Villareal v. LAD-T, LLC

Filed 11/2/22 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
ALBERT VILLAREAL, B313681
Plaintiff and Respondent, (Los Angeles County
Super. Ct.
v. No. 20STCV32252)
LAD-T, LLC, et al., ORDER MODIFYING
OPINION
Defendants and
Appellants. (NO CHANGE IN
APPELLATE JUDGMENT)
THE COURT:
The above-entitled opinion filed on October 20, 2022 is
modified as follows:
On page 22, in the second to last sentence of the last
paragraph, replace “FSG files” with ”defendants file,” so the
sentence reads:
In addition, if defendants file a second motion to compel
arbitration, this would further delay the trial court
proceeding (now two years after Villareal filed this action)
given the need for the filing, scheduling, and briefing on a
new motion.
There is no change in the appellate judgment.
PERLUSS, P.J. SEGAL, J. FEUER, J.
2
Filed 10/20/22 (unmodified opinion)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
ALBERT VILLAREAL, B313681
Plaintiff and Respondent, (Los Angeles County
Super. Ct.
v. No. 20STCV32252)
LAD-T, LLC et al.,
Defendants and
Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Stephanie M. Bowick, Judge. Vacated and
remanded with directions.
Fine, Boggs & Perkins and Michael K. Perkins for
Defendants and Appellants.
Employee Justice Legal Group, Kaveh S. Elihu and
Matias N. Castro for Plaintiff and Respondent.
_________________
LAD-T, LLC, dba Toyota of Downtown Los Angeles
(LAD-T), and its parent company Lithia Motors Inc. (Lithia;
collectively, defendants) appeal from an order denying their
motion to compel arbitration of Albert Villareal’s claims brought
under the California Fair Employment and Housing Act (FEHA;
Gov. Code, § 12900 et seq.). Defendants contend the trial court
erred in finding Business and Professions Code1 section 17918
barred them from enforcing an arbitration agreement made in
the name of an unregistered fictitious business, DT Los Angeles
Toyota. The trial court did not err. Section 17918 bars a party
that regularly transacts business in California for profit under a
fictitious business name from maintaining an action on a contract
until a fictitious business name statement is filed. Substantial
evidence supports the trial court’s finding LAD-T was transacting
business as DT Los Angeles Toyota. Although section 17918 is
most commonly applied to prevent a plaintiff from maintaining
an action on a contract in the name of the fictitious business, we
conclude it also applies to bar a party from maintaining a motion
to compel arbitration because the motion is in essence a suit in
equity to compel performance of a contract—the arbitration
agreement.
Further, contrary to defendants’ contention, Villareal
timely asserted his defense to the motion to compel arbitration by
raising it in his opposition to the motion. In addition, the Federal
Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) does not preempt
section 17918 because the requirement that a party file a
fictitious business name statement applies to all actions on a
contract, not just arbitration agreements.
During the pendency of this appeal and nearly one year
after the trial court denied the motion to compel arbitration,
1 All further undesignated statutory references are to the
Business and Professions Code.
2
defendants registered the name DT Los Angeles Toyota. They
now contend we should reverse the trial court’s order as moot
because there is no longer a bar to their maintaining their motion
to compel arbitration. Villareal responds that we should dismiss
the appeal as moot, leaving the trial court order in place. Neither
position is quite correct. The appeal is not moot because if we
were to decide the appeal in defendants’ favor, we could provide
them immediate relief by directing the trial court to grant the
motion to compel arbitration. We therefore reach the merits of
the appeal. However, because the failure to file a fictitious
business name statement does not invalidate the agreement in
the name of the business, instead only abating the proceeding
until there is compliance, we vacate the trial court’s order and
remand for the court to consider whether defendants’ motion to
compel arbitration should now be granted. Villareal cannot on
remand relitigate issues already decided (for example,
unconscionability), but he should be afforded an opportunity in
the trial court to raise waiver as a defense to enforcement of the
arbitration agreement based on defendants’ delayed filing of the
fictitious business name statement.
BACKGROUND AND PROCEDURAL HISTORY
A. The Complaint
As alleged in the complaint, Villareal began working for
defendants as a car salesman in 2015, and his job performance
was satisfactory or better. On February 1, 2018 Villareal injured
his knee and back and was unable to walk without difficulty. He
was diagnosed with a torn meniscus, and on February 13 he was
3
given an injection for pain. He returned to work on March 1.
Villareal worked up until June 4, 2018, when he took leave due to
recurring pain. He underwent knee surgery in August 2018.
Following the surgery, Villareal was placed on two months’
medical leave. On October 30, 2018 Villareal informed
defendants his medical provider had extended his medical leave
for another three months. Defendants terminated Villareal’s
employment the following day.
