Court Opinion

ID: 6344426
Source: CourtListenerOpinion
Date Created: 2022-05-26 19:02:16.538433+00
Date Added: 2024-06-11T08:50:21.205346
License: Public Domain

Filed 5/26/22 Alvarado v. S.D.S. Industries, Inc. 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         NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

MA IRMA ALVARADO,                                                 B310732

         Plaintiff and Respondent,                                (Los Angeles County
                                                                  Super. Ct. No. 20STCV20856)
         v.

S.D.S. INDUSTRIES, INC. et al.,

         Defendants and Appellants.

      APPEAL from an order of the Superior Court of
Los Angeles County, Jon R. Takasugi, Judge. Affirmed.
      Epstein Becker & Green, Richard J. Frey, Carlos A.
Becerra, Alice Kwak, for Defendants and Appellants.
      Pairavi Law, Edwin Pairavi, Joshua M. Mohrsaz, for
Plaintiff and Respondent.
                         INTRODUCTION
       Plaintiff Ma Irma Alvarado sued her employers,
defendants S.D.S. Industries, Inc. and Timely Industries, for
wrongful termination and other claims. Defendants moved to
compel arbitration, presenting an arbitration agreement in
English that Alvarado signed on the day of her termination.
Alvarado opposed the motion, stating in a declaration that she
spoke and read only Spanish, and that a human resources
employee had misrepresented the nature of the arbitration
agreement to her before she signed it. With their reply,
defendants submitted an opposing declaration stating that the
arbitration agreement was accurately described to Alvarado
before she signed it. The trial court held that the arbitration
agreement was void due to fraud in the execution and denied
defendants’ motion.
      We affirm. Substantial evidence supports the trial court’s
findings, and the trial court did not abuse its discretion in
denying defendants’ request for an evidentiary hearing.
      FACTUAL AND PROCEDURAL BACKGROUND
A.    Complaint
      In June 2020, Alvarado filed a complaint asserting seven
causes of action against defendants relating to age
discrimination, harassment, retaliation, and wrongful
termination. She alleged she was employed by defendants from
February 2015 to June 2018, and she was a “loyal and hard-
working employee who was abruptly fired . . . after reporting the
on-going and relentless harassment she suffered . . . due to her
age, which was fifty-two (52) at the time of her termination.”
Alvarado alleged that another employee repeatedly harassed and
threatened her, and although Alvarado complained to her

                                2
supervisor, her concerns were dismissed. Alvarado alleged she
“can only read and write in Spanish,” but the supervisor
nevertheless required her to sign a write-up in English that was
“in direct retaliation for her numerous complaint[s] of
discrimination.” Alvarado alleged she was fired on June 18, 2018
for continuing to complain that the other employee was harassing
her.
B.     Motion to compel arbitration
       Defendants filed a motion to compel arbitration and to stay
the matter. (Code Civ. Proc., §§ 1280, 1281.4.) They asserted
that on the day of her termination, Alvarado signed an
arbitration agreement that “mutually obligates [Alvarado and
defendants] to arbitrate any claims against the other arising out
of the employment relationship.” The agreement stated, in part,
“In consideration of Employee’s continuing employment with
Employer, Employer and Employee agree to final and binding
arbitration of any and all claims or disputes between Employer
and Employee, whether or not relating to the employment
relationship,” including common law disputes, “state and/or
federal discrimination claims, [and] claims for wrongful
termination.”
       Defendants asserted that the agreement was governed by
the Federal Arbitration Act (FAA, 9 U.S.C. § 1, et seq.), as well as
the rules and procedures of the American Arbitration Association
(AAA).1 They contended that under these rules the question of

      1The arbitration agreement states in one section that “the
Federal Arbitration Act governs the interpretation and
enforcement of this Agreement.” But in another section, under
the heading “Law Governing Agreement,” it states that the
“Agreement will be governed and construed in accordance with

