Filed 6/30/20 T&S Therapy Centre Internat. v. Apex Dental Sleep Lab CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

T&S THERAPY CENTRE INTERNATIONAL, INC. et al.,

Plaintiffs and Respondents,

v.

APEX DENTAL SLEEP LAB INCORPORATED et al.,

Defendants and Appellants.

D075576

(Super. Ct. No. 37-2018-00010761- CU-AT-CTL)

APPEAL from an order of the Superior Court of San Diego County, Joel R. Wohlfeil, Judge. Affirmed.

Miller Miller Gerber, Corey A. Miller and Adam I. Miller for Defendants and Appellants.

Vivoli Saccuzzo, Michael W. Vivoli and Jason P. Saccuzzo for Plaintiffs and Respondents.

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INTRODUCTION

Defendants Apex Dental Lab Incorporated (Apex), Philip Bocala, and Chase Bennett, DDS (collectively, Defendants) appeal an order denying their petition to compel arbitration of a trade secrets dispute with plaintiffs T&S Therapy Centre International, LLC (Centre) and Steven Olmos, DDS (together, Plaintiffs).

After Plaintiffs served the complaint, Defendants filed and obtained a ruling on a demurrer, filed an answer without pleading arbitration as an affirmative defense, propounded discovery requests on Plaintiffs, negotiated a protective order, and delayed for nearly nine months before filing the petition to compel arbitration. Based on Defendants’ delay and litigation conduct, as well as the resulting prejudice suffered by Plaintiffs, the trial court determined Defendants waived their right to seek arbitration.

We conclude substantial evidence supported the trial court’s finding of waiver. Therefore, we affirm the order denying the petition to compel arbitration.

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BACKGROUND

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The Arbitration Provisions

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Dr. Olmos is a dentist and part owner of Centre, which manufactures orthotic appliances and develops diagnostic methods and treatments for patients suffering from temporomandibular joint (TMJ) disorders.

More than a decade ago, Centre formed a partnership with Bocala to develop orthotic appliances. Centre and Bocala entered into two agreements governing the parameters of their partnership and their duties pertaining to the use and protection of confidential information. One agreement contained an arbitration provision requiring arbitration of any dispute “arising from [the a]greement.” The second agreement included an arbitration provision requiring arbitration of “[a]ny controversy, dispute or claim arising out of the interpretation, performance or breach of [the] [a]greement ….”

Sometime after entering into the partnership with Centre, Bocala formed Apex. Apex is a laboratory that fabricates orthotic appliances for the treatment of TMJ disorders and sleep-disordered breathing.

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In 2014, Dr. Bennett purchased a membership interest in a dental practice in which Dr. Olmos was a member. Dr. Olmos, Dr. Bennett, and the other dental practice members executed an operating agreement setting forth the members’ rights and obligations, including their duty not to misuse or disclose confidential information. The operating agreement contained an arbitration provision requiring arbitration of any action to enforce or interpret the agreement or to “resolve disputes with respect to [the a]greement ….” In or about 2015, Dr. Bennett dissociated from the dental practice.

Centre and a company owned in part by Dr. Bennett also executed a licensing agreement permitting Dr. Bennett’s company to use certain processes and products owned by Centre. The licensing agreement included an arbitration provision requiring the signatories to “submit all disputes relating to [the licensing a]greement (whether contract, tort, or both) to non-binding arbitration.”

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The Complaint

On February 28, 2018, Centre and Dr. Olmos filed a complaint against Bocala, Apex, Dr. Bennett, and nonresident defendants Michael Bennett and Braden Bennett (together, the Nonresident Defendants) alleging causes of action for misappropriation of trade secrets, intentional interference with contractual relations, intentional interference with prospective economic relations, and unfair competition. Plaintiffs effected service of process on Apex on March 30, 2018, and on Bocala and Dr. Bennett on April 3, 2018.

The complaint alleged Plaintiffs developed a proprietary protocol for the treatment of TMJ disorders consisting of diagnostic steps and specifications for the design and manufacturing of dental appliances (the trade secrets). It asserted Bocala accessed the trade secrets through his partnership with Dr. Olmos, misappropriated them, and incorporated them into “knock-off appliances,” which Bocala and Apex sold to customers including one of the Nonresident Defendants. Further, the complaint alleged Bocala and Apex divulged the trade secrets to Dr. Bennett. According to the complaint. Dr. Bennett used the trade secrets to operate a competing practice for the treatment of TMJ disorders.

