Case Number: EC059214 Hearing Date: June 13, 2014 Dept: NCD

TENTATIVE RULING
#7
EC 059214
SORGEN v. DANIEL DANILIAN SALVAGE, INC.

Plaintiff’s Motion to Refer Matter to Arbitration Before Jams

TENTATIVE:
The court requests the submission of further information concerning the status of JAMS/ Endispute, as it is not clear from the material submitted that this entity, rather than JAMS, Inc., has been merged out of existence. The court needs further information concerning whether JAMS/Endispute exists, and whether there is a successor entity to which the parties can be found to have agreed to conduct arbitration.

If the court is satisfied that the JAMS/Endispute entity is no longer available to conduct the arbitration pursuant to the court’s November 30, 2011 order, this matter will be treated as a motion for the court to appoint a neutral arbitrator pursuant to CCP § 1281.6. The court will then find that the agreed method in the arbitration agreement cannot be followed, as the entity no longer exists, and will appoint the arbitrator.

The court considers the moving papers to propose as the arbitrator JAMS, and the opposition to propose as arbitrator ADR Services, Judge Letteau.

The court requires that each party submit a list of prospective arbitrators by July 3, 2014, along with information concerning whether each arbitrator proposed fulfills the parties’ agreement that “All Arbitration fees will be paid equally.” [See Ex. A, para. 5]. The court will then review the lists provided by the parties, and lists obtained from governmental agencies and private disinterested associations, and nominate the prospective arbitrator.

Within five days of service of the above-referenced lists, the parties may jointly select an arbitrator and notify the court. If the parties fail to jointly select an arbitrator within five days of the service of the subject lists, any objections to the names on the list shall be filed and personally served by July 11, 2014, and the court will appoint an arbitrator from the nominees following a hearing on July 24, 2014, 9:00 a.m.

BACKGROUND:

ANALYSIS:
The parties here have been ordered to arbitrate pursuant to Judge Milton’s order compelling arbitration of November 30, 2012.

The arbitration provision provides:
“All disputes between you and us surrounding this agreement and the vehicle shall be resolved by Binding Arbitration. With Binding Arbitration you are giving up your right to go to Court and will have your rights determined by a Neutral Arbitrator and not a Judge or Jury. You are waiving your rights to a trial by Jury. All Arbitration fees will be paid equally. Arbitration will be conducted through J.A.M.S./Endispute (800) 352-5267.”
[Ex. A, para. A].

It appears that what has happened here is that since the court ordered the matter to arbitration, the parties agreed to submit the matter to ADR, rather than JAMS/Endispute, have paid initial fees and engaged in transactions with Judge Letteau, but that once the bill for each side to pay the arbitration fees was forwarded to plaintiff, plaintiff could not afford her half of the fees, and requested that the matter be submitted to JAMS, which requires the business to bear the majority of arbitration fees. Plaintiff has paid the $250 fee to initiate the JAMS arbitration imposed on the consumer, but JAMS will not agree to administer the arbitration absent agreement of the parties or a court order. Plaintiff accordingly seeks a court order that the matter be referred to JAMS.

The opposition argues that this is not a situation where the court must refer the matter to JAMS as the entity under which the arbitration agreement the parties agreed to be the arbitral forum, as the agreement expressly states the parties will arbitrate through JAMS/Endispute, which no longer exists. In addition, defendant argues that the arbitration agreement clearly provides that the parties are to split the arbitration fees, so that an entity under which the fees are not split is not a satisfactory substitute for the agreed upon arbitral forum.

This matter accordingly may present a situation where the arbitration agreement method of selecting an arbitrator has failed, such that the court can appoint an arbitrator.

Under CCP §1281.6:
“If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing and arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.”

Here, the problem is that it is not entirely clear from the opposition that JAMS/Endispute no longer exists, as the exhibits attached appear to indicate that JAMS, Inc. is the entity which has merged out. [See Exhibit 3, tabbed].

The court will request further information concerning that entity, and if it satisfied that the entity no longer exists, it will find that the agreed upon method cannot be followed due to the agreed upon arbitral forum no longer being available, and the Court will appoint the arbitrator.

CCP §1281.6 provides:
“When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement…may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.”