Opinion
E076447
07-22-2022
AMERICAN CONSTRUCTION MANAGEMENT & ENGINEERING, Inc., a California Corporation, Plaintiff, Cross-defendant and Appellant, v. WHITTRAM AVENUE FACILITIES LLC, Defendant, Cross-complainant and Respondent; ADVANCED STEEL RECOVERY LLC, Cross-complainant and Respondent.
Law Office of Brian Shumake and Brian R. Shumake, for Plaintiff, Cross-defendant and Appellant. Pine Tillett Pine, Scott L. Tillett and Christian C. Schlachte; Yadegar Minoofar & Soleymani and Pedram Minoofar, for Defendant, Cross-complainant, Respondents.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of San Bernardino County No. CIVDS2009416. Elia V. Pirozzi, Judge. Affirmed.
Law Office of Brian Shumake and Brian R. Shumake, for Plaintiff, Cross-defendant and Appellant.
Pine Tillett Pine, Scott L. Tillett and Christian C. Schlachte; Yadegar Minoofar &
Soleymani and Pedram Minoofar, for Defendant, Cross-complainant, Respondents.
OPINION
CODRINGTON, ACTING P. J.
I.
INTRODUCTION
American Construction & Management and Engineering, Inc. (ACME) appeals the trial court's order denying its motion to compel arbitration. We affirm the order.
Respondent's request for judicial notice filed on October 19, 2021, is DENIED as unnecessary.
FACTUAL AND PROCEDURAL BACKGROUND
ACME contracted with Whittram Avenue Facilities, LLC to develop a property for Whittram on behalf of Advanced Steel Recovery, LLC. ACME stopped working on the project in December 2019 after the parties could not resolve a dispute about ACME's subcontractor's work. ACME then recorded a mechanics lien against Whittram in March 2020.
On June 5, 2020, ACME filed a complaint against Whittram in San Bernardino County Superior Court alleging various claims, including one seeking to foreclose on its mechanics lien against Whittram. ACME did not serve the complaint on Whittram until August 27, 2020.
In the caption of its complaint, ACME alleged that the case was "SUBJECT TO MOTION TO STAY PENDING ARBITRATION UNDER CCP SECTION 1281.5." ACME also alleged in its complaint that it had an arbitration agreement with Whittram, it would "move to stay proceedings on [its] Complaint pending arbitration," and that it filed its complaint "solely to perfect its mechanics lien rights." ACME asserted that it did "not intend to waive any right of arbitration with" Whittram and noted that its "reservation of right to arbitrate is made pursuant to [section] 1281.5."
All further statutory provisions are to the Code of Civil Procedure.
More than two months after the finding of the Complaint, on August 18, 2020, Whittram and Advanced Steel filed a cross-complaint against ACME, two individual defendants, and Suretec Indemnity Company. Whittram and Advanced Steel asserted eight claims, including breach of contract, fraud, and intentional and negligent interference with business relationships. None of the claims concerned a mechanics lien.
Nearly three months later, on November 10, 2020, ACME filed a motion to compel arbitration of its claims against Whittram, as well as the cross-complaint. Whittram and Advanced Steel opposed the motion on several grounds, including that the motion was untimely filed under section 1281.5, subdivision (b) (section 1281.5(b)) because ACME filed it more than 30 days after filing and serving its summons and complaint. In its reply, ACME argued that its motion was timely and, even if it was not, its failure to timely file the motion was due to its counsel's mistake and should be excused under section 473, subdivision (a)(1) (section 473(a)(1)).
The trial court disagreed, denied ACME's motion as untimely filed under section 1281.5(b), and denied its request for relief under section 473(a)(1). ACME timely appealed.
After briefly discussing its tentative written ruling with the parties at the hearing on ACME's motion, the parties submitted on the trial court's tentative ruling, which the trial court then adopted. In a subsequent written order denying ACME's motion to compel arbitration, the trial court stated that its tentative ruling had become "the order of the [c]ourt." ACME, however, did not include a copy of the tentative ruling in its appellant's appendix.
III.
DISCUSSION
ACME contends the trial court erroneously denied its motion to compel arbitration and its request for relief under section 473(a)(1). We conclude the trial court properly denied ACME's motion as to its complaint as untimely and did not abuse its discretion in denying ACME's request for relief from untimely filing the motion.
