Hearing Motion hearingsCal. Super. - 6th Dist.May 11, 2020SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Anna Prenares vs GEICO General Insurance Company Hearing Start Time: 9:00 AM 20CV366495 Hearing Type: Hearing: Motion hearings Date of Hearing: 07/29/2021 Comments: 9 Heard By: Takaichi, Drew C Location: Department 2 Courtroom Reporter: - No Court Reporter Courtroom Clerk: Farris Bryant Court Interpreter: Court Investigator: Parties Present: Future Hearings: Exhibits: - to Compel Arbitration by Ptr Geico General Insurance Com (Daniel Walsh) 4-20-21 The following attorney(s) appear via CourtCaII: Daniel C. Walsh for Petitioner, GEICO General Insurance Company No one has contested the Tentative Ruling. The Tentative Ruling is adopted. See below for ruling. Case name: Anna Prenares v. GEICO General Insurance Company Case No.2 20CV366495 On April 20, 2021, defendant GEICO General Insurance Company ( GEICO ) filed motion to compel arbitration. On July 14, 2021, plaintiff Anna Prenares ( plaintiff ) filed opposition, and on July 22, 2021, GEICO filed reply. Background The action pertains to an automobile accident in which a vehicle driven by an underinsured motorist struck a vehicle driven by plaintiff causing physical injuries to plaintiff. Plaintiff made claim to her insurer, GEICO, under the underinsured motorist provision of her policy of insurance with GEICO. The claim was not resolved, and plaintiff filed a motion for arbitration. GEICO asserted that the policy of insurance required that the arbitration be conducted pursuant to Consumer Arbitration Rules promulgated by American Arbitration Association rules of arbitration ( AAA rules ). Plaintiff asserted surprise that arbitration was to be conducted under AAA rules, and declined to further pursue arbitration. GEICO then filed the instant motion. Printed: 7/29/2021 07/29/2021 Hearing: Motion hearings - 20CV366495 Page 1 of 5 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Summary of contentions GEICO asserts that the subject auto insurance policy contains a provision mandating arbitration of claims pursuant to AAA rules. Plaintiff, a party to the agreement, refuses to arbitrate her claim which is covered by the policy. GEICO asserts that the policy references the AAA rules and the rules include a provision for delegation of selection of a single, neutral arbitrator. Under these circumstances, GEICO asserts that the court is required to order the parties to arbitration pursuant to the provisions of the policy and cited California statutory law. In opposition, plaintiff asserts that after she filed petition for arbitration of her claims, she was surprised that GEICO contended that the policy requires that arbitration be conducted under AAA rules. Plaintiff asserts that she was unfamiliar with the AAA rules, was not provided with a copy at any time prior to filing the Superior Court action, that reference to arbitration under AAA rules was not prominently displayed in the policy and she was not directed to take notice of the provision. As a result, she was not properly apprised that arbitration of her claims was pursuant to AAA rules. Plaintiff further asserts that application of AAA rules to the instant arbitration would be unconscionable, and that arbitration agreements are subject to all defenses in law and equity that apply to contracts in general, including existence of a valid and enforceable agreement. In that regard, plaintiff asserts that the AAA rules are unenforceable in that AAA rules as a whole is a contract of adhesion which she had no meaningful ability to negotiate, that AAA rules unreasonably favor GEICO, are unduly harsh, oppressive and one-sided as to shock the conscious. Plaintiff asserts that she is a consumer, and while she chose GEICO as her auto insurer, she is not on equal bargaining footing and was made to accept all terms of the policy. Because the AAA rules constitute an unconscionable term of adhesion, plaintiff urges the court to find the AAA rules unconscionable and unenforceable, and sever the rules from the policy and from the arbitration proceeding. Plaintiff further asserts that surprise is evidence of procedural unconscionability even where a party had an opportunity to read the document before signing it. Plaintiff argues that the policy is presented on a take-it- or-Ieave-it basis with no opportunity to negotiate pre-printed terms, that plaintiff was not provided with a copy of the AAA rules prior to signing the policy, and the lack of prominent reference to AAA rules supports a finding of surprise. Plaintiff argues that this constitutes oppression sufficient for procedural unconscionability. Plaintiff also asserts that AAA rules are substantively unconscionable because they require her to pay fees above and beyond filing fees in a Superior Court action, provide no procedure for discovery, and do not require testimony under oath. Proceeding under these rules effectively denies plaintiff the constitutional right to a fair trial. In its motion and reply, GEICO asserts that in this matter, jurisdiction to determine issues of enforceability of the arbitration provisions is vested with the arbitrator, not the court. This is because the policy contains a severable and enforceable provision delegating enforceability issues to the arbitrator. Printed: 7/29/2021 07/29/2021 Hearing: Motion hearings - 20CV366495 Page 2 of 5 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER If a delegation provision is specifically challenged, the clause is severed and enforceability of the