Court Opinion

ID: 9956834
Source: CourtListenerOpinion
Date Created: 2024-04-02 23:01:58.988375+00
Date Added: 2024-06-11T08:17:55.413018
License: Public Domain

Filed 4/2/24
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION SEVEN

GAIL DEE LEW-WILLIAMS                B330387
et al.,
                                     (Los Angeles County
        Plaintiffs and Appellants,   Super. Ct.
                                     No. 20STCV15993)
        v.

SEVANA PETROSIAN et al.,

     Defendants and
Respondents.

     APPEAL from an order of the Superior Court of Los
Angeles County, Terry A. Green, Judge. Reversed.
     Nick A. Alden for Plaintiffs and Appellants.
     Buchalter, Robert Collings Little and Michael B. Fisher for
Defendants and Respondents Sevana Petrosian, Salina Ranjbar,
Vana Mehrabian and Staforde Palmer.
                 __________________________
       Gail Dee Lew-Williams, as the surviving spouse and
successor in interest of Wilbur Williams, Jr., M.D., and Wilbur
Williams, M.D., Inc. (the Corporation; collectively, the
Williams plaintiffs)1 appeal from the March 21, 2023 trial court
order dismissing their claims asserted against Williams’s
former business partner Sevana Petrosian and her associates
Salina Ranjbar, Vana Mehrabian, and Staforde Palmer
(collectively, the Petrosian defendants). Between 2014 and
2020 the Petrosian defendants operated a chain of medical
spas where Williams conducted his medical practice. In
April 2020, after the parties terminated their relationship, the
Williams plaintiffs sued the Petrosian defendants, Wells Fargo
Bank, N.A., and Wells Fargo’s branch manager, Hovanes
Tonoyan (together, the Wells Fargo defendants).2 The
Williams plaintiffs alleged the Petrosian defendants embezzled
approximately $11.5 million from the Corporation’s bank
accounts and the Wells Fargo defendants aided and abetted the
embezzlement.
       In July 2021 the trial court granted the motion to compel
arbitration filed by the Petrosian defendants. After the
Williams plaintiffs failed to initiate arbitration proceedings, in
February 2023 the court set a hearing on an order to show
cause re: dismissal for failure to prosecute. The court

1      Williams died on October 28, 2022. On May 2, 2023 the
trial court granted Lew-Williams’s motion to substitute in as
Williams’s successor in interest.
2     The Wells Fargo defendants are not parties to this appeal.

                                2
subsequently dismissed the Williams plaintiffs’ claims against
the Petrosian defendants without prejudice.
       On appeal, the Williams plaintiffs contend their failure
to initiate the arbitration was excused because they did not
have sufficient funds, and the trial court erred in compelling
arbitration because the parties’ agreement to arbitrate was
unconscionable and unenforceable. The Petrosian defendants
argue in response that the claims were properly dismissed
because the Williams plaintiffs had the funds to arbitrate, and
further, the Williams plaintiffs should not be allowed on appeal
to challenge the trial court’s order compelling arbitration
before first arbitrating their claims.
       We requested the parties submit supplemental briefing
on whether the trial court had jurisdiction to dismiss the
claims against the Petrosian defendants after they had been
compelled to arbitration. It did not. Once the court granted
the Petrosian defendants’ motion to compel arbitration and
stayed the action, it retained only vestigial jurisdiction over
the case as provided in the California Arbitration Act (Code
Civ. Proc., § 1281 et seq.),3 and the court did not have the
power to dismiss the claims for failure to prosecute. If a party
fails to diligently prosecute an arbitration, the appropriate
remedy is for the opposing party to seek relief in the
arbitration proceeding (and, if necessary, the opposing party
may need to initiate the arbitration for this purpose). We
reverse.

