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Gary K. Salomons, Esq., SBN 126280
David S. Mayes, Esq., SBN 207173
GABRIELSALOMONS, LLP
16311 Ventura Blvd., Ste. 970
Encino, California 91436
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ounty of os Anneles
Telephone: (818) 906-3700
Facsimile: (818) 906-2142 JUL 1 2016
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Attorneys for Respondent,
PENSKE BUSINESS MEDIA, LLC
SUPERIOR COURT FOR THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES- CENTRAL DISTRICT
10
Case No. BC625685
11 CAL PAC CONSTRUCTION, INC.
Plaintiff, NOTICE OF MOTION AND MOTION TO
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REQUEST FOR STAY; MEMORANDUM OF
3a 14 PENSKE BUSINESS MEDIA, LLC, a POINTS AND AUTHORITIES IN SUPPORT
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el Delaware Limited Liability Company; JAY THEREOF; DECLARATION OF TODD
“ass 15 PENSKE, an individual; LEE POLSTER, an GREENE
aes individual, PAUL WOOLNOUGH, an
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individual; DOES 1-100, inclusive,
16
of Date: August 9, 2016
17 Defendants.
Time: 9:30 a.m.
Dept.: 12
18
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19 Res ID # 160708141900
20 TO EACH PARTY AND TO THEIR ATTORNEYS OF RECORD:
21 YOU ARE HEREBY NOTIFIED THAT on August 9, 2016, at 9:30 a.m. or as soon
22 thereafter as the matter may be heard in Department 12 of the Los Angeles County Superior Court,
located at 111 N. Hill Street, Los Angeles, California 90012, Defendant Penske Business Media,
23
LLC will move the Court for an order compelling arbitration.
24
The motion seeks to compel arbitration of the present action on the grounds that the parties’
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MOTION TO COMPEL ARBITRATION
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consented in writing to having the dispute resolved by Arbitration. In addition, the allegations of
the present action arise out of the identical transactions and occurrences that are the subject of a
pending arbitration between some of the parties to this action. Plaintiff has apparently filed this
action in a poorly conceived strategy of making patently false and scurrilous claims against the
individual defendants in an attempt to circumvent the pending arbitration proceeding and leverage
a settlement.
The motion will be based upon this notice, the attached Declaration of Todd Greene, the
points and authorities, and the complete file and records of this action.
DATED: July 8, 2016 BRIELSA) ONS, LLP
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MOTION TO COMPEL ARBITRATION
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MEMORANDUM OF POINTS AND AUTHORITIES
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FACTUAL BACKGROUND
Pursuant to Code of Civil Procedure §1281.7, Defendant, Penske Business Media, LLC
hereby petitions this Court to compel Plaintiff to submit its newly concocted claims to binding
Arbitration pursuant to a written agreement between the parties.
The facts relevant to the present motion are very simple. Plaintiff, Cal Pac Construction,
Inc. and Defendant, Penske Business Media, LLC are parties to that certain AIA Document A107-
2007, Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope
10 dated as of July 2, 2013 (hereinafter referred to as the “Agreement”). (Declaration of Todd
11 Greene, “Greene Decl.,” Greene Decl. 42, Exhibit “A”) The Agreement contemplated a work of
ao 12 improvement at Defendant’s offices located at 11175 Santa Monica Blvd., Los Angeles, California.
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On< “Claims, disputes and other matters in question arising out of or relating to this Contract, including
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yes those alleging an error or omission by the Architect but excluding those arising under Section 16.2,
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16 shall be referred initially to the Architect for decision. Such matters, except those waived as
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17 provided for in Section 21.8 and Section 15.5.3 and 15.5.4, shall, after initial decision by the
18 Architect or 30 days after submission of the matter to the Architect, be subject to mediation as a
19 condition precedent to binding dispute resolution.” (Greene Decl., 2, Exhibit “A”)
20 Section 21.4 of the Agreement states: “If the parties have selected arbitration as the method
21 for binding dispute resolution in the Agreement, any claim, subject to, but not resolved by,
22 mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be
23 administered by the American Arbitration Association, in accordance with the Construction
24 Industry Arbitration Rules in effect on the date of this Agreement.” (Greene Decl., §2, Exhibit “A”)
25 Section 21.7 of the Agreement states: “The foregoing agreement to arbitrate and other
~ 26 agreements to arbitrate with an additional person or entity duly consented to by parties to the
~~ 27 Agreement shall be specifically enforceable under applicable law in any court having jurisdiction
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MOTION TO COMPEL ARBITRATION
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Plaintiff undertook to perform the work on Defendant’s office premises pursuant to the
Agreement. Disputes arose between the parties, and on January 18, 2016, Plaintiff Cal Pac
Construction, Inc. executed and submitted its Demand for Arbitration to the American Arbitration
Association against Penske Business Media, LLC. (Greene Decl. 3) Cal Pac Construction, Inc.
and Penske Business Media, LLC have subsequently agreed that Hon. James Steele (Ret.) serve as
the Arbitrator, and the arbitration is presently set to commence on October 3, 2016. (Greene Decl.,
44, Exhibit “B”)
Rather than attempt to comply with Section 21.6 of the Agreement, Plaintiff has filed this
present action. The present action alleges disputes subject to the arbitration provisions in the
10 Agreement, and alleges disputes arising out of the identical transactions and occurrences that are
11 subject to the pending arbitration between the parties. Plaintiff has concocted a mangled theory of
AS 12 fraud against the individual defendants in a transparent attempt to circumvent the clear and
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13 unambiguous arbitration provision in the Agreement. In other words, the newly added allegations
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16 Plaintiff, and its principal, Ted Sutherland, have attempted to mask the fraud they
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17 committed, and their failure to perform pursuant to the Agreement, by wrongfully filing this action.
