Case Number: BC520572    Hearing Date: August 19, 2014    Dept: 92

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

KRISTINA ZABUNYAN,
Plaintiff(s),
vs.
VATCHE B. BARDAKJIAN, M.D., et al.,
Defendant(s).

Case No.: BC520572

[TENTATIVE] ORDER CONDITIONALLY GRANTING PETITION TO COMPEL ARBITRATION; ORDERING DEFENDANTS TO PAY THE COSTS OF ARBITRATION

Dept. 92
1:30 p.m. — #41
August 19, 2014

Defendants, Vatche B. Bardakjian, M.D. and Vatche B. Bardakjian, M.D., Inc.’s Petition to Compel Arbitration is Conditionally Granted. The petition is granted on the condition that Defendants pay the fees and costs associated with the arbitral forum.

Plaintiff, Kristina Zabunyan filed this action against Defendants, Vatche B. Bardakjian, M.D. and Vatche B. Bardakjian, M.D., Inc. for negligence and medical malpractice arising out of several cosmetic procedures; Plaintiff alleges the procedures resulted in extreme scarring and injuries. Plaintiff filed her complaint on 9/06/13. Plaintiff filed proof of service of the summons and complaint on Defendants on 4/30/14; the proof of service shows service by personal service on Defendants on 1/28/14. On 5/16/14, Defendants filed the instant petition to compel arbitration; this petition is Defendants’ first appearance in the action.

Defendants move the Court to compel arbitration, contending there is a signed and valid arbitration agreement between Plaintiff and Defendants that covers the claims at issue in this case. Plaintiff opposes the motion. She concedes that there is a signed agreement that covers the claims at issue in this case, but argues that arbitration should be denied because (a) Defendants waived their right to arbitrate, and (b) the agreement is unconscionable. In the event the petition is granted, Plaintiff asks that Defendants be ordered to pay the costs associated with the arbitration.

Plaintiff’s first argument is that Defendants waived their right to arbitrate. On 5/06/13, through counsel, Plaintiff served Defendants with a 90-day notice of intent to sue. On 9/06/13, again through counsel, Plaintiff mailed Defendants a letter indicating that she believes the arbitration agreement is not enforceable, but the letter serves as a demand for arbitration in the event the case does not go forward via binding arbitration. As noted above, Plaintiff filed suit on 9/06/13, the same day she mailed the second letter. Defendants did not respond to the 90-day notice or the letter, but their first appearance in this action was via the instant petition to compel arbitration.

¿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).) This may happen in a variety of contexts, ranging from situations in which the proponent of arbitration has previously taken steps inconsistent with an intent to invoke arbitration, to instances in which the proponent has unreasonably delayed in undertaking the procedure. There is no single determinative test of waiver, and the question for the trial court is one of fact under the substantial evidence rule.” (Guess?, Inc. v. Superior Court (2000) 79 Cal. App. 4th 553, 557-559.)

Waiver may be found where the party seeking arbitration has (1) previously taken steps inconsistent with an intent to invoke arbitration, (2) unreasonably delayed in seeking arbitration, or (3) acted in bad faith or with willful misconduct. (Id.) However, waiver does not occur by mere participation in litigation. There must either be ¿judicial litigation of the merits of arbitrable issues¿ or waiver can occur prior to a judgment on the merits, if prejudice could be demonstrated. (Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1194 [demurrer does not constitute litigation of the merits for waiver].) The burden of establishing such prejudice is on the party opposing arbitration and that burden is a heavy one in light of the public policy favoring arbitration. (Id., 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?, supra, 79 Cal.App.4th at 558; and Berman v. Health Net (2000) 80 Cal.App.4th 1359.)

The Court finds there has been no waiver of the right to arbitrate in this case for two reasons. First, Defendants’ first appearance in the lawsuit was via the instant petition to compel arbitration; Defendants cannot be said to have “invoked the judicial machinery” or otherwise waived any rights. Second, even if their delay in mentioning could somehow lead toward a conclusion of waiver (which it cannot), there has been absolutely no prejudice to Plaintiff as a result of the delay.

Plaintiff’s second argument is that the agreement is unconscionable. A contract will be found to be unconscionable where: (1) it is adhesive, in that all or part of the contract falls outside the reasonable expectations of the weaker party; and (2) equitably, the terms unreasonably favor the other party. (Stirlen v. Supercuts (1997) 51 Cal.App.4th 1519, 1524.) Unconscionability has both a ¿procedural¿ and a ¿substantive¿ element. The procedural element focuses on two factors: oppression and surprise. ¿Oppression¿ arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. ¿Surprise¿ involves the extent to which the supposedly agreed upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms. A contractual term is substantively suspect if it reallocates the risks of the bargain in an objectively unreasonable or unexpected manner. Procedural unconscionability has to do with matters relating to freedom of assent. Substantive unconscionability involves the imposition of harsh or oppressive terms on one who has assented freely to them. The prevailing view is that these two elements must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. (Id., at 1532-1533.) In Stirlen, the court found that an arbitration provision was unconscionable in that included a forced waiver of punitive damages by the plaintiff employee, in violation of Civil Code ¿1668, and accorded the defendant employer greater rights in pursuing a court action for injunctive or equitable relief.

Plaintiff argues that the parties’ contract is procedurally unconscionable because it is one of adhesion. However, the parties’ contract clearly complies with the requirements of CCP §1295, which sets forth the criteria for a valid arbitration agreement in the medical context. Plaintiff does not argue that any of the criteria are not met, and a review of the parties’ agreement reveals that they are. Per CCP §1295(e), “Such a contract (for arbitration in the medical malpractice context) is not a contract of adhesion, nor unconscionable nor otherwise improper, where it complies with subdivisions (a), (b) and (c) of this section.”

Because the parties’ contract is not procedurally unconscionable, the Court need not determine whether it is substantively unconscionable or not; some amount of procedural unconscionability must be shown in order to find the contract unenforceable. The Court notes, however, that substantive unconscionability has also not been shown.

Plaintiff’s final argument is that, if the petition is granted, Defendants should be ordered to pay the costs of arbitration. Defendants concede as much in reply. In Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87, the court held that, where the client/signatory to an arbitration agreement is unable to pay the associated fees, the trial court acts properly in requiring the Defendants to make a choice – either pay the fees associated with the arbitration, or have the matter proceed in court. In light of the fact that the Court signed a fee waiver in favor of Plaintiff on 10/08/13, the Court finds Plaintiff cannot pay the fees associated with arbitration. Defendants have, via reply, agreed to stipulate to pay those fees. The petition to compel arbitration is therefore granted on the condition that Defendants pay the costs associated with arbitration.

Dated this 19th day of August, 2014

Hon. Elia Weinbach
Judge of the Superior Court