Shenian Law Firm v. Lopez
Filed 6/21/12 Shenian Law Firm v. Lopez CA2/9
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
EIGHT
SHENIAN LAW FIRM,
Plaintiff and Appellant,
v.
JONATAN LOPEZ et al.,
Defendants and Respondents.
B232089
(Los Angeles
County
Super. Ct.
No. BC448003)
APPEAL
from an order of the Superior Court
of
County, Teresa Sanchez-Gordon, Judge. Affirmed.
Shenian
Law Firm and Datev Shenian for Plaintiff and Appellant.
Fuchs
& Associates, John R. Fuchs and Gail S. Gilfillan for Defendants and
Respondents.
* * *
* * * *
Appellant
Shenian Law Firm appeals from an order denying its petition to compel
arbitration. The court found appellant
had waived its right to contractual
arbitration. We affirm.
On
October 22, 2010,
appellant filed a lawsuit against respondents Jonatan Lopez, Noemi Farias, and
Alfonso Lopez alleging that respondents retained appellant to perform
attorney fees. Appellant caused a notice
of pendency of action (lis pendens) to be recorded on October 28, 2010.
On
January 5, 2011, respondents
demurred to the complaint. Five days
later, respondents filed a motion to
expunge the lis pendens.
On
February 10, 2011,
appellant filed a petition to compel arbitration. Among other things, appellant attached a
letter to respondent’s counsel dated January
27, 2011, indicating that it was demanding arbitration of “any
defenses and counter-claims, the motion to expunge lis pendens, the filed
demurrer, and all discovery matters.â€
On
March 22, 2011, the court
denied appellant’s petition to compel arbitration, overruled respondents’
demurrer, and granted respondents’ motion to expunge lis pendens. The trial court found appellant waived the
right to arbitration by unreasonably delaying in seeking to compel arbitration. On April
7, 2011, the court issued an order expunging the lis pendens.
The
sole issue on appeal is whether appellant waived its contractual right to
arbitration.
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conclude it did.
evaluating a waiver of a contractual arbitration provision and is the
cornerstone of appellant’s claim that the court erred in finding waiver. In St.
Agnes, the California Supreme Court emphasized the strong public policy
favoring arbitration and made clear that “merely participating in litigation,
by itself, does not result in a waiver [of a contractual right to
arbitrate] . . . .†(
additional holding that to find waiver a court must find prejudice, which does
not result solely from the payment of legal expenses. (Ibid.)
Appellant’s
heavy reliance on St. Agnes is
misplaced because St. Agnes did not
involve the determination of waiver in the context of a statute codifying
special rules. Such statutes apply in
disputes (1) involving a suit supporting the recording of lis pendens, (2)
seeking to foreclose on a mechanic’s lien, and (3) including an application for
provisional remedies. (See Knight et
al., Cal. Practice Guide: Alternative
Dispute Resolution (The Rutter Group 2011) ¶¶ 5:193, 5.195, 5.200, pp. 5-145,
5-147.) As applicable here, Code of
Civil Procedure section 1298.5
name="_ftnref2" title="">
“Any party to an action who proceeds to record a notice of pending
action . . . shall not thereby waive any right of arbitration
which that person may have pursuant to a written agreement to arbitrate, nor
any right to petition the court to compel
arbitration . . . , if, in filing an action to record that
notice, the party at the same time presents
to the court an application that the action be stayed pending the arbitration
of any dispute which is claimed to be arbitrable and which is relevant to the
action.†(Italics added.)
Appellant
argues this court should follow Simms v.
NPCK Enterprises, Inc. (2003) 109 Cal.App.4th 233, in which the court
considered a similar statute. Section
1281.8, states that a party does not waive the right to arbitrate by filing an
application for a provisional remedy if “at the same time†the party presents
an application for a stay.
name="_ftnref3" title="">
blurred the distinction between the statutory waiver and the application of the
more general criteria, holding that compliance with the statute was only one
factor to consider in analyzing waiver.
