Reynosa v. Superior Court ( 2024 )

Filed 5/6/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
ANDREW REYNOSA,
F086342
Petitioner,
(Super. Ct. No. VCU278374)
v.
THE SUPERIOR COURT OF TULARE OPINION
COUNTY,
Respondent;
ADVANCED TRANSPORTATION SERVICES,
INC.,
Real Party in Interest.
ORIGINAL PROCEEDINGS; petition for writ of mandate. Bret D. Hillman,
Judge.
Makarem & Associates and Deborah P. Gutierrez for Petitioner.
No appearance for Respondent.
Williams Brodersen Pritchett & Burke and Nick Pritchett; McCormick, Barstow,
Sheppard, Wayte & Carruth and Todd W. Baxter for Real Party in Interest.
-ooOoo-
Petitioner Andrew Reynosa and real party in interest Advanced Transportation
Services, Inc. (ATS) initiated arbitration in 2019. On March 20, 2023, Reynosa filed a
motion to withdraw from arbitration with the Tulare County Superior Court. Citing Code
of Civil Procedure 1 section 1281.98, he argued ATS twice failed to pay the fees and costs
required to continue arbitration within 30 days after the due date and therefore waived the
right to compel him to proceed with arbitration. On April 18, 2023, the superior court
issued an order denying the motion.
Thereafter, Reynosa filed a “petition for writ of mandate or other appropriate
relief” (boldface & capitalization omitted), asking us to issue a stay of the arbitration
proceeding pending determination of this petition and a writ of mandate directing the
superior court to vacate its April 18, 2023 order and enter a new order granting his
motion to withdraw from arbitration. We granted Reynosa’s stay request and later issued
an order to show cause why writ relief should not be granted. ATS filed a written return
and Reynosa filed a reply to said return. 2
For the reasons set forth below, we conclude the superior court erroneously denied
Reynosa’s withdrawal motion and Reynosa is entitled to writ relief.
BACKGROUND
Reynosa was previously employed by ATS. On March 3, 2017, he signed the
company’s “Arbitration Agreement,” (boldface omitted) which provided in part:
1 Unless otherwise indicated, subsequent statutory citations refer to the Code of
Civil Procedure.
2 ATS filed an informal response to the writ petition on July 21, 2023. Per our
June 2, 2023 order, Reynosa had 20 days from the date of the filing of the informal
response to submit an informal reply. He did not do so. On August 21, 2023, Reynosa
filed a “motion for permission to submit late filing pursuant to CCP § 4[73] . . . .”
(Boldface & capitalization omitted.) Having not yet addressed this motion, we now
exercise our discretion pursuant to section 473, subdivision (b) and deny it as it is
redundant to Reynosa’s reply to ATS’s return.
2.
“In the event of any dispute arising under or involving any provision of the
employment relationship or any dispute regarding the employment of the
undersigned employee (hereinafter referred to as ‘employee’) with the
Company, . . . employee and the Company agree to submit any such
dispute to binding arbitration pursuant to the provisions of Title 9 of Part III
of the California Code of Civil Procedure, commencing at Section 1280
et seq. (or any successor or replacement statutes) within one year of the
date the dispute first arose, or within one year of the termination of
employment, whichever occurs first . . . .
“Employee and the Company agree that arbitration shall be the
exclusive forum for resolving all such disputes. This agreement is a
waiver of all rights to a civil court action, including all class action
lawsuits. A decision through arbitration, not by a judge or jury, will
decide the dispute. [¶] . . . [¶]
“The employee and [t]he Company shall each bear their own costs
for counsel or legal representation at any such arbitration. The cost of the
arbitrator, court reporter, if any, and any incidental costs of arbitration shall
be borne by the Company with the exception of the Initial Case
Management Fee. The Initial Case Management Fee shall be paid equally
by the Company and the Employee. However, the employee portion of the
one-time Case Management Fee shall not exceed $400.00. Any Initial Case
Management Fee charged to the employee in excess of $400.00 shall be
paid by the Company. . . .”
The agreement did not address when arbitration fees and costs needed to be paid.
On April 26, 2019, Reynosa filed a “complaint for damages” (boldface &
capitalization omitted) against ATS with the superior court. On July 8, 2019, the parties
stipulated Reynosa would submit his claims to binding arbitration pursuant to the
aforementioned agreement and the court proceeding would be stayed pending completion
thereof.
On September 9, 2019, Reynosa filed a demand for arbitration with arbitration
provider Judicate West. Under the heading “WHAT RULES OF ARBITRATION DO
YOU PREFER,” (boldface omitted) he marked the checkbox for “CCP § 1280 et se[q].”
Retired judge John L. Wagner would serve as the neutral arbitrator.
On September 10, 2019, Reynosa paid a $250 filing fee.
3.
On October 9, 2019, Judicate West posted ATS’s $250 filing fee. ATS paid $250
on October 14, 2019.
On August 5, 2020, Judicate West posted an invoice totaling $8,180: $7,680 for a
retainer; $250 for Reynosa’s case management fee; and $250 for ATS’s case management
fee. ATS paid $8,180 on August 12, 2020.
In a July 19, 2021 e-mail to counsel, Judicate West’s case manager wrote in part:
“This email summarizes the agreed upon scheduling information, advises of
important dates and highlights key requests, all of which is reflected in your
forthcoming confirmation notice & invoice.
“● 10/29/2021 – Final Date for Payment – Please see the attached fee
schedule for further information. Your invoice will follow with a
confirmation notice to be signed and returned. . . .
“● 11/5/2021 – Last day to continue and/or cancel without risk of
incurring fees for the neutrals reserved time. . . .
“● 11/29/2021 – Briefs due, unless another schedule was discussed and
agreed to with your arbitrator. . . .
“● 12/6-8/2021 – 10:00 am at Downtown LA.”
The attached “ARBITRATION AND PRIVATE JUDGING FEE SCHEDULE” stated in part:
“PLEASE NOTE: All [Judicate West] invoices are due and payable upon receipt.”
On July 21, 2021, Judicate West posted an invoice totaling $27,380: $3,840 for a
retainer; $250 for Reynosa’s case management fee; $250 for ATS’s case management fee;
and $23,040 for a hearing scheduled for April 17 through 19, 2023. 3 The invoice
specified payment was “due upon receipt.” ATS paid $27,130 on September 17, 2021,
leaving a balance of $250.
