Judge: Teresa A. Beaudet, Case: BC89037, Date: 2023-01-06 Tentative Ruling

Case Number: BC89037    Hearing Date: January 6, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On January 3, 2018, Plaintiff Rick Siegel (“Siegel”) filed this action against Defendants

David A. Alessi (“Alessi”); Robert A. Koenig (“Koenig”); Alessi & Koenig; Alessi & Koenig, a Professional Corporation; and Alessi & Bayard. Siegel filed the operative Second Amended Complaint (“SAC”) on July 29, 2019, asserting causes of action for (1) breach of fiduciary duties, (2) constructive fraud, (3) intentional misrepresentation, and (4) legal malpractice.

            On March 8, 2019, Koenig filed a Cross-Complaint against Alessi for indemnity and contribution. On February 10, 2020, Alessi filed a Cross-Complaint against a number of Cross-Defendants, asserting causes of action for equitable indemnity and comparative indemnity.

Koenig now petitions the Court for an order “compelling Plaintiff to arbitrate all claims in a AAA arbitration and stay the proceedings in Court pending the results of arbitration.” Alessi joins in the petition. Siegel opposes.

Legal Standard

In a petition 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.)

            Discussion

A.    Existence of Arbitration Agreement

Koenig indicates that Siegel entered into a Retainer Agreement with the Law Offices of Alessi & Bayard (the “Retainer Agreement”) on August 22, 2011. (Kurtz Decl., ¶ 6, Ex. 3.) The Retainer Agreement defines the Law Offices of Alessi & Bayard as “Attorney.” (Ibid., p. 1.) The Retainer Agreement contains an arbitration clause providing as follows:

“If any dispute arises out of, or relates to, a claimed breach of this Agreement, the professional services rendered by Attorney, or Client’s failure to pay fee [sic] for professional services and other expenses specified, or nay [sic] other disagreement of

any nature, type or description, regardless of the facts or the legal theories which [sic] may be involved, such dispute shall be resolved by arbitration before the American Arbitration Association by a single arbitrator in accordance with the Commercial Rules of the American Arbitration Association in effect at the time the proceeding is initiated. The hearing shall be held in the American Arbitration Association office closest to Attorney and each side shall bear his/her own costs and attorney’s fees.” (Kurtz Decl.,     ¶ 6, Ex. 3, p. 4.)

In the SAC, Siegel alleges that in November 2010, he retained Thomas J. Bayard and the Alessi & Bayard partnership to defend Siegel from a wrongful foreclosure action “being threatened by J.P. Morgan Chase Bank” (“Chase”). (SAC, ¶ 8.) On September 6, 2011, Alessi & Bayard and Thomas J. Bayard filed a complaint for injunctive relief against Chase, in Los Angeles Superior Court Case No. BC469058. (SAC, ¶ 10.) Siegel alleges that on March 2, 2016, Alessi & Koenig filed a third complaint in another action for injunctive relief against Chase, Case No. BC611566; and that this complaint identified Alessi & Koenig as a general partnership and was filed in Koenig’s name. (SAC, ¶ 20.) Siegel alleges, inter alia, that “Defendants failed their duties to supervise the handling of plaintiff’s cases. Plaintiff lost his home, and substantial equity in his home, as a direct result of defendants’ failures to supervise the handling of plaintiff’s cases.” (SAC, ¶ 55.)  

As Siegel notes, Koenig seeks to enforce a clause in an agreement to which he is not a party. Koenig admits that he “was not a signatory on the Retainer Agreement” (Mot. at p. 5:6-7) but asserts that the subject arbitration clause in the agreement is “broad enough to encompass the allegations in the instant matter and is subject to enforcement by any lawyer alleged to have liability in the pending action. The operative complaint alleges misconduct by all Defendants during the time covered by the Retainer Agreement, which should allow Mr. Koenig to seek arbitration pursuant to the Agreement…” (Mot. at p. 1:15-19.) However, Koenig’s petition does not cite to any legal authority to support his assertion that he may enforce the subject arbitration clause as a non-signatory to the Retainer Agreement. As noted by Siegel, Koenig does not make any attempt to demonstrate that he is a third party beneficiary of the Retainer Agreement. Siegel notes that “[n]umerous cases confirm the general rule that a party cannot be compelled to arbitrate a dispute that he or she has not agreed to resolve by arbitration.” ((Benaroya v. Willis (2018) 23 Cal.App.5th 462, 469 [internal quotations omitted].)

In the reply, Koenig contends that the fact that he did not sign the Retainer Agreement does not invalidate Siegel’s duty to arbitrate. In support of this assertion, Koenig notes that “a contract is invalid if not signed by all parties purportedly bound only when it is shown, either by parol or express condition, that the contract was not intended to be complete until all parties had signed. Conversely, in the absence of a showing that the contract is not intended to be complete until signed by all parties, the parties who did sign will be bound.” ((Angell v. Rowlands (1978) 85 Cal.App.3d 536, 542.) But Siegel is not asserting that the subject Retainer Agreement is invalid because it was not signed by all parties purportedly bound. Rather, Siegel notes that Koenig is not a party to the Retainer Agreement. 

In addition, although Alessi joined in the instant petition, the joinder solely contains a discussion regarding waiver, specifically, that Alessi “joins Mr. Koenig’s position that the waiver analysis should be based on events that transpired after plaintiff Siegel

acknowledged there was a written fee agreement in March 2022.” (Joinder at p. 1:10-12.)

The Court notes that Alessi’s joinder does not contain any argument as to how the Retainer Agreement provided in connection with Koenig’s petition is applicable to him.[1]

Based on the foregoing, the Court does not find that Koenig has shown that Siegel’s claims against Koenig are covered by the subject arbitration provision in the Retainer Agreement. (See Cal. Prac. Guide Alt. Disp. Res. Ch. 5-G (The Rutter Group 2021) ¶ 5:320, [“[t]he 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 Court also does not find that Alessi has shown that Siegel’s claims against Alessi are covered by the subject arbitration provision in the Retainer Agreement.

Conclusion

For the foregoing reasons, Koenig’s petition is denied. 

Siegel is ordered to provide notice of this Order.

DATED:  January 6, 2023                             

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court