Preview
1 Trevor McCann, State Bar No. 243724
595 Sunnyvale Avenue, #17
2 Walnut Creek, California 94597 ELECTRONICALLY
3 Tel: (925) 270-7058 F I L E D
E-mail: trevor@tbmclaw.com Superior Court of California,
County of San Francisco
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Attorney for Defendant, 06/19/2020
5 Clerk of the Court
P & T West Holdings, LLC BY: EDWARD SANTOS
Deputy Clerk
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8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
9 UNLIMITED CIVIL JURISDICTION
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FDC SPIRITS, INC, et al., Case No. CGC-20-584380
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Complaint filed: May 11, 2020
12 Plaintiffs,
vs.
13 DEFENDANTS’ MEMORANDUM IN
P & T WEST HOLDINGS, LLC, et al., SUPPORT OF MOTION TO STAY
14 LITIGATION AND TO COMPEL
15 Defendants. MEDIATION
________________________________
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Date: July 21, 2020
17 Time: 9:30 a.m.
18 Dept.: 302
Res. No.: None Required
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1 Introduction
2 In deciding Patty West (“West”) and P & T West Holdings, LLC’s (“P & T”) motion, the
3 Court is presented with one straightforward issue:
4 • Condition Precedent. Where parties to a contract agree to mediate all
disputes that arise from a contract before resorting to litigation, filing a
5 complaint prior to participating in mediation defeats the parties’
6 expectations and violates public policy. Here, FDC twice rejected West
and P & T’s demand to mediate the dispute that has arisen between the
7 parties and FDC filed the instant lawsuit instead of first attending
mediation. Should the Court stay this case and compel mediation?
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I. STATEMENT OF FACTS
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10 As stated in the Complaint, P & T and FDC entered into the Business Purchase Agreement
11 on (the “Agreement”). See Agreement attached as Exhibit 1 to Complaint on file. On March 19,
12 2020, FDC purported to cancel the Agreement which gave rise to the parties’ dispute. West Decl.
13 The Agreement specifically provides the following:
14 “[Section] C. Representations and Warranties by both Buyer and Seller
15 Default
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After execution of this Agreement by the parties, if either party fails to perform its
17 respective obligations, or breaches a warranty or covenant that would constitute a
default, the defaulting party shall cure the default within 30 notice by the other
18 party. In the event of a failure to cure such default by either party within the
stipulated time, Seller or Buyer shall have the right to cancel this transaction
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and/or sue for damages in addition to any other relief provided under this
20 Agreement.
21 Dispute Resolution
22 The parties will attempt to resolve any dispute arising out of or relating to this
23 Agreement through friendly negotiations amongst the parties. If the matter is not
resolved through negotiation, the parties will resolve the dispute using the below
24 Alternative Dispute Resolution (ADR) procedure.
25 Any controversies or disputes arising out of or relating to this Agreement with be
26 submitted to mediation in accordance with any statutory rules of mediation. If
mediation does not successfully resolve the dispute, the parties may proceed to
27 seek any other form of resolution in accordance with the rights and remedies
afforded to them by law.”
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1 As a result of the dispute, on March 27, 2020, West and P & T’s attorney, Trevor McCann
2 (“McCann”), sent a Demand to Mediate to FDC’s attorney, Kymberliegh Korpus (“Korpus”).
3 McCann Decl. On April 28, 2020, McCann confirmed FDC’s rejection of P & T’s Demand to
4 Mediate. Id. On May 11, 2020, FDC filed its Complaint without first mediating the parties’ dispute.
5 On June 17, 2020, pursuant to Local Rules McCann met and conferred with Korpus about
6 West and P & T’s anticipated motion. Id. Korpus represented to McCann that the Plaintiffs “may be
7 willing” to voluntarily submit to mediation without resort to a noticed motion to compel mediation.
