David Carrasco vs. Shrader & associates, Llp

Motion for Order to Stay Proceedings

Cal. Super. - 4th Dist.August 3, 2018

a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ROBIE & MATTHAI A Professional Corporation EDITH R. MATTHALI, SBN 66730 GABRIELLE M. JACKSON, SBN 167528 500 South Grand Avenue, Suite 1500 Los Angeles, California 90071 Telephone: (213) 706-8000 Facsimile: (213) 706-9913 E-Mail: ematthai@romalaw.com Attorneys for Specially Appearing Defendant SHRADER & ASSOCIATES, LLP SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ORANGE, CENTRAL JUSTICE CENTER DAVID CARRASCO, a minorchild,etc., CASE NO. 30-2018-01010074-CU-PO- CIC Plaintiff, SPECIALLY APPEARING Vv. DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF SHRADER & ASSOCIATES, LLP,et al. MOTION AND MOTION TO STAY THE ACTION PURSUANT TO CODE Defendants. OF CIVIL PROCEDURE SECTIONS 410.30 AND 418.10(a)(2) [Filed concurrently with Declarations of Eugene Egdorf, Gabrielle Jackson and Marcos Rosales in support] Date: February 15,2019 Time: 9:30 a.m. Dept: C16 RES ID: 72945548 Assigned to Hon. James J. Di Cesare, Dept. C16 Action Filed: August 3, 2018 Trial Date: None set TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD HEREIN: PLEASE TAKE NOTICE that on February 15, 2019 at 9:30 a.m., or as soon thereafter as the matter may be heard in Department C16 of the above-entitled court located at 700 W. Civic Center Drive, Santa Ana, California, in the courtroom of the Honorable James J. Di Cesare, the undersigned specially appearing Defendant Shrader & motto stay.docx SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Associates, LLP will, and hereby does, move the Court for an order, pursuant to California Code of Civil Procedure sections 410.30 and 418.10(a)(2), staying this action pending final resolution of an action captioned Shrader & Associates, LLP v. Chrissy Carrasco and David Carrasco, Jr., filed in Harris County, Texas District Court, Case No. 2018-57553 and related arbitration (“the Texas Litigation”).! The Texas Litigation was perfected first in time and involves the same parties and the same dispute as involved in this action. This Motion is brought on the grounds that the Court should exercise its discretion and stay this action to further judicial efficiency and comity, avoid duplicative litigation, and avoid the potential for conflicts with the Harris County Texas Court. Allowing this action to proceed before the Texas Litigation is decided will risk inconsistent outcomes. A stay is appropriate because disposition of the Texas Litigation will determine the forum where this dispute should be litigated and possibly resolve this dispute in its entirety. This Motion is based upon this Notice of Motion, the accompanying Memorandum of Points and Authorities, the Declarations of Marcos Rosales, Eugene Egdorf, and /1] /1] /1] /1] /1] /1] /1] /1] /1] ! Shrader’s appearance in this action does not constitute a general appearance (CCP § 418.10(d)) and Shrader preserves its right to challenge jurisdiction,if appropriate. (Air Machine Com SRL v. Superior Court (2010) 186 Cal.App.4™ 414.) 2 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gabrielle M. Jackson, all pleadings and papers filed in this action, the arguments of counsel, and any such other matters as the Court may consider. DATED: December 11, 2018 Respectfully submitted, ROBIE & MATTHAI A Professional Corporation By: /s/ Gabrielle M. Jackson EDITH R. MATTHAI GABRIELLE M. JACKSON Attorneys for Specially Appearing Defendant SHRADER & ASSOCIATES, LLP 3 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATEMENT OF FACTS Defendant Shrader & Associates, LLP is a Texas law firm, withits principal office located in Houston, and another office located in Illinois. (Complaint 92; Pet. for Decl. Relief, 42). Plaintiffs David Carrasco, Jr., and his guardian ad litem Crissy Carrasco are California residents. (Complaint q1; Pet. for Decl. Relief, 93-4). In early 2017, Shrader was contacted, through an online form completed by plaintiff Crissy Carrasco, about possible representation regarding an alleged concussion injury her son, David Carrasco, Jr., had received while engaged in high school football. (Complaint 997-9; Pet. for Decl. Relief, 410). In March of 2017, Shrader sent documents to Carrasco for her review and completion, including a client questionnaire, and an attorney-client retainer agreement containing a provision requiring that any disputes be resolved through binding arbitration in Texas. (Complaint 15; Pet. for Decl. Relief, 911-13). The provision stated, in bolded, all-caps font: XVII. ARBITRATION. ANY DISAGREEMENT, DISPUTE, CLAIM OR CAUSE OF ACTION ARISING PURSUANT TO THE PERFORMANCE OF THIS AGREEMENT SHALL BE RESOLVED THROUGH BINDING ARBITRATION. THE ARBITRATION SHALL TAKE PLACE BEFORE A PANEL OF THREE (3) ARBITRATORS IN CONFORMANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN HOUSTON, HARRIS COUNTY, TEXAS. ATTORNEY WILL SELECT AND COMPENSATE ONE (1) ARBITRATOR AND CLIENT WILL SELECT ONE ARBITRATOR. THE THIRD ARBITRATOR WILL BE CHOSEN BY THE ARBITRATORS SELECTED BY THE ATTORNEY AND CLIENT. IN THE EVENT THE ARBITRATORS SELECTED BY THE ATTORNEY AND CLIENT. IN THE EVENT THE ARBITRATORS SELECTED BY THE ATTORNEY AND CLIENT ARE UNABLE TO AGREE ON THE THIRD ARBITRATOR, THEN THE THIRD ARBITRATOR SHALL BE APPOINTED BY THE SENIOR UNITED STATES DISTRICT JUDGE FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION. THE COST FOR THE THIRD ARBITRATOR AND THE COST AND EXPENSES FOR THE ARBITRATION WILL BE BORNE IN EQUAL SHARE BY ATTORNEY AND CLIENT. (Egdorf Decl., 92.) Carrasco signed and returned the documents to Shrader in mid-March. (Complaint 916; Pet. for Decl. Relief, 11). 