Filed 9 / 30 / 21 Villalobos v. Mike ’ s Auto Group 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

CUAUHTEMOC DELA MORA VILLA L O B OS et al.,

Plaintiff s and Appellant s ,

v.

MIKE ’ S AUTO GROUP, INC. , et al. , Defendant s and Respondent s

. G060400 (Super. Ct. No. 17CV000386 )

O P I N I O N

Appeal from a judgment of the Superior Court of Monterey County, Marla
O. Anderson , Judge. Affirme d.

Rosner, Barry & Babbitt, Christopher P. Barry and Arlyn L. Escalante for
Plaintiff s and Appellant s

.

No appearance for Defendant s and Respondent s

.

* * *2 After the trial court confirmed an arbitration award against Cuauhtemoc Dela Mora Villalobos and Azucena Ponce, t hey appeal from the order compelling the parties to arbitration. Appellants contend that respondent Mike ’ s Auto Group, Inc. (Mike ’ s Auto) , waived its right to seek arbitration, and that the trial c o urt improperly appointed the arbitrator in violation of C ode of Civil Procedure section 1281.6. As discussed below, appellants have not shown reversible error. Accordingly, we affirm

. I
F ACTUAL AND P ROCEDURAL B ACKGROUND A. Complaint and Mediation

On January 27 , 2017 , appellants filed a complai nt against Mike ’ s Auto and Bay Federal Credit Union (Bay FCU) , alleging they had purchased a used 2014 Lexus
vehicle by means of an installment sale contract, which Mike ’ s Auto later assigned to Bay FCU . The complaint alleged the vehicle h ad substantial preexisting damage, and it sought recission of the sale contract and various other remedies. The complaint noted the contract contained a permissive arbitration clause, and stated that plaintiffs elected to
initiate the instant court action , “ but will agree to stipulate to arbitration through JAMS, if Defendants wish to resolve this dispute in arbitration. ”

In March 2017, Mike ’ s Auto and Bay FCU filed answers, generally denying the allegations and raising numerous affirmative defenses , bu t did not plead
arbitration as an affirmative defense

.

The court appointed a mediator on June 6, 2017, and on August 24, 2017, the parties participated in a mediation, which did not result in an agreement.
B. Motion to Compel Arbitration

On Septemb er 18, 2017, Mike ’ s Auto filed a case management statement providing notice it would bring a motion to compel arbitration. Th e case management statement also acknowledged the vehicle had been inspected.3 On October 3, 2017, Mike ’ s Auto filed its motion to compel arbitration. The motion argued the arbitration clause in the sale contract was enforceable, and it requested arbitration before AAA. The motion also stated Mike ’ s Auto would pay appellant s ’ arbitral fees.

Appellants opposed the motion to compel arbitration, arguing Mike ’ s Auto waived its right to seek arbitration by actively participating in litigation for almost a year before requesting arbitration. Appellants stated that Mike ’ s Auto did not assert binding
arbitration as an affirmative d efense in its answer, and that Mike ’ s Auto responded to plaintiffs ’ discovery requests in May 2017, noticed a vehicle inspection on May 23, 2017,
and participated in court

- ordered mediation in August 2017

.

Appellants asserted that if the court were to o rder arbitration, they would select JAMS as the arbitration provider, not AAA. They also requested that a single arbitrator be appointed , and that the court appoint the single arbitrator pursuant to Code of Civil Procedure section 1281.6, 1 if the partie s fail ed to agree on the arbitration provider. In response, Mike ’ s Auto argued its l imited actions did not show waiver, and asserted that inspecting the vehicle and responding to discovery requests would have
occurred in the arbitration in any event . It also renewed its request for arbitration before
AAA. At the hearing on the motion to compel arbitration, the trial court ordered the parties to arbitration. After discussing the process of appointing an arbitrator with the parties, the court further ordered the parties to “ [w]ithin ten days submit five names each ”
and “ then the Court will go ahead and select an arbitrator. ” Neither party objected to this procedure.

