Judge: Upinder S. Kalra, Case: BC715500, Date: 2023-09-25 Tentative Ruling

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Case Number: BC715500    Hearing Date: September 25, 2023    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   September 25, 2023                           

CASE NAME:           Theodosios Roussos, et al. v. S.M.B. Investor Associates, L.P. et al.

CASE NO.:                BC715500

MOTION FOR APPOINTMENT OF AN ARBITRATOR

MOVING PARTY: Defendants Hill Farrer & Burrill LLP, and Daniel J. McCarthy

RESPONDING PARTY(S): None as of September 20, 2023

REQUESTED RELIEF:

1.      An order appointing a neutral arbitrator.

TENTATIVE RULING:

1.      Motion to Appoint an Arbitrator is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On July 30, 2018, Plaintiffs Theodosios Roussos (“Ted”), a natural person, Theodosios Roussos, as trustee for the O.F. Enterprises Irrevocable Trust, and Theodosios Roussos, as trustee for the SMB Investor Associates Irrevocable Trust (“Plaintiffs”) filed a complaint against Defendants S.M.B. Investor Associates, L.P., S.M.B. Management, Inc., O.F. Enterprises, L.P., Liro, Inc., 2209 Ocean Front Walk, LC, Sarah Daly, Daniel J. McCarthy, Hill Farrer & Burrill LLP, David Kaplan, Alex Soleimani, Brentwood Park LP, Group VII, LP, Marcus & Millichap Real Estate Investment Services, Group XIII Properties, LP (“Defendants.”)

On January 7, 2019, Theodosios Roussos (“Ted”) filed the operative First Amended Complaint (“FAC”), which alleged 20 causes of action for damages and injunctive relief based on disposition of real estate and assets pursued by Defendants. 

On July 3, 2019, Kaplan field a Motion to Compel Arbitration. 

On August 28, 2023, Defendants Hill Farrer & Burrill LLP, and Daniel J. McCarthy filed a Motion to Appoint an Arbitrator Pursuant to CCP § 1286.1. On September 15, 2023, Defendants filed a Notice of Non-Opposition. No Opposition has been filed as of September 20, 2023.

LEGAL STANDARD:

CCP § 1286.1 provides the following:

If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.

ANALYSIS:

            Defendants Hill Farrer & Burrill, LLP, and Daniel J. McCarthy move to have the Court appoint an arbitrator.

            Defendants previously filed a motion to compel arbitration, which was granted back in February 2019. Plaintiffs have changed counsel, but still maintained that Plaintiff Ted Roussos still intended to proceed with arbitration. In March 2022, the Court required the parties to submit briefs as to whether the Court had jurisdiction to dismiss the action based on the five-year statute.

            Defendants argue that under CCP § 1281.6, the Court should appoint an arbitrator. The arbitration at issue in this matter provides the method for appointing an arbitrator, which has failed. The process is either that the parties jointly select an arbitrator, or the two name one retired judge or justice and those two will select a third judge as the arbitrator. (Motion 5: 20-26; Dec. Curtis-Ives, ¶ 4, Ex. 2.) Plaintiffs have not been willing to engage in this selection process. Therefore, Defendants request that the Court issue an order “compelling the Parties to participate in the JAMS strike/rank list process as permitted by JAMS Rule 15, or alternatively, nominate five persons from a strike/rank list that will be supplied to the Court by JAMS.

The Court finds that it has the authority to compel the parties to participate in selecting the arbitrator for this matter. “Once a petition is granted and the lawsuit is stayed, ‘the action at law sits in the twilight zone of abatement with the trial court retaining merely vestigial jurisdiction over matters submitted to arbitration.’ [Citation.] During that time, under its ‘vestigial’ jurisdiction, a court may: appoint arbitrators if the method selected by the parties fails ([Code Civ. Proc.,] § 1281.6)…” (Aronow v. Superior Court (2022) 76 Cal.App.5th 865, 873.)

The California Supreme Court in Engalla stated that CCP § 1286.1 “provides a statutory method for resolving breakdowns in the arbitrator selection process, and states in pertinent part that in the absence of an agreed method of appointing an arbitrator, “or if the agreed method fails or for any reason cannot be followed ... the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.”” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 980.) Further, the Engalla Court stated that CCP § 1286.1 is a “a legislative means of implementing this state's policy in favor of arbitration by permitting parties to an arbitration contract to expedite the arbitrator selection process.” (Id. at 981.)

            Here, the unrebutted declaration of defense counsel establishes that after almost five years, Plaintiff has failed to cooperate in proceeding with arbitration. Accordingly, the Court finds that the agreed method under the arbitration agreement cannot be followed. As such,as set forth in section 1286.1, the Court orders the parties to meet and confer and file a joint list of arbitrators for the court to select a list of five arbitrators within 15 days service of this order. If for any reason a party fails to cooperate in creating this joint list, the other party may file a list of their own choices accompanied by a declaration explaining their efforts to comply with the court’s order and the failure on the part of the other party to cooperate.

            Motion to Appoint Arbitrator is GRANTED.

Conclusion:

            For the foregoing reasons, the Court decides the pending motion as follows:

Motion to Appoint Arbitrator is GRANTED as set forth in the process above. Further status on arbitration on November 1, 2023 at 8:30 am

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             September 25, 2023                ________________________________                                                                                                                    Upinder S. Kalra

                                                                                    Judge of the Superior Court