Beverly vs. Newport Mesa Riding Center

With regards to the issue of waiver, Defendant contends that it has timely asserted its right to arbitration and has not waived such right as the “litigation machinery” in this action has not been substantially invoked, and Defendant’s actions are consistent with the right to arbitrate Defendant argues that it appeared in this action in November 2023; that trial is scheduled on June 23, 2025; that Defendant requested Plaintiff stipulate to arbitrate the dispute approximately 2 months after appearing in the action and more than a year and half before trial; that Defendant withdrew discovery propounded on Plaintiff and has not answered any discovery; and that no depositions have been taken.

Plaintiff contends that even if an arbitration provision existed and was enforceable, Defendant waived its right to compel arbitration, that Defendant’s conduct at the outset of this litigation was inconsistent with their intent to arbitrate, that Defendant delayed in the bringing this motion while it invoked the litigation machinery and initiated discovery, and that the parties are already deep into the litigation process. Plaintiff further contends that she would be severely prejudiced by moving this case to arbitration at this point in the litigation where Plaintiff has already responded to and propounded discovery and engaged in motion practice, which are all efforts that would be duplicated in arbitration, as well as where Plaintiff, as a minor, is entitled to trial preference here which she is not guaranteed in arbitration.

“[I]n determining whether a party to an arbitration agreement has lost the right to arbitrate by litigating the dispute, a court should treat the arbitration agreement as it would any other contract, without applying any special rules based on a policy favoring arbitration. That is, courts should apply the same procedural rules that they would apply to any other contract. [Citation.]” (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 583 (“Quach”).)

“To establish waiver under generally applicable contract law, the party opposing enforcement of a contractual agreement must prove by clear and convincing evidence that the waiving party knew of the contractual right and intentionally relinquished or abandoned it. [Citations.]” (Quach, supra, 16 Cal.5th at p. 584.) “Under the clear and convincing evidence standard, the proponent of a fact must show that it is ‘highly probable’ the fact is true. [Citation.] The waiving party’s knowledge of the right may be ‘actual or constructive.’ [Citation.]” (Ibid.) “Its intentional relinquishment or abandonment of the right may be proved by evidence of words expressing an intent to relinquish the right or of conduct that is so inconsistent with an intent to enforce the contractual right as to lead a reasonable factfinder to conclude that the party had abandoned it. [Citation.]” (Ibid.) “The waiver inquiry is exclusively focused on the waiving party’s words or conduct; neither the effect of that conduct on the party seeking to avoid enforcement of the contractual right nor that party’s subjective evaluation of the waiving party’s intent is relevant. [Citations.]” (Id. at p. 585) “This distinguishes waiver from the related defense of estoppel, ‘which generally requires a showing that a party’s words or acts have induced detrimental reliance by the opposing party.’ [Citations.]” (Ibid.) “To establish waiver, there is no requirement that the party opposing enforcement of the contractual right demonstrate prejudice or otherwise show harm resulting from the waiving party’s conduct. [Citations.]” (Ibid.)

Based on the foregoing, the first question is whether the evidence submitted shows by clear and convincing evidence that Defendant was actually or constructively aware of its right to compel arbitration.

The only evidence submitted by Plaintiff to support that Defendant had actual or constructive knowledge of the right to arbitration is Plaintiff’s counsel declaration. Plaintiff’s counsel’s declaration states, in part: “I gave notice of Plaintiff’s claim prior to December 21, 2022 and engaged in prelitigation discussion with opposing counsel Gary Wolensky when the alleged waiver and arbitration was referenced during the parties January 19, 2023 call, nearly a year before Defendant’s moving papers suggest it was discovered.” (ROA 87, Declaration of Puneet K. Toor (“Toor Decl.”), ¶ 2.)

In reply, Defendant’s counsel submits a declaration which states, in part: “On or about January 19, 2023, I spoke with counsel for the Plaintiff, Puneet Toor. This call was solely in regarding [sic] to a settlement demand made by Plaintiff to Defendant. No mention of a waiver or arbitration issues were raised or discussed during this telephone call.” (ROA 94, Declaration of Gary A. Wolensky, ¶ 2.) Attorney Wolensky also states, “Defendant had no notice or knowledge of any waiver or arbitration agreement at the time of the above-described January 19, 2023, telephone conversation.” (Id., ¶ 3.)

The evidence submitted does not show by clear and convincing evidence that Sabo Eventing had actual or constructive knowledge of its right to compel arbitration at any time prior to January 12, 2024, when Defendant’s counsel provides they reviewed the arbitration provision in the Agreement. (ROA 52, Declaration of Tamara M. Rowles (“Rowles Decl.”), ¶ 6.)

In light of the above, Defendant’s failure to assert a right to arbitrate in its Answer filed on or about November 8, 2023, and any omission in Defendant’s Case Management Statement filed for the Case Management Conference then-set for December 14, 2023, are consistent with a lack of knowledge of the arbitration provision before January 12, 2024. (Rowles Decl., ¶ 5; Toor Decl., ¶ 4, Ex. C.)

Additionally, the evidence indicates that once Sabo Eventing became aware of its right to arbitrate, it sought to cease litigation activities in this case.

While Sabo Eventing may have served “a full set of written discovery” on Plaintiff on December 14, 2023, counsel for Sabo Eventing provides that after reviewing the arbitration provision in the Agreement on January 12, 2024, they reached out to Plaintiff’s counsel to request a stipulation to stay this action and to arbitrate the dispute with JAMS pursuant to the Agreement, as well as informed Plaintiff’s counsel that Defendant withdrew the discovery previously served on Plaintiff, which had not yet been answered. (Toor Decl., ¶ 6, Ex.

D; Rowles Decl., ¶¶ 6-7, Ex. B.) Defendant’s counsel also provides that they continued to meet and confer with Plaintiff’s counsel regarding the proposed stipulation to arbitrate this dispute and sent a letter to Plaintiff’s counsel on January 22, 2024, regarding the enforceability of the Agreement, but that Plaintiff’s counsel never provided a response to this correspondence, and instead, served Plaintiff’s response to Defendant’s previously withdrawn discovery on January 29, 2024. (Rowles Decl., ¶¶ 8-9, Ex.

C.) To the extent that subsequent to the instant motion being filed, Plaintiff propounded discovery and noticed a deposition, Defendant provided only a blanket objection to the discovery requests in light of the then-pending motion to compel arbitration. (ROA 90, Declaration of Rachel W. Halbasch, ¶¶ 4-5.) The reply further confirms that Defendant has not engaged in any discovery since the filing of the motion to compel arbitration, and that the only discovery that had been propounded by Defendant was withdrawn, as well as that no depositions have taken place. (Id., ¶¶ 9-10.)

The above evidence demonstrates that once Sabo Eventing was aware of the arbitration provision in the Agreement in January 2024, it immediately sought to cease discovery activities in this action and asserted its right to arbitrate.

Based on the foregoing, Plaintiff has not met her burden of showing by clear and convincing evidence that Sabo Eventing knew of the contractual right to arbitrate and intentionally relinquished it thereby waiving its right to arbitrate.

Sabo Eventing’s motion to compel arbitration is GRANTED. The Court STAYS the action pending completion of arbitration. (Code Civ. Proc. § 1281.4.)

The Court sets an ADR Review hearing for January 28, 2027 at 1:30 p.m.

Sabo Eventing to give notice.