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The Parties’ Litigation Conduct

On May 14, 2018, the Nonresident Defendants made special appearances and filed a motion to quash service of summons on grounds that California courts lacked personal jurisdiction over them. Plaintiffs opposed the motion to quash. The trial court granted the motion to quash and dismissed the Nonresident Defendants from the action.

On May 15, 2018, Plaintiffs filed an ex parte application for a temporary restraining order prohibiting Defendants from manufacturing and selling Apex’s products, using Plaintiffs’ trade secrets, or contacting Centre’s vendors, customers, and clients. Defendants opposed the ex parte application. The trial court denied the ex parte application without prejudice for reasons not apparent from the record.

The trial court scheduled a hearing to determine whether to issue a preliminary injunction and deemed Plaintiffs’ ex parte application for a temporary restraining order to be their moving papers for purposes of the preliminary injunction hearing. Defendants opposed the request for a preliminary injunction. Ultimately, the court denied the request for a preliminary injunction on grounds that Plaintiffs did not demonstrate a probability of success on their causes of action, monetary damages would afford Plaintiffs adequate relief, and Defendants would suffer irreparable harm if injunctive relief were granted.

On June 12, 2018, Defendants demurred to the complaint on the basis it failed to allege facts sufficient to state a cause of action. The trial court overruled the demurrer and set a trial date of April 19, 2019. During the hearing on the demurrer, the court inquired as to how many days the parties expected trial to last and Defendants gave an estimate of seven to 10 days. Defendants also advised the court they “intend[ed] on filing a cross-complaint in [the] matter….”

On July 25, 2018, Defendants propounded written discovery requests consisting of form interrogatories, special interrogatories, and requests for production of documents. Plaintiffs served objections to Defendants’ discovery requests. At least as late as November 27, 2018, Defendants pressed Plaintiffs in meet and confer correspondence to provide more fulsome discovery responses. On or about December 10, 2018, Plaintiffs provided supplemental objections and responses to Defendants’ discovery requests.

On August 6, 2018, Defendants filed an answer generally denying the allegations in the complaint and asserting 20 affirmative defenses. The answer did not assert arbitration as an affirmative defense.

On September 18, 2018, the parties appeared on an ex parte basis before the trial court to resolve a dispute regarding the scope of a proposed protective order governing the use and disclosure of confidential and highly confidential materials. After the dispute was resolved, Plaintiffs filed a stipulated protective order and the court entered the protective order on October 31, 2018.

On November 30, 2018, Plaintiffs provided Defendants their trade secret disclosure statement under Code of Civil Procedure section 2019.210.

In a meet and confer correspondence dated December 5, 2018, Defendants informed Plaintiffs for the first time they believed the arbitration provisions in the parties’ various agreements encompassed Plaintiffs’ causes of action. Defendants, therefore, requested that Plaintiffs agree to transfer the dispute to arbitration. Plaintiffs did not agree to transfer the matter to arbitration.

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The Petition to Compel Arbitration

On December 21, 2018, Defendants filed a petition to compel arbitration of the dispute and to stay judicial proceedings. Although nearly nine months had elapsed since service of the complaint, Defendants asserted the petition to compel arbitration was timely because the case was in its “early stages,” discovery had been “limited,” the case was “nowhere near ready for trial,” and any delay was the result of Plaintiffs’ failure to provide a timely trade secret disclosure.

Plaintiffs opposed the petition to compel arbitration. They argued Apex was not a party to any of the agreements containing the arbitration provisions and, therefore, could not invoke the arbitration provisions to compel arbitration. They also argued the court should deny the petition in its entirety because the dispute did not fall within the scope of the arbitration provisions. In the alternative, they argued Defendants waived their right to compel arbitration.

In support of their waiver argument, Plaintiffs emphasized that Defendants knew about the arbitration provisions when the case began. They argued that Defendants took steps inconsistent with an intent to arbitrate by delaying several months before seeking arbitration, filing and receiving a ruling on their demurrer, failing to assert arbitration as an affirmative defense in the answer, and propounding discovery requests. Finally, Plaintiffs argued Defendants’ delay prejudiced them because it postponed resolution of the case, caused them to incur expenses, and permitted Defendants to obtain access to Plaintiffs’ discovery and trial tactics. Together with their opposition brief, Plaintiffs filed a declaration from their counsel averring that Plaintiffs incurred an unspecified amount of attorney fees during the litigation.

