Ciprianni, et al v. Omni La Costa Resort & Spa, LLC, et al., No. 3:2016cv01002 - Document 41 (S.D. Cal. 2017)

Court Description: ORDER granting 32 Motion to Compel Arbitration and Dismissing Plaintiffs Second Amended Complaint as to Defendants Omni La Costa Resort & Spa, LLC., Omni Hotels Management Corporation, and LC Investment 2010, LLC. Signed by Judge M. James Lorenz on 4/6/2017. (sjt)
Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MICHAEL CIPRIANNI, et al., Case No.: 3:16-cv-01002-L-BGS Plaintiffs, 12 13 v. 14 ORDER GRANTING DEFENDANTS’ MOTION [Doc. 32] TO COMPEL ARBITRATION OMNI LA COSTA RESORT & SPA, et al., 15 Defendant. 16 17 18 Pending before this Court is Defendants Omni La Costa Resort & Spa, LLC., 19 Omni Hotels Management Corporation, and LC Investment 2010, LLC’s (“Defendants”) 20 motion to compel Plaintiffs Michael and Vanessa Cirprianni (“Plaintiffs”) to submit their 21 claims to arbitration. The Court decides the matter on the papers submitted and without 22 oral argument. See Civ. L. R. 7.1(d.1). For the reasons stated below, the Court 23 GRANTS Defendants’ motion. 24 // 25 // 26 // 27 // 28 // 1 3:16-cv-01002-L-BGS 1 I. 2 BACKGROUND This case arises out of an injury sustained in July 2015 by Plaintiff Michael 3 Ciprianni while using a fitness machine at a fitness facility (the “Resort”) owned and 4 operated by Defendants. Plaintiffs joined the Resort in 2009. At that time, Plaintiffs 5 executed an Agreement [Doc. 32–3] that set forth the terms and conditions of 6 membership. Of relevance to the present motion, the Agreement mentioned an 7 arbitration provision, bound Plaintiff to all written membership policies, and contained a 8 change of terms provision reserving to Defendants the right to amend membership 9 policies from time to time. (See Agreement.) In 2011, Defendants modified membership 10 policy by enacting the 2011 Bylaws [Doc. 32–4], which contained an Arbitration 11 Agreement. Defendants sent all Resort members a copy of the 2011 Bylaws and posted 12 them on the member pages of the Resort’s website. (Miringoff Decl. [Doc. 32–2] ¶ 5.) 13 Plaintiffs filed a complaint with the Superior Court of California on March 21, 14 2016, alleging negligence and premises liability. (See Compl. [Doc. 1–2 Ex. A].) 15 Defendants subsequently removed to this Court and answered. (See Removal Notice 16 [Doc. 1]; Answer [Doc. 7].) Defendants now move to compel arbitration. (See Mot. 17 [Doc. 32].) Plaintiffs oppose, arguing (1) the Federal Arbitration Act, 9 U.S.C. § 1 et seq. 18 (“FAA”) does not govern this dispute; (2) compelling arbitration would be unduly 19 prejudicial; (3) Defendant waived any alleged right to compel arbitration; and (4) the 20 2011 Arbitration Clause is not valid. (See Opp’n [Doc. 33].) The Court will address 21 these arguments in turn. 22 23 24 II. APPLICABILITY OF THE FEDERAL ARBITRATION ACT Outside of the maritime context, the FAA governs only if the contract concerns 25 interstate commerce. 9 U.S.C. § 1. Plaintiffs argue that this case does not concern 26 interstate commerce because it involves only a “consumer contract for membership 27 services provide[d] by a resort and spa located in California entered into by Plaintiffs in 28 California and all services were provided in California.” (Opp’n 6:27–7:2.) 2 3:16-cv-01002-L-BGS 1 In enacting the FAA, Congress intended to reach the full range of transactions 2 covered by the Commerce Clause. Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 3 (2003). Thus, even if a specific economic activity alone would not affect interstate 4 commerce in a substantial way, it suffices to trigger the interstate commerce 5 jurisdictional hook of the FAA if the aggregate practice of which that economic activity 6 is a part affects interstate commerce. Id. at 56–57. Furthermore, if some activity of one 7 of the parties, even if not directly the subject of the contract or transaction at issue, has a 8 nexus to interstate commerce, the FAA applies. See Allied-Bruce Terminix Companies, 9 Inc. v. Dobson, 513 U.S. 265, 282 (holding the FAA applied to a local service contract 10 between a homeowner and termite control company because the termite control company 11 was multi-state in nature and used out of state material in performing on the contract). 