Court Opinion

ID: 9838928
Source: CourtListenerOpinion
Date Created: 2023-09-08 20:05:21.845806+00
Date Added: 2024-06-11T09:04:55.272090
License: Public Domain

Filed 9/8/23
                       CERTIFIED FOR PUBLICATION

         IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                          FIRST APPELLATE DISTRICT

                                DIVISION THREE

    JANE DOE,
         Petitioner,
                                               A167105
    v.
    THE SUPERIOR COURT OF THE                  (San Francisco
    CITY AND COUNTY OF SAN                     City & County Super. Ct.
    FRANCISCO,                                 Case No. CGC-21-596749)
         Respondent;
    NA HOKU, INC., et al.,
         Real Parties in Interest.

         Petitioner Jane Doe sued real parties in interest – her former employer
Na Hoku, Inc. and former manager Ysmith Montoya (collectively real parties)
– asserting multiple claims arising from Montoya’s alleged sexual
harassment and assault of Doe. Real parties successfully compelled the case
to arbitration.
         September 1, 20221 was the “due date” for real parties to pay certain
arbitration fees and costs to the arbitrator. Under Code of Civil Procedure
section 1281.98, subdivision (a)(1) (section 1281.98(a)(1))2, these fees and
costs had to be “paid within 30 days after the due date” – or by October 3 – to

1        All dates hereafter refer to the year 2022 unless otherwise stated.

2    All statutory references are to the Code of Civil Procedure unless
otherwise stated.

                                          1
avoid breaching the arbitration agreement. Instead, the arbitrator received
the payment on October 5, two days after the statutory 30-day grace period
expired. This delay was because real parties opted to mail a check on Friday,
September 30 for the full amount due on Monday, October 3 even though
payment could be submitted by credit card, electronic check (also referred to
as “ECheck”), or wire transfer.
      Petitioner moved to vacate the order compelling arbitration on the
basis that real parties failed to pay their arbitration fees and costs within 30
days of the due date as required by section 1281.98(a)(1). After the trial court
denied the motion, thus precluding petitioner from withdrawing from the
arbitration and pursuing her claims in court, she filed a petition for writ of
mandate in this court.
      In this writ proceeding, we strictly enforce the 30-day grace period in
section 1281.98(a)(1) and conclude fees and costs owed for a pending
proceeding must be received by the arbitrator within 30 days after the due
date. We do not find that the proverbial check in the mail constitutes
payment and agree with petitioner that real parties’ payment, received more
than 30 days after the due date established by the arbitrator, was untimely.
We therefore grant the writ petition.
                 FACTUAL AND PROCEDURAL BACKGROUND
      On November 22, 2021, petitioner filed a complaint against real parties
asserting multiple claims arising from several incidents in which Montoya
allegedly sexually harassed and assaulted her. Real parties successfully
moved to compel arbitration, and the court ordered the case to binding
arbitration.
      On May 16, the American Arbitration Association (AAA) sent the
parties a letter confirming the rules for arbitration and seeking payment of

                                        2
the initial administrative fees. AAA explained: “This letter shall serve as the
invoice pursuant to California Code of Civil Procedure Section 1281.97.
Payment is due upon receipt of this letter. As this arbitration is subject to
California Code of Civil Procedure 1281.97, payment must be received by
June 15th, 2022 or the AAA will close the parties’ case. Pursuant to
California Code of Civil Procedure 1281.97, the AAA cannot grant any
extensions to this payment deadline. [¶] Please note payment should be
submitted by credit card or electronic check.” (Underscoring omitted.) On
May 24, real parties timely paid their initial administrative fees by credit
card.
        On September 1, AAA sent the parties another letter and invoice
seeking a deposit to cover the arbitrator’s anticipated compensation and
expenses for the arbitration. The letter stated in relevant part: “Payment in
the amount of $22,500 is due upon receipt of this notice for preliminary
matters. . . . The case management fee [$750] is also due and reflected on
your invoice. As this arbitration is subject to California Code of Civil
Procedure 1281.98, payment must be received 30 days from the date of
this letter to avoid closure of the parties’ case. Pursuant to California Code
of Civil Procedure 1281.98, the AAA cannot grant any extensions to this
payment deadline unless agreed upon by all parties.” (Emphasis in original.)
The total amount owed was $23,250. The letter provided instructions for
online payment and the invoice included a separate page of “Payment
Options” which listed three ways to pay: (1) credit card or eCheck; (2) wire
transfer; or (3) check to an address in Dallas, Texas. The invoice also noted:
“Unless instructed otherwise, invoice balance due upon receipt.”
        On September 28, AAA e-mailed real parties the following message:
“This is a courtesy reminder neutral compensation deposits in the amount of

