Adolph v. Coastal Auto Sales, Inc.
| Decision Date | 26 May 2010 |
| Docket Number | No. G041771.,G041771. |
| Court | California Court of Appeals Court of Appeals |
| Parties | Lauren ADOLPH, Plaintiff and Respondent, v. COASTAL AUTO SALES, INC., Defendant and Appellant. |
Venable LLP, Aaron H. Jacoby, John D. Bronstein, Melanie S. Joo; Arent Fox LLP, Aaron H. Jacoby and John D. Bronstein, Los Angeles, for Defendant and Appellant.
Law Offices of Ronald B. Schwartz, A.P.C., Ronald B. Schwartz and Mark J. Spencer, Newport Beach, for Plaintiff and Respondent.
Defendant Coastal Auto Sales, Inc., doing business as Norm Reeves Honda Superstore, appeals the court's denial of its petition to compel arbitration. 1 We affirm. The court's factual finding that defendant waived its right to arbitrate is supported by substantial evidence. A defendant may not use court proceedings for its own purposes, while remaining uncooperative with a plaintiff's efforts to use those same court proceedings, and then, upon failing to achieve defendant's own objectives in court, and at the time when the parties should be engaged in final trial preparation, demand arbitration for the first time.
Plaintiff Lauren Adolph bought a 2003 Honda Civic from defendant and traded in her 1998 Ford Escort toward the down payment. Plaintiff later sued defendant for failing to transfer ownership of the Escort to itself, causing plaintiff to be charged with parking fines, towing and impound fees, and a tax garnishment related to the Escort she no longer owned. On the day before plaintiff filed her original complaint, she served by certified mail a notice of violation of the Consumers Legal Remedies Act (CLRA) (Civ.Code, § 1750 et seq.),2 as required by section 1782, subdivision (a). More than 30 days thereafter, on July 11, 2008, plaintiff filed andserved her first amended complaint (FAC). The court sustained with leave to amend defendant's demurrer to plaintiff's FAC. Plaintiff filed a second amended complaint (SAC) that referenced (for the first time) that the Escort had been traded in as part of the down payment on her purchase of the Civic. Defendant's demurrer to the SAC was overruled. Defendant then sought arbitration. The court denied defendant's petition to compel arbitration of the controversy, finding defendant waived its right to arbitrate.
On appeal defendant argues its arbitration right was triggered by the SAC's reference to the purchase agreement for the Civic; defendant asserts it moved for arbitration at its very first opportunity.3 To assess this claim, we summarize plaintiff's allegations in her FAC and her SAC, and describe the discovery efforts undertaken before the court overruled defendant's demurrer to the SAC.
In her FAC, plaintiff alleged she "purchased services" from defendant by transferring a 1998 Ford Escort to defendant pursuant to a bill of sale. Defendant agreed to transfer to itself ownership of the Escort and to "take care of all DMV ownership transfer requirements," including "submitting a Notice of Release of Liability to the DMV." Thereafter, on at least seven occasions over a period of three years, plaintiff notified defendant's agents of parking tickets she had received for the Escort after the date of sale, as well as a letter demanding towing and junkyard impound fees, and a tax offset notice threatening garnishment for "monies owed on the 1998 Ford Escort for the outstanding traffic ticket" defendant had promised to take care of. Defendant's agents "admitted it was defendant's fault" and promised to take care of the matter. But as of the date of the FAC, the Escort remained "registered in plaintiff's name."
The FAC contained four causes of action, including a claim under the CLRA. Plaintiff alleged, inter alia, that defendant engaged in an "unfair or deceptive act or practice under" the CLRA by violating section 1770, subdivision (a)(16) (section 1770(a)(16)). Under that subdivision, a "person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer" engages in an "unfair or deceptive" act or practice by "[r]epresenting that the subject of a transaction has been supplied in accordance with a previous representation when it has not." In the FAC, plaintiff alleged that the "subject of [the] transaction [was the] transfer of ownership of the 1998 Ford Escort from plaintiff to defendant, including filing the necessary documents with the DMV to release plaintiff from liability for the car."
In August 2008, defendant demurred to the FAC, inter alia, for failure to state a cause of action under section 1770(a)(16), which prohibits a seller from representing "that the subject of a transaction has been supplied in accordance with a previous representation when it has not." Defendant argued that "the subject of the transaction is the subject vehicle," not the "transfer of ownership." The court sustained with leave to amend defendant's demurrer to plaintiff's CLRA cause of action.
