Manoussi vs. Sterling Infosystems, Inc.

Further, Plaintiff does not present evidence (or describe how) Responding Defendants received any benefit from Plaintiff’s loan to the borrower – or that they were aware of, and did not disavow, an agent providing signatures to Plaintiff purportedly on behalf of the Responding Defendants. See Civ. Code §1589, Newhall v. Joseph Levy Bag Co. (1912) 19 Cal.App. 9, 27; Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1386; Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4th 884, 890–891.

On the current record, the court cannot find as a matter of law that Responding Defendants are estopped from denying they signed the guarantees and forbearance agreements.

Accordingly, the motion for summary judgment is denied as to as to each of the Responding Defendants Leoni, Rashti, and Sarraf.

8. 2023-1363467 Before the Court is Plaintiffs Azadeh Manoussi and Kaveh Manoussi vs. Vakilzadeh’s Motion to allow them to withdraw from arbitration Sterling pursuant to CCP § 1281.97(b)(l) and for monetary sanctions. Infosystems, Inc. At the outset, The Court admonishes Plaintiffs’ counsel for citing an unpublished Court of Appeal opinion in violation of California Rules of Court, rule 8.1115(a). (Reply, ROA 145, p. 3, lines 24–26.)

Plaintiffs Azadeh Manoussi and Kaveh Vakilzadeh move under Code of Civil Procedure section 1281.97 to withdraw their claims from arbitration, lift the stay, and recover $5,910 in monetary sanctions from defendant A Place for Rover, Inc. (Rover).

The motion is granted. The Court finds Rover’s failure to pay the JAMS initiation fee was grossly negligent, constituted a material breach of the arbitration agreement, and permits Plaintiffs to withdraw from arbitration and proceed in this Court. The stay is lifted. Monetary sanctions of $5,910 are imposed against Rover under section 1281.99, payable to Plaintiffs through their counsel within 30 days after service of notice of this ruling.

Request for Judicial Notice Rover’s request for judicial notice of the Court’s September 30, 2024, minute order granting the motion to compel arbitration is granted. (Evid. Code, § 452, subd. (d).) The Court notices the existence and contents of the order, but not the truth of any disputed factual assertion contained in the court record.

Background

On September 30, 2024, the Court granted the motion to compel arbitration and stayed this action. The parties ultimately submitted the dispute to JAMS in approximately October 2025.

On December 23, 2025, JAMS issued Invoice No. 8031202 to Rover for the $3,250 nonrefundable filing fee. The invoice stated that payment was due upon receipt. A month later, JAMS sent a reminder on January 15, 2026. On January 16, defense counsel advised JAMS that the original invoice had been routed to a junkmail folder and stated: “I will forward this to my client today for processing.” On January 20, JAMS issued a final request and closed the arbitration for nonpayment.

Rover did not issue a check until March 6, 2026. That check was not received because it apparently was mailed to the wrong JAMS office. The record does not establish when Rover or its counsel discovered the failed delivery. Rover asserts that counsel thereafter communicated with JAMS to obtain the proper address. JAMS confirmed an address on July 8, and Rover mailed a replacement payment and request for reinstatement on July 9, 2026.

Applicable Law In a consumer arbitration, when the drafting party fails to pay fees required before the arbitration may proceed within 30 days after the due date, section 1281.97 provides that the drafting party is in material breach and default and waives the right to compel arbitration. The consumer may withdraw the claim and proceed in court. (Code Civ. Proc., § 1281.97, subds. (a)(1), (b)(1).)

Hohenshelt v. Superior Court (2025) 18 Cal.5th 310 held that the statutory scheme must be construed together with generally applicable principles governing forfeiture and relief from default. Thus, late payment does not invariably forfeit arbitration rights. Forfeiture is warranted where the nonpayment is willful, grossly negligent, or fraudulent; otherwise, relief may be available for a good-faith mistake, inadvertence, or other excusable neglect. (Id. at pp. 323, 343-346.) The Court considers the circumstances of the nonpayment and the equitable factors bearing on relief, including prejudice and whether the nonbreaching party can be made whole. (Ibid.)

Gross negligence is either a “want of even scant care” or an extreme departure from the ordinary standard of conduct. (City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 754, citing Eastburn v. Regional Fire Protection Authority (2003) 31 Cal.4th 1175, 1185–1186.) In Wilson v. Tap Worldwide, LLC (2025) 114 Cal.App.5th 1077, 1090, the Court of Appeal held that an electronic payment initiated on the last permissible day and received one

business day later was, as a matter of law, not willful, grossly negligent, or fraudulent. Wilson also reversed the associated fee award. (Id. at pp. 1090-1091).

Analysis

1. Rover’s course of conduct was grossly negligent.

The initial diversion of one email to a junk-mail folder, standing alone, could amount to ordinary inadvertence. The motion does not turn on that isolated event. By January 15 or 16, 2026, after a month of non-payment, Rover’s counsel had actual notice of the overdue invoice and expressly represented that it would be forwarded to Rover that day for processing. Still not having received payment, JAMS then issued a final request and closed the arbitration on January 20. Yet Rover did not issue any payment until March 6 - approximately seven weeks after actual notice and more than six weeks after the statutory deadline.

