Court Opinion

ID: 1036802
Source: CourtListenerOpinion
Date Created: 2013-08-07 22:30:23.829538+00
Date Added: 2024-06-11T12:05:33.449720
License: Public Domain

Filed 8/7/13 Schmidt v. Service Corp. International CA2/4
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR

MICHAEL SCHMIDT,                                                        B242154

         Plaintiff and Appellant,                                       (Los Angeles County
                                                                        Super. Ct. No. BS130021)
         v.

SERVICE CORPORATION
INTERNATIONAL et al.,

         Defendants and Respondents.

         APPEAL from a judgment (order of dismissal) of the Superior Court of
Los Angeles County, Susan Bryant-Deason, Judge. Affirmed.
         Thomas & Solomon, The Strong-Todd House, Annette M. Gifford, and Sarah E.
Cressman for Plaintiff and Appellant.
         Gurnee & Daniels, Joan A. Mason; Stinson Morrison Hecker, and Lonnie J.
Williams, Jr. (Pro Hac Vice) for Defendants and Respondents.
       Appellant Michael Schmidt filed a petition to compel respondents, his former
employer and his employer’s alleged affiliates, to arbitrate his overtime and other wage
claims.1 The trial court denied and dismissed Schmidt’s petition because (1) the evidence
failed to show that all of the respondents were bound by the arbitration agreement, and
(2) his delay in requesting arbitration constituted a waiver of the right to arbitration. In
this appeal from the judgment (order of dismissal), we affirm.

                                     BACKGROUND

       This dispute involves Schmidt’s two and a half year employment with respondent
SCFS, which began in March 2005, when he became an apprentice funeral director at
respondent Pierce Brothers, and ended in November 2007, when he was a funeral director
at respondent Eternal Valley.
       When Schmidt began working for SCFS, he signed a “Principles of Employment”
agreement (agreement) with an entity identified in the agreement as “the Company.” The
agreement contained an arbitration clause2 that required Schmidt and the Company to

1      There are four groups of respondents:
       (1)   The parent company, Service Corporation International (SCI), which
             allegedly owns the company that employed Schmidt.
       (2)   The company that employed Schmidt, SCI California Funeral Services, Inc.
             (SCFS), at its two locations: Pierce Brothers Valhalla San Fernando Valley
             Care Center (Pierce Brothers) and Eternal Valley Memorial Park (Eternal
             Valley). Both Pierce Brothers and Eternal Valley are fictitious business
             names of SCFS.
       (3)   The three alleged affiliates of SCI: SCI Funeral and Cemetery Purchasing
             Cooperative, Inc., SCI Western Market Support Center, L.P., also known as
             (a/k/a) SCI Western Market Support Center, Inc., and California Cemetery
             and Funeral Services, LLC.
       (4)   The two individual respondents, Jane D. Jones and Thomas Ryan.

2      The arbitration clause stated as follows:
       “1. Matters Subject To Arbitration. Employee and the Company agree that,
except for the matters identified in Section 2 below and except as otherwise provided by
law, all disputes relating to any aspect of Employee’s employment with the Company

