Mai v. The Tu Firm, APLC CA4/3 ( 2023 )

Filed 4/10/23 Mai v. The Tu Firm, APLC CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
DAVID MAI,
Plaintiff and Respondent, G060947
.
v. (Super. Ct. No. 30-2020-01142902)
THE TU FIRM, APLC, et al., OPI NION
Defendants and Appellants.
Appeal from an order of the Superior Court of Orange County, Richard J.
Oberholzer, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice
pursuant to art. VI, § 6 of the Cal. Const.) Affirmed.
Law Offices of Andrew D. Weiss and Andrew D. Weiss for Defendants and
Appellants.
Hess & Nghiem and Edward W. Hess, Jr., for Plaintiff and Respondent.
* * *
INTRODUCTION
Defendants The Tu Firm, APLC, Hoang Huy Tu, and Walter Emil Teague
III, appeal from the trial court’s order denying their motion to compel an arbitration of
1
plaintiff David Mai’s legal malpractice claim against them. Over nine months after
being served with summonses, defendants demanded arbitration based on their legal
services contract signed by Mai that contained a dispute resolution subsection. During
those months, defendants litigated this matter by filing a demurrer, motion to strike with a
request for judicial notice, answer, cross-complaint, and an amendment to add a cross-
defendant, all without mentioning arbitration. Defendants also responded to Mai’s
discovery request with objections and no mention of arbitration.
The denial of defendants’ motion was based on the trial court’s conclusions
the legal services contract did not cover the parties’ claims and, in any case, that
defendants had waived any right to arbitration they may have had. Defendants challenge
both conclusions on appeal. We affirm the denial order because defendants have not
carried their burden to demonstrate the court’s waiver finding was erroneous as a matter
of law.
FACTUAL AND PROCEDURAL BACKGROUND
A. Context of the Underlying Lawsuit
In October 2013, plaintiff David Mai entered a contract with a third party
unrelated to this appeal, for Mai to perform “construction work” to renovate a residence.
Problems arose from the work performed and, in 2016, Mai signed a legal services
contract printed with defendants’ letterhead (retainer contract).
The retainer contract stipulates California law should govern the
“resolution of all disputes” between the parties. A subsection titled “[d]isputes and
1
We do not distinguish between the defendants in this opinion unless material to our
discussion.
2
[a]ttorney’s [f]ees” memorialized the parties’ understandings on dispute resolution. It
provides in part that, “[i]n the event a dispute arises concerning any aspect of the
relationship between Attorney [defendant The Tu Firm] and Client [Mai], including fee
disputes or claims of legal malpractice, Attorney and Client both agree to adhere to [a]
resolution process” that includes arbitration of the dispute.
One month after Mai signed the retainer contract, he was sued by the third
party for damages arising from the renovation work and counterclaimed for money owed
(collectively the renovation litigation). Defendants represented Mai in the litigation,
which settled three years later in 2017.
According to Mai’s allegations in this matter, in 2017, he was misinformed
by defendants as to the total amount he had to pay for the settlement of the renovation
litigation. Mai alleges he made only one payment because of his misunderstanding and
that, because defendants never informed him about subsequent issues that arose, a
judgment was later entered against Mai for an amount greater than the settlement amount.
Mai filed the lawsuit in this matter in May 2020, asserting a single cause of action for
legal malpractice against defendants.
B. The Parties’ Litigation Before Defendants’ Motion to Compel Arbitration
As noted, defendants engaged in litigation before filing their unsuccessful
June 2021 motion to compel arbitration. As their first response to Mai’s allegations,
defendants filed a demurrer, a motion to strike, and a request for judicial notice in support
of the motion, all without mentioning arbitration. Mai filed oppositional briefs and
defendants’ challenges were unsuccessful.
The court set a January 2022 trial date and defendants filed along with their
answer, a cross-complaint against Mai, seeking a court judgment for attorney fees
allegedly owed for the renovation litigation. Neither filing mentioned a right to
arbitration and defendants did not request to stay the proceedings. Mai filed an answer to
3
the cross-complaint, asserting eight affirmative defenses. Two months later, defendants
filed an amendment to their cross-complaint to add a cross-defendant who is not a party
to this appeal.
