Opinion
G062969
07-02-2024
TYLER HUNTER, Plaintiff and Respondent, v. MOMENTUM SOLAR, LLC et al., Defendants and Appellants.
Reid & Hellyer, Michael G. Kerbs and Jenna L. Acuff for Defendants and Appellants. Southern California Labor Law Group, Taylor M. Prainito, Michael Zelman and Chelsea Dean for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, No. 30-202201282160 David J. Hesseltine, Judge. Affirmed.
Reid & Hellyer, Michael G. Kerbs and Jenna L. Acuff for Defendants and Appellants.
Southern California Labor Law Group, Taylor M. Prainito, Michael Zelman and Chelsea Dean for Plaintiff and Respondent.
OPINION
MOORE, J.
Defendants Momentum Solar, LLC, Momentum Solar, LLC, and Momentum Solar Energy Services, LLC (collectively Momentum or defendants) appeal from the trial court's order denying their motion to compel arbitration. Tyler Hunter, a former employee, had two periods of employment with Momentum. During the first, he signed an arbitration agreement. That period of employment ended when he was terminated by Momentum. He began a second period of employment approximately one year later, signing a new employment agreement which explicitly stated that it "supersedes and replaces any prior oral or written agreements." This agreement did not include an arbitration clause. The trial court determined that the arbitration agreement terminated with Hunter's first period of employment. We agree. Momentum's arguments to the contrary lack merit, and further, that Momentum has failed to establish an implied agreement. Accordingly, we affirm the order denying Momentum's petition to compel arbitration.
I FACTS
In July 2019, Momentum hired Hunter as an outside sales representative. At the time he was hired, Hunter completed a number of onboarding documents through an online portal. One of these was a five-page arbitration agreement. He also signed an acknowledgment of receiving an employee handbook, which also stated that arbitration of disputes was required as a condition of employment. In January 2020, Hunter was provided with and signed an updated version of the handbook that included the same language regarding arbitration as the earlier handbook. The handbook language regarding arbitration was simple: "As a condition of employment, the Company requires that all employee claims against the Company, unless otherwise required by state or federal law, be brought in an arbitral forum. In furtherance of this, each employee must execute an arbitration agreement with the Company."
Hunter was terminated from his position on March 5, 2020. Momentum argues that Hunter's employment did not really end when he was terminated, because his complaint alleged: "Hunter was temporarily let go from his position with Defendants on March 5, 2020. Defendants informed Hunter that this decision was made since the company would be 'going in a different direction' and promised him future promotions." Momentum argues this was a conclusive judicial admission. Hunter may have construed his termination as "temporary," at the time, but there is no evidence cited by Momentum that Hunter's termination was treated that way by either party as a legal matter. The "admission" reflects Hunter's state of mind, and is only conclusive as to his state of mind. The evidence in the record, however, shows that Hunter was "terminated" on March 5, 2020, and marked as "eligible for rehire." There is no indication of a "temporary" termination, or that either party had continuing legal obligations to each other. The trial court determined: "It is undisputed Plaintiff's employment was terminated and he was rehired over a year later."
Additionally, Momentum appears to be raising this claim of a "judicial admission" for the first time on appeal. In their petition to compel arbitration, they state: "In March 2020, Plaintiff was let go from his position, but was subsequently rehired in April 2021 as a Permit Coordinator responsible for coordinating permits to and from city halls."
Hunter was rehired on April 6, 2021. At the beginning of this second period of employment, he signed the same version of the handbook he had signed in January 2020. He did not sign a separate arbitration agreement, but he did sign an employment agreement. Although the employment agreement mentions arbitration several times, it does so in the context of language such as "a court of competent jurisdiction or an arbitrator," "the court or the arbitrator," and "[i]n . . . any action to enforce the provisions of this Agreement, whether by suit in a court of law, arbitration, mediation, alternative dispute resolution or the like." The employment agreement also includes a provision consenting "to personal jurisdiction in the courts of Orange County, California for any action arising out of this Agreement."
The employment agreement also included the following integration clause: "This Agreement, including all Exhibits, represents the entire agreement between the parties on the matters covered herein, and supersedes and replaces any prior oral or written agreements or understandings between the parties."