Villareal filed this action on August 24, 2020, asserting
claims under FEHA for discrimination, retaliation, failure to
prevent discrimination, failure to provide reasonable
accommodation, and failure to engage in a good faith interactive
process. The complaint also asserted claims for retaliation in
violation of the California Family Rights Act (CFRA; Gov. Code,
§ 12945.2), wrongful termination in violation of public policy,
declaratory judgment, and (against LAD-T only) refusal to permit
inspection of personnel and payroll records in violation of the
Labor Code.
B. Motion To Compel Arbitration
On October 14, 2020 defendants filed a motion to compel
arbitration.2 The motion and supporting memorandum stated
2 Defendants styled their motion as a petition to compel
arbitration. (See Code Civ. Proc., § 1281.2 [referring to a request
to enforce an arbitration agreement as a “petition of a party to an
arbitration agreement”].) However, because the pleading was
filed in an existing lawsuit, we refer to it as “motion to compel
arbitration.” (See Phillips v. Sprint PCS (2012) 209 Cal.App.4th
758, 772 [“There is an ‘analytic distinction’ between a motion (or
petition) to compel arbitration filed within an existing action, as
4
Villareal commenced employment with LAD-T in June 2017, and
at that time he electronically signed an agreement to resolve
employment disputes through binding arbitration. The
declaration of Lithia’s recruiting director attached a document
dated June 23, 2017 with two sections titled “At Will
Employment Agreement” and “Binding Arbitration Agreement”
(collectively, the agreement). A header on the first page of the
agreement stated it was “[b]etween DT Los Angeles Toyota and
Albert Villar[]eal.”
In his opposition Villareal argued defendants failed to
meet their burden to establish the existence of a valid arbitration
agreement because DT Los Angeles Toyota was neither a legal
entity nor a fictitious business name. Rather, the vehicle
dealership where Villareal worked, at the corner of Figueroa
Street and Washington Boulevard in downtown Los Angeles,
operated under the name Toyota of Downtown LA or Toyota of
Downtown Los Angeles. Villareal argued that DT Los Angeles
Toyota, as a nonentity, lacked the capacity to contract or consent
to the agreement. Moreover, under section 17900 et seq.,
defendants could not maintain an action to enforce an agreement
made in the name DT Los Angeles Toyota because they had not
filed a fictitious business name statement with the Los Angeles
here, and a petition to compel arbitration that commences an
independent action.”]; accord, Betancourt v. Prudential Overall
Supply (2017) 9 Cal.App.5th 439, 442, fn. 2 [“Because the
document was filed within an existing action, rather than
commencing an independent action, for the sake of clarity, we
refer to it as a ‘motion to compel arbitration.’”].)
5
County Registrar-Recorder/County Clerk (Registrar-Recorder).
Villareal also argued defendants lacked authority to enter into an
arbitration agreement in June 2017 because Lithia had not yet
acquired the dealership from the previous owner, the Shammas
Group (Shammas). Thus, Villareal was still an employee of
Shammas. Further, the arbitration agreement was procedurally
and substantively unconscionable.
Villareal’s attorney submitted a declaration attaching
copies of public records showing that Lithia incorporated LAD-T
with the California Secretary of State between March and May
2017, and, according to a disclosure filed with the United States
Securities and Exchange Commission, in August 2017 Lithia
finalized its acquisition of several automobile dealerships in
downtown Los Angeles, including Toyota of Downtown LA. The
attachments included a printout of the results of a fictitious
business name search on the Registrar-Recorder’s website
indicating a search for “DT Los Angeles Toyota” returned no
matching registrations.
In their reply memorandum and supporting declarations,
defendants asserted that in the course of their acquisition of
eight Los Angeles vehicle dealerships from Shammas, they
executed employment and arbitration agreements with hundreds
of Shammas employees (including Villareal) before the deal
closed in order to ensure seamless operation of the dealerships
throughout the change in ownership. Defendants admitted “the
legal entity ‘DT Los Angeles Toyota’ was never an entity in
existence.” Lithia’s payroll manager stated in her declaration
that DT Los Angeles Toyota was an “internal DBA” used in
Lithia’s human resources computer systems to populate
employment-related documents. She added that the name “may
6
not be the same as the DBA on the company registration.”
Rather, the name was “an internal way for [Lithia] to determine
which of the 8 Shammas dealerships which [Lithia] acquired a
given worker was employed with.” Defendants argued that
“minor variations in the name of the employer” do not invalidate
an arbitration agreement, and Villareal was not confused about
“the entity that provided him electronic access to his onboarding
paperwork,” especially because he continued to work for LAD-T
at the Toyota of Downtown Los Angeles dealership for more than
a year after signing the agreement. Defendants also argued the
agreement was not procedurally or substantively unconscionable.
C. The Trial Court Ruling
After a hearing, on June 1, 2021 the trial court denied
defendants’ motion to compel arbitration. In an 11-page order,
the court found the FAA governed the agreement; defendants met
their burden of showing a valid agreement to arbitrate; and
Villareal’s contention defendants had no legal authority to enter
into an agreement with employees of Toyota of Downtown Los
Angeles during the Shammas acquisition lacked merit. Further,
Villareal did not carry his burden to show procedural and
substantive unconscionability.
