Preview
WENDY C. YORK, SBN 166864 Electronically Filed
I DANIEL P JAY SBN 215860 11/9/2022 11:37 AM
VIRGINIA L. MARTUCCI, SBN 316296 Superior Court of California
YORK LAW CORPORATION County of Stanislaus
1111 Exposition Boulevard, Building 500 Clerk of the Court
Sacramento, California 95815 By: Joshua Teixeira, Deputy
Ph: (916) 643-2200
4 Fax: (916) 643-4680
Attorneys for Plaintiff LARRY DIGNES (Decedent) by and through his Successors-In-Interest
SHEILA M. LOWE, an individual; LORI M. KIRCHERT, an individual
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7 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF STANISLAUS
LARRY B. DIGNES (Decedent) by and
through his Successors-In-Interest SHEILA Case No.: CV-20-004057
10 M. LOWE, an individual; LORI M.
KIRCHERT, an individual PLAINTIFFS'EPLY BRIEF IN
SUPPORT OF MOTION TO LIFT THE
Plaintiff,
12 STAY AND AN ORDER ALLOCATING
vs. ARBITRATION COSTS AND FEES TO
13 DEFENDANTS OR REMAND THE
COVENANT CARE CALIFORNIA, LLC CASE TO SUPERIOR COURT
14 dba TURLOCK NURSING AND
REHABILITATION CENTER; COVENANT Date: October 17, 2022
15 CARE, LLC, a Delaware Corporation; and Time: 8:30
DOES I through 50, inclusive
16 Dept; 24
Defendants Judge: Hon. Sonny S, Sandhu
17
Complaint filed: September 18, 2020
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19
I. INTRODUCTION
20
21
Defendants'pposition begs the question: why would the corporate Defendants that so
adamantly argued for arbitration now refuse to pay for the arbitration that they want? Could it be
23 that the fees are so exorbitant that not even well-funded corporate Defendants, whose litigation
24 costs and fees are funded by a $ 3,000,000 insurance policy, want to pay them? Or is it that
Defendants know that the Plaintiffs will be prejudiced by having to advance the same costs and
fees as a corporate enterprise?
27 This Motion could have been avoided had Defendants agreed to pay for the costs of the
arbitration they moved to compel, and which their Dispute Resolution Agreement says they will
{00094081.1} PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT - I
pay. There are two aspects to costs and fees at issue here: (1) pre-arbitration discovery and law
and motion costs and fees, and (2) thc costs and fees of the arbitration hearing itself.
Defendants'ispute
Resolution Agreement, which they drafted in its entirety, says the "Facility will pay for
the arbitrator's fees and other reasonable costs associated with arbitration, unless Resident
expresses in writing that he/she would like up to equally share in the payment for the cost
maximum of three (3) days of hearing." Plaintiffs did not opt-in to pay any portion, so the
Defendants must pay for it all. Defendants refuse to honor their own words written in this
agreement by refusing to pay for the arbitration. The Court should deem they waived their right
and order this case back to Superior Court unless they agree to pay for it. Defendants
10 interpretation of Paragraph 14 (that it only requires Defendants to pay for three days of hearing
and nothing else) is unsupported by a plain reading of the words in the contract that they drafted.
12 This is not a motion for reconsideration or a "re-litigation" of the opposition to the Motion
13 to Compel Arbitration, and that argument is an attempt to deflect the Court from the issues. The
14 Court has the authority to lift the stay and determine the issue of costs, especially given that the
15 Defendants dispute what Paragraph 14 means. Plaintiffs tried in good faith to engage in
16 arbination, but the Defendants'efusal to pay prevented arbitration from starting.
17 Each of the Defendants'laims is baseless. The Defendants'laim that the
Plaintiffs'eclarations
are insufficient because the elderly stroke victim whom they neglected, and who is
19 deceased, could have had stock options, bonds, or assets that could pay for this arbitration is not
20 only devoid of humanity and gross but also fails because the Plaintiffs made a prima facie
21 showing that Decedent does not have funds to pay for arbitration. Plaintiffs Sheila Lowe and Lori
22 Kirchert were not ordered to arbitration, but they also made a prima facie showing that they
23 cannot pay for it. Furthermore, the Defendants'laim that "Plaintiffs failed to show that Plaintiffs
24 would incur the same out-of-pocket costs and fees if the matter was tried in the Superior Court
25 versus arbitration or if the costs and fees for one would be less than the other," is baseless because
26 the answer is obvious. Arbitration is significantly more expensive than litigating in Superior
27 Court. The Filing fee in Superior Court is $ 435. To even start an arbitration, the parties must
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100094081.1 } PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT - 2
each pay an $ 875 non-refundable fee. To hear a Motion to Coinpcl in Superior Court, the
Plaintiffs will pay $ 60.00. To hear a motion in arbitration, the arbitrator will charge $ 490.00 per
hour to decide a matter—which requires preparation time, hearing time, and any administrative
work. There is no comparison. Plaintiffs made a sufficient showing that they cannot afford the
significant costs of arbitration.
The Court should Order that the Defendants must pay for arbitration in its entirety or, if
they refuse, Order this matter back to Superior Court. Altemnativel, the Plaintiffs request the
Court amend its existing Order compelling arbiiration to add that Defendants must pay for costs
and fees of all of the arbitration or it is deemed waived.