                                       3
$23,250 in the above-referenced matter were due as of September 1, 2022.
An invoice is attached for your reference. As this arbitration is subject to
California Code of Civil Procedure 1281.97 and 1281.98, payment must be
received within 30 days of the due date. The AAA cannot grant any
extension to this deadline. The last day to remit payment is October 3rd.”
The same invoice and “Payment Options” enclosure listing credit card or
eCheck, wire transfer, or check were included with the email.
      On Friday, September 30, Na Hoku mailed a check for $23,250 to the
Texas address provided. On Monday, October 3, counsel for real parties
informed AAA that payment had been mailed. On October 5, AAA received
real parties’ payment and applied it to the case.
      Petitioner moved to vacate the trial court’s order compelling arbitration
on the grounds that real parties had failed to pay their arbitration fees and
costs within 30 days of the due date as required by statute. She argued their
late payment was a material breach of the arbitration agreement and waived
their right to compel arbitration.
      Following further briefing and a hearing, the trial court denied the
motion. Observing that “the provider’s demand was for payment remitted by
October 3,” the court ruled that real parties “indisputably complied” with the
date “having remitted (i.e., sent) the sum in by that date.” The court
recognized the possible “ambiguity as to whether a ‘due’ date meant the day
the sum had to be remitted or received by the provider” but concluded AAA’s
second communication “clarified this: The date was for the remitting of the
sum.” In the trial court’s view, because real parties’ remittance of payment
by October 3 “satisfied the due date imposed by the provider, and that being
so, § 1281.98 was complied with as well.” The court added, “§ 1281.98

                                       4
requires the sum to be ‘paid’ – not necessarily ‘received’ – within the 30 day
period. This was done here.”
      Petitioner filed the instant petition for writ of mandate or prohibition,
or other appropriate relief, requesting we vacate the trial court order denying
her motion to vacate. Upon our request, real parties filed an informal
response to the petition. Petitioner filed an informal reply. We thereafter
issued an alternative writ of mandate directing respondent superior court to
set aside and vacate its order denying petitioner’s motion to vacate the order
compelling arbitration, and to enter a new and different order granting the
motion and addressing the request for sanctions in petitioner’s motion.
      The trial court issued an order declining to comply with the alternative
writ. Real parties filed a return to the petition, to which petitioner filed a
reply (traverse). We now turn to the merits of the petition.
                                  DISCUSSION
      Petitioner argues the trial court misinterpreted section 1281.98 in
allowing real parties more than 30 days to pay arbitration fees and costs. We
agree.
I.    Applicable Law
      Ordinarily, a trial court’s determination that a party waived the right
to arbitrate is subject to substantial evidence review. (Burton v. Cruise
(2010) 190 Cal.App.4th 939, 946.) However, where the parties do not dispute
the factual support for the trial court’s ruling, but instead dispute the proper
interpretation of section 1281.98, the appellate court’s review is de novo.
(De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 749–750 (De Leon);
Carmel Development Company, Inc. v. Anderson (2020) 48 Cal.App.5th 492,
503 [“We review a trial court’s interpretation and application of statutes de
novo.”].)

