Judge: Stephen I. Goorvitch, Case: 22STCV23991, Date: 2023-02-15 Tentative Ruling

Case Number: 22STCV23991    Hearing Date: February 15, 2023    Dept: 39

Montana Marketing & Sales, Inc. v. Tereza Walleman, et al.

Case No. 22STCV23991

Motion to Compel Arbitration

            Plaintiff Montana Marketing & Sales, Inc., which does business as AAA Green Builders (“Plaintiff”) filed this action for breach of contract and foreclosure of a mechanic’s lien.  Plaintiff, a contractor, alleges that Defendants Tereza Walleman and Steven Walleman (“Defendants”) hired it to improve a building parcel but did not pay the required fees.  Now, Plaintiff moves to compel arbitration. 

The moving party on a petition to compel arbitration “bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.”  (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842, internal quotations and citations omitted.)

Defendant relies on an arbitration clause in the contract the parties signed.  The arbitration clause states that the parties agree to arbitrate “any dispute, or a claim arising out of or relating to this agreement, or the enforcement or interpretation thereof . . . .”  Defendants do not challenge the authenticity of this contract.  Rather, Defendants argue that the arbitration clause is unenforceable because it does not contain certain statutory notices.  The arbitration clause states that the parties agree to arbitrate the “enforcement or interpretation” of the agreement.  In doing so, the parties delegated these issues to the arbitrator, which is valid and binding.  (See Hartley v. Superior Court (2011) 196 Cal.App.4th 1249, 1258.)  Similarly, Defendants’ arguments on unconscionability must be resolved by the arbitrator.

Defendants filed a cross-complaint on August 31, 2022, and argue that the Court should deny the motion under Code of Civil Procedure section 1281.2, subd. (c).  That section states:  

“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 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 of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” 

(Code Civ. Proc., § 1281.2, subd. (c).)  Under these circumstances, the Court may: (1) refuse arbitration and order intervention or joinder of all parties in the pending litigation; (2) consolidate the arbitration and litigation as to certain issues; (3) stay the pending court action and order arbitration to proceed among the parties who have agreed to arbitration; or (4) stay the arbitration pending the outcome of the pending court action.  (Code Civ. Proc., § 1281.2, subds. (c), (d)(1)-(4).) 

            The Court is not persuaded that it is necessary to deny the motion.  To the extent Defendants argue that Plaintiff used unlicensed subcontractors, this argument can be raised in the arbitration.  A stay of the instant action will preserve Defendants’ ability to pursue claims against the cross-defendants.

            Based upon the foregoing, the Court orders as follows:

            1.         The Court grants Plaintiff’s motion to compel arbitration and takes the case management conference off-calendar.

            2.         The Court orders Plaintiff’s claims against Defendants, and Defendants’ cross-claims against Plaintiff, to proceed by way of arbitration.  The parties shall meet-and-confer and schedule the arbitration forthwith.

            3.         The Court stays Defendants’ cross-claims against the remaining defendants pending the outcome of the arbitration.  Notwithstanding the stay, Defendants may serve the summons and complaint on the remaining cross-defendants.  However, the cross-defendants’ answer or responsive pleading shall not be due until 30 days after the stay is lifted. 

            4.         The Court sets an Order to Show Cause why the stay should not be lifted following arbitration for November 27, 2023, at 8:30 a.m.  The Court orders Plaintiff’s counsel to file a status report on or before November 17, 2023, concerning the status of the arbitration.  The Court also orders Plaintiff’s counsel and Defendants’ counsel to appear at the hearing, either remotely or in-person. 

            5.         Defendants’ counsel shall provide notice and file proof of such with the Court.