Case Number: LC096170    Hearing Date: April 24, 2014    Dept: 92

SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES – CENTRAL DISTRICT

VALERIE HAGAN,
Plaintiff(s),
vs.

TYE J. OUZOUNIAN III, ET AL.,

Defendant(s).

CASE NO: LC096170

[TENTATIVE] ORDER DENYING MOTION TO COMPEL PLAINTIFF TO ARBITRATE AND STAY ACTION

Dept. 92
1:30 p.m. — #22
April 24, 2014

Defendant Tye J. Quzounian, M.D.’s Motion to Compel Plaintiff to Arbitrate, and stay action, is denied.

1. Background Facts
Plaintiff, Valerie Hagan filed this action against Defendant, Tye J. Ouzounian III for medical malpractice. Plaintiff broke her foot in 2008 and treated with non-party Dr. Thompson from 9/04/08 until sometime in 2009. On 10/16/09, Plaintiff consulted Defendant, who recommended surgery to remove a bone fragment and ligament reconstruction, if needed. Defendant did the bone fragment removal on 3/29/10, but did not perform ligament reconstruction. Plaintiff continued to have pain. In June of 2011, Plaintiff saw Dr. Graboff, who told her she should have had ligament reconstruction and needs ligament reconstruction.
This case was filed on 1/24/12, and on 2/27/12, counsel for Defendant wrote to Plaintiff’s counsel stating that they would “not endeavor to enforce the subject arbitration agreement.” On 5/3/12, trial was set for 1/30/13. Then, on 5/14/12, Defendant answered the complaint asserting the right to arbitrate as a fifth affirmative defense. On 11/28/12, Defendant, Dr. Ouzounian’s first Motion for Summary Judgment was taken off calendar. On 12/5/12, Dr. Ouzounians Motion to Bifurcate Trial was granted. Trial was scheduled for 4/10/13. On 2/5/13, the court granted Dr. Ouzounian’s Motion for Order to Compel Plaintiff to Disclose Settlement Agreement. On 2/22/13, Dr. Ouzounian’s second Motion for Summary Judgment,
scheduled for hearing on 2/28/13, was taken off calendar. On 3/26/13, Dr. Ouzounian’s Ex Parte Motion to Augment Expert Witness List and Ex Parte Motion for a Brief Continuance of Trial was granted, and a Case Management Conference and Trial Setting Conference was scheduled on 7/10/13, by Judge James Steele, for Department 92. Thereafter, the trial date was vacated. On 4/25/13, this matter was transferred from Van Nuys Superior Court to Department 92 of the Stanley Mosk Courthouse.
On 12/6/13, counsel for Dr. Ouzounian wrote to Plaintiff’s counsel requesting that Ms. Hagan agree to stipulate to arbitrate the controversy. On 2/4/14, the parties stipulated to continue the current trial date of 2/21/14 to the new date of 10/7/14. On 2/11/144, Dr. Ouzounian filed his Petition to Compel Arbitration.

2. Motion to Arbitrate
Defendant moves the court for an order compelling plaintiff, Valerie Hagan to arbitrate the controversy; and either staying proceedings on the complaint on the grounds that the Physician-Patient Arbitration Agreement executed by Plaintiff, Hagan provides for arbitration of the dispute which is the subject of this action. Exhibit A.
In response, Plaintiff argues that Defendant fails to disclose the most important factor – that at the beginning of this case, Defendant’s attorney made an express written waiver of his right to arbitration. Decl. James Hagen, Exhibit 1.
In reply, Defendant argues that there has been no waiver because Defendant’s actions were not inconsistent with the right to arbitrate, the litigation machinery was not substantially invoked before petitioners notified Plaintiff of an intent to arbitrate; Petitioners did not unreasonably request arbitration enforcement close to the trial date; and judicial discovery procedures not available in arbitration have not taken place; and any alleged delay did not affect, mislead or prejudice plaintiff.

¿Although a written agreement to arbitrate an existing or future dispute is generally enforceable, a petition to compel arbitration will be denied when the right has been waived by the petitioner¿s failure to properly and timely assert it. Code Civ. Proc. ¿¿1281, 1281.2(a). The California Supreme Court has recognized that while there is no “single test” in establishing waiver, relevant factors include: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party. St. Agnes Medical Center v. Pacificare of California (2003) 31 Cal.4th 1187, 1196.