Hunter was discharged from this second period of employment three months later, on July 14, 2021. In September 2022, he filed the instant action, alleging several forms of discrimination, Labor Code violations, and related claims regarding to his 2021 period of employment. On January 25, 2023, Momentum filed a petition to compel arbitration based on the 2019 arbitration agreement. The matter was fully briefed, and a hearing was held in July 2023. The court denied the motion on the grounds Momentum had failed to establish an enforceable arbitration agreement existed during Hunter's second term of employment in 2021, determining Hunter's second term of employment was "a completely separate employment relationship" from its first one. Momentum now appeals.
II DISCUSSION
A. Applicable Law and Standard of Review
Code of Civil Procedure section 1281.2 requires a court to order arbitration "if it determines that an agreement to arbitrate . . . exists." California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes. (Moncharsh v. Heily &Blase (1992) 3 Cal.4th 1, 9.) Even so, parties can only be compelled to arbitrate when they have agreed to do so. (Westra v. Marcus &Millichap Real Estate Investment Brokerage Co., Inc. (2005) 129 Cal.App.4th 759, 763-764.) "There is a strong public policy favoring contractual arbitration, but that policy does not extend to parties who have not agreed to arbitrate." (Esparza v. Sand &Sea, Inc. (2016) 2 Cal.App.5th 781, 787.)
"'"[W]hen presented with a petition to compel arbitration the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute. [¶] . . ." [Citation.]' [Citations.] 'A party seeking to compel arbitration has the burden of proving the existence of a valid agreement to arbitrate.'" (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59; see Lacayo v. Catalina Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257.)
"To carry this burden of persuasion the moving party must first produce 'prima facie evidence of a written agreement to arbitrate the controversy.' [Citation.] 'If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then . . . the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement.' [Citations.] If the opposing party produces such evidence, then 'the moving party must establish with admissible evidence a valid arbitration agreement between the parties.' [Citation.] Despite the shifting burden of production, '[t]he burden of proving the agreement by a preponderance of the evidence remains with the moving party.'" (Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1120 (Trinity).)
"'"There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed."'" (Holley v. Silverado Senior Living Management, Inc. (2020) 53 Cal.App.5th 197, 201; see Trinity, supra, 78 Cal.App.5th at pp. 1120-1121.)
Any factual determinations made by the trial court are subject to review for substantial evidence. (Holley v. Silverado Senior Living Management, Inc., supra, 53 Cal.App.5th at pp. 201-202.) "Under this deferential standard, '"[A]ll factual matters will be viewed most favorably to the prevailing party [citations] and in support of the judgment."'" (Trinity, supra, 78 Cal.App.5th at p. 1121.) "We must not review the evidence to determine whether substantial evidence supports the losing party's version of the evidence. Instead, we must determine if there is any substantial evidence, contradicted or uncontradicted, to support the trial court's findings." (Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 818.)
"However, '[w]hen, as here, the court's order denying a motion to compel arbitration is based on the court's finding that petitioner failed to carry its burden of proof, the question for the reviewing court is whether that finding was erroneous as a matter of law.' [Citations.] '"Specifically, the question becomes whether the [moving party's] evidence was (1) 'uncontradicted and unimpeached' and (2) 'of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.'"'" (Trinity, supra, 78 Cal.App.5th at p. 1121.)
B. Valid Agreement to Arbitrate
Momentum has the initial burden of proving the existence of an arbitration agreement. They contend that the 2019 arbitration agreement was without temporal limitation and survived the termination of Hunter's employment in 2020. We presume for the moment that the 2019 arbitration agreement was valid and enforceable. The question, therefore, is whether the arbitration provision survived the termination of Hunter's employment, specifically in light of the new employment agreement Hunter signed in 2021.
In Vazquez v. SaniSure, Inc. (2024) 101 Cal.App.5th 139 (Vazquez), Vazquez began working for SaniSure in July 2019. Vazquez was provided with numerous documents at the start of her employment, including agreements that stated, with limited exceptions, "'binding arbitration [i]s the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to [her] employment.'" (Id. at p. 142.) Vazquez terminated this first period of employment in May 2021. Four months later, Vazquez returned to work for SaniSure without signing a new arbitration agreement or discussing the application of the previous arbitration agreement to her new employment. (Id. at pp. 142-143.)
Vazquez's resigned her second period of employment with SaniSure in July 2022. (Vazquez, supra, 101 Cal.App.5th at p. 142.) She subsequently filed a putative class action complaint alleging that SaniSure had failed to provide accurate wage statements during her second tenure of employment. SaniSure thereafter moved to compel arbitration, which was denied by the trial court, because SaniSure failed to show that Vazquez agreed to arbitrate claims arising from her second stint of employment. (Id. at p. 143.)
