Judge: Theresa M. Traber, Case: 22STCV04378, Date: 2022-09-30 Tentative Ruling

Case Number: 22STCV04378    Hearing Date: September 30, 2022    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     September 30, 2022               TRIAL DATE: NOT SET

CASE:                         G&P Group Inc., v. City National Bank

CASE NO.:                 22STCV04378           

MOTION FOR ORDER APPOINTING JUDICIAL REFEREE, SELECTING A REFEREE, STAYING THE ACTION, AND FOR ATTORNEY’S FEES AND COSTS

MOVING PARTY:               Defendant City National Bank

RESPONDING PARTY(S): Plaintiff G&P Group Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for breach of contract stemming from a commercial banking agreement filed on February 3, 2022.

Defendant moves for an order appointing and selecting a judicial referee, staying the action, and for attorney’s fees and costs.

TENTATIVE RULING:

Defendant’s Motion for Judicial Reference is DENIED.

            Defendant’s request for attorney’s fees is DENIED.

DISCUSSION:

Defendant moves for an order appointing and selecting a judicial referee, staying the action, and for attorney’s fees and costs.

Evidentiary Objections

            Plaintiff objects to the Declarations of Robert Wartburg, Lance Jurich, and Christina Harder on numerous grounds. Defendant objects to the Declarations of Jorge Barraza and Larry Berliner on similarly numerous grounds. Neither party cites any statute or precedent requiring the Court to rule on evidentiary objections on a motion to compel judicial reference as opposed to an Anti-SLAPP motion to strike or a motion for summary judgment. (See Code Civ. Proc. §§ 425.16; 437c.) The Court therefore declines to do so. To the extent that any party’s objections are relevant to the Court’s ruling, those objections go to the weight of Defendant’s evidence.

Legal Standard

Code of Civil Procedure section 638 states that a referee may be appointed “upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties.” (Code Civ. Proc. § 638.)¿A motion to compel judicial reference is essentially¿analogous to a motion to compel arbitration, and similar authorities and principles may be relied upon in arguing or opposing the motion. (See¿O’Donoghue¿v. Superior Court¿(2013) 219 Cal.App.4th 245.) However, unlike with arbitration, the statutory language and legislative history of section 638 provides a trial court with discretion to deny a request for judicial reference even where there is a valid reference agreement. (See¿Tarrant Bell Property, LLC v. Superior Court¿(2011) 51 Cal.4th 538, 542–546.)¿

Existence of Reference Agreement

Defendant moves to compel judicial reference based on a Business Account Agreement executed between the parties in June of 2015 as part of Plaintiff’s opening of a business Deposit Account with Defendant. (Declaration of Robert Wartburg ISO Mot. ¶ 4, Exh. A.) The Business Account Agreement states that, by signing, the client’s representative would “acknowledge receipt of the Account Agreement and Disclosures and applicable disclosures and fee schedule(s) containing the terms, conditions, and fees governing the account(s)” and that the clients “agree that these terms . . . govern each account established with City National Bank . . . or City National Securities, Inc. . . . and each service now or later contracted for, as amended by later disclosures. (Wartburg Decl. Exh. A. p. 2.) Defendant contends that it provided with the Business Account Agreement a copy of the Account Agreement and Disclosures, which contains an Alternative Dispute Resolution Clause. (Id. Exh. B.) In 2019, Plaintiff executed a Supersedure Agreement and an updated Business Account Agreement making the same acknowledgement as to an updated Account Agreement and Disclosures containing the same ADR provision. (Id. Exh. C. (Supersedure Agreement); Exh. D. (2016 Business Account Agreement and Disclosures); Exh. E (2020 Account Agreement and Disclosures).)

All the Account Agreements and Disclosures contain the same essential provision:

ALTERNATIVE DISPUTE RESOLUTION For California Only: If your account is maintained at a branch in California and a dispute that involves the combined claims of all parties totaling $250,000 or more arises between us with respect to the deposit account or safe deposit box, this Agreement, its enforcement or our deposit account services, either of us may require that it be resolved by judicial reference in accordance with California Code of Civil Procedure, Sections 638, et seq. The referee shall be a retired judge, agreed upon by the parties or appointed by the court. The costs of the reference procedure, including the fee for the court reporter, shall be paid equally by all parties as the costs are incurred. The referee shall hear all pretrial and post-trial matters, including requests for equitable relief, prepare an award with written findings of fact and conclusions of law, and apportion costs as appropriate. Judgment upon the award shall be entered in the court in which such proceeding was commenced and all parties shall have full rights of appeal.

