Opposition ObjectionsCal. Super. - 6th Dist.May 16, 2019162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1QCV3481 73 Santa Clara - Civil HANSON BRIDGETT LLP JASUN C. MOLINELLI SBN 204456 jmolinelli@hansonbridgett.com 1676 N. California B1Vd., Ste. 620 Walnut Creek, California 94596 Telephone: (925) 746-8476 Facsimile: (925) 746-8496 Attorneys for Plaintiffs GREENLEE'S CINNAMON BREAD AND MORE INC., DERON ROBERTSON; JANETTE ROBERTSON Electronically Filed by Superior Court of CA, County of Santa Clara, on 2/21/2020 3:22 PM Reviewed By: L. Nguyen Case #1 9CV3481 73 Envelope: 4066921 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA GREENLEE'S CINNAMON BREAD AND MORE INC., a California corporation; DERON ROBERTSON, an individual; JANETTE ROBERTSON, an individual and formerly doing business as Greenlee's Cinnamon Bread and More, Plaintiff, V. DLA PIPER, LLP, a California limited liability partnership; and DOES 1 -50, Defendant. I. INTRODUCTION A. Insurance Tender Failure. Greenlee's Cinnamon Bread and More is a small family owned bakery in San Jose owned by Janette and Deron Robertson ("Plaintiff“) as second generation operators 0f the family business. (See Plaintiffs' First Amended Complaint ("FAC") filed in this matter at 1] 1.) They were sued by a family member/employee in a breach 0f contract/employment case ("Garrett Complaint") and retained DLA Piper LLP ("DLA" or "Defendant") t0 represent their best interests and defend them against the lawsuit. (FAC 1] 1.) Case N0. 19-CV-348 1 73 PLAINTIFFS' OPPOSITION TO DEFENDANT'S MOTION TO COMPEL ARBITRATION Date: March 5, 2020 Time: 9:00 am. Dept: 19 Judge: Hon. Peter H. Kirwan Action Filed: May 16, 2019 Trial Date: None set OPPOSITION TO MOTION TO COMPEL ARBITRATION 162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs were served with the Garrett Complaint against them 0n December 2 1 , 2012. (See Declaration 0fJasun Molinelli at 1T3 .) On January 3, 2013, Plaintiffs met with DLA (two attorneys) for 3.5 hours and provided the following items and information to DLA: (1) Copy 0f Garrett Complaint; (2) Identification, disclosure pages and policy statements and requisite information for its Commercial General Liability Policy and Employment Practices Liability Insurance policy ("EPLI") with Farmers/Truck Insurance ("Farmers") which provided Plaintiffs with up t0 $1 million in insurance coverage for Employment Practices related claims. (FACw 47-48.) (3) Facts related t0 Bryan Garrett as being an employee 0f Greenlee's and that Greenlee's was having employment issues and claims made by Garrett. (See FAC 1] 46, 49 and Declaration 0f Jasun Molinelli at 1T4.) Plaintiffs met with DLA (three attorneys) again for 2 hours t0 discuss the case, including potential insurance coverage, 0n January 16, 2013. (See Declaration 0f Jasun Molinelli at 1E.) The EPLI policy contained a reporting requirement 0f 30 days from the date 0f notice 0f the Complaint which would have effectively been a reporting deadline 0f January 21, 2013. DLA had all of the information required t0 actively investigate and pursue a tender for defense/indemnity coverage under the EPLI policy 0n January 3, 2013 but failed its duty 0f care t0 Plaintiffs to do so in a timely manner thereby extinguishing Plaintiffs' right t0 coverage under the EPLI policy. It was then 0n January 21, 2013 that DLA had certainly failed its duties t0 Plaintiffs and committed malpractice t0 the severe detriment 0f Plaintiffs who forfeited its right t0 the available insurance coverage t0 defend the Garrett Complaint. In mid-September 2013, already long past the reporting deadline, DLA advised Plaintiff t0 tender under the CGL policy but still did not advise Plaintiffs t0 tender under the EPLI policy. Farmer's denied the tender under the coverage provided in the CGL policy 0n October 7, 2013. Never did DLA instruct Plaintiffs t0 tender the claim under the EPLI policy. (FAC 1] 52.) Also around October 2013, (long past the reporting deadline) an insurance coverage specialist at DLA Piper, instructed the lead handling attorney at DLA Piper t0 explore a re-tender -2- OPPOSITION TO MOTION TO COMPEL ARBITRATION 162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 under the EPLI policy and requested a copy 0f said policy t0 review for coverage from the lead attorney. (FAC 1] 53.) Rather than follow up with a further insurance coverage investigation and re- tender, as any competent and ethical attorney should d0 in order t0 determine whether insurance coverage is available for its client t0 potentially provide defense and indemnity, DLA Piper inexplicably ignored the information and failed t0 further investigate and re-tender under the EPLI policy within the requisite time period under the policy 0r instruct Plaintiff to tender the EPLI policy directly t0 Farmers. (FAC 1] 54.) In any event, the claim‘s made policy reporting deadline under the EPLI policy had long since passed but not before DLA had a reasonable time in which t0 investigate potential coverage and make a tender 0r advise