Court Opinion

ID: 6325226
Source: CourtListenerOpinion
Date Created: 2022-03-21 19:01:43.945664+00
Date Added: 2024-06-11T09:19:52.292286
License: Public Domain

Filed 3/21/22 Rohan v. Jaybell CA2/1
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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 ONE

 DEREK ROHAN et al.,                                                 B314001

           Plaintiffs and Respondents,                               (Los Angeles County
                                                                     Super. Ct. No. 19STCV45218)
           v.

 JAYBELL, LLC et al.,

           Defendants and Appellants.

     APPEAL from an order of the Superior Court of Los Angeles
County, Patricia D. Nieto, Judge. Reversed.
     Sylg, Susan C. Yu, Erin M. Lode and Katherine Yang for
Defendants and Appellants Jaybell, LLC, Sunnie S. Kim, Duk J.
Corporation dba Samwon Construction, and Kyung Wun Aum.
     Jeffer Mangels Butler & Mitchell, Susan Allison, Mark S. Adams,
and Jon A. Weininger for Defendant and Appellant M. Guy Maisnik.
     Norton & Associates and Timothy L. Norton for Plaintiffs and
Respondents.

                                    ________________________
      The trial court denied a defense motion to compel arbitration. We
reverse.

                       STATEMENT OF FACTS

      This appeal from an order denying a defense motion to compel
arbitration arises out of a 2017 contract to sell a single-family residence
in La Canada, California. The buyers, Derek Rohan and Angela
Saverice-Rohan (collectively, the Rohans) signed the agreement, as did
the seller, Jaybell, LLC. The purchase agreement includes an
arbitration provision obligating “the parties” to the agreement to
arbitrate any dispute arising out of the agreement itself or the
underlying transaction (and providing that enforcement of the
agreement to arbitrate is governed by the Federal Arbitration Act
(FAA)).

       Soon after the Rohans moved into their new house, they
encountered problems with the air conditioning and other systems; by
2019, Jaybell had refused to honor the builder’s warranty included in the
purchase documents. In December 2019, the Rohans sued Jaybell for
breach of contract, negligence, and two fraud causes of action. In
January 2020, Jaybell demurred and filed a motion to strike.
Presumably, the demurrer was sustained with leave to amend, and the
Rohans filed a first amended complaint, adding Duk J. Corporation
(doing business as Samwon Construction), Sunnie S. Kim, Kyung Won
Aum, and GS Heating and Air Conditioning, Inc. as defendants. Another
demurrer was filed but presumably overruled (since the first amended
complaint appears to be the operative pleading). In May 2020, the
Rohans filed an amendment to their first amended complaint naming
Maurice Maisnik as Doe 1. In June and July 2020, Appellants answered
(without raising arbitration as an affirmative defense) and GS Heating
filed a cross-complaint. Discovery ensued and a trial date was set for
August 2021, but at Appellants’ request was continued to June 2022.
Several parties changed lawyers in the spring of 2021 and in May — 17

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months after this lawsuit was filed — Appellants filed their motion to
compel arbitration.

      The Rohans opposed the motion to compel arbitration, contending
(among other things) that the motion was untimely and that the right to
arbitrate had been waived. The Rohans noted the obvious, that Jaybell
was the only other party to the arbitration agreement.

      Following a hearing held on June 15, 2021, the trial court denied
the motion to compel arbitration, finding the signatory party (Jaybell)
had waived the arbitration provision (and that it thus would be
inequitable to allow a non-signatory appellant (Maisnik) to enforce the
waived provision). More specifically, the trial court found the Appellants
had “actively litigated this action for 17 months” before raising the
arbitration issue for the first time less than three months before trial.
Appellants demurred twice, answered without alleging arbitration as a
defense, propounded and responded to extensive discovery, filed a cross-
complaint, and conducted inspections.

     This appeal is from the June 15, 2021 order denying the motion to
compel arbitration.

                           LEGAL DISCUSSION

       Appellants (Jaybell, Kim, Duk (dba Samwon Construction), Aum
and Maisnik) contend the order must be reversed because the trial court
erred by failing to apply the FAA, by finding that Jaybell had waived its
right to arbitrate, and by finding that Maisnik lacked standing to enforce
the arbitration agreement. We agree with Appellants and reverse the
challenged order.

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      A.    Jaybell did not waive it’s right to arbitrate.

      Under the FAA, Jaybell (the only appellant who is a party to the
arbitration agreement) did not waive its right to arbitrate. (Victrola 89,
LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355
(Victrola).) Although the factors governing waiver are generally the
same under both the FAA and California law (St. Agnes Medical Center
v. PacifiCare of California (2003) 31 Cal.4th 1187, 1194; and see Platt
Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307), the FAA requires the
party claiming waiver to present evidence affirmatively establishing
prejudice. (Fisher v. A.G. Becker Paribas Inc. (9th Cir. 1986) 791 F.2d
691, 694 [under the FAA, a party claiming waiver must show the other
party had knowledge of its right to compel arbitration, acts inconsistent
with that right, and prejudice].) Whether arbitration has been waived is
a question of fact, and the trial court’s finding will not be disturbed on
appeal if supported by substantial evidence. (Sobremonte v. Superior
Court (1998) 61 Cal.App.4th 980, 991.)

