Judge: Peter A. Hernandez, Case: 24STCP02480, Date: 2024-11-13 Tentative Ruling

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Case Number: 24STCP02480    Hearing Date: November 13, 2024    Dept: 34

Petitioner Vagharshak Harutyunyan’s Motion to Compel Arbitration is DENIED.

Background

            On August 7, 2024, Petitioner Vagharshak Harutyunyan (“Petitioner”) filed a Petition to Compel Arbitration against Respondent Progressive Insurance (“Respondent”) arising from an automobile collision that occurred in the City of Los Angeles on December 17, 2023.

            On August 14, 2024, Petitioner filed this Motion to Compel Arbitration. On August 28, 2024, Respondent filed an opposition to Petitioner’s motion. No reply has been filed. On November 6, 2024, Respondent filed a supplemental declaration from Respondent’s counsel in support of their opposition.

            On September 10, 2024, the court heard Petitioner’s motion and continued the hearing to November 13, 2024 and ordered the parties to further meet and confer to resolve the issue of arbitration.

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 a 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.) (Ibid.) “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

            Petitioner moves the court to compel arbitration of Petitioner’s claims, and for an order compelling the parties to select neutral arbitrators to commence discovery within 30 days of the court’s order. (Motion, at p. 4.) Petitioner argues that an arbitration agreement between the parties exists as part of Petitioner’s policy of automobile insurance with Respondent. (Motion, Sarukhanyan Decl., ¶ 3.) Petitioner provides a copy of the arbitration provisions within the policy. (Motion, Sarukhanyan Decl., ¶ 3, Exh. A.) The arbitration provisions provide, in relevant part, as follows:

            “ARBITRATION

If we and an insured cannot agree on:

1. the legal liability of the operator or owner of an uninsured auto or an underinsured auto; or

2. the amount of the damages sustained by the insured;

this will be determined by arbitration. If the accident involves an uninsured auto, any demand for arbitration must be made within two years of the date of the accident. If the accident involves an underinsured auto, the demand must be made within two years after all applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements and prior to the expiration of the bodily injury statute of limitations in the state in which the accident occurred. An insured demanding arbitration must send written notice to us, or our agent for process, by certified mail, return receipt requested.

Arbitration shall be conducted by a single neutral arbitrator.

The costs and fees of the arbitrator will be shared equally.

Unless both parties agree otherwise, arbitration will take place in the county in which the insured resides. Local rules of procedure and evidence will apply.

A decision by the arbitrator will be binding with respect to a determination of:

1.     the legal liability of the operator or owner of an uninsured auto or an underinsured auto; and

2.     the amount of the damages sustained by the insured.

The arbitrator shall have no authority to award an amount in excess of the limit of liability.”

(Ibid., [emphasis added].)

            Petitioner also argues that there is a statutory right to arbitrate their claims under California Insurance Code section 11580.2(f). (Motion, at p. 3.)

            “With respect to the moving party's burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. (See Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218, 105 Cal.Rptr.2d 597.) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)

            As such, the court finds that Petitioner has met its initial burden of proving the existence of an arbitration agreement between the parties wherein the parties agreed to arbitrate this dispute by providing Exhibit A in the Declaration of Raffi Sarukhanyan. The burden thus shifts to Respondent, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges.

            Respondent contends that Petitioner is one of two Uber riders who made personal injury claims with Respondent following an alleged automobile incident that occurred on December 17, 2023. (Opp., at p. 9.) On January 22, 2024, Respondent sent a letter to both claimants demanding contractual examinations under oath and production of documents to assist Respondent in evaluating their claims. (Ibid.) Once Petitioner retained new counsel, Respondent again demanded contractual examinations under oath and production of documents from Petitioner on March 18, 2024. (Id., at p. 10.) After not receiving any response on May 21, 2024, Respondent unilaterally set an examination under oath (“EUO”) of Petitioner for June 12, 2024. (Ibid.) Respondent advised Petitioner that failure to appear for the EUO would constitute a breach of the cooperation clause in the insurance policy and would lead to a recommendation of denial of all claims for coverage and benefits. (Ibid.) On June 6, 2024, Petitioner’s counsel informed Respondent of a scheduling conflict with the June 12, 2024 EUO date but failed to respond to any of Respondent’s proposed alternative dates. (Ibid.) On June 26, 2024, Petitioner reset the EUO for July 26, 2024. (Ibid.) On July 2, 2024, Petitioner demanded arbitration of their claims which Respondent did not acknowledge due to Petitioner’s failure to submit to the EUO. (Id., at p. 11.) On July 26, 2024, Petitioner failed to attend the scheduled EUO. (Ibid.) On August 1, 2024, Respondent informed Petitioner that their demand for arbitration would not be acknowledged until the coverage investigation had been completed. (Ibid.)

            In opposition, Respondent argues that Petitioner has breached their duty to cooperate under the insurance policy by failing to attend the EUO and aid in the coverage investigation prior to demanding arbitration. (Id., at p. 12.) Respondent points to an excerpt of the controlling insurance policy which provides, in relevant part, as follows:

DUTIES IN THE EVENT OF AN ACCIDENT OR LOSS

...

