, or within a reasonable time after, the dispute or

claim is presented to the Agent. The arbitration shall be conducted through any arbitration provider or service mutually agreed to by the Parties,

OR ________________. The arbitrator shall be a retired judge or justice, or an

attorney with at least 5 years of residential real estate Law experience, unless the

Parties mutually agree to a different arbitrator. Enforcement of, and any motion to compel arbitration pursuant to, this agreement to arbitrate shall be governed by the procedural rules of the Federal Arbitration Act, and not the California Arbitration

Act, notwithstanding any language seemingly to the contrary in this Agreement.

The Parties shall have the right to discovery in accordance with Code of Civil

Procedure § 1283.05. The arbitration shall be conducted in accordance with Title

9 of Part 3 of the Code of Civil Procedure. Judgment upon the award of the

arbitrator(s) may be entered into any court having jurisdiction.

B.                 EXCLUSIONS: The following matters are excluded from mediation and

arbitration: (i) Any matter that is within the jurisdiction of a probate, small

claims or bankruptcy court; (ii) an unlawful detainer action; and (iii) a judicial

or non-judicial foreclosure of other action or proceeding to enforce a deed of

trust, mortgage or installment land sale contract as defined in Civil Code §

2985.

C.                 PRESERVATION OF ACTIONS: The following shall not constitute a

waiver nor violation of the mediation and arbitration provisions: (i) the filing of

a court action to preserve a statute of limitations; (ii) the filing of a court action

to enable the recording of a notice of pending action, for order of attachment,

receivership, injunction, or other provisional remedies; or (iii) the filing of a

mechanic’s lien.

D.                AGENTS: Agents shall not be obligated nor compelled to mediate or

arbitrate unless they agree to do so in writing. Any Agents(s) participating in

mediation or arbitration shall not be deemed a party to this Agreement.

E.                 ‘NOTICE: BY INITALING IN THE SPACE BELOW YOU ARE

AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE

MATTERS INCLUDED IN THE “ARBITRATION OR DISPUTES”

PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED

BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU

MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT

OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE

GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL,

UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO

SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION,

YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY

OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR

AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.’

‘WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE

TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN

THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.” (Id.)

The foregoing paragraph is followed by Plaintiffs’ and Qi’s initials.

Plaintiffs confirm in their complaint that they entered into the Purchase Agreement on or about October 8, 2022. (Id., ¶ 9). Plaintiffs do not dispute the existence and validity of the above arbitration provision.

Further, the above arbitration clause encompasses the claims in this action. Plaintiffs’ complaint filed May 30, 2023 asserts causes of action for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Common Count and Intentional Interference with Contractual Relations. Plaintiffs’ claims arise out of Qi’s alleged breach of the Purchase Agreement and/or any resulting transaction. (Id., ¶¶ 18, 28, 30 and 31).

2.                  Waiver

Plaintiffs, however, contend that Qi’s request for arbitration should nevertheless be denied on the basis of waiver. “[T]he party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195). “In determining waiver, a court can consider (1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” (Id. at 1196 [quotations and citations omitted].)

Plaintiffs argue, without more, that “[Qi] ha[s] triggered two (2) of the St. Agnes criteria.” (Opp., 2:9-10). Plaintiffs fail to provide the court with any information specific to Qi’s conduct in this case which would constitute a waiver. Plaintiffs have not met their burden.

3.                  Possibility of Conflicting Rulings

Plaintiffs also oppose arbitration on the basis of Code of Civil Procedure § 1281.2, subdivision (c) (i.e., “[o]n 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: . . . [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 or related transactions and there is a possibility of conflicting rulings on a common issue or law or fact. . .”).

Qi, however, is only seeking to compel all claims and causes of action between Qi and Plaintiffs. Qi is not seeking to compel Chen and APEC into arbitration; instead, Qi seeks that all further judicial proceedings in this action (which would include Qi’s cross-complaint and Chen’s/APEC’s cross-complaint) be stayed pending completion of arbitration.

Oddly enough, Plaintiffs subsequently concede that “[t]he matters stated in the Cross-Complaint are entirely severable from those in the initial complaint –capable of being stayed until after arbitration is completed. The Complaint and Cross-Complaint are not inextricably intertwined with each other in a way which would prevent severability; nor likely to create conflicting rulings if the former is stayed until the arbitration is complete.” (Opp., 4:19-24).

Conclusion

The motion, then, is granted. The case is stayed, pending completion of the arbitration, pursuant to Code of Civil Procedure § 1281.4 (i.e., “[i]f a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies. . .”).