However, the trial court found defendants could not enforce
the agreement because they failed to file a fictitious business
name statement as required by the Business and Professions
Code. Specifically, section 17910 requires that any person who
“regularly transacts business” for profit in California under a
fictitious business name must file a fictitious business name
statement with the clerk of the county (section 17915). Further,
section 17918 provides that a party who fails to file a valid
7
statement cannot “maintain any action upon or on account of any
contract made . . . in the fictitious business name in any court of
this state until the fictitious business name statement” has been
filed.
The trial court explained, “Defendants do not argue that a
fictitious business name statement [was filed] or otherwise
respond to [Villareal’s] argument, essentially conceding to its
merits. . . . Especially considering Defendants’ failure to respond,
the Court finds that [Villareal] establishes that Defendants were
transacting business under a fictitious business name that was
different than ‘LAD-T, LLC’ or ‘Lithia Motors, Inc.’ and therefore
were, pursuant to . . . sections 17900 et seq., required to file a
fictitious business name statement in order to maintain an action
upon any contract made in the fictitious name such as the
Arbitration Agreement. . . . The Court finds that [Villareal]
sufficiently establishes that a fictitious business name statement
was never filed and therefore Defendants cannot maintain the
instant proceeding to compel arbitration, which is in essence a
suit in equity to compel specific performance of a contract.”
Defendants timely appealed.
D. Subsequent Fictitious Business Name Registration
On June 27, 2022, while this appeal was pending and after
Villareal filed his respondent’s brief, defendants filed a motion
requesting we take judicial notice that on May 17, 2022, LAD-T
filed with the Registrar-Recorder a fictitious business name
statement registering the names “DT Los Angeles Toyota” and
“Toyota Downtown LA.” We grant the motion and take judicial
notice of the file-stamped May 17, 2022 fictitious business name
registration attached to defendants’ request. (Evid. Code, § 452,
8
subd. (c) [judicial notice may be taken of “[o]fficial acts of the
legislative, executive, and judicial departments of the United
States and of any state of the United States”]; see San Francisco
CDC LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266,
281, fn. 5 [judicial notice of existence and facial contents of
recorded notice of completion of project was proper where
authenticity not challenged].)3
3 We also grant defendants’ January 13, 2022 motion
requesting we take judicial notice of a fictitious business name
statement filed by LAD-T on June 22, 2017 for “Toyota of
Downtown LA.” Villareal also filed a motion for judicial notice
asking us to take judicial notice of the following: (a) a printout of
the results of a search conducted on March 30, 2022 on the
Registrar-Recorder’s website for searching fictitious business
names showing no results for the fictitious business name “dtla
auto group”; (b) the results of a March 29, 2022 Internet search
for “Toyota of Downtown LA” offered as evidence Shammas
Group operated under the name “Toyota of Downtown LA” prior
to June 2017; (c) the results of a March 29, 2022 opengovus.com
business search offered as evidence LAD-T in August 2017 filed a
business tax registration certificate with the City of Los Angeles
identifying Toyota of Downtown LA as its dba; and (d) a copy of
an August 15, 2019 article from bloomberglaw.com titled
“Insight: Forced Arbitration is Bad News for Employees,
California Stats Show.” We deny Villareal’s motion because
exhibits (a) and (d) are not relevant to this appeal (Cal. Rules of
Court, rule 8.252(a)(2)(A)), and Villareal has not shown exhibits
(b), (c), and (d) are matters subject to judicial notice under
Evidence Code sections 451, 452, or 453 (Cal. Rules of Court,
rule 8.252(a)(2)(C)).
9
DISCUSSION
A. Arbitration Agreements and Standard of Review
California law strongly favors arbitration “‘“as a speedy and
relatively inexpensive means of dispute resolution.”’” (OTO,
L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO); accord, Ramos v.
Superior Court (2018) 28 Cal.App.5th 1042, 1051 [“Any doubts
concerning the scope of arbitrable issues will be resolved in favor
of arbitration.”]; Khalatian v. Prime Time Shuttle, Inc. (2015)
237 Cal.App.4th 651, 658.) To further this purpose, there is a
presumption in favor of arbitrability. (OTO, at p. 125; Ramos, at
p. 1051.) However, notwithstanding the policy favoring
arbitration, because arbitration is a matter of consent, “‘“a party
cannot be required to submit to arbitration any dispute which he
has not agreed so to submit.”’” (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,
236 (Pinnacle); accord, Khalatian, at p. 659.)