3     Further undesignated statutory references are to the Code
of Civil Procedure.

                               3
         FACTUAL AND PROCEDURAL BACKGROUND

A.    The Complaint
      Williams and the Corporation filed this action on April 27,
2020. The operative second amended complaint asserted three
causes of action against the Petrosian defendants and the Wells
Fargo defendants: conspiracy to convert and embezzle funds,
financial elder abuse, and declaratory relief. The complaint
asserted four additional causes of action against only the Wells
Fargo defendants: breach of contract, negligence, bad faith, and
unfair business practices.4
      As alleged, Williams was an 84-year-old physician who
operated a medical practice in California through the
Corporation, which he wholly owned. On April 12, 2014 Williams
on behalf of the Corporation and Petrosian on behalf of her
wholly owned company, Petrosian Esthetic Enterprises, LLC
(Petrosian Esthetic), executed a management services agreement
to operate medical spas and laser hair removal clinics in Glendale

4      The second amended complaint omitted several material
allegations from the verified initial complaint and the first
amended complaint. We consider the material allegations
omitted from the prior complaints under the sham pleading
doctrine. (See Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th
408, 425 [“‘If a party files an amended complaint and attempts to
avoid the defects of the original complaint by either omitting
facts which made the previous complaint defective or by adding
facts inconsistent with those of previous pleadings, the court may
take judicial notice of prior pleadings and may disregard any
inconsistent allegations.’”].)

                                4
and West Hollywood.5 Under the terms of the agreement, the
Corporation would provide medical services and make all
decisions related to the practice of medicine, while Petrosian
Esthetic would provide the facilities and non-medical
management services to the Corporation. As part of these
services, Petrosian Esthetic was responsible for collecting patient
payments and depositing them into operating accounts belonging
to the Corporation, and Petrosian Esthetic was authorized “[t]o
sign checks, drafts, bank notes or other instruments on behalf of
the [Corporation], and to make withdrawals from the [operating
account] for payment specified in [the] Agreement.” Petrosian
Esthetic was also “entitled to its actual out-of-pocket costs in
providing its services” plus a management fee equal to 15 percent
of its costs.
       The management services agreement included an
arbitration provision that stated in relevant part, “Except for
claims seeking injunctive relief and claims for indemnity arising
out of third party claims . . . , any dispute, controversy, or claim
as between [Corporation] and [Petrosian Esthetic] arising under
or relating to this Agreement or any breach or threatened breach
thereof shall be resolved by final and binding arbitration
administered by the American Arbitration Association (“‘AAA’”)
by a single arbitrator under its Commercial Arbitration
Rules. . . . The parties agree that . . . the arbitrator shall have
jurisdiction to make an award to the prevailing party, as
determined by the arbitrator, of the costs of such arbitration
proceeding as well as reasonable attorneys’ fees, costs and

5     A copy of the management services agreement was
attached to the initial complaint and incorporated by reference.

                                 5
expenses incurred by said prevailing party in connection with the
arbitration.”
      As alleged, Petrosian and Ranjbar initially acted as the
managers of the West Hollywood and Glendale clinics. In 2017
and 2018 the parties opened seven more clinics throughout
California, and Mehrabian and Palmer served as the managers of
some of those clinics. The seven new clinics were governed by
management services agreements that were substantially
identical to the 2014 agreement governing the original clinics,
including an identical arbitration provision.
      In 2018 Williams opened nine commercial bank accounts
(one for each clinic) in the Corporation’s name at Wells Fargo’s
Glendale branch. The second amended complaint alleged on
information and belief the Petrosian defendants entered into a
conspiracy with Tonoyan to embezzle all of the Corporation’s
profits, and during the period from January 2018 through
March 2020, the Petrosian defendants embezzled approximately
$11.5 million from the Corporation’s accounts by making large
cash withdrawals, wire transfers, and writing checks to
themselves using Williams’s facsimile signature.

B.    The Petrosian Defendants’ Motion To Compel Arbitration
      On April 27, 2021 the Petrosian defendants filed a motion
to compel arbitration of the claims against them and to stay the
action pending arbitration.6 They argued the claims against

6     Also on April 27, 2021, the Wells Fargo defendants filed a
demurrer and motion to strike the second amended complaint.
On June 30, 2021 the trial court (Judge Barbara M. Scheper)
sustained the demurrer and dismissed the claims against the