A. Motion to Compel Arbitration of ACME's Complaint
ACME contends the trial court improperly denied its motion to compel arbitration of its complaint as untimely. We disagree.
Because ACME's complaint sought to enforce its mechanics lien against Whittram, section 1281.5 applies to ACME's motion to compel arbitration of its complaint. (See § 1281.5, subd. (a) ["Any person who proceeds to record and enforce a claim of lien . . . ."].) Section 1281.5(b) provides that a claimant who files an action to enforce a mechanics lien has 30 days after service of the complaint and summons on the defendant to file a motion to stay the proceedings pending the resolution of any arbitrable dispute between the parties. "The failure of a claimant to comply with this subdivision is a waiver of the claimant's right to compel arbitration." (§ 1281.5, subd. (b).)
Section 1281.5(a) provides in relevant part: "(a) Any person who proceeds to record and enforce a claim of lien . . . does not thereby waive any right of arbitration the person may have pursuant to a written agreement to arbitrate, if, in filing an action to enforce the claim of lien, the claimant does either of the following: [¶] (1) Includes an allegation in the complaint that the claimant does not intend to waive any right of arbitration, and intends to move the court, within 30 days after service of the summons and complaint, for an order to stay further proceedings in the action. [¶] (2) At the same time that the complaint is filed, the claimant files an application that the action be stayed pending the arbitration of any issue, question, or dispute that is claimed to be arbitrable under the agreement and that is relevant to the action to enforce the claim of lien."
ACME served its complaint to enforce its mechanics lien on Whittram on August 27, 2020. Under section 1281.5(b), ACME had until September 28, 2020 to file a motion to compel arbitration and seek an order to stay the proceedings, but it did not do so until November 10, 2020, about six weeks later. By failing to timely file its motion, ACME waived its right to compel arbitration of the complaint. (§ 1281.5, subd. (b).) The trial court properly denied ACME's motion on that basis. (Spracher v. Paul M. Zagaris, Inc. (2019) 39 Cal.App.5th 1135, 1137 ["A motion to compel arbitration is properly denied when the moving party has waived its right to do so."].)
Thirty days after August 27, 2020 was Saturday, September 26, so the deadline was extended to the following Monday, September 28. (Cal. Rules of Court, rule 1.10(b); Code Civ. Proc., § 12.)
ACME makes a perfunctory argument in its opening brief that the trial court should have excused its failure to timely file its motion to compel arbitration of the complaint under section 473(a)(1). ACME claims the trial court "did not exercise its discretion" under section 473(a)(1) or, alternatively, the court exercised its discretion without a hearing, in violation of ACME's due process rights.
ACME is mistaken. At the hearing on ACME's motion to compel arbitration, the trial court expressly addressed and denied ACME's request for relief under section 473(a)(1), and ACME submitted on the trial court's ruling.
In any event, the trial court properly denied ACME's section 473(a)(1) request. As the trial court correctly noted, section 473(a)(1) gives trial courts the discretion to allow parties to amend their pleadings for certain reasons and the discretion to give defendants more time to file an answer or demurrer. The provision does not concern the deadline for motions to compel arbitration. Because section 473(a)(1) does not allow courts to extend the deadline to file a motion to compel arbitration, the trial court did not err in refusing to excuse ACME's untimely motion to compel arbitration under section 473(a)(1).
Section 473(a)(1) provides in full: "The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code."
ACME also argues the trial court erred in finding its motion to compel arbitration of its complaint untimely because the deadline was tolled under an April 2020 Emergency Order issued by the Presiding Judge of the San Bernardino County Superior Court in response to the COVID-19 pandemic. The Emergency Order provides in pertinent part that "the statutes of limitations for civil causes of action are tolled from April 6, 2020, until 90 days after the Governor declares that the state of emergency related to the COVID-19 pandemic is lifted." (Italics added.) ACME's motion to compel arbitration is not a "civil cause of action" and its deadline to file the motion is not a statute of limitations. (See People v. Philadelphia Reinsurance Corp. (2021) 70 Cal.App.5th Supp. 10, 242 [statewide COVID-19 emergency order rule tolling statute of limitations for "civil causes of action" does not extend deadlines for motions in pending actions because deadlines are not statutes of limitations].) The trial court therefore properly declined to toll the statute of limitations under the Emergency Order and, in turn, properly denied ACME's motion to compel arbitration of its claims.
