Homestreet Bank vs. Wiebke Bultmann

Motion to Compel Arbitration

Cal. Super. - 4th Dist.May 21, 2018

oo 0 9 nN AR W N N O N O N O N W O N O N N O R mm em mm em em em em em em ® J A A R R S ZT ® QA RN B E R D R R s MAZAREI LAW GROUP, INC. Tannaz “Tawny” Mazarei [SBN 188993] 18881 Von Karman Avenue, Suite 1620 Irvine, California 92612 Phone: (714) 418-5797 Fax: (714) 418-5788 ELECTROMICALLY FILED Superior Court of California, County of Orange 12/05/2018 at 01:40:00 FM Clerk of the Superior Court By Jeannette Dowling. Deputy Clerk Attorneys for Cross-Defendants: SHADI RAD, an individual; SHADI RAD, D. D. S. a California dental corporation HOMESTREET BANK, a Washington State Chartered Bank, VS. WIEBKE BULTMANN, an individual; and WIEBKE BULTMANN, D.D.S., INC, a California corporation and DOES 1 through 50 inclusive, IN THE SUPERIOR COURT OF FOR THE COUNTY OF ORANGE Plaintiffs, Defendants. WIEBKE BULTMANN, an individual; and WIEBKE BULTMANN, D. D. S., INC, a California corporation, VS. SHADI RAD aka SHADI JADALI, an individual; SHADI RAD D.D.S., a California dental corporation; and inclusive, Cross-Complainant, ROES 1 THROUGH 50, ‘Cross-Defendants. 1 THE STATE OF CALIFORNIA - CENTRAL JUSTICE CENTER Case No.: 30-2018-00993976-CU-BC-CJC ASSIGNED FOR ALL PURPOSES TO: Judge: Honorable Nathan Scott Dept.: C15 CROSS-DEFENDANTS’ NOTICE OF PETITION AND PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF THE CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF TAWNY MAZAREI; [PROPOSED] ORDER Hearing: Date: February 11,2019 Time: 2:00 p.m. Dept.: C-15 Court Reservation No.: 72940966 Complaint Filed: May 21, 2018 Cross-Complaint Filed: July 30,2018 Trial Date: None MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF CROSS-DEFENDANTS NOTICE OF PETITION oo 0 0 Na S N nt A W N N O N N N N N N N N ee em hm em j m em pm mk md ed QL aN S h A W N = S e e n Rm W N E s TABLE OF CONTENTS I. INTRODUCTION IL. FACTUAL BACKGROUND AND PROCEDURAL HISTORY.....cccoevenenencnrnnnennn 7 A. Bultmann Entered Into A Binding, Mutual Agreement to Arbitrate All Disputes...” B. Bultmann Has Already Commenced Arbitration .......c..cceevveviieieinecniciornanianes 8 C. Arbitration Continues to Remain Open and Bultmann’s Cross-Complaint Must be Submitted Back to the Pending Arbitration With JAMS .......cccociiiiinnnnn. cereeeees 9 III. ARGUMENTS A. THIS ACTION SHOULD BE ORDERED TO ARBITRATION......... eereereeenn------- 11 . California Law Mandates Enforcement of the Parties’ Arbitration Provision ........... 11 IV. . The Claims Alleged in the Complaint Fall Squarely ‘Within the Scope of the Arbitration Provision......ccoceviiiiiiiiiiiiciiiiiieriiieiiicieiiciiiiiiiiiieiiicnenes 13 . Rad Has Not Waived Their Right to Arbitrate..........cccccccvvviiiiiinnnnnniniiieiiien.. 13 . The Arbitration Agreement is Conscionable .................... FRIRES.8.4 cb ESE MNRAIETE 8 8 14 a. The Arbitration Agreement is Procedurally Conscionable............ccovvvineneennenn. 14 b. The Agreement is Substantively Fair and Conscionable.............c.cvviinineeee... 15 THE PROSECUTION OF CROSS-COMPLAINT SHOULD BE STAYED PENDING - THE OUTCOME OF THE ARBITRATION.....ccccuttiiieiuruciiiriiiiiicncncneiiiesisncnses 16 CONCLUSION. ct cttttiiiintitiitiieiiiieieiattneittaetisseissesesesssassssscssssssssssssssssscnsasons 16 2 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 3 A nN RAR W N N O N O N N N N N N N E em je m em em mk em em ed ed LL NN w n =~ Ww No pd [- ) \& oo RN | aN hn E N w No pa k > TABLE OF AUTHHORITIES Cases Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal App.4th 761 rveveeereeeeerone ee eee 10 Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Group (2011) 197 CalAPDALI 1146... cesses tetera sashes b eset ste aseesb abana ene 10 O’Malley v. Wilshire Oil Co. (1963) B81 P.2d 188 ooo eeseeeeseeeseeeesses sone sessesesses sre esse eenns 5 RES EAB AS 10 Pulli v. Pony International, LLC (2012) 206 Cal ADPD.AI 1507 c.veuieieieieieieinienieinieseesteeeeert esas eseee eb n tsae b ste sashes sent ess s e se ste saobensssesnes sesessoses 12 Twentieth Century Fox Film Corp. v. Superior Court (2000) | TD Cl AAT, TBE cco 0.5550. 500005 10005020... 5.855555 0 Eh Ai SSA. 14 United Trans. Union, AFLICIO v. Southern Cal. Rapid Transit Dist. (1992) 7 CalAPDA 804 .ccvcerrcereeessesesssmessessstsses s s o sss soso nes ise sses oso 10 Wagner Canst. Co. v. Pac. Mech. Corp. (2007) IST P.3A 1029 .ooeoeseesvessoessessosssessssssesss sess sss sesso sensors 9 Treatises Code of Civil Procedure, § 1281....cccccvvvivrvineencicennnen teeeteee reer eesesbeeesinteeatenbaenbaeateeeba eats ease e nse eteenbeenns 9 {ole af Cl Praveen, Br 1 ZB hum mosmmesmmsimesnssnssots emes ssi sms ssa assy 9 Code of Civil Procedure, § 1281 .4.......ooumwnneonninessinm.niasn is 555i 65555 54555 6 ibid in Sinbani ib bibnsbariibesnmosinsimenssnians 14 3 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION o c o ~~ AN wn =~ Ww BN 9 [\ *] ©» NN ~ No ro ro No Jk pk pt pum sk Jt h t pe d p - pk p d © © ~ aN Nn F N Ww No Jk > & [= ] Rt | AN Wn = Ww No Jk > "TO ALL PARTIES