                                        5
      “In 1961, the California Legislature enacted the California Arbitration
Act (CAA) (§ 1280 et seq.) as a way to protect the right of private parties to
resolve their disputes through the ‘efficient, streamlined procedures’ of
arbitration.” (Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 633
(Gallo).) In 2019, the California Legislature added sections 1281.97 and
1281.98 to the CAA. (Gallo, supra, at p. 633.) Section 1281.97 sets forth the
procedures by which a company that has included a predispute arbitration
provision in a contract with an employee must pay its share of initiation fees
or costs for the arbitration. (§§ 1281.97, subd. (a); 1280, subd. (e).) Section
1281.98, subdivision (a) (section 1281.98(a)) sets forth the procedures for a
company’s payment of fees and costs while an arbitration proceeding is
pending. Section 1281.98(a)(1) provides in relevant part: “In an employment
or consumer arbitration that requires . . . that the drafting party pay certain
fees and costs during the pendency of an arbitration proceeding, if the fees or
costs required to continue the arbitration proceeding are not paid within 30
days after the due date, the drafting party is in material breach of the
arbitration agreement, is in default of the arbitration, and waives its right to
compel the employee or consumer to proceed with that arbitration as a result
of the material breach.” (§ 1281.98, subd. (a)(1).)
      Section 1281.98, subdivision (a)(2) (section 1281.98(a)(2)) states the
arbitration provider “shall provide an invoice for any fees and costs required
for the arbitration proceeding to continue to all of the parties to the
arbitration. The invoice shall be provided in its entirety, shall state the full
amount owed and the date that payment is due, and shall be sent to all
parties by the same means on the same day. To avoid delay, absent an
express provision in the arbitration agreement stating the number of days in
which the parties to the arbitration must pay any required fees or costs, the

                                        6
arbitration provider shall issue all invoices to the parties as due upon receipt.
Any extension of time for the due date shall be agreed upon by all parties.”
(§ 1281.98, subd. (a)(2).)
      A company’s breach of its payment obligation in section 1281.98(a)
confers upon the employee the choice of (1) withdrawing the claim from
arbitration and proceeding in a court of appropriate jurisdiction; (2)
compelling arbitration but requiring the company to pay reasonable
attorney’s fees and costs related to the arbitration; (3) petitioning the court
for an ordering compelling the company to pay all arbitration fees it is
obligated to pay under the arbitration agreement or rules provided by
arbitrator; or (4) paying the company’s fees and proceeding with the
arbitration. (§ 1281.98, subds. (b)(1)–(4).)
      A company that materially breaches an arbitration agreement under
section 1281.98(a) is also required to pay the “reasonable expenses, including
attorney’s fees and costs, incurred by the employee . . . as a result of the
material breach” (§1281.99, subd. (a)), and may also suffer an evidentiary,
terminating, or contempt sanction unless it “acted with substantial
justification” or “other circumstances make the imposition of the sanction
unjust” (§ 1281.99, subd. (b)).3
II.   Analysis
      September 1 was the “due date” for payment of the arbitration fees and
costs at issue in this appeal. Section 1281.98(a)(2) allows the parties to agree

3     The procedures set forth in section 1281.98 for the payment of costs for
a pending arbitration largely parallel those set forth in section 1281.97 for
the payment of costs associated with initiating an arbitration. (See
§§ 1281.97, subds. (a)–(d); Gallo, supra, 81 Cal.App.5th at p. 633, fn. 4 [noting
its analysis of section 1281.97 “applies with equal force to the parallel
provisions of section 1281.98”].)

