Judge: Theresa M. Traber, Case: 22STCV02462, Date: 2025-06-04 Tentative Ruling

Case Number: 22STCV02462    Hearing Date: June 4, 2025    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     June 4, 2025               TRIAL DATE: NOT SET

CASE:                         Beverly Smith v. University of Southern California

CASE NO.:                 22STCV02462           

MOTION TO VACATE ORDER TO ARBITRATE

MOVING PARTY:               Plaintiff Beverly Smith

RESPONDING PARTY(S): Defendant University of Southern California

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an employment discrimination action that was filed on January 20, 2022. Plaintiff alleges that she was summarily terminated in retaliation for taking disability leave and requiring accommodations.

Plaintiff moves to vacate an order to arbitrate and for attorney’s fees pursuant to Code of Civil Procedure section 1281.98.

TENTATIVE RULING:

Plaintiff’s Motion to Vacate Order to Arbitrate is DENIED.

DISCUSSION:

Plaintiff moves to vacate an order to arbitrate and for attorney’s fees pursuant to Code of Civil Procedure section 1281.98.

Legal Standard For Termination of Order to Arbitrate

            The California Arbitration Act provides for termination of an arbitration proceeding and reversal of an order to compel arbitration in employment actions as follows:

In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach.

(Code Civ. Proc. § 1281.98(a)(1).) If the drafting party is in material breach and default as described in this section, the employee may unilaterally elect to withdraw the claim from arbitration and proceed in court. (Code Civ. Proc. § 1281.98(b)(1).)

Analysis

            Plaintiff moves to vacate a stipulation to arbitrate pursuant to an arbitration agreement on the grounds that Defendant is in material breach of the arbitration agreement for failure to pay invoiced fees pursuant to Code of Civil Procedure section 1281.98. The parties commenced arbitration with JAMS on March 24, 2022. (Declaration of Viridiana Aceves ISO Mot. ¶ 4.) As relevant here, JAMS issued an invoice to Defendant for $63,300 on December 20, 2024. (Id. ¶ 7; Exh. 2.) This invoice was reissued with a corrected address on January 8, 2025. (Id. Exh. 5.) The reissued invoice expressly did not extend the due date of payment of the original invoice. (Id. ) According to Plaintiff, at the time this motion was brought on January 23, 2025, no payment had been made, and Defendant was therefore in material breach of the agreement.

            Defendant argues that it is not in material breach of the agreement because payment for the exact amount stated in the Invoice was issued and mailed to JAMS on January 17, 2025, before the expiration of the 30-day deadline. (Declaration of Katherine Urbanczyk ISO Opp. ¶ 4; Exh. 3.) Defendant also presents evidence that JAMS received the payment, although the JAMS records date the payment to January 24, 2025, after the expiration of the original invoice. (Declaration of Gil Burkwitz ISO Opp. ¶ 10; Exh. 8.) Defendant contends that the date of payment should be calculated from the date the payment was sent. Plaintiff asserts the opposite position but does not explain her reasoning. Neither party offers legal authority directly supporting their respective positions, and the Court has not independently uncovered any case law on this point. The legislative history of this code provision is similarly uninformative. That said, section 1476 of the Civil Code sets forth a “mailbox rule” regarding the performance of financial obligations to a creditor, stating that  “[i]f a creditor, or any one of two or more joint creditors, at any time directs the debtor to perform his obligation in a particular manner, the obligation is extinguished by performance in that manner, even though the creditor does not receive the benefit of such performance.” (Civ. Code § 1476.) Applying this guidance to the financial obligation of arbitration fees, the Court concludes that the appropriate interpretation is that “payment,” within the meaning of Code of Civil Procedure section 1281.98, occurs when the funds are sent, in accordance with the general mailbox rule. Thus, as Defendant has produced evidence that the check paying for the invoiced fees was sent before expiration of the 30-day deadline, Defendant is not in material breach of the arbitration agreement.

As the Court has found that Defendant is not in material breach of the arbitration agreement, the Court need not resolve the parties’ dispute regarding whether the agreement is subject to the Federal Arbitration Act, nor whether the FAA preempts Code of Civil Procedure section 1281.98.  

CONCLUSION:

            Accordingly, Plaintiff’s Motion to Vacate Order to Arbitrate is DENIED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  June 4, 2025                           ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.