18 That fraud, and the Plaintiff's shameful conduct, will be revealed at arbitration. The filing of this
19 action constitutes nothing more than a sorry attempt to extort a settlement from the Defendant and
20 sully the business and personal reputations of the wrongly named individual defendants. Plaintiff's
21 extortion attempts fail.
22 The present action alleges a dispute and controversy arising out of the identical facts and
23 circumstances that are subject to an existing arbitration. Specifically, the Complaint in the present
24 action alleges as follows:
25 1) The parties entered into a written contract to perform tenant improvements on three
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MOTION TO COMPEL ARBITRATION
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3) The Facts Common to All Causes of Action contain allegations directly related to the
construction of the tenant improvements subject to the written Agreement (Complaint, 7-23):
Section 21.6 of the Agreement states: “Any party to an arbitration may include by joinder
persons or entities substantially involved in a common question of law or fact whose presence is
required if complete relief is to be accorded in arbitration provided that the party sought to be
joined consents in writing to such joinder.” (Greene Decl., §2, Exhibit “A”) Pursuant thereto,
Defendants Jay Penske and Lee Polster consent to having the allegations leveled against them
resolved by Arbitration. (Greene Decl., 5, Exhibits “C” and “D”)
The individual defendants have consented in writing to having the newly manufactured
10 allegations resolved by Arbitration. This action clearly falls within the scope of the arbitration
11 provision set forth in the Agreement. Therefore, an order compelling arbitration to the American
Ao 12 Arbitration Association should be entered.
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On< LEGAL ARGUMENT
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16 Code of Civil Procedure §1281.2 states: “On petition of a party to an arbitration agreement
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17 alleging the existence of a written agreement to arbitrate a controversy and that a party thereto
18 refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to
19 arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists,
20 unless it determines that:
21 (a) The right to compel arbitration has been waived by the petitioner; or
22 (b) Grounds exist for the revocation of the agreement.
23 Both Federal Courts and California Courts have long favored and enforced arbitration
24 provisions in contracts as an expeditious means of resolving disputes. Gilmer v. Interstate/Johnson
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25 Lane Corp. (1991) 500 U.S. 20, 24-25; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9; 10 Cal.
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on~ 26 Rptr. 2d 183.
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ha~ 27 “As a matter of federal law, any doubts concerning the scope of arbitrable issues should be
28
a resolved in favor of arbitration, whether the problem at hand is the construction of the contract
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MOTION TO COMPEL ARBITRATION
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language itself or an allegation of waiver, delay or a like defense to arbitrability.” Moses i Cone
Memorial Hospital v. Mercury Construction Corp. (1983) 460 U.S. 24.
Likewise, California Courts have a long standing policy in favor of resolution through
arbitration. Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608, 622; 116 Cal. Rptr. 507.
Court of Appeal decisions have simply followed the statutory mandate codified at Code of Civil
Procedure §1281 et seq.
In Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 72 Cal.Rptr.2d
598, the Court set forth the guidelines for resolving a petition to compel arbitration. The Court
tuled that: “Code of Civil Procedure Sections 1280 et seq. provides a procedure for the summary
10 determination of whether a valid agreement to arbitrate exists, and such summary procedure
11 satisfies both state and federal law. Under this procedure, the petitioner bears the burden of
ao 12 establishing that existence of a valid agreement to arbitrate, and a party opposing the petition bears
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17 determines that an agreement to arbitrate exists. Indeed, when the trial court reviews a petition to
18 compel arbitration, the threshold question is whether there is an agreement to arbitrate.”
19 In Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 99
20 Cal.Rptr.2d 809 the Court of Appeal stated: “California has a strong public policy in favor of
21 arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of
22 arbitration. ....The strong policy has resulted in the general rule that arbitration should be upheld
23 unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation
24 covering the asserted dispute.” (Emphasis Added)
25 It has long been the rule in California that a broadly worded arbitration clause may extend
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MOTION TO COMPEL ARBITRATION
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In the present case, the subject Agreement contains an unambiguous arbitration provision.
The Agreement requires that disputes shall be submitted to the American Arbitration Association
and shall be final and binding. The parties have agreed to arbitrate the disputes existing between
them. The allegations of this action fall squarely within the arbitration provision. Newly added
defendants Jay Penske and Lee Polster have consented in writing to having the dispute resolved by
arbitration.
Plaintiff Cal Pac Construction, Inc. demonstrated its recognition of the arbitration provision
in the Agreement by initiating the Arbitration against Penske Business Media, LLC on January 18,
2016. Rather than file the present action, Plaintiff need only have followed Section 21.6 of the
10 Agreement to join the individual defendants in the pending Arbitration.
11 The arbitration provision of the Agreement should be enforced. Therefore, this Court
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13 B. DEFENDANTS DID NOT WAIVE THEIR RIGHT TO ARBITRATION
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nes 15 like any other defense, must be proved by a preponderance of the evidence. Engalla v. Permanente
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16 Medical Group (1997) 15 Cal. 4" 951, 984, 938 P. 2d 903, 64 Cal. Rptr. 2d 843.
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17 Here, Defendant has immediately filed the present motion, prior to filing a responsive
18 pleading and prior to propounding discovery. In other words, Defendant has taken no action
19 inconsistent with its intention to arbitrate this matter.
20 Accordingly, there is no evidence, let alone substantial evidence, that Defendant waived its
21 right to arbitrate.
22 Cc DEFENDANTS REQUEST A STAY OF THIS ACTION PURSUANT TO
23 CODE OF CIVIL PROCEDURE §1281.4
24 Code of Civil Procedure §1281.4 states:
25 “If a court of competent jurisdiction, whether in this State or not, has
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~ 26 ordered arbitration of a controversy which is an issue involved in an action or
~ 27 proceeding pending. before a court of this State, the court in which such action or
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=- 28 proceeding is pending shall, upon motion of a party to such action or proceeding,
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MOTION TO COMPEL ARBITRATION
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stay the action or proceeding until an arbitration is had in accordance with the
order to arbitrate or until such earlier time as the court specifies.
