Judge Thomas D. Long, Case 22STCV12740 2022-08-17 Tentative Ruling

On April 15, 2022, Plaintiff Pamela Buzzanco, Individually and as Co-Trustee of Larry and Janine Schoncite Trust and Trustee of Larry J. Schoncite Trust, filed this action against Defendants Scott D. Fisher; Scott D. Fisher, A Professional Law Corporation; Michael L. Magasinn; and Law Offices of Michael L. Magasinn, arising from alleged legal malpractice.

On June 1, 2022, Scott D. Fisher and Scott D. Fisher, A Professional Law Corporation (collectively, “Fisher Defendants”) filed a motion to compel arbitration.

On June 6, 2022, Michael L. Magasinn and Law Offices of Michael L. Magasinn (collectively, “Magasinn Defendants”) filed a motion to compel arbitration.

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 (Condee).) 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.) When a nonsignatory seeks to enforce an arbitration agreement against a signatory, “the nonsignatory bears the burden to establish he or she is a party to the arbitration agreement/provision covering the dispute.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15.)

The Fisher Defendants contend that Plaintiff signed a written retainer agreement for legal services. (Fisher Motion at p. 2.) The retainer agreement contained a provision for binding arbitration “[i]n the event that a dispute arises between Client and Attorney regarding this Agreement, the services performed under this Agreement, or the fees and costs due under this Agreement.” (Fisher Decl., Ex. A at ¶ 12 [“Arbitration Agreement”].)

Plaintiff declares she never received a duplicate copy of the fully executed retainer agreement, as required by Business and Professions Code section 6148, so she has elected to void it. (Opposition to Fisher at pp. 6-7; Buzzanco Decl. ¶ 7.) This contention is belied by the retainer agreement, which is signed by both Plaintiff and Scott D. Fisher immediately under the statement, “Client hereby acknowledges receipt of a copy of this Agreement.” (Fisher Decl., Ex. A at p. 3.)

Plaintiff also argues that arbitration clauses for legal services agreements cannot be ambiguous, citing Lawrence v. Walzer & Gabrielson (1989) 207 Cal.App.3d 1501 (Lawrence). (Opposition at pp. 9-10.) The issue in Lawrence was whether the arbitration clause in the arbitration agreement covered a claim for legal malpractice. (Lawrence, supra, 207 Cal.App.3d at pp. 1504-1505.) The Court of Appeal noted that the phrase “any other aspect of our attorney-client relationship” was “one provision in an agreement devoted almost exclusively to financial matters and appears in a sentence which reads: ‘In the event of a dispute between us regarding fees, costs or any other aspect of our attorney-client relationship, the dispute shall be resolved by binding arbitration.’” (Id. at p. 1506.) Therefore, “[i]n this context, the arbitration clause appears to be limited to disputes concerning financial matters such as fees and costs and is most likely to be so viewed by a prospective client to whom the proposed agreement is tendered by the law firm.” (Ibid.) Based on the context, the Court of Appeal “conclude[d] plaintiff did not agree to binding arbitration of her claims of legal malpractice and breach of fiduciary duty.” (Id. at p. 1508.) Here, the Arbitration Agreement covers “a dispute arises between Client and Attorney regarding this Agreement, the services performed under this Agreement, or the fees and costs due under this Agreement,” and it thus unambiguously covers the legal malpractice alleged in the Complaint based on counsel’s services.

Accordingly, the Fisher Defendants have shown the existence of an agreement to arbitrate that covers the claims in this action, and the burden shifts to Plaintiff to demonstrate unenforceability.

For an arbitration agreement to be unenforceable as unconscionable, both procedural and substantive unconscionability must be present. (Armendariz, supra, 24 Cal.4th at p. 114.) “[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Ibid.) “The relevant factors in assessing the level of procedural unconscionability are oppression and surprise.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 997.) “‘The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.’” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 656.) “The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.” (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1348, fn. omitted (Grand Prospect).) “The component of surprise arises when the challenged terms are ‘hidden in a prolix printed form drafted by the party seeking to enforce them.’” (Ibid.) “The adhesive nature of the employment contract requires [the court] to be ‘particularly attuned’ to [Plaintiff’s] claim of unconscionability [citation], but [the court] do[es] not subject the contract to the same degree of scrutiny as ‘[c]ontracts of adhesion that involve surprise or other sharp practices’ [citation].” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245.) “‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be “so one-sided as to ‘shock the conscience.’”’ [Citation.]’” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85.)