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shall be resolved by binding arbitration. This includes, but is not limited to, any claims
against the Company, its affiliates or their respective officers, directors, employees, or
agents for breach of contract, wrongful discharge, discrimination, harassment,
defamation, misrepresentation, and emotional distress, as well as any disputes pertaining
to the meaning or effect of this Agreement. The arbitration shall be conducted in
accordance with the procedures attached hereto as Exhibit ‘A.’ This agreement to
arbitrate shall cover disputes arising both before and after the execution of this document,
except to the extent that any litigation has already been filed as of the date hereof.
        “2. Exclusions. It is expressly agreed and understood that this Agreement shall
not govern the following: (1) any claims brought under federal discrimination laws
(including Title VII of the Civil Rights Act) or any other federal laws administered by the
Equal Employment Opportunity Commission, (2) claims for workers’ compensation or
unemployment benefits, or (3) claims brought to enforce any noncompetition or
confidentiality agreement which may exist between the parties.
        “3. Notification/Timeliness Of Claims. Any claim which either party has against
the other, other than a claim based on employment discrimination, must be presented in
writing by the claiming party to the other within one year of the date the claiming party
knew or should have known of the facts giving rise to the claim. Otherwise, the claim
shall be deemed waived and forever barred even if there is a federal or state statute of
limitations which would have given more time to pursue the claim. Discrimination
claims shall be subject to state and federal laws prescribing the limitation period for filing
such a claim.
        “4. Legal Counsel/Costs. Each party may retain legal counsel and shall pay its
own costs and attorneys’ fees, regardless of the outcome of the arbitration, provided
however, that the arbitrator may award attorneys’ fees and/or costs to the prevailing party
when expressly authorized by statute to do so. All other costs pertaining to the arbitration
shall be paid by the Company.
        “NOTICE TO EMPLOYEE: BY SIGNING THIS AGREEMENT, YOU ARE
AGREEING TO HAVE ANY AND ALL DISPUTES BETWEEN YOU AND YOUR
COMPANY (EXCEPT THOSE SPECIFICALLY EXCLUDED IN SECTION 2 ABOVE
AND THOSE OTHERWISE EXCLUDED BY APPLICABLE LAW, IF ANY)
DECIDED BY BINDING ARBITRATION AND YOU ARE WAIVING YOUR RIGHT
TO A JURY OR COURT TRIAL.
        “AFFIRMATION OF AT-WILL EMPLOYMENT STATUS: THE PARTIES
ACKNOWLEDGE AND AGREE THAT, UNLESS THEY ARE PARTIES TO A
WRITTEN EMPLOYMENT AGREEMENT WHICH GUARANTEES EMPLOYMENT
FOR A DEFINITE PERIOD OF TIME, EMPLOYEE IS AN EMPLOYEE
TERMINABLE AT-WILL, AND THAT THE COMPANY MAY ALTER THE TERMS
OF, OR TERMINATE, EMPLOYEE’S EMPLOYMENT IN ITS SOLE DISCRETION,
FOR ANY REASON OR NO REASON. EMPLOYEEE FURTHER
ACKNOWLEDGES THAT HE/SHE IS EMPLOYED BY THE COMPANY
IDENTIFIED BELOW AND NOT BY SUCH COMPANY’S ULTIMATE PARENT

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submit all disputes regarding any aspect of his employment (except those disputes
expressly excluded from the agreement) to binding arbitration. The arbitration clause
applied, but was “not limited to, any claims against the Company, its affiliates or their
respective officers, directors, employees, or agents for breach of contract, wrongful
discharge, discrimination, harassment, defamation, misrepresentation, and emotional
distress, as well as any disputes pertaining to the meaning or effect of this Agreement.”
       The arbitration clause required that a written claim be presented by the party
seeking arbitration (the claimant) within one year of the date when the claimant knew or
should have known of the facts giving rise to the claim. It stated that if the claimant
failed to present a timely claim, “the claim shall be deemed waived and forever barred
even if there is a federal or state statute of limitations which would have given more time
to pursue the claim.”
       On April 1, 2011, more than three years after his employment had ended, Schmidt
submitted a “Demand for Arbitration” of his state law claims for unpaid overtime and
other wages. The arbitration demand listed disputes arising “out of injuries . . . caused by
respondents’ violations of various California state laws including California Labor Code
§ 201, et seq., § 202, et seq., § 203, et seq., §§ 226.7 and 512, et seq., §§ 226(a) and
226.3, et seq., § 1194, et seq. and California Business and Profession[s] Code § 17200, et
seq. and/or breach of contract, fraud and misrepresentation laws.” The arbitration
demand was submitted to: (1) the parent company, SCI; (2) SCI’s three alleged affiliates
(SCI Funeral and Cemetery Purchasing Cooperative, Inc., SCI Western Market Support
Center, L.P., a/k/a SCI Western Market Support Center, Inc., and California Cemetery

COMPANY, SERVICE CORPORATION INTERNATIONAL, OR ANY OTHER
AFFILIATE OF THE COMPANY.
      “MODIFICATIONS. NEITHER EMPLOYEE’S AT-WILL STATUS NOR ANY
OF THE ABOVE PROVISIONS PERTAINING TO ARBITRATION MAY BE
MODIFIED EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BOTH
EMPLOYEE AND THE COMPANY.
      “I have read the above, am familiar with its terms and agree that my relationship
with my employer shall be governed thereby.”