3 In contrast to the April 2023 dates listed in the invoice, the parties recalled the
arbitration hearing was originally scheduled for December 6 through 8, 2021. Assuming
the parties were correct, this would shed light on what “12/6-8/2021 – 10:00 am at
Downtown LA” signified in the July 19, 2021 e-mail.
4.
In e-mail correspondences between October 22 and November 1, 2021, the parties
agreed to postpone the December 2021 arbitration hearing and schedule a mediation on
April 8, 2022.
In a December 6, 2022 e-mail to counsel, Wagner issued an “ARBITRATION
MINUTE ORDER” (boldface & underlining omitted) “memorializ[ing] the case
management conference conducted on December 6, 2022 . . . .” He detailed:
“1. The parties have engaged in mediation, but the case did not settle.
“2. The parties are engaged in medical records discovery, the Claimant has
designated experts, and meet-and-confer sessions are ongoing. If issues
remain the parties may invoke the expedited discovery hearing process.
“3. The next telephonic case management conference is set for March 7,
2023, at 9:00 a.m. Judicate West will set up the call. The venue for the
arbitration (whether in-person or via Zoom) will be revisited.
“4. The telephonic pre-hearing conference is set for April 4, 2023, at
9:00 a.m. Judicate West will set up the call.”
In a December 9, 2022 e-mail to counsel, Judicate West’s case manager wrote in
part:
“The following session(s) have been scheduled for this matter:
“● 4/17/2023 – 4/21/2023 – 10:00 AM – Binding Formal Arbitration at
Reserved – Location TBD
“● 3/7/2023 – Case Management Conference Call . . . .
“● 4/4/2023 – Telephonic Conference Call . . . .
“● 4/10/2023 – Briefs Due (unless another schedule was discussed and
agreed with your arbitrator) . . . .
“● 3/2/2023 – Last day to continue and/or cancel without risk of
incurring fees for the neutral’s reserved time.
“● 2/23/2023 – Preliminary Witness Lists Due . . . .
5.
“● Fees Due – The case management and initial retainer fees will be due
upon receipt and the Final Date for Payment of arbitration hearing fees
and other outstanding invoices will be 2/23/2023. Your invoice will
follow. . . .”
On December 12, 2022, Judicate West posted an invoice totaling $23,040: $7,680
for a retainer and $15,360 for a hearing scheduled for April 20 and 21, 2023. The invoice
specified payment was “due upon receipt to secure your reserved date(s).”
In a January 31, 2023 e-mail to Judicate West and Reynosa’s counsel Deborah
Gutierrez, ATS wrote it “need[ed] more time to complete discovery” and requested a six-
month postponement of the April 2023 arbitration hearing. In a reply e-mail, Gutierrez
opposed postponement because “[t]his matter has been continued already once before
causing significant delay to [Reynosa]’s right to arbitration.”
A February 2, 2023 billing statement addressed to ATS’s counsel showed ATS paid
$27,130 on September 17, 2021, but still owed $23,290: the unpaid $250 charge on the
July 21, 2021 invoice plus the $23,040 charge on the December 12, 2022 invoice. The
statement specified payment was “Due Upon Receipt” and “any remaining balance is
due immediately.”
In a February 21, 2023 e-mail to Wagner and Gutierrez, ATS claimed “good
cause” “to continue the arbitration dates,” i.e., the delay of “medical records from the
VA” needed to “schedule IMEs to examine the allegations of emotional damage
pertaining to Mr. Reynosa’s employment.” According to the company, it would “not be
able to comply with” or attend the following “due to the outstanding discovery”: (1) a
February 23, 2023 deadline for preliminary witness lists; (2) the March 2, 2023 deadline
to continue or cancel the arbitration without incurring fees; (3) the April 4, 2023
telephonic conference; (4) the April 10, 2023 deadline for briefing; and (5) the April 17
through 21, 2023 arbitration hearing.
On February 22, 2023, ATS received an e-mail confirming its $23,290 payment to
Judicate West.
6.
In a February 23, 2023 e-mail to counsel, Wagner (1) extended the deadline for
preliminary witness lists “until the next case management conference, unless otherwise
ordered”; (2) extended the cancellation deadline to March 9, 2023; and (3) asked
Gutierrez whether “there is any objection to continuing the arbitration.” In a reply e-
mail, Gutierrez raised “no objection to the Witness List deadline extension to the next
[case management conference], or March 7, 2023,” but she sought clarification regarding
the continuance request. In a follow-up e-mail, Wagner explained he “was not suggesting
moving up the hearing on the merits” and “[t]he question is whether we move the hearing
to a later time.” In a February 24, 2023 e-mail to Wagner and ATS, Gutierrez stated she
“[saw] no reason why the arbitration should be continued, or why [ATS] has been unable
to conduct an IME.” She added: “This case has been in arbitration since September
2019. It is my understanding that the purpose of arbitration is to provide an expeditious
way to resolve cases. This case has languished and Mr. Reynosa deserves his day in
court/arb.”
In a March 7, 2023 e-mail to counsel, Wagner issued an “ARBITRATION
MINUTE ORDER” (boldface & underlining omitted) “memorializ[ing] the proceedings
from the March 7, 2023, case management conference . . . .” He detailed:
“1. [ATS] requested a continuance of the hearing on the merits due to
ongoing difficulty in obtaining [Reynosa]’s military medical records, which
are approximately 8 years old. All medical records since that time are
available for the IME. [ATS] has delayed its IME awaiting the military
records. [Reynosa] opposes the continuance, arguing this matter has
already been unduly delayed. The military records are of marginal value
because any current diagnosis or findings will rely upon and recite
[Reynosa]’s medical history. The IME, if still desired, will proceed without
the military records. [ATS]’s request for a continuance is denied, and the
hearing on the merits will proceed as scheduled, from April 17, 2023,
through April 21, 2023 (5 days). . . . [¶] . . . [¶]
“3. The current hearing setting is within Judicate West’s 45-day
cancellation fee period. . . . Judicate West has agreed to shorten the
cancellation fee period to 30 days before the hearing on the merits, making
7.
