Villalobos v. Mike's Auto Group CA4/3 ( 2021 )

Filed 9/30/21 Villalobos v. Mike’s Auto Group CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
FOURTH APPELLATE DISTRICT
DIVISION THREE
CUAUHTEMOC DELA MORA
VILLALOBOS et al.,
G060400
Plaintiffs and Appellants,
(Super. Ct. No. 17CV000386)
v.
OPINION
MIKE’S AUTO GROUP, INC., et al.,
Defendants and Respondents.
Appeal from a judgment of the Superior Court of Monterey County, Marla
O. Anderson, Judge. Affirmed.
Rosner, Barry & Babbitt, Christopher P. Barry and Arlyn L. Escalante for
Plaintiffs and Appellants.
No appearance for Defendants and Respondents.
* * *
After the trial court confirmed an arbitration award against Cuauhtemoc
Dela Mora Villalobos and Azucena Ponce, they appeal from the order compelling the
parties to arbitration. Appellants contend that respondent Mike’s Auto Group, Inc.
(Mike’s Auto), waived its right to seek arbitration, and that the trial court improperly
appointed the arbitrator in violation of Code of Civil Procedure section 1281.6. As
discussed below, appellants have not shown reversible error. Accordingly, we affirm.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Complaint and Mediation
On January 27, 2017, appellants filed a complaint against Mike’s Auto and
Bay Federal Credit Union (Bay FCU), alleging they had purchased a used 2014 Lexus
vehicle by means of an installment sale contract, which Mike’s Auto later assigned to
Bay FCU. The complaint alleged the vehicle had substantial preexisting damage, and it
sought recission of the sale contract and various other remedies. The complaint noted the
contract contained a permissive arbitration clause, and stated that plaintiffs elected to
initiate the instant court action, “but will agree to stipulate to arbitration through JAMS, if
Defendants wish to resolve this dispute in arbitration.”
In March 2017, Mike’s Auto and Bay FCU filed answers, generally
denying the allegations and raising numerous affirmative defenses, but did not plead
arbitration as an affirmative defense.
The court appointed a mediator on June 6, 2017, and on August 24, 2017,
the parties participated in a mediation, which did not result in an agreement.
B. Motion to Compel Arbitration
On September 18, 2017, Mike’s Auto filed a case management statement
providing notice it would bring a motion to compel arbitration. The case management
statement also acknowledged the vehicle had been inspected.
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On October 3, 2017, Mike’s Auto filed its motion to compel arbitration.
The motion argued the arbitration clause in the sale contract was enforceable, and it
requested arbitration before AAA. The motion also stated Mike’s Auto would pay
appellants’ arbitral fees.
Appellants opposed the motion to compel arbitration, arguing Mike’s Auto
waived its right to seek arbitration by actively participating in litigation for almost a year
before requesting arbitration. Appellants stated that Mike’s Auto did not assert binding
arbitration as an affirmative defense in its answer, and that Mike’s Auto responded to
plaintiffs’ discovery requests in May 2017, noticed a vehicle inspection on May 23, 2017,
and participated in court-ordered mediation in August 2017.
Appellants asserted that if the court were to order arbitration, they would
select JAMS as the arbitration provider, not AAA. They also requested that a single
arbitrator be appointed, and that the court appoint the single arbitrator pursuant to Code
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of Civil Procedure section 1281.6, if the parties failed to agree on the arbitration
provider.
In response, Mike’s Auto argued its limited actions did not show waiver,
and asserted that inspecting the vehicle and responding to discovery requests would have
occurred in the arbitration in any event. It also renewed its request for arbitration before
AAA.
At the hearing on the motion to compel arbitration, the trial court ordered
the parties to arbitration. After discussing the process of appointing an arbitrator with the
parties, the court further ordered the parties to “[w]ithin ten days submit five names each”
and “then the Court will go ahead and select an arbitrator.” Neither party objected to this
procedure.
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All further citations are to the Code of Civil Procedure, unless stated otherwise.
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Appellants submitted their list of arbitrators on November 13, 2017.
