Filed 2/25/13 Brennan v. U.S. TelePacific Corp. 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

JOURNEY BRENNAN,

 Plaintiff and Respondent,

v.

U.S. TELEPACIFIC CORP,

 Defendant and Appellant.

 G046225

 (Super. Ct. No. 30-2010-00422317)

 ORDER MODIFYNG OPINION

 AND DENYING PETITION FOR 

 REHEARING; NO CHANGE IN 

 JUDGMENT

It is ordered that the opinion filed on January 30, 2013 be modified as 

follows: 

On page 2, in the first paragraph, delete “Telepacific” and replace it with 

“TelePacific.”
2

This modification does not change the judgment. The petition for rehearing 

is DENIED.

THOMPSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

ARONSON, J.
Filed 1/30/13 Brennan v. U.S. Telepacific CA4/3 (unmodified version)

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication 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

JOURNEY BRENNAN,

 Plaintiff and Respondent,

 v.

U.S. TELEPACIFIC CORP.,

 Defendant and Appellant.

 G046225

 (Super. Ct. No. 30-2010-00422317)

 O P I N I O N

Appeal from an order of the Superior Court of Orange County, Ronald L. 

Bauer, Judge. Affirmed.

Gibson, Dunn & Crutcher, Daniel M. Kolkey, Christopher Chorba, Babak 

Lalezari and Melissa Case for Defendant and Appellant.

Zeldes & Haeggquist, Amber L. Eck, Aaron M. Olsen; Hunt Ortmann 

Palffy Nieves Lubka Darling & Mah, Omel A. Nieves, Katherine J. Odenbreit and Alison 

C. Gibbs for Plaintiff and Respondent. 

* * *
2

Defendant U.S. Telepacific Corp. appeals from the denial of its motion to 

compel arbitration of a class action complaint filed by plaintiff Journey Brennan. 

Defendant‟s motion was based on an arbitration provision allegedly contained in a 

contract to provide telecommunication services to plaintiff. Defendant contends the court 

erred in finding it failed to meet its burden to show an enforceable arbitration agreement. 

It argues plaintiff made a judicial admission he was bound by an arbitration agreement or 

is equitably estopped from denying the agreement. Defendant also claims the agreement 

is not unconscionable and if there are any unconscionable terms, they may be severed. 

Plaintiff challenges each of these arguments and also asserts defendant waived the right 

to compel arbitration. We agree there is insufficient evidence to show the existence of an 

enforceable agreement to arbitrate and affirm on that basis.

FACTS AND PROCEDURAL HISTORY

According to the complaint and plaintiff‟s declaration, in February 2008 

plaintiff entered into an “Account Agreement” and “Service Contract” (collectively 

Service Contract) for defendant to provide telecommunication services; the term of the 

contract was two years. Plaintiff received six documents comprising the Service 

Contract, none of which contained an arbitration provision. The arbitration provision is 

in a document entitled “Terms and Conditions” (Terms and Conditions). Plaintiff 

declares that at the time he executed the Service Contract he did not receive the Terms 

and Conditions nor did defendant “call [his] attention to it.” 

During the term of the Service Contract plaintiff, unhappy with defendant‟s 

services, contacted a representative who advised him a contract could be terminated if the 

customer gave written notice to defendant within 60 days of expiration of a term. 

Plaintiff gave such notice in January 2010. His declaration states that, despite the notice, 

the Service Contract automatically renewed. When he spoke to a representative about 
3

cancellation in June 2010, that was the first time he was informed about the Terms and 

Conditions, which contained an early termination fee provision. To finally effect 

termination of the Service Contract he was required to pay an early termination fee of 

over $4,000. 

In late 2010 plaintiff filed an action against defendant on behalf of himself 

and other members of the class for unfair competition, violation of Civil Code section 

1671, subdivision (d) for unlawful liquidated damages, breach of contract and of the 

implied covenant of good faith and fair dealing, unjust enrichment, and money had and 

received, seeking damages and injunctive relief. Defendant filed a motion to compel 

arbitration after the decision in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ 

[131 S.Ct. 1740, 179 L.Ed.2d 742], which restricted states from imposing certain 

limitations on the enforceability of arbitration agreements. The court denied the motion, 

ruling defendant had not shown the existence of a binding arbitration agreement and had 

there been such an agreement it would be unenforceable as unconscionable. It stated “the 

arbitration provision was not brought to the attention of nor accepted by nor known to the 

plaintiff.” 