“An agreement to submit disputes to arbitration ‘is valid,
enforceable and irrevocable, save upon such grounds as exist for
the revocation of any contract.’” (OTO, supra, 8 Cal.5th at p. 125;
accord, McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 964; Little
v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1079 [“[U]nder
section 2 of the FAA, a state court may refuse to enforce an
arbitration agreement based on ‘generally applicable contract
defenses, such as fraud, duress, or unconscionability.’”].)4
“Because the existence of the [arbitration] agreement is a
statutory prerequisite to granting the petition, the petitioner
4 The agreement provides and the trial court found the FAA
governs the agreement. Villareal on appeal does not dispute the
applicability of the FAA.
10
bears the burden of proving its existence by a preponderance of
the evidence. If the party opposing the petition raises a defense
to enforcement . . . that party bears the burden of producing
evidence of, and proving by a preponderance of the evidence, any
fact necessary to the defense.” (Rosenthal v. Great Western Fin.
Securities Corp. (1996) 14 Cal.4th 394, 413; accord, Pinnacle,
supra, 55 Cal.4th at p. 236.)
We review an order denying a motion to compel arbitration
based on findings of fact for substantial evidence. (Lopez v.
Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 317; Nieto
v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5th 274, 279.)
Where the facts are undisputed, we review the denial of a motion
to compel arbitration de novo. (OTO, supra, 8 Cal.5th at p. 126;
Pinnacle, supra, 55 Cal.4th at p. 236.) Likewise, we
independently review the order if the trial court’s denial rests
solely on a question of law. (Lopez, at p. 317; Nieto, at p. 279.)
B. Fictitious Business Name Registration Requirement
Section 17910 provides in relevant part, “Every person who
regularly transacts business in this state for profit under a
fictitious business name[5] shall . . . [¶] (a) File a fictitious
business name statement in accordance with this chapter not
later than 40 days from the time the registrant commences to
transact such business.” Section 17918 provides further that
5 A fictitious business name is defined for limited liability
companies as “any name other than the name stated in [the
company’s] articles of organization and in the case of a foreign
limited liability company . . . any name other than the name of
the limited liability company as on file with the California
Secretary of State . . . .” (§ 17900, subd. (b)(5).)
11
where a party transacts business under a fictitious business
name, the party may not “maintain any action upon or on account
of any contract made, or transaction had, in the fictitious
business name in any court of this state until the fictitious
business name statement has been executed, filed, and published
as required by this chapter.” “The object of section 17918 is
simply to ensure that those who do business with persons
operating under a fictitious name will know the true identities of
‘“the individuals with whom they are dealing or to whom they are
giving credit or becoming bound.”’” (Hydrotech Systems, Ltd. v.
Oasis Waterpark (1991) 52 Cal.3d 988, 1001, fn. 8 (Hydrotech).)
“Failure to comply with the fictitious-name statutes does
not make the parties’ promises, agreements, and transactions
invalid as such. Noncompliance merely prevents a fictitiously
named business from enforcing obligations owed to it until it
places on record its true nature and ownership.” (Hydrotech,
supra, 52 Cal.3d at p. 1001, fn. 8; accord, Templeton Action
Committee v. County of San Luis Obispo (2014) 228 Cal.App.4th
427, 432 [“sole penalty” for failure to register a fictitious business
name is “a bar from maintaining an action on contracts made in
the fictitious business name until the statement is filed”]; see
Hand Rehabilitation Center v. Workers’ Comp. Appeals Bd. (1995)
34 Cal.App.4th 1204, 1214 [“failure to file a fictitious business
name statement was a mere technical defect which should not
deprive [business] of an otherwise valid claim”].)
Although the requirement for a fictitious business
statement ordinarily applies to bar a plaintiff from maintaining
an action on a contract in the name of a fictitious business, the
requirement similarly applies to motions to compel arbitration
because “[a] proceeding to compel arbitration is in essence a suit
12
in equity to compel specific performance of a contract.” (Freeman
v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479;
accord, Wagner Construction Co. v. Pacific Mechanical
Corp. (2007) 41 Cal.4th 19, 29; Nelson v. Dual Diagnosis
Treatment Center, Inc. (2022) 77 Cal.App.5th 643, 653.) The fact
a motion to compel arbitration is brought by the defendant to an
action does not change this result. (See Hixson v. Boren (1956)
144 Cal.App.2d 547, 554 [requirement for filing fictitious
business name statement applies to filing of cross-complaint].)
Noncompliance with the filing requirement “is a mere
matter of abatement pending the trial, which has the result of
suspending the trial until the statute is complied with. It is not
jurisdictional.” (Kadota Fig Assn. v. Case-Swayne Co. (1946)
73 Cal.App.2d 796, 804 [trial court erred in dismissing contract
action filed by grower’s cooperative that failed to register
fictitious business name in violation of predecessor statute to
section 17918]; see Tyrone v. Kelley (1973) 9 Cal.3d 1, 14 [“‘Where
the plea in abatement on the basis of the fictitious name statute
is properly raised prior to trial, the plaintiff may thereafter
comply with the statute and then proceed with his action.”].)