Respondents submitted a different list of five arbitrators on November 13, 2017, and also
submitted a proposed order with those arbitrator’s names. In response to the proposed
order, appellants submitted their own proposed order listing all ten arbitrators. On
November 18, 2017, the trial court selected George J. Kovacevich from Mike’s Auto’s
lists of arbitrators, after noting that it had reviewed the “joint list submitted by Plaintiff.”
C. Arbitration and Appeal
Arbitrator Kovacevich granted respondents’ motion for summary
disposition on appellants’ claims, and dismissed the matter with prejudice. He denied
respondents’ fees and costs. Appellants then filed a petition to confirm the arbitration
award. On April 22, 2019, the trial court entered a judgment confirming the arbitration
award. Appellants noticed an appeal from the judgment, and all interim and preceding
orders, including the order granting the motion to compel arbitration.
II
DISCUSSION
Appellants contend the judgment confirming the arbitration award must be
reversed because Mike’s Auto waived its right to seek arbitration and the trial court erred
in selecting the arbitrator.
A. Mike’s Auto Did Not Waive Its Arbitration Rights
As our Supreme Court has stated: “State law. . . reflects a strong policy
favoring arbitration agreements and requires close judicial scrutiny of waiver claims.
[Citation.] Although a court may deny a petition to compel arbitration on the ground of
waiver [citation], waivers are not to be lightly inferred and the party seeking to establish a
waiver bears a heavy burden of proof.” (St. Agnes Medical Center v. PacifiCare of
California (2003) 31 Cal.4th 1187, 1195 (St. Agnes).) “‘In determining waiver, a court
can consider “(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
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‘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 [e.g., taking advantage of judicial discovery
procedures not available in arbitration] had taken place’; and (6) whether the delay
‘affected, misled, or prejudiced’ the opposing party.”’” (Id. at p. 1196.) “No one of these
factors predominates and each case must be examined in context.” (Lewis v. Fletcher
Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 444 (Lewis).)
“The question of waiver is generally a question of fact, and the trial court’s
finding [on] waiver is binding on us if it is supported by substantial evidence. [Citation.]
‘We infer all necessary findings supported by substantial evidence [citations] and
“construe any reasonable inference in the manner most favorable to the judgment,
resolving all ambiguities to support an affirmance.”’ [Citation.] Reversal is not justified
simply because the trial court could have potentially reached a different conclusion on the
question of waiver.” (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th
1035, 1043.)
Here, the trial court, in ordering arbitration, rejected appellants’ argument
that Mike’s Auto had waived its right to seek arbitration. Appellants contend the
evidence does not support this result because Mike’s Auto (1) acted inconsistently with
the right to arbitrate by failing to plead arbitration as an affirmative defense in its answer,
responding to appellants’ discovery requests, conducting a vehicle inspection and
participating in court-ordered mediation, and (2) unreasonably delayed demanding
arbitration until 10 months after the complaint was filed.
While appellants are correct that the failure to plead arbitration as an
affirmative defense in an answer has been found to be inconsistent with the later assertion
of a right to arbitrate (Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557-
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558), it is merely one factor in the determination and is not dispositive on the issue of
waiver. Mike’s Auto could have moved at any time to amend its answer to include this
defense, even at this late stage. (See Ramos v. City of Santa Clara (1973) 35 Cal.App.3d
93, 95 [“A trial court has discretion to allow amendment of any pleading at any stage of
the proceedings.”].)
The remaining factors appellants cite do not provide a basis to reverse the
trial court’s finding that there had been no waiver. Participation in an insignificant
amount of discovery initiated by other parties is not inconsistent with arbitration.
(Zamora v. Lehman (2010) 186 Cal.App.4th 1, 19.) Likewise, mediation is not generally
inconsistent with arbitration. (Id. at p. 20 [“attempt to settle the action was not
inconsistent with the right to arbitrate”].) As to the vehicle inspection, appellants did not
show that conducting a vehicle inspection is a discovery procedure not available in
arbitration.
Appellants also argue on appeal that they revealed their litigation strategy
through discovery, but never made this argument at the trial court. They have, as a result,
forfeited the argument. Even if they had not, the record does not establish that any
litigation strategy was revealed.