Defendants filed a reply brief in support of their petition to compel arbitration. They argued Apex could move to compel arbitration, despite being a nonsignatory to the arbitration provisions, because the complaint alleged Apex was an agent of Defendants who were signatories to the arbitration provisions. Defendants asserted the arbitration provisions encompassed Plaintiffs’ causes of action because the allegations of trade secret misappropriation depended on Defendants’ alleged duties to protect and not misuse confidential information, which were set forth in the various agreements containing the arbitration provisions. Further, Defendants claimed they did not waive their right to seek arbitration because the case was “not on the eve of trial,” Plaintiffs had not propounded any discovery requests, and Defendants discovered that the arbitration provisions applied to the causes of action only after Defendants received Plaintiffs’ trade secret disclosure.

While briefing on the petition to compel arbitration was ongoing, the parties focused their attention on another point of contention—the adequacy of Plaintiffs’ supplemental discovery responses. Defendants were displeased with Plaintiffs’ supplemental discovery responses, apparently believing them to be nonresponsive and incomplete. Defendants asked Plaintiffs to agree to extend the deadline for Defendants to file a motion to compel further discovery responses until after the hearing on Defendants’ pending petition to compel arbitration. Plaintiffs did not agree to the requested extension. Thereafter, on January 29, 2019, Defendants filed a motion to compel further discovery responses and sought discovery sanctions against Plaintiffs.

On February 1, 2019, the trial court denied the petition to compel arbitration. The court reasoned Defendants waived their right to arbitrate because they were aware of the arbitration provisions and yet delayed more than eight months before seeking to compel arbitration. The court also noted that Defendants filed a demurrer, propounded discovery, and did not plead arbitration as an affirmative defense in the answer. Further, the court found that Plaintiffs suffered prejudice because they incurred “substantial” expenses while conducting pretrial discovery and motion practice, which “would have been avoided had Defendants timely and successfully asserted a right to arbitrate.” Because the court denied the petition based solely on waiver grounds, it did not address the parties’ other arguments.

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DISCUSSION

Defendants challenge the order denying their petition to compel arbitration. They argue substantial evidence did not support the trial court’s finding of waiver. Further, although the court did not reach these issues, Defendants argue Plaintiffs’ causes of actions fall within the scope of the arbitration provisions and nonsignatory Apex may compel arbitration as an alleged agent of the other Defendants.

We conclude substantial evidence supported the trial court’s finding of waiver. Therefore, we do not address the scope of the arbitration provisions or nonsignatory Apex’s ability to enforce the arbitration provisions.

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Legal Standards

State and federal law “reflect ‘ “a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution ….” ‘ ” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1204 (St. Agnes).) Nonetheless, a court may deny a petition to compel arbitration where “the right to compel arbitration has been waived by the petitioner ….” (Code Civ. Proc., § 1281.2, subd. (a); accord St. Agnes, at p. 1196 [” ‘ “California courts have found a waiver of the right to demand arbitration in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure.” ‘ “].) In view of the strong public policy favoring arbitration, “waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes, at p. 1195.)

“[N]o single test delineates the nature of the conduct that will constitute a waiver of arbitration….” (St. Agnes, supra, 31 Cal.4th at p. 1195.) However, our Supreme Court has approved several factors (hereafter, the St. Agnes factors) relevant to the analysis: ” ‘ “(1) whether the [petitioning] 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.” ‘ ” (Id. at p. 1196.)

The determination whether a party has waived its right to arbitrate is generally a question of fact unless ” ‘the facts are undisputed and only one inference may reasonably be drawn.’ ” (St. Agnes, supra, 31 Cal.4th at p. 1196.) Where, as here, a court could reasonably draw different inferences from the undisputed events, “we apply the substantial evidence standard in reviewing the court’s findings on these issues.” (Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 795 (Sprunk).) In doing so, ” ‘[w]e infer all necessary findings supported by substantial evidence [citations] and “construe any reasonable inference in the manner most favorable to the judgment, resolving all ambiguities to support an affirmance.” ‘ ” (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1043.) The heavy burden of proof that a party resisting arbitration must carry in the trial court does not alter our standard of review on appeal. (Burton v. Cruise (2010) 190 Cal.App.4th 939, 945–946 (Burton).)