                                        7
to a due date for payment of any required fees or costs in their arbitration
agreement and allows the parties to agree to an extension of the due date;
neither party identifies any such agreement. Therefore, pursuant to section
1281.98(a)(2), any required fees or costs were “due upon receipt” of the
invoice issued to the parties. (§ 1281.98, subd. (a)(2).) As September 1 was
the day the relevant invoice was e-mailed to the parties, that date –
September 1 – was the “due date” for payment.
      Under section 1281.98(a)(1), real parties had to pay necessary fees and
costs to continue the arbitration “within 30 days after the due date” to avoid
breach. (§ 1281.98, subd. (a)(1).) Since September 1 was the due date, the
statutory 30-day grace period expired no later than October 3.4 Indeed,
AAA’s September 1 letter emphasized that “payment must be received within
30 days from the date of this letter” and its September 28 courtesy reminder
email stated October 3 was the last day to remit payment. Neither party ever
objected to these deadlines.
      There is no dispute that real parties mailed a check to AAA for $23,250
on September 30 and that AAA received and applied the payment on October
5. The issue before us is whether real parties’ payment was “paid within 30
days after the due date” and thus was timely within the meaning of section
1281.98. According to petitioner, section 1281.98 “must be interpreted to
require receipt of payment within the 30-day deadline,” and since real
parties’ payment was not received until October 5 – two days after the grace
period expired – real parties breached the arbitration agreement and waived
their right to arbitrate. Real parties, on the other hand, counter that

4     Thirty days after the September 1 due date was October 1, which fell
on a Saturday. While the relevant provisions of the CAA do not discuss
extensions when a performance deadline falls on a weekend or holiday, no
party rejects Monday, October 3 as the extended deadline for payment.

                                       8
remitting payment by October 3 made for a timely payment, and thus, the
check it mailed on September 30 was on time regardless of its actual receipt
date (October 5).
      A.    Statutory Construction
      Since we are called on to interpret what “paid within 30 days after the
due date” in section 1281.98 means, we do so according to well-established
principles of statutory construction. “ ‘As in any case involving statutory
interpretation, our fundamental task here is to determine the Legislature’s
intent so as to effectuate the law’s purpose. [Citation.] We begin by
examining the statute’s words, giving them a plain and commonsense
meaning.’ [Citation.] ‘[W]e must first look to the words of the statute
because they are the most reliable indicator of legislative intent. [Citation.]
If the statutory language is clear and unambiguous, the plain meaning of the
statute governs.’ [Citation.] [¶] ‘If, however, the language supports more
than one reasonable construction, we may consider “a variety of extrinsic
aids, including the ostensible objects to be achieved” ’ and the statute’s
legislative history.” (De Leon, supra, 85 Cal.App.5th at p. 750.)
            1.      Plain Meaning
      Here, the statutory language is not clear. While some terms in the
statutory scheme are defined (see § 1280), there is no definition for the term
“paid” in the clause “if the fees or costs required to continue the arbitration
proceeding are not paid within 30 days after the due date.” (§ 1281.98, subd.
(a)(1).) Absent a statutory definition, we may turn to dictionaries to look for
a word’s usual, ordinary meaning. (Wasatch Property Management v. Degrate
(2005) 35 Cal.4th 1111, 1121–1122.) In the case before us, that inquiry does
not lead us to a definitive conclusion. Webster provides a number of
definitions for “pay” (including “to make due return to for services rendered

                                        9
or property delivered,” “to give in return for goods or service,” and “to make a
disposal or transfer of (money)”) and “paid” as “marked by the receipt of pay,”
or “being or having been paid or paid for.” (Merriam-Webster Dict. Online,
(2023) <https://www.merriam-webster.com/dictionary/pay>,
<https://www.merriam-webster.com/dictionary/paid>, [as of September 8,
2023].) Black’s Law Dictionary has no separate entry for “paid” but offers
multiple definitions of “pay”: “1. To give money for a good or service that one
buys . . . . 2. To transfer money that one owes to a person, company, etc. . . .
3. To give (someone) money for the job that he or she does . . .” (Black’s Law
Dict. (11th ed. 2019).)
      Hence, and while we acknowledge that most service providers would
not consider themselves “paid” until they received payment, the term “paid”
is reasonably subject to more than one interpretation. We therefore turn to
extrinsic aids including the statute’s legislative history to reach an
interpretation that best comports with the Legislature’s purpose.
            2.     Legislative History
      In 2019, when section 1281.97 and 1281.98 were added to the CAA with
the passage of Senate Bill No. 707 (SB 707), the Legislature recognized that a
“ ‘company’s failure to pay the fees of an arbitration provider’ ” as required by
an arbitration agreement or applicable law “ ‘hinder[ed] the efficient
resolution of disputes and contravene[d] public policy.’ ” (De Leon, 85
Cal.App.5th at p. 750.) SB 707 aimed to solve a very specific problem –
namely, the “procedural limbo and delay workers and consumers face when
they submit to arbitration, pursuant to a mandatory arbitration agreement,
but the employer fails or refuses to pay their share of the arbitration fees.”
(Assem. Floor Analysis, 3d reading analysis of Sen. Bill No. 707 (2019-2020
Reg. Sess.) as amended May 20, 2019, p. 2; see also Gallo, supra, 81

