Springs vs. SBM Site Services, LLC

the time required strict compliance with CCP § 1281.98. (ROA 253.) “In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.” (CCP § 1281.98(a)(1).)

In its opposition, Defendant’s counsel admitted to receiving the invoice from JAMS and the follow-up reminder e-mails from JAMS, and conceded that Defendant failed to timely pay the invoice, but argued that the JAMS invoice should have been sent to Defendant directly to trigger the 30-day deadline. Judge Sherman rejected this argument. On March 15, 2024, Defendant filed a notice of appeal of the January 26, 2024 order. (ROA 259.)

The appellate court agreed with Judge Sherman’s finding that JAMS's provision of the deposit request to Defendant's counsel for payment of due and owing fees triggered the 30-day period provided in section 1281.98, subdivision (a). (ROA 320 at p. 14.) However, the appellate court believed Judge Sherman’s ruling had to be reversed and remanded due to a change in the law regarding CCP § 1281.98 based on a recent California Supreme Court decision in Hohenshelt v. Superior Ct. The appellate court instructed: “We remand to the trial court to determine in the first instance whether SBM's failure to timely pay arbitration fees should be excused pursuant to the holding and reasoning of Hohenshelt.” (ROA 320 at p. 16.)

In Hohenshelt, the California Supreme Court held that the penalties for failure to make timely payments of arbitration fees under Section 1281.98 could be subject to relief under certain circumstances of good faith conduct and excusable neglect. The California Supreme Court maintained that Section 1281.98 was enforceable and not preempted by the FAA, noting that “[w]ithout a rule requiring timely payment of arbitration fees and imposing meaningful consequences for willful nonpayment, companies could continue to stymie dispute resolution ‘by refusing to participate in the arbitration proceedings’ initiated by their consumers or employees.” (Hohenshelt v. Superior Ct. (2025) 18 Cal. 5th 310, 348.) However, the court explained: “[T]he Legislature sought to

deter companies and employers from engaging in strategic nonpayment of arbitration fees; we find no indication that it intended to strip companies and employers of their contractual right to arbitration where nonpayment of fees results from a good faith mistake, inadvertence, or other excusable neglect.” (Id. at 323.) Accordingly, the court held that “[s]ection 1281.98 does not displace background statutes permitting relief to a breaching party in certain circumstances[.]” (Id. at 349.)

“[U]nder general contract law principles as under section 1281.98, a drafting party cannot avoid discharging the other party's contractual duty to proceed in arbitration if it willfully withholds fees necessary to move arbitration forward.” (Hohenshelt, 18 Cal. 5th at 344.) “Conversely, if the drafting party acted in good faith, it may seek relief under the above statutes, and its claim should be evaluated under the usual principles in law and equity governing relief from forfeiture or default, including whether the other party has been prejudiced.” (Id.)

Thus, as it currently stands, a party that fails to make a required contractual payment and seeks to excuse that failure bears the burden of demonstrating that its nonpayment was the result of a good faith mistake, inadvertence, or other excusable neglect. MacFadden v. Walker (1971) 5 Cal. 3d 809, 813; CQL Original Prods., Inc. v. Nat'l Hockey League Players' Assn., 39 Cal. App. 4th 1347, 1357, fn. 6 (1995); Estrada v. KAG W., LLC, No. 1:24-CV-00257-KES-CDB, 2025 WL 2829425, at *6 (E.D. Cal. Oct. 6, 2025) (employer has the burden to show delay was excusable under “[California Code of Civil Procedure] section 473, Civil Code section 3275, or Civil Code section 1511”), citing Hohenshelt, 18 Cal.5th at 323.

Here, the defendant fails to carry this burden. The defendant primarily relies on inadvertence, asserting that defendant’s counsel “inadvertently” failed to include a date certain when counsel forwarded the arbitrator’s invoice to her client. This assertion may have been successful if the arbitrator had sent counsel only one reminder of the obligation to pay. Counsel forwarded this invoice to the client and, for all counsel knew, the invoice was paid. In this circumstance, counsel could have logically claimed that it was unaware of the non-payment until the motion to return the case to court was filed.

But this scenario is not the circumstance before the court. Here, the arbitrator sent a second notice to defense counsel, pointing out that payment had not been received. (See Amaral Declaration, Exhibit E). In her declaration, counsel concedes she received this notice (Amaral declaration, paragraph 16). Thus, counsel was aware (or, at the very least, should have been aware) the no payment was made. In this circumstance, counsel cannot claim inadvertence as counsel knew of the nonpayment and did nothing to rectify it (except to, again, futilely forward the invoice to the client without the date certain for payment).

Defendant also argues that its failure to timely pay the arbitrator’s invoice was the result of excusable neglect. This argument is, however, unavailing as the defendant did not pay the arbitration fee until plaintiff filed its motion to return the matter to Superior Court (12 days after the statutory deadline).

On this point, the declaration of defense counsel is critical. In paragraph 17 of counsel’s declaration, counsel states that counsel understands payment was made on October 25, 2024. In paragraphs 18 of counsel’s declaration, counsel states that, on this same date, she received word from plaintiff’s counsel that plaintiff would be moving to have his case returned to Superior Court (which motion was also filed on October 25, 2024). What is missing from the declaration is any explanation of whether there is a connection between these two events; that is, whether the fee was paid because of plaintiff’s motion.

Given that plaintiff has the burden of proof and consciously omitted any explanation from counsel’s declaration, the court cannot escape the conclusion that the fee was only paid when the motion was filed or threatened. This delay, though not provably for a strategic reason, is the exact sort of footdragging that the statute was meant to remedy. The defendant had 42 days to pay a fee that was due upon receipt of the invoice, but did not pay the fee until forced to do so by the opposing party. Under the circumstances, this court does not find defendant’s neglect excusable.

Because the court finds that general principles of equity do not provide defendant relief in this circumstance, the court does not reach plaintiff’s other grounds for opposing this motion. Importantly, the court does not find defense counsel’s conduct to be grossly negligent or below any standard of professional conduct as the court does not believe such findings are necessary for the court to exercise its discretion on this motion.

Defendant is ordered to give notice of this ruling.

9 30-2025-01495354 Defendant SchoolsFirst Federal Credit Union’s unopposed Briseno vs. SchoolsFirst motion to compel arbitration and to strike and dismiss class Federal Credit Union, a action is GRANTED. California Corporation The court finds that, due to SchoolsFirst’s affect on interstate commerce, the Federal Arbitration Act (“FAA”) applies to the arbitration agreement in this case. The Court’s role under the FAA is limited to determining: (1) whether there is a valid agreement to arbitrate between the parties; and, if so, (2) whether the agreement covers the dispute. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). l

The court has reviewed the motion and finds that the binding arbitration agreement entered into between SchoolsFirst and Briseno is valid, governs her claims, and includes an enforceable class action waiver. Accordingly, the court grants the motion.

The matter is compelled to arbitration and the class claims are stricken and dismissed without prejudice.

The moving party is ordered to give notice of this ruling.

11 30-2024-01393974 Plaintiff Liang Huaji’s (“Plaintiff”) Application of Jacob Chen Huaji vs. Jinggang (“Applicant”) to Appear as Counsel Pro Hac Vice is GRANTED.

On or before the anniversary of the date of this order, if Applicant remains counsel for Plaintiff, Plaintiff must pay a renewal fee of five hundred dollars ($500). (Gov. Code § 70617(e)(2).)

Plaintiff is ordered to give notice of this ruling.