Court Opinion

ID: 4691915
Source: CourtListenerOpinion
Date Created: 2021-06-01 20:05:12.690059+00
Date Added: 2024-06-11T08:05:12.760224
License: Public Domain

Filed 6/1/21 Salgado v. Carrows Restaurants CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

MAUREEN SALGADO,                                                 2d Civ. B304799
                                                             (Super. Ct. No. 56-2016-
     Plaintiff and Respondent,                               00489342-CU-WT-VTA)
                                                                (Ventura County)
v.

CARROWS RESTAURANTS,
INC., et al.,

     Defendants and Appellants.

      Defendants Carrows Restaurants, Inc. and Catalina
Restaurant Group, Inc. (sometimes collectively “Carrows”) appeal
an order of the superior court that found an arbitration
agreement signed by plaintiff Maureen Salgado is not
enforceable. The court found procedural and significant
unconscionability in the arbitration agreement. We affirm.
                              FACTS
      Salgado began working at Carrows Restaurant in 1984. On
November 22, 2016, she filed a lawsuit in the Ventura County
Superior Court alleging employment discrimination and violation
of civil rights against Food Management Partners, doing business
as Carrows Restaurant.
       On April 18, 2017, Salgado amended her complaint to add
Carrows Restaurants, Inc. and Catalina Restaurant Group, Inc.
as defendants.
       On September 5, 2017, Carrows filed a motion to compel
arbitration. The arbitration agreement attached to the motion
indicated that Salgado signed the agreement on December 7,
2016.
       Salgado opposed the motion on the ground that her lawsuit
was filed before she signed the arbitration agreement. She
claimed the agreement could not be applied retroactively and it
was procedurally and substantively unconscionable.
       Carrows claimed that it did not know of the existence of
Salgado’s lawsuit when the arbitration agreement was signed
and that Salgado voluntarily signed it.
       The trial court denied the motion. It did not rule on the
unconscionability issue. The court said, “Defendants have failed
to demonstrate that the arbitration agreement applies to a suit
that was filed prior to its signature.”
       Carrows appealed and we reversed. We held that an
arbitration agreement could apply to a lawsuit that was pending
prior to the signing of the arbitration agreement. (Salgado v.
Carrows Restaurants, Inc. (2019) 33 Cal.App.5th 356, 361-362.)
       We also noted that Salgado’s attorney filed a declaration in
the trial court stating that “he was representing Salgado in this
lawsuit.” He said, “It had been filed and served on Carrows’s
‘restaurant manager’ before the arbitration agreement was
signed. He did not have a chance to consult with Salgado before
she signed it, and he did not know she had signed it until “ ‘late

                                 2
Spring 2017.’ ” (Salgado v. Carrows Restaurants, Inc., supra, 33
Cal.App.5th at p. 363.) We said, “Whether these or other facts
support a claim that the arbitration agreement is unenforceable
shall be decided by the trial court. (Ibid.)
       On remand, the parties filed additional declarations. In
her declaration, Salgado said, “[P]rior to December 7, 2016, my
manager, Alonzo Martin, informed me that he was aware of the
lawsuit I had filed against Carrows and that it had no merit.”
“On December 7, 2016, my manager Alonzo Martin, confronted
me while at work, and gave me a multi-page document with what
I perceived to be small type of font. At the time I was presented
with this document, it was nearing the end of my shift, and was
told by Mr. Martin that I needed to sign it before I went home.
At that time, Mr. Martin did not tell me what it concerned nor
anything about it, except that I had to sign it before I went home
or not bother returning to work. . . . At no such time did
Defendants ever provide me with the opportunity to read, review
or discuss the ‘document’ with anyone. I feared my job was in
jeopardy, thus signed it without knowing what I was signing in
effort to save my job.” (Italics added.)
       Salgado declared that she “had no way of knowing” that the
arbitration agreement “required that [she] remit this current
lawsuit into arbitration in the San Diego area and that [she]
would have to foot half the fees/costs for such, which [she] simply
cannot afford. . . . [¶] [She has] lived most of [her] life in Ventura
County and [has] zero ties to [the] San Diego area.”
       Carrows submitted a declaration of Peter Donbavand who
declared, “Defendants did not know of the lawsuit when [Salgado]
signed the Arbitration Agreement. [¶] . . . Defendants first
learned of the lawsuit in January 2017 . . . . [¶] . . . The

