Case Number: 19STCP03171 Hearing Date: March 06, 2020 Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES – CENTRAL DISTRICT

ROSEN & ASSOCIATES, P.C.,

Petitioner,

vs.

RICHARD MERUELO, etc.,

Respondent.

CASE NO.: 19STCP03171

[TENTATIVE] ORDER RE: MOTION FOR SANCTIONS; MOTION TO CONFIRM ARBITRATION AWARD AND ENTER JUDGMENT THEREON

Date: March 6, 2020

Time: 8:30 a.m.

Dept. 56

CMC: March 6, 2020

MOVING PARTY: Respondent Richard Meruelo

RESPONDING PARTY: Petitioner Rosen & Associates, P.C.

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

On July 26, 2019, Petitioner filed a petition to confirm an arbitration award[1] pursuant to a final arbitration award entered in favor of Petitioner and against Respondent on June 26, 2019.

Respondent filed a motion for sanctions in the amount of $4,500.00 jointly and severally against the law firm of Rosen & Associates, P.C. and attorney David Bleisten, Esq. pursuant to California Code of Civil Procedure, Section 128.7. Respondent’s motion is based on the grounds that Petitioner’s motion to strike Respondent’s peremptory challenge is improper and harassing because: (1) the motion is procedurally improper because the only available remedy is a writ of mandate; (2) the motion was filed after the predecessor court, Judge Fahey, accepted Respondent’s peremptory challenge rending this motion moot; (3) Petitioner’s counsel is still pursuing the motion despite a written request that Petitioner withdraw the motion; and (4) the motion is clearly frivolous and is lacking any legal basis because Judge Fujie has no authority to reverse the decision of a similarly situated superior court judge.

On February 7, 2020, Petitioner filed a motion to confirm arbitration award and enter judgment pursuant to the arbitration award pursuant to a final arbitration award entered in favor of Petitioner and against Respondent on June 26, 2019. Petitioner’s motion to confirm arbitration award and enter judgment was filed with an accompanying proof of service indicating that Respondent was served with the motion on February 7, 2020 via overnight mail delivery. Petitioner asserts that: (1) further delay should not be indulged; (2) Respondent must overcome the presumption of validity of the award; (3) Respondent’s unlicensed lawyering argument fails; and (4) Respondent’s undisclosed conflict argument fails.

The Court will address the respective motions filed by the parties in this one ruling.

MOTION FOR SANCTIONS

Petitioner opposes Respondent’s motion for sanctions in part on the grounds that: (1) Petitioner’s motion to strike was reasonable; and (2) Respondent failed to properly serve his motion for sanctions. Petitioner requests monetary sanctions in the amount of $2,475.00 for opposing Respondent’s motion for sanctions.

Judicial Notice

The Court, on its own motion, takes judicial notice of the Court’s ruling on Petitioner’s motion to strike Respondent’s peremptory challenge.

Brief Procedural History

The declaration of Respondent’s counsel, Peter D. Gordon (“Gordon”), relevantly declares that: (1) he filed a petition to vacate the arbitration award on behalf of Respondent on September 27, 2019 as case number 19STCP04198 (the “Meruelo Action”) and took steps to immediately serve the petition on the Rosen firm on October 2, 2019 and thereafter filed a proof of service (Gordon Decl. at ¶ 1 and Exhibit 1); (2) upon receipt of the case assignment in the Meruelo Action, he immediately and timely exercised his right to a peremptory challenge and the case was reassigned (Id. at ¶ 2 and Exhibit 2); (3) at the same time, Petitioner filed a notice of related case in both the earlier filed Rosen Action and the Meruelo Action and based on this notice of related case, the Meruelo Action was reassigned to the same department as the Rosen Action, Department 69 (Id. at ¶ 3 and Exhibit 3); (4) upon further research and investigation, he learned that Judge Fahey in the Rosen Action was heavily involved in another unrelated action involving Respondent and he believed the aggressive conduct of attorney Bleistein was the result of his knowledge of this unrelated action and as such the assigned judge would provide him and his client favorable rulings (Id. at ¶ 6); (5) Respondent exercised his peremptory challenge in the Rosen Action and on October 17, 2019 despite not having formally appeared in that action (Id. at ¶ 7 and Exhibit 6); (6) on October 17, 2019, Petitioner filed an objection to the challenge (Id. at ¶ 8 and Exhibit 7); (7) on October 18, 2019, the Honorable William Fahey reviewed the challenge, accepted the challenge, and based on this order both actions were reassigned to Department 56 (Id. at ¶ 9 and Exhibit 8); and (8) without any legal basis, Petitioner then filed a motion entitled “Motion to Strike Respondent’s Peremptory Challenge” seeking to have Respondent’s peremptory challenge in the Rosen Action stricken, but without explaining where the cases would be assigned to now that Judge Fahey had disqualified himself. (Id. at ¶ 10.)