                                       10
Cal.App.5th at pp. 633–634.) The Legislature noted that when an employer
“fails to properly pay for the arbitration, existing law does not provide the
employee and customer with a clear means to redress their harms. Although
courts have held that such failures to pay for arbitration may be grounds to
invalidate an arbitration agreement, state law does not provide clear
guidance for courts and litigants in the event a drafting party fails to
properly pay to commence arbitration in a timely manner.” (Assem. Comm.
on Judiciary, analysis of Sen. Bill 707 (2019-2020 Reg. Sess.), as amended
May 20, 2019, p. 6.)
      According to the bill’s author: “SB 707 [ensures that] individuals who
have been forced to submit to mandatory arbitration to resolve an
employment or consumer dispute would be provided with procedural options
and remedies . . . when a company stalls or obstructs the arbitration
proceeding by refusing to pay the required fees.” (Sen. Floor Analysis, 3d
reading analysis of Sen. Bill No. 707 (2019-2020 Reg. Sess.) as amended Apr.
30, 2019, p. 6.) Foremost among the remedies provided by SB 707 is that “if
the fees or costs to initiate or continue an arbitration proceeding are not paid
within 30 days after the due date, the drafting party is in material breach of
the arbitration agreement, is in default of the arbitration, and waives its
right to compel arbitration pursuant to existing law.” (Assem. Floor
Analysis, 3d reading analysis of Sen. Bill No. 707 (2019-2020 Reg. Sess.) as
amended May 20, 2019, p. 1.) Analysis of the bill further provided: “In light
of the extreme hardship that needlessly delaying arbitration may cause to
plaintiffs, the material breach and sanction provisions of this bill would seem
to be a strict yet reasonable method to ensure the timely adjudication of
employee and consumer claims that are subject to arbitration.” (Assem. Com.

                                       11
on Judiciary, Analysis of Sen. Bill No. 707 (2019-2020 Reg. Sess.), as
amended May 20, 2019, p. 9.)
      While we identified nothing in the legislative history that addresses
whether payment of arbitration costs “within 30 days after the due date”
means received or remitted within the 30-day grace period, the legislative
purposes in enacting sections 1281.97 and 1281.98 help inform our
construction. One of the Legislature’s main objectives was to deter employers
from strategically withholding payment of arbitration fees so that they could
no longer stymie the ability of employees to assert their legal rights. To do
this, the Legislature established strict breach provisions for nonpayment that
did not involve any inquiry into the intent or good faith of an employer or the
reasons for nonpayment. Any untimely payment constituted a material
breach regardless of the circumstances or status of the arbitration
proceedings. The Legislature further sought to provide employees clear
guidance in the event of untimely payment and to have such breaches strictly
enforced.
      Courts that have considered the legislative history of sections 1281.97
or 1281.98 share these views. The court in De Leon, supra, 85 Cal.App.5th
740, observed that section 1281.98’s “30-day deadline establishes a clear-cut
rule for determining if a [company] is in material breach of an arbitration
agreement.” (De Leon, at p. 755.) The statute’s “legislative history indicates
the California Legislature sought a clear and unambiguous rule for courts to
apply in determining whether late payment of arbitration fees by a drafting
party constituted a material breach of an arbitration agreement.” (Id. at p.
756.) The court in Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073
(Cvejic), observed that “the Legislature sought a clear rule for determining
whether the late payment of a fee by a drafting party constituted a material