TO THIS ACTION AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on February 11, 2019, at 2:00 p.I., Or as soon as thereafter as this matter may be heard in Department C15 of the above-captioned Court, located at 700 Civic Center Drive West, Santa Ana, California 92701, Cross-Defendants, SHADI RAD, an individual; and SHADI RAD, D. D. S. a California dental corporation (collectively “Rad”) hereby specially appear to petition the Court for an order compelling: | (1) arbitration of all the disputes raised in the cross-complaint filed by Plaintiff, WIEBKE BULTMANN, D.D.S., INC., (“Bultmann”); and 2) Staying litigation of Bultmann’s cross-complaint pending resolution of the Arbitration. This Petition is made pursuant to Code of Civil Procedure, §§ 1281.2 and 1281.4 on the grounds that all the disputes raised in Bultmann’s cross-complaint squarely fall within the ambit of the proper and enforceable Arbitration Agreement between the parties. California law dictates that the proper vehicle for resolving the disputes between Bultmann and Rad is arbitration. This is particularly important because there is currently an arbitration pending between Bultmann and Rad. Incidentally, by relying on the terms of their contract, Bultmann is the person who demanded and initiated the arbitration. It is perplexing as to why Rad was served with a cross-complaint in this matter when Bultmann and Rad already agreed to arbitration. ~ After Bultmann’s cross-complaint was served on Rad, in the interest of judicial economy and efficiency, Rad’s counsel contacted Bultmann’s new counsel and asked them to agree to arbitrate the current dispute with the recently initiated arbitration proceeding. Unfortunately, Bultmann’s counsel has not agreed to arbitration. This Petition is based on this Notice of Petition, the attached Memorandum of Points and 1 1 nn 4 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION [od [5] No No 9 » No ~o 9 f d p- ft pd pd fa jm s pk pd W@W I A UN A W N = O o o Q W O N RAR W N = OD ee 00 a S N n t A W N Authorities, the attached Declaration of Tawny Mazarei, the records of this action, and any other evidence or argument that the Court may consider at the hearing on this Petition. Dated: December 5, 2018 Respectfully submitted, G -- MAZAREI By: Wi azarei l__-- Attorney(s) for#foss-Defendants SHADI RAD, an individual; SHADI RAD, D. D. S. a California dental corporation 5 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION No C0 a S N Nn R W N m BN N M O N N N N N N em em e m md md em e d em e m a @ N N N h W N R O Y 0 0 a N N R W N = o S MEMORANDUM OF POINTS AND AUTHORITIES On May 21, 2018, Homestreet Bank (“Homestreet”) initiated this lawsuit against Wiebke Bultmann, an individual; and Wiebke Bultmann, D.D.S., Inc. because they defaulted on their loan to Homestreet. On July 30, 2018, Wiebke Bultmann individually and Wiebke Bultmann, D.D.S., Inc. filed an answer to the complaint and a cross-complaint against Rad. On August 31, 2018, Wiebke Bultmann, as an individual, filed for bankruptcy. As a result, this Court issued a stay as to Wiebke Bultmann, individually only. But, the matter has not been stayed as Wiebke Bultmann, DDS. Inc. Through this Petition to Compel, Rad is seeking this Court’s order to compel arbitration of Weibke Bultmann, D.D.S., Inc.’s claims against Rad and Rad’s claims against Wiebke Bultmann, D.D.S., Inc. as Bultmann (individually and through her corporation) previously initiated arbitration and both parties agreed to submit all the claims and cross-claims to JAMS. Currently, this arbitration remains open and pending with JAMS. 1. INTRODUCTION Rad and Bultmann are both - practicing dentists. On June 7, 2017, Rad and Bultmann entered into a written agreement wherein Rad agreed to sell and Bultmann agreed purchase Rad’s dental practice (the purchase sale agreement is hereinafter referred to as “PSA™). To negotiate the transaction and the terms of the contract, Bultmann was represented by her attorneys, Wood and Delgado. Rad did not have any legal representation. After the PSA was fully signed by all parties, Bultmann became | difficult and refused to pay the purchase price. Notwithstanding having a fully binding contract with Rad, Bultmann put new conditions to closing. More specifically, Bultmann claimed that she had changed her mind and would not agree to share space with an existing dentist, Dr. Randall. Bultmann insisted that Dr. Randall had to agree to vacate the premises or she would not pay the purchase price. Wanting to avoid litigation, Rad began negotiating with Dr. Randall regarding his exit. These new negotiations delayed closing for almost a month and a half. Finally, on July 19, 2017, Bultmann closed the deal. Immediately after closing, Bultmann began reneging on the agreement and refused to abide by her obligations. More specifically, she refused to abide by her obligation to collect Rad’s account receivables, which was a specific term of her contract and also an industry standard practice. Shortly 6 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 