DISCUSSION

1. Introduction

“„The right to arbitration depends upon contract; a petition to compel 

arbitration is simply a suit in equity seeking specific performance of that contract. 

[Citations.] There is no public policy favoring arbitration of disputes which the parties 

have not agreed to arbitrate. [Citation.]‟ [Citation.]” (Hotels Nevada, LLC v. L.A. 

Pacific Center, Inc. (2012) 203 Cal.App.4th 336, 347.) 
4

Defendant maintains the court erred in finding it had not established the 

existence of a valid agreement to arbitrate as set out in the Terms and Conditions and 

presents three arguments in support of its claim.

2. Judicial Admissions

“A judicial admission is a party‟s unequivocal concession of the truth of a 

matter.” (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 48.) “An unclear 

or equivocal statement does not create a binding judicial admission. [Citations.]” 

(Stroud v. Tunzi (2008) 160 Cal.App.4th 377, 385.) 

Defendant asserts certain allegations in the complaint constitute judicial 

admissions. Essentially he relies on plaintiff‟s allegation that the Service Contract had an 

early termination provision. This provision, defendant argues, is in the Terms and 

Conditions, which also contains the arbitration agreement. Likewise, plaintiff alleged he 

gave notice of termination pursuant to the provisions of the Service Contract. The 

termination provision is also in the Terms and Conditions. Finally, defendant points out 

the Terms and Conditions are attached as an exhibit to the complaint. Defendant 

concludes from this that plaintiff admitted he knew of and agreed to the arbitration 

provision. 

But these allegations do not come close to satisfying the requirement that 

plaintiff make clear and unequivocal admissions of a fact. Nowhere does plaintiff plead 

or admit he agreed to the arbitration provision. Further, in addition to the allegations on 

which defendant relies, the complaint pleads the Terms and Conditions were effective in 

December 2009, almost two years after execution of the Service Contract. And attaching 

them as an exhibit is in no way a concession plaintiff knew of or agreed to their 

provisions, including the arbitration clause, at the time he entered into the Service 

Contract. 
5

Defendant also relies on a comment made by plaintiff‟s counsel during 

argument at the hearing on the motion to compel, that the early termination fee was part 

of the agreement plaintiff reached with defendant. But this comment is selectively parsed 

from the larger argument the lawyer made. 

In addressing contract formation and the court‟s question about whether 

plaintiff agreed to the terms of the arbitration provision, counsel stated, “A cursory 

review of the allegations in the complaint do reference the early termination fee 

provisions and the cancellation provisions that were set forth in the standardized [T]erms 

and [C]onditions . . . . It‟s uncontested that plaintiff was forced to pay an early 

termination fee pursuant to the [T]erms and [C]onditions and, likewise, proceeded to 

attempt to cancel his services within the cancellation provision under the [T]erms and 

[C]onditions. [¶] However, those provisions are actual parts of the agreement that [was] 

reached. And there is no specific express concession of fact that the arbitration 

agreement containing the terms and conditions was ever agreed to by the plaintiff.” And 

a few sentences later she repeats, “There is no express allegation in the complaint that 

plaintiff ever agreed to the arbitration provision in the [T]erms and [C]onditions.” 

The only unequivocal statements made there are denials of any judicial 

admissions in the complaint. Reading in context the statement on which defendant relies, 

it appears counsel was stating that the early termination and fee provision were part of the 

agreement defendant was claiming controlled. In any event, we must give wider latitude 

to verbal statements because it is easier to misstate a point or have statements be 

misinterpreted, especially those made in the heat of a hearing. The lawyer‟s comments 

cannot be interpreted as an admission plaintiff consented to the agreement to arbitrate. 