March 20, 2023, the last day to cancel the arbitration hearing without a
cancellation fee. Should unforeseen circumstances require a continuance of
the April 17, 2023, hearing the 45-day cancellation period will again
pertain.
“4. The parties shall exchange preliminary witness lists and make expert
disclosures by March 24, 2023.
“5. The parties shall exchange final witness lists . . . and exhibit lists by
April 4, 2023. . . .
“6. A joint set of exhibits to be used in the hearing will be provided to the
Arbitrator by April 10, 2023. . . .
“7. Opening briefs will be submitted by April 10, 2023. . . .”
On March 20, 2023, Reynosa filed a “motion to terminate arbitration and request
for monetary and evidentiary sanctions” (boldface & capitalization omitted) with the
court. In the motion, Reynosa—citing section 1281.98—asserted ATS materially
breached the arbitration agreement because (1) it was given invoices on July 21, 2021,
and December 12, 2022, respectively; (2) each payment was due within 30 days after the
date of receipt; and (3) each payment was rendered after the grace period elapsed.
Hence, Reynosa was “statutorily entitled to unilaterally withdraw his claims from
arbitration and proceed in court . . . .” In an attached declaration, Gutierrez averred that
on March 17, 2023, she “inquired with [Judicate West’s case manager] if ATS had timely
paid the arbitration fees in this matter” and the case manager “confirmed that Defendant
had . . . paid the December 12, 202[2] [invoice] on February 22, 2023 . . . .”
Wagner was notified of Reynosa’s motion on March 24, 2023, and e-mailed
counsel an “ARBITRATION MINUTE ORDER” (boldface & underlining omitted) on
March 31, 2023. In said order, Wagner conceded ATS’s payments were late but noted
Reynosa “did have the opportunity to request this relief before significant work was done
and non-refundable arbitration fees were paid” and nonetheless “elected on numerous
occasions to proceed with the arbitration process after the alleged tardy payments
occurred.” Wagner stated: (1) “[t]he first tardy payment was made on September [17],
8.
2021, more than 18 months ago,” but Reynosa “sat on his rights under § 1281.98 and did
nothing”; and (2) “[t]he last tardy payment was on February 22, 2023”; during the
March 7, 2023 case management conference, Reynosa “successfully resisted [ATS]’[s]
request for a continuation of the present April 17, 2023, hearing date” and Wagner
“shortened the refundable date for the arbitration hearing fees to March 20, 2023”; and
Reynosa “waited until that very date to file [his] Motion to Terminate Arbitration and
advised [Wagner] of the filing of that motion on March 24, 2023, after the shortened non-
refundable period had ended,” prejudicing ATS financially. Wagner vacated the hearing
dates and stayed the arbitration proceeding “pending a decision on [Reynosa]’s Motion to
Terminate Arbitration by the Tulare Superior Court.”
On April 18, 2023, the superior court held a hearing on Reynosa’s withdrawal
motion. The court remarked:
“Well, from the Court’s perspective, defendant paid the dates set by
the arbitrator in the email. Counsel for plaintiff never objected. No one
ever told the Court in the multiple [case management conferences] we had
– the last time we talked, arbitration was supposed to start yesterday.
Counsel elected to continue despite these alleged defaults. And I think they
either paid prior to the due dates as set in the emails pursuant to the statute
under 1281.98(a)(2) or elected to continue under 1281.98(b)(2). . . .”
Gutierrez responded:
“[E]verybody goes, ‘Why did you wait until just right now, Ms.
Gutierrez?’ Well, part of the problem is Judicate West does not provide
transparency to the parties in terms of when payments are made. Judicate
West has a portal for both parties, one for the plaintiff and one for the
defendant. And there’s a tab that says ‘fees.’ When you click on ‘fees’ if
you’re the plaintiff, you only look at the $[2]50 initial fee that you paid. It
doesn’t give you the full ledger that the defendant has when they click on
the tab ‘fees.’ They have a full ledger of when and where payments were
made, sent, when they were paid. They have all of that information.
“And so when people look at me and say, ‘Oh, why did you wait?’
Because I just realized, partly because of this lack of transparency of
Judicate West and partly because they’re telling their case managers to
misrepresent the code to the parties. This is when I first found out that, in
9.
fact, counsel had not made the payment. So in part, this is – Judicate West
is not only . . . not providing transparency to the parties, but
misrepresenting to the parties under the code when payment should be
made.
“. . . Neither Judicate West nor [Judicate West’s case manager] nor
anybody else has the right to alter the code. And nowhere in the pleadings
is there any evidence that either plaintiff or myself conceded or had any
mutual consent in any way whatsoever to alter the code or alter the terms of
payment.”
Thereafter, the court denied the motion. It reasoned in its order:
“[J]ust as clear-cut is section 1281.98(a)(2)’s statement that ‘. . . Any
extension of time for the due date shall be agreed upon by all parties.’ The
emails from the arbitration organization set forth different, specific due
dates that appear to have been agreed upon by all parties. To be sure,
Plaintiff did not object to these extended payment deadlines when
proposed.
“Therefore, although Defendant was sent a July 21, 2021 invoice due upon
receipt that was paid September [17], 2021 and a December 12, 2022
invoice due upon receipt that was paid February 22, 2023, the payment
deadlines were extended to October 29, 2021 and February 23, 2023.
Defendant, therefore, does not appear to have paid the fees due beyond the
30-day deadlines mutually agreed upon by the parties.
“Plaintiff, therefore, would not appear to have the right to unilaterally elect
to terminate arbitration due to the timely payment of fees owed by
Defendant pursuant to the modified schedule.”
On June 1, 2023, Reynosa filed the writ petition. In the order to show cause, we
directed ATS to respond to the following questions:
“(a) In finding the parties mutually agreed to extend the deadline to pay the
December 12, 2022 invoice, did the trial court make factual findings
entitled to review under the substantial evidence standard? If not, is
there a material dispute of fact relating to the issuance and payment of
the December 12, 2022 invoice?
“(b) Is silence or the failure to object to a proposed later payment deadline a
sufficient manifestation of intent by a consumer or employee to find an
agreement to extend the payment deadline under . . . section 1281.98,
subdivision (a)(2)?”
10.
