Opposition to Motion to Compel Arbitration in California

Arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court’s discretion, to reach a determination on the issue of arbitrability.” (Hotels Nev. v. L.A. Pac. Ctr., Inc. (2006) 144 Cal.App.4th 754, 758.)

How to Structure the Motion

The party moving to compel arbitration must establish that it demanded arbitration from the other party, and that the other party refused to agree to arbitration. (Hernandez v. Ross Stores, Inc. (2016) 7 Cal.App.5th 171, 176; Mansouri v. Super. Ct. (2010) 181 Cal.App.4th 633, 640-641.)

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.) If the existence of the agreement is challenged, “petitioner bears the burden of proving [the arbitration agreement’s] existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; see also Espejo v. S. Calif. Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-1060.)

If the other party has already filed a complaint in court alleging claims that are covered by the arbitration agreement, then the party moving for arbitration need not show that it demanded arbitration and that the plaintiff refused, since the filing of the complaint effectively constitutes a refusal to arbitrate. (Hyundai Amco Am., Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 574.)

“Within 30 days after service of the summons and complaint, the claimant shall file and serve a motion and notice of motion pursuant to Section 1281.4 to stay the action pending the arbitration of any issue, question, or dispute that is claimed to be arbitrable under the agreement and that is relevant to the action to enforce the claim of lien. The failure of a claimant to comply with this subdivision is a waiver of the claimant’s right to compel arbitration.” (Code Civ. Proc., § 1281.5(b).)

Response

Underwriters at Lloyd's of London (2005) 36 Cal.4th 495, 502), imposes the burden of proof on the party resisting arbitration (Coast Plaza Doctors Hospital v. Blue Cross of Cal. (2000) 83 Cal.App.4th 677, 686-687), and compels the Court to construe liberally the terms of the arbitration agreement (Bigler v. Harker School (2013) 213 Cal.App.4th 727, 738) and resolve all doubts in favor of arbitration (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189).

“[W]aivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes Med. Ctr. v. PacifiCare of Cal. (2003) 31 Cal.4th 1187, 1195.) “There is no single determinative test of waiver, and the question for the trial court is one of fact.” (Guess?, Inc. v. Sup. Court (2000) 79 Cal.App.4th 553, 557; see also Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436 (affirming waiver); Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331 (affirming waiver).)

The Court’s Decision

“California law, ‘like [federal law], reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims.’” (Wagner Const. Co. v. Pac. Mech. Corp. (2007) 41 Cal.4th 19, 31.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists....” (Code of Civ. Proc., § 1281.2.)

In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law guide the court in making this determination. (Mendez v. Mid- Wilshire Health Care Center (2013) 220 Cal.App.4th 534.)

A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479; Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515.) Because arbitration is a matter of contract, a party cannot be required to arbitrate a dispute he has not agreed to submit. (Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, review denied.)

“The failure of the [party] to carefully read the agreement and the amendment is not a reason to refuse to enforce the arbitration provisions.” (Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1115.)

The court shall not order the parties to arbitrate if the court determines that,

1. The right to compel arbitration has been waived by the petitioner; or
2. Grounds exist for rescission of the agreement.
3. A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.
4. The petitioner is a state or federally chartered depository institution that, on or after January 1, 2018, is seeking to apply a written agreement to arbitrate, contained in a contract consented to by a respondent consumer, to a purported contractual relationship with that respondent consumer that was created by the petitioner fraudulently without the respondent consumer's consent and by unlawfully using the respondent consumer's personal identifying information, as defined in Section 1798.92 of the Civil Code.

(Code of Civ. Proc., § 1281.2.)

Waiver of the right to arbitration “‘does not occur by mere participation in litigation.’ [A]s an abstract exercise in logic it may appear that it is inconsistent for a party to participate in a lawsuit for breach of a contract, and later to ask the court to stay that litigation pending arbitration. Yet the law is clear that such participation, standing alone, does not constitute a waiver..., for there is an overriding federal policy favoring arbitration.... [M]ere delay in seeking a stay of the proceedings without some resultant prejudice to a party..., cannot carry the day.” (Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1450 (internal citations omitted).) “While engaging in litigation of the matter may be inconsistent with an intent to invoke arbitration, ‘the party who seeks to establish waiver must show that some prejudice has resulted from the other party's delay in seeking arbitration.’” (Berman v. Health Net (2000) 80 Cal.App.4th 1359, 1363–1364.)

“If the court determines that a written agreement to arbitrate a controversy exists, an order to arbitrate that controversy may not be refused on the ground that the petitioner's contentions lack substantive merit.” (Code of Civ. Proc., § 1281.2.)

If the court orders arbitration, then the court shall stay the action until arbitration is completed. (Code of Civ. Proc., § 1281.4.)