Opinion
F086190
05-06-2024
MARIA MEDINA, Petitioner, v. THE SUPERIOR COURT OF MERCED COUNTY, Respondent; MINTURN NUT CO., INC. et al., Real Parties in Interest.
Makarem & Associates and Deborah P. Gutierrez for Petitioner. No appearance for Respondent. Barsamian & Moody, Patrick S. Moody and Catherine M. Houlihan for Real Parties in Interest.
NOT TO BE PUBLISHED
ORIGINAL PROCEEDINGS; petition for writ of mandate No. 23CV-00838 Susan J. Matcham, Judge. (Retired Judge of the Monterey Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)
Makarem & Associates and Deborah P. Gutierrez for Petitioner.
No appearance for Respondent.
Barsamian & Moody, Patrick S. Moody and Catherine M. Houlihan for Real Parties in Interest.
OPINION
DETJEN, ACTING P. J.
Petitioner Maria Medina and real parties in interest Minturn Nut Co., Inc. (Minturn) and Moises Zaragoza initiated arbitration in 2021. On March 14, 2023, Medina filed a motion to withdraw from arbitration with the Merced County Superior Court. Citing Code of Civil Procedure section 1281.98, she argued Minturn failed to pay the fees and costs required to continue arbitration within 30 days after the due date and therefore waived the right to compel her to proceed with arbitration. On April 11, 2023, the superior court entered an order denying Medina's motion.
In a civil complaint (see at p. 4, post), Medina alleged Zaragoza was a Minturn employee.
Subsequent statutory citations refer to the Code of Civil Procedure.
Thereafter, Medina filed a "PETITION FOR WRIT OF MANDATE OR OTHER APPROPRIATE RELIEF" (boldface omitted), asking us to issue a stay of the arbitration proceeding pending determination of this petition and a writ of mandate directing the superior court to vacate its April 11, 2023 order and enter a new order granting her withdrawal motion. We granted Medina's stay request and later issued an order to show cause why writ relief should not be granted. Minturn and Zaragoza filed a written return and Medina filed a reply to said return.
For the reasons set forth below, we conclude the superior court erroneously denied Medina's withdrawal motion and Medina is entitled to writ relief.
BACKGROUND
Medina was previously employed by Minturn. On January 26, 2016, she signed Minturn's "ALTERNATIVE DISPUTE RESOLUTION POLICY AND AGREEMENT" (Arbitration Agreement; boldface omitted), which provided "arbitration is the exclusive remedy for all arbitrable disputes including employment disputes with MINTURN or any employee of MINTURN" and "[t]his Policy shall survive the termination and/or expiration of the employment relationship between the Employee and MINTURN." Pursuant to the Arbitration Agreement, "arbitration fees and related administrative costs shall be borne solely by MINTURN ...." The Arbitration Agreement did not detail when such fees and costs needed to be paid.
On February 9, 2021, Medina filed a demand for arbitration with arbitration provider Judicate West. Retired judge Linda Quinn served as the neutral arbitrator. Quinn and the parties agreed the Code of Civil Procedure would govern the proceeding.
On June 4, 2021, Judicate West posted an invoice totaling $6,520 for a retainer and case management fees. The invoice specified payment was "due upon receipt ...."
Minturn submitted a $6,520 payment on July 2, 2021.
On July 19, 2021, Judicate West posted an invoice totaling $37,380 for a retainer, case management fees, and a hearing scheduled for September 12 through 16, 2022. The invoice specified payment was "due upon receipt to secure your reserved date(s)." However, in a July 19, 2021 e-mail to counsel, Judicate West's case manager identified July 22, 2022, as the "Final Date for Payment of arbitration fees and any outstanding invoices" and advised counsel to reply "immediately if the attached does not accurately reflect your understanding of last week's call." Neither side responded.
In a June 13, 2022 e-mail to counsel, Quinn wrote:
"Per our conference this morning, the Arbitration hearing dates September 12, 13, 14, 15, and 16, 2022 are vacated. A telephonic status conference is set for October 18, 2022 at 8:30 a.m. for the purpose of resetting the Arbitration hearing dates."
In an October 19, 2022 e-mail to counsel, Quinn wrote:
"Summarizing our status conference yesterday:
"The arbitration dates June 5, 6, 7, 8, and 9, 2023 are confirmed.
"You will continue to meet and confer toward an expected agreement regarding discovery issues identified as phone records. Protective Order re: employees' contact info, and scheduling depositions. Deadlines for exchange of expert designations will be determined by the Judicate West Commercial Arbitration Rules - as agreed on by counsel.