                                      12
breach” and further observed that the legislative history and caselaw directed
strict enforcement of section 1281.98. (Cvejic, supra, at p. 1078.) In
construing section 1281.97, the court in Espinoza v. Superior Court (2022) 83
Cal.App.5th 761 (Espinoza), remarked: “[T]he Legislature intended the
statute to be strictly applied whenever a drafting party failed to pay by the
statutory deadline.” (Id. at p. 776.) In short, the courts that have examined
the legislative history agree the Legislature sought to establish a clear and
unambiguous rule for determining a breach based on nonpayment as well as
strict enforcement of the statute.
      Here, the construction offered by petitioner, i.e., payment made and
received within 30 days of the due date, best effectuates this legislative
purpose. (See Beal Bank, SSB v. Arter & Hadden, LLP (2007) 42 Cal.4th
503, 508 [when statutory language is ambiguous, the court adopts the
interpretation that best effectuates the legislative intent].) This construction
provides a clear, bright-line rule for determining compliance with the 30-day
statutory grace period as the arbitrator can readily and definitively
determine whether funds have been received to satisfy any outstanding fees
or costs owed for a pending arbitration. If such fees are not received by the
conclusion of the statutory grace period, an employee may immediately elect
to pursue options for relief.
      The alternative construction endorsed by real parties, i.e., sending
funds within 30 days of the due date satisfies the deadline, risks delay and
uncertainty as to the timeliness of payment given possible delays and the
need to allow for an appropriate period for delivery. It therefore precisely
invites the types of issues the Legislature sought to avoid with a bright-line
rule. Because this construction is more prone to leave an employee with

                                       13
uncertainty and hinder the efficient resolution of a dispute, both of which run
counter to the legislative intent, we decline to adopt it.
             3.    Case Law Supporting Strict Construction
      Our construction is further supported by recent case law in which
courts have strictly enforced the statutory deadlines of 1281.97 and 1281.98.
These cases have uniformly rejected invitations to consider discretionary
factors, e.g., the intent of the employer or prejudice to the employee, in
determining compliance with the statutes or materiality of the breach.
      In Espinoza, supra, 83 Cal.App.5th 761, the appellate court reversed
the trial court’s conclusion that a defendant’s late payment of an arbitration
provider’s invoice was “in ‘substantial[ ] compliance’ with the arbitration
agreement and ‘not in material breach,’ because the delayed payment was
due to ‘ “clerical error,” ’ and the delay did not prejudice plaintiff.” (Id. at p.
775.) The court found the “language of section 1281.97 is unambiguous. . . .
[T]he triggering event is nothing more than nonpayment of fees within the
30-day period—the statute specifies no other required findings, such as
whether the nonpayment was deliberate or inadvertent, or whether the delay
prejudiced the [employee]. The plain language therefore indicates the
Legislature intended the statute to be strictly applied whenever a [company]
failed to pay by the statutory deadline.” (Espinoza, at p. 776.)
      In De Leon, supra, 85 Cal.App.5th 740, the parties agreed the employer
did not pay the outstanding arbitration fees within 30 days after the due date
set by the arbitrator. (Id. at p. 748.) Relying on the plain language of section
1281.98, the trial court concluded that “ ‘a defendant is automatically in
material breach of the arbitration agreement once the defendant fails to pay
the arbitration fees or costs within 30 days of the due date.” (De Leon, at pp.
748–749.) It declined the employer’s request to consider additional factors