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and Funeral Services, LLC.), and (3) four individuals (Jane D. Jones, Gwen Petteway,
Thomas Ryan, and Curtis Briggs).
       On November 17, 2011, Schmidt petitioned the superior court for an order to
compel arbitration against respondents: (1) the parent company, SCI; (2) SCFS and the
businesses (Pierce Brothers and Eternal Valley) where he was employed; (3) SCI’s three
alleged affiliates (SCI Funeral and Cemetery Purchasing Cooperative, Inc., SCI Western
Market Support Center, L.P., a/k/a SCI Western Market Support Center, Inc., and
California Cemetery and Funeral Services, LLC.); and (4) two individuals (Jane D. Jones
and Thomas Ryan).
       In opposition, respondents collectively asserted several defenses including
waiver.3 Respondents argued that Schmidt had waived the right to arbitrate by
(1) committing acts inconsistent with the right to arbitrate, and (2) failing to submit a
timely arbitration demand within one year of the date when he knew or should have
known of the facts giving rise to the claim.
       As to the acts inconsistent with the right to arbitration, the evidence showed that
Schmidt had pursued litigation as an “opt-in plaintiff” in two putative class action
lawsuits against all of the respondents except SCFS and California Cemetery and Funeral
Services, LLC: Stickle v. Service Corporation International et al. (D. Ariz.) Case
No. 08-cv-083-PHX-MHM/JWS (Stickle) and Riggio v. Service Corporation
International et al. (D. Ariz.) Case No. 10-cv-01265-PHX-MHM/JWS (Riggio). Schmidt
filed notices of consent to become a party in Stickle in February 2008, and in Riggio in
July 2010. In both notices, Schmidt stated that he was seeking “‘payment of unpaid
wages under federal or state law, including overtime wages and related relief against any
of my employer(s) including any individual(s) who may be considered my employer(s)
on my behalf and other former employees . . . .’”

3      Respondents also argued that Schmidt had failed to prove the existence of a
written arbitration agreement with SCI, SCI’s three alleged affiliates, and the two
individual respondents. Because we are affirming the trial court’s ruling on the basis of
waiver, we need not discuss this aspect of the parties’ evidence.

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       In opposition to the petition to compel arbitration, respondents argued that after
incurring significant fees and costs to defeat class certification in Stickle, it would be
prejudicial to force them to incur additional fees and costs to defend the identical claims
in arbitration. Respondents pointed out that if Schmidt had proceeded directly to
arbitration, he could not have obtained the type of discovery that was obtained in Stickle
and Riggio.
       Respondents submitted the declaration of their attorney Lonnie J. Williams, Jr.,
who defended them in Stickle and Riggio. Williams attested that: (1) Schmidt
“participated in the Stickle litigation and discovery from February 8, 2008, until April 25,
2011, the date of dismissal”; (2) respondents had taken over 60 depositions in order to
defeat class certification; and (3) respondents had issued over 1,000 sets of
interrogatories and reviewed over 740 discovery responses.
       The superior court denied Schmidt’s petition to compel arbitration, stating in its
order: “The court finds that the Petitioner has failed to present evidence showing that the
Respondents who filed a Response to the Petition agreed in writing to arbitrate the claims
of the Petitioner. The court also finds that the Petitioner waived the right to seek
arbitration by delaying his request for four (4) years since he was last employed by
Eternal Valley Memorial Park.”
       The petition was dismissed with prejudice on March 22, 2012. This timely appeal
followed.

                                       DISCUSSION

       Schmidt contends the trial court erred in finding: (1) the arbitration agreement
was not binding on all respondents, and (2) a waiver of the right to arbitrate. In light of
our affirmance of the finding of waiver, we do not decide whether the arbitration
agreement was binding on all respondents.

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I.       Standard of Review
         The basic rule of appellate review is that the judgment or order of the trial court is
presumed to be correct and error must be affirmatively shown. (Denham v. Superior
Court (1970) 2 Cal.3d 557, 564.)
         “The question of waiver is generally one of fact. (St. Agnes Medical Center v.
PacifiCare of California (2003) 31 Cal.4th 1187, 1196 [St. Agnes]; Roberts v. El Cajon
Motors, Inc. (2011) 200 Cal.App.4th 832, 841.) The waiver issue may be reviewed
de novo when the question is whether the superior court properly applied the correct legal
standard to the undisputed facts: ‘“When . . . the facts are undisputed and only one
inference may reasonably be drawn, the issue [of waiver] is one of law and the reviewing
court is not bound by the trial court’s ruling.” [Citation.]’ (St. Agnes, at p. 1196 . . . .)”
(Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1202.)

