Case Name: Johnson, et al. v. Mainini

Case No.: 1-14-CV-271703

Motion by Defendant Gregory Wilson to Compel Arbitration and to Stay Certain Causes of Action

On October 9, 2014, Plaintiffs Dona Johnson and Daniel Mainini filed the complaint in this action, alleging five causes of action: 1) dissolution of limited liability corporations, Pamela Drive, Tiera II and Fruitdale; 2) dissolution of corporation Real Estate Management & Investment Company; 3) breach of fiduciary duty; 4) accounting; and 5) declaratory relief.

Counsel for Defendant Gregory Wilson has sent correspondence about arbitration, but Defendant has never made a Demand for Arbitration. On November 12, 2014, Defendant pursued this litigation by challenging the complaint through demurrer, set for hearing on January 15, 2015. Plaintiffs opposed and Defendant filed a reply, and on January 14, 2015, the court issued an extensive tentative ruling overruling the demurrer as to all but one cause of action. After the tentative ruling was posted, Defendant filed the current motion. Neither party contested the tentative ruling which became the order at the hearing. In December, while the demurrer was pending, Plaintiffs propounded 83 document production requests, as well as form interrogatories.

On an unspecified date in July 2014, Defendant and Plaintiff Johnson engaged in mediation at JAMS. On July 15, 2014, Defendant filed a complaint against Plaintiff Johnson in the United States District Court for the Northern District of California, seeking a judicial declaration of rights as to the validity and enforceability of the Pamela LLC operating agreement. That agreement contains an arbitration clause.

Defendant’s notice of motion states that the motion requests arbitration of “all causes of action regarding Fruitdale Gardens, LLC and Tiera II, LLC”, but does not state which causes of action Defendant believes those are. The title of Defendant’s motion requests refers to a stay of “certain causes of action” and the notice requests a stay “as to Pamela Drive Apartments, LLC”, but no explanation is provided as to what this means in terms of the parties and causes of action in the case. According to Defendant’s papers, even if the motion were granted, portions of this case would go forward.

Plaintiffs oppose on the ground that Defendant has waived arbitration by engaging in substantial law and motion and discovery and has unreasonably delayed in seeking arbitration and that the case ought not to be stayed in deference to the federal case.

Defendant’s motion seeks a result that would allow disputes between Plaintiffs and Defendants to proceed in three different fora: not an efficient result. Defendant has taken no steps to initiate arbitration, but has instead chosen litigation, in federal court and in state court. Defendant’s actions are inconsistent with the right to arbitrate, and Defendant has substantially invoked litigation with motion practice. Defendant has waived arbitration by litigating this case, unreasonably delaying and not taking action to initiate arbitration. The federal court is not better suited to resolve the part of the dispute before it. The motion is denied.