Alyxandra Snow vs. American Golf Corporation

Reply Other

Cal. Super. - 4th Dist.October 5, 2017

Oo 0 0 N N Wn bh W N nN Ne ] N N N N N N N -_ p- p- - - - - -_ = oo ~J 1 N wh + a wo r o ft oe Oo o e ~ J aN w n EE N Ww [\ & - < AEGIS LAW FIRM, PC KASHIF HAQUE, State Bar No. 218672 FAWN BEKAM, State Bar No. 307312 9811 Irvine Center Drive, Suite 100 Irvine, California 92618 Telephone: (949) 379-6250 Facsimile: (949) 379-6251 khaque@aegislawfirm.com fbekam@aegislawfirm.com Attorneys for Plaintiff ALYXANDRA SNOW ELECTROMICALLY FILED Superior Court of Califarnia, County of Orange 08/22/2018 at 03:40:00 PM Clerk of the Superior Court By & Clerk, Deputy Clerk SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE ALYXANDRA SNOW, an individual, Plaintiff, Vs. AMERICAN GOLF CORPORATION, a California corporation; and DOES 1 through 20, inclusive, Defendants. CASE NO.: 30-2017-00948099-CU-OE-CJC ASSIGNED FOR ALL PURPOSES TO: HON. FREDERICK P. HORN, DEPT. C64 PLAINTIFF'S REPLY IN SUPPORT OF MOTION TO LIFT STAY Hearing Date: August 29, 2018 Hearing Time: 1:30 p.m. Department: C64 Complaint Filed: October 5, 2017 Trial Date: None set REPLY IN SUPPORT OF MOTION TO LIFT STAY OO XX 2 AN Wn RA W N N N N O N O N N N N N N O N = m m em ee p m mm e d e m p m pe ce J O N LL BA W N = DO vO 0 0 N N t n RAR W N R E D L INTRODUCTION AND BACKGROUND Defendant American Golf Corporation (“Defendant” or “AGC”) sought an order compelling arbitration in this matter. After being granted what it sought, AGC unjustifiably defaulted on its obligations and caused AAA to terminate properly-initiated arbitration proceedings in accordance with the rules adopted in the parties’ arbitration agreement. Only after proceedings were terminated and after this Motion was filed did AGC scramble to pay the required fees in an effort to avoid returning to court. L AGC DEFAULTED IN ARBITRATION PROCEEDINGS The statute that governs this dispute squarely addresses it. The Federal Arbitration Act (“FAA”) provides, at 9 U.S.C. § 3, that a court faced with a dispute that is referable to arbitration under contractual agreement shall stay the proceedings pending such arbitration, “providing the applicant for the stay is not in default in proceeding with such arbitration.” The record here is clear that AGC defaulted in proceeding with the arbitration on July 27, 2018. Despite several warnings from AAA that the case would close unless fees were received, AGC failed to submit payment and caused AAA to close the arbitration. Specifically, AAA stated: The employer has failed to submit payment as requested in accordance with our Employment Arbitration Rules for disputes arising out of employer plans; accordingly, we have administratively closed our file on this matter . . . Because the employer has failed to comply with the Employment Arbitration Rules and the Employment Due Process Protocol, we will decline to administer any future employment matter involving respondent. We ask that respondent remove our name from its arbitration agreements so there is no confusion to the public. [Declaration of Fawn Bekam in Support of Plaintiff's Motion to Lift Stay, § 11, Exhibit J]. Therefore, the FAA no longer permits a stay of these court proceedings pending arbitration. Usually, a party that succeeds in terminating litigation based upon an arbitration agreement is careful to preserve its right to arbitrate by timely paying the fees required by the arbitration process, by not litigating elsewhere, and by faithfully abiding by the “speedy” and “summary” procedures afforded to the parties at arbitration. See Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 29. AGC did not do so here. Instead, AGC violated AAA’s Employment Arbitration Rules and the parties’ arbitration agreement, defaulted in arbitration proceedings, and caused AAA to terminate arbitration properly initiated by Plaintiff Alyxandra -1- REPLY IN SUPPORT OF MOTION TO LIFT STAY Oo 0 NN A n k W N N N N N N N N N O N m e m em p m b e e m p m m d pe 0 ~~ O N Wn BR W D N R D S O E N N R W E R S Snow (“Plaintiff” or “Ms. Snow”). Only after proceedings were terminated and after Ms. Snow filed the instant Motion did AGC suddenly express a willingness to pay the required fees in order to unilaterally reopen arbitration and avoid returning to court. | The leading appellate case on this matter is Sink v. Aden Enterprises, Inc. (9th Cir. 