1 All further citations are to the Code of Civil Procedure, unless stated otherwise.4 Appellants submitted their list of arbitrators on November 1 3 , 2017. Respondents submitted a different list of five arbitrators on November 13, 2017, and also
submi tted a proposed order with those arbitrator ’ s names. In response to the proposed order, appellants submitted their own proposed order listing all ten arbitrators. On November 18, 2017, the trial court selected George J. Kovacevich from Mike ’ s Auto ’ s list s of arbitrators, after noting that it had reviewed the “ joint list submitted by Plaintiff. ”
C

. Arbitration and Appeal

Arbitrator Kovacevich granted respondents ’ motion for summary disposition on appellants ’ claims, and dismissed the matter with preju dice. He denied respondents ’ fees and costs. Appellants then filed a petition to confirm the arbitration
award. On April 22, 2019, the trial court entered a judgment confirming the arbitration award. Appellants noticed an appeal from the judgment, and all interim and preceding orders, including the order granting the motion to compel arbitration.
II
D ISCUSSION Appellants contend the judgment confirming the arbitration award must be
reversed because Mike ’ s Auto waived its right to seek arbitration and the trial court erred in selecting the arbitrator.
A. Mike ’ s Auto Did Not Waive Its Arbitration Rights

As our Supreme Court has stated: “ State law

. . . reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims. [Citation.] Although a court may deny a petition to compel arbitration on the ground of waiver [citation], waivers are not to be lightly infer red and the party seeking to establish a waiver bears a heavy burden of proof. ” ( St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 ( St. Agne s) .) “‘ In determining waiver, a court

can consider “ (1) whether the party ’ s action s are inconsistent with the right to arbitrate; (2) whether ‘ the litigation machinery has been substantially invoked ’ and the parties5

‘ were well into preparation of a lawsuit ’ before the party notified the opposing party of an intent to arbitrate; (3) whet her 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 imp ortant 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. ” ’ ” ( Id. at p. 1196 .) “ No one of these
factor s predominates and each case must be examined in context. ” ( Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 444 ( Lewis )

. )

“ The question of waiver is generally a questi on of fact, and the trial court ’ s finding [on] waiver is binding on us if it is supported by substantial evidence. [Citation.]

‘ We infer all necessary findin gs supported by substantial evidence [citations] and

“ construe any reasonable inference in the manner most favorable to the judgment, resolving all ambigu ities to support an affirmance. ”’ [Citation.] Reversal is not justified simply because the trial court could have potentially reached a different conclu sion on the question of waiver. ” ( Bower v. Inter

- Con Security Systems, Inc. (2014) 232 Cal .App.4th 1035, 1043.) Here, the trial court , in ordering arbitration, rejected appellants ’ argument that Mike ’ s Auto had waive d its right to seek arbitration. Appellants contend the
evidence does not support this result because Mike ’ s Auto (1) acted inco nsistent ly with the right to arbitrate by failing to plead arbitration as an affirmative defense in its answer, responding to appellants ’ discovery requests, conducting a vehicle inspection and participating in court

- ordered mediation, and (2) unreasonably delayed demanding
arbitration until 10 months after the complaint was filed

.

While appellants are correct that the failure to plead arbitration as an
affirmative defense in an answer has been found to be inconsistent with the later assertion of a right to arbitrate ( Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557

-6

558) , it is merely one fact or in the determination and is not dispositive on the issue of
waiver

. Mike ’ s Auto could have moved at any time to amend its answer to include th is
defense , even at this late stage. ( See Ramos v. City of Santa Clara (1973) 35 Cal.App.3d 93, 95 [ “ A trial court has discretion to allow amendment of any pleading at any stage of the proceedings. ” ].)

The remaining factors appellants cite do not provide a basis to reverse the
trial court ’ s finding that there had been no waiver. Participation in an insignificant amount of discovery initiated by other parties is not inconsistent with arbitration. ( Zamo ra v. Lehman (2010) 186 Cal.App.4th 1, 19.) Likewise, m ediation is not generally inconsistent with arbitration. ( Id . at p. 20 [ “ attempt to settle the action was not inconsistent with the right to arbitrate ” ].) As to the vehicle inspection, a ppellants di d not show that conducting a vehicle inspection is a discovery procedure not available in
arbitration.
A ppellants also argue on appeal that they revealed their litigation strategy through discovery, but never made this argument at the trial court

. The y have, as a result,
forfeited the argument. Even if they had not , the record do es not establish that any litigation strategy was revealed.