(Simms, at p. 240.) Simms
stated: “absent an explicit statutory
command to find waiver, the failure to include a request for a stay with an
application for provisional relief, is a fact to consider in determining
waiver, but it is not dispositive.†(
As appellant argues, under Simms,
appellant’s failure to timely seek a stay was not dispositive, but instead was
only one factor.
The
rules of statutory interpretation provide that the court’s “‘first task in
construing a statute is to ascertain the intent of the Legislature so as to
effectuate the purpose of the law. In
determining such intent, a court must look first to the words of the statute
themselves, giving to the language its usual, ordinary import and according
significance, if possible, to every word, phrase and sentence in pursuance of
the legislative purpose. A construction
making some words surplusage is to be avoided.
The words of the statute must be construed in context, keeping in mind
the statutory purpose, and statutes or statutory sections relating to the same
subject must be harmonized, both internally and with each other, to the extent
possible. [Citations.] Where uncertainty exists consideration should
be given to the consequences that will flow from a particular
interpretation.’†(Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc. (1997)
60 Cal.App.4th 13, 17.)
Statutory
language that a particular act does not waive the right to arbitration “if, at
the same time†an application for a stay is filed, expresses a
contingency. Specifically, the term “ifâ€
indicates that one act is contingent on the other. The right to arbitration is not waived
contingent on the timely filing of an application for a stay. Finding that the application for a stay is
optional renders the following statutory language surplusage: “the party at the same time
that the action be stayed pending the arbitration of any dispute which is
claimed to be arbitrable and which is relevant to the action.†(§ 1298.5.)
“We must avoid any statutory construction which renders a portion of the
statutory language meaningless.†(
Inc. (2009) 174 Cal.App.4th 940, 951.)
Cases
applying the former statute governing suits to foreclose mechanics liens
interpreted the phrase “at the same time†to require the party filing suit to
immediately or within a reasonable time apply for a stay. For example, in R. Baker Inc. v. Motel 6, Inc.
(1986) 180 Cal.App.3d 928, 930 (Baker),
the court considered the meaning of former section 1281.5 containing the “at
the same time†language.
name="_ftnref4" title="">
court held that under this statute, the party seeking arbitration was required
“to request a stay at the time it filed its action, not afterwards.†(Id.
at p. 931; see also Manhattan Loft, LLC
v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1054.) Applying similar reasoning, in
(1988) 202 Cal.App.3d 1220, 1227 (Kaneko),
the court held that an application for a stay was required to be filed “within
a reasonable time†allowing time only to ensure the party filing the action to
enforce a mechanics lien had an opportunity to serve the defendant with the
summons and complaint prior to filing an application for a stay.
Based on
the language of section 1298.5, Baker,
and Kaneko, we conclude that to
preserve its right to arbitrate appellant was required to file an application
for a stay when it filed its suit supporting a lis pendens.
construed to mean a reasonable time, it cannot be construed to encompass a four
month period. We reject appellant’s
argument that St. Agnes compels a
different result as that case did not involve the application of the relevant
statute. Because appellant waited
several months after filing its lawsuit and recordings its lis pendens to seek
a stay, it forfeited its right to
arbitrate the dispute. The trial
court properly denied appellant’s motion to compel arbitration.
DISPOSITION
The
order denying appellant’s petition to compel arbitration is affirmed. Respondents shall have their costs on appeal.
FLIER,
J.
I concur:
GRIMES,
J.
>
BIGELOW, P. J., Dissenting:
I
respectfully dissent.
The
determination of whether arbitration has been waived is a question of fact,
which is binding on the appellate court only if supported by substantial
evidence. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951,
983.) Those facts must be considered in
light of the strong policy favoring arbitration, and waiver will not be lightly
inferred. Indeed, the party claiming
waiver has a heavy burden of proof. (
of California (2003) 31 Cal.4th 1187, 1195 (St. Agnes).) Applying
these principles, I would find that the trial court erred in denying the motion
to compel arbitration.
