California Mediation and Arbitration

Prompt Payment: Along With Other Courts, 1st District Div. 3 Strictly Interprets Statutory Prompt Payment Requirement For Employer Wanting To Arbitrate

The Payment Must Be Received By The Arbitrator Within 30 Days Of When It Was Due.

        September 1, 20221 was the “due date” for the employer in a sexual harassment dispute to pay arbitration fees and costs to the arbitrator, making payment due October 3. Cal. Code of Civ. Proc., § 1281.98(a)(1). The employer mailed the check on September 30, and it was received on October 5, two days after the 30 day grace period expired. That was good enough for the superior order, which issued an order compelling arbitration, but not good enough for the Court of Appeal. "We do not find that the proverbial check in the mail constitutes payment and agree with petitioner that real parties’ payment, received more than 30 days after the due date established by the arbitrator, was untimely." Jane Doe v. The Superior Court of the City and County of San Francisco, Respondent, and Na Hoku, Inc., et al, Real Parties in Interest, A167105 (1/3  9/8/23) (Petrou, Tucker, Fujisaki).

        What can one say? Almost doesn't count? Close but no cigar? How about: close only counts in horseshoes.

        We have now posted a number of times that California courts have been real sticklers about strictly interpreting the 30 day requirement in § 1281.98. See posts of  7/10/23,  8/1/22, 12/11/22, 1/2/23, 3/21/23. Employers who do not comply with the requirement risk ending up outside arbitration and inside court.

 

Arbitration, Deadlines, Prompt Payment, Fees: Plaintiff Successfully Exercises Option To Withdraw From Arbitration Because Defendant Employer Was Tardy Paying Arbitration Fees

Courts Have Been Unforgiving In Interpreting An Unambiguous Statute. See CCP § 1281.98.

        "A statute gave Milan Cvejic the option to get out of arbitration if Skyview was tardy in paying its arbitration fees. Skyview was tardy in paying its arbitration fee. Cvejic was entitled to get out." Milan Cvejic v. Skyview Capital, LLC, B318880 (2/8  6/28/23) (Wiley, Grimes, Viramontes).

        COMMENTS: (1) A panel of three arbitrators got it wrong. (2) Cvejic was smart and did not sit on his rights. "Within about an hour of the call [whereby the arbitration panel set a new deadline for defendant to pay the fees], Cvejic’s counsel wrote the panel to say Cvejic was withdrawing from the arbitration under section 1281.98." 

        See previous posts about § 1281.98 dated 8/1/22, 12/11/22, 1/2/23, 3/21/23.

Prompt Payment: California Common Law Provides A Basis For Shifting Arbitration Fees When A Party Is Unable To Pay Its Share

Yet Another Skilled Nursing Home Case.

        One of our sidebar categories is "Prompt payment" referring to statutory provisions applying to consumer and employment cases requiring the drafting party to promptly pay arbitration fees and costs or waive its right to arbitrate. But California case law, upon which the next case relied, also provides that in circumstances where a party is unable to pay, it may petition the court to have the counterparty choose between paying the expenses in arbitration or litigating in court. That's what happened in Jimmy Hang v. RG Legacy I, LLC, et al., G061265 (4/3  2/7/23) (Motoike, Goethals, Sanchez). 

        "Citing Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87 (Roldan), the trial court found Daniel [plaintiff] was indigent at the time of his death and granted the petition to compel arbitration on the condition that, within 15 days, the RG Legacy parties agree to pay all arbitration fees and costs, else waive the right to arbitrate the matter." RG Legacy appealed rather than pay fees and costs, and the Court of Appeal affirmed the trial court's order.

        Note that the named plaintiff is "Jimmy Hang." One twist is that the alleged victim of elder abuse and nursing home negligence, plaintiff Daniel Hang, was dead. He had been indigent, and his estate lacked assets. The remaining plaintiffs, Jimmy Hang and Daniel's widow, dropped their wrongful death suit, eliminating the issue of whether they had assets. Jimmy continued in the lawsuit solely as successor to Daniel, i.e., as successor to an indigent.

        COMMENT: California case law has developed so that the contractual right to arbitrate can be trumped by the right to a forum of the indigent plaintiff unable to pay for arbitration. The leading cases relied upon in Jimmy Hang v. RG Legacy are Roldan and Weiler v. Marcus & Millichap Real Estate Investment Services, Inc., 22 Cal.App.5th 970 (2018) (Weiler). We have posted about Roldan on 8/28/13 and about Weiler on 5/1/18. The party who questions whether the indigent party really has assets could petition the court to conduct limited discovery on the issue. Apparently that was not done in the Jimmy Hang case.

 

Payment: Arbitration Prompt Payment Requirements Are Strictly Enforced

California Code of Civil Procedure Sections 1281.97 and 1281.98 Will Be Strictly Enforced.

        California Code of Civil Procedure, sections 1281.97 and 1281.98 provide that if a company or business that drafts an arbitration agreement does not pay arbitration fees within 30 days of when fees are due, the company or business is in material breach of the agreement. Ann Williams v. West Coast Hospitals, Inc. (6th Dist.  12/22/22) (Lie, Greenwood, Grover) continues to strictly apply the payment requirement. We have previously posted about the application of those code sections on 12/11/22  and 10/3/22.

        COMMENT: The court declined to decide whether the issue of the application of sections 1281.97 and .98 had been effectively delegated to the arbitrator to decide, holding instead that the issue had not been preserved for appeal. In order to reach that conclusion, the court also had to conclude that the code provisions were not jurisdictional, because jurisdictional issues can be reached at any time.