Moreover an attorney cannot unilaterally make a concession that would significantly 

harm a client‟s substantive rights. (Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 

404-405; see Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The 

Rutter Group 2012) ¶ 10:146, p. 10-58.) The judicial admissions doctrine does not apply.
6

3. Equitable Estoppel 

“„[E]quitable estoppel is . . . a remedial judicial doctrine employed to insure 

fairness, prevent injustice, and do equity. It stems from the venerable judicial prerogative 

to redress unfairness in the application of otherwise inflexible legal dogma, based on 

sound public policy and equity. [Citation.]‟ [Citation.]” (Leasequip, Inc. v. Dapeer

(2002) 103 Cal.App.4th 394, 403.) Defendant argues that “[w]hen it is successfully 

invoked, the court in effect closes its ears to a point—a fact, argument, claim, or 

defense—on the ground that to permit its assertion would be intolerably unfair.” (City of 

Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 486, fn. omitted.) “A 

paradigmatic estoppel arises from prior conduct by the asserting party that is somehow at 

odds with a point now sought to be asserted in litigation. Typically the triggering 

conduct is itself in some manner blameworthy. [Citations.]” (Id. at pp. 486-487.)

Defendant concludes plaintiff is estopped from denying his obligations 

under the arbitration provision because he “play[ed] fast and loose with his contractual 

obligations” by relying on the early termination fee and automatic renewal provisions in 

the Terms and Conditions all the while “disavowing the arbitration provision” in that 

document. 

But defendant has misinterpreted or misapplied this doctrine or the facts. 

Plaintiff is not seeking to enforce these provisions in the Terms and Conditions against 

defendant. He is suing to enjoin their enforcement and recover for the damages he 

suffered. His position is completely consistent. Defendant is the one seeking to benefit 

from the provisions by enforcing them. The very case defendant cites, Goldman v. 

KPMG, LLP (2009) 173 Cal.App.4th 209, 220, defeats its argument. Goldman bars a 

party only from “„seek[ing] to hold the non-signatory liable pursuant to duties imposed 

by the agreement, which contains an arbitration provision, but, on the other hand, 

deny[ing] arbitration‟s applicability because the defendant is a non-signatory.‟ 

[Citation.]” (Ibid.) 
7

Likewise, the principal enunciated in Inter. Paper v. Schwabedissen 

Maschinene & Anlagen (4th Cir. 2000) 206 F.3d 411 (Inter. Paper), cited with approval 

in Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 

Cal.App.4th 1705, 1711-1713, another case on which defendant relies, is inapplicable. 

Inter. Paper states a “buyer cannot sue to enforce the guarantees and warranties of the 

distributor-manufacturer contract without complying with its arbitration provision.” 

(Inter. Paper, supra, 206 F.3d at pp. 413-414.) Again, plaintiff is not suing to enforce 

any provision of the Terms and Conditions; he seeks to prevent enforcement. 

Metalclad, which applied equitable estoppel, does not support defendant‟s 

position either. There, the plaintiff, who was not a party to the contract, sued for 

damages for breach of that contract yet sought to evade the arbitration provision also 

contained in it. (Metalclad Corp. v. Ventana Environmental Organizational Partnership, 

supra, 109 Cal.App.4th at pp. 1713, 1717.) The court held Metalclad was bound by the 

arbitration provision because it sought the benefit of the contract. (Id. at pp. 1718-1719.) 

Our facts are not parallel. 

At oral argument defendant took a different tack, arguing that, as the basis 

for his complaint, plaintiff is relying on the provision allowing termination with 60 days‟ 

notice, which is also in the Terms and Condition. According to plaintiff‟s declaration he 

did not know of the termination provision until defendant‟s representative told him about 

it during a phone conversation. Plaintiff was advised this is how he could cancel his 

contract. He alleges that, although he followed the procedure, defendant did not honor it 

but instead renewed the contract and then charged him an early termination fee. 

Nowhere in the complaint is plaintiff seeking to take advantage of or basing 

the complaint on the 60-day termination provision for the benefit of the class. The 

complaint revolves around the alleged improper early termination fee. And following the 

termination procedure defendant dictated is hardly the type of “blameworthy” conduct 
8

that is typical in an equitable estoppel situation. (City of Hollister v. Monterey Ins. Co., 

supra, 165 Cal.App.4th at pp. 486-487.) 