II.      The Failure to Timely Demand Arbitration Is a Failure of a Condition
         Precedent to the Right to Arbitrate
         Schmidt’s opening brief analyzes the trial court’s finding of waiver solely in terms
of a purported finding that his pursuit of litigation—through class certification in Stickle
and Riggio—was so inconsistent with the right to arbitration that it constituted a waiver of
that right. The trial court’s written order, however, did not mention Schmidt’s
participation in Stickle or Riggio or any other litigation. Instead, the order spoke solely of
delay. The order stated that “Petitioner waived the right to seek arbitration by delaying
his request for four (4) years since he was last employed by Eternal Valley Memorial
Park.”
         Based on our review of the record, we conclude the trial court’s finding of waiver
was grounded on Schmidt’s failure to submit a timely claim within the one-year period
specified in the agreement. It was undisputed that according to the agreement’s
arbitration clause, Schmidt was required to present a written claim for arbitration within
one year of the date when he knew or should have known of the facts giving rise to the

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claim. Because the filing of a claim initiated the arbitration process, it constituted the
functional equivalent of filing an arbitration demand.
       The concept that a timely arbitration demand is a prerequisite to the right to
arbitrate is well established. As the California Supreme Court stated in Platt Pacific, Inc.
v. Andelson (1993) 6 Cal.4th 307 (Platt), “[t]he leading case for the rule that arbitration
must be demanded within the time agreed upon by the parties is a 1946 decision by the
Court of Appeal in Jordan v. Friedman [(1946)] 72 Cal.App.2d 726. Significantly, a
review of Jordan reveals that the court there did not use the term ‘waiver’ in the sense of
voluntary relinquishment of a known right.
       “In Jordan, a subcontractor sued a general contractor to foreclose a mechanic’s
lien. Relying on an arbitration clause in the subcontract, the general contractor filed a
motion to stay the proceedings pending arbitration. The parties’ subcontract required that
a written demand for arbitration be filed with the architect no later than the time of final
payment. The general contractor, however, made his demand for arbitration to the
subcontractor rather than to the architect, and did so after the time for final payment had
expired. The Court of Appeal held that, in failing to make a written arbitration demand to
the architect as required by the contract, and in not making the demand until three months
after the contractually specified date, the general contractor was foreclosed from
compelling arbitration. The court went on to state: ‘Where a contract provides that a
demand for arbitration must be filed within a stated time and the party desiring arbitration
permits the agreed period to pass without making demand, he waives his right to
arbitration.’ (Jordan v. Friedman, supra, 72 Cal.App.2d at p. 727, italics added.) It
cannot be said of the general contractor in Jordan that it intended to voluntarily
relinquish its right to arbitration, for it had demanded arbitration both orally and in
writing. Thus, the Jordan court’s use of the term ‘waiver’ in its holding was simply a
shorthand way of stating that, by failing to perform certain acts specified in the parties’
contract, the general contractor had lost the right to arbitration.” (Platt, supra, 6 Cal.4th
at pp. 315-316; see St. Agnes, supra, 31 Cal.4th at p. 1195, fn. 4 [“In the arbitration

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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.’”].)
       “Private arbitration is a matter of agreement between the parties and is governed
by contract law. (See, e.g., Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8; Ericksen,
Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312,
323; Code Civ. Proc., § 1280 et seq.) Under the law of contracts, parties may expressly
agree that a right or duty is conditional upon the occurrence or nonoccurrence of an act or
event. (See, e.g., Civ. Code, § 1434 et seq.; Rest.2d Contracts, § 224; 3A Corbin,
Contracts (1960) § 631, p. 21; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts,
§ 722, p. 654.) Thus, a condition precedent is either an act of a party that must be
performed or an uncertain event that must happen before the contractual right accrues or
the contractual duty arises. (Civ. Code, § 1436; 1 Witkin, Summary of Cal. Law, supra,
Contracts, § 722, p. 654.)
       “When, as here, the parties have agreed that a demand for arbitration must be
made within a certain time, that demand is a condition precedent that must be performed
before the contractual duty to submit the dispute to arbitration arises. The nonoccurrence
of a condition precedent may be excused for a number of legally recognized reasons. But
when a party has failed to fulfill a condition that was within its power to perform, it is not
an excuse that the party did not thereby intend to surrender any rights under the
agreement. (See 5 Williston, Contracts (3d ed. 1961) § 676, pp. 219-223.) A contrary
conclusion would undermine the law of contracts by vesting in one contracting party the
power to unilaterally convert the other contracting party’s conditional obligation into an
independent, unconditional obligation notwithstanding the terms of the agreement. Thus,
it is inconsistent with the law governing private arbitration agreements to assert, as
plaintiffs do here, that the failure to satisfy the contractual requirement of making a
timely demand for arbitration has no effect absent an intent to abandon submission of the
dispute to arbitration.
       “Moreover, plaintiffs’ assertion is contrary to the rule that the failure to timely
demand arbitration is a ‘waiver’ of the right to arbitrate. As we shall see, the term

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‘waiver,’ as used in the context of the failure to timely demand arbitration, refers not to a
voluntary relinquishment of a known right, but to the loss of a right based on a failure to
perform an obligation.” (Platt, supra, 6 Cal.4th at pp. 313-314.)