"A telephonic status conference is set for April 3, 2023 at 8:30 a.m." In an October 20, 2022 e-mail to counsel, Judicate West's case manager wrote:
"Scheduled Session Notice
"The following session(s) have been scheduled and deadlines set for this matter:
"• 6/5-9/2023 - 5-Day Binding Arbitration at 9 a.m. in our Sacramento office
"• 4/3/2023 - Status Conference ....
"• 4/21/2023 - Last day to continue and/or cancel without incurring fees.
"• 4/14/2023 - Final Date for Payment of arbitration fees and any outstanding invoices. Approximately 90 days prior to your arbitration you will receive a new invoice for the hearing time and additional retainer. Absent any changes to your reservation, that amount will be $37,380 to Respondent."
In a March 10, 2023 e-mail to counsel, Judicate West's case manager wrote:
"In follow up to the [October 20, 2022] e[-]mail, you will soon receive an invoice for the June 5-9 hearing time reserved for your arbitration with Judge Quinn."
On March 10, 2023, Medina filed a "COMPLAINT FOR DAMAGES" (boldface omitted) against Minturn and Zaragoza with the superior court. On March 14, 2023, she filed a "MOTION TO TERMINATE ARBITRATION AND REQUEST FOR EVIDENTIARY AND MONETARY SANCTIONS" (boldface omitted) with the court. In the motion, Medina-citing section 1281.98-asserted Minturn materially breached the Arbitration Agreement because (1) it received a $37,380 invoice for arbitration hearing fees on July 19, 2021; (2) payment should have been rendered within 30 days after this date; and (3) no payment was ever rendered. Hence, Medina was "statutorily entitled to unilaterally withdraw her claims from arbitration and proceed in court ...."
Minturn and Zaragoza's counsel contacted Judicate West regarding an invoice for the June 2023 hearing and the payment deadline. In a March 14, 2023 e-mail, Judicate West's case manager responded:
"The updated invoice will be going out today and will be due by April 14 and all counsel will be copied. To confirm, there are no past due balances on this case."
The same day, Judicate West posted an invoice totaling $37,380 for a retainer, case management fees, and a hearing scheduled for June 5 through 9, 2023. The invoice specified payment was "due upon receipt to secure your reserved date(s)." Minturn submitted a $37,380 payment on March 16, 2023.
According to Quinn's fee schedule, (1) on July 19, 2021, Minturn was billed $37,380; (2) on March 14, 2023, Judicate West issued credits totaling $37,380 for "Hearing Cancelled," "Unused Retainer," and "Rebilled to New Invoice"; and (3) immediately following issuance of these credits, Minturn was rebilled $37,380.
Aside from the invoice numbers, invoice dates, and arbitration hearing dates, the July 19, 2021, and March 14, 2023 invoices are essentially identical.
On April 11, 2023, the superior court held a hearing on Medina's withdrawal motion. The court pointed out: (1) Judicate West set a due date of April 14, 2023, for payment of the March 14, 2023 invoice; and (2) payment had already been rendered. The court entered an order denying Medina's motion.
On May 2, 2023, Medina filed the writ petition.
DISCUSSION
I. Writ review is warranted in the instant case.
"Writ review is appropriate when '(1) "the remedy by appeal would be inadequate" [citation] or (2) the writ presents a "significant issue of law" or an issue of "widespread" or "public interest" [citations].' [Citation.]" (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 773, fn. 2 (Espinoza).) Here, both conditions are met. First, the superior court's order denied Medina's motion to withdraw from arbitration. "[R]equiring plaintiff to proceed through an arbitration before she can challenge the order on appeal would be a waste of time and resources, for which the appeal would be an inadequate remedy." (Ibid.; see Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 889 [" '[W]rit review is proper . . . to avoid an arbitration based on erroneous rulings of law, which may result in needless delay and expense.' "]; Medeiros v. Superior Court (2007) 146 Cal.App.4th 1008, 1014, fn. 7 ["Writ review is the appropriate way to review the challenged order and avoid having parties try a case in a forum where they do not belong, only to have to do it all over again in the appropriate forum."].) Second, the interpretation and enforceability of section 1281.98 "presents significant issues of law." (Espinoza, supra, at p. 773, fn. 2.)
We note Espinoza focused on section 1281.97. (See Espinoza, supra, 83 Cal.App.5th at p. 775.) Section 1281.97, which "concerns a failure to timely pay 'the fees or costs to initiate' an arbitration proceeding" (De Leon v. Juanita's Foods (2022) 85 Cal.App.5th 740, 750, italics omitted (De Leon)), does not apply in the instant case because Minturn timely paid the first invoice posted on June 4, 2021. (See ante, at p. 3.) Nevertheless, this provision and section 1281.98, which "concerns a failure to timely pay 'the fees or costs required to continue' an arbitration proceeding" (De Leon, supra, at p. 750, italics omitted)," 'largely parallel' each other" (ibid.). Thus, an analysis as to one "applies with equal force" to the other (Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 633, fn. 4).