We are not persuaded plaintiff is somehow seeking to benefit from the 

provisions of the Terms and Conditions by using them as the basis of the class action 

with the hopes of recovering a “large judgment (or settlement) with big attorney fees.” 

The fact he brought a class action, a theoretically perfectly legitimate vehicle, to enjoin 

enforcement of the alleged improper provisions is not the equivalent of someone seeking 

to enforce contract terms while simultaneously attempting to avoid an arbitration 

requirement. It would violate the very equitable premise of equitable estoppel to apply it 

to these circumstances. 

4. Substantial Evidence 

Defendant suggests that even if it does not prevail on judicial admission or 

estoppel theories, plaintiff is still required to arbitrate based on “traditional principals of 

contract law.” (Bold and capitalization omitted.) 

Initially, the parties disagree about the standard of review of this issue. 

Plaintiff submits that we review this for substantial evidence. Defendant claims case law 

dictates we look at it de novo. It points to Marcus & Millichap Real Estate Investment 

Brokerage Co. v. Hock Investment Co. (1998) 68 Cal.App.4th 83, and a case from our 

division, Mayhew v. Benninghoff (1997) 53 Cal.App.4th 1365. In Mayhew the court 

considered an order denying a motion to compel arbitration and held it would review the 

arbitration provision de novo “[s]ince the extrinsic evidence . . . consist[ed] entirely of 

written declarations.” (Id. at p. 1369.) 

Subsequent to Mayhew we decided Metters v. Ralphs Grocery Co. (2008) 

161 Cal.App.4th 696, which reviewed a finding an arbitration agreement did not exist. 

We explicitly declined to conduct a de novo review, stating the court had made factual 
9

decisions after considering extrinsic evidence. Thus, we used the substantial evidence 

standard. (Id. at p. 701.) 

Mayhew and Metters are not inconsistent. In Mayhew both parties admitted 

the existence of the arbitration provision. The only dispute was whether it applied to the 

allegations of the complaint. (Mayhew v. Benninghoff, supra, 53 Cal.App.4th at p. 1370.) 

Thus the question revolved around an interpretation of the language of the arbitration 

clause, a legal issue. “It is . . . solely a judicial function to interpret a written instrument 

unless the interpretation turns upon the credibility of extrinsic evidence.” (Parsons v. 

Bristol Development Co. (1965) 62 Cal.2d 861, 865.)

In Metters, by contrast, the parties disputed whether a valid arbitration 

agreement even existed and introduced declarations to support their respective positions. 

(Metters v. Ralphs Grocery Co., supra, 161 Cal.App.4th at pp. 698, 700.) Thus, we had 

to review factual determinations and the substantial evidence standard applied. (Id. at p. 

701.) 

“„Whether the parties formed a valid agreement to arbitrate is determined 

under general California contract law. [Citations.]‟ . . . „Where the trial court‟s decision 

on arbitrability is based upon resolution of disputed facts, we review the decision for 

substantial evidence. [Citation.] In such a case we must “„accept the trial court‟s 

resolution of disputed facts when supported by substantial evidence; we must presume 

the court found every fact and drew every permissible inference necessary to support its 

judgment, and defer to its determination of the credibility of witnesses and the weight of 

the evidence.‟” [Citation.]‟ [Citation.]” (Hotels Nevada, LLC v. L.A. Pacific Center, 

Inc., supra, 203 Cal.App.4th at p. 348.) 

In both his declaration and his deposition plaintiff stated he never received 

the Terms and Conditions at the time he entered into the Service Contract. Further, 

documents he produced in discovery support his claim he never received the Terms and 

Conditions. In his declaration plaintiff states the fax stamp on the Terms and Conditions 
10

showed a date of June 2010 while the Service Contract faxed to him when he executed it 

showed February 2008. Defendant‟s contrary evidence was a declaration of its sales 

representative stating it was her standard practice to send the Terms and Conditions along 

with other documents when an account was opened. There was no evidence the Terms 

and Conditions had specifically been provided to plaintiff.

