Wolf v. Loring Ward
International
Filed 2/21/13 Wolf v. Loring Ward International CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE
DISTRICT
DIVISION THREE
CHRISTINE WOLF,
Plaintiff
and Respondent,
v.
LORING WARD INT’L, LTD. et al.,
Defendants
and Appellants.
B238428
(Los
Angeles County
Super. Ct.
No. BC445310)
APPEAL
from an order of the Superior Court
of
County, Holly Kendig, Judge. Affirmed.
Kinsella
Weitzman Iser Kump & Aldisert, Dale F. Kinsella, Patricia A. Millett,
Kristen L. Spanier for Defendants and Appellants Loring Ward Int’l, Ltd,
SNCB002, Inc., Assante Corporation and Martin Weinberg.
Buchalter Nemer,
Michael L. Meeks and Robert M. Dato for Defendant and Appellant Robert
Philpott.
McKool
Smith Hennigan, J. Michael Hennigan, Allison K. Chock; Gersh Derby
and Paul B. Derby for Plaintiff and Respondent.
_________________________
Defendants
and appellants Martin Weinberg (Weinberg), Robert Philpott (Philpott), Loring
Ward International, Ltd. (LW International), SNCB002, Inc. (SNCB002), and
Assante Corporation (Assante) (collectively, defendants) appeal an order
denying their motions to compel arbitration of a lawsuit filed by plaintiff and
respondent Christine Wolf (Christine).
The trial court
denied the motions to compel arbitration on the ground “there has been a waiver
by moving parties of their right to compel arbitration, due to the six-year
delay in requesting arbitration and the extensive, substantive litigation that
has proceeded on these very same facts in federal and state court for the past
six years.â€
The “question of
waiver generally is one of fact.
[Citation.] As such, the trier of
fact’s finding of waiver, if supported by substantial
evidence, is binding on this court.
[Citation.] ‘ “The appellate
court may not reverse the trial court’s finding of waiver unless the record as
a matter of law compels finding nonwaiver.â€
[Citation.]’ [Citation.]†(Roberts
v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 841 (
We conclude the
trial court’s finding of waiver is supported by substantial evidence. Accordingly, the order denying the motions to
compel arbitration is affirmed.
1. Parties
and relationships.
In
1994, Philpott began acting as business manager and financial advisor to
Christine and her then husband, Dick Wolf, creator of the Law and Order television franchise.
In 1998, Philpott’s firm merged with Assante, a Canadian corporation
chaired by Weinberg. LW International and
SNCB002 allegedly are agents or affiliates of Assante.
2. Defendants’
services to Christine in connection with her marital settlement agreement
(MSA).
In 2002, the Wolfs
separated. Weinberg represented to
Christine that he and the Assante entities already had assisted another high
net worth couple’s amicable division of marital assets, thereby avoiding the
massive expense, publicity and acrimony of divorce litigation. Christine authorized defendants to analyze
the Wolfs’ financial condition and to propose a fair and equitable MSA. Christine allegedly relied on the
“completeness and objectivity†of the information provided her by the
defendants and entered into an MSA with her husband in 2003. Christine signed the MSA in August 2003.
3. The
arbitration agreement.
During this same
time frame, on May 2, 2003, Christine signed a standard form “Client Services
Agreement†with Assante Global Advisers, Inc., an investment adviser
(hereafter, Assante Global, not a party to this appeal), retaining it to “direct
and manage†her assets.
This Client
Services Agreement provided at paragraph 17 that “all controversies which may
arise between Client, Adviser, Representative, any Sub-Adviser
concerning any transaction arising out of or relating to the Account, or the
construction, performance, or breach of this Agreement, whether entered into
prior to, on or subsequent to the date hereto, shall be submitted to
arbitration conducted under the Rules for Commercial Arbitration of the
American Arbitration Association.â€
(Italics added.)
4. The
federal action.