If an application has been made to a court of competent jurisdiction,
whether in this State or not, for an order to arbitrate a controversy which is an
issue involved in an action or proceeding pending before a court of this State and
such application is undetermined, the court in which such action or proceeding is
pending shall, upon motion of a party to such action or proceeding, stay the action
or proceeding until the application for an order to arbitrate is determined and, if
arbitration of such controversy is ordered, until an arbitration is had in accordance
10 with the order to arbitrate or until such earlier time as the court specifies.
11 If the issue which is the controversy subject to arbitration is severable,
ao 12 the stay may be with respect to that issue only.”
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16 CONCLUSION
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17 The written agreement executed by the parties contains a provision requiring any dispute be
18 arbitrated. The written agreement executed by the parties contains a specific provision for the
19 joinder of additional parties, who have consented thereto. The claims raised in this action are
20 clearly and unambiguously subject to arbitration.
21 Therefore, Defendant respectfully requests that this court order that the matter be arbitrated
22 as to all parties and all causes of action.
23
24 DATED: July 8, 2016 G IRIELSALO S, LLP
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MOTION TO COMPEL ARBITRATION
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DECLARATION OF TODD GREENE
I, TODD GREENE, declare and state as follows:
1 I am the Senior Vice President and General Counsel of Penske Business Media,
LLC, one of the defendants in the present action. I have personal knowledge of the facts stated in
this declaration and, if called as a witness, could and would testify competently to those facts.
2. Plaintiff, Cal Pac Construction, Inc. and Defendant, Penske Business Media, LLC
are parties to that certain AIA Document A107-2007, Standard Form of Agreement Between
Owner and Contractor for a Project of Limited Scope, dated as of July 2, 2013. A true and correct
copy of the Agreement is attached hereto as Exhibit “A”.
10 3 Disputes arose between the parties, and on January 18, 2016, Plaintiff Cal Pac
1 Construction, Inc. executed and submitted its Demand for Arbitration to the American Arbitration
2° 12 Association against Penske Business Media, LLC.
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13 4 Cal Pac Construction, Inc. and Penske Business Media, LLC have subsequently
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65 15 commence on October 3, 2016. A true and correct copy of Judge Steele’s Notice of Ruling is
53
270 attached hereto as Exhibit “B.”
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17 5 Defendants Jay Penske and Lee Polster have consented in writing to having the
18 disputes raised in the present action resolved by arbitration. True and correct copies of the
19 consents are attached hereto as Exhibits “C” and “D.”
20 I declare under penalty of perjury under the law of the State of California that the foregoing
is true and correct. Executed this 8th day of July 2016, at Los Angeles, California.
21
22
23
24 DD. GREENE
25
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a MOTION TO COMPEL ARBITRATION
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(Page 23 of 51) Gee crt
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BAIN Document A107” - 2007
Standard Form of Agreement Between Owner and Contractor for a Project of Limited
Scope
AGREEMENT made as of the Second day of July in the year Two Thousand Thirteen
(In words, indicate day, month and year.)
ADDITIONS AND DELETIONS:
‘The authorof this document has
BETWEEN the Owner: added Information needed for its
(Name, legal status, address and other information) fe. et
completion. The author may also
have revised the text of the original
Penske Business Media AIA standard form. An Additions and
5900 Wilshire Boulevard, PH Oslations Repart that notes added
Los Angeles, Califomia 90036 {nformation as wed as revisions tothe
Standard form text is available from
the author and should be reviewed. A
vertical line In the left margin of this
and the Contractor: document Indicates where the evthor
(Name, legal status, address and other information} has added necassary Information
‘and where the author has added to or tee
Cal Pac Contractors, Inc. ‘deleted from the original AIA text.
1880 Century Park East
Suite 250 ‘This document has Importent legal
Los Angeles, California 90067 ‘consequences. Consultation with an
attomey Is encouraged wih respect
tots completion or modification.
for the following Project:
(Name, location and detailed description)
Variety”
11175 Santa Monica Boulevard
Sth, 8th & 2th Floors - - ne
Los Angeles, California 90025
Tenant Improvement aie
The Architect:
(Name, legal status, address and other information)
Shubin & Donaldson Architects Inc.
3834 Willat Avenue
Culver City, California 90232
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‘The Owner and Contractor agree as follows.
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‘ALA Document A107~ 2007.™ Copyrig) int © 1938, 1951, 1858, 1881, 1869, 1966, 1970, 1074, 1676, 1887, 1997 and 2007
Copyright Law end It Interns \ational Troation. byUnauthor
paint ‘AML ighto reserved, WARNING: Tne The Amorican Institute ef Achhacta,
Document ls protected
pe distebution of thia AIA® Document, or ‘any portion of 't, may reaultby inU.S.severe Elvi} and ertminal por nanos, and will be prosecuttzod ropreduction or af
‘pooaible under the law. This documentwas produced ed to tho maximum extent 1
ey ‘and is nat for. resale, ah 13:26:07 on 08/27/2019 und ler Order No.$539 380393_ 1 which expires on 0042014,
User Notas: :
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Doct 1 Page® 23 - Doc ID = 1656965749 - Doo Type} OTHER
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(Page 24 of 51)
—-
TABLE OF ARTICLES
THE WORK OF THIS CONTRACT
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
CONTRACT SUM
PAYMENT
DISPUTE RESOLUTION
ENUMERATION OF CONTRACT DOCUMENTS
GENERAL PROVISIONS
OWNER
CONTRACTOR
10 ARCHITECT
"i SUBCONTRACTORS
12 CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
93 CHANGES IN THE WORK
14 TIE
15 PAYMENTS
AND COMPLETION
16 PROTECTION OF PERSONS AND PROPERTY
7 INSURANCE
& BONDS
18 CORRECTIONOF
WORK —
19 WISCELLANEOUS PROVISIONS
20 TERMINATION
OF THE CONTRACT -
a CLAIMS AND: DISPUTES
ARTICLE 1 THE WORK OF THIS CONTRACT
The Contractor shall execute the Work described in the Contract Document 6, except as specifically indicate
d in the
Contract Documents to be the responsibilty of others.
