Court Opinion

ID: 4031057
Source: CourtListenerOpinion
Date Created: 2016-09-02 19:03:14.433032+00
Date Added: 2024-06-11T14:35:30.038430
License: Public Domain

Filed 9/2/16 Humski v. Khem 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               NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

BRANKO HUMSKI,                                                       B264755

         Plaintiff and Appellant,                                    (Los Angeles County
                                                                      Super. Ct. No. NC059611)
         v.

BUNNEANG KHEM et al.,

         Defendants and Respondents.

         APPEAL from an order of the Superior Court of Los Angeles County,
Michael P. Vicencia, Judge. Affirmed.
         Albert Lon Chaney III for Plaintiff and Appellant.
         Bissell and Associates, Olivia O. Bissell; Smythe Law Group, Inc., and
Michelle J. Smythe for Defendants and Respondents.
      Branko Humski appeals from an order denying his petition to compel
arbitration of this lawsuit that he filed against respondents Bunneang and Sophany
Khem, individually and as trustees of respondent The Khem Family Trust
(collectively, respondent). Appellant argues the court erred in concluding he
waived his right to enforce the parties’ contractual arbitration agreement. The
argument is unpersuasive.

              FACTUAL AND PROCEDURAL BACKGROUND
      Respondent owns a commercial building in Long Beach. Appellant is a
general contractor who entered into written agreements in January and February
2013 with respondent and one of respondent’s tenants to perform repairs and
reconstruction work after respondent’s building sustained water-related damage.
Those agreements (which we and the parties address as a single agreement) contain
a provision specifically requiring that any dispute arising out of the contract be
resolved through binding arbitration (arbitration clause). Eventually, a dispute
arose as to the amount of money, if any, respondent owed appellant.
      On July 21, 2014, appellant filed the complaint initiating this action. He
alleged several causes of action, including one for breach of contract (attaching as
exhibits the January and February 2013 agreements), and demanded a jury trial.
Appellant’s complaint made no mention of any contractual arbitration clause.
      On September 18, 2014, the parties submitted a “Stipulation to Submit
Action to Binding Arbitration.” That stipulation stated that the parties expressly
waived the right to a bench or jury trial and appeal, and that the arbitrator’s award
would “constitute a final determination of the matter as to all parties and all
claims.” However, the stipulation also stated that the parties had “reserve[d] their
right to file motions for summary judgment,” and that appellant had recorded a

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mechanic’s lien, the validity of which would be determined by the arbitrator, but
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enforcement of which was reserved for the trial court. That stipulation was
apparently rejected for clerical reasons on September 22 and, possibly, also on
September 23, 2014. It was also rejected on the merits by the trial court, which we
will address momentarily.
      On September 24, 2014, respondent filed both an answer to the complaint
and a cross-complaint alleging a claim for breach of contract, among others.
Respondent did not raise the arbitration clause as an affirmative defense in its
answer, nor did it mention the arbitration clause in the cross-complaint.
      In a minute order issued on October 17, 2014, the trial court rejected the
stipulation re arbitration. Though it rejected the initial stipulation, the trial court
“invite[d] [the parties] to submit a new and different Stipulation and Order
indicating the ultimate resolution of this case such as ‘The parties agree that this
case may be dismissed pursuant to CCP 664.6 whereby the Court retains
jurisdiction to enter Judgment consistent with the Arbitration Award, upon motion
of a party.’” Respondent was ordered to notify appellant that the court had rejected
the stipulation, and did so on October 29, 2014.
      From November 3 to November 21, 2014, respondent’s counsel made
several unsuccessful attempts to obtain an agreement from appellant’s counsel as
to modified language for a new joint stipulation re arbitration in order to satisfy the
court’s and the parties’ concerns. According to respondent’s counsel, appellant’s
attorney essentially ignored her communications. Eventually, respondent’s

1
        It appears that, on September 11, 2014, respondent was prepared to file a
petition to compel arbitration and a motion to stay action, pending action on its
petition to compel arbitration. Those documents were either cancelled or not filed
at all once the parties submitted their September 18, 2014 stipulation.