3 S N Wn A W N N O N N N N N N N N je m em h m j m hm mm md j d fe d R@ 9 A n A W N DS Y d S N N E A W N m s thereafter, disputes between the parties arose and Bultmann began to complain about not making the expected income and attributed her failures to Rad’s alleged making misrepresentations about the value of the business. To resolve the parties’ disputes, Section 18 of the PSA provided the following: “In the event of any controversy or claim or dispute between the parties hereto arising out of, or relating to this Agreement, or any of the exhibits attached hereto, or the breach thereof, the parties agree to first meet and confer in person in an attempt to resolve their differences. If the dispute, claim or controversy cannot be settled through direct discussions, the parties agree to first endeavor to settle the dispute by submitting the controversy to the prevailing County Dental Society Peer Review, if applicable; or if appropriate for the controversy, before a mediator agreeable to both parties; or if the amount in within the jurisdiction of a court of Small Claims, the parties may settle the dispute in a court of Small Claims. Mediation must be completed within thirty (30) days of receipt of written notice requesting mediation. The parties agree to undertake mediation with out the participation of attorneys before resorting to arbitration. If mediation proves unsuccessful, or if the mediation is not held within thirty (30) days of written notice requiring mediation, the matter shall be submitted to binding arbitration in the prevailing county, in accordance with the Commercial Rules of the American Arbitration Associate which are in effect at the time the demand for arbitration is filed. The arbitrator(s) shall have power to award a party such money damages and/or injunctive relief, including without limitation, preliminary, temporary, or permanent restraining orders or injunctions, as may be afforded by a judge of a combined California Superior Court with full personal and subject matter jurisdiction.” (Ex. “1”) Therefore, clearly, based on the contractual agreement reached between the parties all disputes was required to be submitted to mediation and arbitration. The right to maintain a civil lawsuit was waived by both parties. In fact, up to the point that Bultmann was sued by the bank for defaulting on her loan, she exercised her options by pursuing arbitration and then mediation. The fact of the matter is that Bultmann is bound by the terms of the agreement and as such must submit her dispute and all grievances under her ctasE-complait to binding arbitration which remains open and pending with JAMS. II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY A. Bultmann Entered Into A Binding, Mutual Agreement to Arbitrate All Disputes On June 7, 2017, Bultmann signed and entered into a contract with Rad to arbitrate all claims 7 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oO 0 0 a A N Nt RA W N N N N N N N N N N em em em em md ed f m e d fe d fe [ = ] ~3 a wn + Ww » J o Oo c e J aN hn H W ro -t oo arising out of the purchase of the dental practice. (Ex. 1) This agreement is a clearly worded agreement that provides that the parties mutually consent to the resolution by arbitration “of any controversy or claim or dispute between the parties hereto arising out of, or relating to this Agreement, or any of the exhibits attached hereto, or the breach thereof” if mediation proves unsuccessful, or if the mediation is not held within thirty (30) days of written Hotice requiring mediation. Arbitration was initiated and remains open with JAMS. Bultmann cannot deviate from her contractual obligation and needs to submit her disputes to arbitration as done by Rad. B. Bultmann Has Already Commenced Arbitration On December 20, 2017, Bultmann’s first attorney, Marc Etinger, sent a letter to Rad claiming “serious issues” with the transaction. Etinger suggested mediation by relying on Section 18 of the PSA, which specifically provided that the parties agreed to submit their disputes to mediation before proceeding to arbitration. (Ex. 2). Between December 21, 2017 and January 8, 2018, attorneys for Bultmann and Rad communicated, via email, confirming that both sides were interested in pursuing mediation. (Ex. 3). On January 23, 2018, Stephen McNamara, acting as Bultmann’s second counsel wrote a letter to Rad’s attorney claiming that he believed the previous negotiations between respective counsel came to an “impasse” and indicated his plan for proceeding with arbitration and inquired about using Judicial Arbitration and Mediation Services (“JAMS”) (Ex. 4). Even though there was a dispute between the parties regarding exhausting mediation under the PSA, ultimately, both parties agreed to submit their disputes to binding arbitration with JAMS. On February 8, 2018, Bultmann’s attorney, made a formal demand for binding arbitration with JAMS. (Ex.5). On February 28, 2018, Rad submitted her cross-complaint to JAMS for arbitration. (Ex. 6). On March 2, 2018, JAMS served a Notice of Commencement