Arck Services, LLC v. Bekam

1011(b), and 1014, and C.R.C. 2.253(b)(2), (3).) The hearing on the Motion is therefore CONTINUED to October 26, 2026, at 2:00 p.m.

The case management conference and order to show cause re monetary/terminating sanctions are also CONTINUED to October 26, 2026, at 2:00 p.m.

Counsel for Maksoud is to promptly prepare an Amended Notice for the continued hearing date for this Motion and the case management conference, and properly serve the Motion itself, along with that Amended Notice, on all parties who have appeared in the action. That Amended Notice, and proofs of service reflecting proper service on all parties, are to be filed and served within 10 days.

Counsel for Maksoud is to give notice of this ruling. 6 Reynolds v. Before the Court is a motion to approve settlement agreement and County of distribution of settlement payment filed by defendant City of Buena Orange Park (City). For the reasons set forth below, the motion is DENIED.

The statutes the City relies on do not authorize the relief requested in the City’s motion. By its own language, Code of Civil Procedure section 708.440 applies to an application by the judgment debtor – in this case, plaintiff Marion Reynolds (Plaintiff). The City is not the judgment debtor in this action and thus the Court cannot approve the settlement pursuant to the City’s motion.

Code of Civil Procedure section 708.470 also does not authorize the relief requested by the City, as this matter involves a settlement, not a judgment. (See Code Civ. Proc., § 708.470(a); Casa Eva I Homeowners Assn. v. Ani Constr. & Tile, Inc. (2005) 134 Cal.App.4th 771, 781 [finding court lacked jurisdiction to act under § 708.470(a) where there was no “judgment” (case settled)].)

“[T]hese judgment lien statutes are subject to strict construction.” [Citation.] “[W]here a statute requires a court to exercise its jurisdiction in a particular manner, follow a particular procedure, or be subject to certain limitations, an act beyond those limits is in excess of its jurisdiction and void.” [Citation.]” (Casa Eva I Homeowners Assn. v. Ani Constr. & Tile, Inc., supra, 134 Cal.App.4th at 780-781.)

Based on the above, the motion is DENIED.

Plaintiff’s request for approval of the settlement is not properly before the Court as it was only raised in Plaintiff’s (very late) opposition. Plaintiff will need to file his own motion pursuant to section 708.440 to obtain approval of the subject settlement. Any motion seeking approval of the settlement must address the County of Orange’s lien in this matter.

Counsel for Plaintiff shall give notice. 7 Arck Services, The motion to compel arbitration filed by defendants Sepehr Bekam; LLC v. Bekam Low Income Property, LLC; SPS Platinum Properties, LLC; Modest

Rental Property, LLC; and Omni Consumer Products & Apartments, LLC (collectively, Defendants) is GRANTED.

A party seeking to compel arbitration pursuant to Code of Civil Procedure section 1281.2 “has the burden of proving the existence of a valid arbitration clause and the dispute is covered by the agreement.” Larian v. Larian (2004) 123 Cal.App.4th 751, 760. “If the moving party meets its burden, the opponent of arbitration has to prove by a preponderance of the evidence any defense to the petition or motion to compel the dispute to be arbitrated.” (Ibid.)

Here, there is no dispute the parties entered into the promissory notes at issue in this action which contain the subject arbitration provisions. (See ROA 118, Afshari Decl., ¶¶ 4, 11, 13-14; Compl. ¶ 13 and Exs. 1-7 thereto.)

In the Opposition, Plaintiff argues the motion should be denied because (1) the loan transactions were illegal, (2) the parties did not agree to arbitrate the fraud, common count, or breach of guaranty claims, or as to the promissory note contained in Exhibit 4 to the Complaint, and (3) the arbitration provision is unconscionable.

Illegality of Contracts

The Court does not reach the illegality argument because the arbitration clauses specify that “the arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. § 1 et seq.” (Maralan Decl., Ex. A [Promissory Note ¶ 10(b)]; Compl., Exs. 1-3, 5-7, ¶ 10(b); Bekam Suppl. Decl., Ex. A, ¶ 10(b).) Where the Federal Arbitration Act governs, the legality of the contract in which the arbitration clause appears must be determined by the arbitrator. (Nitro-Lift Technologies, L.L.C. v. Howard (2012) 568 U.S. 17, 20-21 (“[I]t is a mainstay of the Act’s substantive law that attacks on the validity of the contract, as distinct from attacks on the validity of the arbitration clause itself, are to be resolved ‘by the arbitrator in the first instance, not by a federal or state court’”]; see also Rosenthal v.

Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394,415 [under the FAA claims of fraud in the inducement of the contract generally, that is, fraud claims not going to the making of the agreement to arbitrate, are to be decided by the arbitrator rather than the court].)