Plaintiff t0 tender t0 Farmers Insurance and failed t0 d0 so. Following the culmination 0f the lawsuit, the legal fees and costs billed by DLA Piper t0 Plaintiff totaled over $4.5 million stemming from the representation. (FAC 1] 3.) It is thus indisputable that by January 21, 2013, DLA Piper had failed its duty 0f care t0 Plaintiff by not timely pursuing available defense and indemnity insurance coverage 0f up t0 $1 Million causing Plaintiff to incur unnecessary legal fees in the millions 0f dollars that would have been avoided had the insurance coverage been obtained. (FAC 1] 58.) Furthermore, DLA Piper failed and/or intentionally ignored its duty 0f loyalty t0 Plaintiff by not tendering the Garrett Complaint t0 Farmers for defense and indemnity under the EPLI policy, in order t0 retain the client in self-interest and generate revenue in legal fees rather than lose the client t0 Farmer's appointed staff insurance defense counsel. (FAC 1] 59.) B. Engagement Agreement and Arbitration Agreement. Despite a legal duty t0 d0 so in writing under Cal. Business & Professions Code §6 148, DLA and Plaintiffs entered into the engagement 0n 0r about January 3, 2013 without any written fee agreement 0r written agreement 0f any kind. Plaintiffs were unaware of this requirement and DLA was obligated t0 be aware 0f this legal requirement. Nevertheless, the parties proceeded through eleven months 0f the engagement, amassing over $1 .3 million in legal fees, before DLA presented an engagement letter t0 Plaintiffs 0n December 9, 2013. The engagement agreement contained a forward facing arbitration provision which read: -3- OPPOSITION TO MOTION TO COMPEL ARBITRATION 16298169.1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8. Arbitration 0f Disputes. We anticipate a harmonious and satisfactory attorney-client relationship. If any disputes arise between us, we shall submit them t0 binding arbitration. which shall proceed pursuant t0 the Commercial Arbitration Rules 0f the American Arbitration Association. If you d0 not wish t0 agree t0 arbitrate any disputes with us, you should not sign this letter. Your agreement t0 arbitrate is not necessarily a condition 0f our agreement t0 represent you. and upon request, we will consider deleting the arbitration provision. In the unlikely event that a dispute arises concerning our fees 0r your payment 0f them, you may choose t0 arbitrate the dispute under the auspices 0f the California State Bar Mandatory Fee Arbitration Program, as set forth in California Business and Professions Code Section 6200, et seq. Those procedures permit a trial after arbitration. unless the parties agree in writing, after the dispute has arisen. t0 be bound by the arbitration award. If, after receiving a notice 0f client's right t0 arbitrate, a Client does not elect t0 proceed under the State Bar fee arbitration procedures, and file a request for fee arbitration within 3O days. any dispute over fees. charges. costs 0r expenses, Will be resolved by binding arbitration as provided in the previous subparagraph. For more information 0n the program, please Visit http://Www.calbar.ca.gov. II. LEGAL STANDARD "A written agreement t0 submit t0 arbitration an existing controversy 0r a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation 0f any contract.” (Cal. Code CiV. Proc. § 1281.) Although there is a strong public policy favoring arbitration, there is n0 public policy which favors the arbitration 0f disputes the parties have not agreed t0 arbitrate. Medical StaflofDoctors Medical Center in Modesto v. Kamil (2005) 132 Cal.App.4th 679, 684; Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263; In re Tobacco Cases I, JCCP 404] (2004) 124 Cal.App.4th 1095, 1104; Lopez v. Charles Schwab & C0., Inc. (2004) 118 Cal.App.4th 1224, 1229; Amalgamated Transit Union Local I2 77 v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 673, 685; Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 634.) Arbitration is a matter 0f contract and a party cannot be required t0 submit t0 arbitration any dispute Which he has not agreed so t0 submit. Ajida Technologies, Inc. v. R003 Instruments, Inc. (2001) 87 Cal.App.4th 534, 541.) In the instant matter, n0 agreement exists between the parties t0 arbitrate the claims in the First Amended Complaint related t0 conduct 0f Defendants that occurred during the first eleven months 0f the representation, most notably, the insurance tender failure 0fDLA. /// -4- OPPOSITION TO MOTION TO COMPEL ARBITRATION 162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. ARGUMENT At the time that the parties entered into the Engagement Agreement 0n December 9, 2013, after eleven months 0f representation, DLA opted t0 include an Arbitration provision which Plaintiffs agreed t0. However, the arbitration provision did not seek t0 cover prior claims and in n0 way contains any backward facing 0r sweeping language, express 0r implied. The malpractice that gives rise t0 Plaintiffs' claims alleged in its First Amended Complaint occurred during the period 0f time where