of Arbitration, with a strikelist on all parties. (Ex. 7). On March 7, 2018, JAMS served a Notice of Appointment of Judge Gary L. Taylor as an Arbitrator on all parties. (Ex. 8). On March 22, 2018, as the parties were discussing arbitration, Bultmann’s attorney sent an email to Rad’s attorney inquiring whether Rad would be agreeable to consider mediation again. (Ex. 9). On March 26, 2018, Rad’s counsel notified Bultmann’s attorney that her client was on board with mediation. (Ex. 10). On April 11, 2018, Bultmann’s attorney 8 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 9 AN n t A W N Id No 9 nN No N O N »~N No pt pd pt Jk pd pd a fe d Jd pd LL I S N Wn Ah O W N = O Oo 0 0 a N N A W N E S confirmed the agreement for proceeding with mediation and discussed potential mediation dates. (Ex. 11). On May 11, 2018, the parties submitted their respective claims to mediation, with Judge Velasquez of Judicate West. During the mediation, it became clear that the parties did not have a thorough understanding of the facts and issues. As such, Judge Velasquez ordered that the mediation to be interrupted so the parties can conduct some informal discovery. To the vein, on May 15, 2018, Bultmann’s attorney sent an email to Rad’s attorney specifying the efforts he was making to produce requested information and also made a list of the documents that he requested to be produced prior to the second mediation. (Ex. 12). On May 22, 2018, Bultmann’s attorney emailed Judge Velasquez's case manager, asking for potential dates for a second mediation. He further indicated that he was clearing the dates with his client, Bultmann, and that he would notify Rad’s attorney and Judicate West of their convenient dates. (Ex. 13). On June 4, 2018, Bultmann’s attorney produced a CD with relevant documents requested by Rad’s attorney in preparation of the second mediation. (Ex. 14). | Between June 12 and June 13, 2018, the attorneys discussed producing additional documents requested by the parties as well as having an in-person meeting for June 14, 2018 where the documents and facts of the case were discussed. (Ex. 15). On June 14, 2018, Bultmann and Rad had an in-person meeting to further discuss the | - and the facts of the case. During the meeting, it was discussed the parties’ availability so a second mediation could be scheduled. On July 17, 2018, Judge Velasquez’s case manager sent an email to both counsel inquiring about either scheduling a second mediation or other status of the case. On July 18, 2018, Bultmann’s attorney responded to the email indicating that he no longer represented Bultmann and that directed the case manager to Bultmann’s email for further contact. (Ex. 16). Throughout this time, Bultmann never disclosed that she had defaulted on her bank loan and that she was sued by Homestreet. C. Arbitration Continues to Remain Open and Bultmann’s Cross-Complaint Must be Submitted Back to the Pending Arbitration With JAMS On August 1, 2018, BUTLMANN sent an email to the arbitration case manager at JAMS stating “I have retained new counsel and am no longer interested in arbitration. Since I had prepaid for my part 9 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION No 0 0 a a nh A W N N N No rN |] No rN |) ro | Ja k pd Jk fo pk Jt po sh pk ad J AN WN Rh W N E S O 0 N N S N R W O N m e ‘of the arbitration on 03/07/18 and opposing counsel never paid her part” and asked for the reimbursement of her deposit. Rad’s attorney was very surprised by this email and this was the first time she learned that Bultmann was no longer interested in pursuing mediation or arbitration. So, Rad’s attorney responded to Bultmann and JAMS indicating that “The Purchase sale agreement contains a provision for binding arbitration which is why the matter was submitted to arbitration. After the matter was submitted to arbitration, Dr. Butlmann’s attorney requested that the matter be submitted to mediation. We agreed. We have had follow-up meeting with Dr. Butlmann and her attorney to this regard. Thereafter, Dr. Bultmann’s attorney notified us that he does not represent her any longer. This is the first time we are hearing about Dr. Bultmann being interested in resuming arbitration. If she is, she can provide us with the information of her new attorney and we can proceed accordingly.” (Ex. 17). As such, the JAMS case manager asked for further clarification. Bultmann responded by confirming that she was “withdrawing” from arbitration. (Ex. 17). In response, Rad’s counsel sent a letter to JAMS and Bultmann specifying that “Shortly, after arbitration, through her then counsel of record, Stephen McNamara, Dr. Bultmann requested that the matter to be submitted to mediation. We agreed and the parties attended mediation on May 11, 2018. The mediation was suspended based on the parties’ agreement that Dr. Bultmann would provide additional information requested by our office. Dr. Bultmann never complied with our request and terminated her lawyer. On August 1, 2018, Dr. Bultmann notified that she is no longer interested in proceeding