Christine
subsequently suspected that defendants either intentionally or negligently
failed to disclose the most significant asset in the marital estate – the
vested contractual right to a percentage of income in future licensing of
Christine that her husband was only entitled to receive an additional $8
million of profit participation payments during the succeeding four-year period
and nothing more.
On May 11, 2005,
Christine commenced litigation against defendants in federal court in the
Central District of California.
Christine alleged fraud and invoked the court’s diversity jurisdiction. As set forth in greater detail below, the
matter was intensely litigated in the federal court, including numerous motions
and extensive discovery.
On April 4, 2008,
the district court dismissed the federal action for lack of jurisdiction. On March 30, 2010, the Ninth Circuit reversed
the district court’s dismissal of the action.
On August 6, 2010, the district court again dismissed the federal
action, citing lack of diversity jurisdiction.
5. The
instant action in the superior court.
On September 10,
2010, Christine commenced this action against Philpott, Weinberg, LW
International, Assante and SNCB002 in the Los Angeles Superior Court. The operative first amended complaint pled
causes of action for breach of fiduciary duty, constructive fraud, negligent
misrepresentation, negligence and breach of contract.
The gravamen of
the action is that defendants failed to duly advise Christine that Wolf Films
had a fully vested contractual right and was entitled to significant future
revenues from the Law and Order
franchise, and had Christine been fully informed of the true facts, she would
not have agreed to the amounts set forth in the MSA.
a.
Defendants’ demand for
arbitration; Christine’s refusal.
On July 28, 2011,
defendants sent a letter to Christine, demanding arbitration.
The following day,
Christine responded, stating she would “not voluntarily submit to
arbitration. The referenced Client
Services Agreement arbitration provision does not apply to this dispute. It was not entered into until May 2003, after
the events in dispute; it only applies to transactional disputes; and only
Assante Global Advisers was a party. In
addition, the federal lawsuit was filed in May 2005, and this state court
action in September 2010. The defendants
litigated their demurrers to completion without ever mentioning
arbitration. Years of discovery occurred
in the federal action, including discovery not normally available in
arbitration. These years of litigation
constitute a waiver under California law.â€
b. Motions
to compel arbitration.
On August 1, 2011, eleven months after
the inception of the superior court action, four of the instant defendants
filed motions to compel arbitration.
Nearly three months later, Philpott filed a separate motion to compel
arbitration. All five defendants invoked
the May 2003 Client Services Agreement that Christine signed with Assante
Global, which Agreement contained an arbitration clause at paragraph 17. All five defendants contended they were
“affiliates†of Assante Global, so as to bring themselves within the
arbitration clause.
In
an attempt to explain the delay in seeking arbitration, the moving papers were
supported by the declaration of Attorney Patricia Millettt of Kinsella Weitzman
Iser Kump & Aldisert, counsel of record for the entity defendants. The Millett declaration stated “My office did
not obtain a copy of the [Arbitration] Agreement until June 2011 after it was
located in a box of old LWCM [Loring Ward Capital Management, Inc.] records
retrieved from an off-site storage facility.â€
c. Christine’s
opposition.
In opposition,
Christine contended, inter alia, defendants’ claimed ignorance “of its own
standard form arbitration provision†was untenable and irrelevant. Further, the claim of delayed discovery was
not credible. In October 2007,
Christine’s then attorney, Matthew Hoffman of Gibson, Dunn & Crutcher, sent
a copy of the May 2003 arbitration agreement to the Kinsella firm, in response
to a deposition subpoena. Christine
attached copies of the Bates numbered documents, which had been sent to the
Kinsella firm four years earlier, to her papers.
Christine further argued a finding of waiver was
justified because defendants had substantially invoked the litigation process
during the preceding six years, the parties were well into preparation of the
lawsuit, defendants’ delay in seeking arbitration was extreme, and the delay
was prejudicial to Christine, both in terms of time and expense.
d. Hearing.