                                         14
beyond the late payment, such as whether it caused delay in the proceedings
or otherwise prejudiced the plaintiff, to determine whether the employer
materially breached the agreement. (Ibid.) The appellate court affirmed the
trial court order vacating the earlier order compelling arbitration. (Id. at p.
758.) In doing so, it rejected the employer’s argument that the trial court’s
construction was a “ ‘hyper-technical reading’ of section 1281.98 that failed to
account for whether a late payment caused delay or prejudiced the employee.”
(De Leon, at p. 752.) Finding the language in section 1281.98 “clear and
unambiguous,” the court explained it “establishes a simple bright-line rule
that a [company’s] failure to pay outstanding arbitration fees within 30 days
after the due date results in its material breach of the arbitration
agreement.” (De Leon, at pp. 753, 755 [the statute’s “30-day deadline
establishes a clear-cut rule for determining if a drafting party is in material
breach of an arbitration agreement”].)
      In Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054
(Williams), the trial court granted the plaintiffs’ motion to withdraw from
arbitration because the hospital, which was being sued for elder abuse among
other claims, had not timely paid its share of arbitration fees under section
1281.98. (Williams, at p. 1063.) In affirming the order allowing the plaintiffs
to withdraw, the court acknowledged that the hospital’s “belated payment
was unintentional” and that “the ensuing delay amounted to a few days” but
concluded that “nothing in section 1281.98 as drafted depends on the intent
or good faith of a particular [company] in a specific case. [Citations.] To
further its stated purpose, the Legislature in enacting sections 1281.97 and
1281.98 chose to neither require nor permit an inquiry into the reasons for a
drafting party’s nonpayment.” (Williams, at pp. 1074–1075.)

                                       15
      While none of these cases addresses whether payment of arbitration
costs “within 30 days after the due date” means received or remitted, they
clearly reflect that section 1281.98 has been construed to provide a
straightforward, clear, and unambiguous rule for when the payment
obligation is breached and emphasize the legislative intent for the statute’s
strict enforcement. (See also Gallo, supra, 81 Cal.App.5th at p. 644 [section
1281.97 “statutorily defines a material breach as a matter of law to be failure
to pay anything less than the full amount due by the expiration of the
statutory grace period, rather than leaving materiality as an issue of fact for
the trier of fact to determine”].)
      Our construction and rejection of real parties’ interpretation is also in
line with the general principle that the depositing a check in the mail does
not constitute payment. (See Navrides v. Zurich Ins. Co. (1971) 5 Cal.3d 698,
706 [“the mere giving of a check payable to the agent does not constitute
payment”]; Cornwell v. Bank of America (1990) 224 Cal.App.3d 995, 999
[“ ‘Payment is not effectuated by sending the amount due to the creditor by
mail or other public carrier until the remittance gets into the hands of the
creditor, unless he expressly or by implication directs or consents that
payment be so made, or such mode of payment is according to the usual
course of dealings between the parties, from which the creditor’s assent can
be inferred.’ ”]; Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 439–440
[“ ‘The deposit of a payment check in the mail does not constitute payment.
The borrower assumes the risk that the deposited payment will be delivered
and received by the beneficiary. When a creditor directs a debtor to mail
payment, it is deemed that the payment is made when it is deposited in the

                                       16
mail. Otherwise, the payment is not effective until received by the
creditor.’ ”].)5
              4.   Real Parties’ Counterarguments
       Real parties contend the trial court correctly determined AAA’s
instructions governed the payment of fees and costs they owed because the
Legislature gave the arbitrator the authority to state the date payment is
due. Therefore, AAA’s instruction that October 3 was the last day to remit
payment established both the deadline and that sending payment in the form
of a check by that deadline would constitute timely payment. Real parties
further argue the plain meaning of “remit” is to send or transmit and does
not involve delivery or receipt. None of these arguments are persuasive or
compel a different result.
       First, real parties overstate the arbitration provider’s ability to set
payment deadlines or to dictate the terms of payment. As set forth in section
1281.98(a)(2), “[t]he arbitration provider shall provide an invoice for any fees
and costs required for the arbitration proceeding to continue to all of the
parties to the arbitration. The invoice shall be provided in its entirety, shall
state the full amount owed and the date that payment is due, and shall be
sent to all parties by the same means on the same day. To avoid delay,
absent an express provision in the arbitration agreement stating the number
of days in which the parties to the arbitration must pay any required fees or
costs, the arbitration provider shall issue all invoices to the parties as due

5     Civil Code section 1476, which creates an exception when the creditor
directs payment in a particular manner, provides: “If a creditor, or any one of
two or more joint creditors, at any time directs the debtor to perform his
obligation in a particular manner, the obligation is extinguished by
performance in that manner, even though the creditor does not receive the
benefit of such performance.” (Civ. Code, § 1476.) Real parties do not argue
this provision applies, so we do not consider it.