10 II. ARGUMENT
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A. The Plain Language of Paragraph 14 of the Dispute Resolution Agreement Says
12 Defendants Must Pay for the Arbitrator's Fees and Reasonable Costs of Arbitration,
and the Defendants'efusal to Pay Should Be Considered a Waiver.
13
Defendants'pposition fails to address the actual words of the agreement and the
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argument that it is ambiguous and uncertain. The only mention by Defendants of the agreement
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itself is Defendants'laim that "PiaintiA's assertion that paragraphs 14 of the Agreement is
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ambiguous and uncertain is simply another way of contending...that the Agreement is
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unconscionable." (Defs'pposition, p. 6, fli 3.)
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This is a red herring and a conflation. Plaintiffs are not claiming unconscionability. If the
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Defendants want to proceed with arbitration, the Plaintiffs are ready to do so as long as the
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Defendants pay for t4 Plaintiffs are not arguing that the ambiguity in Paragraph 14 renders it
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unconscionable. Rather, the ambiguity renders the parties unable to move forward because of the
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dispute over its meaning, which must be resolved by the Court.
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The issue before the Court is one of basic contract principles. Under basic contract
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principles, words in a contract that are wholly inconsistent in nature with the main intent of the
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parties must be rejected (Civil Code I'I 1652.); ambiguities in written agreements are to be
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construed against their drafters. (Civil Code ( 1654.) Under Code of Civil Procedure I'I 1284.2,
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(00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASF. TO
SUPERIOR COURT - 3
the payment of arbitration expenses is to be split pro rata between the parties, "unless the
arbitration agreement otherwise provides or the parties to the arbitration otherwise agree."
Here, a plain reading of Paragraph 14 says that Defendants will pay for the arbitrator's
fees and other reasonable costs associated with arbitration:
Facility will pay for the arbitrator's fees and other reasonable costs associated
with arbitration, unless Resident expresses in writing that helshe would like up
to equally share in the payment for the cost maximum of three (3) days of
hearing.
The rules of contract interpretation employed under the FAA are the same as those used
under the CAA. For example, under the FAA, courts interpret arbitration agreements using the
10 plain meaning rule. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 176.) Here, the plain
meaning of this sentence supports one conclusion: Defendants agreed to pay the arbitrator's fees
12 and other "reasonable costs associated with arbitration." Plaintiffs never opted in to pay, so the
13 Defendants must pay for the arbitration.
14 Defendants wrote this Paragraph and could have chosen any words they wanted. Of all
15 the provisions and all the words they could have chosen, they said they agreed to pay for "the
16 arbitrator's fees and other reasonable costs associated with arbitration," which necessarily
17 includes law and motion. Defendants are sophisticated, long-time operators of skilled nursing
18 facilities. They have been using arbitration agreements for years, if not decades. Defendants and
19 their Counsel are both highly experienced with arbitration—both know that arbitration does not
20 include just the hearing. It also includes discovery and law and motion. There is significant
21 discovery and motion work in elder neglect cases, so the issue of costs is significant because the
22 arbitrator is ofien involved in several discovery disputes.
23 If Defendants claim this provision does not require them to pay for law and motion, then
24 what does it incan? The very fact that Defendants dispute the plain meaning of this sentence and
25 refuse to pay for law and motion and discovery costs shows it is vague and ambiguous, and the
26 Court needs to resolve the issue.
27 Defendants falsely claim the Court already resolved the cost issue. (Defs'pposition, p.
7:6-14 [" This is exactly what the Court did when it 'reject[ed]'laintiffs unconscionability
{000940SI, I) PLAINTIFFS'EPLY BRIEF IN SUPPORT 01'OTION TO LIFT THE STAY AND AN
ORDFR ALLOCATING ARBITRATION COSTS AND I'EES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT - 4
arguments in opposition to Dcfcndants'otion to Compel Arbitration."]) Nothing in the Court's
January 3 Order either explicitly or implicitly decided the allocation of fees. The Court had the
authority to resolve the cost issue, but the Court did not reach the cost issue. The rules of contract
interpretation employed under the FAA are the same as those used under the CAA.
In sum, Paragraph 14 says Dcfcndants'ill pay for the arbitrator's fees and reasonable
costs associated with the arbitration unless plaintiffs volunteer to pay up to three days of the
hearing. Plaintiff did not do that, so the Defendants must pay. Defendants offered no alternative,
viable interpretation of Paragraph 14. The Plaintiffs seek an Order that Defendants must pay for
arbitration, as stated in Paragraph 14 or be deemed to have waived their right.
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B. Because Plaintiffs Cannot Afford Arbitration, Defendants Should Either Pay for
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Arbitration or Be Deemed to Have Waived their Right to Arbitrate.
Plaintiffs made a showing they cannot pay for the arbitration. Contrary to the
12 Defendants'rgument,
indigency is not the standard the standard is whether a party can afford the costs.
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California's Supreme Court concluded in Conover v. Hall that formal indigent or in forma
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pauperis status is not a prerequisite for a plaintiff to seek relief from fees and costs that inhibit
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the right of access to the judicial process. ((1974) 11 Cal.3d 842, 852.)
