Castillo v. Alhambra Healthcare & Wellness Centre CA2/2

Filed 6/6/23 Castillo v. Alhambra Healthcare & Wellness Centre CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
ESPERANZA CASTILLO, B319869
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 20STCV32074)
v.
ALHAMBRA HEALTHCARE &
WELLNESS CENTRE, LP et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of
Los Angeles County. Richard L. Fruin, Jr., Judge. Affirmed.
De Castro Law Group, José-Manuel A. de Castro and
Lori V. Minassian for Defendants and Appellants.
Law Offices of Glenn D. Hamovitz and Glenn D. Hamovitz
for Plaintiff and Respondent.
______________________________
Plaintiff and respondent Esperanza Castillo filed this
action against defendants and appellants Alhambra Healthcare
& Wellness Centre, LP, and Rockport Administrative Services
LLC doing business as Rockport Healthcare Services alleging
employment-related claims. Defendants moved to compel
arbitration pursuant to an agreement to arbitrate. The trial
court denied defendants’ motion on the grounds that defendants
waived the right to compel arbitration by unreasonably delaying
in filing their motion to compel.
We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The instant lawsuit
On August 21, 2020, plaintiff filed the instant lawsuit
against defendants. The complaint alleges 11 employment-
related causes of action.
Defendants’ counsel’s letter to plaintiff’s counsel
On August 31, 2020, defense counsel sent a letter to
plaintiff’s counsel, advising, inter alia: “[A]s you may . . . recall
from the documents I provided to you on my clients’ behalf in
response to your client[’s] pre-litigation request for records, your
client signed an arbitration agreement at the outset of her
employment with my client. I have attached a copy for your
reference. Please let me know if your client will stipulate to
arbitration of her claims and a corresponding stay or dismissal
without prejudice of judicial proceedings on her claims pending
arbitration rather than opposing a motion to compel arbitration.”
Plaintiff’s counsel notifies defense counsel of problems with the
arbitration agreement
On September 8, 2020, plaintiff’s counsel responded,
asserting that certain terms in the arbitration agreement were
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impermissible. “Without waiving any rights or remedies, I will
review [the alternative dispute resolution policy documents]
further and get back to you in the near future about your request
for a stipulation.”
Answer
Defendants filed their answer to the complaint on
December 14, 2020, alleging arbitration as one of their
affirmative defenses.
Case management conference
Defendants’ case management statement
On May 11, 2021, defendants filed their case management
statement, requesting a “nonjury trial” and providing the trial
court with dates that defendants and their counsel were
unavailable for trial. The statement also estimated a three to
five day trial. Furthermore, the statement represented that
defense counsel had discussed with defendants an alternative
dispute resolution package and indicated that defendants were
willing to participate in mediation, a settlement conference, and
binding arbitration.
Regarding their intent to enforce the arbitration
agreement, defendants notified the trial court that they were still
“awaiting [p]laintiff’s response to a request to stipulate to
arbitration. Will move if necessary.” Defendants indicated that
they intended to file a “[m]otion to compel arbitration if plaintiff
declines to stipulate.”
Plaintiff’s case management statement
The following day, plaintiff filed her case management
statement, requesting a jury trial. She mentioned a “[p]ossible
motion to compel arbitration by defendants,” but asserted that
her case was exempt from judicial arbitration. She specifically
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requested that the following matter be determined at the case
management conference: “Whether defendants’ delay waives
their right, if any, to move to compel arbitration. Defendants
signed Notice and Acknowledgment of Receipts on September 24,
2020—ALMOST 8 months ago! Defendants answered the
complaint on December 14, 2020—ALMOST 5 months ago.
Plaintiff relied on the pending action and timely posted jury fees
and served notice of the same on defendants[’] counsel on
December 8, 2020.”
She did not check the box that would have indicated her
willingness to participate in binding private arbitration.
Case management conference
At the May 24, 2021, case management conference, the
trial court ordered that all final status conference documents be
filed by January 31, 2022, and set the matter for a jury trial to
begin on February 14, 2022.