B. Motion to Compel Arbitration of the Cross-Complaint
ACME contends the trial court erroneously denied its motion to compel arbitration of the cross-complaint as untimely under section 1281.5(b). We disagree.
In its opening brief, ACME argued its motion was timely under section 1281.5, subdivision (c),which reads in full: "The failure of a defendant to file a petition pursuant to [s]ection 1281.2 at or before the time the defendant answers the complaint filed pursuant to subdivision (a) is a waiver of the defendant's right to compel arbitration." Thus, if ACME were correct that section 1281.5, subdivision (c) governs its motion to compel arbitration of the cross-complaint, then it waived its right to compel arbitration because it filed its motion a day after filing its answer to the cross-complaint.
After the parties submitted their briefs, however, we asked for supplemental briefing on whether section 1281.5 applies to ACME's motion to compel arbitration of the cross-complaint. (See Gov. Code § 68081; § 1281.5(a) ["Any person who proceeds to record and enforce a claim of lien by commencement of an action. . . ."].) ACME now argues in its supplemental brief that section 1281.5 does not apply to its motion to compel arbitration of the cross-complaint because the statute concerns only actions to enforce a mechanics lien, and the cross-complaint is not such an action.
Although Whittram and Advanced Steel agree with ACME in their supplemental brief, they nonetheless argue ACME waived its right to compel arbitration of the cross-complaint under section 1281.5(b). Relying on Von Becelaere Ventures, LLC v. Zenovic (2018) 24 Cal.App.5th 243 (Zenovic), Whittram and Advanced Steel argue ACME waived any right to compel arbitration, including arbitration of the cross-complaint, by failing to timely move to compel arbitration of its complaint within section 1281.5(b)'s 30-day deadline.
Section 1281.5(a) provides that "[a]ny person who proceeds to record and enforce" a mechanics lien does not waive "any right of arbitration the person may have" under a written arbitration agreement if, when filing the "action to enforce the claim of lien," the claimant does one of two things. The claimant must either (1) allege in the complaint that the claimant does not intend to waive any right of arbitration and will move to stay the proceeding within 30 days or (2) file an application with the complaint to stay the action "pending the arbitration of any issue, question, or dispute that is claimed to be arbitrable under the agreement and that is relevant to the action to enforce the claim of lien." (§ 1281.5(a).) If a claimant does neither in commencing its action to enforce a mechanics lien, the claimant "'waives any right to arbitration.'" (Zenovic, supra, 24 Cal.App.5th at p. 246.)
In Zenovic, the defendant filed a construction dispute action against the plaintiff, asserting eight causes of action. (Zenovic, supra, 24 Cal.App.5th at p. 246.) In response, the plaintiff filed suit against the defendant in a different court, asserting seven causes of action, including one for "foreclosure on mechanics lien." (Id. at p. 247.)
In filing its complaint, the plaintiff did not comply with either of section 1281.5(a)'s two stay provisions. (Zenovic, supra, 24 Cal.App.5th at p. 245; see § 1281.5(a)(1)-(2).) By failing to do so, the plaintiff waived "any right of arbitration" it had "'pursuant to a written agreement to arbitrate'" with the defendant under section 1281.5(a). (Zenovic, supra, at pp. 245, 249.) The Zenovic court thus held the plaintiff could not compel arbitration of the defendant's construction dispute action. (Ibid.)
