Filed 4 / 12 / 21 Wells Fargo Bank, N.A. v. Agak CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SIX

WELLS FARGO BANK, N.A.,

Plaintiff. Cross

- defendant, and Appellant,

v.

GEORGE W. AGAK,

Defendant , Cross

complainant, and Respondent. 2d Civ

. No. B300635 (Super. Ct. No. 56

- 2017

- 00500587

- CU

- CL

- VTA) (Ventura County)

This is an appeal from an order denying a petition to compel arbitration . The t ri al court denied the petition on the ground that petition er waived any right it may have had to
arbitrate. We affirm.
FACTS
In A ugust 2017, Wells Fargo Bank, N.A. (Wells Fargo ) brought an action against George W. Agak to collect $17,000 in
credit card deb t. Wells Fargo’s complaint alleged breach of
contract and common counts.2

. Attached as an exhibit to the complaint is Wells Fargo’s alleged credit card customer agreement. The agreement contains a dispute resolution clause. The clause provides that a dis pute between the bank and its customer shall be resolved by
arbitration. The clause continues , “The foregoing notwithstanding, the Bank shall not initiate an arbitration to
collect a consume r debt, but reserves the right to a rbitrate all other disputes

. . . . A ‘Dispute’ is any unresolved disagreement between [the customer ] and the Bank. It includes any disagreement relating in any way to the C ard or related
services

. . . .” The agreement prohibits any dispute as a representative or member of a class. Agak answered Wells Fargo’s complaint by general denial,
and raised as affirmative defenses : ambiguity in the amount at issue; breach of contract; fraud, deceit , and misrepresentation; illegal conduct; v iolation of public policy; and “ Lack of jurisdicti on

– Defendant has a right to arbitrate the s e claims. ”

Wells Fargo Case Management Statement
In A ugust 2018
, Wells Fargo filed a case management statement. Wells Fargo stated that the case will be ready for
trial within 12 months of the filing of the co mplaint. Wells Fargo did not request referral to arbitration. Discovery
Wells Fargo propounded requests for admissions, form interrogatories, inspection demands

, and special interrogatories

. Agak also propounded form interrogatories and inspection
deman ds. In September 2018 , Agak’s response to Wells Fargo’s interrogatories stated that Wells Fargo had charged Agak illegal3

.

“credit defense” fees. Agak claims Wells Fargo charged the fees
without his consent in violation of the credit card agreement.

Motion for Leave to File Cross

- Complaint
In October 2018, Agak filed a motion for leave to file a

cross

- complaint alleging causes of action for breach of contract, fraud, unfair competition , failure to correct a billing error in
violation of Civil Code section 17 4 7.50
, and declaratory relief.
The cross

- complaint alleges Wells Fargo charged Agak an illegal
and unauthorized “credit defense” fee.

Second Case Management S tatement In November 2018, Wells Fargo filed another case management statement. Like the firs t statement, Wells Fargo represented to the court that it was a limited civil case, and
asked for a one

- day court trial. Wells Fargo did not request arbitration.
Motion to File Cross

- Complaint Granted In December 2018, the trial court granted Agak’s moti on to file his cross

- complaint. Wells Fargo did not oppose. Wells Fargo
answered the cross

- complaint. The answer alleged 16 affirmative
defense s , but the right to arbitrate was not alleged.

Case Management Conferences
The trial court conducted case man agement conference s in
December 2018 and January 2019. Wells Fargo did not raise the
issue of arbitration.
Amended Cross

- Complaint In February 2019, Agak sought leave to amend the cross

complaint. The amendment would turn Agak’s existing cross

complaint , alleging Wells Fargo illegally imposed a “credit defense” fee, into a class action.4

. While the motion was pending, the trial court conducted
another case management conference. Wells Fargo did not request arbitration

. Well s Fargo did not oppose the mot ion to amend the cross

complaint. The trial court granted the motion.

Removal to Federal Court In March 2019, Wel l s Fargo removed the matter to federal court. The district court sua sponte ordered the case remanded to

state court . The court ordered Wel ls Fargo to show cause why it should not be sanctioned for improperly removing the case. On remand, Wells Fargo filed its answer to Agak’s
amended cross

- complaint. The answer included as affirmative
defenses that Well s Fargo has the right to arbitrate, a nd that Agak has waived the right to bring a class action.