DISCUSSION
I. Propriety of writ review
“Writ review is appropriate when ‘(1) “the remedy by appeal would be
inadequate” [citation] or (2) the writ presents a “significant issue of law” or an issue of
“widespread” or “public interest” [citations].’ [Citation.]” (Espinoza v. Superior Court
(2022) 83 Cal.App.5th 761, 773, fn. 2 (Espinoza).) Here, both conditions are met. First,
the superior court’s order denied Reynosa’s motion to withdraw from arbitration.
“[R]equiring plaintiff to proceed through an arbitration before [he or] she can challenge
the order on appeal would be a waste of time and resources, for which the appeal would
be an inadequate remedy.” (Ibid.; see Aanderud v. Superior Court (2017) 13 Cal.App.5th
880, 889 [“ ‘[W]rit review is proper . . . to avoid an arbitration based on erroneous rulings
of law, which may result in needless delay and expense.’ ”]; Medeiros v. Superior Court
(2007) 146 Cal.App.4th 1008, 1014, fn. 7 [“Writ review is the appropriate way to review
the challenged order and avoid having parties try a case in a forum where they do not
belong, only to have to do it all over again in the appropriate forum.”].) Second, the
interpretation and enforceability of section 1281.98 “presents significant issues of law.”
(Espinoza, supra, at p. 773, fn. 2.) 4
II. Section 1281.98
“The Legislature enacted section 1281.98 in 2019 to curb a particular arbitration
abuse. The abuse was that a defendant could force a case into arbitration but, once there,
4 We note Espinoza focused on section 1281.97. (See Espinoza, supra, 83
Cal.App.5th at p. 775.) Section 1281.97 “concerns a failure to timely pay ‘the fees or
costs to initiate’ an arbitration proceeding” (De Leon v. Juanita’s Foods (2022) 85
Cal.App.5th 740, 750 (De Leon)) whereas section 1281.98 “concerns a failure to timely
pay ‘the fees or costs required to continue’ an arbitration proceeding” (ibid.). The parties
agree section 1281.98 controls in the instant case. Regardless, sections 1281.97 and
1281.98 “ ‘largely parallel’ each other” (De Leon, at p. 750) and—where appropriate—an
analysis as to one “applies with equal force” to the other (Gallo v. Wood Ranch USA, Inc.
(2022) 81 Cal.App.5th 621, 633, fn. 4 (Gallo)).
11.
could refuse to pay the arbitration fees, thus effectively stalling the matter and stymying
the plaintiff’s effort to obtain relief.” (Cvejic v. Skyview Capital, LLC (2023) 92
Cal.App.5th 1073, 1076 (Cvejic).) Section 1281.98 “grants deliverance from this
procedural purgatory by deeming late payment to be a material breach of the arbitral
agreement that gives the affected employee or consumer the choice of . . . treating the
arbitration agreement as being rescinded and returning to a judicial forum . . . .” (Gallo,
supra, 81 Cal.App.5th at p. 634; see De Leon, supra, 85 Cal.App.5th at p. 751.)
Section 1281.98, subdivision (a)(1)—formerly subdivision (a) (see Stats. 2019,
ch. 870, § 5)—reads:
“In an employment or consumer arbitration that requires, either
expressly or through application of state or federal law or the rules of the
arbitration provider, that the drafting party[ 5] pay certain fees and costs
during the pendency of an arbitration proceeding, if the fees or costs
required to continue the arbitration proceeding are not paid within 30 days
after the due date, the drafting party is in material breach of the arbitration
agreement, is in default of the arbitration, and waives its right to compel the
employee or consumer to proceed with that arbitration as a result of the
material breach.”
Section 1281.98, subdivision (b) reads in part:
“If the drafting party materially breaches the arbitration agreement
and is in default under subdivision (a), the employee or consumer may
unilaterally elect to do any of the following:
“(1) Withdraw the claim from arbitration and proceed in a court of
appropriate jurisdiction. . . .
5 “ ‘Drafting party’ means the company or business that included a predispute
arbitration provision in a contract with a consumer or employee.” (§ 1280, subd. (e).)
12.
“(2) Continue the arbitration proceeding, if the arbitration provider[ 6]
agrees to continue administering the proceeding, notwithstanding the
drafting party’s failure to pay fees or costs. . . .
“(3) Petition the court for an order compelling the drafting party to
pay all arbitration fees that the drafting party is obligated to pay under the
arbitration agreement or the rules of the arbitration provider.
“(4) Pay the drafting party’s fees and proceed with the arbitration
proceeding. As part of the award, the employee or consumer shall recover
all arbitration fees paid on behalf of the drafting party without regard to any
findings on the merits in the underlying arbitration.”
In 2021, via Senate Bill No. 762 (2021–2022 Reg. Sess.) (Senate Bill No. 762),
the Legislature “added a new subdivision to section 1281.98 that compelled arbitrators to
provide invoices to all parties, specified requirements for these invoices, and clarified the
due date for fees.” (Cvejic, supra, 92 Cal.App.5th at p. 1077, citing Stats. 2021, ch. 222,
§ 3.) This subdivision—i.e., subdivision (a)(2) of section 1281.98—reads in part:
“The arbitration provider shall provide an invoice for any fees and
costs required for the arbitration proceeding to continue to all of the parties
to the arbitration. The invoice shall be provided in its entirety, shall state
the full amount owed and the date that payment is due, and shall be sent to
all parties by the same means on the same day. To avoid delay, absent an
express provision in the arbitration agreement stating the number of days in
which the parties to the arbitration must pay any required fees or costs, the
arbitration provider shall issue all invoices to the parties as due upon
receipt. Any extension of time for the due date shall be agreed upon by all
parties. . . .” 7
Subdivision (a)(2) became effective January 1, 2022. (Cvejic, supra, 92 Cal.App.5th at
p. 1077; see Cal. Const., art. IV, § 8, subd. (c)(1); Gov. Code, § 9600, subd. (a).)
6 Prior to 2022, subdivision (b) of section 1281.98 used the term “arbitration
company” (Stats. 2019, ch. 879, § 5) rather than “arbitration provider” (Stats. 2021,
ch. 222, § 3).
7 We point out subdivision (a)(2) of section 1281.97, which was also added in
2021, does not permit due date extensions. (See Stats. 2021, ch. 222, § 2.)
13.