ARTICLE 2 DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
§ 2.1 The date of commencement of the Work shall be the date of this Agreement unless a different
date is stated
belowor provision is made for the date to be fixed in a notice to proceed issued by the Owner,
(risert the date of commencement, if it differs from the date of this Agreement or, Wopplicable, state that the date will
|
be fixed In a notice to proceed)
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Pd oe Ata Documont AtO7™ = 2007. Copyitztt © 1036, 1051, 1950, 1051, 1089,
yh ‘AD ights reserved. Ws a \RNINO: Thip ALA? Cocumontis protected by US.1889, 1070, 1074, 1 1997 and Z0G7 by Tho American Instiute
otlanol Treatlos, Unautharited repradut of AMCRLGCLS,
comment
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Doci 1 Page 24 - Doo ID = 1656965749 - Doc Tere OTHER
(Page 25 of 51)
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§ 22 The Contract Time shat! be measured from
the date of commencement
§ 23 The Contractshall
or echieve Substeota! Ce ompletion fhe entre Warknotltert
‘of commencement, or as follows: han (days frm the dae
nsert mumbe r of calendar days. Alternatively
commencement. If appropriate, insert requ y, a calendar date maybe used when carrardinated with the date of
irements
for earller ‘Substantial Completion 44 SER
‘ork Seertain, Portions of the
| ‘The Contractor shall achieve Substantia
l Completion of the entire Work not later
than December 01, 2013.
Portion of Work Substantial Completion Date
» Subject to adjustments of this Contra: ict
inser! provisions, if any, for liquids tate Timo as provided in the Contract Documents,
leed damagesrellati
to faitu
bonus payments ngre 10 achieve ‘Substantial
for‘early completion Of the Work) Completion on time or for
ARTICLE 3. CONTRACT SUM
§ 3.4 The Owner shall pay the Contract
orthe Contract ‘m In current funds
Contract, The Contract ‘Sum shall be ene
of the follow for the Contractor’ 's performance of the
. Check the Oppropriate bar) i.
| [x] Stipulated Sum, in accordancwith
e Section 3.2 below
Ut Cost of the Wark plus the Cantmctor’s Fee, in
accordance ‘with Section 3.3 below
1 Cost
of the Work p! lus the Contractor's Fee with a Guar
anteed ‘Maximum Price, in accordance
Section 3.4 below with
a
@ased on the selection above, complete
Section 3.2, 3.3 or 3.4. below.)
§ 3.2 The Stipulat ted Sum shall be Two Milli
Dollars ($321,386.00), subject to additionson andTht ree Hundred Twenty One Thousand Three Hur dred Bighty Six
deductions as provided jn th 1e Contract
Docu ments.
§ 3:24 The Stipulated Sum is based
Documents and are hereby ‘accepted pan the following. ‘altemstes, if any, which are described in the Contract
(late the numbers or other Idantificfica:bylonthe Owner:
of accepted alternates. Ythe bidding
Ovener to accept other alternates
sul ibsequentto the execulian ofl hi or proposal doctonents permit the
alternates. ‘Showlng the amount for is A igreerient, atta a sche
ch dule of such other
each and the date when that amou int expires.)
§ 3.2.2 Unit prices, ifany:
Odentify and state the unit price, and
state the swanlty limitations, if ary, ‘o which he unit peice willbe applicable)
item Units and Umitations Price Per Unit (80.00)
§ 3.2.3 Allowances inclu ided in the stipul
Adentify allowanc ated sum, ifany:
e and: state exclusions, if any, from
the allowanée. ‘price.)
Item
Alfowenes ry
qe work
Pe Init, AIA Oncumant AtOT™ — 2007, ighi© 1998, 1054, 9 1951, , $B8, 1888, 4070, 1074, 1670,
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Preview
») ® @ Gary K. Salomons, Esq., SBN 126280 David S. Mayes, Esq., SBN 207173 GABRIELSALOMONS, LLP 16311 Ventura Blvd., Ste. 970 Encino, California 91436 Sy rot ay be ‘Patton ounty of os Anneles Telephone: (818) 906-3700 Facsimile: (818) 906-2142 JUL 1 2016 ee Attorneys for Respondent, PENSKE BUSINESS MEDIA, LLC SUPERIOR COURT FOR THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES- CENTRAL DISTRICT 10 Case No. BC625685 11 CAL PAC CONSTRUCTION, INC. Plaintiff, NOTICE OF MOTION AND MOTION TO AS 12 oe a0 COMPEL ARBITRATION PURSUANT TO Vv Q8o 13 CODE OF CIVIL PROCEDURE §1281.2; ZaA oa REQUEST FOR STAY; MEMORANDUM OF 3a 14 PENSKE BUSINESS MEDIA, LLC, a POINTS AND AUTHORITIES IN SUPPORT on< el Delaware Limited Liability Company; JAY THEREOF; DECLARATION OF TODD “ass 15 PENSKE, an individual; LEE POLSTER, an GREENE aes individual, PAUL WOOLNOUGH, an ps9 >a individual; DOES 1-100, inclusive, 16 of Date: August 9, 2016 17 Defendants. Time: 9:30 a.m. Dept.: 12 18 ” 19 Res ID # 160708141900 20 TO EACH PARTY AND TO THEIR ATTORNEYS OF RECORD: 21 YOU ARE HEREBY NOTIFIED THAT on August 9, 2016, at 9:30 a.m. or as soon 22 thereafter as the matter may be heard in Department 12 of the Los Angeles County Superior Court, located at 111 N. Hill Street, Los Angeles, California 90012, Defendant Penske Business Media, 23 LLC will move the Court for an order compelling arbitration. 