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Arbitration Agreement was part of a company-wide program to
roll out an updated Team Member Handbook, which had been
months in the making.”
       The trial court found Salgado’s declaration was “credible.”
It ruled the arbitration agreement “is not enforceable.” “The
procedural unconscionability associated with the arbitration
agreement is considerable. The substantive unconscionability
associated with the arbitration agreement is also significant.”
       The trial court said: 1) a venue provision in the agreement
requiring the arbitration to take place in San Diego was
“decidedly one-sided”; 2) Carrows “knew or should have known
that [Salgado] was represented by counsel and her lawsuit was
still pending when the Carrows’ manager specifically named in
her lawsuit made her sign the arbitration agreement”; 3) “having
been put on notice that [Salgado] was represented by counsel
regarding a pending lawsuit, it is unconscionable to circumvent
said counsel, and without said counsel’s knowledge, extract a
waiver of [Salgado’s] right to litigate that dispute in court”; and
4) “[c]onditioning [Salgado’s] continued employment on the
signing of a pre-printed Arbitration Agreement is sufficient
enough to establish that the Arbitration Agreement is a contract
of adhesion, because it indicates that [Salgado] had no
meaningful opportunity to negotiate the terms . . . and was not
given a meaningful choice as to whether to sign the Agreement.”

                                 4
                            DISCUSSION
             Is the Arbitration Agreement Enforceable?
       Carrows contends the trial court erred in denying the
motion to compel arbitration because a venue clause in the
arbitration agreement was a “mutual venue provision” and the
agreement was not substantively unconscionable.
       “Courts may refuse to enforce unconscionable contracts and
this doctrine applies to arbitration agreements.” (Salgado v.
Carrows Restaurants, Inc., supra, 33 Cal.App.5th at p. 362.)
“ ‘ “Unconscionability has procedural and substantive aspects.
[Citation.] ‘Both procedural and substantive unconscionability
must be present before a court can refuse to enforce an
arbitration provision based on unconscionability . . . .’ ” ’ ” (Ibid.)
“Substantive unconscionability relates to the fairness of the
agreement’s terms. Procedural unconscionability involves the
‘ “circumstances of contract negotiation and formation.” ’ ” (Ibid.)
       Courts use a sliding scale. “In other words, the more
substantively oppressive the contract term, the less evidence of
procedural unconscionability is required to come to the conclusion
that the term is unenforceable, and vice versa.” (Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
114.) “In addition, ‘the petition to compel arbitration is not to be
granted when there are grounds for rescinding the agreement.’ ”
(Salgado v. Carrows Restaurants, Inc., supra, 33 Cal.App.5th at
p. 362.)
                         The Venue Provision
        The venue provision of the agreement provides, “All claims
brought under this agreement shall be held in San Diego,
California . . . .” An agreement may be substantively
unconscionable where its terms are “overly harsh” or “one-sided.”

                                  5
(Armendariz v. Foundation Health Psychcare Services, Inc.,
supra, 24 Cal.4th at p. 114.) “ ‘Unconscionability is ultimately a
question of law for the court.’ ” (Gutierrez v. Autowest, Inc. (2003)
114 Cal.App.4th 77, 89.) “However, numerous factual issues may
bear on that question.” (Ibid.)
       Carrows contends this venue provision is not one-sided
because it applies equally to the employer and employee.
       But Carrows’s attorneys have their office in San Diego.
This venue favors Carrows. Salgado lives in Ventura County.
Her counsel has an office in Ventura. The Carrows restaurant at
issue in this case is in Ventura. Salgado declared that she had
“zero ties to [the] San Diego area.” She claimed financial
hardship for litigating in San Diego. Before the arbitration
agreement, Salgado had already filed this action in the Ventura
County Superior Court. In her declaration, she said, “I was never
given [the] opportunity to read [the agreement]. I had no way of
knowing that it required that I remit this current lawsuit into
arbitration in the San Diego area and that I would have to foot
half the fees/costs for such, which I simply cannot afford.”
       A court may find a selected venue for arbitration that is
favorable only for one side is “ ‘less as a forum for neutral dispute
resolution and more as a means of maximizing [the stronger
party’s] advantage.’ ” (Magno v. The College Network, Inc. (2016)
1 Cal.App.5th 277, 289.) A relevant factor is whether a provision
results in limiting a party’s ability to participate in the
arbitration process. (Gutierrez v. Autowest, Inc., supra, 114
Cal.App.4th at p. 90.) Or whether it would require an
expenditure of funds that the weaker party would not have the
ability to pay. (Id. at pp. 90-91.) A provision may appear facially
mutual yet be substantively unconscionable in practical

