18-CIV-03397 FRANCIS BAGNAROL, ET AL. VS. CAROLINA BAGNAROL, ET AL.

FRANCIS BAGNAROL CAROLINA BAGNAROL
W. GEORGE WAILES ALISON MADDEN

PETITION TO COMPEL MANDATORY ARBITRATION, OR IN THE ALTERNATIVE MOTION TO COMPEL, BOTH/EITHER WITH MOTION TO STAY BY CAROLINA BAGNAROL AND NADINE BAGNAROL TENTATIVE RULING:

Defendant Bagnarols’ Motion to Compel Arbitration and Stay court proceedings is GRANTED. The present proceedings are hereby STAYED pending completion of the arbitration.

Defendants have established the existence of an arbitration agreement, and there is no basis to deny enforcement of the agreement under CCP §1281.2.

Plaintiffs do not dispute that their claims for breach of fiduciary duty and dissolution of the A Family Affair Elder Care LLC are subject to arbitration under the LLC’s operating agreement. They contend, however, that the claims for partition of the Vera and Canyon properties are “non-arbitrable” and that, as a result, an order compelling arbitration would “split this lawsuit in half.” According to Plaintiffs, “There is a strong likelihood of conflicting rulings because of the need for an accounting of the financial transactions of Family LLC concerning [the] Vera and Canyon [properties] as well as distributions to compensate the Bagnarols for free rent in all the claims. Both the claims involving the real property which are nonarbitrable and the claims involving Family LLC require this accounting.” Opposition, p.7. Plaintiffs, however, have failed to demonstrate that the partition claims are not subject to arbitration. Accordingly, the Court finds no merit in Plaintiffs’ claim that arbitration would risk the possibility of conflicting rulings.

First, Plaintiffs suggest their claims for partition of the Vera and Canyon properties are “non-arbitrable” because partition cannot be accomplished in arbitration. Plaintiffs, however, cite no pertinent authority in support of this proposition. There is, however, authority to the contrary. See, e.g. Morris v. Zuckerman, 257 Cal.App.2d 91, 94 (Ct. App. 1967); Sanker v. Brown, 167 Cal.App.3d 1144, 1145 (Ct. App. 1985).

Next, Plaintiffs contend the partition claims are not subject to the arbitration provision of the LLC operating agreement. The Court disagrees. The LLC’s operating agreement provides “In the event a dispute arises out of or in connection with this Agreement, the parties will attempt to resolve the dispute through friendly consultation. . . . If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration in accordance with the laws of the State of California.” Operating Agmt., ¶55 (emphasis added). The agreement further provides, “Frank and Tony [Bagnarol] will be compensated by rent checks issued by the Company for their ownership interest in the real estate that the Company rents from owners.” Id., ¶68. The agreement also provides that “No Member may do any act that would make it impossible to carry on the ordinary business of the Company.” Id., ¶59.

The Court finds that Plaintiffs’ claims for partition constitute a dispute “aris[ing] out of or in connection with” the LLC’s operating agreement. Plaintiffs’ Complaint seeks partition of 817 Canyon Road, which is identified in the operating agreement as the LLC’s principal place of business. The agreement clearly contemplates that the LLC will be operated out of the properties for which Plaintiffs seek a partition. Plaintiffs’ claim for partition of those properties constitutes a dispute “in connection with” the agreement.

Plaintiffs further assert that the non-signatory parties “could not be compelled to arbitrate the partition claims in an arbitration over Family LLC.” Opposition, p.7. Plaintiffs, however, have not shown that the non-signatory defendants would not agree to arbitration. Indeed, the non-signatory defendants have not appeared in this action and, as a result, have not filed any pleading responsive to the motion. See Bos Material Handling, Inc. v. Crown Controls Corp., 137 Cal.App.3d 99, 112–13 (Ct. App. 1982) (reversing an order denying arbitration, in part, because “the record is silent as to whether or not any third parties would agree to submit to arbitration”). Accordingly, any claim that arbitration will result in conflicting rulings is based on mere speculation at this point. Further, the Court notes that Plaintiffs’ Complaint alleges that “each of the Defendants, including the Doe Defendants, is jointly and severally liable as principal, agent, employer, partner, or alter-ego of each of the remaining Defendants.” Complaint, ¶2. As a result, the non-signatory Defendants appear to be bound by the arbitration agreement under general agency principles.

Plaintiffs also contend that Mary and Sheila Bagnarol cannot be compelled to arbitrate because they are not parties to the operating agreement. Plaintiffs, however, have not alleged the precise nature of Mary and Sheila Bagnarol’s ownership interests in the Vera and Canyon properties, either in the Complaint or in their opposition to this motion. As a result, the Court cannot determine whether those parties have interests that are truly distinct from the signatories to the operating agreement. Additionally, Plaintiffs’ Complaint asserts “The Bagnarols [identified as “Francis and Mary Bagnarol, individually and as Trustees of the Francis & Mary Bagnarol 2014 Living Trust, Dated July 31, 2014 and Anthony and Sheila Bagnarol, individually and as Trustees of the Anthony & Sheila Bagnarol 2017 Living Trust, Dated December 13, 2017”], Nadine, and Carolina formed A Family Affair Elder Care, LLC (“AFA”), as a California limited liability corporation, with the stated purpose of operating elderly care home care facilities.” Complaint, ¶8. The language of Plaintiffs’ Complaint, therefore, suggests that Mary and Sheila are bound by the arbitration provision as third-party beneficiaries of the operating agreement. In any case, Plaintiffs have failed to demonstrate that the interests of Mary and Sheila Bagnarol are distinct from the interests of the signatories to the operating agreement. The Court is not persuaded that they cannot be compelled to arbitrate and, as a result, Plaintiffs have failed to demonstrate a genuine possibility of conflicting rulings on a common issue of law or fact.

Plaintiffs’ remaining arguments are also unpersuasive. With respect to Plaintiffs’ claim that “Defendants fail to carry their burden of showing a demand for arbitration and rejection,” Defendants allege they made a demand to arbitrate. Plaintiffs have acknowledged that they refuse to arbitrate this matter voluntarily. Accordingly, the requirement of a refusal to arbitrate under CCP §1281.2 is satisfied.

For the foregoing reasons, the Court finds Plaintiffs have not demonstrated a genuine “possibility of conflicting rulings on a common issue of law or fact” under CCP §1281.2(c). As a result, Defendants’ Motion to Compel Arbitration and Stay the present proceedings is granted.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Defendants shall prepare a written order consistent with the Court’s ruling for the Court’s signature, pursuant to California Rules of Court, Rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.