24 The motion seeks to compel arbitration of the present action on the grounds that the parties’ 25 @ mal written agreement calls for arbitration of all disputes between them, there is currently pending an ~ 26 Mm arbitration between some of the parties before the American Arbitration Association which was ~ 27 me a initiated by the Plaintiff, and newly named individual defendants Jay Penske and Lee Polster have 28 a , -1- MOTION TO COMPEL ARBITRATION ® @ consented in writing to having the dispute resolved by Arbitration. In addition, the allegations of the present action arise out of the identical transactions and occurrences that are the subject of a pending arbitration between some of the parties to this action. Plaintiff has apparently filed this action in a poorly conceived strategy of making patently false and scurrilous claims against the individual defendants in an attempt to circumvent the pending arbitration proceeding and leverage a settlement. The motion will be based upon this notice, the attached Declaration of Todd Greene, the points and authorities, and the complete file and records of this action. DATED: July 8, 2016 BRIELSA) ONS, LLP 10 11 BY GA) . SALOMONS aS 12 Attorneys for Defendant ae qa PENSKE BUSINESS MEDIA, LLC QLo 13 Zam UR Ba Ons 14 aV aas 15 ee Qss Ze? 16 Ox 17 18 19 20 21 22 23 24 25 ~ ~ 26 | ~ 27 ™n 28 -2- MOTION TO COMPEL ARBITRATION e e MEMORANDUM OF POINTS AND AUTHORITIES I FACTUAL BACKGROUND Pursuant to Code of Civil Procedure §1281.7, Defendant, Penske Business Media, LLC hereby petitions this Court to compel Plaintiff to submit its newly concocted claims to binding Arbitration pursuant to a written agreement between the parties. The facts relevant to the present motion are very simple. Plaintiff, Cal Pac Construction, Inc. and Defendant, Penske Business Media, LLC are parties to that certain AIA Document A107- 2007, Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope 10 dated as of July 2, 2013 (hereinafter referred to as the “Agreement”). (Declaration of Todd 11 Greene, “Greene Decl.,” Greene Decl. 42, Exhibit “A”) The Agreement contemplated a work of ao 12 improvement at Defendant’s offices located at 11175 Santa Monica Blvd., Los Angeles, California. Se ga agES 13 Article 21 of the Agreement is entitled “Claims and Disputes.” Section 21.1 states: Zana oa 3a 14 On< “Claims, disputes and other matters in question arising out of or relating to this Contract, including al “age 15 yes those alleging an error or omission by the Architect but excluding those arising under Section 16.2, ass oe 16 shall be referred initially to the Architect for decision. Such matters, except those waived as o£ 17 provided for in Section 21.8 and Section 15.5.3 and 15.5.4, shall, after initial decision by the 18 Architect or 30 days after submission of the matter to the Architect, be subject to mediation as a 19 condition precedent to binding dispute resolution.” (Greene Decl., 2, Exhibit “A”) 20 Section 21.4 of the Agreement states: “If the parties have selected arbitration as the method 21 for binding dispute resolution in the Agreement, any claim, subject to, but not resolved by, 22 mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be 23 administered by the American Arbitration Association, in accordance with the Construction 24 Industry Arbitration Rules in effect on the date of this Agreement.” (Greene Decl., §2, Exhibit “A”) 25 Section 21.7 of the Agreement states: “The foregoing agreement to arbitrate and other ~ 26 agreements to arbitrate with an additional person or entity duly consented to by parties to the ~~ 27 Agreement shall be specifically enforceable under applicable law in any court having jurisdiction e ™wo 28 thereof.” (Greene Decl., §2, Exhibit “A”) -3- MOTION TO COMPEL ARBITRATION ® e Plaintiff undertook to perform the work on Defendant’s office premises pursuant to the Agreement. Disputes arose between the parties, and on January 18, 2016, Plaintiff Cal Pac Construction, Inc. executed and submitted its Demand for Arbitration to the American Arbitration Association against Penske Business Media, LLC. (Greene Decl. 3) Cal Pac Construction, Inc. and Penske Business Media, LLC have subsequently agreed that Hon. James Steele (Ret.) serve as the Arbitrator, and the arbitration is presently set to commence on October 3, 2016. (Greene Decl., 44, Exhibit “B”) Rather than attempt to comply with Section 21.6 of the Agreement, Plaintiff has filed this present action. The present action alleges disputes subject to the arbitration provisions in the 10 Agreement, and alleges disputes arising out of the identical transactions and occurrences that are 11 subject to the pending arbitration between the parties. Plaintiff has concocted a mangled theory of AS 12 fraud against the individual defendants in a transparent attempt to circumvent the clear and oe Aa ogZo Zanos 13 unambiguous arbitration provision in the Agreement. In other words, the newly added allegations wa 3a On< 14 are clearly subject to the arbitration provisions of the Agreement, and are properly subject to the ged ass AEs 15 pending arbitration. gee 2? 16 Plaintiff, and its principal, Ted Sutherland, have attempted to mask the fraud they o£ 17 committed, and their failure to perform pursuant to the Agreement, by wrongfully filing this action. 18 That fraud, and the Plaintiff's shameful conduct, will be revealed at arbitration. The filing of this 19 action constitutes nothing more than a sorry attempt to extort a settlement from the Defendant and 20 sully the business and personal reputations of the wrongly named individual defendants. Plaintiff's 21 extortion attempts fail. 22 The present action alleges a dispute and controversy arising out of the identical facts and 23 circumstances that are subject to an existing arbitration. Specifically, the Complaint in the present 24 action alleges as follows: 25 1) The parties entered into a written contract to perform tenant improvements on three oe om ~ 26 floors of office space (Complaint, 7); me ~ 27 2) The written agreement is attached to the Complaint as Exhibit “A”; Pel = 28 mm -4- MOTION TO COMPEL ARBITRATION @ @ 3) The Facts Common to All Causes of Action contain allegations directly related to the construction of the tenant improvements subject to the written Agreement (Complaint, 7-23): Section 21.6 of the Agreement states: “Any party to an arbitration may