4 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In October 2017, a Shrader attorney emailed Carrasco to inform her that Shrader declined to represent her and her son. (Pet. for Decl. Relief, 14). On November 6, 2017, Shrader sent a formal rejection letter and the contents of Carrasco’s file to Carrasco. (Id.) A. The Harris County, Texas Action On July 10, 2018, Douglas Linde, counsel for Carrasco, Jr., sent a letter to Shrader alleging that Shrader had committed legal malpractice during its representation of Carrasco, and enclosing a draft Complaint Carrasco intended to file in California against Shrader. (Egdorf Decl., 43.) Shrader, through its Texas counsel Beck Redden, LLP, responded to Linde and the Carrascos on August 24, 2018, informing them of Shrader’s decision to invoke arbitration pursuant to the retainer agreement’s arbitration clause. (Rosales Decl., 43.) The letter included a Demand for Arbitration filed on behalf of Shrader with the American Arbitration Association (AAA). (Rosales Decl., 43; Exhibit 5.) That same day, Shrader filed a Petition in the Harris County, Texas District Court, entitled Shrader & Associates, L.L.P. v. Chrissy Carrasco and David Carrasco, Jr., Case No. 2018-57553, seeking a declaratory judgment finding the retainer agreement’s arbitration provision enforceable and compelling the Carrascos to arbitrate their legal malpractice claim. (Rosales Decl., 942; Exhibit 4.) On or about September 28, 2018, the Carrascosfiled a special appearance and answer to the Petition. (Rosales Decl., 94; Exhibit 6.) The special appearance challenged personaljurisdiction over the Carrascos and argued that the arbitration provision could not be enforced because the attorney-retention agreement was void; the Carrascos argued that the absence of Shrader’s signature on the retention agreement rendered the agreement void. (Exhibit 4, p. 20.) Shrader responded to the special appearance on October 29, 2018. (Rosales Decl., 95.) On November 5, 2018, Harris County Texas District Court Judge Caroline Baker held a hearing on the special appearance filed by the Carrascos, taking the matter under submission. As ofthe filing of this motion, the matter remains under submission. (Rosales Decl., 96.) 5 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. The Orange County, California Action After the Harris County Texas Litigation was filed, Shrader & Associates was served via a letter dated October 8, 2018, with the summons and complaint for the instant action. (Egdorf Decl., 94.) The enclosed complaint indicated it had been filed on August 3, 2018, but the summons had not been issued until September 24, 2018. (Id.) Like the letter sent to Shrader in July 2018, the Carrascos alleged legal malpractice by Shrader during its representation of the Carrascos. The complaint was identicalto the draft complaint sent to Shrader in July 2018. LEGAL ARGUMENT This action should be stayed since the Harris County Texas Litigation has priority, and the Harris County Texas District Court should be allowed to decide the proper forum in which the Carrascos’ legal malpractice claim is to be litigated before this Court considers the identical issuesin this litigation. A stay is expressly authorized by statute for situations, such as this one, where parallel proceedings involving identical facts and parties risk inconsistent or conflicting judicial determinations in different jurisdictions. 1. This Court Should Exercise Its Discretion and Order this Action Stayed Until the Harris County Texas Action is Determined. Code of Civil Procedure section 410.30(a) provides that a court may stay or dismiss an action when upon motion ofa party, or its own motion, it “finds that in the interest of substantial justice an action should be heard in a forum outside this state.” A court’s decision to grant such a motion is both discretionary, and accorded substantial deference on appeal. (Stangvik v. Shiley, 54 Cal.3d 744, 751 (1991).) Furthermore, Code of Civil Procedure section 418.10(a)(2) provides that a court may stay the action on the ground of inconvenient forum. Here, Shrader only seeks a stay of the Orange County California action until such time as the Harris County Texas District Court determines the special appearance and if arbitration is ordered, until the arbitration is completed and award