Thursday, September 13, 2018
Court of Appeal:
Denial of Arbitration Justified Based on Third-Party Exception
By a MetNews Staff Writer
The Court of Appeal for this district has denied a bid by two law firms to compel arbitration of a former client’s malpractice action because the client also named as defendants two persons who were not parties to the arbitration agreement nor agents of the firms.
The unpublished opinion, filed Tuesday, was written by Justice Judith Ashmann-Gerst of Div. Two. It affirms Los Angeles Superior Court Judge Maureen Duffy-Lewis’s order denying the firms’ motion to force arbitration.
Plaintiff Stephanie Wagner sued Homeowner Rights Law Group, APC of West Covina (“HRLG”), Consumer Litigation Law Center, APC of Anaheim (“CLLC”), and attorneys September J. Katje, Diana Torres-Brito, and Sanam A. Nikkhoo for malpractice, breach of fiduciary duty, intentional and negligent misrepresentation, and the intentional infliction of emotional distress.
Wagner alleged that the attorneys led her to believe that she could stop a foreclosure on her home by suing the lender under the Homeowner’s Bill of Rights but that, contrary to the assurances, she lost the property. She also named as defendants legal strategist Gregg Bridwell and his company Premiere Legal Works, LLC (“Premier”).
She also named as defendants, in the causes of action for misrepresentation and emotional distress, legal strategist Gregg Bridwell and company Premiere Legal Works, LLC (“Premier”).
Arbitration Exception Applied
Ashmann-Gerst disagreed with the law firms and lawyers that they were entitled to arbitration based on the five retainer agreements Wagner had signed with the firms. While those agreements had arbitration provisions, she said that an exception to the requirement of enforcing such provisions applies because Bridwell and Premier were included as defendants.
The jurist noted that Code of Civil Procedure §1281.2(c) provides that a court is not obliged to compel arbitration pursuant to a contractual proviso where “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”
(In stating her reasons for denying the motion for arbitration, Duffy-Lewis did not cite that code section. Ashmann-Gerst observed, in a footnote: “Although the transcript is not a model of clarity, we presume the trial court exercised its discretion to deny arbitration under Code of Civil Procedure section 1281.2, subdivision (c) based on its conclusion that Bridwell and Premiere were third parties to the retainer agreements.”)
The justice set forth:
“Although plaintiff’s claims against the individually named attorney defendants certainly rely on, and presume the existence of the retainer agreements, the problem lies with her claims against Bridwell and Premiere. The thrust of plaintiff’s claims against them are based on Bridwell’s misrepresentations pertaining to the foreclosure process involving her property, which do not rely on any violation of any duty, term, or condition imposed by the retainer agreements. Thus, plaintiff cannot be compelled to arbitrate her claims against Bridwell and Premiere….”
Discretion Not Abused
Ashmann-Gerst went on to say:
“Even though plaintiff cannot be forced to arbitrate her claims against Bridwell and Premiere, the issue is whether the trial court abused its discretion in denying defendants’ petition to compel arbitration….
“On the record before us, the trial court could reasonably conclude that litigation involving all of the parties should proceed in order to avoid conflicting rulings because plaintiff’s claims against Bridwell and Premiere would have required the trier of fact to consider some of the same issues as plaintiff’s claims against defendants.”
The case is Wagner v. Homeowner Rights Law Group, APC, B282398.
Robert A. Kahn and Jonathan D. Roven of Kahn Roven in Woodland Hills represented Wagner. Mitchell F. Mulbarger and Benjamin I. Beezy of Baker, Keener & Nahra downtown were counsel for the law firms and the attorneys.
Nikkhoo is currently not eligible to practice law in California pursuant to an interim suspension, effective April 15, based on a conviction for identity theft.
Copyright 2018, Metropolitan News Company