Plaintiff argues that the Arbitration Agreement is not in bold, large, or distinct print; it was at the end of the document; Plaintiff was not encouraged to seek the advice of independent counsel; and the Fisher Defendants did not inform her that she was giving up the right to a jury trial. (Opposition to Fisher at p. 9.) The retainer agreement is approximately two pages long, with signatures on the third page. It has wide margins and not unusually small print. Each paragraph is separately numbered, with space between paragraphs. The Arbitration Agreement is the twelfth paragraph, at the end of the second page. It is not “hidden in a prolix printed form” or otherwise surprising. (Grand Prospect, supra, 232 Cal.App.4th at p. 1348.) Moreover, “[a]s a general rule,” arguments that a plaintiff “did not carefully read the agreements, did not understand the significance of the arbitration provisions, and did not knowingly waive their right to a jury trial in a legal malpractice action . . . may not be used to invalidate a written arbitration provision.” (Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1109.) Additionally, “[a]n arbitration provision need not contain an express waiver of the right to a jury trial to be enforceable.” (Ibid.)

Plaintiff also argues that ethical considerations exist when an attorney attempts to negotiate an arbitration provision during the course of an attorney-client relationship, and the attorney “has an ethical duty to assure that the agreement is fair and openly made with full knowledge on the part of the client of the facts and of the client’s legal rights with respect thereto.” (Opposition to Fisher at p. 11.) Therefore, according to Plaintiff, “if an attorney seeks to negotiate an arbitration provision in a retainer agreement with an existing client, the attorney has an ethical duty to fully disclose to the client the terms of the provision and its legal consequences.” (Id. at p. 12.) The retainer agreement and Arbitration Agreement were entered into upon Plaintiff retaining the Fisher Defendants, not in the course of an existing attorney-client relationship. (see Fisher Decl., Ex. A; Complaint at ¶ 11.) And in any event, Lawrence and numerous other cases involving attorney-client arbitration agreements demonstrate the standard for attorney-client arbitration agreements.

Because Plaintiff has not shown any procedural or substantive unconscionability, the Arbitration Agreement should not be invalidated. The Fisher Defendants’ motion is granted.

The Magasinn Defendants’ request for judicial notice of the Fisher Defendants’ motion is granted.

The Magasinn Defendants rely on the Arbitration Agreement contained in Plaintiff’s retainer agreement with the Fisher Defendants. (Magasinn Motion at pp. 5-6.) Michael L. Magasinn is not a party to that retainer agreement.

Generally, only a party to an arbitration agreement may enforce the agreement, but the doctrine of equitable estoppel is an exception that allows a non-signatory to enforce an agreement. (Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 786 (Garcia).) “Under this exception, ‘a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claim when the causes of action against the nonsignatory are “intimately founded in and intertwined with” the underlying contract obligations.’ [Citation.] The doctrine applies where the claims are ‘ “ ‘based on the same facts and are inherently inseparable’ ’ from the arbitrable claims against signatory defendants.’ [Citation.] ” (Ibid.) “The agency exception is another exception to the general rule that only a party to an arbitration agreement may enforce it. [Citation.] The exception applies, and a defendant may enforce the arbitration agreement, ‘when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement. . . .’ [Citation.]” (Id. at p. 788.) When a complaint refers to the defendants as agents of each other and “every cause of action allege[s] identical claims against ‘All Defendants’ without any distinction,” the agency exception applies. (Ibid.)

Plaintiff alleges Michael L. Magasinn was acting within the scope of his employment “employed by Defendants, Fisher, Fisher Lawfirm, and Magasinn Lawfirm.” (Complaint ¶ 7.) Plaintiff collectively refers to all defendants as “Fisher Lawfirm” (id. at ¶ 10), and all causes of action are brought against “All Defendants.” The allegations are inseparable. Accordingly, the Magasinn Defendants, under both equitable estoppel and the agency exception, can compel arbitration pursuant to the Arbitration Agreement.

Plaintiff argues the Magasinn Defendants “simply began representing Plaintiffs, without their knowledge, their approval, any disclosure and/or consent of Plaintiffs and without any agreement.” (Opposition to Magasinn at p. 7; see id. at p. 8.) The retainer agreement authorized the Fisher Defendants to associate other attorneys to handle the matters covered by the agreement. (Magasinn Motion at p. 6; Fisher Decl., Ex. A ¶ 8.) The Fisher Defendants approached the Magasinn Defendants about associating with them to represent Plaintiff, and Notices of Association were filed in her cases. (Magasinn Decl. ¶¶ 3-7 & Exs. A-C.)

The Magasinn Defendants have shown the existence of an agreement to arbitrate that covers the claims in this action, and the burden shifts to Plaintiff to demonstrate unenforceability. Plaintiff primarily argues that there is no agreement between her and the Magasinn Defendants, and she does not argue unconscionability.

Because Defendants have shown the existence of an applicable arbitration agreement and Plaintiff has not shown waiver or grounds for rescission, the motions to compel arbitration are GRANTED. (Code Civ. Proc., § 1281.2.)

The entire action is STAYED pending the arbitration. A Status Conference re: Arbitration is scheduled for 02/16/2023 at 8:30 AM in Department 48 at Stanley Mosk Courthouse (February 16, 2023). Five court days before, the parties are to file a joint report stating the name of their retained arbitrator and the status of arbitration.

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.

Hon. Thomas D. Long

Judge of the Superior Court