More than two months before defendants’ cross-complaint, Mai filed a
motion to compel The Tu Firm’s further responses to discovery requests for production
of documents and things. According to Mai’s motion, the firm’s initial and supplemental
responses contained objections and claims of privilege with no mention of arbitration.
For example, Mai’s tenth request for production sought “[a]ny and all documents
evidencing the agreement[,] if any, between defendants and [Mai] regarding legal
services.” The firm’s initial response, after asserting objections, stated as follows:
“without waiving objection[s], [The Tu Firm] has no such documents in his [sic]
possession custody or control.”
The firm’s supplemental response, provided by defendant Teague after
meeting and conferral with Mai’s counsel, also failed to mention the retainer contract,
stating: “without waiving objection[s], after a diligent search and a reasonable inquiry
[responsive] documents have never existed, have been destroyed, or have been lost,
misplaced, or stolen, or have never been, or is no longer, in the possession, custody, or
control of the responding party.”
The court granted Mai’s unopposed discovery motion in January 2021,
three months before defendants requested arbitration but the court did not issue Mai’s
separately requested sanctions against the firm because of a lack of formal notice in
Mai’s discovery motion. Defendants did not propound any discovery to Mai.
C. Defendants’ Motion to Compel Arbitration and the Trial Court’s Denial Order
Defendants first communicated an intent to arbitrate this matter by sending
an April 1, 2021 letter to Mai demanding arbitration based on the retainer contract. Their
4
arbitration motion underlying this appeal was filed June 22, 2021, when seven months
remained before the scheduled trial date.
2
After the trial court continued the motion hearing sua sponte, it held a
November 15, 2021 hearing where the parties presented oral arguments and submitted the
matter for decision without requesting a statement of decision. There is no reporter’s
transcript for the hearing but the record shows Mai’s opposition papers discussed the
parties’ motion litigation history which the defendants argued was insufficient to support
a finding of waiver.
The court issued a minute order denying defendants’ arbitration motion,
concluding the retainer contract’s dispute resolution subsection did not cover Mai’s legal
malpratice claim and that, in any event, defendants had waived any right to arbitrate they
might have had through their litigation conduct. Defendants timely appealed. (Code
Civ. Proc., § 1294, subd. (a) [order denying motion to compel arbitration appealable]; all
further undesignated statutory references are to the Code of Civil Procedure unless
otherwise indicated.)
DISCUSSION
A. Public Policy and Arbitration-Specific Waiver
“California’s arbitration statutes reflect ‘“a strong public policy in favor of
arbitration as a speedy and relatively inexpensive means of dispute resolution’” and are
intended ‘“to encourage persons who wish to avoid delays incident to a civil action to
obtain an adjustment of their differences by a tribunal of their own choosing.’”
(Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9[].)” (St. Agnes Medical Center v.
PacifiCare of California (2003) 31 Cal.4th 1187, 1204 (St. Agnes Medical Center);
2
We do not impute any time elapsed because of issues outside of defendants’ control,
e.g., administrative delays due to the COVID-19 pandemic, to defendants’ conduct under
consideration in this appeal.
5
accord, OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125; see § 1291.2 [arbitration motion
“proceedings shall be quickly heard and determined”].)
If an arbitration agreement is proved in the trial court by the moving party
(Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413) and the
party resisting arbitration claims a defense to the enforcement of the agreement, the
burden shifts to that party to prove by a preponderance of the evidence the facts
necessary for the defense (Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 972; see Evid. Code, § 115). A defense to the enforcement of an
arbitration agreement can be based “upon such grounds as exist for the revocation of any
contract.” (§ 1281.)
“[S]ection 1281.2 provides that one ground for denying a petition to compel
arbitration is that ‘[t]he right to compel arbitration has been waived by the petitioner.’ . . .
[¶] ‘. . . In the arbitration context, “[t]he term ‘waiver’ has also been used as a shorthand
statement for the conclusion that a contractual right to arbitration has been lost.”
[Citation.]’ (St. Agnes Medical Center, supra, 31 Cal.4th at pp. 1194-1195, fn. 4 [].)”
(Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 375
(Iskanian), abrogated on another ground by Viking River Cruises, Inc. v. Moriana (2022)
596 U.S. ____ [142 S.Ct. 1906].)
3
Citing California’s policy promoting arbitration, defendants argue the trial
court erroneously construed the retainer contract’s provisions and also erroneously found
defendants waived their right to arbitration. We first assume without deciding that the
parties entered an arbitration agreement and review the court’s ruling that defendants
waived through their conduct any right to arbitration they may have had. (See § 1281.2,
subd. (a); see also Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 984
(Sobremonte) [because of holding on waiver issue, “we need not consider issues relating
3
No party claims the Federal Arbitration Act is implicated in this appeal.
6
to the validity or enforceability of the arbitration provision.”].) Defendants as the
appellants have the burden to overcome the presumption the court order is correct.
(Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
B. Standard of Review
Defendants contend the trial court’s waiver finding was erroneous as a
matter of law because there was insufficient evidence of litigation prejudicing Mai. On
waiver, the court’s minute order stated: “to the extent any agreement to arbitrate existed,
[d]efendants have waived the right to arbitrate. First, they filed a demurrer and motion to
strike in July 2020, thus invoking litigation machinery. Thereafter, six months after the
[c]omplaint was filed, they filed a [c]ross-[c]omplaint and [an a]nswer on [November 25,
2020]. The [a]nswer does not set forth any right to arbitration or request any type of stay.
Finally, after [Mai] propounded discovery (and filed a motion to compel), [d]efendants
filed this motion on [June 22, 2021], which is being heard [November 15, 2021], just
[two] months before trial. [Sobremonte, supra, 61 Cal.App.4th at p. 992].”
In the arbitration context, the California Supreme Court has reiterated
several factors “relevant to the waiver inquiry: ‘“‘(1) whether the party’s actions are
inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been
substantially invoked” and the parties “were well into preparation of a lawsuit” before the
party notified the opposing party of an intent to arbitrate; (3) whether a party either
requested arbitration enforcement close to the trial date or delayed for a long period
before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim
without asking for a stay of the proceedings; (5) “whether important intervening steps
[e.g., taking advantage of judicial discovery procedures not available in arbitration] had
taken place”; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing
party.”” (St. Agnes Medical Center, supra, 31 Cal.4th at p. 1196 [quoting Sobremonte,
supra, 61 Cal.App.4th at p. 992].)” (Iskanian, supra, 59 Cal.4th at p. 375.) “‘[W]hether
7
a delay [by the party petitioning for arbitration] was ‘unreasonable’ [citation]” is relevant
(id. at p. 376) and other grounds for finding waiver include whether the petitioning party
engaged in conduct amounting to “‘bad faith’ or ‘willful misconduct’ [citation.]” (id. at
p. 375).
Defendants contend we should review the trial court’s waiver ruling de
novo, citing to St. Agnes Medical Center, supra, 31 Cal.4th at p. 1196. There, the
California Supreme Court explained: “‘Generally, the determination of waiver is a
question of fact, and the trial court’s finding, if supported by sufficient evidence, is
binding on the appellate court. [Citations.] “When, however, the facts are undisputed and
only one inference may reasonably be drawn, the issue is one of law and the reviewing
court is not bound by the trial court’s ruling.”’ ([Ibid.].)” (Iskanian, supra, 59 Cal.4th
at p. 375.)
Here, defendants’ appellate briefing does not discuss Mai’s opposition to
defendants’ arbitration motion. The opposition included briefing on the litigation history
at issue and a declaration filed by Mai’s counsel. Thus, defendants have not shown the
essential facts are undisputed.
Additionally, we note that even if we assumed undisputed facts, the record
allows conflicting reasonable inferences on the question of waiver. For example, the
record supports an inference defendants improperly “used [the courtroom] as a
convenient vestibule to the arbitration hall so as to allow [defendants] to create [their]
own unique structure combining litigation and arbitration.” (Christensen v. Dewor
Developments (1983) 33 Cal.3d 778, 784 (Christensen).) In his declaration filed to
oppose defendants’ arbitration motion, Mai’s counsel represented that defendants filed
their motion the day before depositions of defendants Tu and Teague were to commence
as mutually agreed by the parties. Mai’s counsel also represented the dates were agreed
to after defendants had already sent their April 1, 2021 letter to Mai demanding
arbitration.