On November 15, 2011, the matter came on
for hearing. The record reflects the
trial court was troubled by defendants’ claim of delayed discovery of the
arbitration agreement. The trial court
observed: “I guess one of my problems on
this case is I have a problem figuring out how nobody knew there was an
arbitration agreement for six years. And
I think too highly of the law firms involved, frankly, to think that nobody
ever asked that question. And of course,
I have the business of plaintiff turning over a copy of it.â€
The trial court
added: “With all due respect, if her
lawyer produced it, she produced it. I
don’t understand the argument. Am I
missing something? . . . [¶] . . . [¶] What do you want? Do you want somebody to come to the door and
nail on the wall and say there’s an arbitration agreement here? They produced a copy of it. For you to argue that that wasn’t enough, I
think that’s a hard fact for you guys to get around and I see why you’re
trying.â€
e. Trial
court’s ruling.
After
taking the matter under submission, the trial court denied the motions to
compel arbitration in an extensive written ruling, stating in pertinent part:
“The
court finds that there has been a waiver by moving parties of their right to
compel arbitration, due to the six-year delay in requesting arbitration and the
extensive, substantive litigation that has proceeded on these very same facts
in federal and state court for the past six years. The plaintiff’s claims on the same facts were
first filed in May 2005 in federal court.
The claims proceeded in federal court with written discovery and written
responses thereto, discovery motions, 22 days of depositions with 5,700 pages
of transcripts, and even expert discovery.
Ultimately, the claims were dismissed from federal court for lack of
federal diversity jurisdiction and refiled in Los Angeles Superior Court, but
not before substantially invoking the litigation machinery on the claims. The moving parties contend that the Los
Angeles Superior Court case must be treated as a new case which is only 14
months old, however they vociferously and vigorously argued the exact opposite
in May and June, 2010 at hearings on their demurrers to the plaintiff’s
complaint. In that context, the defendants contended that this action was an
extension of the federal court case, and that this court should take judicial
notice of the prior 5 years of litigation in the federal court, including
taking judicial notice of the truth of the matters contained in the federal
court file, and dismiss Christine Wolf’s claims without leave to amend. Defendants’ counsel stated at the previous
demurrer hearings that they had suffered litigating this matter for five years,
admitting that there had been ‘a heap of discovery and a huge number of
pleadings,’ and admitting that they had spent more than $4 million on fees and
costs.
“The factors this
court must consider in evaluating a claim of waiver of the right to compel
arbitration are set forth in St. Agnes
Medical Center v. PacifiCare of California (2003) 31 Cal. 4th 1187,
1196. The first such factor is ‘Did the
party seeking arbitration act inconsistently with the right to arbitrate or
otherwise substantially invoke the litigation process.’ It is quite clear that the six years of
activity in this case, considering both the federal and state proceedings,
substantially invoked the litigation process.
The litigation process in the
federal action involved 564 docket items, as well as extensive discovery,
summary judgment motions, motions to dismiss, the twenty-two depositions
(totaling 5,700 pages), four days of deposition of plaintiff Christine Wolf,
disclosure by Ms. Wolf of five expert witnesses and their reports and four
expert witness discovery depositions . . . , which the
defendants do not dispute. In fact, the
defendants apparently thought the facts necessary to their defense were
sufficiently well developed that each moved for summary
judgment. . . . . In
this state action alone, defendants filed seven demurrers (three to the original
complaint, mooted when plaintiff filed a first amended complaint on December
20, 2010, and four to the First Amended Complaint), and asked the court to
certify certain privilege issues for an immediate
appeal. . . . Although
the defendants claim to have been unaware of the agreement with the arbitration
clause until recently, that contention is carefully and artfully worded, and,
in the end, not very persuasive. It is
evident that the defense attorneys knew or should have known long ago, since
attorneys for plaintiff produced the arbitration agreement in the federal
action on October 27, 2007 to the very same defense attorneys. . . .
Thus, the defendants knew or should have
known of the existence of their own contract, with the arbitration clause
drafted by them, since 2007 at the latest.
Thus, the court finds that the parties seeking arbitration here acted
inconsistently with the right to arbitrate, and also substantially invoked the
litigation process.