2003) 352 F.3d 1197. There, a similar situation occurred involving an arbitration provision in an employment agreement. The provision required the employer to front all the costs of the arbitration. The employee initially brought suit in district court alleging that the employer breached the employment by failing to make the required payments and stock options to the employee. The employer moved to stay the action and compel arbitration, which was granted. Once the arbitration process began, the employer defaulted in making the required arbitration payments. AAA then closed the case. The employee in Sink thereafter moved the district court to lift the stay and to enter a default judgment based on the arbitrator’s order of default. The employer opposed and advised the district court that it now had the funds to pay for the arbitration and requested that the action be referred back to arbitration. The district court denied the motion, finding that the employer had defaulted in the arbitration proceeding and had waived its right to arbitrate. Id. at 1199. Because the defendant had defaulted, the FAA no longer permitted a stay of the court proceedings in favor of arbitration and did not require the district court to order the parties to return to arbitration. Id. at 1201-1202. The Ninth Circuit held, “that a party to an arbitration agreement may not compel arbitration of claims under FAA § 4 where a prior default in arbitration of those claims precludes that party from obtaining a stay of litigation pending arbitration under § 3.” Id. Similarly, here, AGC only paid the required fees after AAA closed the case. But this does not cure the fact that AGC had in fact already defaulted under and materially breached the terms of the parties’ agreement. “Defendant’s admission that the filing fee was not paid is sufficient for the court to conclude that Defendant defaulted.” Stowell v. Toll Bros. (E.D. Pa. Jan. 4, 2007) 2007 U.S. Dist. LEXIS 287, at *3. Courts confronted with similar facts have lifted stays when a defendant had finally paid arbitration fees only after being faced with the prospect of returning to court. See, e.g, Noodles Dev., LP v. Latham Noodles, LLC, (D. Ariz. Jan. 9, 2011) 2011 U.S. Dist. LEXIS 9802, *5-6 (“Like [the defendant in Brown v.] Dillards |, Inc. (9th Cir. 2005) 430 F.3d 1004], Defendant 2. REPLY IN SUPPORT OF MOTION TO LIFT STAY No 0 N N nn Rr W N N N N N N O N DN N O N rm e m e m em a p m e m e d e m pe c o ~~ O N Wn A W N R= S O 0 N N Wn R W = Oo Leach expressed his preference to arbitrate, then refused to participate when Franchisor actually demanded arbitration. When Franchisor moved to reopen, Leach finally paid up and returned to this Court to say that he is now ready to arbitrate. Dillards may also have been ready to arbitrate after Brown filed suit, but just as it was too late for Dillards then, it is too late for Leach now.”) (emphasis in original). The same result is appropriate here, as AGC has already unjustifiably and materially breached the terms of the arbitration agreement. Though AGC now argues that it has always expressed its preference to arbitrate, its actions demonstrate that it refused to participate in arbitration until it was too late. AGC has not presented the Court with any authorities that point in an opposite direction. Indeed, in cases where courts have found a party in default for failing to pay fees, the arbitration proceedings had been suspended or terminated for nonpayment, just as they were here. See Pre-Paid Legal Servs., Inc. v. Cahill (10th Cir. 2015) 786 F.3d 1287, 1294); Sink, 352 F.3d at 1199; Garcia v. Mason Contract Products, LLC (S.D. Fla. Aug. 18,2010) 2010 U.S. Dist. LEXIS 92869, at *3. Only when an arbitrator has not held a hearing to address non-payment or has not otherwise suspended or terminated the proceedings has a court not found default. See North St., LLC v. Clipper Constr., LLC (E.D. La. Sept. 2, 2010) 2010 U.S. Dist. LEXIS 98327, at *3, IL ARBITRATION HAS BEEN HAD IN ACCORDANCE WITH THE PARTIES’ AGREEMENT Moreover, the record shows that this default was not simply a bureaucratic error as AGC would contend; instead, it was an intentional act because AAA provided repeated notices to AGC that proceedings would be terminated if timely payment had not been received. AGC did not remit payment or make any attempt to until after AAA closed its case and after