                                 3
arbitrability, as well as any objections as to the scope or
admissibility of the agreement, must be decided by arbitrator.
Defendants further asserted that the arbitration agreement was
neither procedurally nor substantively unconscionable.
C.     Opposition
       Alvarado opposed the motion to compel arbitration,
asserting that the arbitration agreement was unenforceable. She
contended that she was induced to sign the arbitration
agreement through fraud. Alvarado stated in her opposition and
a declaration2 that she was unable to read, write, or speak
English. She stated that throughout her employment with
defendants, documents were either presented to her in Spanish
or translated for her by an employee, such as Obdulia Michel
Pelayo in human resources. Alvarado said that on the day she
was terminated, June 18, 2018, Pelayo told her she was being
terminated and gave her a termination letter. Pelayo also told
Alvarado she was required to sign the arbitration agreement,
which was written in English. Alvarado stated in her
declaration, “I asked if there was a Spanish version of the
document because I could not understand it. Ms. Pelayo told me
there was no Spanish version, and that it did not matter because
I had to sign the document anyway. [¶] I asked what the
document said, and Ms. Pelayo told me it was just explaining
that I would be receiving my final pay and vacation hours.”
Alvarado also stated, “Ms. Pelayo further told me I needed to sign
the document on that day in order to receive my final pay and

the laws of the State of California.” This discrepancy is not
important for purposes of the appeal.
      2 Alvarado’s declaration was presented in Spanish with an

English translation.

                                4
pay for my vacation hours. [¶] I did not have an opportunity to
ask any other questions.” Alvarado stated that no one explained
the arbitration agreement to her, she never received a copy in
Spanish, and she did not understand the nature of the arbitration
agreement when she signed it.
      Alvarado therefore asserted in her opposition that the
arbitration agreement was procured through fraud and was
unenforceable. She also argued that the arbitration agreement
did not constitute a contract because it lacked consideration. She
further asserted that the arbitration agreement was procedurally
and substantively unconscionable, and the court, rather than the
arbitrator, should determine arbitrability.
D.    Reply
      In their reply, defendants asserted that the arbitration
agreement was enforceable. They submitted a declaration by
Pelayo, who stated that she gave Alvarado the documents in
English, and “provided Alvarado with a description of each
document in Spanish, including the Arbitration Agreement. I
went through each section of the Arbitration Agreement and
provided [Alvarado] with an oral translation in Spanish. I
specifically recall informing [Alvarado] that by Signing the
Arbitration Agreement, she would be waiving her right to pursue
legal action against Defendants in court.” Pelayo also stated, “At
no point during the discussion did I inform Alvarado that she
must sign the Arbitration Agreement in order to receive her final
pay. In fact, I informed Alvarado of the exact opposite—that
signing the Agreement was entirely voluntary and optional.”
E.    Court ruling
      There was no court reporter at the hearing on the motion to
compel arbitration. Defendants later filed a proposed settled

                                5
statement, which the trial court certified.3 According to the
settled statement, at the hearing the court “focused on the issue
of the timing of the presentation and execution of the Arbitration
Agreement (i.e. on the date of Plaintiff’s termination).” The
settled statement said that “Defendants’ counsel requested an
evidentiary hearing” to allow the court to assess Alvarado’s and
Pelayo’s credibility. The court denied the request. Defendants’
counsel also asked to file additional briefing about the timing of
the execution of the arbitration agreement, but the court denied
that request as well. The court took the matter under
submission.
       The court later issued a written ruling denying defendants’
motion. The court stated that defendants, as the moving party,
had the burden to prove the existence of an arbitration
agreement, and they had met that burden. The court also found
that Alvarado proved a defense to the enforcement of the
agreement, stating, “The Court finds the arbitration agreement
to be void as a result of fraud in the execution.” The court stated
that Alvarado’s limited ability to read and understand English,
and her statements that no one provided a Spanish translation of

      3 A settled statement is a “record of the oral proceedings in
the superior court” when the “designated oral proceedings in the
superior court were not reported by a court reporter.” (Cal. Rules
of Court, rule 8.137(b)(1)(A).) An appellant’s proposed settled
statement must include “a statement of the points the appellant
is raising on appeal,” and “a condensed narrative of the oral
proceedings.” (Id., rule 8.137(d).) A respondent may propose
amendments to the proposed settled statement (id., rule
8.137(e)(1)), and after addressing any disagreements about the
content, the trial court certifies the settled statement for use on
appeal. (Id., rule 8.137(h)).