“Other
here. Another factor to consider is
whether ‘the parties are “well into preparation†of the lawsuit or whether the
“litigation machinery†has been substantially invoked. Given the evidence here, it seems quite clear
that the litigation machinery has been substantially invoked and the parties
are well into preparation of the lawsuit.
In addition, the intervening steps of discovery, including the
plaintiff’s deposition over four days, as well as expert witness depositions,
have all been taken, meeting yet another factor set forth by the California
Supreme Court in the St. Agnes
case. In sum, the record in both the
federal and state court actions on these claims lends support to the
plaintiff’s view that the defendants tried every possible measure to win the
case in the courts by getting the claims dismissed, and when that didn’t work
out, chose to seek arbitration six years later.
However, California law makes clear that a party may not use the court
to take the benefits of litigation, and then later seek arbitration. As the Second District Court of Appeal has
confirmed, ‘The courtroom may not be used as a convenient vestibule to the
arbitration hall so as to allow a party to create his own unique structure
combining litigation and arbitration.’
Cal. App. 4th 553, 558 . . . .
“On the crucial
element of prejudice, multiple forms of prejudice are apparent here. The prejudice to plaintiff is evidenced by
the fact that the defendants have already engaged in discovery much more
extensive that would be permitted in arbitration. The course of litigation conduct engaged in
by the defendants is entirely inconsistent with the right to arbitrate. In addition, plaintiff asserts that she
retained the experts specifically to explain to the jury certain family law and
entertainment-related issues, and has already disclosed them to
defendants. Thus, defendants obtained
plaintiff’ expert list and deposed four of the five designated experts. Under California law, this constitutes
prejudice. See Burton v. Cruise (2010) 190 Cal.App.4th 939, 949-951 (obtaining
expert panel designation by unreasonable delay caused prejudice because it
revealed trial strategy, including what counsel ‘sift[ed]’ from all available
information ‘to be the relevant from the irrelevant facts,’ and upon which
counsel prepared ‘his legal theories and . . . strategy’).
“Moreover, the
delay in seeking arbitration here is extreme -- over six years. The six years that have passed since
Wolf filed this action -- even attributing some of the time to Wolf for filing
the case in federal court to begin with, and for appealing the diversity
jurisdiction ruling -- amounts to an unreasonable delay which has prejudiced
Wolf here not only for the costs Wolf has incurred, but for the lost ‘ability
at this late date to take advantage of the benefits and cost savings provided
by arbitration.’. . . After
all, because an ‘arbitration clause . . . is not
self-executing,’ the party invoking an arbitration agreement right must ‘timely
raise the defense and take affirmative steps to implement the process.’ [Citations.]
There is no question that
defendants could have sought to compel arbitration at any point in time during
the past six years.
“Defendants argue
that certain defendants were not involved in the federal action, and therefore
could not have waived by the conduct of the other defendants. Defendants’ position on this issue, however,
is entirely inconsistent with their claim that the defendants are all
‘affiliated,’ and thus entitled to be considered parties to the agreement
containing the arbitration clause. This
is the crux of their position that all the defendants have standing to invoke
the arbitration clause. As noted above,
the arbitration clause extends to Assante Global or ‘any of [Assante Global’s]
affiliated companies.’. . . Defense counsel admitted and argued
at the November 15, 2011 hearing that all defendants were ‘affiliates’ of
Assante Global to show that each defendant was entitled to invoke the
arbitration clause, though not parties to it, as an affiliate. If they are affiliated for the purposes of
arbitration, then they are affiliated for the purposes of waiver. Furthermore, any conduct that any Loring Ward
entity undertook to defend the federal action, including expert and non-expert
discovery, has certainly inured to the benefit of all of the entity defendants
(who were and remain represented by the same counsel).
“Even if certain
of the Loring Ward entity defendants were not parties to the federal action,
they were parties to this action, and the fourteen month delay prior to seeking
arbitration in this action amounts to a waiver by itself. Even a three month delay in seeking
arbitration has been held to be a waiver.