Motion to Compel Arbitration In May 2019, Wells Fargo petitioned to compel arbitration. The petition was based on the arbitration provision contained in
the consumer credit card customer agreemen t. The alleged agreement w as attached to the petition as e xhibit A. Wells Fargo’s counsel attempted to authenticate the agreement to arbitrate by declaring: “Attached hereto as Exhibit A is a true and correct copy of the Consumer Credit Card Customer Ag reement governing the terms of a credit card account
Defendant and Cross

- Claimant George W. Agak (‘Aga k’) had with Wells Fargo.” (Boldface omitted.) Agak opposed the petition on the ground that Wells Fargo waived any right it may have had to arbitration by its extensive participation in the lawsuit.5

. Ruling The trial court sustained Agak’s objections to both Wells Fargo’s original affidavit and the affidavit in its reply papers. The court determined by the parties’ actions there was no agreement to arb itrate.
The trial court also found that Wells Fargo waived its right to arbitration by its participation in the litigation. The court stated: “[T]he court also notes that waiver applies. Here, it is apparent that Plaintiff knew of the right to compel arbitration by
virtue of the fact that it possessed the alleged arbitration agreement at issue and filed this motion. It is also apparent that
Plaintiff acted inconsistent with that existing right, by filing this lawsuit in State Court, failing to allege a right to arbitration in
its pleadings , failing to mention its right to compel arbitration in its case management statement s , filing a motion for removal, participating in discovery, participating in four case management conferences without mentioning arb itration, generally participating in the litigation for nearly 2 years, and filing two discovery motions.”
The trial court did not consider whether the arbitration agreement is unconscionable

. DISCUSSION
I Standard of Review The trial court’s ruling on the admissibility of evidence is reviewed for an abuse of discretion. ( Christ v. Schwartz (2016) 2 Cal.App.5th 440, 446

- 447.) The trial court’s ruling on waiver of the right to arbitrate is revie wed for substantial evidence. ( Burton v. Cruise (2010) 190 Cal.App.4th 939, 945

- 946.)6

. II Waiver of Arbitration
T he trial court found that Wells Fargo waived its right to compel arbitration by its participation in the litigation.
Code of Civil Procedure s ection 1281.2, subdivision (a) provides: “ 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 that controversy, the court shall order the petitioner and the respondent to arbitrate the c ontroversy if it determines that an agreement to arbitrate the controversy exists, unless it
determines that: [¶] (a) The right to compel arbitration has been waived by the petit ioner

. . . .” A determination of waiver is a question of fact, and we will affirm the trial court’s finding if supported by substantial evidence. ( St. Agnes Medical Center v. Pacifi Care of California (2003) 31 Cal.4th 1187, 1196 ( St. Agnes ).) Where, however , the evidence is undisputed and only one reasonable inference may be
d rawn, the question is one of law. ( I bid. ) The court may consider the following factors in determining
whether there has been a waiver: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the parties are well into pr eparation for the lawsuit before a party notified the opposing party of the intent to invoke arbitration; (3) whether a party delayed for a lo n g period before seeking a stay; ( 4) whether a party seeking arbitration filed a counterclaim before seeking a sta y; (5) whether important intervening steps such as discovery procedures not available in arbitration had taken place; and (6) whether the delay affected

, misled

, or prejudiced the opposing party. ( St. Agnes

, supra , 31 Cal.4th at7

.

p. 1196.) Although the tr ial court may consider these factors, no single test determines the nature of the conduct that constitutes

a wa iver of arbitration. ( I d. at p. 1195.) Wells Fargo contends the trial court erred in considering it s actions prior to December 18, 2018. That is the date Agak filed
his cross

- complaint alleging Wells Fargo unlawfully imposed an
unauthorized “ credit defense” fee, the dispute that Wells Fargo now claims is subject to arbitration

. But Wells Fargo had notice of the dispute that it now
claims is arb itrable at least as early as October 2018, when Agak
made a motion to file his cross

- complaint. Wells Fargo did not respond with a petition to compel arbitration . Nor did it o ppose Agak’s motion

. Instead, it allowed the motion to be granted unopposed, a nd answered the cross

- complaint without raising
arbitration as a defense. Thereafter, Wells Fargo participated in case management conferences without mentioning arbitration.
In February 2019, when Agak sought leave to amend his

cross

- complaint to convert it to a class action , Wells Fargo still did not petition to compel arbitration

. Instead, it participated in another case management conference, and allowed the motion to be granted unopposed.
Wells Far g o responded to the amended cross

- complaint by

remov ing the case to federal court, thus, showing its intent not to
arbitrate. It was not until May 2019, seven months after Agak
motioned for leave to file his cross

- complaint, that Wells Fargo petitioned to compel arbitration.
St. Agnes points out that a wa iver of arbitration is not to be lightly inferred, and a party seeking to establish a waive r bears a heavy burden of proof. ( St. Agnes

, supra , 31 Cal.4th at p. 1195.)8

.

Agak carried that burden here. Applying the applicable factors listed by our Supreme C ourt in St. Agn es , the trial court could reasonably conclude that Wells Fargo waived the right t o arbitrate. The court could reasonably conclude that Wells Fargo’s actions were inconsistent with the right to arbitrate; that the parties were well into prep aration for the lawsuit; that Wells Fargo delayed for a long period before invok ing the right to arbitrate; that important intervening steps, such as case management conferences, h ad taken place; and that the delay prejudiced Agak by making him spend time and money on the court action. ( Id. at p. 1196.) Wells Fargo argues it did nothing more than what was necessary to avoid default. But it could have avoided default by bringing a motion to compel arbitration in response to Agak’s
motion for le a ve to file a cross

