Isobe v. Matsuhisa CA2/8

California Court of Appeal Feb 7, 2025 No. B333628Unpublished

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Holding. The court held that because the parties' agreement contained a valid delegation provision and the plaintiffs failed to specifically challenge that provision, the trial court was required to submit the threshold issue of the arbitration agreement's validity to the arbitrator.

Issues

Whether a trial court or an arbitrator should determine the validity of an arbitration agreement when the agreement contains a delegation provision.
Whether the plaintiffs' failure to specifically challenge the delegation provision requires the court to enforce it.

Disposition. reversed

Quotations verified verbatim against the opinion

“the operating agreement’s delegation provision deprived the trial court of authority to determine whether the arbitration agreement as a whole was valid and enforceable in the first instance.”

“The party opposing the enforcement of a delegation provision must challenge the delegation provision specifically.”

“Because the delegation provision was severable from the arbitration agreement, and Isobe and Kazan failed to challenge that provision, the trial court should have directed the gateway issue of the validity of the arbitration agreement to the arbitrator.”

Filed 2/7/25 Isobe v. Matsuhisa CA2/8 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

RYUTARO ISOBE et al., B333628

Plaintiffs and Respondents, (Los Angeles County Super. Ct. No. 23SMCV01686) v.

YOKO MATSUHISA,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Los Angeles County. Mark H. Epstein, Judge. Reversed. Mayer Brown, Kevin Ranlett, Carmen Longoria-Green, John Nadolenco, and Daniel D. Queen for Defendant and Appellant. Keith A. Fink & Associates, Keith A. Fink and Olaf J. Muller for Plaintiffs and Respondents. ____________________________________

Defendant and appellant Yoko Matsuhisa appeals from an order denying her motion to compel arbitration and to stay the action filed by plaintiffs and respondents Kazan LLC (Kazan) and Ryutaro Isobe. Matsuhisa argues the trial court erred when it refused to submit respondents’ unconscionability challenge to the arbitrator in the first instance based on a valid delegation provision. We agree and reverse.

FACTUAL AND PROCEDURAL BACKGROUND I. Complaint Isobe had created Kazan to own and operate Kazan Beverly Hills, a restaurant that won a Michelin star just three years after opening. Matsuhisa is the wife of famed restauranteur Nobu Matsuhisa. Isobe and Matsuhisa signed a written operating agreement for Kazan whereby Matsuhisa would buy a minority membership interest in Kazan for $1 million. Isobe alleged that while he treated Matsuhisa as a minority member, Matsuhisa failed to pay for her Kazan membership interest and has failed to pay the contractually agreed sum of $1 million. He further alleged that Matsuhisa’s failure to contribute the promised $1 million in capital to Kazan caused tremendous hardship, leaving Kazan with insufficient capital to properly operate with full staff or pay vendors. As a result, Isobe had to work tremendous hours to make up for this staffing shortfall, which significantly impacted his health. After failing to resolve the matter informally, Isobe sued Matsuhisa, alleging breach of contract and other causes of action based on the failed deal.

Isobe v. Matsuhisa CA2/8

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

YOKO MATSUHISA,

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