Judge: Robert B. Broadbelt, Case: 20STCV43519, Date: 2023-01-26 Tentative Ruling

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Case Number: 20STCV43519    Hearing Date: January 26, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                 Plaintiff Olivia Yanez de Herbert      

RESPONDING PARTY:       Defendant Altamed Health Services Corporation

Motion to Vacate Order Compelling Case to Arbitration

The court considered the moving, opposition, and reply papers filed in connection with this motion.

REQUEST FOR JUDICIAL NOTICE

The court grants plaintiff Olivia Yanez de Herbert’s request for judicial notice.  (Evid. Code, § 452, subd. (d).)

DISCUSSION

Plaintiff Olivia Yanez de Herbert (“Plaintiff”) filed this wrongful termination action against defendant Altamed Health Services Corporation (“Defendant”) on November 12, 2020, alleging 14 causes of action under the California Fair Employment and Housing Act, Labor Code, and bringing claims for wrongful termination, unfair business practices, and for penalties pursuant to the Private Attorneys General Act.

On October 22, 2021, the court granted Defendant’s motion to compel arbitration and stay Plaintiff’s PAGA claim, and ordered (1) Plaintiff and Defendant to arbitrate all claims alleged in Plaintiff’s Complaint, except for the representative PAGA claim, and (2) this action is stayed until arbitration is completed.

Plaintiff now moves the court for an order vacating the court’s October 22, 2021 order compelling this action to arbitration pursuant to Code of Civil Procedure sections 1281.97 and 1281.98.

Code of Civil Procedure “[s]ections 1281.97 and 1281.98 ‘largely parallel’ each other.  [Citation.]  Whereas section 1281.97 concerns a failure to timely pay ‘the fees or costs to initiate’ an arbitration proceeding [citation], section 1281.98 concerns a failure to timely pay ‘the fees or costs required to continue’ an arbitration proceeding [citation].”  (De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 750 [internal citations omitted].)  

Section 1281.97 provides that “[i]n an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under [Code of Civil Procedure] Section 1281.2.”  (Code Civ. Proc., §¿1281.97, subd. (a)(1).)  If the drafting party materially breaches the arbitration agreement and is in default under section 1281.97, subdivision (a), the employee or consumer may elect to withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.  (Code Civ. Proc., §¿1281.97, subd. (b)(1).)

Similarly, in an employment or consumer arbitration that requires the drafting party to pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.  (Code Civ. Proc., §¿1281.98, subd. (a)(1).)  If the drafting party materially breaches the arbitration agreement and is in default under section 1281.98, subdivision (a), the employee or consumer may elect to, inter alia, withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.  (Code Civ. Proc., §¿1281.98, subd. (b)(1).)  

Plaintiff moves for relief on the ground that Defendant did not timely pay the arbitrator’s fees within 30 days, as required by statute.  The parties dispute whether Defendant’s payment of the arbitrator’s fees was timely.

Plaintiff presents evidence establishing that Judicate West sent a revised invoice, dated April 13, 2022, to the parties for $7,500 on April 14, 2022.  (Chami Decl., ¶ 7; Chami Decl., Ex. C.)  The invoice provides that (1) Defendant is to pay 100 percent of the arbitration fees, and (2) payment is due upon receipt.  (Chami Decl., Ex. C.)  Plaintiff also submits a Billing Statement dated November 15, 2022, which states that payment was received in the amount of $7,500 on May 23, 2022.  (Chami Decl., ¶ 9; Chami Decl., Ex. E.) 

In opposition, Defendant contends that it timely paid all arbitration fees in accordance with the further revised invoice received by Defendant on April 21, 2022.  Defendant submits various email correspondence between counsel and Judicate West, which establish that (1) Plaintiff advised Judicate West that she did not agree to pay $750 as her share of the arbitrator’s invoice, since her share could not exceed the cost of filing (i.e., $435); (2) Judicate West stated that it would “adjust the billing to reflect the below and bill the difference” to Defendant’s counsel; and (3) on April 21, 2022, Judicate West sent an email to Defendant’s counsel stating that it “inadvertently issued the incorrect credit in [the] initial invoice” and attached an “amended invoice reflecting a credit for $750.”  (Hermiz Decl., Exs. B, C, A.)  Defendant’s counsel states that Defendant “executed and mailed payment for the April 21, 2022, invoice on May 19, 2022” to Judicate West’s office.  (Hermiz Decl., ¶¶ 8, 7.)  Defendant therefore contends that this payment, made within 30 days of receiving the amended April 21, 2022 invoice, was timely. 

The court finds that Plaintiff has met her burden to establish that Defendant (1) materially breached the arbitration agreement by failing to pay the fees and costs required to initiate arbitration, as set forth in the invoice dated April 13, 2022 and served on April 14, 2022, and therefore (2) is in default under section 1281.97. 