                                6
them, although styled as a conspiracy with Wells Fargo, were
essentially identical to the claims the Williams plaintiffs asserted
against them under the management services agreements in an
earlier-filed related action, Wilbur Williams, Jr., M.D., et al. v.
Sevana Petrosian, et al. (Super. Ct. Los Angeles County, 2020,
No. 20STCV14137) (Petrosian I), which the trial court had
compelled to arbitration in August 2020.
       The Williams plaintiffs argued in opposition that their
claims against the Petrosian defendants in this action were based
solely on their conspiracy with the Wells Fargo defendants, who
could not be compelled to arbitrate, and as a result, if they were
ordered to arbitration, the Williams plaintiffs would need to
litigate their claims against the Petrosian defendants in
arbitration and the Wells Fargo defendants in court, duplicating
effort and potentially leading to inconsistent outcomes. Further,
the management services agreements had been induced by fraud,
and the arbitration clauses were procedurally and substantively
unconscionable (including that they disallowed punitive damages
and waived the Williams plaintiffs’ right to a jury trial).
       On July 8, 2021 the trial court7 granted the motion to
compel arbitration and stayed the action. The court took judicial

Wells Fargo defendants. The Williams plaintiffs appealed, and
we reversed and remanded the matter with directions for the
trial court to overrule the demurrer to the causes of action for
conspiracy and unfair business practices, but to affirm the order
sustaining the demurrer to the other causes of action. (See
Williams v. Wells Fargo Bank, N.A. (June 21, 2022, B314887)
[nonpub. opn.] (Wells Fargo).) The remittitur issued on October
12, 2022.
7     Judge Scheper.

                                 7
notice of the management services agreements, noting they
authorized the Petrosian defendants to conduct banking on
behalf of the Corporation, including signing checks, making
withdrawals, and obtaining reimbursement of their costs, plus a
management fee. The court found “the gravamen of the [second
amended complaint] in this case and the [complaint in Petrosian
I] is that the Petrosian [d]efendants embezzled money in
violation of the Management Services Agreement.” Further, the
Willliams plaintiffs’ arguments that the arbitration provision was
unconscionable and unenforceable had been raised and rejected
in Petrosian I. The court summarily rejected the arguments for
the same reasons as in Petrosian I.
        At the August 19, 2022 status conference, the trial court set
a hearing for October 18, 2022 on an order to show cause (OSC)
re: dismissal for failure to arbitrate. However, the OSC was
taken off calendar after the Williams plaintiffs filed a peremptory
challenge to Judge Scheper on October 13 (following issuance of
the remittitur in the Wells Fargo appeal), and the case was sent
for reassignment.

C.    Dismissal for Failure To Prosecute the Arbitration
      On February 14, 2023 the trial court8 set a new OSC re:
dismissal for failure to prosecute the arbitration. In a responsive
declaration opposing dismissal, the Williams plaintiffs did not
dispute that they failed to initiate the arbitration for nearly two
years. Nor did they explain their delay or specify a date by when

8     On October 25, 2022 the case and related cases were
reassigned to Judge Terry A. Green.

                                 8
they intended to commence arbitration.9 Instead, they again
argued the management services agreements were induced by
fraud and should be invalidated, making the arbitration
provision unenforceable.
      In a responsive declaration, the Petrosian defendants’
attorney stated the Williams plaintiffs had initiated an
arbitration in Petrosian I but failed to pay the arbitration fees,
and AAA suspended and ultimately terminated the arbitration
for nonpayment in April 2022. After the trial court in Petrosian I
set an order to show cause re: dismissal for failure to prosecute,
the Williams plaintiffs dismissed Petrosian I.
      After a hearing on the OSC re dismissal in this action, on
March 21, 2023 the trial court ordered dismissal of the Petrosian
defendants based on the Williams plaintiffs’ failure to prosecute
the arbitration. The court found it was undisputed the Williams
plaintiffs had not initiated the arbitration. The court continued,
“They offer no excuse for this failure. They offer no promise to
correct it. They offer nothing, other than the defiant insistence
that they are right not to go to arbitration.” Thus, “rather than
comply with the orders of the prior judicial officer which were
never appealed and never properly presented to her for
reconsideration, [p]laintiffs ask this court to simply overrule her,”
which “[t]his court cannot and will not do. . . .” The court
observed the Petrosian defendants “cannot initiate arbitration
because they have no affirmative demands against [p]laintiffs.”

9      The Williams plaintiffs only obliquely raised their inability
to finance the arbitration, stating “the only reason Petrosian
insists on arbitration is because she knows Plaintiffs have [run]
out of money and Dr. Williams is now deceased.” They did not
present any evidence they could not afford the arbitration fees.