12 Applying this broad standard, the Court finds that the contract between the parties 13 involves interstate commerce. Defendants are unquestionably multi-state in nature as 14 they are citizens of Delaware and Texas that offer services nationwide to customers of 15 diverse citizenship. Furthermore, it would seem beyond dispute that Defendants utilize 16 some out of state materials and/or services in the operation of the Resort. Accordingly, 17 the Court finds that the facts of this case trigger the FAA and therefore preempt any 18 conflicting state law. 9 U.S.C. §2; Volt Information Scis., Inc. v. Board of Trs. of Leland 19 Stanford Junior Univ., 489 U.S. 468, 478 (1989). 20 21 III. UNDUE PREJUDICE 22 It is undisputed that Defendants Juan Manuel Anaya and San Diego Fitness 23 Services, neither of whom are signatories to the Agreement, are not bound by the 24 Arbitration Agreement. Thus, granting Defendants’ motion could require Plaintiffs to 25 litigate their claims against the Omni Defendants in arbitration while litigating their 26 claims against Defendants Juan Manuel Anaya and San Diego Fitness Services before 27 this Court. Plaintiffs contend this would cause them undue prejudice and, for this reason, 28 asks the Court to deny Defendants’ motion. 3 3:16-cv-01002-L-BGS 1 This argument is problematic in that Plaintiffs do not cite to any authority that 2 supports it. Furthermore, it is clearly established law that under the FAA “an arbitration 3 agreement must be enforced notwithstanding the presence of other persons who are 4 parties to the underlying dispute but not to the arbitration agreement.” Moses H. Cone 5 Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983). Accordingly, the Court 6 finds that the presence of defendants Juan Manuel Anaya and San Diego Fitness Services 7 cannot defeat this motion to compel arbitration as to the Omni Defendants. 8 9 10 IV. WAIVER Plaintiffs contend Defendants waived their right to arbitrate by not bringing the 11 instant motion sooner. In support of their argument, Plaintiffs rely entirely on California 12 law. Having decided the FAA governs here, the Court will apply federal law. In the 13 Ninth Circuit, “[t]he party arguing waiver of arbitration bears a heavy burden of proof.” 14 Britton v. Co-op Banking Group, 916 F.2d 1405, 1412 (9th Cir. 1990) (internal citations 15 omitted). To carry this burden, the opposing party must show that the other party (1) had 16 knowledge of the right to compel arbitration; (2) acted inconsistently with that right; and 17 (3) resulting prejudice. Id. 18 Plaintiffs argue that Defendants sat on their alleged right to compel arbitration for 19 one year after injury and, as a result, caused Plaintiffs prejudice in the form of incurred 20 legal fees and unintentional evidence spoliation. As an initial matter, the Court disagrees 21 with Plaintiffs’ contention that the proper temporal focus is the time elapsed between 22 injury and the filing of a motion to compel. Plaintiffs have not shown that, at time of 23 injury, Defendants knew a lawsuit was forthcoming. Thus, the Court finds the proper 24 focus is the time elapsed between service upon Defendants of the original complaint and 25 the time Defendants first moved to compel arbitration. This period is only about four 26 months (See Summons [Doc. 1-2]; First Mot. to Compel [Doc. 16].)), and during this 27 four months, no substantive motion practice occurred. Accordingly, the Court finds 28 Plaintiffs have failed to make an adequate showing that they were prejudiced in the form 4 3:16-cv-01002-L-BGS 1 of unnecessary legal fees because of Defendants’ delay. Plaintiffs also speculate that, but 2 for this delay, Defendants might not have unintentionally spoiled evidence by losing the 3 Nautilus exercise machine at issue here. (Opp’n 11:3–10.) However, Plaintiffs fail to 4 show that the Nautilus machine has in fact been irretrievably lost and, if so, how any 5 delay in seeking arbitration occasioned this loss. 6 Thus, the Court is not convinced that Plaintiffs suffered prejudice from any delay 7 in moving to compel arbitration. Nor does the Court find that Defendants’ took any 8 actions inconsistent with an intention to arbitrate. Other than move to compel, 9 Defendants have merely removed and answered. Plaintiffs cite no authority, and the 10 Court is unaware of any, holding that removal and answer are inconsistent with an 11 intention to seek enforcement of an arbitration agreement. For these reasons, the Court 12 finds Plaintiffs have failed to carry their “heavy burden” of showing Defendants waived 13 their right to compel arbitration. 