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Because the Plaintiffs made a showing they cannot afford arbitration, the Defendants have
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a simple choice: pay for arbitration or go back to Superior Court. (Roldan v. Callahan & Blat ne
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(2013) 219 Cal.App.4th 87; II'eiler v. Marcus &. Millichap Real Estate Investment Services, Inc.
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20 (2018) 22 Cal.App.5th 970, 982 [holding when a party who has engaged in arbitration in good
faith cannot afford arbitration, the party may seek relief from the superior court and the court
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may order (1) the arbitration continue so long as the other party to the arbitration agrees to pay,
or the arbitrator orders it to pay, all fees and costs of the arbination, and (2) if neither of those
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occurs, the arbitration shall be deemed "had" and the case may proceed in the superior court.])
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Public policy also supports that Defendants must either pay for arbitration or litigate Mr.
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Dignes'laims in Superior Court. "From a public policy standpoint, a defendant accused of
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wrongdoing should not be permitted to avoid potential liability by forcing the matter to arbitration
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and subsequently making it so expensive that the plaintiff eventually has no choice but to give
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(00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT 5 —
up. To hold otherwise would be to turn 'and justice for all'nto 'and justice for those who can
afford it'nd 'threaten the very underpinnings of our social contract.'Weiler v. Marcus &0
Millichap Real Estate Investment Services, Inc. (2018) 22 Cal.App.5th 970, 978 —979 [citations
omitted].)
Defendants can keep this case in arbitration—if they pay for it. This is supported not only
by the plain language of the contract that they wrote but also by case authority and public policy.
C. This is Not a Motion for Reconsideration, Nor is it Premature, and the Plaintiffs
Made Good Faith Attempts to Start Arbitration.
In the same breath, Defendants argue (1) this motion is late, and (2) this motion is
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premature.'ut simply, this is not a Motion for Reconsideration, and the Defendants'mphasis
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on this argument is a misplaced red herring meant to distract the Court from the real issue.
Nowhere in the Court's January order did the Court allocate costs and fees, or even mention costs.
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The case law is clear: the Court may lift the stay to consider the allocation of arbitration costs and
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fees. Just as in Aronow, the Court may consider a party's request to allocate the costs and fees.
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Likewise, this Motion is not premature and the Plaintiffs made a good faith effort to
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engage in arbitration. Plaintiffs asked the Defendants to start arbitration almost a year ago.
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Plaintiffs were forced to initiate it by filing a Notice of Intent to Arbitrate before the process could
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start. Plaintiffs did that. Then, the parties had to select an arbitrator. As the Defendants concede,
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"over the next seven months...the parties actively met and conferred regarding the...selection of
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the arbitrator." (Defs'pposition, p. 3:1-3.) This took almost a year because the parties failed to
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mutually agree on an arbitrator. The disagreement required the parties to go through the rank and
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strike process. Once an arbitrator was selected, Judicate West circulated fee agreements, which
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required the Plaintiffs to pay a non-refundable filing fee of $ 875.00 and required all parties to
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split the arbitration costs 50/50. (See Decl. Martucci, Exhibit B.) This begged the question: which
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party is paying for law and motion and other costs before the hearing? Plaintiffs met and conferred
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'efendants also argue that Plaintiffs are required to attend mediation. Nothing in the Court's
27 January 3, 2021 Order compelled the parties to inediation. Nor did Defendants move the Court to
compel mediation. Thus, Plaintiffs are not under a Court Order to attend mediation and this point
28 is meritless and another red herring.
(00094081.1) PLAINTIFFS 'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR RE~
THE CASE TO
SUPERIOR COURT 6 —
with Defendants and asked them to confirm they would pay for arbitration (just as the Dispute
Resolution agreement says they will in Paragraph 14) so that the parties could start arbitration.
Defendants refused. Plaintiffs filed the instant motion.
Thus, the Plaintiffs made good faith attempts to engage in arbitration. In fact, the Plaintiffs
actively pursued arbitration because the Defendants have not responded to the discovery that has
been outstanding for nearly two years, and law and motion need to start. Without an arbitrator,
the only party prejudiced is the Plaintiffs. The case has been completely stalled for years now. It
is the Defendants who have prevented arbitration from moving forward by failing to pay for it
according to the Dispute Resolution Agreement they drafted.
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D. Plaintiffs Made a Prima Facie Showing they Cannot Afford Arbitration and No
Discovery Is Warranted,
Plaintiffs submitted declarations that show they cannot afford arbitration. Plaintiffs also
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submitted prima facie evidence that their father, Decedent Larry Dignes, does not have sufficient
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assets or funds to pay for the arbitration. His modest estate has been distributed outside of probate,
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and all that remains is $ 2,100.00. (Decl. Sheila Lowe, $ 3.) Plaintiffs, therefore, made the requisite
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showing that Plaintiff/Decedent Larry Dignes cannot afford to pay the exorbitant costs of
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arbitration.