III.   Schmidt Fails to Refute the Trial Court’s Finding that His Request for
       Arbitration Was Not Submitted Within the One-Year Deadline
       As previously mentioned, Schmidt’s opening brief does not address the denial of
his petition to compel arbitration based on his failure to make a timely request within the
one-year period specified in the agreement. (See Platt, supra, 6 Cal.4th at pp. 313-314.)
Schmidt focuses instead on the six-factor test to determine whether a party waived the
right to compel arbitration by participating in litigation. (See St. Agnes, supra, 31 Cal.4th
at p. 1196.) The six-factor test has no bearing on the loss of a right based on a failure to
perform an obligation.
       Even if the arguments raised by Schmidt in the opening brief were correct, they
fail to refute the dispositive finding that the request for arbitration was untimely and,
therefore, a condition precedent to the right to arbitration was not met. “An appellate
court is not required to examine undeveloped claims, nor to make arguments for parties.
[Citation.]” (Paterno v. State of California (1999) 74 Cal.App.4th 68, 106.)
       Applying the basic rule that a judgment or order is presumed to be correct and
error must be affirmatively shown (Denham v. Superior Court, supra, 2 Cal.3d at p. 564),
we conclude that Schmidt has failed to meet his burden of setting forth a reasoned
argument, supported by applicable authority, to refute the trial court’s determination that,
because he did not present a timely request for arbitration within the one-year period set
forth in the agreement, the right to arbitration was lost due to the failure of a condition
precedent. (See Platt, supra, 6 Cal.4th at pp. 313-314.)
       At oral argument, Schmidt claimed, for the first time, that he preserved his right to
arbitrate by filing the requisite claim. Initially, we note that we need not consider an
argument not raised in the briefs. (People v. Thompson (2010) 49 Cal.4th 79, 110, fn. 13
[because counsel failed to raise issue in briefs, it was improper to raise it at oral

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argument].) On the merits, Schmidt’s contention is not supported by the record. There is
no evidence that he filed a written claim directly with SCFS within the required one-year
period, and Schmidt does not argue otherwise. Instead, he asserts his written consent to
opt in the Stickle litigation was sufficient to give SCFS notice. This is so, Schmidt urges,
because SCFS was a defendant in that action and was advised that he was joining the
litigation for the purpose of seeking payment of wages under federal and state law. We
are not persuaded. The arbitration agreement requires actual, not constructive, notice of
claims.

IV.    Schmidt’s Participation in the Fair Labor Standards Act Litigation Did Not
       Toll the One-Year Limitations Period
       In his reply brief, Schmidt, for the first time, cited Pearson Dental Supplies, Inc. v.
Superior Court (2010) 48 Cal.4th 665 and contended that his participation in the Fair
Labor Standards Act litigation tolled the one-year limitations period in the arbitration
clause. The contention fails for two reasons: (1) arguments raised for the first time in a
reply brief will not be considered (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754,
764); and (2) Pearson does not support Schmidt’s position. In Pearson, the parties did
not dispute that Code of Civil Procedure section 1281.12 applied because the plaintiff
commenced a lawsuit based on the same claim that was the subject of the proposed
arbitration.4 (Id. at p. 673.) Here, however, Schmidt does not meet two of the
requirements of section 1281.12. First, he did not initiate the action that he now alleges
tolled the limitations period. He was a participant in litigation that was initiated by other

4       Code of Civil Procedure section 1281.12 provides: “If an arbitration agreement
requires that arbitration of a controversy be demanded or initiated by a party to the
arbitration agreement within a period of time, the commencement of a civil action by that
party based upon that controversy, within that period of time, shall toll the applicable
time limitations contained in the arbitration agreement with respect to that controversy,
from the date the civil action is commenced until 30 days after a final determination by
the court that the party is required to arbitrate the controversy, or 30 days after the final
termination of the civil action that was commenced and initiated the tolling, whichever
date occurs first.”

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parties. Second, the civil litigation Schmidt participated in was not based on the claims
he now seeks to arbitrate. In his petition to compel, Schmidt alleged that he “has never
raised the state law claims he asserts here in any litigation.” As a result, the one-year
limitations period in the arbitration clause was not tolled by Schmidt’s participation in the
federal litigation.

                                      DISPOSITION

       The judgment (order of dismissal) is affirmed. Respondents are entitled to their
costs on appeal.

       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                  SUZUKAWA, J.

We concur:

       EPSTEIN, P. J.

       WILLHITE, J.

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