                                 9
The court concluded, “Neither [p]laintiffs nor the court can hold
defendants in the limbo of an arbitration stay forever,” and there
was “no reason to believe the case against the Petrosian
[d]efendants will ever go to arbitration.” The court dismissed the
action without citing a statutory basis for the dismissal.
      On March 27 the trial court filed an order of dismissal,
dismissing the Petrosian defendants without prejudice.10 The
Williams plaintiffs timely appealed.

                            DISCUSSION

A.    Governing Law and Standard of Review
      Once a trial court has compelled claims to contractual
arbitration, the court has “very limited authority with respect
to [the] pending arbitration.” (SWAB Financial, LLC v.
E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1200
(SWAB); accord, Optimal Markets, Inc. v. Salant (2013)
221 Cal.App.4th 912, 924 [“Appellate courts have . . . routinely
rejected parties’ efforts to have courts overstep their limited
jurisdiction in cases that are stayed pending binding
contractual arbitration.”].) As the Supreme Court explained in
Gaines v. Fidelity National Title Ins. Co. (2016) 62 Cal.4th
1081, 1096, “A party seeking to enforce contractual arbitration
is statutorily entitled to a stay of pending legal actions.

10    The order of dismissal states only that Sevana Petrosian is
dismissed without referring to the other Petrosian defendants.
We assume this is a clerical error because the minute order for
the March 21, 2023 OSC hearing states the claims against the
Petrosian defendants were dismissed.

                                10
(§ 1281.4.)[11] ‘Once a court grants [a] petition to compel
arbitration and stays the action at law, the action at law sits in
the twilight zone of abatement with the trial court retaining
merely a vestigial jurisdiction over matters submitted to
arbitration’ to determine, upon conclusion of the arbitration
proceedings, whether an award on the merits requires
dismissal of the legal action. [Citation.] This is so, in part,
because the whole point of contractual arbitration is to obviate
the need for an action at law.” (Quoting Brock v. Kaiser
Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1796
(Brock); accord, Titan/Value Equities Group, Inc. v. Superior
Court (1994) 29 Cal.App.4th 482, 487 (Titan/Value).)
      “During that time, under its ‘vestigial’ jurisdiction, a
court may: appoint arbitrators if the method selected by the
parties fails (§ 1281.6); grant a provisional remedy ‘but only
upon the ground that the award to which an applicant may be
entitled may be rendered ineffectual without provisional relief’
(§ 1281.8, subd. (b)); and confirm, correct or vacate the
arbitration award (§ 1285).” (Titan/Value, supra,
29 Cal.App.4th 482, 487; accord, SWAB, supra,
150 Cal.App.4th at p. 1200.) However, “[a]bsent an agreement

11     Section 1281.4 provides in relevant part, “If a court of
competent jurisdiction . . . has ordered arbitration of a
controversy which is an issue involved in an action or proceeding
pending before a court of this State, the court in which such
action or proceeding is pending shall, upon motion of a party to
such action or proceeding, stay the action or proceeding until an
arbitration is had in accordance with the order to arbitrate or
until such earlier time as the court specifies.”

                               11
to withdraw the controversy from arbitration, . . . no other
judicial act is authorized. [Citation.] [¶] In the interim, the
arbitrator takes over. It is the job of the arbitrator, not the
court, to resolve all questions needed to determine the
controversy. [Citations.] The arbitrator, and not the court,
decides questions of procedure and discovery.” (Titan/Value,
at pp. 487-488, fn. omitted; accord, Optimal Markets, Inc. v.
Salant, supra, 221 Cal.App.4th at pp. 923-924.)
       Accordingly, when a plaintiff “fail[s] to timely prosecute
the arbitration,” a defendant’s “only avenue for redress” is in
the arbitration proceeding. (Blake v. Ecker (2001)
93 Cal.App.4th 728, 737 (Blake), disapproved on another
ground in Le Francois v. Goel (2005) 35 Cal.4th 1094, 1107,
fn. 5; see Titan/Value, supra, 29 Cal.App.4th at p. 488.) “The
trial court may not step into a case submitted to arbitration
and tell the arbitrator what to do and when to do it: it may not
resolve procedural questions, order discovery, determine the
status of claims before the arbitrator or set the case for trial
because of a party’s alleged dilatory conduct. It is for the
arbitrator, and not the court, to resolve such questions.”
(Titan/Value, at p. 489; accord, Blake, at p. 738; Brock, supra,
10 Cal.App.4th at p. 1808 [remedy for “dilatory tactics” in an
arbitration is to “move in the arbitration proceedings to
terminate them for failure to pursue the arbitration claim with
reasonable diligence”]; see Byerly v. Sale (1988) 204 Cal.App.3d
1312, 1316 (Byerly) [“arbitration has a life of its own outside
the judicial system, and only the arbitrator should determine
whether there has been an unreasonable delay in prosecution
which would justify dismissal”].)