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Defendants'equest for discovery is baseless. Plaintiffs submitted declarations showing
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they cannot afford arbitration. In Hood v. Superior Court (1999) 72 Cal.App.4th 446, the court
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considered a trial court's order appointing a discovery referee under Code of Civil Procedure tj
20
639. The plaintiff set forth a declaration in which he claimed an inability to pay the referee's fees.
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(/d. at 448-49.) The trial court rejected the declaration and ordered the plaintiff to provide the
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discovery referee with "documentation of his income backed up by tax records or other
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documents." (Id.) The court issued a preemptory writ and vacated the trial court's order
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25 appointing the referee. (/d. at 450.) The court stated that "[a]bsent extenuating circumstances, a
declaration concerning the party's financial hardship should be considered sufficient, and no more
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can be required." (/d.) The discovery rcferec issue is analogous to paying for arbitration. Plaintiffs
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(00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT - 7
submitted declarations that are sufficient to demonstrate they cannot pay, and Defendants
demonstrated no basis to call those declarations into question.
In sum, Defendants have made no showing that Plaintiffs'eclarations are deficient such
that discovery is warranted. Aronow supports that discovery is available in limited circumstances
at the Court's discretion. And, as Defendants pointed out numerous times, that case involved a
Plaintiff claiming to be indigent. Plaintiffs here are not indigent but claim an inability to pay.
Furthermore, it would be particularly prejudicial to allow Defendants to depose Plaintiffs and/or
engage in written discovery when their failure to pay for arbitration has completely stalled
Plaintiffs'bility to do discovery. To the extent the Court orders limited discovery, Plaintiffs also
10 seek the opportunity to do discovery into the Defendants'bility to pay, including what insurance
is funding this litigation. To date, Defendants have refused to produce the insurance policy that
12 applies to this case, which Plaintiffs are entitled to as a matter of law, among other discovery.
13 (Code of Civil Procedure $ 2017.210.)
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E. The Court Should Not Look at the Financial Status of the Heirs or at Counsel's
15 Ability to Pay.
The Court did not Order Ms. Lowe and Ms. Kirchert to arbitration. Their claims are stayed
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in Superior Court. (Decl. Martucci, f[ 3, Ex. A.) The Court should not look at their ability to pay.
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To do so would thwart an Elder Abuse plaintiff's ability to pursue otherwise meritorious
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litigation. There is no rule which would require a decedent's heirs to assume liability for the
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thousands of dollars of expenses associated with arbitration whenever a person who has
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experienced elder abuse dies without the funds to pay for it. To do so would create a nonsensical
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result. If an indigent elder who was abused was fortunate enough to survive the abuse, Roldan
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and the other cases would require the defendants to pay for the arbitration. However, if that same
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elder died as a result of the abuse, the rule the defense wants to create (e.g., looking at the
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heirs'ssets)
would require the heirs to pay for arbitration if they could afford it. Whether an elder's
rights are vindicated should not depend on whether the elder lives or dies.
Defendants concede that the Court cannot look at Counsel's ability to pay.
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(Defs'pposition,
p. 10:24-11:2; citing .) Contingent fee agreements promote access to the courts by
{00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
SUPERIOR COURT 8 —
allowing people who otherwise could not afford to hire an attorney the ability to do so. Such
agreements work to "level the playing field" between ordinary citizens with ordinary means and
large, wealthy corporations and businesses. In 1993, the Cali fornia Legislature enacted Business
& Professions Code tj 6147, which set forth the basic legal requirements for contingent fee
agreements in California. In short, contingent fee agreements are a widely used and accepted
method to govern the attorney-client relationship, and the rule that they cannot be looked to for
a party's ability to pay is well-settled in several contexts. (See Isrin v. Superior Court (1965) 63
Cal.2d 153 [holding that in considering a plaintiffs'etition to waive the prepayment of jury fees
on the grounds of indigency, the Court may not look to the contingency fee agreement between
10 plaintiff and counsel as a basis to deny the request]; see also Code of Civil Procedure tj 639(6)(B)
[stating that in the context of Discovery Referee fees, the Court may not consider the party'
12 counsel's ability to pay, only the party].)
13 Mr. Dignes, the only plaintiff ordered to arbitration, is dcccased and cannot pay tens of
14 thousands of dollars to vindicate the fact that Defendants neglected him. On the other hand, the
15 party who wants arbitration, the corporate Defendants, can pay for the arbitration. Arbitration
16 can proceed as soon as they pay for it under their own contract. And the Court should order them
17 to do so or deem arbitration waived.
18 VI. CONCLUSION
19 Based on the foregoing and the moving papers, the Plaintiffs respectfully request that the
20 Court lift the stay and issue an order that (I) Defendants pay all of the arbitrator's fees and all
21 costs of arbitration, under Paragraph 14 of their Dispute Resolution Agreement, or (2) deem the
22 right to arbitrate waived if Defendants refuse to pay and an order referring this matter back to
Superior Court. Alternative}, the Plaintiffs request the Court to modify its existing Order to
24 require Defendants to pay for the arbitration. Plaintiffs made a showing they cannot afford it, and
25 the case law is clear that Defendants must choose between paying for the arbitration or having
26 the case remanded to Superior Court.