- complaint

. Instead, Wells Fargo
continued to litigate the matter in court. Moreover, Wells Fargo did more than what was necessary

to av o id default . It removed the case to federal court. Wells Fargo cites St. Agnes

, supra , 31 Cal. 4 th at page 12 05 for the proposition that a party does not waive arbitration by removing to federal court or otherwise attempting to change venue. What St. Agnes actually says is that a party does not waive arbitration rights “merely” by seeking to change venue, but a waiver
determination requires a consideration of all the circumstances. ( Ibid

. ) H ere the trial court did not find waiver merely because Wells Fargo removed the case to federal court. The court considered all the circumstances, including that the federal court sua sponte remanded the case to state court on the ground that the removal was obviously improper, resulting in an order to
show cause re garding sanctions.9

. In view of our decision, we need not discuss the other issues raised by Wells Fargo.
The di ssent acknowledges that Wells Fargo did not request arbitration until May 19 after participating in numerous court hearings. The dissent ignores that in Agak’s answer to the complaint he raised arbitration. Yet Wells Fargo continued with the litigation. The dissent also confuses the abuse of discretion standard with substantial evidence. But assuming the applicable standard of review is abuse of discretion, the dissent apparently believes the trial judge’s ruling was arbitrary, capricious, and beyond th e bounds of reason. Otherwise, the dissent is improperly assuming the role of the trial judge.
Th e judgment (order) is affirmed. Costs are awarded to Agak.
NOT TO BE PUBLISHED.

GILBERT, P. J.
I concur:

PERREN, J.TANGEMAN, J., dissenting: I respectfully dissent. The record in this case does not support a waiver for the following reasons. The credit card customer agreement between the parties provides that “the Bank shall not initiate an arbitration to collect
a consumer debt.” 1 Accordin gly, Wells Fargo was legally prohibited from compelling arbitration prior to the date that Agak’s cross

- complaint was filed. That date was December 18,
2018. Wells Fargo filed its motion to compel on May 14, 2019.
Our task is to determine whether the trial court abused its discretion when it determined that Wells Fargo, by its conduct and/or omissions, waived its right to arbitrate during this period
of less than five months. During this five

- month period, no trial date was pending,
no demurrers or motions to strike were filed or pending, no discovery was initiated or responded to by Wells Fargo, and no litigation of the merits occurred. During this same period, Wells Fargo asserted its right to arbitrate no less than five times: first, on February 22 in its case management statement; second, in its
statement of non

- opposition to Agak’s motion for leave to file an
amended cross

- complaint on March 4; third, as the basis for its removal to federal court (to arbitrate class action allegations pursuant to the FAA), in March; fourth, in a formal written demand to Agak on April 8; and fifth, when it asserted its right to arbitrate as an affirmative defense to the operative pleading, i.e.,
the amended cross

- complaint, on April 22.

1 This specific language was held enforceable in Quiroz v. Cavalry SPV I, LLC (C.D.Cal. 2016) 217 F.Supp. 1130, 1138.11

. The majority finds waiv er because it “starts the clock” before December 18, thus penalizing Wells Fargo for not taking actions it was legally barred from taking. It compounds that error by ignoring the numerous and repeated assertions by Wells Fargo of its right to arbitrate in February, March (two times), and April (two times). The majority acknowledges that waiver shall not be lightly inferred, that waiver cannot be inferred by removal to federal court, and that Agak “bears a heavy burden of proof.” ( St. Agnes
Medical Cent er v. Pacifi Care of California (2003) 31 Cal.4th 1187, 1195.) In St. Agnes , our Supreme Court set forth six factors to consider in determining whether a waiver occurred. All six factors militate against a waiver finding : (1) Wells Fargo
undertook no act ions during the relevant period inconsistent with
its desire to arbitrate the cross

- complaint; (2) Wells Fargo asserted its arbitration right on numerous occasions including in its answer to the operative cross

- complaint; (3) there was no lengthy delay aft er the right arose (December 18) and before Wells Fargo first asserted its arbitration right (February 22); (4) Wells Fargo filed no counterclaim to the cross

- complaint; (5) no discovery or litigation of the merits occurred in the relevant period; and (6) Agak has shown no prejudice he incurred between December 18 and February 22. On this record, I would conclude that the trial court abused its discretion when it found waiver based on Wells Fargo’s filing of the initial complaint (as was required by cont ract), failing to mention its right to arbitrate in its case management statements (it did so on February 22), removing the case to federal court (which does not operate as a waiver), participating in discovery (it did not do so during the relevant time pe riod), participating in12

.

litigation “for nearly 2 years,” and filing two discovery motions (it filed no such motions in the relevant time period).
NOT TO BE PUBLISHED.

TANGEMAN, J.Kevin G. DeNoce, Judge

Superior Court County of Ventura

________

______________________

Faegre Drinker Biddle & Reath, Angela J. Morales, Alan J.
Lazarus and Amanda Sema an, for Plaintiff, Cross

- defendant, and Appellant. Mardirossian & Associates, Inc.

, Garo Mardirossian and
Adam Feit for Defendant , Cross

- complainant

, and Respondent.