                                 6
application by giving one party a one-sided advantage to
maximize its position over the other. (Little v. Auto Stiegler, Inc.
(2003) 29 Cal.4th 1064, 1073.)
       The trial court found, “The requiring of all claims to be
made in San Diego is decidedly one-sided. [Salgado] and her
counsel are required to expend their time and resources to
litigate the matter in a County which does not have any clear
connection to the dispute other than the fact that [Carrows’s]
attorneys [appear] to have their office there.” (Italics added.)
Salgado “has worked most of her adult life for Defendant’s
restaurants in Ventura County. [Salgado], an elderly woman
who works for minimum wage and tips, would be compelled to
travel to San Diego to arbitrate this matter.” (Italics added.)
The trial court could reasonably find this provision denied
Salgado reasonable access to litigate her claims and provided an
unfair advantage for Carrows.
       Moreover, “California favors contractual forum selection
clauses so long as they are entered into freely and
voluntarily . . . .” (America Online, Inc. v. Superior Court (2001)
90 Cal.App.4th 1, 11, italics added.) The trial court’s findings
show this provision was not “entered into freely and voluntarily.”
It was also not an ordinary venue provision. The court’s findings
show it was a device to override Salgado’s and her counsel’s
choice to litigate in Ventura County, achieved without the
knowledge or consent of Salgado’s attorney.
       Carrows contends the trial court erred because if the venue
provision was invalid, the court was required to sever it from the
agreement, and it could not invalidate the entire arbitration
agreement. “[C]ourts may invalidate an arbitration agreement if
it contains provisions that are unconscionable or contrary to

                                 7
public policy.” (Baxter v. Genworth North America Corp. (2017)
16 Cal.App.5th 713, 721.) They may sever an invalid provision to
save an otherwise valid agreement.
        But a decision whether to sever is a matter within the trial
court’s sound discretion. (Magno v. The College Network, Inc.,
supra, 1 Cal.App.5th at p. 292.) Courts will not sever a provision
to save the agreement where the bad provision “permeates the
whole contract” or where the underling purpose of the agreement
is unlawful. (Abramson v. Juniper Networks, Inc. (2004) 115
Cal.App.4th 638, 659.) Severance is not required where the
“interests of justice” would not be furthered by severance.
(Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 254.) Nor
is it required where it would result in the court having to condone
improper conduct of the drafter of the agreement that violates
public policy. (Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th
at p. 93.) Or where there is no way “to remove the
unconscionable taint from the agreement.” (Baxter v. Genworth
North America Corp., supra, 16 Cal.App.5th at p. 738.)
        Carrows contends that if the venue provision is severed,
enforcement of the remainder of the arbitration agreement will
not result in unequal treatment for Carrows or Salgado. We
disagree.
                  Other Provisions of the Agreement
        Carrows suggests that our “de novo” review of the
agreement will not disclose another provision that will be
enforced unequally. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th
702, 711 [appellate court may review the agreement on de novo
review].) Carrows claims the only portion of the agreement the
trial court found to be invalid was the venue provision.