8
In other words, the record supports a chronology showing defendants
notified Mai of an intent to arbitrate, then agreed to conduct depositions outside of
arbitration, and then changed their minds again by reverting back to a position that the
4
parties should arbitrate the matter. This court’s previous comment on a similar pre-
motion context merits mention here: “We are loathe to condone conduct by which a
defendant repeatedly uses the court proceedings for its own purposes (challenging the
pleadings with demurrers) while steadfastly remaining uncooperative with a plaintiff who
wishes to use the court proceedings for its purposes (taking depositions), all the while not
breathing a word about the existence of an arbitration agreement, or a desire to pursue
arbitration.” (Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1452.)
Ultimately, we need not and do not reach a conclusion as to whether bad
faith conduct occurred in this matter. For purposes of determining the correct standard of
review to apply, it is sufficient to conclude that because defendants have not
demonstrated undisputed facts allowing only one reasonable inference on the question of
waiver, we must apply the substantial evidence standard of review to the trial court’s
waiver finding. (St. Agnes Medical Center, supra, 31 Cal.4th at p. 1196.)
Notwithstanding that “‘waivers are not to be lightly inferred and the party
seeking to establish a waiver bears a heavy burden of proof’ [citation]” (Iskanian, supra,59 Cal.4th at p. 375 [citing California’s “policy in favor of arbitration”]), “‘[w]hen a trial
court’s factual determination is attacked on the ground that there is no substantial
evidence to sustain it, the power of an appellate court begins and ends with the
determination as to whether, on the entire record, there is substantial evidence,
contradicted or uncontradicted, which will support the determination.’ [Citation.]”
4
We note that, in contrast to depositions conducted through judicial litigation,
depositions conducted through arbitrations governed by the default procedural framework
of the California Arbitration Act require leave granted by an arbitrator. (§ 1238.05,
subd. (e) [“Depositions for discovery shall not be taken unless leave to do so is first
granted by the arbitrator or arbitrators”].)
9
(Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143, accord,
Christensen, supra, 33 Cal.3d at p. 781 [a waiver finding “is ordinarily one of fact which
‘“if supported by substantial evidence, is binding on an appellate court’”].)
Another well established appellate principle is triggered in this case by the
5
parties’ lack of a request for a statement of decision in the trial court: “‘A . . . failure to
request a statement of decision when one is available has two consequences. First, the
party waives any objection to the trial court’s failure to make all findings necessary to
support its decision. Second, the appellate court applies the doctrine of implied findings
and presumes the trial court made all necessary findings supported by substantial
evidence. [Citations.]’” (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 237.)
Based upon the above, we review for substantial evidence and apply the doctrine of
implied findings if substantial evidence supports an implied finding.
C. Relevant Case Law on Arbitration-Specific Waiver
“‘California courts have found a waiver of the right to demand arbitration
in a variety of contexts, ranging from situations in which the party seeking to compel
arbitration has previously taken steps inconsistent with an intent to invoke arbitration
[citations] to instances in which the petitioning party has unreasonably delayed in
undertaking the procedure. [Citations.]”’ (Iskanian, supra, 59 Cal.4th at pp. 374-375.)
As noted, the California Supreme Court has reaffirmed several factors,
quoted infra, “relevant to the waiver inquiry.” (Iskanian, supra, 59 Cal.4th at p. 376.)
5
Section 1291 appears within title nine of the Code of Civil Procedure, governing the
arbitration sought in this matter. The section provides that: “A statement of decision
shall be made by the court, if requested pursuant to [s]ection 632, whenever an order or
judgment, except a special order after final judgment, is made that is appealable under
this title.” (§ 1291.) An order denying a petition to compel arbitration is appealable
under the same title (§ 1294, subd. (a)) and under section 632, if the hearing “is
concluded within one calendar day . . . the request [for statement of decision] must be
made prior to the submission of the matter for decision.”
