Martinez v. Baronhr, Inc.

• Decision Date: 08 July 2020
• Docket Number: B296858
• Citation: 51 Cal.App.5th 962,265 Cal.Rptr.3d 523
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph MARTINEZ, Plaintiff and Respondent, v. BARONHR, INC., et al, Defendants and Appellants.

51 Cal.App.5th 962

265 Cal.Rptr.3d 523

Joseph MARTINEZ, Plaintiff and Respondent,

v.BARONHR, INC., et al, Defendants and Appellants.

B296858

Court of Appeal, Second District, Division 4, California.

Filed July 8, 2020

Lewis Brisbois Bisgaard & Smith, David L. Martin and Anne M. Turner, Costa Mesa, for Defendants and Appellants.

The Bloom Firm, Woodland Hills, and Raquelle de la Rocha for Plaintiff and Respondent.

CURREY, J.

INTRODUCTION

What if neither party to an arbitration agreement places initials next to a jury waiver contained in the agreement, even though the drafter included lines for their initials? On the facts of this case, we conclude the lack of initials is of no legal consequence.

Here, when appellants BaronHR, Inc., BaronHR, LLC, Fortress Worldwide, Inc. and Luis Perez (collectively BaronHR), hired respondent Joseph Martinez, both Martinez and an employer representative signed an arbitration agreement, but neither initialed a jury waiver included in the agreement. Later, Martinez filed an employment-related lawsuit against BaronHR, who then moved to compel arbitration. For reasons discussed below, we conclude the court erred in denying the motion to compel arbitration, reverse the court's order, and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

BaronHR is an employment staffing company that recruits candidates for commercial, administrative and health care positions. BaronHR hired Martinez as a sales manager and gave him several employment-related documents, including an arbitration agreement. Martinez signed all of the documents the same day he was hired.

Martinez filed a complaint asserting 18 employment-related causes of action stemming from BaronHR's alleged discriminatory and retaliatory mistreatment of him. BaronHR moved to stay the lawsuit and to compel arbitration, arguing Martinez was bound by the arbitration agreement.

The arbitration agreement, entitled "Mutual Agreement to Arbitrate Claims," consists of three typed pages in which BaronHR is referred to as "Employer or Company" and Martinez as "Employee." The first sentence of the agreement states Employer and Employee "mutually agree that they shall resolve by final and binding arbitration any and all claims or controversies for which a court or other governmental dispute resolution forum otherwise would be authorized by law to grant relief in any way arising out of, relating to, or associated with Employee's application for employment with Employer, Employee's employment with Employer, or the termination of any such employment ... This Agreement shall be effective on the date it is signed by Employee."

The third paragraph of the agreement is the subject of the motion to compel. It consists of two sentences: "Employer and Employee each agree that arbitration, as provided for in this Agreement, shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both Employer and Employee explicitly waive their respective rights to trial by jury ." (Original emphasis.) Next to the bolded sentence, in the right-hand margin, "INITIAL:" is written. (Capitalization as in the original.) Beneath that is a short line. Neither a representative of BaronHR nor Martinez initialed the "INITIAL" line.

The second paragraph of the third page of the agreement provides, in part: "This is the complete agreement of the parties on the subjects of arbitration of claims and waiver of trial by jury."

The final portion of the agreement, which we will refer to as the certification paragraph, contains a second express jury trial waiver which reads: "EMPLOYEE'S CERTIFICATION OF UNDERSTANDING OF AGREEMENT EMPLOYEE'S SIGNATURE BELOW CONFIRMS THAT EMPLOYEE HAS READ, UNDERSTANDS, AND AGREES TO BE LEGALLY BOUND BY, ALL OF THE TERMS OF THIS AGREEMENT.[¶] EMPLOYEE SHALL NOT SIGN UNTIL EMPLOYEE HAS READ AND UNDERSTANDS THE ENTIRE AGREEMENT. AFTER SIGNING THIS AGREEMENT, EMPLOYEE HAS NO RIGHT TO PURSUE CLAIMS AGAINST THE COMPANY IN COURT AND BEFORE A JURY, BUT ONLY THROUGH THE ARBITRATION PROCESS." (Original emphasis, underscoring and capitalization.)