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(00094081.I } PLAINTIFFS'EPLY BRIEF QV SUPPORT OF MOTION TO LIFT THE STAY AND AN
ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO
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Dated: November 9, 2022 YO AW CO
WENDY C. YORK
DANIEL P. JAY
VIRGINIA L. MARTUCCI
Attorneys for Plaintiffs
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(00094081.1 } PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN
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WENDY C. YORK, SBN 166864 Electronically Filed I DANIEL P JAY SBN 215860 11/9/2022 11:37 AM VIRGINIA L. MARTUCCI, SBN 316296 Superior Court of California YORK LAW CORPORATION County of Stanislaus 1111 Exposition Boulevard, Building 500 Clerk of the Court Sacramento, California 95815 By: Joshua Teixeira, Deputy Ph: (916) 643-2200 4 Fax: (916) 643-4680 Attorneys for Plaintiff LARRY DIGNES (Decedent) by and through his Successors-In-Interest SHEILA M. LOWE, an individual; LORI M. KIRCHERT, an individual 6 7 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF STANISLAUS LARRY B. DIGNES (Decedent) by and through his Successors-In-Interest SHEILA Case No.: CV-20-004057 10 M. LOWE, an individual; LORI M. KIRCHERT, an individual PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE Plaintiff, 12 STAY AND AN ORDER ALLOCATING vs. ARBITRATION COSTS AND FEES TO 13 DEFENDANTS OR REMAND THE COVENANT CARE CALIFORNIA, LLC CASE TO SUPERIOR COURT 14 dba TURLOCK NURSING AND REHABILITATION CENTER; COVENANT Date: October 17, 2022 15 CARE, LLC, a Delaware Corporation; and Time: 8:30 DOES I through 50, inclusive 16 Dept; 24 Defendants Judge: Hon. Sonny S, Sandhu 17 Complaint filed: September 18, 2020 18 19 I. INTRODUCTION 20 21 Defendants'pposition begs the question: why would the corporate Defendants that so adamantly argued for arbitration now refuse to pay for the arbitration that they want? Could it be 23 that the fees are so exorbitant that not even well-funded corporate Defendants, whose litigation 24 costs and fees are funded by a $ 3,000,000 insurance policy, want to pay them? Or is it that Defendants know that the Plaintiffs will be prejudiced by having to advance the same costs and fees as a corporate enterprise? 27 This Motion could have been avoided had Defendants agreed to pay for the costs of the arbitration they moved to compel, and which their Dispute Resolution Agreement says they will {00094081.1} PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT - I pay. There are two aspects to costs and fees at issue here: (1) pre-arbitration discovery and law and motion costs and fees, and (2) thc costs and fees of the arbitration hearing itself. Defendants'ispute Resolution Agreement, which they drafted in its entirety, says the "Facility will pay for the arbitrator's fees and other reasonable costs associated with arbitration, unless Resident expresses in writing that he/she would like up to equally share in the payment for the cost maximum of three (3) days of hearing." Plaintiffs did not opt-in to pay any portion, so the Defendants must pay for it all. Defendants refuse to honor their own words written in this agreement by refusing to pay for the arbitration. The Court should deem they waived their right and order this case back to Superior Court unless they agree to pay for it. Defendants 10 interpretation of Paragraph 14 (that it only requires Defendants to pay for three days of hearing and nothing else) is unsupported by a plain reading of the words in the contract that they drafted. 12 This is not a motion for reconsideration or a "re-litigation" of the opposition to the Motion 13 to Compel Arbitration, and that argument is an attempt to deflect the Court from the issues. The 14 Court has the authority to lift the stay and determine the issue of costs, especially given that the 15 Defendants dispute what Paragraph 14 means. Plaintiffs tried in good faith to engage in 16 arbination, but the Defendants'efusal to pay prevented arbitration from starting. 17 Each of the Defendants'laims is baseless. The Defendants'laim that the Plaintiffs'eclarations are insufficient because the elderly stroke victim whom they neglected, and who is 19 deceased, could have had stock options, bonds, or assets that could pay for this arbitration is not 20 only devoid of humanity and gross but also fails because the Plaintiffs made a prima facie 21 showing that Decedent does not have funds to pay for arbitration. Plaintiffs Sheila Lowe and Lori 22 Kirchert were not ordered to arbitration, but they also made a prima facie showing that they 23 cannot pay for it. Furthermore, the Defendants'laim that "Plaintiffs failed to show that Plaintiffs 24 would incur the same out-of-pocket costs and fees if the matter was tried in the Superior Court 25 versus arbitration or if the costs and fees for one would be less than the other," is baseless because 26 the answer is obvious. Arbitration is significantly more expensive than litigating in Superior 27 Court. The Filing fee in Superior Court is $ 435. To even start an arbitration, the parties must 28 100094081.1 } PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT - 2 each pay an $ 875 non-refundable fee. To hear a Motion to Coinpcl in Superior Court, the Plaintiffs will pay $ 60.00. To hear a motion in arbitration, the arbitrator will charge $ 490.00 per hour to decide a matter—which requires preparation time, hearing time, and any administrative work. There is no comparison. Plaintiffs made a sufficient showing that they cannot afford the significant costs of arbitration. The Court should Order that the Defendants must pay for arbitration in its entirety or, if they refuse, Order this matter back to Superior Court. Altemnativel, the Plaintiffs request the Court amend its existing Order compelling arbiiration to add that Defendants must pay for costs and fees of all of the arbitration or it is deemed waived. 