confirmed. Since both 6 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Harris County Texas Litigation and this action involve identical parties and identical claims, a stay ofthis Action is appropriate. A. Texas is an Appropriate Forum for Resolution of the Dispute. A stay ofthis matter is appropriate because the Petition for Declaratory Judgement should be determined by the Harris County, Texas District Court before this action moves forward. The Harris County Texas District Court is a suitable forum to determine the issues involved in this dispute, namely the validity of the arbitration agreement between the parties and if valid, arbitration of the legal malpractice claim in Texas as contemplated under the agreement. A suitable forum is one that has jurisdiction over the parties and where the case is not barred by the statute of limitations. (Chong v. Superior Court, 58 Cal.App.4™ 1032, 1036-1037 (1997).) The action in Texas was filed within the statute of limitations, and the Texas court has jurisdiction over the Carrascos. Contrary to the Carrascos’ argumentto the contrary, the Carrascos have sufficient minimum contacts with Texas such that the assumption of Texas jurisdiction does not offend traditional notions of fair play and substantial justice. (International Shoe v. Washington, 326 U.S. 310, 316 (1945); Snowney v. Harrah's Entertainment, Inc., 35 Cal.4™ 1054, 1062 (2005) [Specific jurisdiction over a non-resident defendant appropriate where the defendant purposefully avails themselves of forum benefits, and the controversy arises from the defendant’s contacts with the forum].) Here, the Carrascos conducted business in Texas by contacting Shrader, a Texas resident, to serve as their counsel and by entering into a contract with them, giving rise to the present dispute and the subject ofthe petition pending in Texas. Even though the Carrascos have challenged the jurisdiction of the Texas court, the Harris County Texas District Court should be allowed to make that determination before this action is allowed to proceed. Accordingly, Texas is an appropriate forum. Texas is also a suitable forum for the arbitration of the legal malpractice claim. The agreement between the parties, which has given rise to this dispute, specifies that arbitration will take place in Texas. Furtherstill, the retention agreement provides that 7 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Texas law governs. (Egdorf Decl., 4 2; Exh. 1, p. 3.) The arbitration provision ofthe agreement between the Shrader firm and the Carrascos is enforceable because it is indisputably within the Federal Arbitration Act (the “FAA”), which has an extremely broad application to contracts affecting interstate commerce. (9 U.S.C. §§ 1-2; Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003) [“Because the statute provides for the enforcement of arbitration agreements within the full reach of the Commerce Clause,it is perfectly clear that the FAA encompasses a wider range of transactions than those actually in commerce-that is, within the flow of interstate commerce.”].) Given that Shrader is a Texas law firm and the Carrascos are California residents, the retention agreement between them satisfies the interstate commerce requirement of the FAA. Even though the Carrascos have taken the position the arbitration provision cannot be enforced because the agreement, as a whole, is void due to the absence of Shrader’s signature on the retention agreement, which was signed by Carrasco. However, this argumentis unavailing. In Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, the U.S. Supreme Court recognized that when the Federal Arbitration Act applies, “arbitration clauses as a matter of federal law are ‘separable’ from the contracts in which they are embedded....” (Id. at 402.) As a result, an arbitration clause may be enforceable regardless ofwhether the contract surrounding it is enforceable. (Id., at 404.) And under Texas law, “challenges relating to an entire contract will not invalidate an arbitration provision in the contract; rather, challenges to an arbitration provision in a contract must be directed specifically to that provision.” (Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 501 (Tex. 2015) (citing In re Labatt Food Serv., L.P., 279 S.W.3d 640, 647-48 (Tex. 2009).) Only challenges relating specifically to the arbitration provision may defeat arbitration. (In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001).) Accordingly,it is appropriate forthis action to be stayed until such time as the Harris County Texas District Court determines whether the Carrascos are subject to the personaljurisdiction of the Texas Court, whether the arbitration is enforceable, and ifso, for the arbitration to proceed in Texas and any award confirmed in Texas. 