Directly underneath the certification paragraph are two separate sets of three lines. One set is for "Employee" and the other is for "Authorized Company Representative." The three lines provide space for the Employee and Authorized Company Representative to sign, print their names, and insert the date. Martinez signed, printed his name, and wrote the date, "5/3/17," on the first set of lines. Julie Schlotterback, BaronHR's authorized representative, signed, printed her name, and wrote the date, "5/9/17," on the second set of lines.

Martinez opposed BaronHR's motion to compel arbitration. In support of his opposition, Martinez attached a declaration stating in relevant part: "[¶] 4. I remember coming across the arbitration agreement and pausing at the bolded paragraph which asked for an initial in the blank space to waive a jury trial. [¶] 5. Due to my experience as a professional in the industry, it was my belief and understanding that arbitration was not as beneficial to employees where employers have exhibited harmful activity. [¶] 6. I did not want to initial a statement agreeing to waive jury trial and I did not initial the statement agreeing to waive a jury trial."

BaronHR filed a reply brief but did not object to Martinez's declaration. The trial court denied the motion to compel arbitration, explaining that while there was "no ambiguity in the language" of the agreement, there was "ambiguity" about whether Martinez in fact agreed to arbitrate and waive his right to a jury trial. BaronHR timely appealed, and the court issued a stay.

DISCUSSION

A. Standard of Review

An order denying a motion to compel arbitration is an appealable order. ( Code Civ. Proc. § 1294, subd. (a).) As a preliminary matter, the parties dispute the appropriate standard of review. According to BaronHR, there are no factual disputes and we should thus review the denial of the motion to compel arbitration de novo. ( Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 227, 252 Cal.Rptr.3d 149 [" ‘[I]f the court's denial rests solely on a decision of law, then a de novo standard of review is employed....’ "].) Martinez argues the trial court found there was insufficient evidence of mutual assent in light of his omitted initials and declaration. ( Ibid. [If the trial court's decision on arbitrability " ‘... is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.]’ "].)

The issue before the trial court was whether mutual assent existed, which is a question of fact. ( Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141, 127 Cal.Rptr.2d 145.) In determining there was no mutual assent, the trial court relied on extrinsic evidence produced by Martinez and made an implied credibility finding from that evidence that Martinez did not want to arbitrate when he signed the agreement. Accordingly, we apply the substantial evidence standard of review. " ‘We must accept the trial court's resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence.

[Citation.]’ [Citation.]" ( Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653, 35 Cal.Rptr.2d 800.)

B. Mutual Assent

"In California, ‘[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.’ [Citations.]" ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) "An essential element of any contract is the consent of the parties or mutual assent. [Citations.]" ( Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270, 109 Cal.Rptr.2d 807, 27 P.3d 702, Civ. Code §§ 1550, 1565.) The parties’ mutual intent is to be ascertained solely from the contract that is reduced to writing, if possible. ( Civ. Code § 1639, Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568.) The contract language controls if it is clear and explicit. ( Civ. Code § 1638 ; Palmer , supra , at p. 1115, 90 Cal.Rptr.2d 647, 988 P.2d 568.) "Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings. [Citation.]" ( Alexander v. Codemasters Group Limited, supra, 104 Cal.App.4th at p. 141, 127 Cal.Rptr.2d 145.)

The language of the agreement between Martinez and BaronHR establishes their mutual assent to submit employment-related disputes to arbitration and to waive the right to jury trial. As noted, three separate terms of the agreement acknowledge in explicit and unmistakable language the parties’ mutual intent to arbitrate all disputes; two of those terms also acknowledge the parties’ mutual intent to waive their right to jury trial. Among them, is the uninitialed third paragraph with its boldface jury waiver: "Employer and Employee each agree that arbitration, as provided for in this Agreement, shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both Employer and Employee explicitly waive their respective rights to trial by jury. "

Martinez does not dispute he signed the agreement. He is, therefore, deemed to have assented to all its terms. ( Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049, 107 Cal.Rptr.2d 645 [Generally, "one who signs an instrument, which on its face is a contract, is deemed to assent to all its terms."].) Moreover, as the certification paragraph makes explicit, in signing the agreement, the employee ...