      In determining whether a party waived its right to arbitrate,
courts consider several factors, including (i) whether the party’s actions
are inconsistent with the right to arbitrate, (ii) whether judicial action
has been substantially invoked and the parties are preparing for trial
before the arbitration issue is raised, (iii) whether a trial date is
imminent when the arbitration issue is raised, (iv) whether the party
seeking arbitration has previously engaged in discovery, and (v) whether
the delay causes prejudice to the opposing party. (Sobremonte v.
Superior Court, supra, 61 Cal.App.4th at p. 992.) Here, the Rohans failed
to present any evidence of prejudice.

      Although most of the other factors needed to show waiver were
established (arbitration was not pleaded as an affirmative defense, the
parties actively litigated this case in court, jury fees were posted, and
there was a 17-month delay between the time this action was filed and
the defense motion to compel arbitration), there was absolutely no

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showing of prejudice. We are concerned with the FAA, not California
law, and the FAA requires an affirmative showing of prejudice.

       Under the FAA, prejudice is the touchstone of waiver, and for this
reason waiver is rarely found. (Aviation Data, Inc. v. American Express
Travel Related Services Co., Inc. (2007) 152 Cal.App.4th 1522, 1535; Lake
Communications, Inc. v. ICC Corp. (9th Cir. 1984) 738 F.2d 1473, 1477.)
Under federal law, the presence or absence of prejudice from the
litigation of the dispute before a defense motion to compel arbitration is
critical to the waiver determination. (St. Agnes Medical Center v.
PacifiCare of California, supra, 31 Cal.4th at p. 1194.)

       As Appellants note, Victrola is strikingly similar to this case.
There, as here, the parties agreed to arbitrate all disputes and to do so
under the FAA rules. (Victrola, supra, 46 Cal.App.5th at pp. 343-344.)
Indeed, it appears that both sets of parties used the same California
Association of Realtors form, with verbatim arbitration clauses,
including the provision that “Enforcement of this agreement to arbitrate
shall be governed by the Federal Arbitration Act.” (Id. at pp. 342, fn. 1,
343.) Both cases involved a home buyer’s claims against the home’s
seller. (Id. at p. 342.) In Victrola, the trial court found, expressly, that
the procedural provisions of California law applied. (Ibid.) In the case
before us, the trial court did not make that finding but did ignore the
FAA and, specifically, the FAA’s requirement of prejudice when there is
a claim of waiver.

      The Rohans’ opposition to the motion to compel arbitration did not
discuss prejudice and neither did the trial court’s order. As Appellants
contend, it appears the trial court ignored the parties’ agreement to
proceed with an arbitration governed by the FAA. Accordingly, the order
must be reversed.1

      1  The Rohans do not cite Victrola, let alone attempt to distinguish
it, and the trial court’s six-page order does not mention that case.

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      B.    The trial court’s finding that Maisnik lacked
            standing to enforce the arbitration agreement
            is based on the trial court’s finding of waiver
            and thus cannot stand.

      Having concluded that Jaybell’s right to enforce the arbitration
agreement was waived, the trial court denied Maisnik’s motion to
arbitrate on the ground that requiring the Rohans to arbitrate their
claims against Maisnik while litigating their claims against Jaybell
would risk inconsistent rulings and be prejudicial to the Rohans.

       Jaybell and Maisnik owned the property sold to the Rohans as
tenants in common, and Maisnik was sued as Jaybell’s alter ego and
agent. The trial court found that, in order to enforce the arbitration
agreement, Maisnik was required to submit proof that he is in fact an
alter ego or agent of Jaybell. Once again, Victrola tells us our trial court
erred. The determination of standing to arbitrate is a question of law,
and there are many instances in which nonparties to the arbitration
agreement are allowed to compel arbitration. (Victrola, supra, 46
Cal.App.5th at pp. 351-352.) Under the doctrine of equitable estoppel, it
is sufficient that the Rohans alleged that Maisnik was Jaybell’s alter ego
and agent. (Id. at p. 353.) In other words, the Rohans’ allegation that
Maisnik was Jaybell’s alter ego estops the Rohans from claiming
otherwise in response to Maisnik’s motion to compel arbitration.

      This matter is to be arbitrated against all Appellants.

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                            DISPOSITION

      The order is reversed and the cause is remanded to the trial court
with directions to enter a new order granting the motions to compel
arbitration. Appellants shall recover their costs of appeal.

      NOT TO BE PUBLISHED

                                                VOGEL, J.*

We concur:

             ROTHSCHILD, P. J.

             CHANEY, J.

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

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