10 II. ARGUMENT 11 A. The Plain Language of Paragraph 14 of the Dispute Resolution Agreement Says 12 Defendants Must Pay for the Arbitrator's Fees and Reasonable Costs of Arbitration, and the Defendants'efusal to Pay Should Be Considered a Waiver. 13 Defendants'pposition fails to address the actual words of the agreement and the 14 argument that it is ambiguous and uncertain. The only mention by Defendants of the agreement 15 itself is Defendants'laim that "PiaintiA's assertion that paragraphs 14 of the Agreement is 16 ambiguous and uncertain is simply another way of contending...that the Agreement is 17 unconscionable." (Defs'pposition, p. 6, fli 3.) 18 This is a red herring and a conflation. Plaintiffs are not claiming unconscionability. If the 19 Defendants want to proceed with arbitration, the Plaintiffs are ready to do so as long as the 20 Defendants pay for t4 Plaintiffs are not arguing that the ambiguity in Paragraph 14 renders it 21 unconscionable. Rather, the ambiguity renders the parties unable to move forward because of the 22 dispute over its meaning, which must be resolved by the Court. 23 The issue before the Court is one of basic contract principles. Under basic contract 24 principles, words in a contract that are wholly inconsistent in nature with the main intent of the 25 parties must be rejected (Civil Code I'I 1652.); ambiguities in written agreements are to be 26 construed against their drafters. (Civil Code ( 1654.) Under Code of Civil Procedure I'I 1284.2, 27 (00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASF. TO SUPERIOR COURT - 3 the payment of arbitration expenses is to be split pro rata between the parties, "unless the arbitration agreement otherwise provides or the parties to the arbitration otherwise agree." Here, a plain reading of Paragraph 14 says that Defendants will pay for the arbitrator's fees and other reasonable costs associated with arbitration: Facility will pay for the arbitrator's fees and other reasonable costs associated with arbitration, unless Resident expresses in writing that helshe would like up to equally share in the payment for the cost maximum of three (3) days of hearing. The rules of contract interpretation employed under the FAA are the same as those used under the CAA. For example, under the FAA, courts interpret arbitration agreements using the 10 plain meaning rule. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 176.) Here, the plain meaning of this sentence supports one conclusion: Defendants agreed to pay the arbitrator's fees 12 and other "reasonable costs associated with arbitration." Plaintiffs never opted in to pay, so the 13 Defendants must pay for the arbitration. 14 Defendants wrote this Paragraph and could have chosen any words they wanted. Of all 15 the provisions and all the words they could have chosen, they said they agreed to pay for "the 16 arbitrator's fees and other reasonable costs associated with arbitration," which necessarily 17 includes law and motion. Defendants are sophisticated, long-time operators of skilled nursing 18 facilities. They have been using arbitration agreements for years, if not decades. Defendants and 19 their Counsel are both highly experienced with arbitration—both know that arbitration does not 20 include just the hearing. It also includes discovery and law and motion. There is significant 21 discovery and motion work in elder neglect cases, so the issue of costs is significant because the 22 arbitrator is ofien involved in several discovery disputes. 23 If Defendants claim this provision does not require them to pay for law and motion, then 24 what does it incan? The very fact that Defendants dispute the plain meaning of this sentence and 25 refuse to pay for law and motion and discovery costs shows it is vague and ambiguous, and the 26 Court needs to resolve the issue. 27 Defendants falsely claim the Court already resolved the cost issue. (Defs'pposition, p. 7:6-14 [" This is exactly what the Court did when it 'reject[ed]'laintiffs unconscionability {000940SI, I) PLAINTIFFS'EPLY BRIEF IN SUPPORT 01'OTION TO LIFT THE STAY AND AN ORDFR ALLOCATING ARBITRATION COSTS AND I'EES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT - 4 arguments in opposition to Dcfcndants'otion to Compel Arbitration."]) Nothing in the Court's January 3 Order either explicitly or implicitly decided the allocation of fees. The Court had the authority to resolve the cost issue, but the Court did not reach the cost issue. The rules of contract interpretation employed under the FAA are the same as those used under the CAA. In sum, Paragraph 14 says Dcfcndants'ill pay for the arbitrator's fees and reasonable costs associated with the arbitration unless plaintiffs volunteer to pay up to three days of the hearing. Plaintiff did not do that, so the Defendants must pay. Defendants offered no alternative, viable interpretation of Paragraph 14. The Plaintiffs seek an Order that Defendants must pay for arbitration, as stated in Paragraph 14 or be deemed to have waived their right. 10 B. Because Plaintiffs Cannot Afford Arbitration, Defendants Should Either Pay for 11 Arbitration or Be Deemed to Have Waived their Right to Arbitrate. Plaintiffs made a showing they cannot pay for the arbitration. Contrary to the 12 Defendants'rgument, indigency is not the standard the standard is whether a party can afford the costs. 13 California's Supreme Court concluded in Conover v. Hall that formal indigent or in forma 14 pauperis status is not a prerequisite for a plaintiff to seek relief from fees and costs that inhibit 15 the right of access to the judicial process. ((1974) 11 Cal.3d 842, 852.) 