                                        17
upon receipt. Any extension of time for the due date shall be agreed upon by
all parties.” (§ 1281.98, subd. (a)(2).) The statute directs arbitrators to set
invoices as “due upon receipt” barring agreement by the parties, provides for
an automatic 30-day statutory grace period, and only contemplates
extensions of the due date by agreement of the parties, not by the arbitration
provider. (§ 1281.98, subds. (a)(1)–(2).) Once the due date has been set, there
is no provision in section 1281.98 which contemplates any extension of the
statutory 30-day grace period. Therefore, once AAA set the due date as
September 1 – the day it emailed the relevant invoice to the parties – and
triggered the 30-day grace period, it had no authority to alter the due date
absent the parties’ agreement. When AAA emailed its September 28 courtesy
reminder, it has no authority to adjust the statutory 30-day grace period
either.
      Second, even if the final sentence in AAA’s courtesy reminder noting
that “the last day to remit payment [was] October 3rd” created some
unfortunate confusion as to whether payment had to be received or could
simply be sent by that date, there is no basis for this instruction to have
controlled how payment must be made or to have superseded AAA’s earlier
instructions which clearly notified real parties payment needed to be
“received.” Real parties identify no provision in the statute which allows the
arbitration provider to set terms, including how payment is made, which
alter payment deadlines.6

6
       In any event, real parties’ heavy reliance on the “remit” instruction also
overlooks the explicit text in AAA’s letter of September 1 emphasizing in bold
that “payment must be received 30 days from the date of this letter”
(italics added), and the earlier sentence in the courtesy reminder email
repeating that “payment must be received within 30 days of the due date.”
Across its two communications about the invoice, AAA did not consistently

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      Third, we do not quarrel with real parties’ plain meaning analysis of
the term “remit” and the authorities it relies on construing the term to mean
send. But “remit” is not part of the text of section 1281.98 and does not
control our construction of what the Legislature meant by “paid within 30
days of the due date” in that statute.
      Finally, we understand the payments in Espinoza, De Leon, and
Williams were indisputably late, in contrast to our situation in which real
parties contend their mailed check was timely. Even so, these cases
underscore the need to strictly construe and enforce the terms of section
1281.98 without exception.
                                 DISPOSITION
      Let a peremptory writ of mandate issue commanding respondent in
Doe v. Na Hoku, Inc., et al. (Super. Ct. S.F. City and County, No. CGC-21-
596749), to set aside and vacate its order of December 5, 2022 denying
petitioner’s motion to vacate order compelling arbitration, and to enter a new
and different order granting the motion and addressing the request for
sanctions in petitioner’s motion. All parties shall bear their own costs
associated with this writ proceeding. (Cal. Rules Court, rule 8.493(a).)

use the term “remit” when discussing compliance with the payment deadline.
Further, they cite no authority to support their contention that the remit-by-
October 3 language superseded these instructions simply because it appeared
last.

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                                         _________________________
                                         Petrou, J.

WE CONCUR:

_________________________
Tucher, P.J.

_________________________
Fujisaki, J.

A167105/Doe v. Superior Court of the City and County of San Francisco

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Trial Court:   San Francisco County Superior Court

Trial Judge:   Hon. Curtis Karnow

Counsel:       Alexander Morrison + Fehr, Tracy L. Fehr; Malk Law Firm,
               Michael Malk for Petitioner.

               Lewis Brisbois Bisgaard & Smith, Melissa Daugherty,
               Lann McIntyre, Caroline Chan, and Irene Gharapet for
               Real Parties in Interest.

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