Judge: Robert B. Broadbelt, Case: 22STCV09698, Date: 2022-08-19 Tentative Ruling

Case Number: 22STCV09698    Hearing Date: August 19, 2022    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                Plaintiff Cathay Bank

RESPONDING PARTY:       Unopposed

Motion to Compel Arbitration and Stay Action

The court considered the moving papers filed in connection with this motion.  No opposition papers were filed. 

DISCUSSION

            On March 18, 2022, plaintiff Cathay Bank (“Plaintiff”) filed its verified Complaint against defendant Frank Hai Lin, a/ka Frank H. Lin, a/k/a Frank Lin (“Defendant”) for judicial foreclosure and deficiency judgment. 

            Plaintiff now moves the court for an order (1) compelling Defendant to submit to binding arbitration, and (2) staying this action pending the completion of arbitration.

1.     Existence of a Written Agreement to Arbitrate the Controversy

A written provision in any contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.  (9 U.S.C. § 2.)  The Federal Arbitration Act (“FAA”) requires courts to direct parties to proceed to arbitration on issues covered by an arbitration agreement upon a finding that the making of the arbitration agreement is not in issue.  (9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostic Sys. (9th Cir. 2000) 207 F.3d 1126, 1130.)  “The court’s role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.”  (Chiron Corp., supra, 207 F.3d at p. 1130.)  The FAA reflects “both a ‘liberal federal policy favoring arbitration,’ [citation], and the ‘fundamental principle that arbitration is a matter of contract,’ [citation].”  (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) 

            A party seeking to compel arbitration bears the burden of proving a written agreement to arbitrate exists.  (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)  The burden of production as to this finding shifts in a three-step process.  (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.)  First, the moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate, which can be met by attaching a copy of the arbitration agreement purporting to bear the opponent’s signature.  (Ibid.)  If the moving party meets this burden, the opposing party bears, in the second step, the burden of producing evidence to challenge its authenticity.  (Ibid.)  If the opposing party produces evidence sufficient to meet this burden, the third and final step requires the moving party to establish, with admissible evidence, a valid arbitration agreement between the parties.  (Ibid.)

The court finds that Plaintiff has met its burden of proving a written agreement to arbitrate exists.

In support of its motion, Plaintiff presents the following loan documents: (1) the Business Loan Agreement executed by Plaintiff and Cherry Man Industries, Inc. for the sum of $13,800,000; (2) the Promissory Note executed by Plaintiff and Cherry Man Industries, Inc. in relation to the Business Loan Agreement; (3) a second Promissory Note executed by Plaintiff and Cherry Man Industries, Inc. for the sum of $988,00; and (4) the Commercial Guaranty executed by Plaintiff and Defendant, wherein Defendant guaranteed full and punctual satisfaction of the indebtedness of Cherry Man Industries, Inc. to Plaintiff.  (Scheiber Decl., Exs. 1-4.)  Each document contains an arbitration clause expressly governed by the FAA.  (Scheiber Decl., Ex. 1, p. 8; Scheiber Decl., Ex. 2, p. 2; Scheiber Decl., Ex. 3, pp. 2-3; Scheiber Decl., Ex. 4, pp. 3-4.)  The Business Loan Agreement and related Promissory Note states arbitration may be compelled between the borrower—Cherry Man Industries, Inc.—and the lender—Plaintiff.  (Scheiber Decl., Ex. 1, p. 8, Ex. 2, p. 2.)  The second Promissory Note applies to the borrower Cherry Man Industries, lender Plaintiff, and any guarantor (here, Defendant). (Scheiber Decl., Ex. 3, p. 2.)

As to the Commercial Guaranty executed by Plaintiff and Defendant, the arbitration clause provides that Defendant and Plaintiff, as guarantor and lender, “agree that all disputes, claims and controversies between them … arising from this Guaranty or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the Rules of the American Arbitration Association in effect at the time the claim is filed, upon request of either party.”  (Scheiber Decl., Ex. 4, p. 3.)  The arbitration clause further states that, “in the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action will not constitute a waiver of the right to arbitrate….”  (Ibid.)  The Commercial Guaranty contains the signature of Defendant.  (Id. at p. 5.)  Finally, the Deed of Trust executed and signed by Defendant granting the right, title, and interest in certain real property to First American Title Company for the benefit of Plaintiff contains an arbitration clause.  (Scheiber Decl., Ex. 5, p. 8 [all disputes arising from the Deed of Trust or otherwise shall be arbitrated pursuant to the Rules of the American Arbitration Association upon request of either party].)

The court finds that Plaintiff has met its burden of producing prima facie evidence of written agreements to arbitrate the controversy by producing the Commercial Guaranty and Deed of Trust executed by Plaintiff and Defendant, both of which contain an arbitration agreement.  (Gamboa, supra, 72 Cal.App.5th at p. 165.) 

The court finds that Defendant has not met his burden of producing evidence to challenge the authenticity of the agreements by failing to oppose this motion.  (Gamboa, supra, 72 Cal.App.5th at p. 165.) 

The court finds that Plaintiff’s Complaint falls within the scope of the arbitration agreements included within the Commercial Guaranty and Deed of Trust.  The agreements apply to “all disputes, claims and controversies” between Plaintiff and Defendant arising from (1) the Commercial Guaranty or otherwise, and (2) the Deed of Trust or otherwise.  (Scheiber Decl., Ex. 4, p. 3; Scheiber Decl., Ex. 5, p. 8.)  Plaintiff’s Complaint for judicial foreclosure and deficiency judgment arise from Defendant’s obligations under both the Commercial Guaranty and the Deed of Trust and therefore are subject to the arbitration agreements therein.  (Compl., ¶ 32 [alleging that Defendant, pursuant to the Commercial Guaranty, owes Plaintiff $14,176,153.96]; Compl., ¶ 35 [requesting the court judicially foreclose the subject property described in the Deed of Trust].)

For the reasons set forth above, the court finds that (1) valid agreements to arbitrate exist and, (2) the agreements encompass the dispute at issue.  (Chiron Corp., supra, 207 F.3d at p. 1130.)  The court therefore grants Plaintiff’s motion to compel arbitration and stay action.  

ORDER

The court grants plaintiff Cathay Bank’s motion to compel arbitration and stay action.  (9 U.S.C. §§ 2, 4.)

The court orders (1) plaintiff Cathay Bank and defendant Frank Hai Lin, a/k/a Frank H. Lin, a/k/a Frank Lin to arbitrate the claims alleged in Plaintiff’s complaint in this action, and (2) this action is stayed until arbitration is completed.  (9 U.S.C. § 3.)

The court sets an Order to Show Cause re completion of arbitration for hearing on ____________________, 2023 at 11:00 a.m., in Department 53.

The court orders plaintiff Cathay Bank to give notice of this order.

IT IS SO ORDERED.

DATED:  August 19, 2022

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court