14 15 16 V. VALIDITY OF THE ARBITRATION AGREEMENT An agreement to arbitrate is “valid, irrevocable, and enforceable, save upon such 17 grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. 18 Under California law, the elements of a valid contract are (1) parties capable of 19 contracting; (2) mutual consent; (3) a lawful object; and (4) consideration. Cal. Civ. Code 20 § 1550. However, a court will not enforce an otherwise valid contract if there exists a 21 viable defense. 1 Witkin, Summary 10th (2005) Contracts, § 331, p. 365. 22 Plaintiffs argue the 2011 Arbitration Agreement is invalid because of a lack of 23 notice. Plaintiffs’ argument relies entirely on Badie v. Bank of America, 67 Cal. App. 4th 24 779 (1998). In Badie, plaintiffs were individuals who opened credit card accounts with 25 defendant Bank of America (“BoA”). Badie, 67 Cal. App. 4th at 783. When plaintiffs 26 opened their accounts, they signed account agreements that did not include an arbitration 27 provision. Id. at 787. However, the account agreements did contain a change of terms 28 clause that purported to give BoA unilateral authority to change the terms of the account 5 3:16-cv-01002-L-BGS 1 agreements so long as BoA provided plaintiffs with advance notice. Id. at 786–87. BoA 2 subsequently mailed plaintiffs letters announcing a change in terms requiring arbitration 3 of disputes arising out of the account agreements. Id. at 785. 4 Plaintiffs sued to enjoin enforcement of the arbitration provision, arguing that the 5 change of terms provision did not bestow carte blanche upon BoA to make any change it 6 wanted provided it gave advance notice. Badie, 67 Cal. App. 4th at 783–84. The Court 7 of Appeals agreed. Id. at 807. Plaintiffs argue that the instant case is on all fours with 8 Badie because, like BoA, Defendants here seek to (1) take advantage of a change of 9 terms provision to (2) modify an existing agreement such that (3) any disputes arising out 10 of the agreement must go to arbitration. 11 While the Court agrees that there are some similarities between the present action 12 and Badie, Plaintiffs’ opposition ignores a central distinction. The Badie court reasoned 13 that a change of terms provision confers upon a party only the authority to modify a term 14 “whose general subject matter was anticipated when the contract was entered into.” 15 Badie, 67 Cal. App. 4th at 791. Because the original account agreement contained no 16 mention at all regarding dispute resolution, the Court of Appeals reasoned that an 17 arbitration provision fell outside the reach of the change of terms provision and was not 18 valid as a modification of the original agreement. Id. at 795. Here, by contrast, the 19 subject matter of arbitration was undeniably “anticipated when the contract was entered 20 into.” Indeed, the 2008 Rules and Regulations [Doc. 32–6] in place when Plaintiffs’ 21 joined the Resort included an arbitration agreement, and this arbitration agreement was 22 expressly referenced in the Agreement. 23 Furthermore, the Agreement indicated assent to (1) the 2008 Rules and 24 Regulations, (2) an arbitration provision, and (3) subsequent amendments to Resort 25 policies. (Agreement.) When Defendants adopted the 2011 Bylaws, they sent a copy to 26 all members and posted them on the members’ pages of the Resort’s website. (Miringoff 27 Decl. ¶ 5.) Accordingly, the Court finds that the Arbitration Agreement contained in the 28 2011 Bylaws was effective when Plaintiff sustained his injury in 2015. Under the FAA, a 6 3:16-cv-01002-L-BGS 1 Court must compel arbitration of claims covered by a valid arbitration agreement. 2 Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). 3 Here, there is no dispute as to whether the Arbitration Agreement covers Ciprianni’s 4 claim. Accordingly, the Court GRANTS Defendants’ motion to compel arbitration and 5 dismisses Plaintiffs’ Second Amended Complaint as to the moving Defendants. 6 7 8 9 VI. CONCLUSION AND ORDER For the foregoing reasons, the Court GRANTS Defendants’ Motion to Compel arbitration and dismisses Plaintiffs’ Second Amended Complaint as to the following 10 Defendants only: Omni La Costa Resort & Spa, LLC., Omni Hotels Management 11 Corporation, and LC Investment 2010, LLC. 12 13 IT IS SO ORDERED. 14 Dated: April 6, 2017 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 3:16-cv-01002-L-BGS
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.