Guess?, Inc. v. Superior Court
(2000) 79 Cal. App. 4th 553, 557. As
noted above, the attorneys for Loring Ward knew in October 2007 of the Client
Services Agreement containing the arbitration clause. . . . Those same attorneys represent all of the
Loring Ward entities in this state action, filed on September 10, 2010. All defendants utilized the past fourteen
months by demurring on the ground that certain issues had already been
determined in federal court, asking this court to sustain their demurrers
without leave to amend, but never once mentioning arbitration.
“Under the
circumstances, having already spent years in federal court arguing the same
case, and having knowledge of the arbitration clause in the Client Services
Agreement since 2007, the court finds all of the defendants’ delay in seeking
arbitration was unreasonable and altogether inconsistent with the desire to
arbitrate rather than litigate.
Arbitration is intended to provide an alternative forum for dispute
resolution that is ‘speedy and relatively inexpensive’ -- and this action has
been anything but speedy or inexpensive for Wolf, who has by now been
thoroughly deprived of the ability to take advantage of the time-benefits and
cost savings arbitration is intended to provide. [Citations.]
“Wolf has carried
her ‘heavy burden’ of showing waiver.
Defendants’ separate petitions are accordingly denied.â€
This appeal
followed.
CONTENTIONS
Defendants contend the trial court erred
in finding they waived their right to arbitrate.
Christine contends
the trial court properly determined the defendants waived any right to compel
arbitration, and in any event, her claims against defendants fell outside the
scope of the arbitration clause.
1. Governing
law.
a. General
principles.
The
controlling statute, Code of Civil Procedure section 1281.2, provides in
relevant part: “On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party
thereto refuses to arbitrate such controversy, the court shall order the
petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines that: [¶] (a) The right to compel arbitration has been waived by the petitioner;
or [¶] (b) Grounds exist for the revocation of the
agreement. . . . .â€
(Italics added.)
Public policy
considerations favor arbitration as a means of resolving disputes. (St. Agnes
Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 (
compel arbitration if it finds the moving party has “waived†that right. (Ibid.) Waiver of the right to demand arbitration may
arise in a variety of contexts, such as where “ ‘ “the petitioning party has
procedure.†’ †(Id. at p. 1196, italics added; accord Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557
[party may waive right to compel arbitration by failing to properly and timely
assert right to arbitration]; Roman v.
Superior Court (2009) 172 Cal.App.4th 1462, 1478 [same].)
In assessing a
claim of waiver, the trial court may consider the following factors: (1) whether the party’s actions are
inconsistent with the right to arbitrate; (2) whether the litigation machinery
has been substantially invoked and the parties were well into preparation of a
lawsuit before the party notified the opposing party of an intent to arbitrate;
(3) whether a party either requested arbitration enforcement close to the trial
date or delayed for a long period before seeking a stay; (4) whether a
defendant seeking arbitration filed a counterclaim without asking for a stay of
the proceedings; (5) whether important intervening steps, such as taking
advantage of judicial discovery procedures unavailable in arbitration, had
taken place; and (6) whether the delay affected, misled, or prejudiced the
opposing party. (St. Agnes, supra, 31 Cal.4th at p. 1196.)
“Although a court
may deny a petition to compel arbitration on the ground of waiver ( [Code Civ.
Proc.] § 1281.2, subd. (a)), waivers are not to be lightly inferred and the
party seeking to establish a waiver bears a heavy burden of proof.†(St.
Agnes, supra, 31 Cal.4th at p. 1195.)
b. Standard
of appellate review.