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counsel invited appellant’s counsel to draft the parties’ revised stipulation himself
using whatever language he deemed appropriate that the court would accept and
that he believed would protect his client’s rights. Appellant’s counsel did not
respond to or accept that invitation.
      On December 8, 2014, in its case management statement, respondent
indicated a continued willingness to participate in arbitration, and noted that the
parties’ contract required arbitration for which the matter remained ripe.
Respondent also noted, however, that appellant’s attorney had, to date, refused to
revise the parties’ stipulation and continued to “refuse[] to submit a new
[stipulation] because he [was] concerned about the mechanic’s lien issue in his
complaint.”
      Appellant filed a case management statement on December 10, 2014. He
stated he was willing to participate in mediation or a settlement conference. He did
not acknowledge an obligation to participate in private arbitration (but did note that
the parties’ contract contained an arbitration clause). Appellant also stated that he
planned, at some unspecified time, to file a “petition for arbitration and a motion to
stay pending arbitration.” Conversely, however, he also stated that he planned to
conduct extensive discovery and to propound written discovery and inspection
demands, and conduct an unspecified number of depositions in the pending
litigation by June 30, 2015.
      A case management conference was conducted on December 18, 2014. The
appellate record does not contain a transcript or order from that conference. Based
on other documents in the record, it is apparent that the trial court concluded the
parties remained unable to agree on language for a revised stipulation re
arbitration. As an alternative resolution method, the court noted it had time open
on its calendar and proposed to conduct a bench trial in the matter; the parties

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                               2
accepted the court’s proposal. The court scheduled a final status conference for
June 12, and set trial to begin on June 22, 2015.
      On December 23, 2014, respondent propounded form interrogatories,
document requests, and requests for admission. On January 28, 2015, respondent
propounded a set of special interrogatories.
      On January 15, 2015, appellant answered the cross-complaint, and stated
that, by answering the pleading, he did “not waive, and . . . expressly reserve[d],
the right to arbitrate this matter pursuant to the terms of the Contract.”
(Boldface in original.)
      After requesting an extension, appellant responded to respondent’s first three
sets of discovery on February 17, and responded to the special interrogatories on
March 3, 2015. Appellant’s responses to each individual query was prefaced by an
objection that respondent’s discovery had been propounded inappropriately as the
matter belonged in arbitration, and discovery could not commence until an
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arbitrator was appointed and established the parameters for discovery.

2
       Appellant asserts this ruling was made over his objection. However, the
only evidence that appellant objected to the court’s proposal is that he argued that a
June 2015 trial date was too early, not that he objected to having a trial at all.
Appellant also noted that he still had plans to arbitrate. However, as the court
observed, neither party filed a formal demand for arbitration in this action until
mid-April 2015, 10 months into the litigation. We reiterate: all judgments and
orders are presumed correct; it is appellant’s burden to affirmatively demonstrate
error. (Denham v. Superior Court (1970) 2 Cal. 3d 557, 564 (Denham).) Appellant
has not carried that burden.
3
       In February 2015, appellant sent a demand for arbitration of this action to
ADR Services, Inc. (ADR). After being contacted, respondent notified ADR that
its services were not needed as appellant had agreed to have the trial court try this
matter rather than to have it arbitrated.

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      On March 26 and April 14, 2015, respondent filed “Ex Parte Application[s]
for . . . Order[s] Providing for a Hearing Date for [Respondent’s] Motion[s] to
Compel Further Objectionless Responses” to its discovery. A hearing was set for
May 5, 2015.
      On April 14, 2015, appellant filed a petition to compel arbitration (Petition),
and a motion to stay pending arbitration with the trial court. Appellant also
opposed respondent’s discovery motions, arguing they were barred by statute
(Code Civ. Proc., §§ 1281.2, 1281.4), by virtue of the parties’ agreement to submit
any disputes to binding arbitration, pursuant to which respondent had relinquished
the “judicial rights to discovery.” Appellant argued that respondent had acted in
bad faith by first demanding arbitration, then revoking its demand and refusing to
sign a new stipulation required by the court.
      Respondent opposed the Petition. Respondent asserted that appellant was
being disingenuous and that his Petition was merely a thinly disguised, untimely
and unmeritorious motion for reconsideration (Code Civ. Proc., § 1008) of the
court’s December 18, 2014 offer––which the parties had accepted––to resolve this
matter at a trial in June 2015.
      Respondent also noted it had not propounded discovery until after the parties
agreed to a bench trial in lieu of arbitration, and that both its discovery and
appellant’s superseding agreement to resolve the matter by trial instead of an
arbitration were entirely proper. Accordingly, appellant’s belated Petition was
merely an untimely and improper attempt––based on no new or different facts––to
have the court reconsider its December 2014 ruling.
      The court granted respondent’s motion to compel and ordered appellant to
provide objection-free responses to the discovery. The court also denied
appellant’s Petition. This timely appeal followed.

