Case Number: BC539410    Hearing Date: September 04, 2014    Dept: 46

Case Number: BC539410
SUZANNE DONDANVILLE VS BANC OF CALIFORNIA N A ET AL
Filing Date: 03/14/2014
Case Type: Other Employment Complaint (General Jurisdiction)

09/04/2014

This tentative ruling is posted at 12:45 p.m. on 9-2-2014 and the matter is set for hearing on 9-4-2014 at 8:30 a.m.

If there are no parties other than Plaintiff/Petitioner, then Plaintiff/Petitioner may submit to the tentative without appearance by telephonic notification to the clerk of Dept. 46 between 8:00 a.m. and 4:30 p.m. on a date prior to the hearing or morning prior to the hearing by calling (213) 974-5665, and the court will issue the tentative ruling as the final ruling. If the other parties have appeared in the action, then the parties must first confer and all agree that the tentative ruling will be the final ruling on the matter. If the parties to the matter before the court all agree, a representative of the parties may call the clerk and submit without an appearance, and the court will issue the tentative ruling as the final ruling. If an order is required, it should be lodged directly in Dept. 46 with a copy to adverse/other parties, if any.

Banc of California, N.A. fka Pacific Trust Bank, successor-in-interest to Beach Business Bank and The Private Bank of California and Banc of California, Inc. fka First Pactrust Bancorp, Inc.’s motions (1) Application for Order to File Under Seal Exhibits of Motion to Compel Arbitration of First and Second Causes of Action [“COA”]; (2) Motion to compel arbitration; (3) Demurrer to Complaint; (4) Case Management Conference.

TENTATIVE RULING: Application for sealing order GRANTED. See discussion below; Motion to Compel Arbitration is DENIED. Also see discussion below. The demurrer is ordered off calendar as moot in light of the filing on 08/26/2014 of the Notice of Intent to File FAC. The FAC is deemed filed and served as of 08/26/2014, The case management conference is premature at this time in light of the newly filed FAC – CMC is continued to 10/15/2014 at 8:30 a.m. or to the date of the hearing on the demurrer to the FAC, if any, whichever is later.

Suzanne Dondanville [“P”] is the former COO of The Private Bank of California (hereinafter, “PBOC”). P claims that, pursuant to her amended change in control agreement, she was owed, upon her termination, the equivalent of 100% of her highest one-year compensation over the prior two years of her employment with PBOC—an amount in excess of $280,000. P claims that Banc of California, N.A. fka Pacific Trust Bank, successor-in-interest to Beach Business Bank and The Private Bank of California and Banc of California, Inc. fka First Pactrust Bancorp, Inc. [“Ds”] have failed to pay her and accordingly, also owe waiting time penalties. She further contends that she was terminated for taking FMLA/CFRA leave.

D’s (per CCP §§ 1281.2 and 1281.4) seek an order compelling the 1st and 2nd COAs to arbitration and staying this case, on the basis that the parties entered into a written arbitration agreement (i.e., the “First Amendment to Change in Control Agreement;” hereinafter, “Amended CoC”). For the purposes of this motion the court considers the Complaint and FAC to be the same.

(1) Sealing Request – GRANTED.

D’s “Application for Order to File Under Seal…Exhibits of Motion to Compel Arbitration of First and Second Causes of Action” is GRANTED pursuant to Rules of Court Rule 2.551 – Exhibits “A” and “B” to the Declaration of Andrew Smith (hereinafter, “Smith”), which are the Amended CoC and the Severance Pay Plan and Summary Plan Description (hereinafter, “Severance Plan”), respectively, are ordered sealed. This is appropriate, inasmuch as both exhibits contain commercially sensitive information; as such, Ds’ interest in safeguarding same overrides the public’s right in accessing that information.

Although P has also lodged records under seal, she has failed to file an application or motion as is required by CRC 2.551. Exhibits “A” and “B” are the Severance Pay Plan and Summary Plan Description and Amended CofC and on the basis of D’s motion are nonetheless sealed on the basis of D’s motion. Exhibit “C” is an “Amendment 2 to the Form S-4 Registration statement” filed with the SEC on/about 4/10/13. Exhibit C is ordered placed in the public file (not sealed.)

(2) Compel Arbitration Motion – DENIED.

