Estate of Svetlana Leonidova Dayal vs Logix Federal Credit Union et al

Case Number

24CV01984

Case Type

Hearing Date / Time

Mon, 09/09/2024 - 10:00

Nature of Proceedings

CMC; Motion: Compel

Tentative Ruling

Estate of Svetlana Leonidovna Dayal v. Logix Federal Credit Union, et al.    

Case No. 24CV01984          

Hearing Date: September 9, 2024                                                      

HEARING:              Motion To Compel Arbitration And Stay Judicial Proceedings

ATTORNEYS:        For Plaintiff Svetlana Leonidovna Dayal, as Executor of the Estate of Svetlana Leonidovna Dayal: Self Represented

For Defendants Logix Federal Credit Union, Ana Fonseca, Timothy Jensen, and Wendy Vannoy: Mark K. Worthge, Elizabeth M. Sanguinetti, Litchfield Cavo LLP

TENTATIVE RULING:

The motion of defendants to compel arbitration and stay judicial proceedings is denied.

Background:

On April 9, 2024, plaintiff the Estate of Svetlana Leonidovna, by and through its Executor, Svetlana-Leonidovna Dayal (Dayal), filed a verified complaint in this matter against defendants Logix Federal Credit Union (Logix), Ana Fonseca (Fonseca), Timothy Jensen (Jensen), and Wendy Vannoy (Vannoy) (collectively, defendants), alleging six causes of action: (1) conversion; (2) breach of contract; (3) recoupment; (4) defamation; (5) punitive damages; and (6) unjust enrichment. As alleged in the complaint:

On November 23, 2021, Dayal purchased a preowned automobile (the vehicle) for the price of $22,489, of which the amount of $22,444.45 was to be paid by a loan (the Loan) from Logix to Dayal. (Compl., ¶¶ 15, 17 & Exh. A.) Dayal issued a promissory note and signed a security agreement (the Note) for the Loan which Dayal transferred to Logix. (Id. at ¶¶ 18-19 & Exh. B.) Logix created an account and assigned an account number to the Note but Dayal did not receive money from Logix and there is no evidence that Logix delivered or transferred its own money from the account to the seller of the vehicle. (Id. at ¶¶ 19-22 & 24.) The contract between Dayal and Logix does not state that Dayal is under any obligation to return the vehicle to Logix to satisfy the agreement. (Id. at ¶ 27.)

On March 13, 2024, Dayal tendered a negotiable instrument payable to Logix in the amount of $14,275.22, which is the amount that a Logix representative had requested in full payment of the Loan, together with a letter explaining what the payment was for and to which account it should be credited. (Compl., ¶¶ 34, 37 & Exh. E.) Logix did not raise any objections to, and did not contact Dayal regarding, the payment which Logix received on March 15, 2024. (Id. at ¶¶ 36 & 38.) Dayal concluded that Logix had accepted the payment and would release its claim of lien on the vehicle’s title. (Id. at ¶ 38.)

Logix failed to credit Dayal’s account for the payment made by Dayal on March 13, 2024. (Compl., ¶¶ 34 & 37.) On March 20, 2024, the vehicle was taken by Logix at the direction of Vannoy, who is Logix’s Senior Repossession Specialist, despite Vannoy’s knowledge that Logix had been paid in full several days prior and that the security interest in the vehicle was without effect. (Id. at ¶¶ 39-40 & Exh. F.) Vannoy stated in a letter dated March 20, 2024, that Logix intends to sell the vehicle on April 4, 2024, unless Dayal contacts Logix to make additional payment arrangements. (Id. at ¶¶ 40-42.)

On May 17, 2024, defendants filed a motion (the motion) for an order compelling the arbitration of the claims made by Dayal in this action and staying these proceedings pending resolution of the arbitration. The hearing on the motion was initially set for July 1, 2024.

On June 20, 2024, Dayal filed an opposition to the motion. Court records also reflect that on June 27, 2024, Dayal filed a request for judicial notice in support of Dayal’s opposition to the motion.