III. Standard of review
“Ordinarily, a trial court’s determination [as to whether] a party waived the right to
arbitrate is subject to substantial evidence review. [Citation.] However, where the parties
do not dispute the factual support for the trial court’s ruling, but instead dispute the
proper interpretation of section 1281.98, the appellate court’s review is de novo.
[Citations.]” (Doe v. Superior Court (2023) 95 Cal.App.5th 346, 353 (Doe); accord,
De Leon, supra, 85 Cal.App.5th at p. 749.)
“ ‘Questions of statutory interpretation, and the applicability of a statutory
standard to undisputed facts, present questions of law, which we review de novo.’
[Citation.] ‘Because the interpretation and application of a statute are questions of law,
an appellate court is not bound by the trial judge’s interpretation.’ [Citation.] Instead,
‘we undertake our own interpretation of the determinative statute and assess any claims
raised by the parties completely anew.’ [Citation.]” (California State University, Fresno
Assn., Inc. v. County of Fresno (2017) 9 Cal.App.5th 250, 265–266 (Cal. State Fresno).)
“ ‘In ascertaining the meaning of a statute, we look to the intent of the Legislature
as expressed by the actual words of the statute’ [citation], ‘giving them a plain and
commonsense meaning’ [citation]. ‘We examine the language first, as it is the language
of the statute itself that has “successfully braved the legislative gauntlet.” [Citation.] “It
is that [statutory] language which has been lobbied for, lobbied against, studied,
proposed, drafted, restudied, redrafted, voted on in committee, amended, reamended,
analyzed, reanalyzed, voted on by two houses of the Legislature, sent to a conference
committee, and, after perhaps more lobbying, debate and analysis, finally signed ‘into
law’ by the Governor. The same care and scrutiny does not befall the committee reports,
caucus analyses, authors’ statements, legislative counsel digests and other documents
which make up a statute’s ‘legislative history.’ ” [Citation.]’ [Citation.]” (Cal. State
Fresno, supra, 9 Cal.App.5th at p. 266; see De Leon, supra, 85 Cal.App.5th at p. 750.)
14.
“ ‘If there is no ambiguity in the language, we presume the Legislature meant what
it said and the plain meaning of the statute governs.’ [Citation.] ‘When statutory
language is clear and unambiguous there is no need for construction, and we will not
indulge in it.’ [Citations.] ‘We will not speculate that the Legislature meant something
other than what it said. Nor will we rewrite a statute to posit an unexpressed intent.’
[Citations.]” (Cal. State Fresno, supra, 9 Cal.App.5th at p. 266; see De Leon, supra, 85
Cal.App.5th at p. 750.) “ ‘If, however, the language supports more than one reasonable
construction, we may consider “a variety of extrinsic aids, including the ostensible
objects to be achieved” ’ and the statute’s legislative history. [Citation.]” (De Leon,
supra, 85 Cal.App.5th at p. 750; accord, Doe, supra, 95 Cal.App.5th at p. 355.)
IV. Analysis
In his writ petition, Reynosa argues ATS “failed to remit payment of the arbitration
fees within the statutorily prescribed thir[ty]-day period” (boldface & capitalization
omitted) on two occasions. First, the company received a $27,380 invoice “due upon
receipt” on July 21, 2021, and rendered its $27,130 payment more than 30 days later on
September 17, 2021. Second, the company received a $23,040 invoice “due upon
receipt” on December 12, 2022, and rendered its $23,290 payment more than 30 days
later on February 22, 2023. We address these contentions seriatim.
a. July 21, 2021 invoice
The record demonstrates Judicate West posted an invoice totaling $27,380 on
July 21, 2021. Said invoice specified payment was “due upon receipt.” Judicate West’s
“ARBITRATION AND PRIVATE JUDGING FEE SCHEDULE” (boldface omitted) reiterated “[a]ll
[Judicate West] invoices are due and payable upon receipt.” However, in an e-mail to
counsel sent on July 19, 2021, Judicate West’s case manager indicated the parties “agreed
upon” October 29, 2021, as the “Final Date for Payment.”
Section 1281.98 as it then existed—i.e., without subdivision (a)(2)—did not
prescribe how to establish and/or modify the “due date” from which the 30-day grace
15.
period begins to run. Thus, October 29, 2021, appears to be the appropriate due date,
whether this date was amenable to both parties, amenable to only one party, or decided
upon exclusively by Judicate West.
On September 17, 2021, well before the October 29, 2021 due date, ATS paid
$27,130, leaving a balance of $250. In its return, ATS states it did not pay the extra $250
because this amount constituted “Plaintiff’s Case Management Fee of $250.00, which
Reynosa was obligated to pay under the terms of the arbitration agreement.” In other
words, the $250 “reflects Reynosa’s share of” the “initial case management fee.”
Pursuant to the arbitration agreement, “[t]he cost of the arbitrator, court reporter, if
any, and any incidental costs of arbitration shall be borne by the Company with the
exception of the Initial Case Management Fee. The Initial Case Management Fee shall
be paid equally by the Company and the Employee. . . . [T]he employee portion of the
one-time Case Management Fee shall not exceed $400.00.” While the July 21, 2021
invoice did identify a $250 charge for Reynosa’s case management fee, the record shows
(1) almost a year earlier, an August 5, 2020 invoice also identified a $250 charge for
Reynosa’s case management fee; and (2) this amount was paid by ATS on August 12,
2020. Logically, the subsequent $250 charge on the July 21, 2021 invoice cannot be
considered the “initial” case management fee. 8 Therefore, the contractual exception was
inapplicable. Moreover, ATS ultimately paid the $250 on February 22, 2023.
The clear and unequivocal language of section 1281.98, subdivision (a)(1)
“establishes a simple bright-line rule that a drafting party’s failure to pay outstanding
arbitration fees within 30 days after the due date results in its material breach of the
arbitration agreement.” (De Leon, supra, 85 Cal.App.5th at p. 753; see Espinoza, supra,
83 Cal.App.5th at p. 775 [§ 1281.97 “contains no exceptions for substantial compliance,
8 In its informal response to Reynosa’s writ petition, ATS acknowledges its
October 14, 2019, and August 12, 2020 payments were for “[t]he fees for initiating the
arbitration . . . .”
