C.A. Justices Differ on Degree of Deference to Accord Trial Court Determinations
Bendix Says L.A. Superior Court Judge Lacked Evidence to Support Her Ruling; That Conclusion, Chaney Counters, Can’t Be Drawn Without Information As to What Was Said at Unreported Hearing
By a MetNews Staff Writer
A judge erred in declaring unconscionable an arbitration agreement that a woman signed in retaining services of a law firm, the majority of a Court of Appeal division in this district held Friday, saying that the ruling was based on supposition, and not evidence produced by the former client.
Dissenting, Justice Victoria Chaney protested that the majority cannot know what information Los Angeles Superior Court Judge Shirley K. Watkins had in making her call because there was no transcript, agreed statement or settled statement reflecting what was said at the first of two hearings on a motion to compel arbitration.
Acting Presiding Justice Helen I. Bendix authored the majority opinion, in which San Luis Obispo Superior Court Judge Rita Coyne Federman, sitting on assignment, joined. The opinions were not certified for publication.
Watkins provided a detailed explanation of why she was denying the motion by attorneys Alex Vo, David Jones, and their Woodland Hills law firm, Santiago & Jones (“S&J”), in an action against them for malpractice. Having reviewed the retainer agreement, she said:
“There was no explanation of what COMMERCIAL arbitration meant; there were no AAA rules or fee schedules attached; the retainer does not mention that even though plaintiff would be hiring the defendants to represent her and she would not need to advance costs or owe them any money if she had no recovery, she would have to spend thousands of dollars to pursue a case against them in arbitration rather than pursuing a case in court for little or no money. In particular, the agreement is silent on who would be required to pay for arbitration.”
The judge continued:
“The attorneys were clearly in a superior bargaining position. First, they are attorneys; plaintiff is not. Second, plaintiff was in a vulnerable state because of her injuries and the need to find an attorney to substitute into an existing case. Third, the attorneys knew that there was a substantial cost associated with COMMERCIAL arbitration but did not disclose this to plaintiff. That information was a material term[ ] of the agreement known to defendants and not disclosed to plaintiff, with whom they were in a fiduciary relationship. This term would be substantially prejudicial to plaintiff because of the cost and defendants knew, but did not disclose, that to plaintiff. Fourth, defendants knew that plaintiff was a consumer and that CONSUMER arbitration through AAA was intended for persons in a consumer setting, as opposed to a commercial setting whether both sides are in a business arrangement. Here, plaintiff was obviously a consumer of legal services. By not telling plaintiff that there was a choice between consumer and commercial arbitration and the relative costs, plaintiff was intentionally kept in the dark and could not make a knowing waiver of her right to have a jury determine her case.”
In her opinion reversing Watkins’s order, Bendix declared:
“The problem with the trial court’s findings is there was virtually no evidence to support them.”
She said the plaintiff in the malpractice action, Gloria Weischadle, “who had the burden to prove unconscionability,” presented no evidence as to the circumstances surrounding her signing the retainer agreements, such as any negotiations as to the terms. Bendix wrote:
“[T]he trial court appears to have relied on the content of the agreement itself, noting that the agreement did not explain what commercial arbitration was, who would be responsible for paying for it, and what the cost would be. Assuming arguendo the lack of this information would support a finding of procedural unconscionability, there was no evidence from which the trial court could conclude that S&J did not provide this information some other way; in fact, the agreement expressly stated that ‘Client acknowledges that he/she has been fully advised of all of the possible consequences of arbitration,’ which at least raises the possibility that S&J provided advisements not contained in the agreement itself.”
Bendix said that Watkins “presumed” that Weischadle was vulnerable with no factual basis for that impression.
She recited that when S&J pointed at the second hearing on its motion to the lack of supporting evidence for the plaintiff’s position, Watkins responded that the law firm “was given every opportunity to present whatever evidence it wanted.” Bendix commented:
“This was both a legal and factual error. It was Weischadle’s burden, not S&J’s, to substantiate a claim of unconscionability….
“Even if it were S&J’s burden, S&J had no opportunity to meet it. Weischadle did not raise the issue of unconscionability in her opposition to the motion to compel arbitration….”
It was not raised, she said, until the first of two hearings, on Jan. 14, 2020. Watkins continued the matter to Feb. 4 to permit briefing on the issue, but with no declarations or exhibits attached.
“S&J was never able to submit evidence specific to the issue of unconscionability,” Bendix said.