CCP § 1281.2 states, in pertinent part, as follows:

“On petition of a party to an arbitration agreement alleging the existence
of a written agreement to arbitrate a controversy and that a party thereto
refuses to arbitrate such controversy, the court shall order the petitioner
and the respondent to arbitrate the controversy if it determines that an
agreement to arbitrate the controversy exists, unless it determines that:
(a) The right to compel arbitration has been waived by the petitioner; or
(b) Grounds exist for the revocation of the agreement.
(c) A party to the arbitration agreement is also a party to a pending court
action or special proceeding with a third party, arising out of the same
transaction or series of related transactions and there is a possibility of
conflicting rulings on a common issue of law or fact…”

CCP § 1281.4, furthermore, states in part that:

“If a court of competent jurisdiction, whether in this State or not, has
ordered arbitration of a controversy which is an issue involved in an action
or proceeding pending before a court of this State, the court in which such
action or proceeding is pending shall, upon motion of a party to such action
or proceeding, stay the action or proceeding until an arbitration is had in
accordance with the order to arbitrate or until such earlier time as the court
specifies.”

Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. Blake v. Ecker (2001) 93 C.A.4th 728, 741 (overruled on other grounds by Le Francois v. Goel (2005) 35 C.4th 1094). A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. Banner Entertainment, Inc. v. Superior Court (1998) 62 C.A.4th 348, 356-57.

In April 2012, P and Private Bank of CA (hereinafter, “PBOC”) entered into a Change of Control and Severance Agreement (hereinafter, “Original CoC”). In February 2012, P and PBOC entered into the Amended CoC and Severance Plan. The Amended CoC states, in relevant part, as follows:

“This First Amendment to Change in Control Agreement (this
‘Amendment’) is entered into by and between The Private Bank
of California (‘TPBOC’) and Suzanne Dondanville (‘Executive’) as
of February 4, 2012 and effective as of the Closing Date (as defined
in the Merger Agreement (the ‘Merger Agreement’) by and between
First PacTrust Bancorp, Inc. (‘Bancorp’), Beach Business Bank
(‘Beach’) and TPBOC, which shall hereafter be referred to as the
‘Effective Date’). For purposes of this Agreement, Bancorp and
Beach, and Pacific Trust Bank, a federally-chartered savings bank
(‘Bank’) shall collectively be referred to as ‘Employer.’ If the Closing
Date does not occur, this Amendment will be null and void ab initio
and of no force and effect. This Amendment is made with reference
to the following:

A. TPBOC and Executive are currently parties to that certain Change
in Control Agreement, dated as of April 2, 2012 (the ‘Agreement’),
specifying the terms of certain severance benefits to Executive in the
event of a Change in Control (as such term is defined in the
Agreement).
B. TPBOC has entered into the Merger Agreement referenced above
with Bancorp and Beach, providing for the merger of TPBOC with and
into Beach (the ‘Merger’).

C. The Merger would constitute a ‘Change in Control‘ as defined in
the Agreement.

D. In connection with the proposed Merger, TPBOC adopted a
Severance and Retention Plan on August 21, 2012, to incentivize key employees, including Executive, to remain with TPBOC through the
closing of the Merger (the ‘Severance and Retention Plan’).

E. In connection with the proposed Merger and the adoption of the
Severance and Retention Plan, the parties hereto desire to amend the Agreement so that it terminates immediately prior to the consummation
of the Merger.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Agreement and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:…

2. Termination of Agreement. Effective immediately prior to the
consummation of the Merger, the Agreement shall be terminated and
shall be null and void for all purposes and effect, and Executive shall
be entitled to no payment thereunder on account of the Merger. Instead, Executive shall receive the following benefits payable under the
Severance and Retention Plan:

a. Executive will be entitled to receive an amount equal to 50%
of her highest one-year compensation (as defined in the Change of
Control agreements) over the past two years, provided she continues
to be employed by Employer 90 days after the Effective Time of the
transaction.

b. Executive will be entitled to receive an additional 50% of the compensation plus any unpaid installments of such retention amounts
that would be due under Section 2.a on the earlier of (i) the one-year
anniversary of the Effective Time, or (ii) immediately upon involuntary
termination by Employer (other than for cause) if such termination
occurs within one year after the Effective Time.

c. Executive will be entitled to one year of medical coverage in
the event of involuntary termination by Employer (other than for cause)
within one year after the Effective Time…”

Paragraph 12 of the Severance Plan states as follows:

“Claims and Review.