As to the delay in demanding arbitration, appellants have not shown the delay was unreasonable. While Mike ’ s Auto waited nearly 10 months before moving to compel arbitration, that 10

- month period included nearly two months when the parties
were in mediati on. More important , “ a delay is found unreasonable only when it is combined with the attempt by the party asserting a right to arbitrate to obtain an advantageous litigation position during the delay. ” ( Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.Ap p.4th 438, 449.) For example, i n Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 996, the defendant delayed 10 months before moving to compel arbitration but also filed demurrers and engaged in expansive discovery during that time period

. In Davi s v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 213, 217, the7

defendant delayed six months before moving to compel arbitration but also used court discovery procedures not available in arbitration to obtain 1,600 pages of documents from plaintif

f, and took plaintiff ’ s two

- day deposition. In Lewis , supra , 205 Cal.App.4th at p. 446, the defendant delayed five months before moving to compel arbitration , but
also f i led multiple demurrers and motions to strike and participated in discovery. In
Guess ?, Inc. v. Superior Court , supra 79 Cal.App.4th at p. 558, the defendant delayed three months before moving to compel arbitration but fully participated in the discovery process, including sending two sets of lawyers to third party depositions and taking f ull advantage of every opportunity to cross

- examine deponents. The appellate court also noted that Guess?, Inc., spent over $150,000 in litigating the case, and four third party depositions were taken, with another 11 arranged. ( Id. at p. 559, fn. 2.)

Here, in contrast, Mike ’ s Auto did not take significant affirmative action to litigate the case. It did not file demurrers or other motions, did not initiate discovery except for a vehicle inspection , and merely responded to appellants ’ written discover y requests as the law requires (§ 2030.210)

. The record shows Mike ’ s Auto ’ s responses totaled 14 pages, not including produced documents.

In sum, while there was some evidence that could support a finding of waiver, appellants did not meet their “ heav y burden of proof ” to show Mike ’ s Auto waived its right to arbitration. ( St. Agnes , supra , 31 Cal.4th at p. 1195 .) The trial court found no waiver, and the record does not establish waiver as a matter of law

. Accordingly, we must affirm the trial court ’ s waiver ruling. ( Lewis , supra , 205 Cal.App.4th at p. 453 [ “ It is not enough the trial court potentially could have reached a different conclusion; rather, we may reverse the trial court ’ s waiver finding only if the
record establishes a

. . . waiver as a matter of law. ” ] .)
B. The Trial Court Did Not Commit Reversible Error in Its Selection of the Arbitrator

Section 1281.6 provides: “ If the arbitration agreement provides a method of app ointing an arbitrator, that method shall be followed. If the arbitration agreement8

does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of
ap pointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

“ When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parti es to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within fi ve days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within
the five

- day period, the court shall appoint the arbitrator f rom the nominees. ” (§ 1281.6) Appel l a nts contend the sel ection o f Kovacevich as the arbitrator failed to conform with the mandatory requirements of section 1281.6 because the trial court did not nominate five persons and allow the parties to jointly sele ct the arbitrator. However,
the record demonstrates that , at the hearing on the motion to compel arbitration, the trial
court discussed the arbitrat or selection process it intended to follow with the parties. Both parties agreed to this selection process , and t he court ’ s selection of Kovace v ich was consistent with the agreement

. Although appellants objected to Mike ’ s Auto ’ s proposed arbitrator appointment order, the record does not show any objection to the court ’ s order appointing Kovacevich as the arbi trator. Thus , appellants forfeited any challenge to the
arbitrat or selection process because they agreed to that process and never objected below to the trial court order selecting Kovacevich. (See, e.g., K.C. Multimedia, Inc. v. Bank of
America Technolo gy & Operations, Inc. (2009) 171 Cal.App.4th 939, 948 [ “ appellant forfeited its challenge to the propriety of the pretrial procedure by failing to object9

below ” ] ; In re Wilford J. (2005) 131 Cal.App.4th 742, 754 [ “ An appellate court ordinarily will not consider challenges based on procedural defects or erroneous rulings where an objection could have been but was not made in the trial court ” ].)
III
D IS POSITION The judgment is affirmed

. B ecause respondent did not participate in the appeal, no costs are a warded

.

ZELON, J.*

WE CONCUR:

O’LEARY, P. J.

BEDSWORTH, J. *Retired Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.