with arbitration and asked for a refund of her arbitration fees. We have sent multiple emails regarding the fact that Dr. Bultmann’s decision to withdraw from arbitration should not be construed as | a waiver of the arbitration agreement that she entered into when she signed the purchase agreement for the dental office that has been the subject of this litigation. Therefore, in the future, should Dr. Bultmann be interested in pursuing her allegations, she continues to be bound by the purchase agreement that she has signed and must submit the dispute to binding arbitration. Our agreement to close the arbitration is not a waiver of the parties’ obligation to proceed with binding arbitration or a waiver of our client’s rights at law or in equity.” (Ex 18) Thereafter, Rad discovered that Bultmann’s withdrawal was due to the fact that she has defaulted on her loan obligations and had been sued by Homestreet bank. Furthermore, she had filed a cross- 10 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 0 a S N nt A W O N BN O N N N N N N N N je m p m em pm em md ed mk fe d WW N N A W N = O YO 0 Nd N N R W O N E e complaint against Rad. Accordingly, Rad’s counsel sent an email to the JAMS case manager indicating “I just found out that Dr. Butlmann has been sued by the bank after defaulting on her loans. Asa result, she has filed a cross-complaint against our client in Orange County Superior Court. We will be filing a petition to compel arbitration of the claims alleged in Dr. Bultmann’s case and will try to bring the case back to JAMS. So, please do not close the arbitration.” (Ex. 19). On December 4, 2018, Rad’s counsel contacted JAMS and confirmed with Jenny Trux - Judge Taylor’s Case Manager “that the arbitration remain open and pending with Judge Taylor.” (Ex. 20). For the reasons set forth above, and pursuant to the provisions of California law, the parties are required to submit their dispute to binding arbitration. 111. ARGUMENTS - A. THIS ACTION SHOULD BE ORDERED TO ARBITRATION 1. California Law Mandates Enforcement of the Parties’ Arbitration Provision "[T]he right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. "(Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal. App.4th 644, 653.) When presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute. (Marcus & Millichap Real Estate Investment Brokerage Co. v. Hock Investment Co. (1998) 68 Cal. App.4th 83, 88-89.) If an agreement to arbitrate is found, a petition to compel arbitration must be granted. (Cal. Code Civ. Proc. § 1281.2.) | Under the California Arbitration Act (Code Civ. Proc. § 1281, et seq.), any party bound by a written arbitration agreement may bring a petition to compel arbitration in the manner provided for in the agreement. (See, Code Civ. Proc. § 1281.2.) California law requires the enforcement of an arbitration agreement unless it finds that (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for seueation of the agreement; or (4) a party to the arbitration agreement is also a party to pending litigation with a third party that may render the arbitration unnecessary or create conflicting rulings on common issues. (lbid; see also, Wagner Canst. Co. v. Pac. Mech. Corp. (2007) 157 P.3d 1029, 1031-32.) A Comes discretion to deny a motion to compel arbitration is extremely narrow. In fact, denying a motion to compel on any other grounds other 11 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION No 0 Na S N RA W N N O N N N N N N N O N EE em je m em em mk p m e m e d je @ J S N nN A W N = DS 0 0 N N S N WN R A W N = than the aforementioned circumstances is reversible error. (Valsan Partners Limited Partnership v. CalCor Space Facility, Inc. (1994) 25 Cal.App.4th 809, 816-817.) The California Arbitration Act reflects California’s strong public policy in favor of arbitration as an expeditious and cost-effective way to resolve disputes. (See, e.g, Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1153; see also, Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761,771.) The courts in California have further stated that “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question.” (Id. [citations omitted].) In fact, “[a] heavy presumption weighs the scales in favor of arbitrability,” and “an order directing arbitration should be granted ‘unless it may be said with positive assurance that the arbitration 9% [provision] is not susceptible of an interpretation that covers the asserted dispute.”” (ld quoting O'Malley v. Wilshire Oil Co. (1963) 381 P.2d 188.) And, where there is any doubt, it should be resolved in favor of coverage. (See, e.g., United Trans. Union, AFLICIO v. Southern Cal. Rapid Transit Dist. (1992) 7 Cal.App.4th 804, 808.) | Here, there is no question that a written agreement to arbitrate exists between the parties covering the subject matter of disputes. In fact, Provision 1, contains the language: If the dispute, claim or controversy cannot be settled through direct discussions, the parties agree to first endeavor to settle the dispute by submitting the controversy to the prevailing