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                                    DISCUSSION
       Appellant maintains the trial court erred when it denied his petition to
compel arbitration on the ground that he engaged in conduct inconsistent with an
intent to arbitrate this dispute.

I. Controlling Law and the Standard of Review
       The right to arbitrate may be forfeited. A trial court may deny a motion to
compel contractual arbitration if it finds the moving party has waived the right to
arbitrate, even if that party did not intend to do so. (Code Civ. Proc., § 1281.2,
           4
subd. (a).) But the “law . . . reflects a strong policy favoring arbitration
agreements and requires close judicial scrutiny of waiver claims. [Citation.]
Although a court may deny a petition to compel arbitration on the ground of
waiver [citation], waivers are not to be lightly inferred and the party seeking to
establish a waiver bears a heavy burden of proof. [Citations.]” (St. Agnes Medical
Center v. PacifiCare of California (2003) 31 Cal. 4th 1187, 1195 (St. Agnes);
Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348, 375
(Iskanian).)
       No single test delineates what conduct will constitute waiver of an
arbitration right. (St. Agnes, supra, 31 Cal.4th at p. 1195.) Rather, California
courts have found waiver of the right to demand arbitration––and trial courts’
attendant justification to refuse to compel it––in contexts ranging from those in

4
      Although the statutes and case law speak in terms of waiver, that term is
used as shorthand ‘“for the conclusion that a contractual right to arbitration has
been lost.”’ [Citation.] . . . In this context, waiver is more like a forfeiture arising
from the nonperformance of a required act. [Citations.]” (Burton v. Cruise (2010)
190 Cal. App. 4th 939, 944 (Burton).)

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which a party seeking to compel arbitration previously has taken steps inconsistent
with an intent to invoke arbitration, has engaged in unreasonable delay before
invoking arbitration, or in situations involving outright “‘“bad faith”’” or “‘“willful
misconduct.”’” (See Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal. 4th 951, 983.)
      To assess whether a waiver has occurred, courts are guided by six factors,
none of which is dispositive and some of which may not apply in a given case:
“‘“(1) whether the party’s actions are inconsistent with the right to arbitrate;
(2) whether ‘the litigation machinery has been substantially invoked’ and the
parties ‘were well into preparation of a lawsuit’ before the party notified the
opposing party of an intent to arbitrate; (3) whether a party either requested
arbitration enforcement close to the trial date or delayed for a long period before
seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim
without asking for a stay of the proceedings; (5) ‘whether important intervening
steps [e.g., taking advantage of judicial discovery procedures not available in
arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or
prejudiced’ the opposing party.”’” (St. Agnes, supra, 31 Cal.4th at p. 1196; accord,
Iskanian, supra, 59 Cal.4th at p. 375; Burton, supra, 190 Cal.App.4th at pp. 944–
945 [applying a four-factor test where two St. Agnes factors did not apply].)
      Here, as in most cases, the question whether waiver occurred turns on
disputed questions of fact. We are bound by the trial court’s findings if those
findings are supported by sufficient evidence. (St. Agnes, supra, 31 Cal.4th at
p. 1196; Augusta v. Keehn & Associates (2011) 193 Cal. App. 4th 331, 337
(Augusta).) We construe all reasonable inferences in the manner most favorable to
the judgment, resolve ambiguities to favor the judgment and must affirm if
substantial evidence, contradicted or not, supports the trial court’s determination.

                                           8
(Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal. App. 4th 436, 443
(Lewis); Burton, supra, 190 Cal.App.4th at p. 944.) “Only ‘“in cases where the
record before the trial court establishes a lack of waiver as a matter of law, [may]
the appellate court . . . reverse a finding of waiver made by the trial court.”’
[Citation.]” (Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal. App. 4th 1443,
1450 (Adolph).) Further, because all judgments and orders are presumed correct, it
is appellant’s burden to affirmatively demonstrate error. (Denham, supra, 2 Cal.3d
at p. 564.)