First, I do
not share in the majority’s interpretation that Code of Civil Procedure section
1298.5 (hereafter, § 1298.5) compels a conclusion that appellant waived
contractual arbitration. Section 1298.5
provides: “Any party to an action who
proceeds to record a notice of pending action . . . shall
not thereby waive any right of arbitration . . . if, in
filing an action to record that notice, the party at the same time presents to the court an application that the
action be stayed pending the arbitration . . . .†(Italics added.) The majority interprets section 1298.5 to mean
that if a party files an action to record a lis pendens, the party must at the
same time present an application to the trial court for a stay pending
arbitration, or the party loses any and all right to arbitration. I disagree.
In my view, section 1298.5 protects a party who desires to record a lis
pendens, while also retaining the right to arbitrate a claim. The statute clarifies that a party’s right to
arbitrate a dispute is protected, notwithstanding that the party files a lis
pendens, if at the same time the party seeks a stay pending the arbitration. The converse, in my view, is not contemplated
by the statute. That is, I do not
believe a party’s failure to file an application for a stay pending arbitration
at the same time a lis pendens is filed forfeits the right to arbitrate a
claim. This was the same result reached
by Simms v. NPCK Enterprises, Inc.
(2003) 109 Cal.App.4th 233, 240, under strikingly similar circumstances.
I interpret
section 1298.5 to mean that a party’s failure to file an application for a
stay, at the same time a court action is filed, leaves the issue of whether the
party waived contractual arbitration an open question, subject to the criteria
set forth in St. Agnes, supra, 31
Cal.4th 1187. I do not believe that the
public policy favoring arbitration (id.
at pp. 1203-1204) should be undermined by an interpretation of section 1298.5
that cuts against the grain of that public policy, particularly where the
statutory language does not plainly command such a result.
Second, I
would find no waiver under the principles of the California Supreme Court case
in St. Agnes. There, our high court taught us that merely
participating in litigation does not result in a waiver of arbitration; instead
the presence or absence of prejudice from the litigation is “ ‘the
determinative issue . . . .’ †(
prejudice where the petitioning party used the judicial discovery processes to
gain information about the other side’s case that could not have been gained in
arbitration [Citations]; where a party unduly delayed and waited until the eve
of trial to seek arbitration [Citation]; or where the lengthy nature of the
delays associated with the petitioning party’s attempts to litigate resulted in
lost evidence. [Citation.]†(Id.
at p. 1204.)
The record
in this case does not show that the parties litigated the merits of the
respondent’s claims, or that any discovery took place. There is no evidence that the appellant
gained any information about respondent’s case that would be unavailable in
arbitration. There is no showing of any
lost evidence. Instead, the record
reflects the parties were attempting to settle their dispute immediately after
the case was filed in late October. Only
about seven weeks passed between the filing of the lis pendens on November 5,
and appellant informing respondents on December 28, 2010 that they would seek
arbitration of their claims if settlement negotiations failed. After respondents indicated by letter that
they were not interested in arbitration, appellant filed a formal motion to compel
arbitration on February 10, 2011. No
discovery was undertaken; no motions had been resolved. Really, nothing happened regarding the case
until the motion to compel arbitration was denied. Further, appellant did not take actions
inconsistent with the right to arbitrate.
Instead, the parties were attempting to settle the case and appellant
informed respondents that if the settlement negotiations failed, appellant
would seek arbitration. Even adding to
these facts that there was a three-month delay between filing the lis pendens
and filing a formal motion to compel arbitration, given the circumstances, I do
not find substantial evidence that appellant met his “heavy burden†of
demonstrating a waiver of the right to arbitration.
BIGELOW, P. J.
We
need not discuss appellant’s challenge to the court’s evidentiary rulings
because we do not rely on any “evidence†appellant challenges. Because we find appellant’s petition to
compel arbitration was not timely, we need not consider appellant’s argument
that respondent suffered no prejudice.
We have considered
respondents’ argument that appellant’s opening brief should be stricken, but
conclude it lacks merit.
are to the Code of Civil Procedure.