                                 8
       Salgado disagrees and contends the trial court’s findings on
unconscionability are not confined solely to the venue provision.
She notes that the court also found the agreement invalidly
“extract[s] a waiver” of her “right to litigate” in “a pending
lawsuit.” This essentially goes to the portions of the agreement
that require the parties to forfeit their right to a trial in pending
litigation “in a lawsuit,” in “a court of law,” and to “give up”
rights to “trial by jury.” The agreement has a single exclusion
and does not apply to the right to participate in “class[] action
lawsuits which may have been filed against the Company and are
pending at the time this agreement is executed.” But this means
it applies to non-class action lawsuits, such as Salgado’s, “which
may have been filed against the Company and are pending at the
time this agreement is executed.” (Italics added.) The
enforcement of these provisions is one-sided in favor of Carrows,
because Carrows was not required to “give up” a right to a trial in
“pending” litigation. Carrows did not have pending litigation
against Salgado. Only Salgado had pending litigation. Carrows
did not forfeit a right to a jury trial in a pending case, but
Salgado was required to forfeit that right in her pending lawsuit.
       Lack of mutuality may be “ ‘manifested as much by what
the agreement does not provide as by what it does.’ ” (Carmona
v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74,
86.) There is substantive unfairness where the agreement
requires the employee to give up actually existing rights while
the employer only facially surrenders hypothetical ones.
(Armendariz v. Foundation Health Psychcare Services, Inc.,
supra, 24 Cal.4th at p. 114; see also OTO, L.L.C. v. Kho (2019) 8
Cal.5th 111, 136-137.) Here the enforcement of these provisions,

                                 9
which constitutes a substantial portion of the agreement, results
in detriment to Salgado, and to the exclusive benefit of Carrows.
       Multiple provisions of the agreement were unconscionable,
but even “a single unconscionable term could justify a refusal to
enforce an arbitration agreement if it were drafted in bad
faith . . . .” (Gutierrez v. Autowest, Inc., supra, 114 Cal.App.4th at
p. 93), or where other conduct of a party precludes enforcement of
the agreement. (Davis v. Blue Cross (1979) 25 Cal.3d 418, 426-
427.)
                  Other Evidence of Unconscionability
       Salgado contends the trial court properly invalidated the
entire arbitration agreement because it was “ ‘ “permeated” by
unconscionability.’ ” (Magno v. The College Network, Inc., supra,
1 Cal.App.5th at p. 292.) Here the trial court found Carrows
improperly used the agreement to undermine Salgado’s existing
lawsuit against Carrows.
              Interference with Salgado’s Pending Lawsuit
       In Salgado v. Carrows Restaurants, Inc., supra, 33
Cal.App.5th at page 359, we ruled the trial court originally
denied Carrows’s motion to compel arbitration on an invalid
ground. But the court never reached the issue of whether the
agreement was not enforceable because of unconscionability. We
noted that Salgado’s counsel filed a declaration stating: 1) he
represented Salgado in this lawsuit; 2) the declaration was filed
and served on Carrows’s “restaurant manager” before the
arbitration agreement was signed; 3) Salgado’s counsel “did not
have a chance to consult with Salgado before she signed [the
arbitration agreement]”; and 4) her counsel did not know she had
signed [the arbitration agreement] until ‘late spring 2017.’ ” (Id.
at p. 363.) We remanded the case to the trial court with

                                 10
instructions to determine whether “these or other facts support a
claim that the arbitration agreement is unenforceable.” (Ibid.,
italics added.)
       After remand, Salgado filed a declaration stating: 1) her
work manager “informed [her] that he was aware of the lawsuit
[she] had filed against Carrows and that it had no merit”; 2) she
was forced to sign the arbitration agreement before she went
home; and 3) she was not aware of the impact it would have on
her current lawsuit.
       Carrows claims it did not know about Salgado’s lawsuit.
But we do not decide the credibility of witnesses. That is a
matter for the trial court. (People v. Ochoa (1993) 6 Cal.4th 1199,
1206; Carlson v. Home Team Pest Defense, Inc. (2015) 239
Cal.App.4th 619, 630 [“ ‘If the court’s order is based on a decision
of fact, then we adopt a substantial evidence standard’ ”]; In re
Christopher R. (2014) 225 Cal.App.4th 1210, 1216.) On a motion
to compel arbitration, “the trial court sits as a trier of fact.”
(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th at
p. 972, italics added.) “ ‘If there is any conflict in the affidavits,
those in favor of the prevailing party must be taken as true, and
the facts stated therein must be considered established.’ ”
(Chronometrics, Inc. v. Sysgen, Inc. (1980) 110 Cal.App.3d 597,
603; Fuller v. Lindenbaum (1938) 29 Cal.App.2d 227, 230.)
       Here the trial court resolved the evidentiary conflicts in
favor of Salgado and her counsel. It said the way Carrows
obtained Salgado’s signature on the arbitration agreement was
unconscionable. The court said, “[H]aving been put on notice that
[Salgado] was represented by counsel regarding a pending
lawsuit, it is unconscionable to circumvent said counsel, and
without said counsel’s knowledge, extract a waiver of [Salgado’s]