On June 28, 2024, defendants filed their reply to the opposition of Dayal. On the same date, Dayal filed a “reply” to the reply of defendants (the surreply). Also on June 28, 2024, defendants filed objections to Dayal’s surreply and to the request for judicial notice filed by Dayal on June 27, 2024.

On July 1, 2024, the Court issued a Minute Order continuing the hearing on the motion to August 26, 2024, on the grounds that the Court had no record of the filing of the declarations of Liliana Palma (Palma) and Mark K. Worthge (Worthge) by defendants, each of which ostensibly were submitted in support of, and include information necessary to determine, the motion.

Prior to the August 26, 2024, continued hearing, the Court issued a tentative ruling further continuing the hearing to September 9, 2024, due to an apparent confusion regarding the Palma and Worthge declarations which had not yet been filed by defendants. The tentative ruling included an order that defendants file the missing declarations on or before August 30, 2024.

Due to a power outage, the hearing did not proceed on August 26, 2024, and was rescheduled to September 9, 2024. (See Aug. 27, 2028, Notice Of Resetting Hearing.)

Court records reflect that defendants filed the Palma and Worthge declarations on August 28, 2024.

Analysis:

“ ‘Arbitration is ... a matter of contract.’ [Citation.] ‘The policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate. Although the law favors contracts for arbitration of disputes between parties, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate. Absent a clear agreement to submit disputes to arbitration, courts will not infer that the right to a jury trial has been waived.’ [Citations]” (Remedial Construction Services, LP v. AECOM, Inc. (2021) 65 Cal.App.5th 658, 663, italics omitted (Remedial Construction).)

California law incorporates the presumption in favor of arbitrability contained in the Federal Arbitration Act, codified at 9 United States Code section 1 et seq. (the FAA), and the requirement that “an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general [citation].” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972; see also Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, 1332 [state contract law determines whether the parties have formed a valid agreement to arbitrate the dispute].) “Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.” (Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683; see also 9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130 [under the FAA, the court must determine “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue”].)

The party moving to compel arbitration “bears the burden of proving [the] existence [of a written agreement to arbitrate the controversy] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party “ ‘can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature.’ [Citation.] Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. [Citations.] For this step, ‘it is not necessary to follow the normal procedures of document authentication.’ [Citation.] If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).)

As stated in the Palma declaration submitted in support of the motion, Logix is a member-owned, not-for-profit cooperative and financial institution which provides account and loan services to its members. (Palma Decl., ¶ 3.) As a credit union, Logix does not operate to earn profits for the benefit of its shareholders but is an entity that exists to serve the best interests of all of its members. (Ibid.)

Palma, who has been employed by Logix since 2010, is the Senior Branch Manager of Logix. (Palma Decl., ¶ 1.) During her tenure with Logix, Palma’s duties included reviewing and implementing the terms of contracts and disclosures of Logix, and reviewing account documents, information, and notes pertaining to the members of Logix. (Id. at ¶ 2.) Palma has access to, is familiar with, and frequently refers to disclosures, membership agreements, and other statements and notifications sent to the members of Logix. (Ibid.) These documents include written notices to members, account statements provided to members, and other required written notices to members which are created in the ordinary course of Logix’s business and provided at or about the time of the events and transactions reflected in those records. (Ibid.)

Palma has reviewed the records kept by Logix pertaining to Dayal, including records pertaining to the account referenced in Dayal’s complaint. (Palma Decl., ¶ 4.) Pursuant to a “New Account Application” executed by Dayal, Dayal became a member of Logix on November 23, 2021. (Id. at ¶ 5.) On this date, Dayal opened her member account with Logix in person at Logix’s Burbank branch by signing the New Account Application in person through a “Docusign” system. (Id. at ¶ 5 & Exh. 1.) The New Account Application signed by Dayal includes the following language: “[I] agree to be bound to the terms and conditions of this and all account agreements with Logix now or in the future, including, but not limited to, the Membership and Accounts Agreement and Disclosure, the Schedule of Service Charges and Fees and the Account Rate Sheet, which have been provided to [me] and which are incorporated into and made part of this New Account Application as though they were set forth in length.” (Id. at ¶ 6 & Exh. 1.)