                               12
      Where, as here, the procedural facts are undisputed, the
question whether the trial court exceeded its jurisdiction is a
legal question subject to de novo review. (See MKJA, Inc. v. 123
Fit Franchising, LLC (2011) 191 Cal.App.4th 643, 657 [de novo
review whether trial court had jurisdiction to lift litigation stay
under section 1281.4 on the ground plaintiff could not afford
costs of arbitration]; see also Jack v. Ring LLC (2023)
91 Cal.App.5th 1186, 1196 [de novo review whether trial court
lacked jurisdiction to rule on reconsideration motion]; People v.
Bilbrey (2018) 25 Cal.App.5th 764, 770 [de novo review
whether trial court lacked jurisdiction to rule on Penal Code
section 1382 motion to dismiss].)

B.    The Trial Court Exceeded Its Jurisdiction in Dismissing the
      Claims Ordered to Arbitration
      The trial court exceeded its jurisdiction when it
dismissed the Williams plaintiffs’ claims against the Petrosian
defendants for failure to prosecute, after compelling the claims
to arbitration and staying the action against the Petrosian
defendants. (Blake, supra, 93 Cal.App.4th at pp. 737-738;
Titan/Value, supra, 29 Cal.App.4th at p. 487-489; Byerly,
supra, 204 Cal.App.3d at p. 1316.)
      Blake is directly on point. There, Diana Blake sued her
employer for workplace harassment. Two months after the
lawsuit was filed, the trial court compelled arbitration and
stayed the action. (Blake, supra, 93 Cal.App.4th at pp. 734-
735.) Two years later the employer moved to dismiss the
complaint for failure to prosecute under the two-year
discretionary dismissal statute (section 583.420), arguing

                                13
Blake’s failure to commence arbitration prejudiced its defense
of the case by making witnesses unavailable. (Id. at p. 735.)
The trial court dismissed the case, and the Court of Appeal
reversed, explaining that once the trial court granted the
petition to compel arbitration and stayed the action,
“[d]efendants’ only avenue for redress when plaintiff failed to
timely prosecute the arbitration was in the arbitration
proceeding.” (Id. at pp. 737-738.) Rather than seeking relief
from the trial court, the employer “should have sought relief in
the arbitration proceeding, by pursuing the remedies available
under the arbitration agreement and the rules of the
arbitration association designated therein.” (Id. at p. 738 &
fn. 8; see Titan/Value, supra, 29 Cal.App.4th at pp. 485-486 [trial
court erred where, in response to plaintiffs’ frustration with
failure of arbitration to get “off the ground,” the court issued a
trial setting order that set deadlines for scheduling and
completion of arbitration with trial date if arbitration was not
timely completed].)
       In their supplemental letter brief, the Petrosian
defendants argue there is a split of authority on whether a
trial court continues to have jurisdiction to enforce its own
orders requiring that an arbitration proceed once it compels
arbitration, contrasting Preston v. Kaiser Foundation Hospitals
(1981) 126 Cal.App.3d 402, 407 (Preston) with Brock, supra,
10 Cal.App.4th 1790, and they urge us to recognize a trial court’s
authority to penalize dilatory plaintiffs. We agree with the
reasoning in Blake, Titan/Value, and Brock and decline the
invitation to adopt the reasoning in Preston and other pre-Brock
cases holding that trial courts continue to have jurisdiction to
dismiss cases for failure expeditiously to proceed to arbitration.

