Judge: Thomas D. Long, Case: 22NWCV00301, Date: 2023-04-20 Tentative Ruling

Case Number: 22NWCV00301    Hearing Date: April 20, 2023    Dept: 48

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

On April 20, 2022, PRC Restoration Inc. (“PRC”) filed this action against TL Veterans (“TLV”) Construction Inc. and Suretec Insurance Company (“Suretec”).  The complaint alleges that TLV failed to pay PRC after PRC performed emergency mitigation services pursuant to a contract.

On May 25, 2022, Suretec filed a cross-complaint against Theodore Gregory Lee and TLV for indemnity, reimbursement, and contribution.

On July 7, 2022, TLV filed a cross-complaint against Eun Hee Song, JNH Roofing Inc. (“JNH”), and Jay Hahm (collectively, “Cross-Defendants”) for indemnity and contribution.

On October 11, 2022, Cross-Defendants filed a motion to compel arbitration of TLV’s cross-complaint.  Cross-Defendants also ask to stay the cross-complaint pending the arbitration.

DISCUSSION

When seeking to compel arbitration of a plaintiff’s claims, the defendant must allege the existence of an agreement to arbitrate.  (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.)  The burden then shifts to the plaintiff to prove the falsity of the agreement.  (Ibid.)  After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability.  (Ibid.)  The Court must grant a petition to compel arbitration unless the defendant has waived the right to compel arbitration or if there are grounds to revoke the arbitration agreement.  (Ibid.; Code Civ. Proc., § 1281.2.)

A.        The Parties Agree That an Arbitration Agreement Applies.

Cross-Defendants provide a copy of a December 21, 2020 Construction Subcontract between TLV and JNH.  (Hahm Decl., Ex. 1.)  The contract has an arbitration provision for any claim arising out of the contract.  (Hahm Decl., Ex. 1, ¶ 32(b) [“Arbitration Agreement”].)  Song and Hahm are not individual signatories to the contract, but they may also compel arbitration because TVL alleges that they are alter egos of signatory JNH.  (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1285 [“By suing [non-signatory defendants] for breach of the Agreement on the ground that they are [the company’s] alter egos . . . [defendants] are ‘entitled to the benefit of the arbitration provisions’”]; see Cross-Complaint ¶ 8.)

TLV does not dispute that the arbitration agreement applies to the cross-complaint’s claims.  (See Opposition at p. 2.)  Instead, it argues that the claims cannot be separated from those in PRC’s complaint.

B.        The Court Stays Arbitration Pending the Resolution of the Complaint’s Claims.

A court must grant a motion to compel arbitration unless a party to the arbitration agreement is also a party to a pending court action with a third party arising out of the same transaction and there is a possibility of conflicting rulings on a common issue of law or fact.  (Code Civ. Proc., § 1281.2, subd. (c).)  If the court does determine that subdivision (c) applies, the court may refuse to enforce the arbitration agreement, order intervention or joinder, order arbitration among the parties who have agreed to arbitration and stay the court action pending the outcome of the arbitration proceeding, or may stay arbitration pending the outcome of the court action.  (Code Civ. Proc., § 1281.2.)

TLV argues that non-signatory PRC’s claims “arise out of the same general set of facts relating to the subject construction project” because “the parties are fighting over who is actually responsible to PRC regarding PRC’s claims for work on the project.”  (Opposition at p. 2.)

PRC’s complaint alleges that on December 15, 2021, it entered into a contract with TLV through which PRC agreed to provide emergency mitigation services.  PRC fully performed, but TLV failed to pay the amount due.  TLV issued a check for a partial payment, but the check did not clear the bank.

TLV’s cross-complaint alleges that TLV entered into a construction contract with California Department of General Services for a roof-replacement project.  TLV also entered into a subcontract with JNH.  After a rain leak, JNH was to restore the condition of the project, and JNH entered into a verbal contract with PRC for the restoration work.  On December 16, 2021, PRC sent an invoice to JNH with a request for a deposit in order to start the project.  TLV seeks indemnity and contribution if it is found liable for PRC’s harm.

Although TLV’s liability to PRC and Cross-Defendants’ liability to TLV arise from separate contracts, the complaint’s and cross-complaint’s claims relate to the same payment owed to non-signatory PRC.  Whether and for how much Cross-Defendants should indemnify TLV cannot be determined until there is first a determination of whether TLV is liable to PRC.  Cross-Defendants acknowledge that TLV’s claims against them do not fully arise until after a determination of the complaint’s claims.  (Reply at pp. 3-4.)  Accordingly, the Court finds that subdivision (c) applies.

The Court will grant the petition but stay arbitration pending the outcome of the claims in PRC’s complaint.  (See Code Civ. Proc., § 1281.2.)

CONCLUSION

The motion to compel arbitration is GRANTED, and TLV’s claims against Cross-Defendants are ordered to arbitration.  Arbitration is stayed pending a resolution of PRC’s complaint.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit.  Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

      Dated this 20th day of April 2023