County Dental Society Peer Review, if applicable; or if appropriate for the controversy, before a mediator agreeable to both parties; or if the amount in within the jurisdiction of a court of Small Claims, the parties may settle the dispute in a court of Small Claims. Mediation must be completed within thirty (30) days of receipt of written notice requesting mediation. The parties agree to undertake mediation with out the participation of attorneys before resorting to arbitration. If mediation proves unsuccessful, or if the mediation is not held within thirty (30) days of written notice requiring mediation, the matter shall be submitted to binding arbitration in the prevailing county, in accordance with the Commercial Rules of the American Arbitration Associate which are in effect at the time the demand for arbitration is filed. The arbitrator(s) shall have power to award a party such money damages and/or injunctive relief, including without limitation, preliminary, temporary, or ‘permanent restraining orders or injunctions, as may be afforded by a judge of a combined California 12 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 9 A N A W N 9 No N O |] no r o rN ro a J k J k f k p d po Ju d J po d pb WLW J OO Wn A W N = Oo 2 0 a0 S N Nn Rh W N E S (See, Exhibit 1.) Thus, California’s policy in favor of arbitration applies here and any doubts in the enforcement of an arbitration agreement must be resolved in favor of arbitration. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1282; Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711.) 2. The Claims Alleged in the Complaint Fall Squarely Within the Scope of the Arbitration Provision A party wishing to compel arbitration is only required to show that (1) an arbitration agreement exists, and (2) that the dispute is covered by the agreement. (Larian v. Larian (2004) 123 Cal. App. 4th 751, 760.) Once the moving party has met this burden, the burden shifts to the responding party to| prove any alleged defenses to the agreement’s enforcement. (Ibid) As argued more fully supra, an arbitration agreement clearly exists between the parties. Furthermore, a review of the allegations of the Cross-Complaint makes it clear that Bultmann’s claims squarely fall within the ambit of the Arbitration Agreement. All of Bultmann’s claims arise out of her purchase of the dental office. The terms of the Arbitration Agreement clearly states that any and all disputes arising out of the PSA must be submitted to arbitration. So, it is clear that the dispute between the parties is covered by the Arbitration Agreement. Furthermore, under both California and federal cases where an agreement to arbitrate includes an | agreement to follow a particular set of arbitration rules, in this case, JAMS rules the parties are bound. It is for the arbitrator to decide questions of arbitrability where the parties “clearly and unmistakably” intended the arbitrator to determine the question of arbitrability. Rodriguez v. American Technologies, Inc., (2006) 136 Cal. App.4th 1110, 1123. Rad respectfully submits that Bultmann by signing the Agreement agreed to be bound by attention and should not be allowed to escape her obligations. Both Bultmann and Rad must comply with the terms of the PSA and resubmit their claims and cross-claims to binding arbitration which remains pending and open with JAMS. | 3. Rad Has Not Waived Their Right to Arbitrate In determining whether a party has waived a contractual right to arbitrate, courts consider factors sgh as whether a party’s actions are inconsistent with that right to arbitrate, whether a party has “substantially invoked” the “litigation machinery” prior to seeking arbitration, and whether a party’s 13 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION © ® 9 A WN A W N N O N RN N N N R N N N N EE em em em me d mt je m e d em @ JI A WN AE W O N E S YO 0 d S N R W O N mE actions have prejudiced the opposing party. (Id. at 1196; see also, Pulli v. Pony International, LLC (2012) 206 Cal.App.4th 1507, 1514.) None of these factors are present here. It is undisputable that Bultmann requested and Rad agreed for the parties to submit their claim to arbitration. Arbitration was temporarily paused and placed on a stay only and only after BUTLMANN’s attorney requested mediation. After Bultmann fired her attorney and asked for a refund of her deposit with JAMS. This, however, in no way or shape could be construed as a waiver of the obligation and agreement to arbitrate this dispute. As stated above, the arbitration of this matter remains open and pending with Judge Taylor of JAMS. Bultmann must be ordered to resume arbitration with JAMS. 4. The Arbitration Agreement is Conscionable The Arbitration Agreement is conscionable and must be enforced. Unconscionability has both a procedural and a substantive element, and a party asserting the defense bears the burden of proving both by a preponderance of the evidence. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development, (US), LLC (2012) 55 Cal.4th 23, 246-7; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951,972.) | | | In evaluating a contract for unconscionability, the courts employ a "sliding scale" such that "the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." (Adrmendariz v. Foundation Health Psychcare Services, Inc. (2000) 24Cal.4th 83, 114). The "procedural" element of unconscionability focuses on oppression due to unequal bargaining power and/ or surprise, while the "substantive" element focuses on overly harsh or one sided results. (Performance Team Freight Systems, Inc. v. Aleman (2015) 241Cal.App.4th 1233, 1246,citing Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.) | a. The Arbitration Agreement Is Procedurally Conscionable In determining procedural unconscionability, courts have looked at factors such as whether there was an absence of meaningful choice, sophistication of the parties, and the presence of deceptive practices. Perdue v. Crocker Nat'l Bank, (1985) 38 Cal. 3d 913, 927. Procedurally unconscionability concerns the manner in which the contract was negotiated and the parties circumstances at that time. It focuses on the factors of oppression or surprise due to unequal bargaining power. (Baltazar v. Forever 14 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION ‘OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION No LL NN AN n T BR W N NN N N N O N N N N EE em em j m p m je m mm mk md e m C W N A N A W N = O ee ® N d S N N R A W O N E > 21, Inc. (2016) 62 Cal4th 1237, 1243.) A contract of adhesion gives rise to procedural unconscionability, when a party of superior bargaining power drafts the contract, and only allows the subscribing party the opportunity to adhere to the contract or reject it without any ability to negotiate the terms. Ajamian v. CantorCOZ2e, L.P., (2012) 203 Cal. App. 4th 771, 796. However, contracts of adhesion are generally enforceable according to their terms so long as the terms fall within the subscribing party’s reasonable expectations. (Serafin v. Balco Props. Ltd., LLC (2015) 235 Cal. App. 4th 165, 179-181; Serpa v. Cal. Sur. Investigs., Inc. (2013) 215 Cal. App. 4th 695, 704; Parada v. Superior Ct. (2009) 176 Cal. App. 4th 1554, 1569; Bruni v. Didion (2008) 160 Cal. App. 4th 1272, 1277, 1288- 1289). The Agreement here was not entered between a superior seller and a lay person. Rather, it was entered between two sophisticated parties, both of whom are highly educated dentists with years of training and experience. In fact, Butlmann is the person who was in a better negotiating position as it was only Bultmann who was represented by counsel throughout the entire purchase process. Rad had no legal representation. Therefore, there is no dispute that Bultmann ilazly and intelligently signed the Arbitration Agreement. Furthermore, Bultmann is the party that initiated arbitration by filing an arbitration demand. As such, Bultmann could not argue that the arbitration agreement is procedurally unconscionable. b. The Agreement is Substantively Fair and Conscionable. For the same reasons stated above, Bultmann could not argue that the arbitration agreement is substantively unconscionable. The analysis of substantive unconscionability turns on whether and the extent to which the terms of the arbitration provision are "overly harsh", "unfairly one sided" or "unduly oppressive." (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-11). Here, a review of the arbitration dEresmEn makes clear that it is substantively conscionable and even-handed. Essentially, the same rules apply to the disputes raised by Bultmann or Rad. The Arbitration Agreement does not sway in favor of either party. There is no terms which is unfairly one-sided or otherwise more favorable to Rad or Bultmann. | Furthermore, it should be noted that it was Bultmann who initiated arbitration. Her Arbitration Demand, by citing to the specific provisions of the PSA, demanded that her dispute with Rad be 15 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION eo 0 9 A nN RA W N N O N N N N N N N N Ee em em em em em mk wm e d j d QW 0 O N n t BA W N E S O 0 Na S N NN R A W O N = o submitted to arbitration. As such, she cannot now argue substantive unconscionability in an attempt to oppose the instant Petition to Compel Arbitration. Furthermore, the moving party, Rad respectfully submits that even assuming arguendo the arbitration agreement was unconscionable - which it is not - Bultmann by initiating and actually opening an arbitration file, ensued by appointment of Judge Taylor as the arbitrator, has waived any objection she may have had. Bultmann cannot use the arbitration agreement both as a sword and a shield. | IV. THIS PROSECUTION OF CROSS-COMPLAINT SHOULD BE STAYED PENDING THE OUTCOME OF THE ARBITRATION Code of Civil Procedure Section 1281.4 authorizes the Court to issue a concurrent order staying any pending action. (Cal. Code Civ. Proc., §1281.4; Meri Insurance Group v. Superior Court (1998) 19 Cal.4th 332.) A stay must be granted where an application for an order compelling arbitration has been made but not yet ruled upon. In this