The Wrinkle Is That After A Year, Defendant/Appellant Filed A Fictitious Business Name Statement.
Wrinkles. "Val Morgan, a retired attorney for the U.S. agency that oversees federal health-care payments, relaxes with two of her three wrinkly-faced, short-muzzle pug dogs, 14-year old Loretta, left, and 17-year-old Gus." Library of Congress. Photographer: Carol M. Highsmith.
Plaintiff Albert Villareal sued his employer after he injured his knee and his employer terminated his employment. The employer moved to compel arbitration. The trial court and the Court of Appeal both agreed that the employer's failure to file a fictitious business name statement prevented it from enforcing an arbitration provision at the time defendant moved to compel arbitration. Albert Villareal v. LAD-T, LLC et al, No. B313681 (2/7 10/27/22) (Feuer, Perluss, Segal).
Business and Professions Code § 17918 provides that a party who fails to file a valid fictitious business name statement cannot “maintain any action upon or on account of any contract made . . . in the fictitious business name in any court of this state until the fictitious business name statement” has been filed. Section 17918 would be dispositive, but for the fact that the failure to file the fictitious business statement only abates the action (in this case, a motion to compel arbitration, i.e., a suit in equity to compel performance of the arbitration agreement). And here, the defendant corrected the problem a year after filing its motion to compel.
So the Court of Appeal vacated the order denying the motion to compel arbitration, and remanded with directions. Plaintiff Villareal can argue in the trial court on remand that defendant LAD-T, LLC's year delay in filing a fictitious business name statement resulted in waiver of the right to arbitrate, an issue that the trial court would then need to decide.
COMMENT: Why isn't the § 17918 requirement to file a fictitious business name statement preempted by the Federal Arbitration Act, since the FAA applied to this case? As the Court of Appeal explains, the requirement to file a fictitious business name statement doesn't uniquely burden a motion to compel arbitration, because it also applies to the filing of lawsuits in general.
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