                                 6
the arbitration agreement, “suggests that she did not have a
‘reasonable opportunity’ to discover the true nature of the
writing.”
       The court further stated, “[Alvarado] had been employed by
Defendants for three years, and had come to rely on the benefits
of that employment. While Defendants presumably could have
approached [Alvarado] at any time during her employment, they
chose to present [Alvarado] with an arbitration agreement at a
moment of acute economic pressure, i.e., termination. Faced with
the economic uncertainty that termination brings, [Alvarado’s]
access to her final pay and vacation payout was then expressly
made conditional on her willingness to sign the arbitration
agreement.” The court stated that the information in Pelayo’s
declaration “does not change the undisputed fact that [Alvarado]
was presented with the arbitration agreement on the same day
that she was terminated, and the only arbitration agreement
attached is an English language version.”
       The court therefore found that “the arbitration agreement
is void due to fraud in the execution.” And because the entire
agreement was void, the provision that the arbitrator would
determine arbitrability was “nonbinding.”
       Defendants timely appealed.
                           DISCUSSION
       Defendants contend that Alvarado was not fraudulently
induced into signing the arbitration agreement, and therefore the
court’s order should be reversed. They also assert that the court
erred in denying defendants’ request for an evidentiary hearing,
the arbitrator should decide any issues regarding enforceability
of the arbitration agreement, and the arbitration agreement is

                                7
not unconscionable. Alvarado asserts that the trial court’s ruling
was correct. We find no error and affirm.
      A court shall order arbitration “if it determines that an
agreement to arbitrate the controversy exists.” (Code Civ. Proc.,
§ 1281.2.) Under the FAA and California law, an arbitration
agreement is valid, irrevocable, and enforceable, save upon such
grounds as exist for the revocation of any contract. (9 U.S.C. § 2;
Code Civ. Proc., § 1281.) “The petitioner bears the burden of
proving the existence of a valid arbitration agreement by the
preponderance of the evidence, and a party opposing the petition
bears the burden of proving by a preponderance of the evidence
any fact necessary to its defense.” (Engalla v. Permanente
Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
      When a court’s order denying a motion to compel
arbitration is based on a decision of fact, we review the order
under a substantial evidence standard. (Avila v. Southern
California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 839-
840; see also Bannister v. Marinidence Opco, LLC (2021) 64
Cal.App.5th 541, 544.) “[I]f there are material facts in dispute,
we must accept the trial court’s resolution of such disputed facts
when supported by substantial evidence. [Citation.] We also
must presume the court found every fact and drew every
permissible inference necessary to support its judgment or order,
and we must defer to the court’s determination of credibility of
the witnesses and weight of the evidence in resolving such
disputed facts.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 12.)
A.    Fraud in the execution
      The trial court found that the arbitration agreement was
void due to fraud in the execution. Fraud in the execution of a
contract “‘“goes to the inception or execution of the agreement, so

                                 8
that the promisor is deceived as to the nature of his act, and
actually does not know what he is signing, or does not intend to
enter into a contract at all, mutual assent is lacking, and [the
contract] is void.”’” (Rosenthal v. Great Western Fin. Securities
Corp. (1996) 14 Cal.4th 394, 415 (Rosenthal); see also Najarro v.
Superior Court (2021) 70 Cal.App.5th 871, 885-886 (Najarro).)
        To establish fraud in the execution, a plaintiff must show
that his or her signature on a contract “is negated by fraud so
fundamental” that the plaintiff was “deceived as to the basic
character of the documents” signed, and the plaintiff “had no
reasonable opportunity to learn the truth.” (Rosenthal, supra, 14
Cal.4th at p. 425.) In Rosenthal, for example, 24 plaintiffs
invested in mutual funds with defendant Great Western
Financial Securities Corporation (GWFSC). Most plaintiffs
mistakenly believed the GWFSC employees worked for Great
Western Bank (GWB), with which the plaintiffs had an existing
banking relationship. One plaintiff, Greco, stated in a
declaration that she was “an 81-year-old Italian immigrant, who
speaks ‘only a few words of English’ and ‘cannot read English at
all.’” (Id. at p. 427.) GWFSC representatives convinced Greco
and her daughter, Kasbarian (another plaintiff with limited
English proficiency), to sign documents without telling the
plaintiffs that they were agreeing to arbitration or giving up any
rights. (Id. at pp. 427-428.)
        The Supreme Court stated that the two plaintiffs’
“declarations, if believed (and interpreted, where ambiguous or
self-contradictory, in plaintiffs’ favor), would establish facts
sufficient to show reasonable reliance as an element of fraud in
the execution of the client agreements. In light of plaintiffs’ prior
relationship with GWB, which they were led to believe was also

