Marquez v. Pollo Campero of California, et al.

Thus, the Court stays this action pending the conclusion of the arbitration proceedings.¿¿

Conclusion

Petitioner Vivek Shah's petition to compel arbitration is granted. The Court stays this action pending the conclusion of the arbitration process.

Department 516 Hearing Date: August 28, 2026 Case Name: Marquez v. Pollo Campero of California, et al. Case No.: 26STCV04954 Matter: Motion - Other to Lift Stay Moving Party: Plaintiff Jasmine Marquez Responding Party: Defendants Pollo Campero of California, LLC and Campero USA Corp. doing business as Pollo Campero Tentative Ruling: Plaintiff Jasmine Marquez's motion is denied.

Plaintiff Jasmine Marquez ("Plaintiff") filed this action against Defendants Pollo Campero of California, LLC, Campero USA Corp. doing business as Pollo Campero (collectively "Defendants") and Does 1 through 10. Plaintiff's claims against Defendants are employment and wrongful termination related. On May 7, 2026, the parties stipulated to stay the proceedings until mediation was completed; if mediation were not successful, Defendants would file their motion to compel arbitration. Plaintiff moves to lift the stay for Defendants' failure to pay fees, and requests monetary sanctions in the amount of $4,830.27. Defendants oppose.

Legal Standard

Code of Civil Procedure section 1281.98, subdivision (a) provides: "[i]n 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." (Code Civ. Proc., Sec. 1281.98, subd. (a)(1).)

"If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following: (1) "[w]ithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction"; (2) continue the arbitration proceeding if the arbitrator agrees; (3) petition the Court for an order compelling the drafting party to pay all fees, or (4) "[p]ay the drafting party's fees and proceed with the arbitration proceeding." (Code Civ. Proc., Sec. 1281.98, subd. (b).)

Analysis

Plaintiff moves to lift the stay on the proceedings because Defendants did not pay within 30 days of the American Arbitration Association's ("AAA") invoice, which was issued on May 15, 2026. Plaintiff contends that pursuant to Code of Civil Procedure section 1281.98, the Court must lift the stay because she has the right to proceed with her case in court.

Plaintiff contends that on May 15, 2026, the AAA issued correspondence and an invoice regarding Defendant's share of fees. (Nguyen Decl., P.P. 9-11, Ex. C.) Moreover, Defendants were required to pay $2,100.00. (Id. at P. 10.) On May 13, 2026, Plaintiff asserts that she shared the invoice with Attorneys Rachel Albert ("Albert") and Diana Lerma ("Lerma") because the leading attorneys on the case Syafiqah Shuhaimi ("Shuhaimi") and Leonora Schloss ("Schloss") were not available due to an internal transfer. (Id. at P. 12, Ex. D.) On July 8, 2026, the AAA closed the case because Defendants had not paid their share of fees. (Id. at P. 14, Ex. F.)

In opposition, Defendants argue that their late payment does not trigger automatic forfeiture because the delay was not willful, grossly negligent, or fraudulent. Defendants cite to the Supreme Court of California's ruling in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310, 323. In Hohenshelt, the Supreme Court of California found that the FAA does not preempt Code of Civil Procedure section 1281.98. (Id., at p. 323.) The Supreme Court rejected the argument that "section 1281.98¿imposes¿an inflexible rule that deems any failure to make timely payment a material breach, regardless of circumstances, with the automatic consequence that the drafting party loses its arbitral rights." (Id., at p. 331.)

The Supreme Court looked to the legislative history and longstanding relief-from-forfeiture principles, including Civil Code section 3275, Civil Code section 1511, and Code of Civil Procedure section 473, subdivision (b) in rejecting a rigid application of Code of Civil Procedure section 1281.98. (Id., at p. 335-41.) The Supreme Court concluded: "instead of '[i]mposing a higher standard for enforcement of arbitration agreements' [Citation.], section 1281.98 construed in harmony with background statutes, makes arbitration contracts enforceable on the same grounds as those that apply to other contracts: When a party breaches its contractual obligations willfully, fraudulently, or with gross negligence, it cannot escape the consequences by pointing to a lack of harm to the other party.

But short of such wrongful conduct, a breaching party may be relieved from forfeiting its right to enforce an arbitration agreement based on the circumstances, as provided by longstanding legal principles." (Id., at p. 346.)

The Court agrees with Defendants that the less rigid application of Code of Civil Procedure section 1281.98, as prescribed by the Supreme Court of California in Hohenshelt, governs here. Defendants provide several declarations to support the claim that their failure to pay their share of the fees was not willful, grossly negligent, or fraudulent. Defendants' attorneys Shuhaimi and Schloss went on leave within two days of each other, and attorneys Lerma and Albert began covering for them. (Lerma Decl., P. 2; Albert Decl., P.2.)

Lerma contends that she did not expect the invoice to be sent to her by Plaintiff's Counsel instead of the AAA, and as a result did not open the email from Plaintiff's Counsel. (Lerma Decl., P.P. 4-6.) Albert declares that she did not receive any correspondence from AAA or Plaintiff's Counsel, including Plaintiff's Counsel's email, which was automatically blocked by her email server. (Albert Decl., P.P. 4-5, Ex. B.) Moreover, Shuhaimi's automatic out-of-office replies listed legal assistant, Vivian Castro ("Castro"), as the person to contact regarding counsel's matters.

Castro declares that she never received the invoice or any communications from AAA regarding the outstanding fees. (Castro Decl., P.P. 2-8.)

Here, Defendants establish that the failure to pay the deposit within 30 days was not "willful, fraudulent, or grossly negligent." (Hohenshelt, supra, 18 Cal.5th at p. 346; Wilson v. Tap Worldwide, LLC (2025) 114 Cal.App.5th 1077, 1087 ["to avoid federal preemption,¿section 1281.98¿must be interpreted to allow courts to excuse untimely payments that are not willful, grossly negligent, or fraudulent."].) While Defendants ultimately failed to pay the fees by the deadline, the circumstances and events demonstrate at most negligent conduct, not willful, fraudulent, or grossly negligent conduct.

On May 21, 2026, Albert's legal assistant, Jacqueline Barker, contacted AAA and requested that Albert be added to the AAA account. (Albert Decl., P.P. 6-7, Ex. C.) Moreover, at the July 8, 2026, Case Management Conference, the issue of fees was not raised, and Albert remained unaware of the issue. (Albert Decl., P.P. 9, 11.)

The Court finds that the delay was inadvertent and a result of internal changes in the attorney handling the case and not a strategic choice to prevent Plaintiff from pursuing her claims against Defendants. Defendants have also paid their share of fees owed. (Albert Decl., P.18.) The Court therefore agrees that even if Code of Civil Procedure section 1281.98 applies, then Defendants would be excused from forfeiture under Hohenshelt. As the Court finds that Code of Civil Procedure section 1281.98 does not apply and even if it did, there was no material breach, the Court does not award attorney's fees. Thus, the Court denies Plaintiff's motion to lift the stay.

Conclusion

Plaintiff Jasmine Marquez's motion to lift stay is denied. | Home -->)" -->