10
Although the high court has explained “no single test delineates the nature of the conduct
that will constitute a waiver of arbitration” (St. Agnes Medical Center, supra, 31
Cal.4th at p. 1195), it has also reiterated that “‘prejudice . . . is critical in waiver
determinations” (Iskanian, supra, 59 Cal.4th at pp. 375-377, quoting St. Agnes Medical
Center, supra, 31 Cal.4th at p. 1203), noting “‘[p]rejudice typically is found only where
the petitioning party’s conduct has substantially undermined [the] important public policy
[promoted by arbitration] or substantially impaired the other side’s ability to take
advantage of the benefits and efficiencies of arbitration’” (id. at p. 377, quoting St. Agnes
6
Medical Center, supra, 31 Cal.4th at p. 1204.)
Central to defendants’ contention in this appeal, the high court has also
reiterated that “‘[b]ecause merely participating in litigation, by itself, does not result in
. . . waiver, courts will not find prejudice where the party opposing arbitration shows only
that it incurred court costs and legal expenses.’” (Iskanian, supra, 59 Cal.4th at p. 377,
quoting St. Agnes Medical Center, supra, 31 Cal.4th at p. 1203; ibid. [“‘“‘waiver could
occur prior to a judgment on the merits if prejudice could be demonstrated ’”’”].
[Citations.]) In the same discussion, however, the high court has also quoted our
discussion in Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 446
(Lewis) for the proposition that “whether a delay [by the party petitioning for arbitration]
6
The parties have not briefed the California Supreme Court’s recent grant of review in
Quach v. California Commerce Club, Inc. (2022) 78 Cal.App.5th 470, 479 [majority
holding “St. Agnes Medical Center test” for waiver not met] (S275121, Supreme Ct.
Mins., August 24, 2022), an opinion filed just before the United States Supreme Court’s
opinion in Morgan v. Sundance, Inc. (2022) 596 U.S. ____ [142 S.Ct. 1708] (Morgan).
Morgan held that where federal law controls, prejudice to a party resisting arbitration
should not bear on the question of whether the party petitioning for arbitration waived its
right to arbitrate. (Id. at p. 1708 [rejecting the rule of a majority of federal circuits
requiring a showing of prejudice for “arbitration-specific waiver”].) Although the
California Supreme Court will soon provide updated guidance on analyzing arbitration
waiver, at present, St. Agnes Medical Center and Iskanian provide the most authoritative
statements of state law on arbitration-specific waiver.
11
was ‘unreasonable’ [citation]” is a “factor relevant to the waiver inquiry” (Iskanian,
supra, 59 Cal.4th at p. 376).
In Lewis, which involved a delay only half as long as the one at issue here,
we held that substantial evidence supported the trial court’s denial of a defendant’s
delayed motion to compel arbitration. (Lewis, supra, 205 Cal.App.4th at pp. 442-443.)
The opinion, which dicussed our earlier analysis of arbitration-specific waiver in Burton
v. Cruise (2010) 190 Cal.App.4th 939 (Burton), stands for the proposition that, although
waiver of a right to arbitrate does not occur by mere participation in litigation, “‘a
petitioning party’s conduct in stretching out the litigation process itself,’” i.e., through
unreasonable delay, “‘may cause prejudice by depriving the other party of the advantages
of arbitration as an “expedient, efficient and cost-effective method to resolve disputes.’””
(Lewis, supra, 205 Cal.App.4th at p. 452, quoting Burton, supra, 190 Cal.App.4th
at p. 948; accord, Sobremonte, supra, 61 Cal.App.4th at p. 995 [“courts ‘“may consider
. . . the expense incurred by that party from participating in the litigation process’” and
the length of delay as factors bearing on whether the opposing party has been
prejudiced”].)
“As we explained in Burton, ‘a party’s unreasonable delay in demanding or
seeking arbitration, in and of itself, may constitute a waiver of a right to arbitrate.’
[Citation.]” (Lewis, supra, 205 Cal.App.4th at p. 452.) We read the high court’s most
recent discussion on arbitration-specific waiver as guidance that, although mere
participation in litigation resulting in costs and legal expenses is insufficient as a matter
of law to show prejudice, substantial expense resulting from an “unreasonable or
unjustified [delay] of the party seeking arbitration” can amount to sufficient prejudice for
a waiver finding. (Iskanian, supra, 59 Cal.4th at p. 377.)