Gordon further declares that: (1) Petitioner’s counsel refused to take the motion off calendar to which counsel did not respond (Id. at ¶ 11 and Exhibit 9); and (2) the motion cites no legal basis for the motion and contains no precedent on how such motion shall be maintained after the Court has already affirmatively ruled on the underlying challenge and the case has been transferred to another court. (Id. at ¶ 12.)

On December 27, 2019, the Court denied Petitioner’s motion to strike Respondent’s peremptory challenge. The Court found that Petitioner: (1) was seeking review of the Court’s granting of the peremptory challenge that was filed by Respondent in the Rosen Action; (2) was accepted by the Court; and (3) wanted this Court to reverse acceptance of such peremptory challenge. The Court clearly stated in its ruling that “the language from Hull and Section 170.3 is clear in that the procedurally correct method to challenge the Court’s peremptory challenge acceptance is via a writ of mandate. Thus, Petitioner’s motion is procedurally improper as Petitioner did not seek a writ of mandate within 10 days of the Court’s acceptance of Respondent’s peremptory challenge.”

Legal Standard

California Code of Civil Procedure, Section 128.7(b) states that “[b]y presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, petition, written notice of motion, or other similar paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances” that: (1) it is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; and (2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. California Code of Civil Procedure, Section 128.7(c) says that “[i]f, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may . . . impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.”

Issue No. 1: Failure to Properly Serve Motion for Sanctions

California Code of Civil Procedure, Section 128.7(c)(1) provides that a motion for sanctions “shall not be filed with or presented to the court unless, within 21 days after service of the motion, or any other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.” Notice of a motion for sanctions must be in accordance with Section 1010 of the California Code of Civil Procedure. (Code Civ. Proc. § 128.7(c)(1).) “Notices must be in writing, and the notice of a motion . . . must state when, and the grounds upon which it will be made, and the papers, if any, upon which it is to be based.” (Code Civ. Proc. § 1010.) “Notices and other papers may be served upon the party or attorney in the manner prescribed in this chapter.” (Id.)

The hearing on the motion to strike Respondent’s peremptory challenge was scheduled for hearing on December 26, 2019. The proof of service in connection with the motion for sanctions indicates that it was served on Petitioner’s counsel on December 2, 2019 via personal service and messenger. The motion for sanctions was not filed with the Court until January 9, 2020.

In connection with its opposition, Petitioner presents the declarations of: (1) David Bleistein; (2) Robert C. Rosen; (3) John B. Wallace; (4) Sharan Ramchandani; (5) Lora Foley; (6) Marcia Hendrick; and (7) Natalie Rosen, who each state the same things. Each declarant states that: (1) they never saw any documents “affixed” or attached in any way to Rosen’s front office door relating to the motion at any time; (2) they never say Respondent’s motion in the mail was a result of any alleged mailing; (3) they were never personally served with the motion for sanctions by anyone; and (4) they first became aware of the motion after it was filed on January 9, 2020.

Respondent’s counsel, Andrew T. Schoettle, declares in connection with Respondent’s reply brief that: (1) on December 2, 2019, he prepared 3 envelopes respectively addressed to—Rosen & Associates, Robert Rosen, Esq. and David Bleistein Esq., each containing Respondent’s motion for sanctions and related papers (Schoettle Decl. at ¶ 1); (2) he hand-delivered those 3 envelopes to a messenger that same day who was instructed to deliver the envelopes to the law firm of Rosen & Associates, 515 S. Figueroa Street, Ste. 1060, Los Angeles, CA 90071 (Id. at ¶ 2); (3) immediately thereafter, he received confirmation of the service via an invoice dated December 2, 2019, which states the envelopes were accepted by Natalie Rosen at 12:45 p.m. (Id. at ¶ 3 and Exhibit 1.)