16 Because the Plaintiffs made a showing they cannot afford arbitration, the Defendants have 17 a simple choice: pay for arbitration or go back to Superior Court. (Roldan v. Callahan & Blat ne 18 (2013) 219 Cal.App.4th 87; II'eiler v. Marcus &. Millichap Real Estate Investment Services, Inc. 19 20 (2018) 22 Cal.App.5th 970, 982 [holding when a party who has engaged in arbitration in good faith cannot afford arbitration, the party may seek relief from the superior court and the court 21 22 may order (1) the arbitration continue so long as the other party to the arbitration agrees to pay, or the arbitrator orders it to pay, all fees and costs of the arbination, and (2) if neither of those 23 occurs, the arbitration shall be deemed "had" and the case may proceed in the superior court.]) 24 Public policy also supports that Defendants must either pay for arbitration or litigate Mr. 25 Dignes'laims in Superior Court. "From a public policy standpoint, a defendant accused of 26 wrongdoing should not be permitted to avoid potential liability by forcing the matter to arbitration 27 and subsequently making it so expensive that the plaintiff eventually has no choice but to give 28 (00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT 5 — up. To hold otherwise would be to turn 'and justice for all'nto 'and justice for those who can afford it'nd 'threaten the very underpinnings of our social contract.'Weiler v. Marcus &0 Millichap Real Estate Investment Services, Inc. (2018) 22 Cal.App.5th 970, 978 —979 [citations omitted].) Defendants can keep this case in arbitration—if they pay for it. This is supported not only by the plain language of the contract that they wrote but also by case authority and public policy. C. This is Not a Motion for Reconsideration, Nor is it Premature, and the Plaintiffs Made Good Faith Attempts to Start Arbitration. In the same breath, Defendants argue (1) this motion is late, and (2) this motion is 9 premature.'ut simply, this is not a Motion for Reconsideration, and the Defendants'mphasis 10 on this argument is a misplaced red herring meant to distract the Court from the real issue. Nowhere in the Court's January order did the Court allocate costs and fees, or even mention costs. 12 The case law is clear: the Court may lift the stay to consider the allocation of arbitration costs and 13 fees. Just as in Aronow, the Court may consider a party's request to allocate the costs and fees. 14 Likewise, this Motion is not premature and the Plaintiffs made a good faith effort to 15 engage in arbitration. Plaintiffs asked the Defendants to start arbitration almost a year ago. 16 Plaintiffs were forced to initiate it by filing a Notice of Intent to Arbitrate before the process could 17 start. Plaintiffs did that. Then, the parties had to select an arbitrator. As the Defendants concede, 18 "over the next seven months...the parties actively met and conferred regarding the...selection of 19 the arbitrator." (Defs'pposition, p. 3:1-3.) This took almost a year because the parties failed to 20 mutually agree on an arbitrator. The disagreement required the parties to go through the rank and 21 strike process. Once an arbitrator was selected, Judicate West circulated fee agreements, which 22 required the Plaintiffs to pay a non-refundable filing fee of $ 875.00 and required all parties to 23 split the arbitration costs 50/50. (See Decl. Martucci, Exhibit B.) This begged the question: which 24 party is paying for law and motion and other costs before the hearing? Plaintiffs met and conferred 25 26 'efendants also argue that Plaintiffs are required to attend mediation. Nothing in the Court's 27 January 3, 2021 Order compelled the parties to inediation. Nor did Defendants move the Court to compel mediation. Thus, Plaintiffs are not under a Court Order to attend mediation and this point 28 is meritless and another red herring. (00094081.1) PLAINTIFFS 'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR RE~ THE CASE TO SUPERIOR COURT 6 — with Defendants and asked them to confirm they would pay for arbitration (just as the Dispute Resolution agreement says they will in Paragraph 14) so that the parties could start arbitration. Defendants refused. Plaintiffs filed the instant motion. Thus, the Plaintiffs made good faith attempts to engage in arbitration. In fact, the Plaintiffs actively pursued arbitration because the Defendants have not responded to the discovery that has been outstanding for nearly two years, and law and motion need to start. Without an arbitrator, the only party prejudiced is the Plaintiffs. The case has been completely stalled for years now. It is the Defendants who have prevented arbitration from moving forward by failing to pay for it according to the Dispute Resolution Agreement they drafted. 10 D. Plaintiffs Made a Prima Facie Showing they Cannot Afford Arbitration and No Discovery Is Warranted, Plaintiffs submitted declarations that show they cannot afford arbitration. Plaintiffs also 12 submitted prima facie evidence that their father, Decedent Larry Dignes, does not have sufficient 13 assets or funds to pay for the arbitration. His modest estate has been distributed outside of probate, 14 and all that remains is $ 2,100.00. (Decl. Sheila Lowe, $ 3.) Plaintiffs, therefore, made the requisite 15 showing that Plaintiff/Decedent Larry Dignes cannot afford to pay the exorbitant costs of 16 arbitration. 