Regarding defendants’ potential motion to compel
arbitration, defense counsel represented that a motion to compel
would be filed within two to three weeks.
Defendants’ motion to compel arbitration
After plaintiff had propounded multiple discovery requests
on defendants, on November 2, 2021, defendants filed their
motion to compel arbitration. As is relevant to the issues on
appeal, defendants argued that they did not waive their right to
compel arbitration as they (1) pled arbitration as an affirmative
defense in their answer to plaintiff’s complaint,
(2) reaffirmed their intent to move to compel arbitration at the
case management conference, and (3) had not yet conducted any
discovery or sought affirmative relief from the trial court.
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Plaintiff’s opposition
Plaintiff opposed defendants’ motion, asserting, inter alia,
that defendants waived their right, if any, to compel arbitration
by delaying more than 14 months before filing their motion.
Initial hearing on defendants’ motion (Dec. 10, 2021)
The night before the scheduled hearing on defendants’
motion to compel arbitration, the trial court e-mailed the parties
its tentative ruling. Regarding waiver, the trial court found: “It
is this last argument that most concerns the Court, and which
necessitates denial of the motion . . . . Moving parties’ delay in
seeking arbitration was significant. The Complaint was filed on
8/21/20. Per proofs of service filed 10/8/20, moving defendants
were served with S&C on 9/4/20. Defendants’ Answer, filed
12/14/20, asserts arbitration as an affirmative defense, yet the
instant motion wasn’t filed until 11/2/21. Plaintiff’s opposition
notes the long delay, and cites cases for the proposition that a
delay in seeking arbitration supports a finding that the right to
compel arbitration has been waived. [Citations.]
“The Court finds this argument to be persuasive.
“Notably, while the Reply argues that defendants haven’t
taken steps which are inconsistent with the right to compel
arbitration, the Reply offers no explanation for the delay.
Instead, Defense counsel submits a declaration in which he
asserts that: a) even before the complaint was served, he asked
Plaintiff’s counsel whether Plaintiff would stipulate to
arbitration, but he never got a response; b) he advised the Court
that a motion to compel arbitration would be forthcoming at a
case management conference; and c) after he received discovery
from Plaintiff on 10/1/21, he realized that Plaintiff ‘had elected
not to stipulate,’ and he then prepared the motion. The
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declaration doesn’t explain why Defendants waited; instead, it
states only that Defendants waited until Plaintiff took action to
move the case along—i.e., for approximately fourteen months
after service of the Summons and Complaint. Had defendants
acted promptly to compel arbitration, the case might have been
resolved by now in arbitration. Defendants could not simply ‘sit
on their hands’ and wait for Plaintiff to serve discovery. They
were obligated to seek to compel arbitration within a reasonable
time, and they failed to do so.”
During oral argument, defendants cited new case law at
the hearing. As a result, the trial court continued the hearing to
allow plaintiff to file a surreply to address the legal authority
first mentioned at the hearing.
Continued hearing on defendants’ motion (Dec. 16, 2021)
After entertaining further argument from the parties, the
trial court indicated that it had “looked at the facts carefully,”
considered the new cases cited by defendants at the prior hearing
date, and was going to stand by its earlier tentative ruling and
deny defendants’ motion to compel arbitration.
Appeal
Defendants’ timely appeal ensued.
DISCUSSION
I. Relevant law
A court may deny a petition to compel arbitration on the
ground that “[t]he right to compel arbitration has been waived by
the petitioner.” (Code Civ. Proc., § 1281.2, subd. (a).) A party
may waive the right to compel arbitration by failing to demand
arbitration within a reasonable time. (Wagner Construction Co.
v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30 (Wagner).)
“This rule is an application of the general principle of contract
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law articulated in Civil Code section 1657, to the effect that, ‘[i]f
no time is specified for the performance of an act required to be
performed, a reasonable time is allowed.’ [Citation.] ‘[W]hat
constitutes a reasonable time is a question of fact, depending
upon the situation of the parties, the nature of the transaction,
and the facts of the particular case.’” (Wagner, supra, at p. 30.)