The Scope of Arbitration Clause in the Promissory Notes includes the Fraud and Common Count Causes of Action and the Guaranty Agreements

The provision at issue here reads:

“THE PARTIES AGREE TO SUBMIT ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF THIIS NOTE TO PRIVATE MEDIATION. IN THE EVENT THAT THE PARTIES ARE UNABLE TO REACH AN AMICABLE RESOLUTION TO THE DISPUTE AT THE MEDIATION, THE DISPUTE, CLAIM OR CONTROVERSY ARISING UNDER

THIS NOTE SHALL BE RESOLVED BY BINDING ARBITRATION.”

Plaintiff asserts that the phrase “arising under this note” relating to arbitration is narrower than the phrase “arising out of this note” relating to mediation. The Court is unconvinced the drafter of the note intended to limit arbitration to only some of the matters subject to mediation. Indeed, the phrases “arising out of” and “arising under” are both considered to be relatively narrow arbitration clauses, both viewed as applicable to “disputes relating to the interpretation and performance of the agreement.” Rice v. Downs (2016) 248 Cal.App.4th 175, 187 (“arising out of”); Mediterranean Enters., Inc. v. Ssangyong Corp. (9th Cir. 1983) 708 F.2d 1458, 1464 (“arising under”).

But the conclusion that the scope of the arbitration provision here is narrow rather than broad is the beginning, not the end of the analysis. “The issue is not resolved simply by determining whether the arbitration clause is narrow or broad, . . . or . . . whether the claims in issue sound in tort, not contract.” Rice, at 187. The Rice court determined that narrow arbitration provisions like that here involved “encompasses contractual claims and perhaps even tort claims arising from the agreement,” but held that “a tort claim based upon violation of an independent duty or right originating outside of the agreement does not arise from the agreement and falls outside the scope of the arbitration provision.” Id. at 190-191.

In Mediterranean, one of three federal cases relied upon by Rice, the Ninth Circuit determined the phrase “arising under the Agreement” to be “relatively narrow” but nonetheless upheld the district court’s inclusion of a tort claim of breach of fiduciary duty in the arbitration order because the fiduciary duty arose from the contract itself. Id. at 1465.

More to the point, Rice acknowledged that claims of fraud in the inducement of the contract would fall within even a narrow arbitration clause. Id. at 193. This was recognized by our Supreme Court in Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak St. (Ericksen)(1983) 35 Cal.3d 312. In Ericksen, the defendant filed a petition to compel arbitration based on a Lease agreement which included a provision to arbitrate “any dispute between the parties hereto with respect to the provisions of this Lease . . . .” Id. at 315 (Emphasis added.). Supreme Court determined that despite the limited scope of the clause “the contract language was broad enough to include a claim of fraud in the inducement of the contract itself . . . .” Id. at 318.

In reaching this decision, the Supreme Court in Ericksen observed:

“The scope of arbitration is, of course, a matter of agreement between the parties, and if they choose to limit that scope so as to exclude questions of fraud in the inducement of the contract that choice must be respected. In this state as under federal law [citation], doubts concerning the scope of arbitrable issues are to

be resolved in favor of arbitration. [Citations.] Therefore, in the absence of indication of contrary intent, and where the arbitration clause is reasonably susceptible of such an interpretation, claims of fraud in the inducement of the contract ... will be deemed subject to arbitration.”

Id. at 323.

In the present case, the fraud cause of action alleges fraud in the inducement as to the notes containing the arbitration clause; nothing in the arbitration clause suggests that the parties intended to exclude from its scope claims for fraud in the inducement.

As to the common count cause of action, the complaint alleges:

“As set forth above in the First and Second Causes of Action, Defendants breached the promissory notes and the guaranty agreements within the past four years. There is due, owing and unpaid, from Defendants to Plaintiff, an amount of approximately $205,488.52 for payments due through the present on the notes and guaranty agreements and $132,000.00 for the loan for the purchase of 3715 Flora Avenue, Kansas City, MO, all subject to proof at time of trial.”

Given that the common count is expressly premised on breach of the notes, there is little question the cause of action concerns “disputes relating to the interpretation and performance of the agreement.”

Similarly, although the guaranty agreements do not themselves contain an arbitration clause, liability under each guaranty arises based on a breach of the corresponding note; thus, the partis’ dispute as to the guaranty agreements “arises under” the promissory notes.

Finally, Plaintiff’s argument that the promissory note at Exhibit 4 to the Complaint does not contain an arbitration provision relies on its own incomplete exhibit. The complete promissory note with the arbitration provision at paragraph 10(b) is included with Defendants’ reply declaration. (See Bekam Suppl. Decl., Ex. A.) Plaintiff’s argument in this regard thus fails.