8 Id. Additionally, Korpus represented that Plaintiffs would not commit to any concrete deadline to
9 inform West and P & T of whether Plaintiffs would in fact submit to mediation. Id.
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II. LEGAL ARGUMENT
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12 This Court should stay this litigation and compel mediation according to the Agreement
13 because: 1. The State of California has established a policy favoring mediation; 2. This Court has
14 the authority to stay this litigation and compel the parties to mediation; and 3. The mediation
15 provision is valid, clear, and unambiguous.
16 1. The State of California favors Alternative Dispute Resolution in lieu of litigation.
17 When it enacted California Code of Civil Procedure § 1775, the California legislature
18 found and declared, that “The peaceful resolution of disputes in a fair, timely, appropriate, and
19 cost-effective manner is an essential function of the judicial branch of state government under
20 Article VI of the California Constitution. C.C.P. § 1775(a). The Legislature went on to state,
21 “Mediation may also assist to reduce the backlog of cases burdening the judicial system. It is in the
22 public interest for mediation to be encouraged and used where appropriate by the courts.” C.C.P. §
23 1775(c). And finally, the Legislature determined that, “Mediation and similar alternative processes
24 can have the greatest benefit for the parties in a civil action when used early, before substantial
25 discovery and other litigation costs have been incurred. Where appropriate, participants in disputes
26 should be encouraged to utilize mediation and other alternatives to trial for resolving their
27 differences in the early stages of a civil action.” C.C.P. § 1775(d); see also Local Rule 4 (all
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1 parties should participate in alternative dispute resolution prior to trial). It is difficult to imagine a
2 clearer statement of the Legislature’s intent favoring alternative dispute resolution.
3 2. This Court has the authority to stay this litigation and compel mediation.
4 Code of Civil Procedure § 1281.2 provides,
5 “On petition of a party to an arbitration agreement alleging the existence of a written
agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate
6 that controversy, the court shall order the petitioner and the respondent to arbitrate the
7 controversy if it determines that an agreement to arbitrate the controversy exists.”
8 While the section refers to arbitration, in light of California’s policy favoring mediation, the
9 section applies equally to this matter. Therefore, this Court need only determine if the parties
10 agreed to mediate.
11 In examining the mediation agreement, “[t]he court should attempt to give effect to the
12 parties’ intentions, in light of the usual and ordinary meaning of the contractual language.” Gravillis
13 v. Coldwell Banker Residential Brokerage Co. (2009) 143 Cal.App.4th 761, 771. “The language of a
14 contract is to govern its interpretation, if the language is clear and explicit, and does not involve an
15 absurdity.” Civ. Code § 1638. “When a contract is reduced to writing, the intention of the parties is
16 to be ascertained from the writing alone, if possible.” Civ. Code § 1639. “The whole of a contract is
17 to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping
18 to interpret the other.” Civ. Code § 1641. And “the words of a contract are to be understood in their
19 ordinary and popular sense, rather than according to their strict legal meaning; unless used by the
20 parties in a technical sense, or unless a special meaning is given to them by usage, in which case the
21 latter must be followed.” Civ. Code § 1644.
22 The plain language of Dispute Resolution paragraph, quoted above, says that a dispute
23 among the parties “will” be submitted to mediation. And if mediation fails to resolve the dispute, the
24 dispute “may” proceed to litigation. Viewing the Agreement in its entirety, the parties did not intend
25 that “may” and “will” (or “shall”)” are synonymous. “May” should be read to mean “shall” only
26 where necessary to make sense of the contract as a whole. See Jones v. Catholic Healthcare West
27 (2007) 147 Cal.App.4th 300, 307 (applying this rule in the context of a statute; holding that “may”
28 meant “may” with respect to the particular statute at issue).
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1 The Agreement provides no reason this Court should interpret the word “will” in any sense
2 other than its ordinary and popular meaning; that is, providing a mandated rather than a permissive
3 course of action.