the parties had n0 written agreement between them, thus there was n0 agreement t0 arbitrate any claims that arose during the period 0f engagement prior t0 entering into a written agreement. Being the sophisticated party among the two parties and being the party required t0 memorialize the engagement in writing under BPC§6148, DLA nevertheless elected t0 represent Plaintiffs without any written agreement for eleven months and charge them over $1.3 million in legal fees. And then getting wise t0 their error and seeing their risk of exposure, DLA then, purely in self-interest, presented Plaintiffs with a formal written engagement. It was DLA'S decision t0 take 0n the representation without any formal agreement 0r arbitration agreement for eleven months 0f the engagement and it is DLA who comes now seeking cover, yet again, for their mistake and seeks t0 compel Plaintiffs t0 arbitrate the claims which arose during the period 0f representation without any written agreement 0r arbitration agreement. It is clear from the reading 0f the Arbitration provision in the engagement letter, that there was n0 intent 0f the parties t0 enter into a backwards facing arbitration agreement which would include arbitration for disputes that occurred during the prior eleven months 0f un-papered representation. Plaintiffs did not interpret the clause t0 include past claims at the time 0f execution because the language did not explicitly 0r implicitly specify such. Had DLA (or Plaintiff) desired such an effective provision, it would have/could have/should have included clear language, explicitly stating the intent 0f the arbitration clause, t0 apply t0 "past, present and future" claims. By way 0f example, in a recent ruling out 0f the U.S. Southern District 0f Florida (Kent V. Citibank, N.A., CASE NO. 19-60260-CIV-DIMITROULEAS/SNOW, 2019 U.S. Dist. LEXIS -5- OPPOSITION TO MOTION TO COMPEL ARBITRATION 162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 124478 (S.D. F. July 24, 2019)) the court enforced a backwards facing arbitration provision t0 claims that arose before the arbitration agreement because the arbitration clause applied t0 “past, present, 0r future” conduct. The Court noted that by entering into a contract sweeping “past” conduct within the scope 0f arbitration, the Plaintiff was found t0 have agreed t0 sweep all such claims out 0f court. The language in the Arbitration Provision at issue in the instant matter does not contain any backwards facing language 0r sweeping provision and clearly applies only t0 any claim 0r dispute that arises under the services and terms 0f the engagement letter 0f December 9, 2013. Where the contract provisions are unambiguous, such as they are in the December 9, 2013 engagement letter, the Court shall give effect t0 the plain and ordinary meaning 0f the language used by the parties. (Bank 0fthe West v. Superior Court (1992) 2 Cal.4th 1254, 1264; CiV.C0de, §§ 1636, 1638 and 1644.) Applying the plain meaning doctrine in contemplation 0f the instant motion, and based upon the points and authorities cited above, the Court should find that the parties did not intend 0n creating a backwards sweeping arbitration clause and thus, Plaintiffs should not be compelled t0 arbitrate the claims in their First Amended Complaint because it did not agree t0 d0 so. IV. CONCLUSION As a result 0f DLA'S ruthless recent enforcement 0f a judgment for $2million in legal fees (the same fees at issue in the instant action, resulting from 0f DLA'S insurance tender failure), Plaintiffs were forced t0 file for Chapter 11 Bankruptcy currently pending in the U.S. Bankruptcy Court, California Northern District. Plaintiffs' financial resources t0 provide for the care 0f their family, let alone prosecute the instant action, are under severe duress. Arbitration is prohibitively expensive for plaintiffs. DLA is well aware that Plaintiffs' ability t0 pay for a costly multi session arbitration is impossible at this time and so, seeks t0 continue its brutal assault 0n its former clients, t0 which they caused severe harm, in order t0 collect millions 0f dollars in fees and interests that it should have never been owed and that it knew Plaintiffs could never afford t0 pay. Plaintiffs did not agree t0 arbitrate any disputes 0r claims that arose during the eleven month period 0f DLA'S representation prior t0 entering into the written fee agreement containing an -6- OPPOSITION TO MOTION TO COMPEL ARBITRATION 162981691 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 arbitration clause. That arbitration clause applies only t0 disputes arising from the terms 0f, and services rendered under, the Engagement Letter 0f December 9, 2013. Based upon the foregoing facts and authorities, Plaintiffs respectfully request that this Court deny Defendant's motion t0 compel arbitration. DATED: February 21, 2020 By: HANSON BRIDGETT LLP JASUN C. MOLINELLI Attorneys for Plaintiffs GREENLEE'S CINNAMON BREAD AND MORE INC., DERON ROBERTSON; JANETTE ROBERTSON -7- OPPOSITION TO MOTION TO COMPEL ARBITRATION