8 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. Staying the Action would Further Judicial Efficiency and Avoid Inconsistent Results ceeIn considering whether to grant a stay, important factors include “‘avoiding unseemly conflicts with the courts of other jurisdictions’as well as “‘whether the rights of the parties can best be determined by the court of the other jurisdiction because ofthe nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other court have already advanced.’ [Citations].” (Thomson v. Continental Ins. Co, 66 Cal. 2d 738, 746 (1967).) As one court explained, “If proceedings should be stayed in the first case mentioned,it is in order to avoid a multiplicity ofsuits and prevent vexatious litigation, conflicting judgments, confusion and unseemly controversy between litigants and courts. Any and all of this may occur where the later action is commenced in another state, as well as where it is commenced in the same state.” (Simmons v. Superior Court in & for Los Angeles County, 96 Cal. App. 2d 119, 125 (1950).) The factors weigh in favor of granting the stay of the Orange County Action. The action before the Harris County Texas District Court concerns the identical parties to the instant action; arises from identical facts and claims; and, will have a significant bearing on the outcome ofthe presentlitigation. Moreover, even though the complaint in the Orange County Action wasfiled first, the Harris County Texas action has priority because process was first served in that action. (Burch v. Slamin, 137 Cal.App.2d 1, 3 (1955).) The Orange County complaint was filed on August 3, 2018, but the summons was not issued until September 24, 2018 and service ofprocess was not perfected until October 16, 2018. The Harris County Texas Action and arbitration demand was filed on August 24, 2018 and served shortly thereafter. In fact, four days after the issuance ofthe summons in the Orange County Action (and long before the Orange County Action was served), the Carrascos filed their special appearance and answer in the Harris County Texas action on September 28, 2018. Furtherstill, on November 5, 2018, the Harris County Texas District Court held a hearing on the special appearance and the matter is currently under submission before any responsive pleading was due in the Orange County 9 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Action. Staying the Orange County Action until the Harris County, Texas court rules on the special appearance and determines the declaratory judgmentpetition furthers judicial efficiency. Moreover, allowing the Orange County Action to proceed while the Harris County Texas Action is pending will likely result in inconsistent rulings. Currently pending in the Harris County Texas Action is determination of personal jurisdiction over the Carrasco and enforceability of the arbitration provision. If the Orange County Action is not stayed until the Harris County Texas Action is resolved, Shrader will be forced to litigate these same issues in the Orange County Action, which could result in inconsistent rulings. Allowing this action for legal malpractice to proceed before the enforceability of the arbitration clause is decided risks inconsistent outcomes, and could result in conflicting determinations between the Texas and California courts. Accordingly, the better course of action is for this Court to exercise its discretion and order this Action stayed until the Harris County Texas Action is determined. CONCLUSION For the foregoing reasons, defendants’ Motion to Stay should be granted and this action stayed until the Harris County Texas Action is determined. DATED: December 11, 2018 Respectfully submitted, ROBIE & MATTHAI A Professional Corporation By: /s/ Gabrielle M. Jackson EDITH R. MATTHAI GABRIELLE M. JACKSON Attorneys for Specially Appearing Defendant SHRADER & ASSOCIATES, LLP 10 SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION a A W O N o e 0 9 S N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES At the time of service, | was over 18 years of age and not a party to this action. | am employed in the County of Los Angeles, State of California. My business addressis 500 South Grand Avenue, 15" Floor, Los Angeles, CA 90071. On December 11, 2018, I served true copies of the following document(s) described as SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION PURSUANT TO CODE OF CIVIL PROCEDURE SECTIONS 410.30 AND 418.10(a)(2) on the interested parties in this action as follows: Timothy J. Gonzales Attorneys for Plaintiff D. Aaron Brock BROCK & GONZALES, LLP 6701 Center Drive West, Suite 610 Los Angeles, CA 90045 Telephone: (310) 294-9595 Facsimile: (310) 961-3673 Douglas A. Linde Erica A. Gonzales The Linde Law Firm 9000 Sunset Blvd., Suite 1260 Los Angeles, CA 90069 Telephone: (310) 203-9333 Facsimile: (310) 203-9233 eag@lindelaw.net dal@lindelaw.net BY E-MAIL OR ELECTRONIC SERVICE: I caused the documents to be electronically served on the parties listed above at the e-mail addresses shown. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on December 11, 2018, at Los Angeles, California. /s/ Mark Johnson Mark Johnson SPECIALLY APPEARING DEFENDANT SHRADER & ASSOCIATES, LLP’S NOTICE OF MOTION AND MOTION TO STAY THE ACTION