17 Defendants'equest for discovery is baseless. Plaintiffs submitted declarations showing 18 they cannot afford arbitration. In Hood v. Superior Court (1999) 72 Cal.App.4th 446, the court 19 considered a trial court's order appointing a discovery referee under Code of Civil Procedure tj 20 639. The plaintiff set forth a declaration in which he claimed an inability to pay the referee's fees. 21 (/d. at 448-49.) The trial court rejected the declaration and ordered the plaintiff to provide the 22 discovery referee with "documentation of his income backed up by tax records or other 23 documents." (Id.) The court issued a preemptory writ and vacated the trial court's order 24 25 appointing the referee. (/d. at 450.) The court stated that "[a]bsent extenuating circumstances, a declaration concerning the party's financial hardship should be considered sufficient, and no more 26 can be required." (/d.) The discovery rcferec issue is analogous to paying for arbitration. Plaintiffs 27 (00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT - 7 submitted declarations that are sufficient to demonstrate they cannot pay, and Defendants demonstrated no basis to call those declarations into question. In sum, Defendants have made no showing that Plaintiffs'eclarations are deficient such that discovery is warranted. Aronow supports that discovery is available in limited circumstances at the Court's discretion. And, as Defendants pointed out numerous times, that case involved a Plaintiff claiming to be indigent. Plaintiffs here are not indigent but claim an inability to pay. Furthermore, it would be particularly prejudicial to allow Defendants to depose Plaintiffs and/or engage in written discovery when their failure to pay for arbitration has completely stalled Plaintiffs'bility to do discovery. To the extent the Court orders limited discovery, Plaintiffs also 10 seek the opportunity to do discovery into the Defendants'bility to pay, including what insurance is funding this litigation. To date, Defendants have refused to produce the insurance policy that 12 applies to this case, which Plaintiffs are entitled to as a matter of law, among other discovery. 13 (Code of Civil Procedure $ 2017.210.) 14 E. The Court Should Not Look at the Financial Status of the Heirs or at Counsel's 15 Ability to Pay. The Court did not Order Ms. Lowe and Ms. Kirchert to arbitration. Their claims are stayed 16 in Superior Court. (Decl. Martucci, f[ 3, Ex. A.) The Court should not look at their ability to pay. 17 To do so would thwart an Elder Abuse plaintiff's ability to pursue otherwise meritorious 18 litigation. There is no rule which would require a decedent's heirs to assume liability for the 19 thousands of dollars of expenses associated with arbitration whenever a person who has 20 experienced elder abuse dies without the funds to pay for it. To do so would create a nonsensical 21 result. If an indigent elder who was abused was fortunate enough to survive the abuse, Roldan 22 and the other cases would require the defendants to pay for the arbitration. However, if that same 23 elder died as a result of the abuse, the rule the defense wants to create (e.g., looking at the 24 25 26 heirs'ssets) would require the heirs to pay for arbitration if they could afford it. Whether an elder's rights are vindicated should not depend on whether the elder lives or dies. Defendants concede that the Court cannot look at Counsel's ability to pay. 27 28 (Defs'pposition, p. 10:24-11:2; citing .) Contingent fee agreements promote access to the courts by {00094081.1) PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT 8 — allowing people who otherwise could not afford to hire an attorney the ability to do so. Such agreements work to "level the playing field" between ordinary citizens with ordinary means and large, wealthy corporations and businesses. In 1993, the Cali fornia Legislature enacted Business & Professions Code tj 6147, which set forth the basic legal requirements for contingent fee agreements in California. In short, contingent fee agreements are a widely used and accepted method to govern the attorney-client relationship, and the rule that they cannot be looked to for a party's ability to pay is well-settled in several contexts. (See Isrin v. Superior Court (1965) 63 Cal.2d 153 [holding that in considering a plaintiffs'etition to waive the prepayment of jury fees on the grounds of indigency, the Court may not look to the contingency fee agreement between 10 plaintiff and counsel as a basis to deny the request]; see also Code of Civil Procedure tj 639(6)(B) [stating that in the context of Discovery Referee fees, the Court may not consider the party' 12 counsel's ability to pay, only the party].) 13 Mr. Dignes, the only plaintiff ordered to arbitration, is dcccased and cannot pay tens of 14 thousands of dollars to vindicate the fact that Defendants neglected him. On the other hand, the 15 party who wants arbitration, the corporate Defendants, can pay for the arbitration. Arbitration 16 can proceed as soon as they pay for it under their own contract. And the Court should order them 17 to do so or deem arbitration waived. 18 VI. CONCLUSION 19 Based on the foregoing and the moving papers, the Plaintiffs respectfully request that the 20 Court lift the stay and issue an order that (I) Defendants pay all of the arbitrator's fees and all 21 costs of arbitration, under Paragraph 14 of their Dispute Resolution Agreement, or (2) deem the 22 right to arbitrate waived if Defendants refuse to pay and an order referring this matter back to Superior Court. Alternative}, the Plaintiffs request the Court to modify its existing Order to 24 require Defendants to pay for the arbitration. Plaintiffs made a showing they cannot afford it, and 25 the case law is clear that Defendants must choose between paying for the arbitration or having 26 the case remanded to Superior Court. 27 28 (00094081.I } PLAINTIFFS'EPLY BRIEF QV SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR REMAND THE CASE TO SUPERIOR COURT - 9 Dated: November 9, 2022 YO AW CO WENDY C. YORK DANIEL P. JAY VIRGINIA L. MARTUCCI Attorneys for Plaintiffs 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (00094081.1 } PLAINTIFFS'EPLY BRIEF IN SUPPORT OF MOTION TO LIFT THE STAY AND AN ORDER ALLOCATING ARBITRATION COSTS AND FEES TO DEFENDANTS OR RE~ THE CASE TO SUPERIOR COURT - 10