You and a person seeking coverage must:

1.     cooperate with us in any matter concerning a claim or lawsuit, including providing us with information regarding the driver's use of other transportation network company applications at the time of the accident or loss;

2.     provide any written proof of loss we may reasonably require;

3.     allow us to take signed and recorded statements, including sworn statements and examinations under oath, which we may conduct outside the presence of you or any person claiming coverage, and answer all reasonable questions we may ask as often as we may reasonably require;

4.     promptly call us to notify us about any claim or lawsuit and send us any and all legal papers relating to any claim or lawsuit;

5.     attend hearings and trials as we require;

6.     submit to medical examinations at our expense by doctors we select as often as we may reasonably require;

7.     authorize us to obtain medical records that are reasonably related to the cause of loss or the injuries being asserted and any other pertinent records;

8.     take reasonable steps after a loss to protect the insured auto from further loss if the coverage sought is for damage to the insured auto under Part II of this policy. We will pay reasonable expenses incurred in providing that protection. If failure to provide such protection results in further loss, any additional damages will not be covered under this policy; and

9.     allow us to have the damage to an insured auto or other vehicle involved in the accident or loss inspected and appraised before its repair or disposal."

(Id., Exh. A [emphasis added].)

            Respondent argues that an insured’s compliance with a policy requirement to submit to an EUO is a prerequisite to the right to receive benefits under the policy. (Id., at p. 14.) As such, Respondent contends that Petitioner failed to cooperate with the policy investigation and Petitioner’s demand for arbitration does not nullify the insured’s duties contained in the policy. (Ibid.) Thus, Respondent argues that Petitioner’s failure to comply with the insured’s duties precludes any legal action against Respondent according to the insurance policy which provides as follows:

4. Legal Action Against Us

We may not be sued by a person, corporation or entity insured by this policy unless there is full compliance by that same insured person, corporation or entity with all the terms of this policy.

We may not be sued for payment under Part I—Liability To Others until the obligation of an insured under Part I to pay is finally determined either by judgment against that insured after actual trial or by written agreement of the insured, the claimant, and us. No one will have any right to make us a party to a lawsuit to determine the liability of an insured.”

(Id., Exh. A [emphasis added].)

            Respondent also argues that Petitioner’s demand for arbitration is premature since the applicable policy provides that arbitration is only warranted if the insurer and the insured cannot agree on liability or damages. (Id., at p. 16.) Respondent contends that since it is unknown if an agreement can be reached regarding Petitioner’s claims as Respondent has not been able to investigate and evaluate them, a demand for arbitration is premature as it might be unnecessary. (Id., at pp. 16-18.)

            Petitioner anticipated Respondent’s argument in the moving papers. Petitioner argues that Respondent is creating policy conditions that are absent from the insurance contract and are unsupported by legal authority to prevent Petitioner from demanding arbitration. (Motion, at p. 3.) Petitioner contends that Respondent’s arguments create an inconsistency within the insurance policy based on the presumption that one policy provision (i.e. attending an EUO) supersedes another (i.e. arbitration). (Ibid.) Petitioner argues that there is no language in the policy that explains which provision precedes the other. (Ibid.)

            In contrast, Respondent’s counsel’s supplemental declaration contends that, in accordance to Minute Order dated September 10, 2024, Respondent met and conferred with Petitioner’s counsel to attempt to resolve the issue of arbitration. (Supp. Calendo Decl., ¶¶ 6-8.) On September 11, 2024, Respondent unilaterally set an EUO for October 25, 2024 informing Petitioner that a failure to attend may result in a denial of all claims for coverage. (Id., ¶ 6.) On October 24, 2024, Respondent was then informed that Petitioner refused to appear at the scheduled EUO and failed to do so on October 25, 2024. (Id., ¶¶ 8-9.) Thus, Respondent denied coverage for all of Petitioner’s claims. (Id., ¶¶ 10-11.)

Insurance Code section 11580.2(f), which is part of the uninsured motorist insurance statute, requires arbitration of only two issues: (1) whether the insured may recover against the uninsured motorist and (2) the amount of damages. (Bouton v. USAA Casualty Ins. Co. (2008) 43 Cal.4th 1190, 1201.)  “Questions of coverage—that is, whether the claimant is insured and therefore entitled to take advantage of the protection provided by the policy at issue—must be resolved before an arbitrator reaches the two arbitrable questions pursuant to section 11580.2, subdivision (f).”  (Ibid.) 

            “The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Civ. Code §1641.) Reading the insurance policy as a whole, Respondent is not liable to Petitioner until Petitioner cooperates in Respondent’s investigation.  Provisions of the insurance policy, entitled “DUTIES IN THE EVENT OF AN ACCIDENT OR LOSS” states that Respondent has a duty to “...cooperate with [Respondent] in any matter concerning a claim or lawsuit...” (Opp., Exh. A, at p. 1.)  Petitioner also has a duty under the policy to “...allow [Respondent] to take signed and recorded statements, including sworn statements and examinations under oath...”  (Ibid.)   

Because the arbitration provisions in Part III, “Uninsured/Underinsured Motorists Bodily Injury Coverage,” are part of the policy, Petitioner is not entitled to the benefits of uninsured motorist arbitration until Petitioner cooperates with Respondent in the investigation of the subject collision and submits to an examination.  (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1192 [“Generally, a party's failure to perform a condition precedent will preclude an action for breach of contract.”].)  Petitioner may not condition their cooperation on Respondent’s agreement to arbitrate. 

Respondent indicates that Petitioner has neither provided a recorded statement nor appeared for examination. (Supp. Calendo Decl., ¶¶ 6-8.)  Because Petitioner contends in open court that Petitioner has not cooperated with Respondent’s investigation, Respondent is under no obligation to submit to arbitration. 

Conclusion