include by joinder persons or entities substantially involved in a common question of law or fact whose presence is required if complete relief is to be accorded in arbitration provided that the party sought to be joined consents in writing to such joinder.” (Greene Decl., §2, Exhibit “A”) Pursuant thereto, Defendants Jay Penske and Lee Polster consent to having the allegations leveled against them resolved by Arbitration. (Greene Decl., 5, Exhibits “C” and “D”) The individual defendants have consented in writing to having the newly manufactured 10 allegations resolved by Arbitration. This action clearly falls within the scope of the arbitration 11 provision set forth in the Agreement. Therefore, an order compelling arbitration to the American Ao 12 Arbitration Association should be entered. oe a0 QLo 13 IL Zan g= Sa 14 On< LEGAL ARGUMENT zee ass 15 A THE ACTION SHOULD BE ORDERED TO ARBITRATION a 5 16 Code of Civil Procedure §1281.2 states: “On petition of a party to an arbitration agreement Oz 17 alleging the existence of a written agreement to arbitrate a controversy and that a party thereto 18 refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to 19 arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, 20 unless it determines that: 21 (a) The right to compel arbitration has been waived by the petitioner; or 22 (b) Grounds exist for the revocation of the agreement. 23 Both Federal Courts and California Courts have long favored and enforced arbitration 24 provisions in contracts as an expeditious means of resolving disputes. Gilmer v. Interstate/Johnson = 25 Lane Corp. (1991) 500 U.S. 20, 24-25; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9; 10 Cal. ul on~ 26 Rptr. 2d 183. et ha~ 27 “As a matter of federal law, any doubts concerning the scope of arbitrable issues should be 28 a resolved in favor of arbitration, whether the problem at hand is the construction of the contract =5- MOTION TO COMPEL ARBITRATION @ ® language itself or an allegation of waiver, delay or a like defense to arbitrability.” Moses i Cone Memorial Hospital v. Mercury Construction Corp. (1983) 460 U.S. 24. Likewise, California Courts have a long standing policy in favor of resolution through arbitration. Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608, 622; 116 Cal. Rptr. 507. Court of Appeal decisions have simply followed the statutory mandate codified at Code of Civil Procedure §1281 et seq. In Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 72 Cal.Rptr.2d 598, the Court set forth the guidelines for resolving a petition to compel arbitration. The Court tuled that: “Code of Civil Procedure Sections 1280 et seq. provides a procedure for the summary 10 determination of whether a valid agreement to arbitrate exists, and such summary procedure 11 satisfies both state and federal law. Under this procedure, the petitioner bears the burden of ao 12 establishing that existence of a valid agreement to arbitrate, and a party opposing the petition bears aE& qa ogZe 13 the burden of proving by a preponderance of the evidence any fact necessary to its defense.” Zam 7S 23a 14 ons In Villa Milano Homeowners Association v. Il Davorge (2000) 84 Cal.App.4th 819, 102 220 nas Es 15 Cal.Rptr.2d 1, the Court stated: “A written agreement to arbitrate is fundamental, because Code of QSe oe 16 Civil Procedure section 1281.2 permits a court to order the parties to arbitrate a matter only if it o£ 17 determines that an agreement to arbitrate exists. Indeed, when the trial court reviews a petition to 18 compel arbitration, the threshold question is whether there is an agreement to arbitrate.” 19 In Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 99 20 Cal.Rptr.2d 809 the Court of Appeal stated: “California has a strong public policy in favor of 21 arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of 22 arbitration. ....The strong policy has resulted in the general rule that arbitration should be upheld 23 unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation 24 covering the asserted dispute.” (Emphasis Added) 25 It has long been the rule in California that a broadly worded arbitration clause may extend a a ~ 26 to tort claims that may arise under or from the contractual relationship. There is no requirement mt ~ 27 that the cause of action arising out of a contractual dispute must be itself contractual. At most, the Bt a = 28 requirement is that the dispute must arise out of the contract. Jd, at 686. a -6- MOTION TO COMPEL ARBITRATION e e In the present case, the subject Agreement contains an unambiguous arbitration provision. The Agreement requires that disputes shall be submitted to the American Arbitration Association and shall be final and binding. The parties have agreed to arbitrate the disputes existing between them. The allegations of this action fall squarely within the arbitration provision. Newly added defendants Jay Penske and Lee Polster have consented in writing to having the dispute resolved by arbitration. Plaintiff Cal Pac Construction, Inc. demonstrated its recognition of the arbitration provision in the Agreement by initiating the Arbitration against Penske Business Media, LLC on January 18, 2016. Rather than file the present action, Plaintiff need only have followed Section 21.6 of the 10 Agreement to join the individual defendants in the pending Arbitration. 