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Application

In the following section, we will address the evidence pertinent to each of the St. Agnes factors to determine whether substantial evidence supported the trial court’s finding of waiver. (Sprunk, supra, 14 Cal.App.5th at pp. 807–809; Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1098–1104.) However, we emphasize that no single factor, standing alone, is necessarily dispositive of whether Defendants waived their right to arbitrate. (St. Agnes, supra, 31 Cal.4th at p. 1195.)

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Factor One: Actions Inconsistent with Arbitration

The first St. Agnes factor concerns whether the petitioning party’s ” ‘ “actions are inconsistent with the right to arbitrate.” ‘ ” (St. Agnes, supra, 31 Cal.4th at p. 1196.) ” ‘A waiver of the right to arbitrate may properly be implied from any conduct which is inconsistent with the exercise of that right.” (Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 448, 449 (Lewis), italics added.)

In the present case, substantial evidence demonstrated that Defendants engaged in conduct at odds with an intent to arbitrate. Defendants were served with the complaint on or before April 3, 2018, yet did not inform the court they intended to seek arbitration until they filed their petition to compel arbitration on December 21, 2018. During this nearly nine-month period, Defendants filed a demurrer attacking the complaint, opposed Plaintiffs’ requests for provisional relief, attended a case management conference, negotiated a protective order, attended a hearing regarding the scope of the protective order, supplied the court an estimate as to the expected duration of the jury trial, propounded discovery requests, pressed Plaintiffs to supplement their discovery responses, and filed an answer that listed 20 affirmative defenses, but omitted any reference to arbitration.

These actions, whether considered individually or collectively, are decidedly inconsistent with an intent to arbitrate. (See Oregel v. PacPizza, LLC (2015) 237 Cal.App.4th 342, 356 [defendant acted inconsistently with intent to arbitrate by propounding discovery, not raising arbitration as an affirmative defense, and attending case management conferences]; Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331, 338–341 [plaintiff acted inconsistently with intent to arbitrate by delaying arbitration petition for six and a half months, propounding discovery requests, and pursuing further discovery responses]; Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 558 (Guess?) [defendant acted inconsistently with intent to arbitrate by participating in discovery process, not asserting arbitration as affirmative defense, and remaining silent about arbitration for four months]; Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 212–214 [defendants waived arbitration by answering suit, waiting approximately six months to demand arbitration, and conducting discovery in the interim].)

Defendants do not meaningfully dispute the fact that their litigation conduct was inconsistent with an intent to arbitrate. However, they argue the trial court’s waiver finding was improper, in part, because the trial court never issued a ruling on the merits of the case. Defendants are mistaken. As noted, Defendants filed a demurrer, which the trial court overruled. Litigating issues through demurrer can constitute judicial litigation on the merits justifying a waiver finding. (Lewis, supra, 205 Cal.App.4th at pp. 449–451; Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1452 (Adolph); Berman v. Health Net (2000) 80 Cal.App.4th 1359, 1371, fn. 16; Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 994–995; but see Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1195.) In any event, the filing of a demurrer was just one example among many others in which Defendants engaged in conduct evincing an intent to resolve the dispute through litigation rather than arbitration.

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Factor Two: Substantial Invocation of the Litigation Machinery

The second factor asks 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.” ‘ ” (St. Agnes, supra, 31 Cal.4th at p. 1196.)

On the one hand, the litigation machinery was invoked when the parties contested Plaintiffs’ requests for provisional relief, Defendants filed their demurrer, the parties sought the assistance of the court to determine the scope of their protective order, and Defendants propounded discovery requests—requests that later gave rise to motions to compel further discovery responses. On the other hand, the discovery conducted prior to the filing of the petition to compel arbitration was not particularly extensive. For example, Plaintiffs did not propound discovery requests and the parties did not conduct depositions prior to Defendants’ filing of the petition to compel arbitration. On the whole, we conclude the evidence relevant to the second St. Agnes factor does not strongly support or militate against the trial court’s finding of waiver.

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Factor Three: Unreasonable Delay

Next, we assess whether Defendants ” ‘ “requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay ….” ‘ ” (St. Agnes, supra, 31 Cal.4th at p. 1196.) “Unreasonable delay in seeking arbitration may, standing alone, constitute a waiver of a right to arbitrate.” (Spracher v. Paul M. Zagaris, Inc. (2019) 39 Cal.App.5th 1135, 1138; accord Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30 [“When no time limit for demanding arbitration is specified, a party must still demand arbitration within a reasonable time.”].)