As to the delay in demanding arbitration, appellants have not shown the
delay was unreasonable. While Mike’s Auto waited nearly 10 months before moving to
compel arbitration, that 10-month period included nearly two months when the parties
were in mediation. More important, “a delay is found unreasonable only when it is
combined with the attempt by the party asserting a right to arbitrate to obtain an
advantageous litigation position during the delay.” (Gloster v. Sonic Automotive, Inc.
(2014) 226 Cal.App.4th 438, 449.) For example, in Sobremonte v. Superior Court (1998)
61 Cal.App.4th 980, 996, the defendant delayed 10 months before moving to compel
arbitration but also filed demurrers and engaged in expansive discovery during that time
period. In Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 213, 217, the
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defendant delayed six months before moving to compel arbitration but also used court
discovery procedures not available in arbitration to obtain 1,600 pages of documents
from plaintiff, and took plaintiff’s two-day deposition. In Lewis, supra, 205 Cal.App.4th
at p. 446, the defendant delayed five months before moving to compel arbitration, but
also filed multiple demurrers and motions to strike and participated in discovery. In
Guess?, Inc. v. Superior Court, supra 79 Cal.App.4th at p. 558, the defendant delayed
three months before moving to compel arbitration but fully participated in the discovery
process, including sending two sets of lawyers to third party depositions and taking full
advantage of every opportunity to cross-examine deponents. The appellate court also
noted that Guess?, Inc., spent over $150,000 in litigating the case, and four third party
depositions were taken, with another 11 arranged. (Id. at p. 559, fn. 2.)
Here, in contrast, Mike’s Auto did not take significant affirmative action to
litigate the case. It did not file demurrers or other motions, did not initiate discovery
except for a vehicle inspection, and merely responded to appellants’ written discovery
requests as the law requires (§ 2030.210). The record shows Mike’s Auto’s responses
totaled 14 pages, not including produced documents.
In sum, while there was some evidence that could support a finding of
waiver, appellants did not meet their “heavy burden of proof” to show Mike’s Auto
waived its right to arbitration. (St. Agnes, supra, 31 Cal.4th at p. 1195.) The trial court
found no waiver, and the record does not establish waiver as a matter of law.
Accordingly, we must affirm the trial court’s waiver ruling. (Lewis, supra,
205 Cal.App.4th at p. 453 [“It is not enough the trial court potentially could have reached
a different conclusion; rather, we may reverse the trial court’s waiver finding only if the
record establishes a . . . waiver as a matter of law.”].)
B. The Trial Court Did Not Commit Reversible Error in Its Selection of the Arbitrator
Section 1281.6 provides: “If the arbitration agreement provides a method
of appointing an arbitrator, that method shall be followed. If the arbitration agreement
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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.” (§ 1281.6)
Appellants contend the selection of Kovacevich as the arbitrator failed to
conform with the mandatory requirements of section 1281.6 because the trial court did
not nominate five persons and allow the parties to jointly select the arbitrator. However,
the record demonstrates that, at the hearing on the motion to compel arbitration, the trial
court discussed the arbitrator selection process it intended to follow with the parties.
Both parties agreed to this selection process, and the court’s selection of Kovacevich was
consistent with the agreement. Although appellants objected to Mike’s Auto’s proposed
arbitrator appointment order, the record does not show any objection to the court’s order
appointing Kovacevich as the arbitrator. Thus, appellants forfeited any challenge to the
arbitrator selection process because they agreed to that process and never objected below
to the trial court order selecting Kovacevich. (See, e.g., K.C. Multimedia, Inc. v. Bank of
America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 948 [“appellant
forfeited its challenge to the propriety of the pretrial procedure by failing to object
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below”]; In re Wilford J. (2005) 131 Cal.App.4th 742, 754 [“An appellate court
ordinarily will not consider challenges based on procedural defects or erroneous rulings
where an objection could have been but was not made in the trial court”].)
III
DISPOSITION
The judgment is affirmed. Because respondent did not participate in the
appeal, no costs are awarded.
ZELON, J.*
WE CONCUR:
O’LEARY, P. J.
BEDSWORTH, J.
*Retired Justice of the Court of Appeal, Second Appellate District, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
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