Plaintiff filed her SAC on October 6, 2008. As relevant here, the SAC was substantiallysimilar to the FAC, but contained changes to paragraph 5 of the general allegations and paragraphs 19 and 20 of the CLRA claim. Inparagraph 5 of the SAC plaintiff alleged she "purchased a 2003 Honda Civic Automobile" from defendant, and that, as "part of that purchase transaction, defendant agreed to take in plaintiff's ... Escort ... and apply its value as a down payment toward the purchase of the 2003 Honda Civic." (In contrast, in paragraph 5 of the FAC plaintiff alleged she "purchased services from" defendant.) In paragraph 19 of the SAC plaintiff alleged that, under section 1770(a)(16), the subject of the transaction was "effecting transfer of ownership of the 1998 Ford Escort from plaintiff to defendant, including obtaining a release of plaintiff from liability for the car, as performance pursuant to the purchase agreement for the 2003 Honda Civic." And in paragraph 20 of the SAC plaintiff alleged that defendant's misrepresentations "in the performance of its agreement were intended to result in the sale of the 2003 Honda Civic to plaintiff." (In contrast, in paragraph 20 of the FAC plaintiff alleged that defendant's misrepresentations "in the performance of its agreement were intended to result in the sale of the service to plaintiff.") Thus, the consumer transaction described in the SAC was defendant's sale of a Civic to plaintiff pursuant to a purchase agreement. The performance of that purchase agreement allegedly included defendant's transferring the Escort to itself.
On November 7, 2008, defendant demurred to the SAC for failure to state a cause of action under the CLRA. On December 5, 2008, the court overruled defendant's demurrer.
In August and September of 2008, plaintiff propounded written discovery requests on defendant and noticed depositions of defendant's personnel. Defendant stalled the depositions. Plaintiff served her first deposition notices on August 15. Defendant's counsel responded with a letter on August 28, stating that "witnesses and defense counsel were unavailable" on the dates noticed. Instead of proposing dates on which the witnesses and counsel would be available, defendant's counsel simply stated: " '[C]onsequently, alternative dates will be proposed ... as soon as those dates have been ascertained.' " Defendant's counsel did not object to the depositions on the ground that arbitration would be sought. Apparently, alternative deposition dates were never provided, despite plaintiff's counsel asking for them at court appearances on September 26, October 16, and December 5, 2008, and defendant's counsel saying she would do so.
Written discovery did not go much better. On August 20, 2008, plaintiff served a set of form interrogatories, requests for admissions, and a demand for production of documents. After obtaining an extension, defendant responded to the written discovery on October 1, 2008, but the responses resulted in plaintiff's counsel finding it necessary to write two meet and confer letters regarding asserted insufficiency of the responses.
On the same day the court overruled defendant's demurrer to the SAC, i.e. December 5, 2008, and after the hearing, defendant wrote plaintiff asking for a stipulation to arbitrate the matter, enclosing for the first time the contract containing the arbitration clause, a contract which had been withheld from the earlier documentproduction. On January 7, 2009, plaintiff declined defendant's request to arbitrate the dispute. On January 28, 2009, defendant filed its petition to compel arbitration of all claims in plaintiff's SAC and to stay plaintiff's lawsuit.
The court denied defendant's petition, finding defendant waived its right to arbitrate.4 The court's reasoning is set forth at length in the discussion section below.
Defendant contends it did not delay in seeking arbitration because the dispute became arbitrable only when plaintiff filed her SAC, predicating her CLRA claim on the Civic purchase contract. Further, defendant asserts plaintiff was not prejudiced by any delay because all "discovery was generated solely by" plaintiff and related "only to the causes of action in the FAC."
Plaintiff counters that defendant "knew of its right to arbitrate since the inception of the litigation...." Plaintiff asserts the court found (1) defendant "did not move to compel arbitration at its 'very first opportunity' but, rather, delayed six months intending to pursue the court action," and (2) plaintiff was prejudiced because defendant's "conduct substantially undermined [her] ability to take advantage of the benefits and cost savings provided by arbitration two months before trial."
We apply the substantial evidence standard of review to the court's finding defendant waived its right to arbitrate. (Guess?, Inc....
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