11 The arbitration provision of the Agreement should be enforced. Therefore, this Court ao 12 should enter an order that this matter be arbitrated. Se qa oyeo ZaSR 13 B. DEFENDANTS DID NOT WAIVE THEIR RIGHT TO ARBITRATION oa 3a ons 14 The burden of proving waiver is on the party resisting arbitration. The defense of waiver, 280 nse nes 15 like any other defense, must be proved by a preponderance of the evidence. Engalla v. Permanente Oss Z> 16 Medical Group (1997) 15 Cal. 4" 951, 984, 938 P. 2d 903, 64 Cal. Rptr. 2d 843. o£ 17 Here, Defendant has immediately filed the present motion, prior to filing a responsive 18 pleading and prior to propounding discovery. In other words, Defendant has taken no action 19 inconsistent with its intention to arbitrate this matter. 20 Accordingly, there is no evidence, let alone substantial evidence, that Defendant waived its 21 right to arbitrate. 22 Cc DEFENDANTS REQUEST A STAY OF THIS ACTION PURSUANT TO 23 CODE OF CIVIL PROCEDURE §1281.4 24 Code of Civil Procedure §1281.4 states: 25 “If a court of competent jurisdiction, whether in this State or not, has e ~ 26 ordered arbitration of a controversy which is an issue involved in an action or ~ 27 proceeding pending. before a court of this State, the court in which such action or a =- 28 proceeding is pending shall, upon motion of a party to such action or proceeding, -7- MOTION TO COMPEL ARBITRATION ®e ® stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies. If an application has been made to a court of competent jurisdiction, whether in this State or not, for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had in accordance 10 with the order to arbitrate or until such earlier time as the court specifies. 11 If the issue which is the controversy subject to arbitration is severable, ao 12 the stay may be with respect to that issue only.” Se aa ogZe 13 Accordingly, pursuant to Code of Civil Procedure §1281.4, Defendant requests a stay of the Zam d=os 3a 14 Onc proceeding while the arbitration is pending. ago nee es 15 iil. Qos 2? 16 CONCLUSION Ox 17 The written agreement executed by the parties contains a provision requiring any dispute be 18 arbitrated. The written agreement executed by the parties contains a specific provision for the 19 joinder of additional parties, who have consented thereto. The claims raised in this action are 20 clearly and unambiguously subject to arbitration. 21 Therefore, Defendant respectfully requests that this court order that the matter be arbitrated 22 as to all parties and all causes of action. 23 24 DATED: July 8, 2016 G IRIELSALO S, LLP = ~ me 25 ~ 26 ~ 27 if ‘GARY|K. SALOMONS Attorneys for Defendant = 28 PENSKE BUSINESS MEDIA, LLC -8- MOTION TO COMPEL ARBITRATION @ ® DECLARATION OF TODD GREENE I, TODD GREENE, declare and state as follows: 1 I am the Senior Vice President and General Counsel of Penske Business Media, LLC, one of the defendants in the present action. I have personal knowledge of the facts stated in this declaration and, if called as a witness, could and would testify competently to those facts. 2. Plaintiff, Cal Pac Construction, Inc. and Defendant, Penske Business Media, LLC are parties to that certain AIA Document A107-2007, Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope, dated as of July 2, 2013. A true and correct copy of the Agreement is attached hereto as Exhibit “A”. 10 3 Disputes arose between the parties, and on January 18, 2016, Plaintiff Cal Pac 1 Construction, Inc. executed and submitted its Demand for Arbitration to the American Arbitration 2° 12 Association against Penske Business Media, LLC. Re qa DLo 208 13 4 Cal Pac Construction, Inc. and Penske Business Media, LLC have subsequently sz Sa 14 agreed that Hon. James Steele (Ret.) serve as the Arbitrator, and the arbitration is presently set to Cn 65 15 commence on October 3, 2016. A true and correct copy of Judge Steele’s Notice of Ruling is 53 270 attached hereto as Exhibit “B.” 16 Os 17 5 Defendants Jay Penske and Lee Polster have consented in writing to having the 18 disputes raised in the present action resolved by arbitration. True and correct copies of the 19 consents are attached hereto as Exhibits “C” and “D.” 20 I declare under penalty of perjury under the law of the State of California that the foregoing is true and correct. Executed this 8th day of July 2016, at Los Angeles, California. 21 22 23 24 DD. GREENE 25 26 mR 27 mM 28 Be e -9- a MOTION TO COMPEL ARBITRATION = Pret a (Page 23 of 51) Gee crt eo @ ® @ . BAIN Document A107” - 2007 Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope AGREEMENT made as of the Second day of July in the year Two Thousand Thirteen (In words, indicate day, month and year.) ADDITIONS AND DELETIONS: ‘The authorof this document has BETWEEN the Owner: added Information needed for its (Name, legal status, address and other information) fe. et completion. The author may also have revised the text of the original Penske Business Media AIA standard form. An Additions and 5900 Wilshire Boulevard, PH Oslations Repart that notes added Los Angeles, Califomia 90036 {nformation as wed as revisions tothe Standard form text is available from the author and should be reviewed. A vertical line In the left margin of this and the Contractor: document Indicates where the evthor (Name, legal status, address and other information} has added necassary Information ‘and where the author has added to or tee Cal Pac Contractors, Inc. ‘deleted from the original AIA text. 1880 Century Park East Suite 250 ‘This document has Importent legal Los Angeles, California 90067 ‘consequences. Consultation with an attomey Is encouraged wih respect tots completion or modification. for the following Project: (Name, location and detailed description) Variety” 11175 Santa Monica Boulevard Sth, 8th & 2th Floors - - ne Los Angeles, California 90025 Tenant Improvement aie The Architect: (Name, legal status, address and other information) Shubin & Donaldson Architects Inc. 3834 Willat Avenue Culver City, California 90232 a ‘The Owner and Contractor agree as follows. nae a é femy ont ‘ALA Document A107~ 2007.