II. Medina is entitled to writ relief because the superior court erroneously denied her motion to withdraw from arbitration.
"The Legislature enacted section 1281.98 in 2019 to curb a particular arbitration abuse. The abuse was that a defendant could force a case into arbitration but, once there, could refuse to pay the arbitration fees, thus effectively stalling the matter and stymying the plaintiff's effort to obtain relief." (Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073, 1076 (Cvejic).) Section 1281.98 "grants deliverance from this procedural purgatory by deeming late payment to be a material breach of the arbitral agreement that gives the affected employee or consumer the choice of . . . treating the arbitration agreement as being rescinded and returning to a judicial forum ...." (Gallo v. Wood Ranch USA, Inc., supra, 81 Cal.App.5th at p. 634; see De Leon, supra, 85 Cal.App.5th at p. 751.)
Section 1281.98, subdivision (a)(1)-formerly subdivision (a) (see Stats. 2019, ch. 870, § 5)-reads:
"In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach."
" 'Drafting party' means the company or business that included a predispute arbitration provision in a contract with a consumer or employee." (§ 1280, subd. (e).)
Section 1281.98, subdivision (b)(1) reads in part:
"If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to . . . [¶] . . . [w]ithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction...."
In 2021, the Legislature "added a new subdivision to section 1281.98 that compelled arbitrators to provide invoices to all parties, specified requirements for these invoices, and clarified the due date for fees." (Cvejic, supra, 92 Cal.App.5th at p. 1077, citing Stats. 2021, ch. 222, § 3.) This subdivision-i.e., subdivision (a)(2) of section 1281.98-reads in part:
"The arbitration provider shall provide an invoice for any fees and costs required for the arbitration proceeding to continue to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt. Any extension of time for the due date shall be agreed upon by all parties...."
In 2023, the Legislature added the following language to subdivision (a)(2) of section 1281.98:
"Once the invoice has been paid, the arbitration provider shall provide to all parties a document that reflects the date on which the invoice was paid." (Stats. 2023, ch. 478, § 17.)
Subdivision (a)(2) became effective January 1, 2022. (Cvejic, supra, 92 Cal.App.5th at p. 1077.)
b. Standard of review
" 'Questions of statutory interpretation, and the applicability of a statutory standard to undisputed facts, present questions of law, which we review de novo.' [Citation.]" (California State University, Fresno Assn., Inc. v. County of Fresno (2017) 9 Cal.App.5th 250, 265 (Cal. State Fresno); see De Leon, supra, 85 Cal.App.5th at p. 749 ["[The parties] dispute the proper interpretation of section 1281.98. In this circumstance, our review is de novo."].)" 'Because the interpretation and application of a statute are questions of law, an appellate court is not bound by the trial judge's interpretation.' [Citation.] Instead, 'we undertake our own interpretation of the determinative statute and assess any claims raised by the parties completely anew.' [Citation.]" (Cal. State Fresno, supra, at pp. 265-266.)
" 'In ascertaining the meaning of a statute, we look to the intent of the Legislature as expressed by the actual words of the statute' [citation], 'giving them a plain and commonsense meaning' [citation]. 'We examine the language first, as it is the language of the statute itself that has "successfully braved the legislative gauntlet." [Citation.] "It is that [statutory] language which has been lobbied for, lobbied against, studied, proposed, drafted, restudied, redrafted, voted on in committee, amended, reamended, analyzed, reanalyzed, voted on by two houses of the Legislature, sent to a conference committee, and, after perhaps more lobbying, debate and analysis, finally signed 'into law' by the Governor. The same care and scrutiny does not befall the committee reports, caucus analyses, authors' statements, legislative counsel digests and other documents which make up a statute's 'legislative history.'" [Citation.]' [Citation.]" (Cal. State Fresno, supra, 9 Cal.App.5th at p. 266; see De Leon, supra, 85 Cal.App.5th at p. 750.)