II. Substantial Evidence Support’s the Trial Court’s Finding that Appellant
                                                           5
    Waived the Right to Compel Contractual Arbitration
       In denying appellant’s Petition, the court considered the matter in light of the
six factors above. It concluded the applicable “factors . . . turn[ed] sharply in favor
                                                                    6
of waiver,” and that appellant was “not entitled to arbitration.”
       First, instead of seeking arbitration from the outset, appellant filed a
complaint in July 2014––in which he failed to mention the contractual arbitration
                                     7
clause––and demanded a jury trial. Several months later, the parties stipulated to

5
      There is no dispute that the parties have a valid contractual arbitration
agreement.
6
       The fourth and fifth factors are not pertinent here.
7
       Appellant claims to have sent a letter to respondent in March 2014
demanding arbitration. Both respondent and its counsel, who has represented it
during and before this litigation, deny ever receiving the letter before April 2015.
       Even if respondent had received appellant’s March 2014 letter, it would be
of no effect. The mere announcement of the right to compel arbitration is
insufficient. To properly invoke the right to arbitration, a party must take

                                           9
have the matter submitted to binding arbitration. However, in October 2014, the
court rejected their stipulation which imposed improper conditions, and suggested
alternative language. After that, however, appellant refused to cooperate with
respondent’s counsel’s efforts to reach consensus on a revised stipulation. Nor did
appellant make an effort to file a formal petition on his own to compel arbitration
                 8
until April 2015. There is ample evidence to support the court’s conclusion that
appellant’s conduct was inconsistent with a willingness to arbitrate.
      The court also found that appellant waited an unreasonable amount of time
to file his Petition or to attempt to stay the litigation he began. As a result, the
court observed his Petition was not heard until: “five weeks before the scheduled
trial date,” even though the “proceeding has been pending for ten months. There
have been four court appearances, discovery motion practice, hundreds of pages of

affirmative steps to implement the process, and engage in conduct consistent with
an intent to arbitrate the dispute. (Sobremonte v. Superior Court (1998)
61 Cal. App. 4th 980, 997-998 (Sobremonte).) A party must engage in both actions
in order to secure the benefits of arbitration. (Ibid.) Appellant engaged in neither.
There is no question that, other than the failed joint stipulation in September 2014,
appellant made no formal attempt to invoke the arbitration procedure before the
trial court until April 2015.
8
       In addition, appellant failed to acknowledge he had an obligation to arbitrate
this matter in the case management statement he filed in early December 2014. He
did note that he planned at some unspecified time to file a “petition for arbitration,”
but also inconsistently announced his intention to conduct extensive written and
oral discovery over the next six months. Such conduct has been found inconsistent
with the assertion of a right to arbitrate. (See Adolph, supra, 184 Cal.App.4th at p.
1451 [six months of delay, efforts to conduct discovery, and failure to assert intent
to arbitrate in case management statement support trial court’s finding that
defendant’s conduct was inconsistent with an intent to arbitrate].)

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documents have been produced, fees have been paid to appear and answer. Both
parties have spent a good deal of time and expense to [sic] the litigation process.”
      The court found that appellant’s unreasonable delay in formally requesting
that the matter be sent to arbitration had affected, misled, and prejudiced
respondent. This was particularly so given that appellant’s recalcitrance and
refusal to cooperate with respondent’s counsel’s effort to move the matter toward
arbitration forced respondent to “substantially invoke” the “litigation machinery.”
Appellant’s conduct caused respondent significant expense and inconvenience in
that respondent was obligated, over the course of 10 months, to participate in
litigation and pay its counsel to perform arguably unnecessary legal services, such
as filing an answer and counter-claim, preparing for and attending numerous court
appearances, drafting discovery and, later, motions to compel, some of which may
not have been permitted or could have been streamlined in an arbitration forum,
and preparing for a trial set to begin in just over a month.
      The trial court found that appellant’s unreasonable delay in filing the
Petition was inconsistent with an assertion of a right to arbitrate. It is axiomatic
that a petition to compel arbitration “should be brought within a reasonable time.”
(Zamora v. Lehman (2010) 186 Cal. App. 4th 1, 17.) Substantial evidence supports
the conclusion that appellant’s unwarranted delay in formally seeking arbitration
was so lengthy it deprived respondent of a primary benefit of contractual
arbitration.
      Clearly, a fundamental attribute of contractual arbitration is its efficient,
streamlined process. As a result of the 10-month delay, respondent incurred
significant expense and was forced to propound extensive discovery for which it
received meaningless (initial) responses, and thus was forced to incur additional
expense engaging in a discovery battle to compel meaningful responses to its