On appeal, the court noted: "'"'"Where the judgment is against the party who has the burden of proof, it is almost impossible for that party to prevail on appeal by arguing the evidence compels a judgment in [that party's] favor. That is because unless the trial court makes specific findings of fact in favor of the losing [party], we presume the . . . court found the [party's] evidence lacks sufficient weight and credibility to carry the burden of proof. [Citations.] We have no power on appeal to judge the credibility of witnesses or to reweigh the evidence."'" [Citation.]' [Citation.] Nor can we '"'substitute [our] factual determinations for those of the [court below]; [we] must [instead] view all factual matters most favorably to the prevailing party and in support of the judgment. [Citation.] "'All conflicts, therefore, must be resolved in favor of the [prevailing party].'"'"'" (Vazquez, supra, 101 Cal.App.5th at p. 144.)
The court determined that SaniSure's evidence was not "so uncontradicted, so unimpeached, and of such a character that it left no room for a judicial determination that it was insufficient to support the existence of an arbitration agreement governing Vazquez's second stint of employment. 'An arbitration agreement is tied to the underlying contract containing it.'" (Vazquez, supra, 101 Cal.App.5th at p. 144.) At-will employment contracts can be revoked with notice. (Ibid.)
"Vazquez signed arbitration agreements during her first stint of at-will employment with SaniSure. But she revoked these agreements by terminating her employment in May 2021. The causes of action in Vazquez's lawsuit are based on events that allegedly occurred only during her second stint of employment with SaniSure. As SaniSure concedes, Vazquez did not sign a second set of arbitration agreements during that stint of employment. Thus, for her claims to be subject to arbitration, SaniSure must show that the parties agreed that the agreements Vazquez signed during her first stint of employment would apply to her second." (Vazquez, supra, 101 Cal.App.5th at p. 144.) "SaniSure has not done so. Vazquez testified that she never agreed that the agreements she signed during her first stint of employment would govern her second. She also said that SaniSure never told her that getting rehired was contingent on agreeing to arbitration. And the documents she signed upon rehiring do not mention arbitration. SaniSure points to no evidence to the contrary. It has thus failed to carry its '"'"almost impossible"'"' burden of showing that the trial court erred as a matter of law when it denied the motion to compel arbitration." (Id. at p. 145.)
This case, obviously, has facts that are almost entirely similar to Vazquez. Momentum, like SaniSure, has failed to show evidence that Hunter agreed to arbitrate during his second period of employment. "Because Vazquez terminated her prior employment relationship with SaniSure in May 2021, and did not sign an arbitration agreement during her subsequent period of employment, there is no contractual language requiring arbitration of her claims." (Vazquez, supra, 101 Cal.App.5th at p. 145.) The same is true here.
Momentum, instead, relies on legal arguments regarding the survivability of the arbitration clause past the termination date of Hunter's first period of employment. Those arguments, too, must fail.
Momentum relies heavily on Oxford Preparatory Academy v. Edlighten Learning Solutions (2019) 34 Cal.App.5th 605 (Oxford Preparatory), for the proposition that arbitration agreements can survive the termination of a contract. The parties in Oxford Preparatory entered into a management services agreement with an arbitration provision, and, later, a termination agreement. (Id. at p. 607.) The termination agreement did not have an arbitration provision, but it did have a clause that the court interpreted to mean that "[n]othing in the Termination Agreement waives, extinguishes, excuses, or releases any right or obligation of either party accruing before June 17, 2016. One set of rights and obligations were extant before June 17, 2016, and another set of rights and obligations were extant after June 17, 2016. The Termination Agreement merely divided the rights and obligations of the parties on a temporal basis." (Id. at p. 610.) Accordingly, when the plaintiff sought to maintain an action for breach of contract and other claims that occurred during the existence of the contract, the court held that the termination agreement did not extinguish the obligation of the parties to arbitrate disputes arising out of the management services agreement. (Ibid.)
The present case is obviously distinguishable. First, Hunter's first term of employment did not end with a written, negotiated agreement between the parties, and there is no express clause in any document Hunter signed during his first term of employment stating the arbitration clause survived his employment. Second, unlike the plaintiff in Oxford Preparatory, which attempted to bring claims in court for breach of the agreement during the period covered by the arbitration clause, Hunter's claims were limited to his second period of employment. This case is simply not helpful to Momentum.