" 'If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.' [Citation.] 'When statutory language is clear and unambiguous there is no need for construction, and we will not indulge in it.' [Citations.] 'We will not speculate that the Legislature meant something other than what it said. Nor will we rewrite a statute to posit an unexpressed intent.' [Citations.] 'The plain meaning of words in a statute may be disregarded only when that meaning is" 'repugnant to the general purview of the act,' or for some other compelling reason ...." [Citation.]' [Citation.]" (Cal. State Fresno, supra, 9 Cal.App.5th at p. 266; see De Leon, supra, 85 Cal.App.5th at p. 750.)
c. Due date for $37,380 payment
The threshold issue is the due date for the $37,380 payment to Judicate West. On the one hand, Medina advocates for July 19, 2021, the day Judicate West posted an invoice for this amount "due upon receipt" to secure the September 2022 hearing dates. On the other hand, Minturn and Zaragoza insist on April 14, 2023, i.e., the due date specified in the October 20, 2022 e-mail from Judicate West's case manager to counsel. Neither is correct.
We agree with Medina that Judicate West posted an invoice totaling $37,380 on July 19, 2021, and said invoice indicated payment was "due upon receipt to secure your reserved [September 2022 hearing] date(s)." However, in an e-mail to counsel sent the same day, Judicate West's case manager indicated the parties agreed upon a July 22, 2022 due date at "last week's call." Nothing in section 1281.98-as it existed at that time- suggested the due date for the payment of fees or costs required to continue an arbitration proceeding could not be modified in the manner described.
Effective January 1, 2022, section 1281.98, subdivision (a)(2) "clarified the due date for fees" (Cvejic, supra, 92 Cal.App.5th at p. 1077), requiring (1) arbitration providers to "issue all invoices to the parties as due upon receipt" (unless express contractual language provides otherwise); and (2) "all parties" to agree upon "[a]ny extension of time for the due date" (§ 1281.98, subd. (a)(2)). In a June 13, 2022 e-mail to counsel, Quinn indicated the parties conferred in the morning and agreed to vacate the September 2022 hearing dates. In an October 19, 2022 e-mail to counsel, Quinn indicated the parties conferred the day before; agreed to reschedule the hearing for June 2023; agreed to comply with Judicate West's rules regarding "[d]eadlines for exchange of expert designations"; and were instructed to "continue to meet and confer toward an expected agreement regarding discovery issues." Quinn also mentioned a "Protective Order re: employees' contact info, and scheduling depositions." However, neither e-mail demonstrated Medina, Minturn, and Zaragoza collectively agreed to modify the July 22, 2022 due date for the $37,380 payment.
In an October 20, 2022 e-mail to counsel, Judicate West's case manager identified April 14, 2023, as the "Final Date for Payment of arbitration fees and any outstanding invoices." In a March 10, 2023 e-mail to counsel, Judicate West's case manager stated an invoice for the June 2023 hearing would be sent shortly. In a March 14, 2023 e-mail to Minturn and Zaragoza's counsel, Judicate West's case manager confirmed said invoice would be posted that day. Still, none of these e-mails demonstrated Medina, Minturn, and Zaragoza collectively agreed to change the due date for the $37,380 payment from July 22, 2022, to April 14, 2023.
Absent any evidence an April 14, 2023 payment due date was "agreed upon by all parties" (§ 1281.98, subd. (a)(2)), the due date for the $37,380 payment remained July 22, 2022. Pursuant to section 1281.98, subdivision (a)(1), Minturn had until August 22, 2022, to settle it.
The 30th day after July 22, 2022, was August 21, 2022, which fell on a Sunday. "Generally speaking, when the last day for the performance of an act provided by law falls on a Sunday or a holiday, that day is excluded in the computation of time, and the act may be performed on the next succeeding day." (Alford v. Industrial Accident Com. (1946) 28 Cal.2d 198, 200.)
d. Material breach of Arbitration Agreement
There is no dispute Minturn made the $37,380 payment on March 16, 2023. The clear and unequivocal language of section 1281.98, subdivision (a)(1) "establishes a simple bright-line rule that a drafting party's failure to pay outstanding arbitration fees within 30 days after the due date results in its material breach of the arbitration agreement." (De Leon, supra, 85 Cal.App.5th at p. 753.) Because Minturn did not render payment until well after August 22, 2022, it materially breached the Arbitration Agreement and-as a result-waived the right to compel Medina to proceed with arbitration. Thus, Medina could unilaterally elect to withdraw her claims from arbitration and proceed in court.
Minturn and Zaragoza emphasize the arbitration fees were eventually paid. "Under the plain language of [section 1281.98, subdivision (a)(1)], . . . the triggering event is nothing more than nonpayment of fees within the 30-day period-the statute specifies no other required findings, such as whether the nonpayment was deliberate or inadvertent, or whether the delay prejudiced the nondrafting party." (Espinoza, supra, 83 Cal.App.5th at p. 776, italics added.) "[L]ate payment as provided in section 1281.98 constitutes a 'material breach' without regard to any additional considerations." (De Leon, supra, 85 Cal.App.5th at p. 749.) In arguing otherwise, Minturn and Zaragoza "turn[] the language of the statute on its head." (De Leon, supra, at p. 755.)