There was ample evidence to support a determination that Defendants unreasonably delayed in filing their petition to compel arbitration. It is uncontested that Defendants were aware of the relevant arbitration provisions when they were served with the complaint. Nevertheless, they delayed filing their petition to compel arbitration for nearly nine months. They never once mentioned the arbitration provisions in any court filing or hearing of which we are aware. They offered no satisfactory explanation—and, on appeal, give no explanation at all—for their delay. Under these circumstances, we have no trouble concluding that Defendants’ delay was unreasonable. (Lewis, supra, 205 Cal.App.4th at pp. 445–446 [finding waiver where arbitration was sought after five-month delay]; Guess?, supra, 79 Cal.App.4th at p. 558 [same, where arbitration was sought after four-month delay]; Kaneko Ford Design v. Citipark, Inc. (1988) 202 Cal.App.3d 1220, 1228–1229 [same, where arbitration was sought after five and a half-month delay].)

The only argument Defendants make pertinent to the third St. Agnes factor is that they did not seek arbitration on the “eve of trial.” We are not convinced. At an early hearing on Plaintiffs’ ex parte application for a temporary restraining order, the court opined it would “get [the parties] into a speedy trial resolution ….” At a hearing soon after, it advised the parties that, “given the pace at which [the] litigation … [was] moving along,” it would “give [the parties] dates, prompt dates” so they could “start looking at the finish line.” True to its word, the court scheduled trial for April 19, 2019. Defendants sought arbitration a mere four months before the scheduled trial date. While perhaps Defendants’ request was not made on the proverbial eve of trial, it certainly was ” ‘ “close to the trial date” ‘ ” when viewed in the context of the overall litigation. (St. Agnes, supra, 31 Cal.4th at p. 1196; see Zamora v. Lehman (2010) 186 Cal.App.4th 1, 18 [request for arbitration made four months before trial weighed in favor of waiver]; Adolph, supra, 184 Cal.App.4th at p. 1452 [defendant waived right to arbitration by filing petition to compel arbitration more than three months before scheduled trial date].)

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Factor Four: Filing of Counterclaim

The fourth St. Agnes factor considers ” ‘ “whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings.” ‘ ” (St. Agnes, supra, 31 Cal.4th at p. 1196.) During the demurrer hearing, Defendants advised the court they intended to file a cross-complaint; however, they never filed a cross-complaint. Because Defendants did not file a cross-complaint, we conclude the fourth St. Agnes factor is not applicable in this case. (See Lewis, supra, 205 Cal.App.4th at p. 445 [all six St. Agnes factors do not apply in every case].)

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Factor Five: Intervening Steps

The fifth factor examines whether ” ‘ ” ‘important intervening steps’ ” ‘ ” took place before arbitration was sought. (St. Agnes, supra, 31 Cal.4th at p. 1196.) We believe the same evidence pertinent to the second factor—whether there was a substantial invocation of the litigation machinery—is relevant here. While some important intervening steps have occurred—including the court’s determination of Plaintiffs’ entitlement to provisional relief, the court’s ruling on the demurrer, and some discovery—the discovery has not been extensive and the court has not issued any rulings on the merits apart from the demurrer ruling. As with the second factor, the fifth factor does not strongly support either side.

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Factor Six: Prejudice

Finally, we consider whether Defendants’ conduct caused Plaintiffs to suffer prejudice. (St. Agnes, supra, 31 Cal.4th at p. 1196.) “Because merely participating in litigation, by itself, does not result in a waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses.” (Id. at p. 1203.) However, prejudice can arise “where the petitioning party’s conduct has substantially undermined” the policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution or “substantially impaired the other side’s ability to take advantage of the benefits and efficiencies of arbitration.” (Id. at p. 1204.)

The trial court found prejudice because Plaintiffs incurred “substantial expense” from “pretrial discovery and motions [that] would have been avoided had Defendants timely and successfully asserted a right to arbitrate.” The court further determined Defendants’ conduct “undermined the strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.” Drawing all reasonable inferences in favor of the trial court’s order, we conclude substantial evidence supported the trial court’s prejudice findings.