™ Copyrig) int © 1938, 1951, 1858, 1881, 1869, 1966, 1970, 1074, 1676, 1887, 1997 and 2007 Copyright Law end It Interns \ational Troation. byUnauthor paint ‘AML ighto reserved, WARNING: Tne The Amorican Institute ef Achhacta, Document ls protected pe distebution of thia AIA® Document, or ‘any portion of 't, may reaultby inU.S.severe Elvi} and ertminal por nanos, and will be prosecuttzod ropreduction or af ‘pooaible under the law. This documentwas produced ed to tho maximum extent 1 ey ‘and is nat for. resale, ah 13:26:07 on 08/27/2019 und ler Order No.$539 380393_ 1 which expires on 0042014, User Notas: : ry (resa7sseaa) Doct 1 Page® 23 - Doc ID = 1656965749 - Doo Type} OTHER KA - (Page 24 of 51) —- TABLE OF ARTICLES THE WORK OF THIS CONTRACT DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION CONTRACT SUM PAYMENT DISPUTE RESOLUTION ENUMERATION OF CONTRACT DOCUMENTS GENERAL PROVISIONS OWNER CONTRACTOR 10 ARCHITECT "i SUBCONTRACTORS 12 CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS 93 CHANGES IN THE WORK 14 TIE 15 PAYMENTS AND COMPLETION 16 PROTECTION OF PERSONS AND PROPERTY 7 INSURANCE & BONDS 18 CORRECTIONOF WORK — 19 WISCELLANEOUS PROVISIONS 20 TERMINATION OF THE CONTRACT - a CLAIMS AND: DISPUTES ARTICLE 1 THE WORK OF THIS CONTRACT The Contractor shall execute the Work described in the Contract Document 6, except as specifically indicate d in the Contract Documents to be the responsibilty of others. ARTICLE 2 DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION § 2.1 The date of commencement of the Work shall be the date of this Agreement unless a different date is stated belowor provision is made for the date to be fixed in a notice to proceed issued by the Owner, (risert the date of commencement, if it differs from the date of this Agreement or, Wopplicable, state that the date will | be fixed In a notice to proceed) mt pe Pd oe Ata Documont AtO7™ = 2007. Copyitztt © 1036, 1051, 1950, 1051, 1089, yh ‘AD ights reserved. Ws a \RNINO: Thip ALA? Cocumontis protected by US.1889, 1070, 1074, 1 1997 and Z0G7 by Tho American Instiute otlanol Treatlos, Unautharited repradut of AMCRLGCLS, comment rap Gistabution of this AIA” Dorument, Copyright Law ond mae ay rosuitin cevoze etvll and erfrotad! p: enaltandas,wil! bo pres tothe maximum 2 A poashlo undor tho Faw. This: ‘ands nat for reste, Software61 14:2&59on 0772/2013, ‘under Gaver No.S532380355_§ whicheevl od oxtent expires on OStOM20%6, tsar Hotes: "+ (se5t001088) t 1 Doci 1 Page 24 - Doo ID = 1656965749 - Doc Tere OTHER (Page 25 of 51) eo bo § 22 The Contract Time shat! be measured from the date of commencement § 23 The Contractshall or echieve Substeota! Ce ompletion fhe entre Warknotltert ‘of commencement, or as follows: han (days frm the dae nsert mumbe r of calendar days. Alternatively commencement. If appropriate, insert requ y, a calendar date maybe used when carrardinated with the date of irements for earller ‘Substantial Completion 44 SER ‘ork Seertain, Portions of the | ‘The Contractor shall achieve Substantia l Completion of the entire Work not later than December 01, 2013. Portion of Work Substantial Completion Date » Subject to adjustments of this Contra: ict inser! provisions, if any, for liquids tate Timo as provided in the Contract Documents, leed damagesrellati to faitu bonus payments ngre 10 achieve ‘Substantial for‘early completion Of the Work) Completion on time or for ARTICLE 3. CONTRACT SUM § 3.4 The Owner shall pay the Contract orthe Contract ‘m In current funds Contract, The Contract ‘Sum shall be ene of the follow for the Contractor’ 's performance of the . Check the Oppropriate bar) i. | [x] Stipulated Sum, in accordancwith e Section 3.2 below Ut Cost of the Wark plus the Cantmctor’s Fee, in accordance ‘with Section 3.3 below 1 Cost of the Work p! lus the Contractor's Fee with a Guar anteed ‘Maximum Price, in accordance Section 3.4 below with a @ased on the selection above, complete Section 3.2, 3.3 or 3.4. below.) § 3.2 The Stipulat ted Sum shall be Two Milli Dollars ($321,386.00), subject to additionson andTht ree Hundred Twenty One Thousand Three Hur dred Bighty Six deductions as provided jn th 1e Contract Docu ments. § 3:24 The Stipulated Sum is based Documents and are hereby ‘accepted pan the following. ‘altemstes, if any, which are described in the Contract (late the numbers or other Idantificfica:bylonthe Owner: of accepted alternates. Ythe bidding Ovener to accept other alternates sul ibsequentto the execulian ofl hi or proposal doctonents permit the alternates. ‘Showlng the amount for is A igreerient, atta a sche ch dule of such other each and the date when that amou int expires.) § 3.2.2 Unit prices, ifany: Odentify and state the unit price, and state the swanlty limitations, if ary, ‘o which he unit peice willbe applicable) item Units and Umitations Price Per Unit (80.00) § 3.2.3 Allowances inclu ided in the stipul Adentify allowanc ated sum, ifany: e and: state exclusions, if any, from the allowanée. ‘price.) Item Alfowenes ry qe work Pe Init, AIA Oncumant AtOT™ — 2007, ighi© 1998, 1054, 9 1951, , $B8, 1888, 4070, 1074, 1670, Pelee sights resorycrod. WARNING: Gisuibutiofontis This AIA® D, jecumentis 858, prota: ed B97 and 2007 by| Tha Amorcan insiauto-e, al Docemaat OF any pordan off, may, st os by US, Copyig ue ete ‘and Laweximi ht ead f Teaatls Unsut ed reproductionor mon taoer1s‘ethlonedNotre:under tho lew. This document was for reaste, AIA softwa re ta Sever et 14:2 nal penal des, 5:68on, 07/02/2013 under Order O ond wilbe prosecthorte