4 In drafting the Agreement, the parties knew how to mandate a result when that was their
5 desire; indeed, they said a dispute “will” be submitted to mediation in the very same paragraph they
6 agreed that a dispute unresolved by mediation “may” be submitted to “any other form of resolution.”
7 The plain language of the Agreement mandates that the parties submit their dispute to
8 mediation before resorting to litigation.
9 3. P & T did not waive the Mediation requirement.
10 Code of Civil Procedure § 1281.2(a) provides that a motion to compel, like this motion,
11 may be denied “where the right to compel mediation has been waived.” Here, that is not the case.
12 West and P & T demanded that FDC submit to mediation, and even provided a detailed proposal to
13 FDC to ensure timely submission. But FDC twice rejected West and P & T’s demand.
14 Finally, where a party moves the Court to compel mediation, an order “may not be refused
15 on the ground that the movant’s contentions lack merit.” C.C. P. 1281.2(d); see also AT & T Tech.,
16 Inc. v. Communications Workers of Am., 475 U.S. 643, 649-650 (1986) (“[I]n deciding whether the
17 parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the
18 potential merits of the underlying claims. Whether “arguable” or not, indeed even if it appears to
19 the court to be frivolous…).
20 III. CONCLUSION
21 West and P & T’s motion is proper and, in light of Plaintiffs’ reliance on the “time is of the
22 essence clause,” the motion is timely, too; mediation may allow the parties to understand their
23 rights and obligations more expeditiously than if the matter proceeds through litigation –
24 especially given that Plaintiffs have tactically sat on the Complaint since May 11, 2020.
25 California statutory and caselaw apply directly to this motion – and in West and P & T’s
26 favor. This Court should grant the motion, stay this litigation, and compel the parties to mediate
27 their dispute within 45 days of granting West and P & T’s motion.
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1 Dated: June 19, 2020 Respectfully submitted,
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4 ________________________
Trevor McCann
5 Attorney for Defendants
6 Patty West and P & T West Holdings, LLC
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Preview
1 Trevor McCann, State Bar No. 243724 595 Sunnyvale Avenue, #17 2 Walnut Creek, California 94597 ELECTRONICALLY 3 Tel: (925) 270-7058 F I L E D E-mail: trevor@tbmclaw.com Superior Court of California, County of San Francisco 4 Attorney for Defendant, 06/19/2020 5 Clerk of the Court P & T West Holdings, LLC BY: EDWARD SANTOS Deputy Clerk 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO 9 UNLIMITED CIVIL JURISDICTION 10 FDC SPIRITS, INC, et al., Case No. CGC-20-584380 11 Complaint filed: May 11, 2020 12 Plaintiffs, vs. 13 DEFENDANTS’ MEMORANDUM IN P & T WEST HOLDINGS, LLC, et al., SUPPORT OF MOTION TO STAY 14 LITIGATION AND TO COMPEL 15 Defendants. MEDIATION ________________________________ 16 Date: July 21, 2020 17 Time: 9:30 a.m. 18 Dept.: 302 Res. No.: None Required 19 20 21 22 23 24 25 26 27 28 1 1 Introduction 2 In deciding Patty West (“West”) and P & T West Holdings, LLC’s (“P & T”) motion, the 3 Court is presented with one straightforward issue: 4 • Condition Precedent. Where parties to a contract agree to mediate all disputes that arise from a contract before resorting to litigation, filing a 5 complaint prior to participating in mediation defeats the parties’ 6 expectations and violates public policy. Here, FDC twice rejected West and P & T’s demand to mediate the dispute that has arisen between the 7 parties and FDC filed the instant lawsuit instead of first attending mediation. Should the Court stay this case and compel mediation? 