Although there is no uniform or single test for determining
whether a party’s conduct amounts to a waiver of the right to
arbitrate, the courts have formulated a list of factors that are
relevant in making that determination. These include
“‘“(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.”’ [Citation.]”
(St. Agnes Medical Center v. PacifiCare of California (2003)
31 Cal.4th 1187, 1196 (St. Agnes); see also Simms v. NPCK
Enterprises, Inc. (2003) 109 Cal.App.4th 233, 240.)
“No one of these factors predominates and each case must
be examined in context.” (Lewis v. Fletcher Jones Motor Cars,
Inc. (2012) 205 Cal.App.4th 436, 444.) The question of prejudice,
however, “is critical in waiver determinations.” (St. Agnes, supra,31 Cal.4th at p. 1203.)
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“Relatedly, a party that wishes to pursue arbitration must
take ‘“active and decided steps to secure that right”’ because an
arbitration agreement ‘“is not . . . self-executing.”’ [Citation.]
‘Mere announcement of the right to compel arbitration is not
enough. To properly invoke the right to arbitrate, a party must
(1) timely raise the defense and take affirmative steps to
implement the process, and (2) participate in conduct consistent
with the intent to arbitrate the dispute. Both of these actions
must be taken to secure for the participants the benefits of
arbitration. [Citations.]” (Fleming Distribution Co. v. Younan
(2020) 49 Cal.App.5th 73, 80–81 (Fleming).)
II. Standard of review
The party asserting waiver “‘bears the burden of producing
evidence of, and proving by a preponderance of the evidence, any
fact necessary to the defense.’ [Citation.]” (Hotels Nevada v. L.A.
Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761.)
“Generally, the determination of waiver is a question of
fact, and the trial court’s finding, if supported by sufficient
evidence, is binding on the appellate court. [Citations.] ‘When,
however, the facts are undisputed and only one inference may
reasonably be drawn, the issue is one of law and the reviewing
court is not bound by the trial court’s ruling.’ [Citation.]”
(St. Agnes, supra, 31 Cal.4th at p. 1196.)
“Here, the essential facts may not be in dispute, in the
sense that no one doubts that party X did or did not do act Y on
date Z. Nevertheless, even if there is no difference in opinion on
such events or nonoccurrences, the inferences to be drawn from
the essential facts are conflicting. And where conflicting
inferences may be drawn, the issue is reduced to whether the
trial court’s finding of waiver is supported by substantial
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evidence. [Citations.] In conducting that standard of review,
‘[w]e infer all necessary findings supported by substantial
evidence [citations] and “construe any reasonable inference in the
manner most favorable to the [ruling], resolving all ambiguities
to support an affirmance” [citation].’ [Citation.]” (Davis v.
Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 962–963.)
“Reversal is not justified simply because the trial court
could have potentially reached a different conclusion on the
question of waiver; ‘rather, we may reverse the trial court’s
waiver finding only if the record establishes a lack of waiver as a
matter of law.’ [Citation.]” (Fleming, supra, 49 Cal.App.5th at
p. 81.)
III. The trial court properly denied defendants’ motion
Applying these legal principles, we conclude that the trial
court did not err in denying defendants’ motion to compel
arbitration. Substantial evidence supports the trial court’s
determination that defendants waived their right1 to arbitrate
this dispute.
Defendants’ conduct was inconsistent with a right to
arbitrate. As confirmed in defense counsel’s August 31, 2020,
letter to plaintiff’s counsel, defendants knew they had a right to
arbitrate plaintiff’s claims before they were served with the
summons and complaint. Despite this knowledge, defendants
waited over 14 months before bringing their motion to compel
arbitration. In the meantime, (1) plaintiff posted jury fees,
(2) defendants filed their answer to the complaint, asserting
1
For ease, we refer to defendants’ “right” to arbitrate this
dispute, but we offer no opinion on whether the contract was
enforceable.