Unconscionability

Unconscionability has a procedural and a substantive element: the procedural element focuses on the existence of oppression or surprise and the substantive element focuses on overly harsh or one-sided results. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)

Plaintiff failed to show procedural unconscionability based on its claimed inequality of bargaining power. As Defendants argue in the reply, the dispute here is a commercial one between business entities, where Plaintiff, a private lender, made repeated loans to

real estate investment companies, and it sues to collect on those loans. “[P]rovision for arbitration in a commercial context is quite common, and reasonably to be anticipated.” (Keating v. Superior Court (1982) 31 Cal.3d 584, 595, revd. in part on other grounds Southland Corp. v. Keating (1984) 465 U.S. 1.) Moreover, Plaintiff admits the parties transacted with each other for at least five years before the loans at issue. (Afshari Decl., ¶ 10.) In this context, Plaintiff failed to demonstrate oppression or surprise sufficient to support a finding of procedural unconscionability.

Plaintiff may have shown some degree of procedural unconscionability based on the failure to attach the JAMS arbitration rules to the contracts. (See Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84; Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406–1407). Plaintiff, however, failed to show the arbitration provisions are substantively unconscionable.

Plaintiff contends the JAMS arbitration rules place unreasonable limits on discovery. As Defendants argue, Plaintiff relies on employment cases applying the minimum requirements for arbitrations of claims based on the FEHA or a fundamental public policy imposed by Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. The instant case does not involve such claims and thus the Armendariz requirements would not be applicable. (See Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1290 [Armendariz requirements inapplicable to contract claim for bonus and severance payments].)

Even if Armendariz applied, the discovery provision here is “sufficient to adequately arbitrate [Plaintiff’s] claim, including access to essential documents and witnesses, as determined by the arbitrator” and is thus not substantively unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at 106; see also, JAMS Rule 16.2(b), (d) and (g) [ROA 122, Ex. 3].) Moreover, “[l]imited discovery rights are the hallmark of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California, supra, 83 Cal.App.4th at 689.)

Plaintiff also failed to demonstrate that the costs of arbitration render the agreements substantively unconscionable. Plaintiff does not claim, and the evidence offered by Plaintiff does not establish, that the costs of arbitration would be prohibitive to Plaintiff. (See Sanchez v. Superior Court (2025) 108 Cal.App.5th 615, 628 [A mandatory arbitration agreement is substantively unconscionable if it requires the payment of unaffordable fees to initiate the process.].) The only evidence Plaintiff offers on this point is the conclusory statement from its managing member, Ms.

Afshari, that “Arck and I would be very hard pressed, if we would even be able, to pay for the costs of JAMS and the fees of an arbitrator in addition to our living expenses and costs of attorneys to pursue the claims to try to recover the monies owed.” (Afshari Decl., ¶ 6.) This is insufficient to demonstrate the arbitral fees are unaffordable to Plaintiff. Plaintiff offered no evidence of its own finances. Moreover, the claims at issue in this case involve loans in excess of $560,000.

Plaintiff has not shown this factor supports a finding of substantive unconscionability.

For the same reasons, Plaintiff’s request that any order granting arbitration be conditioned upon Defendants either paying Plaintiff’s share of the arbitration costs and fees up front or waiving their right to arbitration is DENIED.

Accordingly, the motion to compel arbitration is GRANTED.

Plaintiff’s request for judicial notice is DENIED as to Items 1-2 and 4-9. (Center for Community Action & Environmental Justice v. City of Moreno Valley (2018) 26 Cal.App.5th 689, 695, fn 4 [declining to take judicial notice of records not necessary for court’s analysis].) Plaintiff’s request for judicial notice is GRANTED as to Item 3. (Evid. Code, § 452(h).)

The entire action is STAYED pending completion of arbitration.

The case management conference set for today is OFF-CALENDAR.

A Status Conference re: Status of Arbitration is scheduled for December 4, 2026, at 9:30 a.m.

Counsel for Defendants shall give notice. 8 Flicker v. Defendant Newport Harbor Post No. 291, of the American Legion’s Newport unopposed Motion to Compel Arbitration and Stay Action is Harbor Post GRANTED. No. 291, of the American A party seeking to compel arbitration pursuant to Code of Civil Legion Procedure section 1281.2 “has the burden of proving the existence of a valid arbitration clause and the dispute is covered by the agreement.” (Larian v. Larian (2004) 123 Cal.App.4th 751, 760.) “If the moving party meets its burden, the opponent of arbitration has to prove by a preponderance of the evidence any defense to the petition or motion to compel the dispute to be arbitrated.” (Ibid.)

Here, the moving party has submitted two arbitration agreements signed by Plaintiff. The two subject agreements are separate from any other agreements, and are each clearly labelled “DISPUTE RESOLUTION AGREEMENT.” Plaintiff has not opposed the motion.

The action is ordered to arbitration and is stayed pending its outcome.

The case management conference set for today is OFF-CALENDAR.

Status conference re selection of arbitrator is set for December 4, 2026, at 9:30 a.m.

Moving party to give notice. 9 Stein v. Before the Court are two motions. The first is a motion to quash ActBlue service of summons filed by Defendants ActBlue Charities, Inc., Charities, Inc. ActBlue Civics, Inc., ActBlue Technical Services, Inc., and ActBlue