Where a trial court has dismissed an action based on a
business’s noncompliance with the fictitious business name
registration requirement, the business is not precluded by the
doctrine of claim preclusion from bringing a second action
(subject to the applicable statute of limitations) after compliance
with the registration statute. (See Folden v. Lobrovich (1957)
153 Cal.App.2d 32, 34 [where trial court entered a judgment
against the plaintiff business operating under an unregistered
business name after it failed in its attempt to cure the defect
before trial, the court erred in later dismissing the business’s
13
subsequent complaint on the basis of claim preclusion]; but see
Hand Rehabilitation Center v. Workers’ Comp. Appeals Bd.,
supra, 34 Cal.App.4th at pp. 1214-1215 [affirming administrative
board’s decision to dismiss unregistered business’s medical lien
claim because the board properly granted the business 45 days to
file a registration statement yet the business “made no attempt to
do so”].)
C. The Filing of a Fictitious Business Statement for DT Los
Angeles Toyota Does Not Moot the Appeal
In their reply brief, defendants contend LAD-T’s recent
filing of a fictitious business name statement for DT Los Angeles
Toyota “resolves any grounds for abatement of [defendants’]
petition to compel arbitration under . . . section 17918,” rendering
the trial court’s order denying defendants’ motion to compel
arbitration moot. (Capitalization omitted.) Defendants request
we reverse the order on this basis. In his supplemental briefing,
Villareal contends we should instead dismiss the appeal as moot
and defendants are barred from filing a second motion to compel
arbitration by their lack of diligence in registering the name DT
Los Angeles Toyota.6 The appeal is not moot.
6 On July 12, 2022 Villareal filed a motion to strike
defendants’ reply brief, arguing we should decline to consider
theories advanced for the first time in the brief. We deny
Villareal’s motion. However, on September 14, 2022 we invited
the parties to submit supplemental letter briefs addressing
whether the appeal is moot, and if so, whether the appeal
should be dismissed or the trial court order reversed. We also
asked the parties to address whether, if we dismiss the appeal,
there is any bar to defendants filing a second motion to compel
14
“‘“An appellate court will not review questions which are
moot and which are only of academic importance.”’” (Delta
Stewardship Council Cases (2020) 48 Cal.App.5th 1014, 1053;
accord, Eye Dog Foundation v. State Board of Guide Dogs for the
Blind (1967) 67 Cal.2d 536, 541 [“‘“[T]he duty of this court, as of
every other judicial tribunal, is to decide actual controversies by a
judgment which can be carried into effect, and not to give
opinions upon moot questions or abstract propositions, or to
declare principles or rules of law which cannot affect the matter
in issue in the case before it.”’”].) “‘“[W]hen, pending an appeal
from the judgment of a lower court, and without any fault of the
[opposing party], an event occurs which renders it impossible for
this court, if it should decide the case in favor of [defendant], to
grant him any effectual relief whatever, the court will not proceed
to a formal judgment, but will dismiss the appeal”’ as moot.”
(People v. DeLeon (2017) 3 Cal.5th 640, 645; see Wilson & Wilson
v. City Council of Redwood City (2011) 191 Cal.App.4th 1559,
1574 [“If events have made [the requested] relief impracticable,
the controversy has become ‘overripe’ and is therefore moot.”].)
Because section 17918’s bar to enforcing a contract in the
name of an unregistered fictitious business is only a matter of
abatement that prevents litigation of the motion until there is
compliance with the statute (Kadota Fig Assn. v. Case-Swayne
Co., supra, 73 Cal.App.2d at p. 804), arguably we need not resolve
whether a fictitious business name statement was required for
defendants to maintain their motion to compel arbitration
arbitration. In their supplemental brief defendants argued their
appeal is not moot, but we should still reverse the order denying
their motion to compel arbitration on the basis of their filing of
the fictitious business name statement.
15
because regardless of our holding, defendants can renew their
motion in the trial court now that they have cured the deficiency.
However, it does not follow that defendants’ filing of the fictitious
business name statement renders it impossible for us to grant
defendants relief if we were to decide the appeal in their favor.
(See People v. DeLeon, supra, 3 Cal.5th at p. 645.) If we were to
reverse the trial court’s order on the merits, as defendants
request, they would obtain immediate relief (compelling
arbitration). But if we dismiss the case as moot, defendants will
need to file a second motion to compel arbitration, which Villareal
will undoubtedly again oppose, this time based on defendants’
delay in curing their lack of a fictitious business name statement.
Accordingly, we review the trial court’s order on the merits.