16.
unintentional nonpayment, or absence of prejudice” (italics & some capitalization
omitted)].) Such a breach occurred here because ATS was supposed to pay $27,380 by
October 29, 2021, but it remitted “less than the full amount due by the expiration of the
statutory grace period” (Gallo, supra, 81 Cal.App.5th at p. 644) and settled the remaining
$250 nearly 16 months after the due date. 9
b. December 12, 2022 invoice
Effective January 1, 2022, section 1281.98, subdivision (a)(2) “clarified the due
date for fees” (Cvejic, supra, 92 Cal.App.5th at p. 1077), requiring (1) arbitration
providers to “issue all invoices to the parties as due upon receipt” (unless express
contractual language provides otherwise) (§ 1281.98, subd. (a)(2)); and (2) “[a]ny
extension of time for the due date” to be “agreed upon by all parties” (ibid.).
The record demonstrates Judicate West posted an invoice totaling $23,040 on
December 12, 2022. Said invoice specified payment was “due upon receipt to secure
your reserved date(s).” In addition, the arbitration agreement did not contain “an
express provision . . . stating the number of days in which the parties to the arbitration
must pay any required fees or costs . . . .” (§ 1281.98, subd. (a)(2).) In an e-mail to
counsel sent on December 9, 2022, Judicate West’s case manager identified February 23,
2023, as the “Final Date for Payment of arbitration hearing fees and other
outstanding invoices.” In contrast to the July 19, 2021 e-mail, the December 9, 2022
e-mail did not contain any reference to the parties expressly agreeing to this due date.
Neither the earlier December 6, 2022 e-mail nor the e-mails sent between January 31 and
9 In Espinoza, at the behest of the defendant/real party in interest, Division One of
the Second Appellate District evaluated the legislative history of Senate Bill No. 707
(2019–2020 Reg. Sess.), which enacted section 1281.97. (See Espinoza, supra, 83
Cal.App.5th at pp. 773, 777–778.) In view of that history, the court rejected the argument
that strict interpretation of the statute, which would penalize drafting parties for the
mistake of paying “ ‘ “a majority of the fees and costs, but [not] a small, minor
portion” ’ ” (id. at p. 777), resulted in absurd consequences (ibid.).
17.
March 7, 2023 established the parties directly discussed and/or agreed to a payment
deadline beyond the one set forth in section 1281.98, subdivision (a).
Nevertheless, the superior court concluded the parties “mutually agreed upon” the
February 23, 2023 due date, emphasizing Reynosa “did not object to the[] extended
payment deadline[] when proposed” and Judicate West “set forth [other] different,
specific due dates that appear to have been agreed upon by all parties.” In its return, ATS
contends “the substantial evidence standard applies to the trial court’s finding of an
agreement to extend the deadline to pay the December 12, 2022 invoice.” (Boldface &
some capitalization omitted.) We disagree. “When the facts are undisputed, the effect or
legal significance of those facts presents a question of law, which we review de novo.”
(Hill v. San Jose Family Housing Partners, LLC (2011) 198 Cal.App.4th 764, 774, citing
Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) We agree with Reynosa that “the
parties do not dispute the factual support for the trial court’s ruling”; instead, “they
dispute the proper interpretation of [section] 1281.98.” (See Doe, supra, 95 Cal.App.5th
at p. 353; De Leon, supra, 85 Cal.App.5th at p. 749.)
Under section 1281.98, subdivision (a)(2), “[a]ny extension of time for the due
date shall be agreed upon by all parties.” 10 The verb “agree”—of which “agreed” is the
past participle—is essentially undefined by the statute. 11 “Absent a statutory definition,
10 The clear and unequivocal language “only contemplates extensions of the due
date by agreement of the parties . . . .” (Doe, supra, 95 Cal.App.5th at p. 361; see Quarry
v. Doe I (2012) 53 Cal.4th 945, 970 [“It is a settled rule of statutory construction that
‘where exceptions to a general rule are specified by statute, other exceptions are not to be
implied or presumed.’ ”]; Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 894
[“[W]e presume the Legislature intended everything in a statutory scheme, and we should
not read statutes to omit expressed language or include omitted language.”].) Hence, an
arbitration provider is not empowered to unilaterally extend the due date.
11 Section 1280, subdivision (a) only provides the following description of an
“agreement”:
18.
we may turn to dictionaries to look for a word’s usual, ordinary meaning.” (Doe, supra,
95 Cal.App.5th at p. 356.) In Webster’s II New College Dictionary (1995) at page 23,
column 1, “agree” means “to grant consent,” “to be in accord,” “to be of one opinion,” or
“to come to an understanding or to terms.” (Boldface & capitalization omitted.) In
Black’s Law Dictionary (11th ed. 2019) at page 84, column 1, “agree” means “to unite in
thought,” “to concur in opinion or purpose,” “to exchange promises,” or “to unite in an
engagement to do or not do something.” (Boldface & capitalization omitted.) Some
definitions—e.g., “grant consent,” “exchange promises”—suggest an agreement must be
affirmatively communicated. Other definitions are so broadly worded as to allow
inferences of agreement from the circumstances. Because the results of our inquiry are
inconclusive, we may resort to the legislative history. (Doe, supra, 95 Cal.App.5th at
p. 355; De Leon, supra, 85 Cal.App.5th at p. 750.)
In their analyses of Senate Bill No. 762, with respect to payment extensions,
Senate committees articulated:
“[T]o avoid the reported problem of one-sided payment extensions and
extension-related delays, this bill requires all parties to an arbitration to
agree before agreeing to a payment extension. Given that businesses
already have a 30-day grace period after a due date in which to pay an
arbitration fee without being in material breach of an arbitration clause,
requiring the consumer or employee to agree to any further delay appears to
be a fair balance between the parties’ interests.” (Sen. Rules Com., Off. of
Sen. Floor Analyses, Unfinished Business Analysis of Sen. Bill No. 762
(2021–2022 Reg. Sess.) as amended June 14, 2021, p. 2; Sen. Rules Com.,
Off. of Sen. Floor Analyses, Consent Analysis of Sen. Bill No. 762 (2021–
2022 Reg. Sess.) as amended Mar. 9, 2021, p. 2; Sen. Com. on Judiciary,
analysis of Sen. Bill No. 762 (2021–2022 Reg. Sess.) as amended Mar. 9,
2021, p. 5.)