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legitimate discovery, a battle which did not end until shortly before trial was set to
begin. The California Supreme Court has held that an “unjustified delay,
combined with substantial expenditure of time and money, deprive[s] the parties of
the benefits of arbitration and [is] sufficiently prejudicial to support a finding of
waiver to arbitrate.” (lskanian, supra, 59 Cal.4th at p. 377.) In Lewis, supra,
205 Cal. App. 4th 436, the court found unreasonable delay, conduct inconsistent
with an intent to arbitrate and prejudice to the opposing party where a party let four
months elapse between the time the suit was initiated and its first attempt to invoke
arbitration, during which time the party belatedly seeking to enforce arbitration had
engaged in litigation on the merits by virtue of demurrers and motions to strike and
had participated in discovery without raising its right to arbitrate. (Id. at pp. 446,
452.) A number of courts have found periods of delay equivalent to or shorter than
the one involved here sufficient to waive arbitration, when combined with
damaging facts and prejudice. (See, e.g., Hoover v. American Income Life Ins. Co.
(2012) 206 Cal. App. 4th 1193, 1205 [waiver after “almost a full year,” and
defendant’s two failed efforts to remove the case to federal court and recalcitrant
discovery responses suggest a policy aimed at delay rather than seeking a prompt,
expeditious resolution through arbitration]; Sobremonte, supra, 61 Cal.App.4th at
p. 996 [10 months]; Augusta, supra, 192 Cal.App.4th at p. 338 [six and one-half
months]; Adolph, supra, 184 Cal.App.4th at pp. 1451–1452 [six months]; Roberts
v. El Cajon Motors, Inc. (2011) 200 Cal. App. 4th 832, 844, fn. 8 [five or seven
months, depending on manner of calculation]; Guess?, Inc. v. Superior Court
(2000) 79 Cal. App. 4th 553, 558 (Guess?) [four-month delay].)
      The final St. Agnes factor––whether appellant’s conduct and delay
“‘“affected, misled, or prejudiced”’” respondent—is significant. Prejudice is
typically found where “the petitioning party’s conduct has substantially

                                           12
undermined [the] important public policy [in favor of arbitration as a speedy and
relatively inexpensive means of dispute resolution] or substantially impaired the
other side’s ability to take advantage of the benefits and efficiencies of arbitration.”
(St. Agnes, supra, 31 Cal.4th at p. 1204; see Burton, supra, 190 Cal.App.4th at pp.
948 [“a petitioning party’s conduct in stretching out the litigation process itself
may cause prejudice by depriving the other party of the advantages of arbitration as
an ‘expedient, efficient and cost-effective method to resolve disputes.’”].)
      Appellant delayed seeking arbitration for almost a year, all the while
engaging in hot and cold tactics asserting an intention and desire to arbitrate while
simultaneously litigating in court, and delaying and frustrating respondent’s ability
to use arbitration as a speedy, inexpensive means to resolve this dispute. This was
true even as to discovery appellant essentially forced respondent to propound. “It
is the manner in which [appellant ] responded that matters, and it was [appellant’s]
response that was inconsistent with [his] present claim of a right to arbitrate.”
(Guess?, supra, 79 Cal.App.4th at p. 558.) At the same time he resisted moving
this case into an arbitration forum, appellant asserted the parties’ obligation to
arbitrate in order to justify objecting to discovery respondent needed in order to
prepare for the trial to which appellant had agreed. Appellant’s gamesmanship
forced respondent to file motions to compel in order to obtain meaningful
responses to discovery it may not even have needed had the parties arbitrated this
dispute as agreed. The record contains ample evidence to support the trial court’s
conclusion that appellant engaged in conduct inconsistent with an intent to
arbitrate, and caused prejudicial delay and expense that deprived respondent of the
advantages of arbitration.

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                                DISPOSITION
      The judgment is affirmed. Respondents Bunneang and Sophany Khem,
individually and as trustees of respondent The Khem Family Trust are awarded
costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                           WILLHITE, J.

            We concur:

            EPSTEIN, P. J.

            MANELLA, J.

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