2151 Michelson, L.P. v. Corp of the Presiding Bishop ( 2019 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
FEB 22 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
2151 MICHELSON, L.P., a California No. 17-56106
limited partnership,
D.C. No.
Plaintiff-Appellant, 8:17-cv-00781-DOC-DFM
v.
MEMORANDUM*
CORPORATION OF THE PRESIDING
BISHOP OF THE CHURCH OF JESUS
CHRIST OF LATTER-DAY SAINTS, a
Utah Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Argued and Submitted February 8, 2019
Pasadena, California
Before: WARDLAW and BEA, Circuit Judges, and MURPHY,** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Stephen J. Murphy, III, United States District Judge
for the Eastern District of Michigan, sitting by designation.
2151 Michelson, L.P. (“Michelson”) appeals the district court’s order
denying its motion to remand and granting the Corporation of the Presiding Bishop
of the Church of Jesus Christ of Latter-Day Saints’s (“CPB”) motion to dismiss
and compel arbitration in an action brought by Michelson challenging the
provisions of a lease. We have jurisdiction under 28 U.S.C. § 1291, and we affirm
in part and reverse in part the district court’s order granting CPB’s motion to
dismiss and compel arbitration.
1. The district court correctly determined that CPB’s litigation of a rent
reset dispute with Michelson in 2002 was not a waiver of CPB’s right to arbitrate
the current rent reset dispute. “[A] party seeking to prove waiver of a right to
arbitration must demonstrate: (1) knowledge of an existing right to compel
arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the
party opposing arbitration resulting from such inconsistent acts.” Richards v. Ernst
& Young, LLP, 744 F.3d 1072, 1074 (9th Cir. 2013).
CPB’s actions in the present dispute are not inconsistent with the right to
arbitrate. In its complaint, Michelson acknowledged that CPB intended to
arbitrate. Furthermore, “litigation machinery” has not been “‘substantially
invoked’” in this case. See Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1124
(9th Cir. 2008). CPB has filed only a motion to remove and a motion to dismiss
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and compel arbitration. No discovery has been conducted. Moreover, Michelson
has not cited any controlling authority for the proposition that CPB’s actions in the
prior state court proceeding may be considered in a waiver analysis.
In addition, Michelson failed to address in its opening brief the district
court’s finding that it failed to meet its burden of demonstrating prejudice.
Accordingly, any argument against the district court’s finding that Michelson has
not suffered prejudice is waived. See Kumar v. Gonzales, 444 F.3d 1043, 1056
(9th Cir. 2006).
2. The district court erred by concluding that the state court preclusion
issue is not subject to arbitration. The parties agree that the preclusive effect of
prior litigation is arbitrable. See Collins v. D.R. Horton, Inc., 505 F.3d 874, 880
(9th Cir. 2007) (“Arbitrators are not free to ignore the preclusive effect of prior
judgments under the doctrines of res judicata and collateral estoppel, although they
generally are entitled to determine in the first instance whether to give the prior
judicial determination preclusive effect.”). Michelson may therefore present
arguments to the arbitration panel about what preclusive effect the earlier state
court proceedings have on the current dispute.
3. The district court correctly dismissed the action on the basis that all
the claims are arbitrable. A district court may dismiss an action, rather than stay it,
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when all of the issues are arbitrable. See, e.g., Sparling v. Hoffman Constr. Co.,
864 F.2d 635, 638 (9th Cir. 1988). Here, as explained above, all the claims are
arbitrable. Thus, the district court did not err by dismissing the action without
prejudice.
Each party shall bear its own costs of appeal.
AFFIRMED IN PART AND REVERSED IN PART.
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