D. The Trial Court Did Not Err in Denying the Motion To
Compel Arbitration
Defendants assert four grounds for reversing the trial
court’s order. Defendants first contend they were not required to
file a fictitious business name statement for DT Los Angeles
Toyota because that name was only an “internal DBA” during the
Shammas acquisition, and they did not regularly transact
business under that name. However, defendants’ witnesses
averred that Lithia used the name DT Los Angeles Toyota to
determine for which of the eight Shammas dealerships a given
worker was employed. And defendants admitted their software
used this information to populate the agreements they reached
with the employees. This evidence provided substantial evidence
to support the trial court’s finding that defendants “were
transacting business under a fictitious business name that was
different than ‘LAD-T, LLC’ or ‘Lithia Motors, Inc.’” (See § 17910
16
[registration requirement applies to “[e]very person who
regularly transacts business in this state for profit”].) The
relevant fact here is not, as defendants frame it, whether they
marketed vehicles to consumers under the name DT Los Angles
Toyota, but rather, whether they used the fictitious business
name in contracting with their numerous employees. (See
Hydrotech, supra, 52 Cal.3d at p. 1001, fn. 8 [section 17918 is
designed “to ensure that those who do business with persons
operating under a fictitious name will know the true identities of
‘“the individuals with whom they are dealing”’”].) Moreover, even
accepting that the initial use of the name DT Los Angeles Toyota
was for expedience during the Shammas acquisition in the
summer of 2017, there is no evidence defendants ever amended
the agreements after the acquisition, thereby continuing to do
business with their employees in the name of DT Los Angeles
Toyota.
Defendants also contend the trial court erred in refusing to
enforce the agreement because “minor variations in the
employer’s name do not invalidate an arbitration agreement.”
(Capitalization omitted.) This misapprehends the issue: The
question is not whether the agreement was unenforceable
because the entity lacked contractual capacity—the trial court
expressly found the agreement was enforceable. Rather, the
issue is whether section 17918 allows a company to deviate from
a registered fictitious business name without a new registration.
Defendants’ reliance on Noori v. Countrywide Payroll & HR
Solutions, Inc. (2019) 43 Cal.App.5th 957, 964 to support their
contention DT Los Angeles Toyota is an acceptable de minimis
variation of the registered name Toyota of Downtown LA is
misplaced. In Noori, the Court of Appeal observed in the context
17
of an employee’s claim that his employer violated Labor Code
section 226, subdivision (a), by failing to include the legal entity
employing him on his wage slips that “minor truncations of an
employer’s name have been found to comply with the statute.”
But the Noori court went on to hold the employer violated the
Labor Code because the acronym on the wage slips, CSSG,
corresponded to an unregistered out-of-state business entity
called Country Wide Staffing Solutions Group, whereas the
company’s registered fictitious business names were Countrywide
HR and CWHR. (Id. at pp. 961, 965.)
The federal cases cited by defendants involved only very
minor truncations of the legal entity’s names. (See e.g., Mejia v.
Farmland Mutual Insurance Company (E.D. Cal., June 26, 2018,
No. 217CV00570TLNKJN) 2018 U.S. Dist. Lexis 106856, at *15,
*16 [reference to Farmland Mutual Insurance Co. instead of
registered name Farmland Mutual Insurance Company did not
violate Labor Code section 226, subdivision (a)]; see Elliot v.
Spherion Pacific Work, LLC (C.D. Cal. 2008) 572 F.Supp.2d 1169,
1179-1180 [reference to Spherion Pacific Work, LLC, instead of
Spherion Pacific Workforce, LLC, did not violate Labor Code
section 226, subdivision (a)]; cf. Clarke v. First Transit, Inc. (C.D.
Cal. Aug. 11, 2010, No. CV 07-6476 GAF) 2010 U.S. Dist. LEXIS
147118, at *10 [jury could find use of the name “First Transit”
with the company logo instead of “First Transit Transportation,
LLC,” violated the Labor Code].)7
7 The only case defendants cite that involved the assertion of
section 17918 as a defense to a motion to compel arbitration does
not assist them. In Taylor v. Eclipse Senior Living (S.D. Cal.,
Mar. 15, 2021, No. 20-CV-0190-LAB-WVG) 2021 U.S. Dist. Lexis
18
DT Los Angeles Toyota is not a minor abbreviation or
truncation of the registered fictitious business name Toyota of
Downtown LA. The name inverts where “Toyota” appears, while
using the abbreviation “DT Los Angeles” to refer to “Downtown
LA” as used in the registered name. Although defendants argue
there were no other Toyota vehicle dealerships in downtown Los
Angeles, they do not present evidence there were no Toyota
dealerships elsewhere in “LA,” which could refer to an area larger
than the City of Los Angeles (i.e., Los Angeles County). Further,
LAD-T’s registration of Toyota of Downtown LA did not ensure
that Villareal, who was doing business with DT Los Angeles
Toyota, knew “the true identities of ‘“the individuals with whom
[he was] dealing.”’” (Hydrotech, supra, 52 Cal.3d at p. 1001,
fn. 8.) The trial court therefore did not err in rejecting the
argument the name DT Los Angeles Toyota was a de minimis
variation of the registered fictitious business name.