Watkins also ruled that S&J had waived any right to arbitration by announcing it would demur, invoking the automatic 30 extension for filing demurrers where the parties have not met and conferred within five days of the due-date of a responsive pleading, and then using the extra time to prepare a motion to compel arbitration.
The ruling, Bendix said, was erroneous, Bendix said, explaining:
“Assuming arguendo that invoking a section 430.41 extension under false pretenses constitutes a waiver of arbitration, an issue we do not decide, there is no evidence in the record to support a finding that S&J, at the time it filed its declaration in support of the automatic extension, had no intention of filing a demurrer. That was speculation on the part of the trial court. Further, we are aware of no authority that a party who seeks a 30-day extension to file a demurrer becomes obligated thereby actually to file a demurrer—parties commonly switch tactics as litigation proceeds, and it would be a waste of time to require a party to file a particular responsive pleading it no longer deems necessary simply because the party earlier declared an intent to file that pleading.”
Chaney maintained that in the absence of evidence as to what was said at the first hearing, Watkins’s ruling must be presumed to be correct. She argued:
“We cannot know what happened at the hearing on January 14, 2020. Consequently, we must presume that something happened that would justify the trial court’s denial of the motion to compel arbitration. Litigants frequently concede points in response to bench officers’ questions or make representations or assertions of fact upon which trial courts must be allowed to rely. The standard of review that the appellants invoked and the presumptions that bind us command us to presume something happened at the January 14, 2020 hearing that supported the trial court’s order; nothing in the record before us demonstrates otherwise.
“That the hearing was not reported is of no consequence. The rules of court allow appellants the alternatives of an agreed statement or a settled statement when they must provide the Court of Appeal with a record of oral proceedings and no reporter’s transcript exists….
“The absence of any record of an oral proceeding, however, is glaring.”
“The reporter’s transcript from the February 4 hearing, as well as the trial court’s detailed five-page written order, indicate the court’s ruling was not based on anything that occurred at the January 14 hearing. In the transcript and written order, the trial court never referred to any evidence other than the retainer agreement itself and the declaration S&J filed in support of its motion to compel arbitration, a declaration submitted before the issue of unconscionability arose. Particularly given S&J’s express protest at the February hearing that S&J had not been allowed to present evidence, we would expect the trial court to have cited to evidence presented or concessions made at the January 14 hearing to dispute S&J’s claim had such evidence or concessions existed.
“In short, every indication in the record is that nothing occurred at the January 14 hearing to support the trial court’s ruling.”
Oral argument took place in the case on May 18, and the case was submitted as of that date. The order of submission was vacated on 28, and the cause was resubmitted, with an unusual reason given: “a change in the author of the opinion.”
The case is Weischadle v. Vo, B304845.
Peter J. Woo, David Y. Choi, and Jordan G. Cohen of the downtown Los Angeles office of Goldberg Segalla represented S&J. Weischadle was in pro per.
She was also in pro per in the case of Weischadle v. Charboneau, decided by Div. Seven on May 20. The unpublished opinion in that case, by Presiding Justice Dennis M. Perluss, affirms an award of attorney fees in favor of Burbank attorney Robert Charboneau and his law firm.
Weischadle sued for fraud, conspiracy, suppression of evidence and legal malpractice alleging that Charboneau, in representing Los Angeles World Airports (“LAWA”) in her personal injury action against it, withheld material evidence from her in discovery. Charboneau and his firm filed a anti-SLAPP motion; Weischadle dismissed her action; Los Angeles Superior Court Judge Michael Harwin granted the defendants attorney fees pursuant to the anti-SLAPP statute, Code of Civil Procedure §425.16; Weischadle argued on appeal that Harwin erred because the motion was not heard in light of her dismissal so the defendants did not prevail.
“The trial court retains jurisdiction to award attorney fees pursuant to section 425.16, subdivision (c)(1), even when a plaintiff voluntarily dismisses the complaint while a special motion to strike is pending,” Perluss wrote.
The action against LAWA, based on an injury she sustained at the Los Angeles International Airport, was the litigation in which S&J had briefly provided services to Weischadle.
She lost that case after making her opening statement. Then-Los Angeles Superior Court Judge William G. Willett (now retired) ruled that she failed to allege that the defendant had knowledge of a dangerous condition.
Div. Four of the Court of Appeal for this district affirmed on Oct. 28, 2019, in an opinion by Justice Audrey B. Collins. That case is Weischadle v. L.A. World Airports.
Pending before Watkins is Weischadle’s action for fraud, intentional infliction of emotional distress and gross negligence against a medical doctor, Mahin Amirgholaini.
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