As the Supreme Court has recognized, courts have considered “the expenditure of time and money in determining prejudice where the [petitioner’s] delay is unreasonable.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 377 (Iskanian).) Here, Defendants delayed seeking or even mentioning arbitration for nearly nine months. During this time, they filed a demurrer, opposed requests for provisional relief, disputed the form of the parties’ protective order, propounded discovery, and pursued supplemental discovery responses, all of which required Plaintiffs to incur litigation expenses. Further, the delay and resulting expenses were unreasonable and unjustified, as Defendants have proffered no explanation—let alone a satisfactory one—for their failure to seek arbitration sooner.

Defendants’ unreasonable and unjustified conduct substantially undermined Plaintiffs’ ability to benefit from the relative speed and cost efficiencies of arbitration. On this basis, we are satisfied that Defendants’ conduct prejudiced Plaintiffs. (Fleming Distribution Co. v. Younan (2020) 49 Cal.App.5th 73, 83–84 [plaintiff suffered prejudice where defendant unreasonably delayed in seeking arbitration and plaintiff incurred costs and fees in litigation]; Lewis, supra, 205 Cal.App.4th at pp. 451–453 [plaintiff suffered prejudice where defendant unreasonably delayed seeking arbitration for five months and plaintiff was forced to litigate demurrers and motions to compel further discovery]; accord, Burton, supra, 190 Cal.App.4th at p. 948 [“[A] petitioning party’s conduct in stretching out the litigation process itself may cause prejudice by depriving the other party of the advantages of arbitration as an ‘expedient, efficient and cost-effective method to resolve disputes.’ “]; cf. Iskanian, supra, 59 Cal.4th at p. 377 [no prejudice where expense and delay were not “caused by the unreasonable or unjustified conduct of the party seeking arbitration”].)

Defendants challenge the trial court’s finding of prejudice on grounds that they did not cause all of Plaintiffs’ litigation expenses. They point out that Plaintiffs incurred some of their expenses while opposing the Nonresident Defendants’ motion to quash service of summons. They contend other of Plaintiffs’ expenses were “self-inflicted” because, on December 5, 2018, Defendants informed Plaintiffs that they could refrain from supplementing their discovery responses until after resolution of the petition to compel arbitration. Despite the offer, Plaintiffs produced supplemental discovery responses on or about December 10, 2018, which in turn led Defendants to file their motions to compel further discovery responses from Plaintiffs.

These arguments are unavailing. While some delay and expense might fairly be attributed to the conduct of the Nonresident Defendants or Plaintiffs themselves, there can be no reasonable dispute that most of the delay and expense was attributable to Defendants’ conduct. As noted, the parties engaged in motion practice and appeared in court to contest Plaintiffs’ request for provisional remedies, Defendants’ demurrer, the scope of the protective order, and Defendants’ discovery requests—disputes that would not have been incurred had Defendants timely exercised their right to arbitration. Each of these disputes caused Plaintiffs to suffer additional expense and delay.

Further, by the time Defendants offered to extend Plaintiffs’ deadline to provide supplemental discovery responses, Plaintiffs had already served one set of objections to Defendants’ discovery requests and been urged by Defendants for weeks to provide supplemental discovery responses. Defendants’ last-minute offer to extend Plaintiffs’ production deadline—three business days before the production occurred, likely when Plaintiffs were nearly finished preparing their supplemental discovery responses—does not erase the delay and expense Plaintiffs suffered prior to Defendants’ belated offer.

Finally, Defendants challenge the trial court’s finding of prejudice on grounds that Plaintiffs did not file any “computer printouts itemizing the expenses” or “bills or invoices for those expenses.” We believe it should be a noncontroversial proposition that a party with retained counsel would incur certain fees and expenses over nine months of active litigation involving motion practice and discovery. However, we need not rely on our common sense alone, given that Plaintiffs’ counsel submitted a declaration averring Plaintiffs incurred fees at various stages of the litigation. This declaration constitutes substantial evidence of expense, irrespective of whether it contained detailed accounting or supporting documentation.

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Conclusion

Each of the relevant factors enunciated by the Supreme Court supports the trial court’s finding of waiver or, at minimum, is neutral or irrelevant to the analysis. On this record, drawing every reasonable inference in favor of the order denying Defendants’ petition to compel arbitration, we conclude substantial evidence supported the trial court’s determination that Defendants waived their right to arbitrate the dispute.

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DISPOSITION

The order denying the petition to compel arbitration is affirmed. Plaintiffs are entitled to their costs on appeal.

McCONNELL, P. J.

WE CONCUR:

HUFFMAN, J.

IRION, J.