Defendant contends that its actions were not inconsistent with its right to arbitrate. However, Plaintiff points out that in Defendant counsel’s letter dated February 27, 2012, Mr. Fesler wrote as follows:
Following up on your letter dated February 10, 2012, I have discussed the
issue of whether our client wishes to proceed in arbitration or in the
Superior Court. In this regard, given the costs related to a neutral arbitrator — I recently
had to pay about $20,000 for a one week hearing — I have recommended
to Dr. Ouzounian that this matter stay in Superior Court. Frankly, the
tripartite arbitration process has become prohibitedly expensive, in my
view.
To make a long story short, we wish to remain in Superior Court and will not endeavor to enforce the subject arbitration agreement.
Exhibit 1 to the Declaration of James Hagan, Esq.
Waiver is defined as the intentional relinquishment of a known right after knowledge of the facts. Butchers Union v. Farmers Markets (1977) 67 Cal.App.3d 905, 909. Plaintiff argues that Defendant is estopped from now enforcing the right to arbitration, citing to Evidence § 623. Evidence Code § 623 provides: “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.” In reply, Defendant points out that shortly after filing the letter (almost three months later), Defendant answered the complaint, asserting a demand for arbitration as his fifth affirmative defense.
While the court in Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790 did state that the right to arbitration may be properly asserted as an affirmative defense in an answer, here, Defendant affirmatively stated that he was waiving arbitration, waited three months later to assert the right to arbitration as a defense, but then waited almost two years to file a Petition for Arbitration (from asserting answer May 2012 to tiling this on 2/11/14). The issue becomes whether Defendant’s delay in filing his Petition for Arbitration constitutes waiver.
Defendant points to Boys Club of San Fernando Valley, Inc. v. Fidelity and Deposit Company of Maryland (1992) 6 Cal.App.4th 1266 as authority for the proposition that even a delay of almost three years in demanding arbitration was not found to constitute “unreasonable delay” because the delay caused no prejudice. However, in Boys Club, supra, there is no mention of any suit being filed, therefore, no reliance on any actions taken that could be inconsistent with right to arbitrate.
The burden of establishing inconsistent actions and any resulting prejudice is on the party opposing arbitration and that burden is a heavy one in light of the public policy favoring arbitration. Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1194, at 1195. Several recent cases have concluded, for example, that prejudice can be established when the party seeking arbitration has used judicial discovery procedures not available in arbitration to obtain discovery of the opposing party¿s strategies, evidence, theories, or defenses. Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205; Guess? Inc v. Superior (2000) 79 Cal.App.4th 553, 558; and Berman v. Health Net (2000) 80 Cal.App.4th 1359.
In Guess?, supra, the court held that all evidence pointed to waiver. First, the defendant knew about the arbitration provisions since before the lawsuit was filed and served and failed to offer any explanation for its decision to wait three months before making its arbitration demand. Second, the defendant did not plead its purported right to arbitrate as an affirmative defense and the court held that, at a minimum, the failure to plead arbitration as an affirmative defense is an act inconsistent with the later assertion of a right to arbitrate. Third, the defendant¿s other conduct in the lawsuit was wholly inconsistent with a desire to arbitrate — the defendant moved for a stay, which was denied, and then fully participated in the discovery process – objecting to interrogatories and document demands, but never suggesting that discovery should be barred because the dispute had to be arbitrated, and cross-examining third parties at depositions. Fourth, the defendant¿s conduct caused prejudice to the plaintiff — i.e., the plaintiff was exposed to the substantial expense of pretrial discovery and motions that would have been avoided had the defendant timely and successfully asserted a right to arbitrate and, through discovery, the plaintiff disclosed at least some trial tactics to the defendant which would not have been required in the arbitral arena.
In Berman, supra, the appellate court affirmed a finding of waiver based on prejudice which the opposing party suffered as a result of complying with discovery. There had also been a stipulation between the parties that the filing of demurrers in that case by the defendant would not be considered a waiver of the right to compel arbitration. In dictum, the appellate court majority stated, however, that were it not for the stipulation, they would have found that defendant waived its right to compel arbitration by engaging in multiple rounds of demurrers. In Groom, however, the appellate court stated that the Berman court¿s comment is not controlling and, in any event, they did not agree that the filing of a series of demurrers to a vague complaint necessarily or obviously waives the defendant¿s right to seek arbitration. (Groom, supra, at 1198.)