                                  9
the employer of [the GWFSC representatives], their limited
ability to understand English, and [GWFSC’s] representations
that their oral recitals accurately reflected the terms of the
agreements, plaintiffs would not have been negligent in relying
on the GWFSC representatives instead of reading the
agreements themselves.” (Rosenthal, supra, 14 Cal.4th at p.
428.) “Under these circumstances, we conclude, the alleged fraud
of GWFSC's representatives, if true, would have deprived Greco
and Kasbarian of a reasonable opportunity to learn the character
and essential terms of the documents they signed. (Rest.2d
Contracts, § 163.)” (Ibid.) Because the trial court did not
determine factual disputes in the case, however, the Supreme
Court remanded the matter.
       Similarly, in Najarro, supra, 70 Cal.App.5th 871, eight
employees sued their employer, and after the employer moved to
compel arbitration, the employees contended that the defendant
used coercive tactics to induce the employees to sign the
arbitration agreements. (Id. at p. 878.) One plaintiff, Serrano,
only spoke Spanish; her ability to read Spanish was limited and
she could not speak or read English. (Id. at p. 887.) A
representative for the employer had Serrano sign documents
without telling her what they were, saying they were “nothing
important.” (Ibid.) The Court of Appeal stated, “Given Serrano’s
inability to read either Spanish or English, the fact she was told
that her arbitration agreement and other agreements were
unimportant, statements pressuring her to sign (‘do you want to
work or not?’), a lack of an explanation as to what she was
signing despite her professed inability to understand, and an
omission of any factual dispute as to these issues, we conclude

                               10
that Serrano has adequately established fraud in the execution.”
(Ibid.)
        Here, the facts follow a similar pattern. Alvarado spoke
and read only Spanish, but the arbitration agreement was
presented to her in English while she was in the process of being
terminated. Alvarado stated that she did not know what the
document was, so she asked Pelayo, whom Alvarado had relied
upon in the past to translate documents for her. Pelayo told
Alvarado that the document only explained that she would be
receiving her final paycheck and vacation pay, and if she did not
sign the document, she would not receive her final paycheck or
vacation pay. Alvarado stated that she relied on Pelayo’s
statement and signed the document. This evidence was sufficient
to show that Alvarado was deceived as to the nature of her act,
and did not know what she was signing. (Rosenthal, supra, 14
Cal.4th at p. 415; Najarro, supra, 70 Cal.App.5th at pp. 885-886.)
        Defendants assert that Alvarado is bound by the agreement
even though she did not read it before signing it. They cite
Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686
(Ramos) for the proposition that “‘“one who accepts or signs an
instrument, which on its face is a contract, is deemed to assent to
all its terms, and cannot escape liability on the ground that he
has not read it. If he cannot read, he should have it read or
explained to him.”’” Defendants also cite Rosenthal, in which the
Supreme Court stated, “one party’s unreasonable reliance on the
other’s misrepresentations, resulting in a failure to read a
written agreement before signing it, is an insufficient basis,
under the doctrine of fraud in the execution, for permitting that
party to avoid an arbitration agreement contained in the
contract.” (Rosenthal, supra, 14 Cal.4th at p. 423.)