The
“heavy burden of proof†guides the trial court’s determination as to whether
arbitration has been waived; however, the higher burden below does not alter
the standard of review on appeal. (
939, 945-946.) It was the trial court’s
role to determine whether the movants met their burden of proof; it is this
court’s duty to determine whether there is substantial evidence to support the
trial court’s determination. (
“Generally,
the determination of waiver is a question of fact, and the trial
court’s finding, if supported by sufficient evidence, is binding on the
appellate court.†(Saint Agnes, supra, 31 Cal.4th at p. 1196.) This court may not reverse the trial
court’s finding of waiver “ ‘ “unless the record as a matter of law
compels finding nonwaiver.†’ †(
841.) We construe any reasonable
inference in the manner most favorable to the trial court’s ruling, resolving
all ambiguities to support an affirmance.
(Ibid.)
2. Trial
court’s finding of waiver is supported by substantial evidence.
a. Unreasonable
delay.
The trial court flatly
rejected defendants’ claim of recent discovery of the arbitration agreement as
“carefully and artfully worded, and, in the end, not very persuasive.†The trial court specifically found: “There is no question that defendants could
have sought to compel arbitration at any
point in time during the past six years.â€
(Italics added.) The trial court
further found, “the defendants knew or should have known of the
the arbitration clause drafted by them, since 2007 at the latest,†when Christine’s attorneys produced the arbitration agreement in
discovery. (Italics added.)
The record supports the
trial court’s findings. Because these
five defendants contend they are all affiliates of Assante Global, so as to be
entitled to the benefit of the arbitration clause in the Client Services
Agreement, said defendants either knew or should have known of their own
contract from the inception of the litigation in 2005.
Moreover, in October 2007, Christine produced a copy of the
Client Services Agreement in response to a deposition subpoena. Therefore, the trial court properly found
that by 2007 at the latest,
defendants either knew or should have known of the existence of their own arbitration
clause. Therefore, defendants’ failure
to invoke the arbitration clause until 2011 was unreasonable.
In an attempt to
minimize the extent of their delay, defendants seek to focus on Christine’s
lawsuit in the superior court, filed in September 2010, rather than on the
totality of the litigation. The trial
court already has rejected this argument.
In ruling on the matter, the trial court noted the inconsistency in defendants’
positions, citing defense counsel’s statements “at the previous demurrer
hearings that they had suffered litigating
this matter for five years, admitting that there had been ‘a heap of
discovery and a huge number of pleadings,’ and admitting that they had spent
more than $4 million on fees and costs.â€
(Italics added.) On this record,
the trial court properly considered the totality of the circumstances in
determining whether defendants unreasonably delayed their demand for
arbitration. (Lewis v. Fletcher Jones Motor Cars, Inc. (2012)
205 Cal.App.4th 436, 448-449 (Lewis)
[court must view the litigation as a whole in determining whether parties’
conduct is inconsistent with a desire to arbitrate].)
b.
Defendants’ litigation conduct was
inconsistent with the right to arbitrate.
Notwithstanding
their extreme delay in seeking arbitration, defendants contend their conduct in
the federal action was insufficient to support a finding of waiver. The argument is unpersuasive. Whether defendants substantially invoked the
litigation process in state or federal court is separate from whether
defendants were dilatory in seeking arbitration. As indicated, unreasonable delay in demanding
arbitration may be sufficient to give rise to a waiver. (St.
Agnes, supra, 31 Cal.4th at p. 1196 [waiver where moving party has
unreasonably delayed in undertaking arbitration]; accord Guess?, Inc. v. Superior Court, supra, 79 Cal.App.4th at p. 557;
172 Cal.App.4th at p. 1478.)
Leaving aside the
issue of delay, defendants “concede that SNCB002, Inc., Martin Weinberg
and Robert Philpott did participate in the Federal action,†but argue their
litigation conduct was insufficient to effect a waiver of their right to
arbitrate. The argument is
unpersuasive. Given the extent of the
litigation activity in the district court, as noted by the trial court in its
ruling, the trial court properly found these parties engaged in extensive
substantial litigation in federal court, and thereby acted inconsistently with
the right to arbitrate.
With respect to
the other two defendants, Assante and LW International, the circumstances are
somewhat different.
