Judge: Teresa A. Beaudet, Case: 21STCV15469, Date: 2022-10-25 Tentative Ruling

Case Number: 21STCV15469    Hearing Date: October 25, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Leart, Inc. (“Plaintiff”) filed this action on April 23, 2021 against the Gemological Institute of America, Inc. (“GIA”) and Those Certain Underwriters at Lloyd’s, Longon (“Lloyd’s”). The operative First Amended Complaint (“FAC”) was filed on December 23, 2021, and asserts causes of action for (1) res ipsa loquitur, (2) negligence, (2) fraudulent inducement, (4) breach of insurance contract (failure to provide insurance), (5) breach of warranty of fitness of purpose, (6) trespass to chattel, (7) breach of insurance contract, and (8) breach of the implied covenant of good faith.[1]

Lloyd’s now moves for an order compelling arbitration and staying this action. Plaintiff opposes.

Legal Standard

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). ((Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)   

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. ((Code Civ. Proc., § 1281.2); (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” ((Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” ((Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. section 2, et seq.; (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

“[I]n the context of a petition to compel arbitration,¿‘it is not necessary to follow the normal procedures of document authentication.’” (Espejo v. Southern California Permanente Medical Group¿(2016) 246 Cal.App.4th 1047, 1058 (Espejo)); (see Cal. Rules of Court, rule 3.1330: “A petition to compel arbitration . . . must state . . . the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.”) The Espejo Court noted that in Condee v. Longwood Management Corp.¿(2001) 88 Cal.App.4th 215, the court “concluded that by attaching a copy of the agreement to its petition, defendants had satisfied their initial burden of establishing the existence of an arbitration agreement.” (Espejo v. Southern California Permanente Medical Group, supra, 246 Cal.App.4th at p. 1058.) 

Discussion

A.    Existence of Arbitration Agreement

As an initial matter, in the opposition, Plaintiff indicates that “the only document that was served in connection with this motion was the notice of motion to stay and compel along with the memorandum of points and authorities without any declaration or other supporting document, not even the agreement purporting to provide for arbitration…” (Kar Decl., ¶ 2.) The Court notes that the instant motion filed on July 5, 2022 likewise does not attach any declaration or agreement purporting to provide for arbitration. 

In the reply, Lloyd’s notes that the notice of motion indicates that it is “based upon this Motion, the Memorandum of Points and Authorities attached hereto, the Hearing Reservation Receipt attached hereto, the Declaration of Christina Yates in Support of Defendant Gemological Institute of America, Inc.’s Amended Motion to Stay Action and Compel Arbitration, filed June 23, 2022 in this matter (“Decl. of Yates”) and exhibits thereto; and the Declaration of Arthur Wellman in Support of Defendant Gemological Institute of America, Inc.’s Amended Motion to Stay Action and Compel Arbitration, filed June 23, 2022 in this matter (Decl. of Wellman”) and exhibits thereto. all documents currently on file in this action, and such evidence as may be offered at the time of hearing on this Motion.” (Notice of Motion, p. vi; see also Mot. at p. 2:2-9.) 

However, as Plaintiff notes, and as set forth above, Cal. Rules of Court, rule 3.1330 provides that “[a] petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” Here, the motion does not set forth all of the provisions of the purported written agreement that provides for arbitration. In addition, the agreement is not attached to the motion.

In the reply, Lloyd’s asserts that a motion can be based upon papers filed earlier, citing to Cal. Rules of Court, rule 3.1110, subd. (d), which provides that “[a]ny paper previously filed must be referred to by date of execution and title.” However, as Lloyd’s acknowledges, its references in the instant motion to the previously filed Declaration of Christina Yates and Declaration of Arthur Wellman in support of GIA’s Amended Motion to Stay Action and Compel Arbitration does not set forth the date of execution of the declarations. In any event, this argument does not take into consideration the requirements of Cal. Rules of Court, rule 3.1330.

Lloyd’s also asserts in the reply that “Plaintiff agrees that the ‘evidence is undisputed’ as to the authenticity of the Client Agreements and their provisions.” (Reply at p. 2:16-18.) But this is not exactly what is stated in the opposition, rather, Plaintiff asserts that “[t]he evidence is undisputed that GIA entered into an agreement that provided that it would procure a standard all risk jeweler’s block policy, of which Plaintiff was the intended beneficiary and therefore also deemed an insured.” (Opp’n at p. 3:20-23.) Plaintiff does not indicate that the evidence is undisputed that it entered into an arbitration agreement with Lloyd’s.

            Conclusion

For the foregoing reasons, Lloyd’s motion to compel arbitration is denied without prejudice.   

Lloyd’s is ordered to give notice of this Order.

DATED:  October 25, 2022                          

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court