                                11
       Indeed, Rosenthal stated that “California law, like the
Restatement [Second of Contracts], requires that the plaintiff, in
failing to acquaint himself or herself with the contents of a
written agreement before signing it, not have acted in an
objectively unreasonable manner. One party’s
misrepresentations as to the nature or character of the writing do
not negate the other party’s apparent manifestation of assent, if
the second party had ‘reasonable opportunity to know of the
character or essential terms of the proposed contract.’ (Rest.2d
Contracts, § 163.)” (Rosenthal, supra, 14 Cal.4th at p. 423.)
Relying on this principle, in Ramos the Court of Appeal held that
fraud in the execution occurred when a car buyer reasonably
relied on an inaccurate Spanish translation of an English
contract. (Ramos, supra, 242 Cal.App.4th at p. 690.)
       According to Alvarado’s declaration, she had no opportunity
to discover the character of the document—she asked Pelayo
what it was, because Pelayo had translated documents for
Alvarado in the past. Pelayo misrepresented the nature of the
document, and told Alvarado she had to sign it in order to receive
her final pay. Substantial evidence therefore supported the trial
court’s finding that Alvarado’s reliance on Pelayo’s statements
was not unreasonable.
       Defendants further assert that they presented evidence to
contradict Alvarado’s version of events. However, “under
California law, the testimony of a single witness, even a party,
may alone constitute substantial evidence.” (Chase v. Wizmann
(2021) 71 Cal.App.5th 244, 257.) Moreover, we do not disturb the
court’s factual determinations. “Even though contrary findings
could have been made, an appellate court should defer to the
factual determinations made by the trial court when the evidence

                               12
is in conflict. This is true whether the trial court’s ruling is based
on oral testimony or declarations.” (Shamblin v. Brattain (1988)
44 Cal.3d 474, 479.)4
B.     No evidentiary hearing was required
       At the hearing on the motion, the court denied defendants’
request to hold an evidentiary hearing. Defendants assert that
the court abused its discretion by doing so. Notably, they do not
contend that any new or different evidence would have been
presented at such a hearing. We find no abuse of discretion.
       A petition to compel arbitration “shall be heard in a
summary way in the manner and upon the notice provided by law
for the making and hearing of motions.” (Code Civ. Proc.,
§ 1290.2.) Thus, “the facts are to be proven by affidavit or
declaration and documentary evidence, with oral testimony taken
only in the court’s discretion.” (Rosenthal, supra, 14 Cal.4th at
pp. 413-414.) The Supreme Court in Rosenthal rejected the

      4 In their reply brief, defendants argue that Alvarado
“concedes” certain issues as defendants presented them in the
settled statement, and they assert that Alvarado
“mischaracteriz[es] evidence in the Settled Statement,”
“introduce[es] evidence not included in the Settled Statement,”
and “improperly relies on evidence outside of the Settled
Statement.” These arguments misapprehend both the nature of
appellate review and the purpose of a settled statement. The
burden is on defendants, as the appellants, to demonstrate that
the trial court erred (Jameson v. Desta (2018) 5 Cal.5th 594, 608-
609); Alvarado does not have a burden to disprove defendants’
contentions of error. In addition, a settled statement is a
summary of oral proceedings in the trial court (Cal. Rules of
Court, rule 8.137(b)(1)(A)), and is only one part of an appellate
record. A respondent is not barred from relying on the entire
record in contending that the trial court’s ruling was correct.

                                 13
contention that a “summary bench trial” must be held where the
evidence relating to an arbitration agreement is in conflict,
stating, “There is simply no authority for the proposition that a
trial court necessarily abuses its discretion, in a motion
proceeding, by resolving evidentiary conflicts without hearing
live testimony.” (Id. at p. 414.) The court continued,
“Nonetheless, we agree that where—as is common with
allegations of fraud such as are made here—the enforceability of
an arbitration clause may depend upon which of two sharply
conflicting factual accounts is to be believed, the better course
would normally be for the trial court to hear oral testimony and
allow the parties the opportunity for cross-examination. As the
trial court here remarked, ‘it’s pretty difficult to weigh credibility
without seeing the witnesses.’” (Rosenthal, supra, 14 Cal.4th at p.
414.)
       Here, although some facts were disputed, the issues were
relatively simple. The court relied on the undisputed evidence
before it, noting, for example, that even though Alvarado had
been employed with defendants for three years, they waited to
present her with an arbitration agreement (in a language she
could not speak or read) until she was in the process of being
terminated. The parties do not agree about how the arbitration
agreement was explained to Alvarado, in that Alvarado stated
that Pelayo misrepresented the nature of the document to her,
and Pelayo stated that she accurately represented the nature of
the document. However, defendants do not suggest that any
additional or different evidence would have been presented at an
evidentiary hearing. The court acted within its discretion in
determining that the declarations provided sufficient information