Rover offers only the general statement that additional time was required to complete its internal corporate payment process and obtain funds. That does not explain what happened during those weeks, why counsel represented that payment would be made “that day,” why a $3,250 filing fee could not be timely paid, what steps anyone at Rover took, or why counsel did not ensure compliance after expressly acknowledging the invoice. No declaration from a Rover employee responsible for payment supplies those missing facts. A party that obtained an order compelling arbitration had, at a minimum, a duty to monitor and timely perform the payment obligation necessary to initiate that arbitration.

The March 6 check does not cure the lack of care. It was mailed to the wrong office and never received. The record does not show that Rover used tracking, verified delivery, promptly learned of the nondelivery, or immediately sent replacement funds by an assured method. Nor does it identify the dates or substance of the asserted follow-up communications with JAMS. The first documented replacement effort shown by the evidence occurred on July 9 - nearly seven months after the invoice, almost six months after actual notice, and long after JAMS closed the matter.

The Court need not find that Rover deliberately sought delay, and it need not reject counsel’s explanation that the first invoice went to junk mail. The opposition’s emphasis on the absence of intentional delay is misplaced. (Opposition, ROA 137, p. 5.) Gross negligence does not require intentional misconduct. Thus, the absence of a deliberate effort to obstruct the arbitration does not preclude a finding of material breach under Hohenshelt. Even accepting

Rover’s account, its serial failures after actual notice - a lengthy and unexplained internal delay vaguely attributed to “administrative oversight,” a check directed to the wrong office, no demonstrated effort to verify delivery, and months of further delay before replacement—reflect a “want of even scant care” and an extreme departure from the conduct reasonably expected of a drafting party whose payment was indispensable to the forum it had compelled. This is not a short, promptly corrected, good-faith mistake.

Wilson underscores the difference. There, the drafting party acted on the deadline and the provider received funds one business day late. (Wilson, supra, 114 Cal.App.5th at 1090.)

Here, the default persisted for months after actual notice and after administrative closure. Wilson does not insulate such conduct.

2. Rover has not established grounds for equitable relief from forfeiture.

Rover bears the burden of showing facts supporting relief from the consequences of its default. Its generalized invocation of an administrative delay is insufficient. The evidence does not establish a good-faith mistake that was promptly corrected or otherwise excusable neglect. Civil Code section 3275 independently withholds relief from a party whose breach was grossly negligent, willful, or fraudulent. Because the Court finds gross negligence, equitable relief is unavailable on this record.

The absence of a missed merits hearing or completed discovery does not compel a different result. Plaintiffs were prevented from commencing the arbitration for months, JAMS closed its file, and Plaintiffs were required to pursue relief in court. Prejudice is relevant to equitable relief, but it does not erase gross negligence. Nor would an order simply restarting arbitration fully restore the time and expense occasioned by Rover’s repeated failures.

3. Plaintiffs may withdraw from arbitration and the stay must be lifted.

Because Rover materially breached the arbitration agreement within the meaning of section 1281.97, subdivision (a), Plaintiffs may exercise their statutory election to withdraw their claims from arbitration and proceed in court. (§ 1281.97, subd. (b)(1).) The stay imposed pending arbitration is therefore lifted. The September 30, 2024, order compelling arbitration is no longer enforceable against Plaintiffs as to the claims encompassed by their statutory election.

4. Monetary sanctions are mandatory and the requested amount is reasonable.

Section 1281.99, subdivision (a), requires the Court to order a drafting party that materially breaches under section 1281.97 to pay the reasonable expenses, including attorney fees and costs, incurred by the consumer as a result of the breach. Plaintiffs request $5,910, consisting of 2.0 hours reviewing JAMS correspondence and following up regarding payment, 3.0 hours researching available remedies, 2.0 hours drafting the election and motion, 2.0 hours for the hearing, all at $650 per hour, plus $60 in filing fees and costs. (Vance Decl., ¶ 8.)

The hourly rate and time claimed are reasonable for this motion and were caused by Rover’s material breach. Rover does not offer a developed challenge to the amount. The Court therefore awards the requested $5,910. The award is compensatory and mandatory under section 1281.99, subdivision (a); the Court does not impose discretionary evidentiary, terminating, or contempt sanctions under subdivision (b).

Disposition

1. Plaintiffs’ motion to withdraw from arbitration and lift the stay is granted.

2. The stay of this action is lifted.

3. Monetary sanctions of $5,910 are imposed against defendant A Place for Rover, Inc., payable to Plaintiffs through counsel within 30 days after service of notice of this ruling.

4. Rover shall give notice.

9. 2024-1424606 Vega vs. Case Management Conference Bearley The demurrer of plaintiffs Philip Vega, Kevin Vega, and Contractors and Developers Bonding & Insurance Services Inc. to defendant Great American Insurance Company’s answer is sustained in part and overruled in part. The demurrer is sustained with 15 days leave to amend as to the ninth cause of action; it is otherwise overruled.