Judge Robert B. Broadbelt, Case Number: 22STCV00532, Date: 2023-11-17 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 22STCV00532, Date: 2023-11-17 Tentative Ruling

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

The court sustains defendant Citiguard, Inc.’s evidentiary objection, filed on November 13, 2023, to the article filed by plaintiff Tennia Taylor as Exhibit 1 to the reply papers. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.)

Plaintiff Tennia Taylor (“Plaintiff”) moves for an order vacating the court’s order compelling Plaintiff to submit her claims against defendant Citiguard, Inc. (“Defendant”) to binding arbitration. Plaintiff moves for this relief on the ground that Defendant did not pay all arbitration fees within 30 days after the due date.

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 fees and costs during the pendency of an arbitration proceeding, the failure of the drafting party to pay such fees or costs within 30 days after the due date constitutes a material breach of the arbitration agreement and a waiver of that party’s 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).)

Plaintiff has submitted a letter from the American Arbitration Association (“AAA”) dated April 3, 2023, which requested that the employer (i.e., Defendant) pay the full filing fee of $2,450 by May 3, 2023, upon payment of which AAA would proceed with administration of the arbitration. (Roven Decl., Ex. 2, p. 2.) An invoice was issued with the letter. (Id., p. 3.) On May 12, 2023, the AAA sent a letter to the parties advising them that Defendant “ha[d] failed to submit the previously requested filing fee” and, as a result, AAA closed its file in their matter. (Roven Decl., Ex. 3, p. 1.) Defendant contends that it did not waive its right to arbitration because it believed that it paid all arbitration fees. Specifically, Defendant argues that this case was related to the case Mejia-Hill v. Memorial Hospital of Gardena, et al. (Case No. 22STCV00937), both of which were submitted to AAA for arbitration at the same time. Defendant argues that the correspondence received from AAA did not identify the amount to be paid for both cases, and Defendant’s counsel believed that the April 26, 2023 payment of $2,450 to AAA applied both to this matter and to the Mejia-Hill matter. (Josephson Decl., ¶¶ 4-5.)

The court finds that Plaintiff has met her burden to establish that (1) Defendant materially breached the arbitration agreement by failing to pay the fees required to commence arbitration as set forth in the April 3, 2023 invoice within 30 days of receipt thereof, and (2) Defendant is therefore in default under section 1281.97.[1]

The court acknowledges that two related cases involving Defendant were submitted to AAA at the same time. However, the April 3, 2023 letter and the accompanying invoice (1) clearly identify (i) this case name (i.e., Tennia Taylor v. Memorial Hospital of Gardena and Citiguard, Inc.), and (ii) the corresponding case number (Case Number: 01-23-0001-1721), and (2) did not reference the related Mejia-Hill matter. It is undisputed that Defendant did not pay the $2,450 by May 3, 2023 as required, even if such nonpayment was the result of a mistaken belief that Defendant did make the required payment. (Josephson Decl., ¶¶ 5-6, 8; Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 774 [“unless the parties expressly agree to the contrary, the drafting party’s receipt of the invoice triggers the 30-day clock under section 1281.97, subdivision (a)(1)”].)

The court also notes that Defendant contends that relief is justified pursuant to Code of Civil Procedure section 473. The court disagrees.

First, Defendant’s request for relief under section 473, made in its opposition, is premature because no “judgment, dismissal, order, or other proceeding” has yet been “taken against” Defendant. (Code Civ. Proc., § 473, subd. (b).) Second, even if Defendant’s request for relief were not premature, Defendant has not pointed to any authority allowing the court to take into consideration the alleged excusable neglect or surprise of a nonpaying party in ruling on a motion made under Code of Civil Procedure section 1281.97, which is “unambiguous” in providing that the drafting party is in material breach of the arbitration agreement if the fees and costs are not paid within 30 days after the due date. (Espinoza, supra, 83 Cal.App.5th at p. 776; Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1074 [in drafting sections 1281.97 and 1281.98, the Legislature “chose to neither require nor permit an inquiry into the reasons for a drafting party’s nonpayment”].) Thus, the court finds that it does not have the discretion to grant relief pursuant to Code of Civil Procedure section 473 in connection with Plaintiff’s request that the court withdraw her claims from arbitration.

The court therefore finds, after considering the evidence and arguments submitted by the parties, that (1) Defendant failed to pay the fees and costs required to initiate arbitration within 30 days after service of the April 3, 2023 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 to proceed in a court of appropriate jurisdiction. (Code Civ. Proc., § 1281.97, subd. (b)(1).)

The court grants plaintiff Tennia Taylor’s motion to vacate order compelling arbitration.

The court orders that the February 10, 2023 order compelling plaintiff Tennia Taylor and defendant Citiguard, Inc. to arbitrate the claims alleged in the Complaint in this action is vacated.

The court orders that plaintiff Tennia Taylor and defendant Citiguard, Inc. 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 February 10, 2023 order is lifted.

The court sets a Case Management Conference in this case on January 17, 2024, at 8:30 a.m.

[1] The court notes that Plaintiff has argued that Defendant is in default under section 1281.98, which provides that a drafting party materially breaches an arbitration agreement by failing to pay fees and costs “during the pendency of an arbitration proceeding[.]” (Code Civ. Proc., § 1281.98, subd. (a)(1).) However, the April 3, 2023 letter and invoice appear to indicate that the $2,450 in fees and costs were to be paid to initiate the arbitration proceeding, as governed by section 1281.97. (Roven Decl., Ex. 2, p. 2 [“As this arbitration is subject to California Code of Civil Procedure 1281.97, payment must be paid by May 3, 2023 or the AAA will close the parties’ case”]; Code Civ. Proc., § 1281.97, subd. (a)(1).)

tennia taylor ; Plaintiff, vs. memorial hospital of gardena , et al.; Defendants.	Case No.:	22STCV00532

	Hearing Date:	November 17, 2023

	Time:	10:00 a.m.

	[Tentative] Order RE: plaintiff’s motion to vacate order compelling arbitration