Defendants further contend Villareal waived any defense to
performance of the agreement based on section 17918 because he
failed to raise the lack of registration “at the earliest
opportunity.” (See Color-Vue, Inc. v. Abrams (1996)
44 Cal.App.4th 1599, 1604 [“[A] plea in abatement such as lack of
capacity to sue ‘must be raised by defendant at the earliest
48193, the federal district court denied without prejudice a
motion to compel arbitration filed by Eclipse Senior Living
because it sought to enforce an arbitration agreement made in
the name of Elmcroft Senior Living without filing a fictitious
business name statement for Elmcroft Senior Living. (Id. at *4
[“Crediting . . . Eclipse’s representation that it signed the
agreements, but under the Elmcroft name that it operates under,
leads only to the conclusion that Eclipse can’t enforce the
arbitration agreement, albeit temporarily.”].)
19
opportunity or it is waived. . . . The proper time to raise a plea in
abatement is in the original answer or by demurrer at the time of
the answer.’”].) This contention fares no better. Villareal
properly asserted section 17900 et seq. at the first opportunity to
do so—in his opposition to the motion to compel arbitration.
Defendants’ waiver argument is premised on the notion that
Villareal was required to respond to their “petition” to compel
arbitration within 10 days after it was served pursuant to Code of
Civil Procedure sections 1290 and 1290.6. However, those
provisions relate to petitions that commence a proceeding,
whereas defendant’s motion to compel arbitration in the existing
FEHA action was, as noted, effectively a motion and not a
petition. Additionally, both parties treated the petition as a
motion, filing their respective opposition and reply briefs in
advance of the May 2021 hearing date as prescribed for motions
under Code of Civil Procedure section 1005.8
Finally, defendants contend the FAA preempts
section 17918 to the extent the section limits the enforcement of
arbitration agreements. It does not. Under the FAA, an
agreement to arbitrate “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.” (9 U.S.C. § 2.) As the
8 Defendants’ argument they were prejudiced because they
did not have time to execute, file, and publish a fictitious
business name statement before the hearing on the motion to
compel arbitration is not persuasive given that they failed to seek
a continuance of the hearing. Nor did they make any effort to
register the name (by filing a one-page statement) until more
than a year later, during the pendency of this appeal.
20
California Supreme Court explained in McGill v. Citibank, N.A.,
supra, 2 Cal.5th at page 962, the savings clause in section 2
“‘indicates’ that Congress’s ‘purpose’ in enacting the FAA ‘was to
make arbitration agreements as enforceable as other contracts,
but not more so.’” (Quoting Prima Paint v. Flood & Conklin
(1967) 388 U.S. 395, 404, fn. 12; accord, Patterson v. Superior
Court (2021) 70 Cal.App.5th 473, 491; see Ting v. AT&T (9th Cir.
2003) 319 F.3d 1126, 1148 [“[A]s long as state law defenses
concerning the validity, revocability, and enforceability of
contracts are generally applied to all contracts, and not limited to
arbitration clauses, federal courts may enforce them under the
FAA.”].) Section 17918 does not substantively limit a company’s
capacity to enter a binding agreement; it merely abates the
company’s ability to enforce the agreement until it complies with
the fictitious business name registration requirement.
(Hydrotech, supra, 52 Cal.3d at p. 1001, fn. 8.) And section 17918
applies to all actions on a contract, not just arbitration
agreements. (See Mitchell v. American Fair Credit Assn. (2002)
99 Cal.App.4th 1345, 1357 [FAA did not preempt state law
signature requirement as applied to arbitration agreement
because it is a “neutral state law contract formation
requirement”].)
E. We Vacate the Order Denying the Motion To Compel
Arbitration To Afford Villareal an Opportunity To Assert a
Waiver Defense
Now that we have concluded the trial court did not err in
denying defendants’ motion to compel arbitration, we must
address the appropriate disposition in light of the unusual facts
before us. Because defendants have (belatedly) filed their
21
fictitious business name statement, they may maintain their
motion to compel arbitration. Therefore, if we affirm the trial
court’s order, defendants could simply file another motion to
compel arbitration. But this would waste judicial resources given
that the trial court has already ruled on Villareal’s principal
defenses, including unconscionability. In addition, if FSG files a
second motion to compel arbitration, this would further delay the
trial court proceeding (now two years after Villareal filed this
action) given the need for the filing, scheduling, and briefing on a
new motion. And it would be unfair to Villareal to direct the trial
court to grant defendants’ motion in light of the late-filed
statement because that would deny Villareal an opportunity to
raise waiver as a defense in light of defendants’ delay in filing the
statement.9
We agree with Villareal that defendants failed to act
diligently in filing their fictitious business name statement.
Defendants filed their motion to compel arbitration on
October 14, 2020. In his May 18, 2021 opposition, Villareal
argued the motion should be denied because of the failure of
defendants to file a fictitious business name statement. And in
its June 1 order, the trial court denied the motion on this basis.
