Domestic Linen Supply Co. v. L J T Flowers, Inc., 2d Civ. Nos. B292863

• Court: California Court of Appeals
• Writing for the Court: GILBERT, P. J.
• Citation: 272 Cal.Rptr.3d 291,58 Cal.App.5th 180
• Parties: DOMESTIC LINEN SUPPLY CO., INC., Plaintiff and Appellant, v. L J T FLOWERS, INC., Defendant and Respondent.
• Docket Number: B294788,2d Civ. Nos. B292863
• Decision Date: 04 December 2020

58 Cal.App.5th 180
272 Cal.Rptr.3d 291

DOMESTIC LINEN SUPPLY CO., INC., Plaintiff and Appellant,
v.
L J T FLOWERS, INC., Defendant and Respondent.

2d Civ. Nos. B292863
B294788

Court of Appeal, Second District, Division 6, California.

Filed December 4, 2020

Law Offices of Scott D. Wu and Scott D. Wu, Alhambra, for Plaintiff and Appellant.

Goldenring & Prosser and Peter A. Goldenring, Ventura; Pachowicz / Goldenring and Peter A. Goldenring, Ventura, for Defendant and Respondent.

GILBERT, P. J.

58 Cal.App.5th 182

An arbitration clause in a contract is invalid because the clause is as inconspicuous as a frog in a thicket of water lilies. The prevailing party is entitled to attorney fees per Civil Code section 1717.¹ Speaking of frogs, Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 141 Cal.Rptr.3d 834 ( Frog Creek ) does not prohibit the award of attorney fees.

Plaintiff appeals the trial court's order denying a petition to compel arbitration and awarding attorney fees to the respondent. We affirm.

FACTS

Domestic Linen Supply Co., Inc. (Domestic) rents uniforms to businesses. In 2011, L J T Flowers, Inc. (LJT) entered into a contract drafted by Domestic to rent uniforms from Domestic.

The contract is printed on a single double-sided page. The place designated for signature of the parties is on the front page. The first paragraph on the front page provides, "THE PARTIES HEREBY AGREE UPON THE TERMS SET FORTH BELOW AND UPON THE REVERSE SIDE HEREOF."

On the reverse side are paragraphs 5 to 21 of the agreement. Paragraph 15 contains an arbitration agreement as follows: "In the event of any controversy or claim in excess of $10,000.00 arising out of or relating to this agreement,

58 Cal.App.5th 183

including but not limited to questions regarding the authority of the persons who have executed this agreement and enforcement of any guarantee that is related to this agreement, the question, controversy or dispute shall be submitted to and settled by arbitration to be held in the city closest to the city in which the branch office of the Company which serves the Customer is located. Said arbitration shall be held in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association except any rules which require the parties to use the American Arbitration Association as their sole Arbitration Administrator. Judgement upon and award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. The filing party may use either court or arbitration where the claim is less than $10,000.00. Venue for any court proceeding shall be in the county of the Company's

272 Cal.Rptr.3d 294

branch office servicing the Customer. The judge or arbitrator shall include as part of the award all costs including reasonable attorney fees and arbitration fees of the non-breaching party where it is determined that one of the parties has breached the agreement."

All the paragraphs on the back page, including paragraph 15, are in eight-point type. Paragraph 15 contains no heading, boldface, or italics. There is no place on the back page for the parties’ signatures or initials.

Tom M. Goldberg signed the rental agreement on behalf of LJT. Goldberg also signed a guaranty agreement in which he personally guaranteed payment for "services rendered or for contractual obligations incurred" under the rental agreement. The guaranty agreement contained no reference to arbitration.

After three years of doing business together, a dispute arose between the parties relating to Domestic's performance. LJT refused to pay Domestic. Domestic claims LJT owes it $30,515.58 under the rental agreement.

Domestic filed a petition to compel arbitration against LJT and Goldberg. Domestic filed an amended petition and set the matter for a hearing. LJT filed opposition. Domestic took the hearing off calendar.

Domestic filed third and fourth petitions to compel arbitration against LJT and Goldberg. Both petitions requested that the trial court order arbitration under the American Arbitration Association (AAA) expedited procedure rules.² Those rules do not allow discovery. The AAA rules make use of the expedited procedure mandatory where there are only two parties and by agreement where there are more than two parties. LJT filed opposition to both petitions. Domestic moved the third petition off calendar prior to a hearing. Thereafter the fourth petition proceeded to a hearing.

58 Cal.App.5th 184

Prior to the hearing, LJT deposed Jason Campbell, Domestic's person most qualified (PMQ). Campbell stated he did not know the person who signed the agreement on behalf of Domestic; did not know when the person left Domestic or under what circumstances; and did not know whether the person discussed the terms of the agreement. Campbell said the only thing he knows about the transaction is what is written on the agreement. He said Domestic's employees are not trained to disclose the arbitration agreement.

Domestic's training manual states that no agreement will be approved where the back side of the agreement is written on. Another document tells the employee to have the client read the personal guaranty while the salesperson fills out the front of the agreement.

The trial court denied the petition to compel arbitration. The court found that LJT suffered a lack of "procedural due process" because the arbitration agreement was "inconspicuous."

LJT made a motion for attorney fees pursuant to the fee provision in the arbitration agreement. The trial court awarded LJT $32,757.04.

DISCUSSION

I.

Arbitration Petition Dismissal

Domestic contends the arbitration agreement must be enforced because there was no lack of consent.

Arbitration agreements are enforceable except upon such grounds that exist in law or in equity for voiding any

272 Cal.Rptr.3d 295

contract. ( Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98, 99 Cal.Rptr.2d 745, 6 P.3d 669.) There is no contract unless the parties agree on the material terms. ( Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 797, 71 Cal.Rptr.2d 265.)

Domestic points out that there is a strong public policy in favor of agreements to arbitrate. (Citing Wagner Construction Co. v. Pacific Mechanical Corp . (2007) 41 Cal.4th 19, 25, 58 Cal.Rptr.3d 434, 157 P.3d 1029.) But no public policy compels persons to accept arbitration of controversies they have not agreed to arbitrate. ( Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, 222 Cal.Rptr. 1, 710 P.2d 833.)

58 Cal.App.5th 185

There is a constitutional right to trial by jury. ( Cal. Const., art. I, § 16.) That right is basic and should be zealously guarded by the courts. ( Titan Group, Inc. v. Sonoma Valley County Sanitation Dist . (1985) 164 Cal.App.3d 1122, 1127-1128, 211 Cal.Rptr. 62.) In case of doubt, the issue should be resolved in favor of the right to a trial by jury. ( Id . at p. 1128, 211 Cal.Rptr. 62.) The party seeking to compel arbitration bears the burden of proving a valid agreement to arbitrate. ( Lacayo v. Catalina Restaurant Group, Inc. (2019) 38 Cal.App.5th 244, 257, 250 Cal.Rptr.3d 444...