                                14
      In Preston, the trial court dismissed a wrongful death
action that had been stayed pending arbitration, as well as the
related arbitration, under the mandatory five-year dismissal
statute (former section 583; now section 583.360) because the
parties failed to select a panel of arbitrators and five years had
passed since the filing of the complaint. (Preston, supra,
126 Cal.App.3d at pp. 405-407.) In response to the plaintiffs’
argument that the trial court lacked jurisdiction to dismiss the
arbitration, the Court of Appeal held without further analysis,
“We read . . . sections 1281.4 and 1292.6[12] in combination as
investing a court, which has ordered a matter to be arbitrated,
with the power on the one hand to entertain a petition by the
plaintiff for judicial assistance in moving the arbitration forward
where the matter is foundering for reasons beyond plaintiffs’
control, or on the other hand, to entertain a motion by defendants
to dismiss the arbitration where plaintiffs have failed to exercise
reasonable diligence in moving the dispute to a conclusion.” (Id.
at p. 407.) However, the Court of Appeal reversed and remanded
for the trial court to consider whether the plaintiffs had
prosecuted their case with “reasonable diligence,” consistent with
a judicially-created condition precedent for dismissal under the
five-year rule. (Id. at pp. 408-409.)
       A decade later the Court of Appeal in Brock, supra,
10 Cal.App.4th at pages 1793 to 1794 held the trial court erred in
dismissing a medical malpractice action and the related

12    Section 1292.6 provides that a court in which a petition or
motion to compel arbitration has been filed “retains jurisdiction
to determine any subsequent petition involving the same
agreement to arbitrate and the same controversy, and any such
subsequent petition shall be filed in the same proceeding.”

                                 15
arbitration proceedings under the mandatory five-year dismissal
rule. The court reasoned that because the lawsuit had been
stayed pending arbitration, the time that had elapsed during the
stay should have been excluded in calculating the five-year
period, and thus, the five-year period had not expired.13 (Id. at
pp. 1797, 1801.) The court distinguished Preston, supra,
126 Cal.App.3d at page 406 on the basis that the court there did
not consider the effect of the arbitration stay on accrual of the
five-year dismissal period, and further, the court erroneously
concluded the effect of the dismissal of the action was to
terminate the arbitration. (Brock, at pp. 1799-1800, 1805.)
       In the three decades since Brock was decided no published
cases have followed the principle enunciated in Preston and
repudiated in Brock that a trial court may dismiss an action for
failure to prosecute the arbitration regardless of the stay, and can
terminate the arbitration. And, as discussed, the Supreme Court
in Gaines cited Brock approvingly in clarifying that once a trial
court grants a petition to compel arbitration and stays the action,
the trial court retains only vestigial jurisdiction over the matter
to determine once the arbitration is concluded whether the action
should be dismissed. (Gaines v. Fidelity National Title Ins. Co.,
supra, 62 Cal.4th at pp. 1095-1096, citing Brock, supra, 10
Cal.App.4th at p. 1796.)

13     Here too, excluding the period during which the case was
stayed pending arbitration (from July 2021 to March 2023), at
the time of dismissal fewer than 15 months had passed since the
filing the complaint (in April 2020). Thus, the two-year mark for
discretionary dismissal for failure to prosecute under
section 583.420, subdivision (a)(2)(B), and California Rules of
Court, rule 3.1340(a) had not yet passed.

                                16
       The Petrosian defendants argue that if the trial court
lacked authority to dismiss them, the Williams plaintiffs—who
are pursuing three related lawsuits with overlapping claims
against the Wells Fargo defendants who cannot be compelled to
arbitration—will never commence the arbitration and instead
will litigate against the other defendants, frustrating the order
compelling arbitration of the central dispute. However, the
Petrosian defendants have recourse within the arbitration
process to prevent unreasonable or abusive delay. Contrary to
the trial court’s finding that the Petrosian defendants cannot
initiate the arbitration “because they have no affirmative
demands,” the AAA Commercial Arbitration Rules (AAA rules or
rule) expressly recognize that a defendant may initiate
arbitration. (See AAA rule R-4(a)(ii-c) [“The party filing the
[d]emand with the AAA is the claimant and the opposing party is
the respondent regardless of which party initiated the court
action.”].)14 Although the Petrosian defendants would need to
pay a substantial filing fee,15 they ultimately will not be unfairly

14    On our own motion, we take judicial notice of the current
version of the AAA rules (effective September 1, 2022) available
on the AAA website:
<https://adr.org/sites/default/files/CommercialRules.pdf (as of
April 1, 2024). (Evid. Code, §§ 452, subd. (h), 459, subd. (a); see
Emerald Aero, LLC v. Kaplan (2017) 9 Cal.App.5th 1125, 1132
[AAA rules are subject to judicial notice].)
15     The AAA standard fee schedule sets the initial filing fee for
claims exceeding $10 million at $11,000, plus a small percentage
of the claimed amount above $10 million. (AAA Administrative
Fee Schedule (Effective May 1, 2018)
<https://www.adr.org/sites/default/files/Commercial_Arbitration_