LW International was involved in the
federal action for 27 months, from the date it was served, June 16, 2005, until
it obtained a dismissal for lack of personal jurisdiction, on September 24,
2007. In the meantime, LW International
conducted jurisdictional discovery related to its motion to dismiss. As for Assante, it was served in the federal
action but did not appear, and its default was entered on June 18, 2007.
Therefore, with respect to LW
International and Assante, we also look to their litigation activity in state
court. In the state action alone, the
defendants filed two sets of demurrers, first to the original complaint and
then to the first amended complaint.
Defendants filed answers to the amended complaint (which asserted
arbitrability as one of 28 affirmative defenses). Defendants filed case management
statements. In addition, defendants
asked the trial court to certify certain privilege issues for an immediate
appeal.
Case law
recognizes that “litigating issues through [multiple] demurrers may justify a
waiver finding.†(Lewis, supra, 205 Cal.App.4th at p. 450.) Lewis
cited other decisions involving “similar conduct inconsistent with an
intent to arbitrate.
(See, e.g., . . . Kaneko Ford [Design v.
Citipark, Inc. (1988) 202 Cal.App.3d 1220, 1228-1229] [plaintiff engaged in
conduct inconsistent with intent to arbitrate by filing action, forcing
defendant to disclose legal strategies by answering complaint, and waiting over
five months to assert right to arbitration]; cf. Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 783-784 (
conduct inconsistent with intent to arbitrate by filing a lawsuit and pursuing
the litigation through two demurrers for the admitted purpose of obtaining
verified pleadings revealing the defendants’ legal theories].)†(Lewis,
supra, at p. 449.)
Here, the trial court found defendants’ belated assertion of the right to
arbitrate was tactical. The trial court
credited Christine’s position “that the defendants tried every possible measure
to win the case in the courts by getting the claims dismissed, and when that
didn’t work out, chose to seek arbitration six years later.â€
Here, substantial evidence and established
authority support the trial court’s conclusion that defendants engaged in
conduct inconsistent with the right to arbitrate.
c. Substantial
evidence of prejudice to Christine.
Lastly, we address the issue of
prejudice. An “egregious delay [in
seeking arbitration] may result in prejudice.
As the Supreme Court explained in St.
Agnes, prejudice is typically found where ‘the petitioning party’s conduct
has substantially undermined [the] important public policy [in favor of
arbitration] or substantially impaired the other side’s ability to take
advantage of the benefits and efficiencies of arbitration.’ (St.
Agnes, supra, 31 Cal.4th at p. 1204.)â€
(Burton v. Cruise, supra, 190 Cal.App.4th
at p. 947.)
Thus, a
petitioning party’s “ ‘conduct in stretching out the litigation process itself
may cause prejudice by depriving the other party of the advantages of
arbitration as an “expedient, efficient and cost-effective method to resolve
disputes,†’ and . . . ‘[a]rbitration loses much, if not all, of its value if undue
time and money is lost in the litigation process preceding a last-minute
petition to compel.’ †(
p. 844, fn. 9.)
By any standard,
the six-year delay in seeking arbitration was egregious. The protracted delay deprived Christine of
the advantages of arbitration as an expeditious and cost-effective method of
resolving her claims against defendants.
The record supports the trial court’s determination that defendants’
delay in seeking arbitration was prejudicial to Christine.
3. Remaining
issues not reached.
In view of our
conclusion the trial court properly found defendants have waived the right to
seek arbitration, it is unnecessary to address Christine’s contention the
arbitration clause is inapplicable to her claims, or any other issues.
DISPOSITION
The order denying the defendants’
motions to compel arbitration is affirmed.
Christine shall recover her costs on appeal.
NOT TO BE
PUBLISHED IN THE OFFICIAL REPORTS
KLEIN,
P. J.
We
concur:
CROSKEY,
J.
KITCHING,
J.
We refer to respondent by
her first name for purposes of clarity.
(In re Marriage of Weiss
(1996) 42 Cal.App.4th 106, 109, fn. 1.)
The facts are gleaned from the
pleadings.