“The filing of a proof of service creates a rebuttable presumption that the service was proper.” (Floveyor Internat., Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 795.) Here, Respondent filed a proof of service in connection with a motion for sanctions, as well as a confirmation that the motion for sanctions was delivered to Natalie Rosen despite her declaration indicating the contrary. The Court finds that Petitioner has not overcome the presumption that the motion for sanctions was properly served.

Thus, the Court rejects Petitioner’s argument that service was not properly effectuated.

Issue No. 2: Frivolousness of the Motion to Strike Peremptory Challenge

The Court incorporates its December 27, 2019 ruling with respect to the motion to strike Respondent’s peremptory challenge, and applies it to the discussion of the frivolous nature of Respondent’s motion. As indicated by the Court’s order, Petitioner failed to follow proper procedure under Hull and California Code of Civil Procedure, Section 170.3, in that a writ of mandate was the only manner to challenge review of the disqualification of Judge Fahey. (People v. Hull (1991) 1 Cal.4th 266.) Petitioner’s motion to strike was clearly improper pursuant to this Court’s order in connection with such motion. Petitioner’s claims in its motion to strike were not warranted by existing law and in fact the entire motion was procedurally inaccurate. Moreover, Petitioner’s opposition to the instant motion argues that the motion to strike was acceptable and in good faith because “it showed clear procedural violations by [Respondent].” (Opposition at 3:20-24.) The fact that Petitioner’s motion showed procedural violations is not indicative of whether the motion was presented to harass, for an improper purpose, or lacked a meritorious basis in the law. Moreover, none of the declarations in support of Petitioner’s opposition states that the motion to strike Respondent’s peremptory challenge: (1) was presented for a proper purpose; (2) was not intended to harass Respondent; or (3) was warranted by its legal contentions.

Thus, the Court finds that Respondent’s request for sanctions pursuant to California Code of Civil Procedure, Section 128.7(c)(1) is appropriate.

Issue No. 3: Sanctions

If monetary sanctions are warranted “the court may award to the party prevailing on the motion the reasonable expenses and attorney’s fees incurred in presenting or opposing the motion. Absent exceptional circumstances, a law firm shall be held jointly responsible for violations committed by its partners, associates, and employees.” (Code Civ. Proc. § 128.7(c)(1).)

Gordon declares that: (1) he undertook representing Respondent at the rate of $475.00 per hour which is reasonable given his more than 30 years of litigation experience (Gordon Decl. at ¶ 14); (2) since Petitioner’s counsel has refused to take the motion off-calendar, the Respondent has been forced to incur 15 hours of attorney time in dealing with the motion, necessary research and drafting an opposition brief (Id. at ¶ 13); (3) his associate, Andrew Schoettle, bills at the rate of $300.00 per hour (Id. at ¶ 15); (4) he has incurred 8 hours of his time and his associate has incurred 7 hours of legal time (Id. at ¶ 16); (5) Respondent is requesting sanctions in the form of attorney fees and costs based on the fees and costs incurred and anticipated to be incurred to respond to Petitioner’s frivolous motion (Id. at ¶ 17); and (6) due to Plaintiff’s counsel’s refusal to take their frivolous motion off calendar, monetary sanctions of not less than $4,500 should be awarded jointly and severally against counsel David Bleistien and Rosen & Associates, P.C. (Id. at ¶ 18.)

The Court exercises its discretion pursuant to California Code of Civil Procedure, Section 128.7(c)(1) and awards Respondent reasonable monetary sanctions in the amount of $1,425.00 which represents three hours of work at Gordon’s rate. Monetary sanctions are to be paid to Respondent within 20 days of the date of this order by Rosen & Associates, P.C. and attorney David Bleistein, Esq.

The Court GRANTS Respondent’s motion for sanctions.

Respondent is ordered to give notice of this ruling with respect to the motion for sanctions.

MOTION TO CONFIRM ARBITRATION AWARD AND ENTER JUDGMENT

Petitioner asserts that the AAA arbitration award should be confirmed in a judgment, and that Petitioner’s petition to confirm and Respondent’s petition to vacate should be denied.