regard, the California Arbitration Act states: If an application has been made to a court ... for an order to arbitrate a controversy which is an issue involved in an action ... pending before a court of this State and such application is undetermined, the court in which such action ... is pending shall, upon motion of a party to such action ..., stay the action ... until the application for an order to arbitrate is determined .... (Code Civ. Proc. § 1281.4; see also Twentieth Century Fox Film Corp. v. Superior Court (2000) 79 Cal.App.Ath 188, 192 [This statute is clear and unambiguous: it requires that the trial court stay an action pending before it while an application to arbitrate the subject matter of the action is pending in a court of competent jurisdiction.”].) Moreover, if an “arbitration of such controversy is ordered,” the court shall stay the action “until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc. § 1281.4.) Thus, pursuant to Section 1281.4, this prosecution of the cross-complaint should be stayed until this arbitration is completed. If granted, the action should be thereafter stayed pending the outcome of the resulting Arbitration. Iv. CONCLUSION For the foregoing reasons, Rad respectfully requests that the Court issue an order for: 16 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION oo 0 Na S N nt AR W N = B O N N N N N N E E em em em em em j d md md fe d @W NN A RAR W N H O Y X N S N R W N R O n compelling arbitration of Bultmann’s cross-complaint and all disputes raised therein; and 2) Staying the prosecution of the cross-complaint and pending the resolution of the Arbitration. Respectfully submitted, Dated: December 5, 2018 MAZAREI LAV/GROUP; yM a le ss-Complainants, SHADI , D.D.S., a Dental Corporation; DR. SHADI RAD, D.D.S. 17 NOTICE OF PETITION & PETITION (1) TO COMPEL ARBITRATION; AND (2) STAY THE PROSECUTION OF CROSS- COMPLAINT PENDING RESOLUTION OF THE ARBITRATION 10 11 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 . 27 28 PROOF OF SERVICE : STATE OF CALIF ORNIA, COUNTY OF ORANGE Tam employed in the County of Orange, State of California. I am over the age of 18 and not a party to the action; my business address is 18881 Von Karman Ave, Irvine, CA 92612. On December 5, 2018, I served the foregoing documents described as : "1. CROSS-DEFENDANTS’ NOTICE OF PETITION AND PETITION ay TO COMPEL ARBITRATION; AND (2) STAY THE CROSS-COMPLAINT PENDING RESOLUTION OF THE ARBITRATION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; | DECLARATION OF TAWNY MAZAREI; [PROPOSED] ORDER W N on all interested parties in this action as follows: ZIEVE, BRIDNAX & STEELE, LLP ATTORNEYS FOR: John C. Steele, Bar No. 179875 HOMESTREET BANK, Jennifer A. Needs, Bar No. 261153 a Washington state chartered Jeff Tchakarov, Bar No. 295506 bank 30 Corporate Park, Suite 450 Irvine, CA 92606 Telephone: (714) 848-7920 Fax: (714) 908-2615 RANDALL P. MROCZYNSKI ATTORNEYS FOR: COOKSEY, TOOLEN, GAGE, WIEBKE BULTMANN DUFFY & WOOG, APC WIEBKE BULTMANN, D.D.S. 535 Anton Blvd, Tenth FL. INC. Costa Mesa, CA 92626-1977 Telephone: (714) 431-1100 Fax: (714) 431-1119 1. BY MAIL [x] I caused such envelope with postage thereon fully paid to be placed in the United States mail at Irvine, California. [x] 1 am "readily familiar" with the office's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with U.S. Postal Service on the 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 postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. PROOF OF SERVICE - 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. BY PERSONAL SERVICE AS INDICATED IN THE SERVICE LIST [1 Icaused such envelope to be delivered by hand to the offices of the addressee. 3. BY FEDERAL EXPRESS NEXT DAY DELIVERY: [1 Icaused each such envelope to be deposited with Federal Express at Irvine, California, as - follows: I am “readily familiar” with the firm’s practice of collection and processing correspondence for mailing. It is deposited with Federal Express Delivery service with postage thereon fully prepaid on the same day in the ordinary course of business. I am aware that on “motion of party served, service is presumed invalid if postal cancellation date or Haste meter date is more than 1 day after date of deposit for mailing in affidavit. 4. BY COURIER [1 1 caused the above-referenced document(s) to be delivered to the courier service for delivery at the above address. 5. BY FACSIMILE [1 . I caused the above-referenced document(s) to be transmitted to the above-named person(s) at the following fax No. between the hours of 9:00 a.m. and 5:00 p.m. on 6. BY E-FILE SERVICE [1 caused the document(s) to be served on the persons listed above by requesting that One Legal Online Court Services, the Orange County Court's e-file vendor, electronically serve them. 7. BY ELECTRONIC MAIL ] I caused the above-referenced document(s) to be transmitted to the above- named person(s) at the following emails: I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on December 5, 2018 at Irvine, California. ia Khajavi PROOF OF SERVICE -2