12
D. Analysis
Here, substantial evidence supports the trial court’s implicit findings that
defendants unreasonably delayed their motion to compel arbitration and that the delay
caused sufficient prejudice to Mai in the form of substantial expense. Defendants
pursued litigation during the nine months between Mai’s service of summonses and their
first communication of an intent to arbitrate. Defendants justified their right to arbitration
on their retainer contract with Mai, a document they had no reasonable justification to be
ignorant of during those months. During their silence on their own arbitration clause,
defendants sought multiple court orders on the substantive merits of Mai’s claim and
twice responded to Mai’s discovery production requests — without mentioning
arbitration or identifying the contract — in a manner that led to the court ordering further
responses be provided. The totality of these circumstances support implied findings of
unreasonable and unjustified delay.
On the expense caused by the delay, a sufficient ground for reasonable
inferences amounting to substantial expense is shown by Mai’s counsel’s declaration
submitted in support of Mai’s successful discovery motion. (See Schreiber v. City of Los
Angeles (2021) 69 Cal.App.5th 549, 559 [“We review the entire administrative record for
substantial evidence, including documents ‘not directly introduced or discussed at the
administrative hearing nor specifically referenced in the final statement of decision.’
[Citation.]”].) According to the declaration, Mai’s counsel spent a minimum of three
hours on the discovery issue, working at a rate of $495 an hour, and paid a filing fee for
the motion. This was an example of expense incurred in one instance of defendants’
dilatory conduct. (See Christensen, supra, 33 Cal.3d at p. 784 [noting, in discussing
evidence of prejudice there, that underlying 1980 lawsuit resulted in “nearly $300 in
court costs and over $2,000 in attorney’s fees” incurred motion by party resisting
arbitration].) The record supports reasonable inferences that similar expenses were
incurred when Mai responded to defendants’ litigation filings, such as their demurrer and
13
motion to strike with request for judicial notice. In other words, the record, not briefed
by defendants, contains substantial evidence supporting the trial court’s implied finding
of substantial expense incurred by Mai because of defendants’ unreasonable delay. (See
Iskanian, supra, 59 Cal.4th at p. 377.)
We hold substantial evidence supports the trial court’s implicit finding of
prejudice to Mai based on implicit findings that defendants unreasonably delayed their
motion to compel arbitration and that their pre-motion conduct caused Mai substantial
expense. (Iskanian, supra, 59 Cal.4th at p. 377.) It was not error as a matter of law for
the court to implicitly conclude that granting defendants’ motion would have undermined
California’s public policy to favor arbitration as a speedy and relatively inexpensive
means of dispute resolution or substantially impaired Mai’s ability to take advantage of
the benefits and efficiencies of arbitration. (Id. at p. 377.)
E. Defendants’ Appellate Burden
Defendants have not carried their burden to demonstrate error under the
substantial evidence standard of review. Most fundamentally, they have failed to fairly
summarize the evidence that was before the trial court for its waiver decision and so
cannot carry their burden to demonstrate insufficient evidence. (Boeken v. Philip Morris,
Inc. (2005) 127 Cal.App.4th 1640, 1658 [appellant’s “burden to provide a fair summary
of the evidence ‘grows with the complexity of the record [citation.]’”].)
Notwithstanding, we also note the record does not compel a conclusion
there was insufficient evidence of waiver. The record clearly shows substantial evidence
of at least three factors endorsed in St. Agnes Medical Center, quoted infra, supporting
the trial court’s waiver finding: defendants’ motion actions were inconsistent with the
right to arbitrate; defendants delayed their request for arbitration enforcement after a long
period of time; and defendants filed a counter-claim without asking for a stay of
proceedings. (See St. Agnes Medical Center, supra, 31 Cal.4th at p. 1196 [factors 1, 3,
14
and 4 quoted from Sobremonte, supra, 61 Cal.App.4th at p. 992].) Of the remaining
endorsed factors, none clearly supports defendants’ argument to compel a reversal in this
matter. (See, e.g., Lewis, supra, 205 Cal.App.4th at p. 453 [citing examples of waiver
finding affirmances where no trial date was set].)