(Wartburg Decl. Exhs. B. p.45 [monetary threshold of $50,000 instead of $250,000], D pp. 44-45, E p.23.)

            In the Court’s August 8, 2022 initial ruling on this motion, the Court found that City National had offered sufficient evidence to meet its initial burden to establish that it had entered into a judicial reference agreement with G&P. The Court also found that the declarations of G&P’s principals adequately challenged City National’s showing “by denying receipt of any version of the Account Agreement nor any information about how to access it online.” (August 8, 2022 Minute Order p.4.) Thus, the Court found that City National now has a burden to establish by a preponderance of the evidence that G&P had notice of the provisions of the Account Agreement and agreed to be bound by the judicial reference provision and ordered the parties to file supplemental briefing and evidence on this issue. (Id.) The parties having done so, the Court now addresses this evidence.

            Defendant offers, as supplemental evidence of notice, an email from Defendant to Ms. Barraza containing a web link to the 2019 Account Agreement. (Declaration of Christina Harder ISO Mot. ¶¶ 17-18, Exhs. F, G.) Defendant also offers additional documentation from its noticing vendor which purports to show that Ms. Barraza received the email on January 27, 2020 and opened the pdf containing the 2019 Account Agreement on that date. (Declaration of Anne Lopez ISO Mot. ¶¶ 4, 11-13, Exhs. A-C, E; Harder Decl. ¶ 21, Exh. H.) However, as Plaintiff raises in objection, Ms. Lopez is not presented as an expert in SQL computer data, despite offering evidence that is plainly beyond the common understanding of a layperson. (See Evid. Code § 800.) Defendant also offers declaration statements from the initial moving papers that Plaintiff signed the 2015 Business Account Agreement and the 2019 Supersedure Agreement. (Wartburg Decl. ¶ 7.)

            In opposition, Plaintiff provides the Declaration of Larry Berliner, who is offered as an expert in SQL. Critically, Mr. Berliner’s declaration states that Exhibit E of the Lopez Declaration, which is offered to show that Ms. Barraza actually accessed the 2019 Account Agreement, is inconclusive, because the critical message, “User retrieved document” can be triggered by automated processes or by accident without actually displaying a user-readable document. (Berliner Decl. ¶¶ 15-17.) Furthermore, Plaintiff contends that the 2015 and 2019 agreements are irrelevant because the agreements are ambiguous as to their application to future accounts, and the new account was, in fact, a separate account, not a replacement. Plaintiff provides no evidence in support of the contention regarding the two accounts. However, the agreement states that it governs “each account,” but does not clearly state whether it governs future accounts. As Plaintiff correctly states, contractual ambiguity must be construed against the drafter. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 801.)

            Upon review of this evidence, the Court finds that Defendant has not demonstrated, by a preponderance of the evidence, that Plaintiff received notice of an Account Agreement governing the account at issue here. Even if the Court were to construe the 2019 Agreement as clearly governing the new account, Defendant’s evidence that Ms. Barraza received the 2019 agreement is undercut by the lack of admissible expert testimony, and by Plaintiff’s evidence in opposition, which shows that the SQL messages offered by Defendant are inconclusive, at best. Further, construing the contractual ambiguities against the drafter, as required, Defendant has not shown that the previous agreements governed the new account, and has not established that Plaintiff was ever provided the 2020 Agreement.

            As Defendant has not established by a preponderance of the evidence that there was a judicial reference agreement into which the parties entered, Defendant is not entitled to compel this matter to judicial reference.

Fees

            Defendant seeks attorney’s fees in connection with this motion in excess of $28,000 pursuant to the Account Agreement’s fee-shifting provision. Defendant did not specify the amount of fees in its Notice of Motion, nor do the accompanying declarations state how Defendant arrived at this requested number. (See Declaration of Lance N. Jurich ¶ 4.) Therefore, even if Defendant is entitled to fees despite not being the prevailing party, Defendant has not properly noticed this request or supported it with evidence. The Court therefore declines to award attorney’s fees.

CONCLUSION:

            Accordingly, Defendant’s Motion for Judicial Reference is DENIED.

            Defendant’s request for attorney’s fees is DENIED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated: September 30, 2022                            ___________________________________

                                                                                    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.