8 I. STATEMENT OF FACTS 9 10 As stated in the Complaint, P & T and FDC entered into the Business Purchase Agreement 11 on (the “Agreement”). See Agreement attached as Exhibit 1 to Complaint on file. On March 19, 12 2020, FDC purported to cancel the Agreement which gave rise to the parties’ dispute. West Decl. 13 The Agreement specifically provides the following: 14 “[Section] C. Representations and Warranties by both Buyer and Seller 15 Default 16 After execution of this Agreement by the parties, if either party fails to perform its 17 respective obligations, or breaches a warranty or covenant that would constitute a default, the defaulting party shall cure the default within 30 notice by the other 18 party. In the event of a failure to cure such default by either party within the stipulated time, Seller or Buyer shall have the right to cancel this transaction 19 and/or sue for damages in addition to any other relief provided under this 20 Agreement. 21 Dispute Resolution 22 The parties will attempt to resolve any dispute arising out of or relating to this 23 Agreement through friendly negotiations amongst the parties. If the matter is not resolved through negotiation, the parties will resolve the dispute using the below 24 Alternative Dispute Resolution (ADR) procedure. 25 Any controversies or disputes arising out of or relating to this Agreement with be 26 submitted to mediation in accordance with any statutory rules of mediation. If mediation does not successfully resolve the dispute, the parties may proceed to 27 seek any other form of resolution in accordance with the rights and remedies afforded to them by law.” 28 2 1 As a result of the dispute, on March 27, 2020, West and P & T’s attorney, Trevor McCann 2 (“McCann”), sent a Demand to Mediate to FDC’s attorney, Kymberliegh Korpus (“Korpus”). 3 McCann Decl. On April 28, 2020, McCann confirmed FDC’s rejection of P & T’s Demand to 4 Mediate. Id. On May 11, 2020, FDC filed its Complaint without first mediating the parties’ dispute. 5 On June 17, 2020, pursuant to Local Rules McCann met and conferred with Korpus about 6 West and P & T’s anticipated motion. Id. Korpus represented to McCann that the Plaintiffs “may be 7 willing” to voluntarily submit to mediation without resort to a noticed motion to compel mediation. 8 Id. Additionally, Korpus represented that Plaintiffs would not commit to any concrete deadline to 9 inform West and P & T of whether Plaintiffs would in fact submit to mediation. Id. 10 II. LEGAL ARGUMENT 11 12 This Court should stay this litigation and compel mediation according to the Agreement 13 because: 1. The State of California has established a policy favoring mediation; 2. This Court has 14 the authority to stay this litigation and compel the parties to mediation; and 3. The mediation 15 provision is valid, clear, and unambiguous. 16 1. The State of California favors Alternative Dispute Resolution in lieu of litigation. 17 When it enacted California Code of Civil Procedure § 1775, the California legislature 18 found and declared, that “The peaceful resolution of disputes in a fair, timely, appropriate, and 19 cost-effective manner is an essential function of the judicial branch of state government under 20 Article VI of the California Constitution. C.C.P. § 1775(a). The Legislature went on to state, 21 “Mediation may also assist to reduce the backlog of cases burdening the judicial system. It is in the 22 public interest for mediation to be encouraged and used where appropriate by the courts.” C.C.P. § 23 1775(c). And finally, the Legislature determined that, “Mediation and similar alternative processes 24 can have the greatest benefit for the parties in a civil action when used early, before substantial 25 discovery and other litigation costs have been incurred. Where appropriate, participants in disputes 26 should be encouraged to utilize mediation and other alternatives to trial for resolving their 27 differences in the early stages of a civil action.” C.C.P. § 1775(d); see also Local Rule 4 (all 28 3 1 parties should participate in alternative dispute resolution prior to trial). It is difficult to imagine a 2 clearer statement of the Legislature’s intent favoring alternative dispute resolution. 3 2. This Court has the authority to stay this litigation and compel mediation. 4 Code of Civil Procedure § 1281.2 provides, 5 “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate 6 that controversy, the court shall order the petitioner and the respondent to arbitrate the 7 controversy if it determines that an agreement to arbitrate the controversy exists.” 