In Wolschlager, to the contrary, the court could not say that the defendant unreasonably delayed or acted inconsistently with the right to demand arbitration. Although the defendant failed to raise arbitration as an affirmative defense in their answer to the complaint, it demanded arbitration as soon as the plaintiff served his first discovery. Since it did not substantively engage in the litigation process, there was no evidence of any appreciable prejudice to plaintiff. Given the totality of the circumstances, substantial evidence supported the trial court’s finding that there was no waiver. (Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal.App.4th 784, 792-793.)
Similarly, in Saint Agnes Medical Center, the California Supreme Court held that the record did not reflect that the parties had litigated the merits or the substance of any arbitrable claims, or that any discovery of those claims has occurred. Nor was there any indication that the defendant used the court actions to gain information about the case that otherwise would be unavailable in arbitration. There was also no claim that the defendant’s actions impaired the plaintiff’s ability to have the arbitrable disputes in the action resolved fairly through arbitration. The plaintiff argued that it had been prejudiced because it incurred substantial costs and expenses in opposing a motion to change venue, as well as the defendant’s unsuccessful attempt to block a venue change to Fresno. However, California courts addressing the issue held that a petitioning party does not waive its arbitration rights merely by seeking to change judicial venue of an action prior to requesting arbitration. In so holding, those courts reasoned that a party is not required to litigate the issue of arbitration in an improper or inconvenient venue, and that a party’s position on venue does not necessarily reflect a position on arbitrability. The California Supreme Court agreed. Saint Agnes Medical Center v. Pacific Care of California (2003) 31 Cal.4th 1187, 1204.
Here, Defendant has acted inconsistently in invoking the “litigation machinery,” and Plaintiff has been prejudiced having to defend numerous motions. In opposition to this motion, Defendant argues that because he asserted his right to arbitration in his answer, he did not unreasonably request arbitration enforcement close to trial date. However, this argument makes no sense because he did file his petition after the original 1/30/13 trial date.
Defendant’s answer was filed with the court on March 3, 2013. Exhibit 8. Since then, Defendant has filed many pleadings and motions in court, and, until the petition herein was filed in February, 2014, not one of the Defendant’s pleadings asked for arbitration. Defendant filed a Case Management Statement for the Case Management Conference that was held on May 3, 2012. Exhibit 9. The Case Management Statement of Defendant did not ask for arbitration. Another scheduling hearing took place on August 20, 2012. Exhibit 10. Defendant did not ask for arbitration at that hearing. In 2013, the case was transferred to the Central District. A stipulation to continue the trial date was filed in the Central District and approved by the court on February 4, 2014. That stipulation and order did not ask for arbitration. That stipulation and order set the new date for the bifurcated trial of this case for October 7, 2014, with a Final Status Conference on September 22. Exhibit 11.
Defendant has made two motions for summary judgment. The first was set for hearing on November 28, 2012. Exhibit 12. The second was set for hearing on February 28, 2013. Expending time, and effort, Plaintiff responded to the motions. In each case, after receiving the Plaintiffs opposition, the Defendant withdrew the motion. Exhibit 13. Defendant made a motion in court to compel the Plaintiff to disclose a confidential settlement agreement in a previous case. That motion was heard by the court and granted. Exhibit 14. Defendant made a motion for an order to bifurcate the trial in this action. That motion was heard by the court and granted. Exhibit 15. Defendant made a motion to augment its Expert Witness List. That motion was heard by the court and granted. Exhibit 16. Defendant has taken depositions in this case. On June 26, 2012, the Defendant took the deposition of the Plaintiff. Exhibit 17. On June 12, 2012, the Defendant took the deposition of Dr. Carol Frey, a current treating physician for Plaintiff. On March 7, 2013, the Defendant took the deposition of Dr. Leonard Kalfuss, the Plaintiffs expert witness. On May
22, 2013, the Defendant took the deposition of Dr. Jerome Gold, a former treating physician of
Plaintiff. The Plaintiff has also taken the deposition of the Defendant in this case.
Defendant has conducted extensive written discovery in this case. He has served Plaintiff with Demands for the Identification and Production of Documents, sets one through three, Form Interrogatories, sets one through four, Special Interrogatories, Requests for Admissions, sets one through four, and a Supplemental Demand for the Production and Inspection of Documents. Decl. Hagan, ¶ 15. Defendant has also sought to obtain evidence from third parties and has served a total of sixty-seven Deposition Subpoenas seeking documents or oral depositions from the third parties that are listed in Exhibit 21. Some of those Deposition Notices were withdrawn, but the Plaintiff had to review each one of them, and oppose some of them.
Therefore, Defendant has acted inconsistently with any intention to now enforce the arbitration agreement. Therefore, Defendant has waived his right to compel arbitration. As such, this motion to compel arbitration is granted.
Dated this 24th day of April, 2014

Hon. Elia Weinbach
Judge of the Superior Court