“ ‘Agreement’ includes, but is not limited to, agreements providing for
valuations, appraisals, and similar proceedings and agreements between
employers and employees or between their respective representatives.”
19.
According to documents originating in both the Assembly and the Senate, by “permitting
the plaintiff to have input into potential extensions of due dates, [Senate Bill No. 762] is
intended to prevent arbitration providers from delaying payment in order to put off the
strict 30-day deadline for payment . . . .” (Off. of Sen. Floor Analysis, 3d reading
analysis of Sen. Bill No. 762 (2021–2022 Reg. Sess.) as amended June 14, 2021, p. 3;
Assem. Com. on Judiciary, analysis of Sen. Bill No. 762 (2021–2022 Reg. Sess.) as
amended June 14, 2021, p. 6.) Finally, various documents incorporated the following
remark from the California Employment Lawyers Association, Senate Bill No. 762’s
sponsor:
“[Senate Bill No. 762] would require the provider to obtain the consent of
all parties to extend deadlines for fees incurred during the pendency of the
arbitration.” (Sen. Rules Com., Off. of Sen. Floor Analyses, Unfinished
Business Arguments in Support of Sen. Bill No. 762 (2021–2022 Reg.
Sess.) as amended June 14, 2021, p. 4; Off. of Sen. Floor Analysis, 3d
reading analysis of Sen. Bill No. 762 (2021–2022 Reg. Sess.) as amended
June 14, 2021, p. 4; Assem. Com. on Judiciary, analysis of Sen. Bill No.
762 (2021–2022 Reg. Sess.) as amended June 14, 2021, p. 7; Sen. Rules
Com., Off. of Sen. Floor Analyses, Consent Arguments in Support of Sen.
Bill No. 762 (2021–2022 Reg. Sess.) as amended Mar. 9, 2021, p. 3; Sen.
Com. on Judiciary, analysis of Sen. Bill No. 762 (2021–2022 Reg. Sess.) as
amended Mar. 9, 2021, p. 6.)
From the foregoing passages, it is clear the Legislature sought to preempt
undisclosed payment extensions that exploited a loophole in section 1281.98, former
subdivision (a). As one mechanism to achieve this objective, the statute was amended to
prohibit an arbitration provider, which “may be financially interested in continuing the
arbitration and in pleasing regular clients” (Cvejic, supra, 92 Cal.App.5th at p. 1079),
from implementing a due date extension without first affording the consumer or
employee claimant the opportunity to give input thereon and then obtaining the consent
of all parties (including said claimant) thereto. (See Black’s Law Dict., supra, at p. 1297,
col. 1 [“obtain” means “to bring into one’s own possession; to procure, esp. through
effort” or “to succeed either in accomplishing (something) or in having it be
20.
accomplished; to attain by effort” (boldface & capitalization omitted)]; Webster’s II New
College Dict., supra, at p. 756, col. 1 [“obtain” means “to gain possession of, esp. by
intention or endeavor : acquire” (boldface & capitalization omitted)].) In our view, the
construction of “agreed” in section 1281.98, subdivision (a)(2) advanced by ATS and
adopted by the superior court undermines the legislative intent: by letting a claimant’s
silence, failure to object, or other seemingly acquiescent conduct (not amounting to direct
expression) constitute a sufficient manifestation of his or her agreement to an extension,
the need for the arbitration provider or the business/employer to actively procure such
consent—e.g., by having the claimant sign an acknowledgement form—is obviated.
Furthermore, placing this onus on these entities is consonant with the overall tenor of
section 1281.98, subdivision (a)(2), which also obligates (1) the arbitration provider to
furnish comprehensive “due upon receipt” invoices to all parties “by the same means on
the same day” (ibid.); 12 and (2) the “company or business that included a predispute
arbitration provision in a contract with a consumer or employee” (§ 1280, subd. (e)) to
add “an express provision in the arbitration agreement stating the number of days in
which the parties to the arbitration must pay any required fees or costs” (§ 1281.98, subd.
(a)(2)) in order to supersede the “due upon receipt” default. (See Robert L. v. Superior
Court (2003) 30 Cal.4th 894, 903 [“ ‘Statutory language should not be interpreted in
isolation, but must be construed in the context of the entire statute of which it is a part, in
order to achieve harmony among the parts.’ ”].)
Reynosa did not directly express agreement with the February 23, 2023 due date.
Therefore, pursuant to section 1281.98, subdivision (a)(2), the December 12, 2022
12 Additionally, in 2023, the Legislature appended the following language to
section 1281.98, subdivision (a)(2):
“Once the invoice has been paid, the arbitration provider shall provide to all
parties a document that reflects the date on which the invoice was paid.”
(Stats. 2023, ch. 478, § 17.)
21.
invoice was due upon receipt. Pursuant to section 1281.98, subdivision (a)(1), ATS had
until January 11, 2023, to pay the arbitration fees and costs. By submitting payment on
February 22, 2023, the company materially breached the arbitration agreement. (See
De Leon, supra, 85 Cal.App.5th at p. 749 [“[L]ate payment as provided in section
1281.98 constitutes a ‘material breach’ without regard to any additional
considerations.”].)
c. Election of remedies
Because ATS materially breached the arbitration agreement, it waived the right to
compel Reynosa to proceed with arbitration. (§ 1281.98, subd. (a)(1).) As mentioned,
“[i]f the drafting party materially breaches the arbitration agreement and is in default
under [section 1281.98,] subdivision (a), the employee or consumer may unilaterally elect
to”—among things—“[w]ithdraw the claim from arbitration and proceed in a court of
appropriate jurisdiction” (§ 1281.98, subd. (b)(1)) or “[c]ontinue the arbitration
proceeding, if the arbitration provider agrees to continue administering the proceeding,
notwithstanding the drafting party’s failure to pay fees or costs” (§ 1281.98, subd. (b)(2)).
Reynosa filed the withdrawal motion on March 20, 2023. In its return, ATS counters the
motion is precluded because “[Reynosa’s] counsel, on multiple occasions, elected to
continue with arbitration.” As supporting evidence, the company refers to e-mails
predating March 17, 2023, in which Reynosa’s counsel Gutierrez never sought to halt the
arbitration proceeding, bemoaned the hearing delays, and vehemently opposed further
postponement.