Procedural Issues

California Code of Civil Procedure, Section 1290.4(a) says that “[a] copy of the petition and written notice of the time and place of the hearing thereof and any papers upon which the petition is based shall be served in the manner provided in the arbitration agreement for the service of such petition and notice.” “If the arbitration agreement does not provide the manner in which such service shall be made and the person upon whom service is to be made has not previously appeared in the proceeding and has not previously been served” then “[s]ervice within this State shall be made in the manner provided by law for the service of summons in this action.” (Code Civ. Proc. § 1290.4(b)(1).) “Service outside this State shall be made by mailing a copy of the petition and notice and other papers by registered or certified mail. Personal service is the equivalent of such service by mail.” (Code Civ. Proc. § 1290.4(b)(2).) “If the arbitration agreement does not provide the manner in which such service shall be made and the person on whom service is to be made has previously appeared in the proceeding or has previously been served in accordance with subdivision (b) of this section, service shall be made in the manner provided in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of this code.” (Code Civ. Proc. § 1290.4(c).)

Lack of Service of the Petition

Respondent asserts that the petition to confirm arbitration award (the “Petition”) was filed on July 26, 2019, and since that time, Petitioner has not served the Petition on either Respondent or his counsel, and no proof of service has been filed. The proofs of service filed on February 26, 2020 which are titled “Notice of Filing Proofs of Service of Rosen’s Petition to Confirm on Respondent Meruelo” only indicate that a summons was served and do not indicate that the Petition was served on Respondent or his counsel. Both proofs of service indicate that the party served was “Monica Front Desk Clerk @ Seacoast Towers.” Thus, that is neither Respondent nor his counsel, and such service was made in Miami, Florida. In connection with its moving papers or reply, Respondent does not indicate in a declaration by what means the arbitration agreement giving rise to such arbitration between the parties indicates the method of service of the Petition. A review of the Petition and the agreement therein giving rise to the right to arbitrate does not indicate a service method for such Petition. (Petition at Exhibit 1.) Even considering that Respondent has appeared in this action, based on the February 26, 2020 proofs of service, Respondent has still not been served with the Petition.

Moreover, the proofs of service contain a sworn statement by Luis E. Palomo Mendret who states that he personally served Respondent with the summons in Puerto Rico on September 14, 2019; however, the proofs of service indicate that service took place in Miami, Florida and a person named “Monica” was served. Thus, based on this discrepancy, the Court cannot find that “service was proper” [Lebel v. Mai (2012) 210 Cal.App.4th 1154, 1163] and finds that Respondent has not been served with the Petition as required by California Code of Civil Procedure, Section 1290.4. Service of the Petition is a mandatory requirement under Section 1290.4.

Peter Gordon’s Declaration

Respondent’s counsel Peter Gordon filed a declaration: (1) objecting to the defective proofs of service to confirm the arbitration award; and (2) indicating that the March 6, 2020 hearing is premature and requires continuance to allow Respondent’s pending motion to set aside award to be heard on June 5, 2020.

Gordon declares that: (1) the motion to confirm set for hearing on March 6, 2020 should be continued to the current scheduled hearing on Respondent’s motion to vacate the arbitration award scheduled for June 5, 2020[2] to allow Petitioner time to properly serve its Petition and Respondent proper time to file responses. (Gordon Decl. at ¶ 13.) On February 25, 2020, Petitioner filed a response to Respondent’s petition to vacate arbitration award. A review of the Court’s future hearing dates does not indicate a set hearing date for June 5, 2020 with respect to Respondent’s petition to vacate. The Court, however, finds it logistically inefficient to rule on Petitioner’s motion while Respondent’s petition remains outstanding due to the risk of inconsistent rulings.

The Court therefore CONTINUES the hearing on Petitioner’s motion to confirm arbitration award to June 5, 2020 at 8:30 a.m. in this department. The Court also sets a hearing date of June 5, 2020 at 8:30 a.m. in this department with respect to Respondent’s petition to vacate arbitration award so that both matters may be heard at the same time.

Petitioner is ordered to give notice of this ruling with respect to the motion to confirm arbitration award.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the

hearing, the motion will be placed off calendar.

Dated this 6th day of March 2020

Hon. Holly J. Fujie

Judge of the Superior Court

[1] A review of the Court file indicates that Respondent was never served with Petitioner’s petition to confirm arbitration award. As explained below, the proofs of service filed on February 26, 2020 do not cure this defect.

[2] The Court’s electronic filing system with respect to this action does not show a motion to vacate the arbitration award being filed with respect to this case; however, Petitioner filed a response to such petition to vacate on February 25, 2020. Respondent is ordered to file its petition to vacate arbitration award properly with the Court.