8 While the section refers to arbitration, in light of California’s policy favoring mediation, the 9 section applies equally to this matter. Therefore, this Court need only determine if the parties 10 agreed to mediate. 11 In examining the mediation agreement, “[t]he court should attempt to give effect to the 12 parties’ intentions, in light of the usual and ordinary meaning of the contractual language.” Gravillis 13 v. Coldwell Banker Residential Brokerage Co. (2009) 143 Cal.App.4th 761, 771. “The language of a 14 contract is to govern its interpretation, if the language is clear and explicit, and does not involve an 15 absurdity.” Civ. Code § 1638. “When a contract is reduced to writing, the intention of the parties is 16 to be ascertained from the writing alone, if possible.” Civ. Code § 1639. “The whole of a contract is 17 to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping 18 to interpret the other.” Civ. Code § 1641. And “the words of a contract are to be understood in their 19 ordinary and popular sense, rather than according to their strict legal meaning; unless used by the 20 parties in a technical sense, or unless a special meaning is given to them by usage, in which case the 21 latter must be followed.” Civ. Code § 1644. 22 The plain language of Dispute Resolution paragraph, quoted above, says that a dispute 23 among the parties “will” be submitted to mediation. And if mediation fails to resolve the dispute, the 24 dispute “may” proceed to litigation. Viewing the Agreement in its entirety, the parties did not intend 25 that “may” and “will” (or “shall”)” are synonymous. “May” should be read to mean “shall” only 26 where necessary to make sense of the contract as a whole. See Jones v. Catholic Healthcare West 27 (2007) 147 Cal.App.4th 300, 307 (applying this rule in the context of a statute; holding that “may” 28 meant “may” with respect to the particular statute at issue). 4 1 The Agreement provides no reason this Court should interpret the word “will” in any sense 2 other than its ordinary and popular meaning; that is, providing a mandated rather than a permissive 3 course of action. 4 In drafting the Agreement, the parties knew how to mandate a result when that was their 5 desire; indeed, they said a dispute “will” be submitted to mediation in the very same paragraph they 6 agreed that a dispute unresolved by mediation “may” be submitted to “any other form of resolution.” 7 The plain language of the Agreement mandates that the parties submit their dispute to 8 mediation before resorting to litigation. 9 3. P & T did not waive the Mediation requirement. 10 Code of Civil Procedure § 1281.2(a) provides that a motion to compel, like this motion, 11 may be denied “where the right to compel mediation has been waived.” Here, that is not the case. 12 West and P & T demanded that FDC submit to mediation, and even provided a detailed proposal to 13 FDC to ensure timely submission. But FDC twice rejected West and P & T’s demand. 14 Finally, where a party moves the Court to compel mediation, an order “may not be refused 15 on the ground that the movant’s contentions lack merit.” C.C. P. 1281.2(d); see also AT & T Tech., 16 Inc. v. Communications Workers of Am., 475 U.S. 643, 649-650 (1986) (“[I]n deciding whether the 17 parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the 18 potential merits of the underlying claims. Whether “arguable” or not, indeed even if it appears to 19 the court to be frivolous…). 20 III. CONCLUSION 21 West and P & T’s motion is proper and, in light of Plaintiffs’ reliance on the “time is of the 22 essence clause,” the motion is timely, too; mediation may allow the parties to understand their 23 rights and obligations more expeditiously than if the matter proceeds through litigation – 24 especially given that Plaintiffs have tactically sat on the Complaint since May 11, 2020. 25 California statutory and caselaw apply directly to this motion – and in West and P & T’s 26 favor. This Court should grant the motion, stay this litigation, and compel the parties to mediate 27 their dispute within 45 days of granting West and P & T’s motion. 28 5 1 Dated: June 19, 2020 Respectfully submitted, 2 3 4 ________________________ Trevor McCann 5 Attorney for Defendants 6 Patty West and P & T West Holdings, LLC 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6