                                 17
saddled with the expense because payment of filing fees is an
advancement “subject to final apportionment by the arbitrator in
the award,” (AAA rule R-55), and the parties’ arbitration
agreement further provides for the arbitrator to award the costs
of the arbitration to the prevailing party.
       Moreover, once the arbitration has commenced, the
Petrosian defendants may request the arbitrator issue orders to
control and expedite the proceeding (AAA rule R-24), and the
arbitrator may issue sanctions for violations.16 (See AAA rule R-
60(a) [“The arbitrator may, upon a party’s request, order
appropriate sanctions where a party fails to comply with its
obligations under these Rules or with an order of the
arbitrator.”].) Further, if the Williams plaintiffs refuse to
participate in the arbitration, the arbitration may proceed in
their absence. (AAA rule R-32.) The arbitrator also has
discretion to dismiss the arbitration due to a party’s failure to
proceed with reasonable diligence. (See Burgess v. Kaiser

Fee_Schedule_1.pdf> [as of April 1, 2024].) This fee does not
include the arbitrator’s compensation or a final administrative
fee.
16    We note the parties’ agreements do not specify how the
arbitrator should be selected. However, rule R-13 of the AAA
rules provides a mechanism for expeditiously appointing an
arbitrator if the parties have not appointed one or have not
agreed to any other method of appointment. Further, under
section 1281.6, if the AAA fails to appoint an arbitrator or the
arbitrator “fails to act,” the court may, on petition of a party,
appoint an arbitrator. (See (Titan/Value, supra, 29 Cal.App.4th
487 [vestigial jurisdiction includes power to appoint an
arbitrator under section 1281.6]; SWAB, supra,
150 Cal.App.4th at p. 1200 [same].)

                               18
Foundation Hospitals (1993) 16 Cal.App.4th 1077, 1081-1082
[trial court erred in denying plaintiffs’ petition to vacate
arbitrator’s dismissal of arbitration due to failure to prosecute
where delay was caused by difficulty in selecting an arbitrator
and arbitrator’s unreasonable demand for a reservation fee];
Brock, supra, 10 Cal.App.4th at p. 1808 [“‘only the arbitrator
should determine whether there has been an unreasonable delay
in prosecution which would justify dismissal’”].)
       On appeal, the Williams plaintiffs maintain they have not
commenced arbitration because they do not have sufficient funds
to pay the AAA fees. But the Williams plaintiffs never
submitted documentation to show they did not have the ability
to pay. And if they could make that showing, they should have
raised their inability to pay in opposition to the Petrosian
defendants’ motion to compel arbitration; if the court found a
substantial hardship rendering the arbitration agreement
unconscionable, it could have required the Petrosian
defendants to pay the fees or waive arbitration. (Roldan v.
Callahan & Blaine (2013) 219 Cal.App.4th 87, 96 [“[I]f the
court determines that any plaintiff is unable to [pay for the
arbitration], it must issue an order specifying that [the
defendant] has the option of either paying that plaintiff’s share
of the arbitration cost or waiving its right to arbitrate that
plaintiff's case and allowing the case to proceed in court.”].)17

17    Other appellate courts have agreed with Roldan that a trial
court has jurisdiction to lift the stay under section 1281.4 to allow
a party to an arbitration agreement to request a waiver or
reallocation of arbitration costs where the party is unable to pay
the costs and otherwise would have no access to a forum to

                                 19
      Moreover, the Williams plaintiffs could have asserted
their inability to pay in the arbitration. As discussed, the
arbitrator has the discretion to allocate administrative fees
between the parties, and the AAA may also defer or reduce fees
in cases of “extreme hardship.” (AAA rule R-55.) Further, if
the arbitrator denied the Williams plaintiffs’ request for relief
and terminated the arbitration for failure to pay the fees, the
case would be returned to the superior court, which would have
the power to lift the stay and make further orders on how to