Ms. Snow filed this Motion. By that point, however, AAA-exercising the rules that the parties agreed to abide by- had conducted the arbitration by terminating it and Ms. Snow had sought redress from this Court. As Justice Rehnquist explained in the Court’s opinion in Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., “there is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure enforceability, according to their terms, of private agreements to arbitrate.” (1989) 489 U.S. 468, 475. As a result, 3- REPLY IN SUPPORT OF MOTION TO LIFT STAY Oo 0 NN NN Un B R A W N e a BN O N ND O N N N N N O N = o m em em e m e m p d em e m © NN A N nh B R A W N = O O ® N N N WN R W e o “§ 4 of the FAA does not confer a right to compel arbitration of any dispute at any time; it confers only the right to obtain an order directing that ‘arbitration proceed in the manner provided for in [the parties’] agreement.’ 9 U.S.C. § 4.” Id. at 474-475 (emphasis in original). Here, the parties incorporated the AAA Employment Rules into their arbitration agreement. Pursuant to that agreement, Ms. Snow submitted a demand for arbitration. AAA requested that AGC pay the required filing fee several times over the course of nearly three months, but to no avail. Then, according to the Employment Rules, AAA closed its file. Therefore, arbitration has been had pursuant to the parties’ agreement. | AGC contends that arbitration has not been had because AAA allegedly reopened proceedings without Ms. Snow’s consent and without the filing of a new demand for arbitration. But no provision in the Employment Rules nor in the arbitration agreement which Ms. Snow and AGC agreed to permits AGC to unilaterally reopen a terminated arbitration in order to avoid going back to court. The Rules required AGC to remit payment. Without payment, AAA can and did terminate the proceedings. “As such, the arbitration ‘had been had in accordance with the terms of the agreement.”” Pre-Paid Legal Servs, Inc., 786 F.3d at 1294 (citing 9 U.S.C. § 3). III. CONCLUSION For all of these reasons, Ms. Snow respectfully requests that this Court enter an order lifting the stay pending arbitration, which was entered by this Court on April 18, 2018. Upon lifting of the stay, Plaintiff also requests that a case management conference be held to allow this matter to proceed in this Court. Dated: August 22, 2018 AEGIS LAW FIRM, PC By ZL Er a Kashif Haque Fawn Bekam Attorneys for Plaintiff ALXYANDRA SNOW -4- REPLY IN SUPPORT OF MOTION TO LIFT STAY OO ® NN NN hh BR W N D N D N N N N N N N = m e e e e m e m b a a e m e m e a = a E W N =, O V R E N A N R W N N - CERTIFICATE OF SERVICE I, the undersigned, am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action; am employed with Aegis Law Firm PC and my business address is 9811 Irvine Center Drive, Suite 100, Irvine, California 92618. On August 22, 2018, I served the foregoing document entitled PLAINTIFF’S REPLY IN SUPPORT OF MOTION TO LIFT STAY on all the appearing and/or interested parties in this action by placing [_] the original a true copy thereof enclosed in sealed envelope(s) addressed as follows: Daniel F. Fears James R. Moss PAYNE & FEARS, LLP 4 Park Plaza, Suite 1100 Irvine, CA 92614 Attorneys for Defendant: American Golf Corporation (BY MAIL) I am readily familiar with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Irvine, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postage cancellation date or postage meter date is more than one day after date of deposit for mailing this affidavit. (Cal Code Civ. Proc. § 1013(a); Fed. R. Civ. Proc. 5(a); Fed. R. Civ. Proc. 5(c).) (BY OVERNIGHT MAIL) I am personally and readily familiar with the business practice of Aegis Law Firm PC for collection and processing correspondence for overnight delivery, and I caused such document(s) described herein to be deposited for delivery to a facility regularly maintained Federal Express for overnight delivery. (Cal Code Civ. Proc. § 1013(c); Fed. R. Civ. Proc. 5(c).) (BY ELECTRONIC TRANSMISSION) I caused said document(s) to be served via electronic transmission via the above listed email addresses on the date below. (Cal. Code Civ. Proc. § 1010.6(6); Fed. R. Civ. Proc. 5(b)(2)(E); Fed. R. Civ. Proc. 5(b)(3).) I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on August 2, 2018, at Irvine, California. Hele HE Grethel Gonzalez CERTIFICATE OF SERVICE