All inquiries and claims respecting the Plan must be submitted in
writing to the Administrator at the address specified below.

a. Claims. In the case of a claim respecting a benefit under this
Plan, a written determination allowing or denying the claim shall be
furnished by the Administrator to the claimant promptly upon
receipt of the claim. A denial or partial denial of a claim shall be
dated and signed by the Administrator and shall clearly set forth:
(1) the specific reason or reasons for the denial; (2) specific
reference to pertinent Plan provisions on which the denial is based;
(3) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and (4) an explanation of the
review procedure set forth below.
If no written determination is furnished to the claimant within sixty
(60) days after receipt of the claim by the Administrator, then the claim
shall be deemed denied and the sixtieth (60th) day after such receipt
shall be the determination date.

b. Review. A claimant may obtain review of an adverse
determination by filing a written notice of appeal with the Administrator
within sixty (60) days after the determination date or, if later, within
sixty (60) days after written notice denying the claim. Thereupon the Administrator shall appoint one or more persons who shall conduct a
full and fair review. The Administrator may appoint himself or herself,
or any other person or persons whether or not connected with Bank,
to review a claim. The review shall include the right for claimant: (1)
be represented by a person of the claimant’s choosing; (2) to present
a written statement of facts and of the claimant’s interpretation of any
pertinent document, statute or regulation; and (3) to receive a prompt
written decision clearly setting forth findings of fact and the specific
reasons for the decision written in a manner calculated to be
understood by the claimant and containing specific references to
pertinent Plan provisions on which the decision is based. A decision
shall be rendered no more than sixty (60) days after the request for
review, except that such period may be extended for an additional sixty
(60) days if the person or persons reviewing the claim determine that
special circumstances, including the advisability of a hearing, require
such extension.”

It is disputed as to whether or not the Severance Plan is, in fact, incorporated into the Amended CoC, inasmuch as the Severance Plan specifically defines an “eligible participant” therein as “[n]ot hav[ing] an individual written or oral employment agreement with Bank, which governs the rights of such employee in the event of termination of employment.” (See ¶ 2(b) therein).

However, this dispute need not be resolved at this point in the litigation because, as P points out, paragraph 12 of the Severance Plan does not constitute a true contractual arbitration. Said provision does not constitute “an agreement to submit disputes to a third-party decision maker, a mechanism for ensuring neutrality in the decision-making process, a decision-maker who is chosen by the parties, and a binding decision.” (Opposition, 2:20-23). The “Claims and Review” procedure “[p]ermits the Bank itself, or an individual unilaterally chosen by the Bank, to make benefits decisions as to the claims themselves and as to any appeals of such claims. There is no mechanism to ensure impartiality. In addition, there is no ‘binding decision’… (Id., 2:24-3:1).

A contractual arbitration “refers to the process whereby parties voluntarily submit their disputes for resolution by one or more impartial third persons instead of by a judicial tribunal provided by law: ‘(Contractual) arbitration is a procedure for resolving disputes which arise from contract; it only comes into play when the parties to the dispute have agreed to submit to it.’ [Herman Feil, Inc. v. Design Center of Los Angeles (1988) 204 C.A.3d 1406, 1414; see Air Line Pilots Ass’n v. Miller (1998) 523 U.S. 866, 876].” Knight, Chernick, Haldeman and Bettinelli, CAL. PRAC. GUIDE: ALT. DISP. RES. (The Rutter Group 2013) ¶ 5:6. “Although arbitration may take many procedural forms, a dispute resolution mechanism is not an arbitration unless it has all of the following attributes: —a third party decisionmaker chosen by the parties; —a mechanism for ensuring neutrality in the rendering of the decision; —an opportunity for both parties to be heard; and —a binding decision. [Cheng-Canindin v. Renaissance Hotel Assoc. (1996) 50 C.A.4th 676, 684; Elliott & Ten Eyck Partnership v. City of Long Beach (1997) 57 C.A.4th 495, 503; Saeta v. Sup.Ct. (Dent) (2004) 117 C.A.4th 261, 268 (citing text)…].” Id. at ¶ 5:6.1 (emphasis theirs).

Furthermore, D asks for new and different relief in the reply. Ds reply urges the court to “enforce the contract agreed to by the parties and send this matter to the Plan Administrator, even if it this [sic] proceeding is not deemed to be arbitration is not sufficient to overcome the deficiencies in the dispute resolution language in the above documents. In an effort to avoid needless litigation, such as the present lawsuit, PBOC created a mechanism for claims to be resolved informally, if possible, before being submitted for judicial review. This mechanism was incorporated into the Amended CIC, and thus Plaintiff must submit to Defendants’ internal grievance procedures before petitioning this Court.” (Reply, 1:19-24). This is a different relief from that sought in the notice of motion. Also, Ds have not provided this court with any authority that would require P to comply with its internal grievance procedures prior to filing suit.