The court acknowledges that Defendant has presented evidence to argue that it received an amended invoice on April 21, 2022, and mailed payment within 30 days after receiving that invoice.  However, Defendant has not submitted a copy of the amended invoice sent to Defendant on April 21, 2022, and Plaintiff denies having been served with any amended invoice.  (Reply, p. 2:11-12.)  The court has, therefore, not been presented with evidence establishing that (1) the amended invoice sent to Defendant on April 21, 2022, as referenced in Judicate West’s email, set forth a different date for payment, or (2) the amended invoice satisfied the requirements of section 1281.97, subdivision (a)(2), such that the court could conclude that the amended invoice set forth another due date for payment. 

First, because Defendant did not submit a copy of the April 21, 2022 invoice, the court cannot determine whether the invoice establishes a different due date for payment.

Second, an invoice for any fees and costs required before the arbitration can proceed “shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day.”  (Code Civ. Proc., § 1281.97, subd. (a)(2).)  The court has not been presented with evidence establishing that any invoice sent on April 21, 2022 (1) was provided in its entirety, (2) stated the full amount owed and the date that payment was due, or (3) was provided to all parties by the same means on the same day, especially in light of the fact that Judicate West’s April 21, 2022 email appears to have been sent only to Defendant’s attorneys.  (Hermiz Decl., Ex. A [Judicate West’s April 21, 2022 email to two attorneys with the domain name “lewisbrisbois.com”].)

Moreover, the court finds significant that, when Judicate West issued an amended invoice to the parties that was intended to supersede the prior invoice, Judicate West clearly expressed that intent.  The parties both agree that (1) Judicate West served an initial invoice on the parties on March 30, 2022, and (2) Judicate West served a revised invoice on the parties on April 14, 2022 by email, stating that they had adjusted their billing practices and advised the parties to “disregard the invoice(s) emailed to [them] on Mar. 30, 2022, and process the corrected invoice(s) attached.”  (Chami Decl., ¶ 6; Chami Decl., Exs. B, C; Hermiz Decl., ¶ 4; Hermiz Decl., Ex. B.)  The court has not been presented with any evidence establishing that Judicate West served the revised April 21, 2022 invoice on both parties and communicated to counsel that it was intended to supersede and replace the invoice served on April 14, 2022.

Accordingly, the only invoice that has been presented to the court is the invoice dated April 13, 2022 and served on April 14, 2022 for $7,500, which was due upon receipt.  (Chami Decl., Ex. C.)  Defendant did not mail payment to Judicate West until May 19, 2022, and Judicate West did not receive payment until May 23, 2022.  (Hermiz Decl., ¶¶ 7-8; Chami Decl., Ex. E.)  The evidence therefore establishes that Defendant’s May 19, 2022 payment of the invoice served on the parties on April 14, 2022 is untimely.  (Code Civ. Proc., § 1281.97, subd. (a)(1); Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 774 [“the drafting party’s receipt of the invoice triggers the 30-day clock under section 1281.97, subdivision (a)(1)”].) 

Upon consideration of the evidence and arguments presented by the parties, the court finds that (1) Defendant failed to pay the fees and costs to initiate an arbitration proceeding within 30 days after the April 14, 2022 service of the invoice, and therefore (2) Defendant is in material breach of the arbitration agreement, is in default of the arbitration, and has waived its right to compel arbitration.  (Code Civ. Proc., § 1281.97, subd. (a).)  Plaintiff is therefore entitled to withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.  (Code Civ. Proc., § 1281.97, subd. (b)(1); Espinoza, supra, 83 Cal.App.5th at p. 776.) 

The court finds that Plaintiff is entitled to an award of monetary sanctions against Defendant for the reasonable expenses, including attorney’s fees and costs, incurred by Plaintiff as a result of the material breach.  (Code Civ. Proc., §§ 1281.97, subd. (d), 1281.99, subd. (a).)  The court will determine the amount of sanctions to be awarded in connection with the motion for attorney’s fees filed by Plaintiff on December 27, 2022 and set for hearing on September 13, 2023.

ORDER

The court grants plaintiff Olivia Yanez de Herbert’s motion to vacate order compelling case to arbitration.

The court orders that the October 22, 2021 order compelling plaintiff Olivia Yanez de Herbert and defendant Altamed Health Services Corporation to arbitrate the claims alleged in the Complaint in this action is vacated.

The court orders that plaintiff Olivia Yanez de Herbert and defendant Altamed Health Services Corporation are permitted to withdraw their claims from arbitration and to proceed in court.  (Code Civ. Proc., § 1281.97, subd. (b)(1).)

The court orders that the stay of this action pursuant to the court’s October 22, 2021 order is lifted.

The court sets a Case Management Conference in this action on February 15, 2023, at 8:30 a.m. 

The court orders plaintiff Olivia Yanez de Herbert to give notice of this ruling.

DATED:  January 26, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court