resolve the party’s claims. (See Aronow v. Superior Court (2022)
76 Cal.App.5th 865, 885 [trial court had jurisdiction to address
plaintiff’s request to lift arbitration stay to conduct discovery into
his financial hardship, and “if he demonstrates financial inability
to pay the anticipated arbitration costs, to require [defendant]
either to pay [his] share of the arbitrator’s fee or to waive the
right to arbitration”]; Weiler v. Marcus & Millichap Real Estate
Investment Services, Inc. (2018) 22 Cal.App.5th 970, 232 [plaintiff
could request relief under Roldan from superior court (to require
defendant to pay for arbitration or waive right to arbitrate) after
matter was compelled to arbitration where plaintiff suffered
drastic change in her financial circumstances that made
arbitration unaffordable]; but see MKJA, Inc. v. 123 Fit
Franchising, LLC, supra, 191 Cal.App.4th at p. 661 [trial court
does not have jurisdiction to lift the stay where party cannot
afford arbitration costs because “lifting a stay of litigation based
merely upon a determination that a party cannot afford the costs
associated with arbitration would directly and materially impede
the arbitrator’s jurisdiction”].) Because the Williams plaintiffs
did not present evidence showing they could not afford the
arbitration costs, we do not reach whether they could have
petitioned the trial court for relief after the matter was compelled
to arbitration.

                                 20
proceed. (See AAA rule R-59(f) [“[If] the parties have failed to
make the full payments requested within the time provided
after the suspension, the arbitrator, or the AAA if an arbitrator
has not been appointed, may terminate the proceedings.”];
Cinel v. Christopher (2012) 203 Cal.App.4th 759, 767-769
[where the arbitrator dismissed an arbitration due to
defendants’ nonpayment of fees, trial court properly denied
defendants’ motion to confirm the dismissal because it was not
an “award” under section 1283.4, and the court acted within its
jurisdiction in lifting the stay and setting the matter for trial];
cf. Burgess v. Kaiser Foundation Hospitals, supra,
16 Cal.App.4th at pp. 1081-1082 [plaintiffs could file petition to
vacate arbitrator’s dismissal of arbitration (as an award) due
to failure to prosecute]; Brock, supra, 10 Cal.App.4th at p. 1808
[if arbitrator concludes that claimants have failed to proceed
with reasonable diligence, “the arbitrator may order that
claimants take nothing on their claims by reason of their
dilatory prosecution,” which trial court may confirm as
“‘functional equivalent of an award against the claimants’”].)18

18    We note that in Cinel v. Christopher, supra,
203 Cal.App.4th at pages 763-764, the two defendants that had
moved to compel arbitration failed to pay the fees, leading to
dismissal of the arbitration; one of the two defendants then filed
a petition in the trial court to confirm the award (the arbitrator’s
dismissal) and dismiss the complaint. If the arbitrator in this
case were to dismiss the arbitration because the Williams
plaintiffs failed to pay the arbitration fees after a finding they
had the ability to pay, this case would be in a different posture
from Cinel. The trial court would still have jurisdiction to lift the

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Likewise, if the arbitrator ordered the Petrosian defendants to
advance the fees, and they refused, the arbitrator could
terminate the arbitration, returning the matter to the
jurisdiction of the trial court.19 (See Cinel, at p. 768.)

stay, but it could decide that setting the case for trial under those
circumstances would unfairly allow the Williams plaintiffs to
avoid arbitration. We take no position on what action the trial
court should take if the arbitrator dismisses the arbitration for
failure to pay the arbitration fees and returns the matter to the
trial court.
19    The Petrosian defendants contend this appeal should be
dismissed under the disentitlement doctrine because the
Williams plaintiffs “engineered” appealability of the order
compelling arbitration by “refusing to prosecute their claims in
arbitration leading to a dismissal judgment they now appeal.”
(See Gastelum v. Remax Internat., Inc. (2016) 244 Cal.App.4th
1016, 1023 [“An order granting a motion to compel arbitration is
not appealable under California law.”].) Because we reverse the
order of dismissal, we do not reach the merits of the order
compelling arbitration. Moreover, our holding that the trial court
lacks jurisdiction to dismiss a claim pending in arbitration for
failure to prosecute prevents a plaintiff from manufacturing an
interlocutory appeal from an order compelling arbitration.

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                            DISPOSITION

      The order of dismissal is reversed. The parties are to bear
their own costs on appeal.

                                     FEUER, J.
We concur:

             SEGAL, Acting P. J.

             RAPHAEL, J.*

*     Judge of the San Bernardino County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

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