Moreover, what makes Hunter's argument even stronger is the presence of an integration clause in his 2021 employment agreement. That clause stated: "This Agreement, including all Exhibits, represents the entire agreement between the parties on the matters covered herein, and supersedes and replaces any prior oral or written agreements or understandings between the parties."
Grey v. American Management Services (2012) 204 Cal.App.4th 803, addressed a similar issue regarding an integration clause. The plaintiff in Grey, at the time he applied for employment, signed an Issue Resolution Agreement (IRA) required by the company before employment consideration. After employment, Grey signed an employment contract with a provision stating: "'This Agreement is the entire agreement between the parties in connection with Employee's employment with [defendant], and supersedes all prior and contemporaneous discussions and understandings.'" (Id. at p. 805.) The employment contract did not include an arbitration provision. The Grey court held the employment contract was "the final expression of the parties' agreement with respect to Grey's employment and it supersedes the IRA. The clause says the contract is exclusive as to the parties' respective rights and obligations related to Grey's employment.... Because the contract says it is the entire agreement, common sense dictates that it supersedes other prior agreements related to Grey's employment. An 'understanding' can mean 'an agreement.' [Citation.] Since the clause then says it supersedes all prior understandings, when read in the context of the clause as a whole, 'understandings' means all prior agreements. We find the clause's express language that it is the 'entire agreement' and supersedes all prior 'understandings' to mean that the parties intended the contract to be the final and exclusive embodiment of their agreement." (Id. at pp. 807-808.)
Momentum claims the integration clause in Grey is broader than that of the 2021 employment agreement, but the language they parse so carefully creates a distinction without a difference. The integration clause in the agreement stated: "This Agreement . . . represents the entire agreement between the parties on the matters covered herein, and supersedes and replaces any prior oral or written agreements or understandings between the parties." (Italics added.) The differences in the language are not meaningful.
As to whether dispute resolution is "covered herein," it is indeed covered by the 2021 employment agreement, despite Momentum's assertions to the contrary. Momentum argues that because the agreement does not address arbitration, the agreement does not supersede the earlier arbitration agreement. As the trial court determined, "That language, however, modifies the statement the agreement 'represents the entire agreement between the parties,' it does not modify the phrase this agreement 'supersedes and replaces any prior oral or written agreement or understanding between the parties.'"
Further, by explicitly choosing language such as "a court of competent jurisdiction or an arbitrator," "the court or the arbitrator," and "[i]n . . . any action to enforce the provisions of this Agreement, whether by suit in a court of law, arbitration, mediation, alternative dispute resolution or the like," the language of the 2021 agreement lays to rest any contention that arbitration was to be the sole method of addressing disputes. The inclusion of a personal jurisdiction provision "in the courts of Orange County, California for any action arising out of this Agreement" further weakens the argument that any reasonable reader of this agreement would expect that a mandatory arbitration agreement remained in place. Momentum claims the personal jurisdiction provision applies only to claims it might bring for improper use of confidential information or trade secrets, implying the provision applies only to that section. But that is not what the plain language says - it says "any action arising out of this Agreement," not "this section of this Agreement."
The integration clause, therefore, is conclusive, and it contradicts Momentum's contentions on this point. The 2021 agreement replaced all prior agreements, including the arbitration agreement.
Momentum's arguments about out-of-state cases and federal district court cases are simply unpersuasive in light of the relevant California law. We need not look to out-of-state authority when California law is clear.
C. Implied Agreement
Momentum next contends there was an "implied agreement" to arbitrate, citing Code of Civil Procedure section 1280, subdivision (f), which states a written arbitration agreement "shall be deemed to include a written agreement which has been extended or renewed by an oral or implied agreement." They claim "there was sufficient evidence to find that the Arbitration Agreement was accepted, extended and/or renewed by implied agreement through the continued employment that was promised to him and by signing the same versions of the Employment Handbook referencing a separate arbitration agreement which he had already signed."
This argument, however, turns the standard of review for factual issues on its head. We do not review for substantial evidence to see if evidence might exist to support a finding contrary to the one the lower court made, but only to determine if enough evidence exists to support the decision it did reach. The trial court found that "[t]he second term of employment is a completely separate employment relationship from the first one." Momentum fails to show substantial evidence did not support this finding, and accordingly, its contentions regarding an implied agreement must fail.
III DISPOSITION
The order is affirmed. Hunter is entitled to his costs on appeal.
WE CONCUR: O'LEARY, P. J., DELANEY, J.