In reaching this conclusion, the Zenovic court rejected the plaintiff's argument that section 1281.5(a)'s waiver provision applies only to an action to enforce a mechanics lien and thus did not apply to the construction dispute action. (Zenovic, supra, 24 Cal.App.5th at p. 248.) The court observed that the purpose of section 1281.5(a)'s stay procedures is to hold the mechanics lien action in abeyance so that anything "'arbitrable under the agreement'" that is "'relevant to the action to enforce the claim of lien'" may be arbitrated first. (Zenovic, supra, at p. 249, quoting § 1281.5(b).) As the Zenovic court noted, the statute was enacted to overrule a decision that held a plaintiff waived its right to arbitration if it filed a lawsuit seeking to enforce a mechanics lien. (Zenovic, supra, at p. 250.) Section 1281.5 thus allows a mechanics lien claimant to enforce the lien in court while preserving its arbitration rights. (Zenovic, supra, at p. 250.) But as Zenovic and other courts have held, "'[a] party who files an action to enforce a mechanic's lien, but who does not at the same time request that the action be stayed pending arbitration, waives any right to arbitration.'" (Id. at p. 246, quoting R. Baker v. Motel 6 (1986) 180 Cal.App.3d 928, 929.)
Section 1281.5(a)'s waiver rule applied in Zenovic because the defendant's construction dispute action was "relevant to the [plaintiff's] action to enforce" his mechanics lien action, which "specifically included allegations related to [the plaintiff's] actions in recording and attempting to enforce his mechanics lien." (Zenovic, supra, 24 Cal.App.5th at pp. 249-250.) The Zenovic plaintiff therefore waived its right to compel arbitration of the relevant construction dispute action under section 1281.5(a) by failing to comply with its stay provisions. (Zenovic, supra, at pp. 249-250.)
Under section 1281.5(b), a claimant who has filed an action to enforce a mechanics lien must move within 30 days after serving the complaint and summons to stay the action "pending the arbitration of any issue, question, or dispute that is claimed to be arbitrable under the agreement and that is relevant to the action to enforce the claim of lien." The failure of a claimant to comply with this deadline "is a waiver of the claimant's right to compel arbitration." (§ 1281.5(b).)
The question, then, is the extent to which a claimant waives the "right to compel arbitration" by failing to comply with section 1281.5(b)'s 30-day deadline. We agree with Whittram and Advanced Steel that Zenovic's analysis is applicable here, even though the case did not concern a cross-complaint and did not address section 1281.5(b). When read in conjunction with section 1281.5(a) and Zenovic, the most logical reading of section 1281.5(b) is that a claimant who fails to comply with its 30-day deadline waives the "right to compel arbitration" of "any issue, question, or dispute that is claimed to be arbitrable under the [claimant's arbitration] agreement and that is relevant to the action to enforce the claim of lien." (§ 1281.5(b).)
No one disputes that Whittram and Advanced Steel's cross-claims are "arbitrable under the [parties' arbitration] agreement." (§ 1281.5(b).) In addition to its cause of action to foreclose on the lien, ACME asserts three causes of action related to the parties' construction dispute that generally allege Whittram breached its contract with ACME and owes ACME about $572,000 for construction work. Whittram and Advanced Steel similarly allege several cross-claims that generally allege ACME breached the parties' contract, negligently performed its construction work for Whittram, fraudulently induced Whittram into accepting the work, and interfered with Whittram and Advanced Steel's business relationships by performing substandard work. Whittram and Advanced Steel's cross-claims against ACME are thus "'relevant to [ACME's] action to enforce'" its mechanics lien. (See Zenovic, supra, 24 Cal.App.5th at p. 249.)
Because ACME failed to comply with section 1281.5(b) by not filing a motion to stay its action within 30 days of filing and serving its complaint, it waived its right to compel arbitration of "any issue, question, or dispute" that is arbitrable under its arbitration agreement with Whittram and is relevant to its action to enforce its lien. The trial court thus correctly found that ACME waived its right to compel arbitration of Whittram and Advanced Steel's cross-claims. Because ACME has not shown that the trial court otherwise erred, we affirm its order denying ACME's motion to compel arbitration of the cross-complaint.
Whittram and Advanced Steel alternatively argue that the trial court properly denied ACME's motion to compel arbitration of the cross-complaint because the individual cross-defendants and Suretec do not have an arbitration agreement with ACME. We need not address the issue because ACME does not differentiate between cross-defendants, and instead argues only that its motion to compel arbitration of the entire cross-complaint was timely filed.
IV.
DISPOSITION
The trial court's order denying ACME's motion to compel arbitration of the complaint and cross-complaint is affirmed. Respondents may recover their costs on appeal.
We concur: RAPHAEL J., MENETREZ J.