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arbitration as an affirmative defense, (3) defendants filed a case
management statement requesting a nonjury trial and providing
the trial court with a time estimate and dates of unavailability,
(4) defendants were aware of plaintiff’s case management
statement that specifically referenced a potential defense motion
to compel, and (5) defense counsel represented to the trial court
at the May 24, 2021, case management conference that their
motion to compel would be filed within two to three weeks.
Taken together, all of these actions are inconsistent with an
intent to arbitrate this matter.2
The same evidence demonstrates that the parties were well
into preparation for a lawsuit and trial before defendants filed
their motion to compel. In addition, a final status conference
date had been set, with accompanying deadlines for pretrial
documents. And, a jury trial was scheduled to commence just two
months after the initial hearing date of defendants’ motion.
Finally, defendants’ delay prejudiced plaintiff. (Fleming,
supra, 49 Cal.App.5th at p. 83.) As the trial court aptly noted,
plaintiff suffered the prejudice of having to wait to have her
claims determined—claims that may have already been decided
had defendants promptly moved to compel arbitration. (Ibid.
[prejudice exists where the petitioning party’s conduct has
substantially impaired the other side’s ability to secure the
benefits and efficiencies of arbitration].)
Urging us to conclude otherwise, defendants direct us to
Quach v. California Commerce Club, Inc. (2022) 78 Cal.App.5th
2The fact that defendants “notified” plaintiff of their intent
to enforce the arbitration agreement is insufficient. (Fleming,
supra, 49 Cal.App.5th at pp. 80–81.)
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470, review granted August 24, 2022, S275121 (Quach). In
Quach, the Court of Appeal held that the party opposing the
motion to compel arbitration did not make an adequate showing
of prejudice as a matter of law. (Id. at p. 478.) “His showing
below indicated nothing more than the parties participated in
litigation. . . . [He did] not show[] any prejudice apart from the
expenditure of time and money on litigation. He [did] not, for
example, claim [that the defendant/moving party] gained
information or conducted discovery it would not have been able to
obtain in arbitration or that the delay led to lost evidence.”
(Id. at p. 479) Relying upon this language, defendants contend
that plaintiff here did not demonstrate prejudice; therefore, her
waiver argument fails.
Defendants seem to be asking us to do what our colleagues
in Division 8 recently refused to do. In Kokubu v. Sudo (2022)
76 Cal.App.5th 1074, the court considered a request “to limit
prejudice to situations where the opposing party has (i) provided
information in compliance with civil discovery obligations that do
not apply in arbitration; or (ii) ‘alter[ed] its litigation posture in a
fundamentally inalterable or otherwise sticky [sic] way . . . .’”
(Kokubu v. Sudo, supra, 76 Cal.App.5th at p. 1090; see also id. at
p. 1083.) It declined to do so, noting that the “[c]ases do not
support such a limitation.” (Id. at p. 1090.)
For the same reason, including those outlined in the
dissent in Quach, we reject defendants’ contention. (Quach,
supra, 78 Cal.App.5th at pp. 485–490 (dis. opn. of Crandall, J.).)
Defendants’ “tactics were prejudicial because they deliberately
and forever undermined the very nature of a quick resolution
that is the central tenet of arbitration.” (Id. at p. 490; see also
Kokubu v. Sudo, supra, 76 Cal.App.5th at p. 1091 [“courts have
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considered delayed recovery of a claimed, but disputed,
entitlement as contributing to prejudice resulting from a delayed
arbitration demand”].)
To the extent defendants purport to blame plaintiff for
their delay in filing their motion to compel, we are not convinced.
Regardless of whether defense counsel asked plaintiff’s counsel to
stipulate to arbitration and never got a response, it was
incumbent upon defendants to pursue their motion if that is what
they desired—particularly in light of plaintiff’s actions that
demonstrated her desire to proceed with a jury trial.
DISPOSITION
The order is affirmed. Plaintiff is entitled to costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
_____________________, Acting P. J.
ASHMANN-GERST
We concur:
________________________, J.
CHAVEZ
________________________, J.
HOFFSTADT
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