Defendants present no case postdating St. Agnes Medical Center, let alone
any discussion of why our reasoning in Burton or Lewis are not apt for this appeal.
Defendants unpersuasively claim that, if the trial court had correctly applied St. Agnes
Medical Center and Sobremonte, it would have ruled to grant defendants’ arbitration
motion. St. Agnes Medical Center is factually inapt because that case involved the
Federal Arbitration Act (St. Agnes Medical Center, supra, 31 Cal.4th at p. 1194), parties
who litigated both and nonarbitrable claims (see id. at p. 1202), and did not involve a
question of whether a delay was reasonable or unreasonable (see id. at pp. 1203-1205).
Although Sobremonte is more factually analogous to this appeal than St.
Agnes Medical Center, the result in Sobremonte does not support defendants’ position
here. In that case, the trial court granted a defendant’s motion to compel arbitration but
the appellate court granted a writ petition reversing the result, concluding there was “no
substantial evidence to support the trial court’s determination that the [defendant] had not
waived its right to arbitration.” (Sobremonte, supra, 61 Cal.App.4th at p. 998.)
Defendants characterize as key in the Sobremonte appellate court’s
discussion a point that prejudice was caused to that plaintiff (who resisted arbitration)
when ‘“defendants used the discovery processes of the court to gain information about
plaintiff’s case which defendants could not have gained in arbitration.” [Citations.]’
(Sobremonte, supra, 61 Cal.App.4th at p. 996) This concept of showing unfairly gained
information was central in Groom v. Health Net (2000) 82 Cal.App.4th 1189 (Groom), an
opinion cited by the California Supreme Court as an analytical example of “excluding
time and expense from the calculus of prejudice.” (Iskanian, supra, 59 Cal.4th at p. 377;
referencing Groom, supra, 82 Cal.App.4th at p. 1197 [“Because merely participating in
15
litigation, by itself, does not result in a waiver, courts will not find prejudice where the
party opposing arbitration shows only that it incurred court costs and legal expenses”].)
(St. Agnes Medical Center, supra, 31 Cal.4th at p. 1203.)
Our opinions in Lewis and Burton explicitly contrasted our view on
arbitration-specific waiver from Groom (see Burton, supra, 190 Cal.App.4th at 948 [“In
St. Agnes [Medical Center], the Supreme Court cited both Groom and Sobremonte as
opposite extremes of the same continuum for finding prejudice”]; Lewis, supra, 205
Cal.App.4th at p. 451 [“We again decline to apply Groom”].) We maintain our
difference here and note we are not the only court to consider defendants’ asserted point.
For example, the appellate court in Bower v. Inter-Con Security Systems, Inc. (2014)
232 Cal.App.4th 1035, 1048 expounded on the role of gained tactical advantage as
follows: “In the course of its analysis, the [Iskanian] court harmonized case law that
takes different approaches to the issue of whether time and expense incurred by a party
opposing arbitration can be sufficiently prejudicial by itself to justify a waiver of the right
to arbitrate, even without a showing that the party seeking arbitration gained some unfair
advantage in the arbitration as a result of its conduct. The distinction in the case law
turns on whether any delay in seeking arbitration is reasonable.”
We do not read Iskanian or St. Agnes Medical Center as compelling us to
adopt a restrictive view of prejudice where unreasonable delay is supported by the record,
as in this case. Defendants do not cite to Iskanian, Lewis, Burton, or Groom to discuss
whether the pre-motion history here should compel a reversal under this matter’s
particular circumstances. (See Cahill v. San Diego Gas & Electric Co. (2011)
194 Cal.App.4th 939, 956 [“‘[w]e are not bound to develop appellants’ arguments for
them’ [Citations.]”].) In sum, defendants have not carried their burden to demonstrate the
court’s waiver finding was erroneous as a matter of law.
16
DISPOSITION
The order denying appellants’ motion to compel arbitration is affirmed.
Respondent is entitled to his costs on appeal.
DELANEY, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
SANCHEZ, J.
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