                                 11
right to litigate that dispute in court. A contrary finding would
encourage employer Defendants who are served with lawsuits to
circumvent counsel and extract arbitration agreements from
employee Plaintiffs.” (Italics added.)
       The trial court’s finding about Carrows’s purpose and use of
this agreement to improperly undermine Salgado’s counsel and
Salgado’s existing lawsuit supports the court’s ruling that the
agreement is not enforceable. (In re Marriage of Wickander
(1986) 187 Cal.App.3d 1364, 1367 [stipulation obtained without
counsel of record’s consent is improper and not enforceable]; St.
Agnes Medical Center v. PacificCare of California (2003) 31
Cal.4th 1187, 1196 [“[T]he ‘bad faith’ or ‘willful misconduct’ of a
party may constitute a waiver and thus justify a refusal to
compel arbitration”]; Davis v. Blue Cross, supra, 25 Cal.3d at pp.
426-427 [no enforcement of arbitration agreement because party
engaged in a course of conduct inconsistent with “good faith”]; see
also Armendariz v. Foundation Health Psychcare Services, Inc.,
supra, 24 Cal.4th at p. 124; Gutierrez v. Autowest, Inc., supra, 114
Cal.App.4th at p. 93.)
       In litigation “ ‘before any direct communication is made
with the opposing party, consent of the opposing attorney is
required.’ ” (Continental Ins. Co. v. Superior Court (1995) 32
Cal.App.4th 94, 112.) Salgado’s counsel was surprised by
Carrows’s conduct. Secretly obtaining Salgado’s signature on the
arbitration agreement without her counsel’s knowledge and
consent interfered with her counsel’s ability to represent Salgado
in court.
       Where a represented party in litigation gives information
or documents to the adverse party, without the knowledge or
consent of his or her attorney, courts may prevent the use of the

                                12
improperly obtained information or documents. “ ‘While there is
an attorney of record, no stipulation as to the conduct or disposal
of the action should be entertained by the Court unless the same
is signed or consented to by such attorney. . . .’ ”’ (In re Marriage
of Wickander, supra, 187 Cal.App.3d at p. 1367; Chronometrics,
Inc. v. Sysgen, Inc., supra, 110 Cal.App.3d at p. 608 [affirming
exclusion order]; see also Boulas v. Superior Court (1986) 188
Cal.App.3d 422, 434; Holdren v. General Motors Corp. (D.Kan.
1998) 13 F.Supp.2d 1192, 1197 [protective order]; Chancellor v.
Boeing Co. (D.Kan. 1988) 678 F.Supp. 250, 254 [protective
order].)
       Here the trial court achieved the result of protecting
Salgado and her counsel by not enforcing the improperly obtained
document – the arbitration agreement. Salgado said her
manager demanded that she sign the agreement and said her
lawsuit had no merit. The court could reasonably infer the
arbitration agreement was retaliation for Salgado’s lawsuit
against Carrows. Precluding contact with a party represented by
counsel, without that counsel’s consent, is “ ‘ “necessary to the
preservation of the attorney-client relationship” ’ ” and is
“ ‘designed to permit an attorney to function adequately in his [or
her] proper role.’ ” (Triple A Machine Shop, Inc. v. State of
California (1989) 213 Cal.App.3d 131, 139, italics added.) Here
the arbitration agreement completely removed Salgado’s
counsel’s ability to “function” in court by removing the lawsuit
from his control without his knowledge or consent.
       “[T]he petition to compel arbitration is not to be granted
when there are grounds for rescinding the agreement.” (Engalla
v. Permanente Medical Group, Inc., supra, 15 Cal.4th at p. 973.)
Here the court’s findings show there are such grounds because:

                                 13
1) the method Carrows used to obtain the agreement and
undermining Salgado’s attorney’s control over Salgado’s lawsuit
invaded an attorney-client relationship (In re Marriage of
Wickander, supra, 187 Cal.App.3d at p. 1367); and 2) enforcement
of the agreement would consequently contravene public policy.
(Ibid.; see also St. Agnes Medical Center v. PacificCare of
California, supra, 31 Cal.4th at p. 1196; Armendariz v.
Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at
pp. 124, 126; Salgado v. Carrows Restaurants, Inc., supra, 33
Cal.App.5th at p. 362.)
     Forcing Salgado To Sign the Agreement Or Lose Her Job
       Here the trial court also found unconscionability because
Salgado “was not given a meaningful choice as to whether to sign
the [Arbitration] Agreement.” The evidence supports this
finding.
       In her declaration, Salgado said that when her manager
presented her with the arbitration agreement, she asked him “if
[she] did not sign would [she] be fired immediately.” (Italics
added.) Her manager responded that “if [she] did not sign [she]
should not bother returning to work.” (Italics added.) Salgado
said, “I feared my job was in jeopardy.” She said Carrows did not
provide her “with the opportunity to read, review or discuss the
‘document’ with anyone.”
       From this evidence, the trial court could reasonably infer
Carrows gave Salgado an ultimatum. She had to sign or be fired.
She consequently had no ability to voluntarily consent to an
arbitration; the agreement was the product of duress or coercion.
       “An arbitration clause is a contractual agreement.”
(Salgado v. Carrows Restaurants, Inc., supra, 33 Cal.App.5th at
p. 359.) “[A]n essential component to a contract is the consent of

                               14
the parties to the contract.” (Mitri v. Arnel Management Co.
(2007) 157 Cal.App.4th 1164, 1170, italics added.) There is a
strong policy favoring arbitration, but there is also a “basic
precept that arbitration ‘is a matter of consent, not coercion.’ ”
(Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559
U.S. 662, 681.) If an arbitration agreement is the product of
duress, facts showing unconscionability or other grounds
supporting the “revocability” or invalidity “of contracts
generally,” then a court may properly refuse to enforce it.
(Doctor’s Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 687.)
       Unconscionability is present where the arbitration
agreement is the product of “oppression and surprise.” (Kinney v.
United Healthcare Services, Inc. (1999) 70 Cal.App.4th 1322,
1329.) “The oppression component arises from an inequality of
bargaining power of the parties to the contract and an absence of
real negotiation or a meaningful choice on the part of the weaker
party.” (Ibid.) This may occur where the employer gives the
employee no opportunity to negotiate and “pressured” the
employee “to sign the form that same day” without time to review
the arbitration policy. (Id. at p. 1330; see also Mercuro v.
Superior Court (2002) 96 Cal.App.4th 167, 174-175 [the court
ruled procedural unconscionability may be found where a
company uses economic pressure to require employees to sign
arbitration agreements or face the prospect of resigning if they do
not sign].) The trial court essentially found that is what occurred
in this case. Carrows has not shown error.

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                         DISPOSITION
     The order is affirmed. Costs on appeal are awarded to
respondent.
     NOT TO BE PUBLISHED.

                                   GILBERT, P. J.
We concur:

             YEGAN, J.

             TANGEMAN, J.

                              16
                    Kevin G. DeNoce, Judge

               Superior Court County of Ventura

                ______________________________

     Spencer C. Skeen and Nikolas T. Djordjevski for
Defendants and Appellants.
     Law Office of Ruben M. Ruiz, Ruben M. Ruiz for Plaintiff
and Respondent.

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