The court weighed the conflicting evidence on this issue and came down in 

plaintiff‟s favor, when it found plaintiff did not know about or agree to the arbitration 

agreement. To prevail on a motion to compel arbitration a party must prove the existence 

of an arbitration agreement by a preponderance of the evidence. (Olvera v. El Pollo 

Loco, Inc. (2009) 173 Cal.App.4th 447, 453.) Defendant failed to meet its burden. 

Defendant argues that even if plaintiff did not initially receive the Terms 

and Conditions, it sent a brochure with the November 2009 invoice announcing they had 

been revised. The brochure directed plaintiff to defendant‟s Web site to find the 

complete text of the revised Terms and Conditions. Defendant maintains this was 

sufficient to bind plaintiff to the arbitration provision. We are not persuaded.

In Badie v. Bank of America (1998) 67 Cal.App.4th 779, the defendant 

enclosed an insert with the invoice to the plaintiff, an existing customer, seeking to add 

an arbitration provision. The court held it was not enforceable, holding the provision had 

been added unilaterally and the plaintiff had never agreed to arbitrate. “„“„[T]here is no 

policy compelling persons to accept arbitration of controversies which they have not 

agreed to arbitrate . . . .‟” [Citations.]‟ [Citations.]” (Id. at p. 788.)

Defendant attempts to distinguish Badie, arguing that here there was only a 

modification to the Service Contract, no addition of an arbitration provision, and it made 

only “minor, non-substantive edits.” But that is not correct, given the trial court‟s finding 

plaintiff never agreed to the original arbitration provision. Thus, the so-called revision 

would in actuality have been a unilateral addition of an arbitration agreement, which, 

under Badie, is not allowed. 
11

Furthermore, there is no evidence plaintiff knew of or agreed to the terms 

of the so-called amended arbitration provision. Plaintiff testified in his deposition the 

invoice containing the brochure was sent to his accountant. He had no opinion as to 

whether the accountant actually received it but had no “reason to doubt” that she did and 

did not “recall one way or the other” whether he himself received it. He stated in his 

declaration he never received the brochure and had never seen it before it was faxed to 

him in June 2010. 

Defendant argues receipt by the accountant was sufficient to bind plaintiff. 

It relies on plaintiff‟s testimony that the accountant was authorized to “„receive and 

process invoices‟” and maintains plaintiff also stated she forwarded “„important‟” mail to 

plaintiff. But defendant points to nothing in the record actually supporting the latter 

assertion. And, as plaintiff points out, limited authority to pay invoices is not the same as 

authorization to waive the right to a jury trial. “An agent has such authority as the 

principal, actually or ostensibly, confers upon him.” (Civ. Code, § 2315; see Flores v. 

Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 594 [authority to make 

medical decisions does not extend to authority to authorize arbitration, which “waive[s] 

important legal rights”].)

Defendant also contends Badie did not discuss Civil Code section 1589, 

which provides that “[a] voluntary acceptance of the benefit of a transaction is equivalent 

to a consent to all the obligations arising from it, so far as the facts are known, or ought 

to be known, to the person accepting.” (Italics added.) In making this argument 

defendant failed to quote the italicized portion of the section or address the knowledge 

requirement, which, obviously, is the crucial issue here. And, as discussed, the trial court 

properly found plaintiff had no such knowledge. 

Finally, defendant asserts that at the very least, rather than outright denying 

the motion the trial court should have held an evidentiary hearing including live 

testimony. We disagree. First, the argument is set out in a footnote, violating court rules 
12

requiring discrete headings for each issue, and we are not required to consider it. (Evans 

v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 160.) Second, even on the 

merits the contention fails. The case defendant cites to support its claim makes clear 

there is no requirement for a court to do so but rather it lies within its discretion. (Bouton 

v. USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412, 428.) Defendant has not shown 

it even requested such a hearing or that the court abused its discretion in failing to set 

one.

Because we affirm the trial court‟s finding plaintiff did not agree to enter 

into the arbitration provision, we have no need to decide the issues of unconscionability 

and waiver.

DISPOSITION

The order is affirmed. Plaintiff is entitled to costs on appeal. 

THOMPSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

ARONSON, J.