“ ‘ “An election of remedies is defined as the choosing between two or more
different and coexisting modes of procedure and relief allowed by law on the same state
of facts.” [Citation.] “Election of remedies has been defined to be the right to choose or
the act of choosing between different actions or remedies where [the] plaintiff has
suffered one species of wrong from the act complained of. Broadly speaking, an election
of remedies is the choice by a plaintiff to an action of one of two or more coexisting
22.
remedial rights, where several such rights arise out of the same facts, but the term has
been generally limited to a choice by a party between inconsistent remedial rights, the
assertion of one being necessarily repugnant to or a repudiation of the other.” [Citation.]’
[Citation.]” (Schumm v. Berg (1951) 37 Cal.2d 174, 189–190.) “ ‘The doctrine of
election is applicable only when the party is cognizant of all the facts.’ ” (Orlopp v.
Willardson Co. (1965) 232 Cal.App.2d 750, 756; accord, Wells, Fargo & Co. v. Robinson
(1859) 13 Cal. 133, 142 (Wells) [“ ‘The general rule is, that the party is not bound to
make an election, until all the circumstances are known . . . .’ ”].) Without such
knowledge, “ ‘it is impossible for the party to make a discriminating and deliberate
choice, such as ought to bind him to reason and justice.’ ” (Wells, supra, at p. 142.)
ATS materially breached the arbitration agreement when it (1) failed to pay the
entirety of the July 21, 2021 invoice within 30 days after October 29, 2021; and (2) failed
to pay the December 12, 2022 invoice within 30 days after its receipt thereof. A
February 2, 2023 billing statement addressed to ATS’s counsel showed the company paid
$27,130 (not the full $27,380) of the first invoice on September 17, 2021. A February 22,
2023 e-mail to ATS verified the company paid Judicate West $23,290 (the outstanding
combined balance of both invoices) that day. The record, though, does not demonstrate
Reynosa received either the statement or the confirmation e-mail. In her March 20, 2023
declaration, Gutierrez maintained she did not find out about the February 22, 2023
payment until she spoke with Judicate West’s case manager on March 17, 2023. ATS did
not rebut this avowal. None of the pre-March 17, 2023 e-mails relied upon by ATS
detailed the company’s payments to Judicate West. At the April 18, 2023 motion hearing,
Gutierrez indicated Judicate West’s clients could log in to an online portal to manage
their cases and remit payments. However, a client could only see fees charged directly to
and payments rendered by him or her and were not privy to the fees and payments
associated with the opposing side. The record contains a screenshot of the portal
accessed by Reynosa’s counsel’s law firm, which merely showed Judicate West posted a
23.
$250 fee on September 9, 2019, and the law firm paid it on September 10, 2019. Nothing
was disclosed as to the fees charged to and payments rendered by ATS. 13
In view of the above, Reynosa’s involvement in the arbitration proceeding prior to
March 17, 2023, does not evince he deliberately chose to “[c]ontinue the arbitration
proceeding” “notwithstanding [ATS]’s failure to [timely] pay fees or costs” (§ 1281.98,
subd. (b)(2)) because he had not yet become cognizant of the untimely payments. It is
evident one cannot elect a remedy to redress a wrong inflicted upon him or her when—at
the time of the purported election—he or she was unaware of said wrong. To deem
otherwise puts the proverbial cart before the horse. 14
d. Sanctions
“A company that materially breaches an arbitration agreement under section
1281.98[, subdivision ](a) is also required to pay the ‘reasonable expenses, including
attorney’s fees and costs, incurred by the employee . . . as a result of the material breach’
[citation], and may also suffer an evidentiary, terminating, or contempt sanction unless it
‘acted with substantial justification’ or ‘other circumstances make the imposition of the
13 Lack of disclosure to claimants regarding exactly when arbitration fees and
costs were paid may have been the impetus for the most recent amendment to section
1281.98, subdivision (a)(2). (See ante, fn. 12.)
14 In its April 18, 2023 order, the superior court concluded—in the alternative—“if
a material breach did occur,” Reynosa “did seek to continue with the arbitration process
in October 2021 and November 2021, confirming various arbitration dates.” To the
extent ATS believes this finding is entitled to deference, we disagree. The substantial
evidence standard of review “operates only where it can be presumed that the court has
performed its function of weighing the evidence. If analysis of the record suggests the
contrary, the rule should not be invoked.” (Estate of Larson (1980) 106 Cal.App.3d 560,
567.) As mentioned, the doctrine of election of remedies only applies when the aggrieved
party is aware of facts that would enable him or her to make a meaningful choice. (Wells,
supra, 13 Cal. at p. 142; Orlopp v. Willardson Co., supra, 232 Cal.App.2d at p. 756.)
Here, the court ignored the evidence Reynosa was not apprised of ATS’s untimely
payments until March 17, 2023. Moreover, we point out the court limited its inquiry to
Reynosa’s conduct in late 2021, which would have no bearing on issues related to the
December 12, 2022 invoice.
24.
sanction unjust.’ ” (Doe, supra, 95 Cal.App.5th at p. 354, quoting § 1281.99, subds. (a)
& (b).)
In his withdrawal motion, Reynosa asked for both monetary and nonmonetary
sanctions. Upon remand, the superior court shall address these requests in conformance
with section 1281.99.
DISPOSITION
Let a writ of mandate issue directing the Tulare County Superior Court to
(1) vacate its April 18, 2023 order denying plaintiff Andrew Reynosa’s motion to
withdraw from arbitration; (2) enter a new order granting his motion to withdraw from
arbitration; and (3) hold proceedings to address his requests for sanctions under Code of
Civil Procedure section 1281.99. In calculating the mandatory monetary sanction under
subdivision (a) thereof, the court shall include Reynosa’s reasonable attorney’s fees
incurred in prosecuting his writ petition. The stay of further proceedings in the superior
court is vacated upon finality of this opinion. (State Water Resources Control Bd. v.
Superior Court (2002) 97 Cal.App.4th 907, 919.) Costs are awarded to Reynosa. (Cal.
Rules of Court, rule 8.493(a)(1)(A).)
DETJEN, Acting P. J.
WE CONCUR:
MEEHAN, J.
SNAUFFER, J.
25.