                                 14
to determine the issues, and additional testimony on the matter
was unnecessary.
       Thus, this case is different than Ashburn v. AIG Financial
Advisors, Inc. (2015) 234 Cal.App.4th 79 (Ashburn), which
defendants cite. There, the trial court granted the defendants’
petition to compel arbitration without holding an evidentiary
hearing. The Court of Appeal reversed, stating, “there was
significant dispute about what appellants signed, how they came
to sign it, and what they signed said—not to mention extensive
evidence of the significant relationship [one defendant] had with
each appellant before they signed anything,” and “the parties do
not even agree as to what the pertinent documents are even
called.” (Id. at p. 98.) The court held that the trial court should
have conducted an evidentiary hearing, stating, “In light of the
record here, we do not understand how the trial court could have
made such a finding without an evidentiary hearing.” (Id. at p.
95.)
       Ashburn relied on Hotels Nevada v. L.A. Pacific Center, Inc.
(2006) 144 Cal.App.4th 754 (Hotels Nevada), in which the trial
court denied the defendant’s motion to compel arbitration. The
trial court stated that a hearing eventually would be necessary to
address the disputed facts, but it denied the motion based on
allegations of fraud asserted in the pleadings instead of receiving
evidence on the matter. (Id. at pp. 760-761.) The Court of Appeal
reversed, stating that the trial court erred when it “denied
appellant’s motion to compel arbitration without the benefit of
any evidence. Rather, it relied on the allegations contained in
Hotels Nevada’s unverified complaint in declining to find a valid
and enforceable agreement to arbitrate. . . . Although the trial
court appropriately foresaw that the issues raised by the

                                15
complaint ‘may require something in the nature of a hearing or
trial in this court,’ it erred by denying the motion to compel
arbitration on the basis of the complaint’s allegations instead of a
factual determination made after such a hearing.” (Id. at pp.
762-763.)
       Here, the issues were not as complicated as those in
Ashburn or Hotels Nevada, and unlike Hotels Nevada, the trial
court made an appropriate factual finding. As Rosenthal stated,
often the “better course” is to hold an evidentiary hearing in cases
in which potential fraud is at issue. However, the evidence
presented on the relatively straightforward issues here was
sufficient to allow the court to determine that a decision could be
made without additional testimony. We find no abuse of
discretion.
C.     The court properly decided enforceability
       Defendants further contend that the issue of arbitrability
should have been decided by the arbitrator, because under AAA
rules the arbitrator has the power to decide his or her own
jurisdiction. However, “claims of fraud in the execution of the
entire agreement are not arbitrable under either state or federal
law. If the entire contract is void ab initio because of fraud, the
parties have not agreed to arbitrate any controversy,” and it is
appropriate for the trial court to determine arbitrability.
(Rosenthal, supra, 14 Cal.4th at p. 416; see also Hotels Nevada,
supra, 144 Cal.App.4th at pp. 763-764 [where “the entire contract
is void at its inception because of fraud, then the parties have not
agreed to anything, including the arbitration of any
controversy”]; Mendoza v. Trans Valley Transport (2022) 75
Cal.App.5th 748, 774 [same].) Here, because Alvarado alleged

                                16
fraud in the execution of the contract, the trial court did not err
in determining arbitrability.5
                          DISPOSITION
      The court’s order is affirmed. Respondent is entitled to
costs on appeal.
  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                            COLLINS, J.

We concur:

WILLHITE, ACTING P.J.

CURREY, J.

      5 Because we affirm the court’s order, we do not address the
parties’ alternative arguments regarding unconscionability of the
arbitration agreement.

                                 17