De Leon v. Juanita's Foods
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Following the commencement of arbitration proceedings between appellant Juanita’s Foods and Respondent, Juanita’s Foods failed to pay its share of arbitration fees within 30 days after such fees were due. Based on that late payment, the trial court concluded that Juanita’s Foods was in material breach of the parties’ arbitration agreement and allowed Appellant to proceed with his claims against Juanita’s Foods in court.
Juanita’s Foods argues that the trial court should have considered factors in addition to its late payment—for example, whether the late payment delayed arbitration proceedings or prejudiced Appellant—to determine the existence of a material breach of the arbitration agreement.
The Second Appellate District affirmed, concluding that the trial court correctly declined to consider these additional factors. The court explained that Code of Civil Procedure sections 1281.97 and 1281.98 provide that if a company or business that drafts an arbitration agreement does not pay its share of required arbitration fees or costs within 30 days after they are due, the company or business is in “material breach” of the arbitration agreement. In the case of such a material breach, an employee or consumer can, among other things, withdraw his or her claim from arbitration and proceed in court. Accordingly, the court affirmed the order granting Appellant’s motion to vacate the order compelling arbitration as to Juanita’s Foods.
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