Minturn and Zaragoza also contend "the parties mutually vacated the September hearing dates," "withdraw[ing]" "[t]he June 19, 2021 invoice" and "thereby obviating the need for any payment of fees" until a new invoice was issued on March 14, 2023. They cite the following from Cvejic:
"[T]he record shows the initial fee deadline of January 28, 2021, was moved to June 4, 2021, because the final hearing was rescheduled. The arbitration provider requested fees '60 days prior to the first day of hearing.' The parties had agreed to continue the hearing on January 25th, before any breach by [the drafting party]." (Cvejic, supra, 92 Cal.App.5th at p. 1078.)
Based on this passage, Minturn and Zaragoza appear to suggest the mutual agreement of the parties to reschedule an arbitration hearing inevitably equates to a mutual agreement to extend the payment due date. We disagree. In Cvejic, the payment due date was expressly contingent on the arbitration hearing date. Given this fact, which cannot be found in the instant case, one could then deduce parties who agree to postpone the hearing necessarily agree to extend the payment due date.
Furthermore, "we presume the Legislature intended everything in a statutory scheme, and we should not read statutes to omit expressed language or include omitted language." (Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 894, italics added.) "It is a settled rule of statutory construction that 'where exceptions to a general rule are specified by statute, other exceptions are not to be implied or presumed.' [Citation.]" (Quarry v. Doe I (2012) 53 Cal.4th 945, 970; accord, People v. Fernandez (2017) 11 Cal.App.5th 926, 936.) Section 1281.98, subdivision (a) "directs arbitrators to set invoices as 'due upon receipt' barring agreement by the parties, provides for an automatic 30-day statutory grace period, and only contemplates extensions of the due date by agreement of the parties ...." (Doe v. Superior Court (2023) 95 Cal.App.5th 346, 361 (Doe), italics added.) If the Legislature had intended to permit deadline modifications based on hearing postponements or invoice withdrawals, "it would have included language to that effect." (Davis Boat Manufacturing-Nordic, Inc. v. Smith (2023) 95 Cal.App.5th 660, 675.)
Minturn and Zaragoza point out Medina "failed to object" when Judicate West's case manager identified April 14, 2023, as the payment deadline. This deadline was mentioned for the first time in the October 20, 2022 e-mail, which was sent nearly two months after expiration of the 30-day grace period. (See ante, at pp. 9-11 & fn. 8.)
"Because we reject [Minturn and Zaragoza]'s argument based on the plain language of section 1281.98, 'we need go no further.' [Citation.]" (De Leon, supra, 85 Cal.App.5th at p. 755.)
In any event, we agree with other appellate courts that have examined the legislative history that "the Legislature sought to establish a clear and unambiguous rule for determining a breach based on nonpayment as well as strict enforcement of the statute." (Doe, supra, 95 Cal.App.5th at p. 358.)
e. Sanctions
"A company that materially breaches an arbitration agreement under section 1281.98[, subdivision ](a) is also required to pay the 'reasonable expenses, including attorney's fees and costs, incurred by the employee . . . as a result of the material breach' [citation], and may also suffer an evidentiary, terminating, or contempt sanction unless it 'acted with substantial justification' or 'other circumstances make the imposition of the sanction unjust.'" (Doe, supra, 95 Cal.App.5th at p. 354, quoting § 1281.99, subds. (a), (b).) In her withdrawal motion, Medina asked for both monetary and nonmonetary sanctions. Upon remand, the superior court shall address these requests in conformance with section 1281.99.
DISPOSITION
Let a writ of mandate issue directing the Merced County Superior Court to (1) vacate its April 11, 2023 order denying plaintiff Maria Medina's motion to withdraw from arbitration; (2) enter a new order granting her motion to withdraw from arbitration; and (3) hold proceedings to address her requests for sanctions under Code of Civil Procedure section 1281.99. In calculating the mandatory monetary sanction under subdivision (a) thereof, the court shall include Medina's reasonable attorney's fees incurred in prosecuting her writ petition. The stay of further proceedings in the superior court is vacated upon finality of this opinion. (State Water Resources Control Bd. v. Superior Court (2002) 97 Cal.App.4th 907, 919.) Costs are awarded to Medina. (Cal. Rules of Court, rule 8.493(a)(1)(A).)
WE CONCUR: MEEHAN, J., SNAUFFER, J.