Defendants then filed their notice of appeal on June 18. But it
was not until May 17, 2022, after Villareal filed his respondent’s
9 Although the trial court could have suspended a ruling on
the motion until defendants filed the statement (avoiding the
inefficiency of addressing this issue on appeal), neither party
requested suspension of the proceedings or a continuance of the
hearing, and the court properly denied the motion based on
section 17918.
22
brief, that defendants elected to file the statement with the
Registrar-Recorder, and they waited until June 27, 2022 to
request we take judicial notice of the filed statement. Defendants
provide no explanation for why they would vigorously defend
their position that no fictitious business name statement was
required, including appealing the trial court’s order, then
abandon this position at the eleventh hour by filing the very
statement that could have enabled the case to proceed to
arbitration a year earlier.
Although we are troubled by the dilatory conduct by
defendants, the trial court will need to determine in the first
instance whether defendants have by their conduct waived their
right to arbitration. “A motion to compel arbitration is properly
denied when the moving party has waived its right to do so.”
(Spracher v. Paul M. Zagaris, Inc. (2019) 39 Cal.App.5th 1135,
1137; accord, Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 982 [“[Civil Code] [s]ection 1281.2,
subdivision (a), provides that a trial court shall refuse to compel
arbitration if it determines that ‘[t]he right to compel arbitration
has been waived by the petitioner.’”].) However, “[i]n light of the
policy in favor of arbitration, ‘waivers are not to be lightly
inferred and the party seeking to establish a waiver bears a
heavy burden of proof.’” (Iskanian v. CLS Transportation Los
Angeles, LLC (2014) 59 Cal.4th 348, 375 (Iskanian), overruled in
part on another ground in Viking River Cruises, Inc. v.
Moriana (2022) 595 U.S. ___ [142 S.Ct. 1906]; accord, St. Agnes
Medical Center v. Pacificare (2003) 31 Cal.4th 1187, 1196 (St.
Agnes).) The FAA and California law apply the same standards
for determining whether a party has waived the right to seek
23
arbitration. (Lewis v. Fletcher Jones Motor Cars, Inc. (2012)
205 Cal.App.4th 436, 444.)
“‘California courts have found a waiver of the right to
demand arbitration in a variety of contexts, ranging from
situations in which the party seeking to compel arbitration has
previously taken steps inconsistent with an intent to invoke
arbitration [citations] to instances in which the petitioning party
has unreasonably delayed in undertaking the procedure.
[Citations.] The decisions likewise hold that the “bad faith” or
“willful misconduct” of a party may constitute a waiver and thus
justify a refusal to compel arbitration.’” (Iskanian, supra,
59 Cal.4th at pp. 374-375; accord, Davis v. Blue Cross of Northern
California (1979) 25 Cal.3d 418, 425-426.)
The Supreme Court in St. Agnes, supra, 31 Cal.4th at
page 1196 held that the following factors are relevant to the
waiver inquiry: “‘“(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 [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.”’” (Accord, Iskanian, supra, 59 Cal.4th at p. 375.)
We are not in a position to address the St. Agnes factors
given the lack of briefing on waiver. (See Engalla v. Permanente
24
Medical Group, Inc., supra, 15 Cal.4th at p. 982 [plaintiffs’
“waiver claims may have merit, but . . . the question of waiver
must be determined by the trial court on remand”].) Although
the factors are couched in terms of a typical motion to compel
arbitration filed in the trial court, they apply at this stage as
well. For example, the trial court will need to consider whether
the “‘“‘litigation machinery’”’” (here, the appellate process) was
substantially invoked. (St. Agnes, supra, 31 Cal.4th at p. 1196.)
And, among other factors, was Villareal prejudiced by the delay?
(Id. at p. 1203 [“In California, whether or not litigation results in
prejudice also is critical in waiver determinations.”]; accord,
Iskanian, supra, 59 Cal.4th at pp. 376-377.) Further, the court
may consider whether LAD-T’s late change in position was made
in bad faith. (Iskanian, at p. 375; see Engalla, at p. 984 [there
was ample evidence insurer’s delay in selecting an arbitrator was
unreasonable or taken in bad faith, which could provide sufficient
grounds for trial court to conclude on remand the insurer waived
its right to compel arbitration].)
Accordingly, in the interests of justice we vacate the court’s
order denying the motion to compel arbitration and direct the
court to again consider the motion to compel arbitration limited
to the narrow issue of whether defendants have waived their
right to compel arbitration by their delay in filing the fictitious
business name statement.
25
DISPOSITION
The order denying defendants’ motion to compel arbitration
is vacated and the matter remanded for the trial court to address
whether defendants have waived their right to compel
arbitration. If the court finds waiver, it should again deny the
motion to compel arbitration; if it finds no waiver, it should grant
the motion. Villareal is to recover his costs on appeal.
FEUER, J.
We concur:
PERLUSS, P. J.
SEGAL, J.
26