clause is determined by the court. If the clause is determined enforceable, jurisdiction to determine the enforceability of the agreement then vests in the arbitration proceeding. GEICO asserts that the policy s reference to AAA rules, which contains the delegation clause, is clear and unmistakable evidence of the parties intention for the arbitrator to decide issues of arbitration, including enforceability of the arbitration provisions. In contrast, if the arbitration agreement is challenged as a whole, it is not a specific challenge to the delegation clause, and the delegation clause is severed, and its validity is presumed and enforced. Jurisdiction to determine the issues of the claim and existence, validity and enforcement of the arbitration agreement then vests with the arbitrator, not the court. GEICO asserts that plaintiff s challenge is a general challenge, and notwithstanding that jurisdiction to determine enforceability is vested in the arbitration proceeding, GEICO asserts here that the delegation clause is enforceable, and the AAA rules are not unconscionable, procedurally or substantively. Judicial notice The unopposed request forjudicial notice of the AAA rules is GRANTED. Evidence Code section 452(h). The document is also referenced by both parties in their papers. Analysis The AAA rules referenced in the policy include RuIe-14 which is a delegation clause . The delegation clause provides that determination of issues regarding the existence, scope or validity of the arbitration agreement is vested in the arbitrator. This would include the issues of unconscionability asserted by plaintiff. Plaintiff s claim of unconscionability is in substance a general challenge to the whole of AAA rules of arbitration. While the general challenge necessarily includes the delegation clause, it is not a specific challenge to the clause. Consequently, the delegation clause is severed out and enforced, and the arbitrator and not the court determines the enforceability of the arbitration agreement. Malone v. Superior Court (2014) 226 Cal.App.4th 1551. Further, plaintiff does not challenge the validity of the delegation clause, and that pursuant to the evidence and authorities submitted by GEICO, the court finds that the clause is valid and enforceable. Plaintiff also asserts that a provision of the policy itself that mandates arbitration pursuant to AAA rules is unconscionable and unenforceable. This is within the jurisdiction of the court to determine. Plaintiff asserts that the provision in the policy is oppressive, and therefore, unenforceable because plaintiff was not apprised of the requirement to arbitrate pursuant to AAA rules. It is asserted that reference to the Printed: 7/29/2021 07/29/2021 Hearing: Motion hearings - 20CV366495 Page 3 of 5 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER AAA in the policy is not prominently displayed and plaintiff was not provided with a copy of the AAA rules. Plaintiff also asserts that the policy was presented to her on a take-it-or-Ieave-it basis with no opportunity to negotiate. The contents section of the subject policy include a bold face font heading SECTION IV UNINSURED MOTORISTS AND UNDERINSURED MOTORISTS COVERAGE . This section lists a subsection Disputes Between Us and Insured . The subsection refers the policy holder to page 13 of the policy .The text ofthe subsection in the policy states unambiguously that disputes are settled in arbitration according to American Arbitration Association rules. The court finds that the provision of the policy requiring arbitration pursuant to AAA rules is clear and conspicuous. Plaintiff s filing of her petition for arbitration evidences her reading of the subsection and awareness, understanding and intention that the parties are bound to the arbitration provision in the policy. To the extent plaintiff did not carefully read the provision in the policy does not bar a finding of validity of the provision where, as here, the provision is understandable, clear and conspicuous. See Mission Viejo Emer.Med.Ass n. v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146. Although the AAA rules were not furnished to plaintiff, the fact that the policy refers to the rules and they are accessible on the internet substantially defeats the asserted ground of surprise. See Lane v. Francis Capital Mgmt., LLC (2014) 224 Cal.App.4th 676, 689. Disposition Plaintiff s challenge ofthe arbitration agreement, specifically the AAA rules, is a general challenge, and not specific to the delegation clause in the AAA rules. The delegation clause in the AAA rules referenced in the policy is therefore severed from the arbitration agreement and enforced. The motion to compel arbitration is GRANTED on that basis. Further, assuming for argument s sake that the challenge was specific to the delegation clause, the court finds that the delegation clause is valid and enforceable. Additionally, the provision in the policy requiring arbitration of plaintiff s claims in this action pursuant AAA rules is valid and enforceable, and the petition to compel arbitration is GRANTED on that alternative basis. Arbitration shall include determination of all issues of the existence, scope or validity of the arbitration agreement, including issues that the AAA rules are procedurally and/or substantially unconscionable. Printed: 7/29/2021 07/29/2021 Hearing: Motion hearings - 20CV366495 Page 4 of 5 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Printed: 7/29/2021 07/29/2021 Hearing: Motion hearings - 20CV366495 Page 5 of 5