Palma asserts that Dayal was provided with a copy of the New Account Application and the “Membership and Accounts Agreement and Disclosure” (the Member Agreement) referenced in the New Account Application, in person at Logix’s Burbank branch at the time her account was opened on November 23, 2021. (Palma Decl., ¶ 7.)

The Member Agreement includes a section entitled “Binding Arbitration Consent And Agreement” (the Arbitration Agreement), which includes the following terms:

“You and Logix agree to attempt to informally settle any and all claims or disputes, whether in contract, tort, statute, or otherwise, affecting your Accounts and arising out of, affecting, or relating to your Account, this [Member Agreement], or the products or services Logix has provided, will provide, or has offered to provide to you, or any aspect of your Account relationship with Logix (with the exception of any sweepstakes, which are subject to their own dispute resolution provisions) (collectively, ‘Claims’). “If that cannot be done, you and Logix agree that any Claims that are threatened, made, filed, or initiated after the Effective Date (as defined below), even if the Claims arise out of, affect, or relate to conduct which occurred prior to the Effective Date, will, at the election of either you or Logix, be resolved by BINDING ARBITRATION pursuant to the Federal Arbitration Act, 9 United States Code (‘USC’) Section 1, et seq. (not withstanding any state law to the contrary, regardless of the origin or nature of the Claims at issue) administered by the American Arbitration Association (‘AAA’) in accordance with its applicable rules and procedures for consumer disputes (‘Rules’). [¶]

“Either you or Logix may elect to resolve a particular Claim through arbitration, even if you or Logix have already initiated litigation in court related to the Claim, by: (a) making written demand for arbitration upon the other party, (b) initiating arbitration against the other party, or (c) filing a motion to compel arbitration in court. AS A RESULT, IF EITHER YOU OR LOGIX ELECT TO RESOLVE A PARTICULAR CLAIM THROUGH ARBITRATION, YOU AND LOGIX WILL GIVE UP ANY RIGHT TO GO TO COURT TO ASSERT OR DEFEND YOUR OR LOGIX’S RIGHTS UNDER THIS AGREEMENT AND DISCLOSURE (EXCEPT FOR CLAIMS BROUGHT INDIVIDUALLY WITHIN SMALL CLAIMS COURT JURISDICTION, SO LONG AS THE CLAIM REMAINS IN SMALL CLAIMS COURT).

“You acknowledge that by consenting to BINDING ARBITRATION under this [Member Agreement], you and Logix agree with the following terms: [¶]

“[] EFFECTIVE DATE: This Arbitration Agreement is effective upon the 61st day after Logix provides it to you (‘Effective Date’), unless you opt-out in accordance with the requirements of the RIGHT TO OPT-OUT provision below. [¶]

[] RIGHT TO OPT-OUT: You have the right to opt-out of this Arbitration Agreement, provided you notify Logix of your intent to do so within sixty (60) days after it is provided to you. Your opt-out is only effective if you notify Logix in writing at Logix Federal Credit Union, Attention: Law Department, P.O. Box 4070, Castaic, CA 91310, within such sixty- (60) day time period. If you fail to opt-out within this sixty- (60) day time period, you will be deemed to have consented to the resolution of your Claims through binding arbitration….”

(Palma Decl., ¶ 1 & Exh. 2 at PDF pp. 15-16.)

Dayal took no action to opt out of the Arbitration Agreement. (Palma Decl., ¶ 10.) Therefore, Palma contends, the Arbitration Agreement became effective as to Dayal on January 23, 2022. (Ibid.) Palma further states that Dayal continues to use her Logix account and to accept the benefit of Logix’s services. (Palma Decl., ¶ 11.)

As further detailed above, the claims alleged by Dayal in the complaint arise from or relate to the Loan under which Logix allegedly took the vehicle, which Dayal contends in the complaint constitutes a violation of Dayal’s rights to possess the vehicle considering the alleged payment made by Dayal towards the Loan. (Compl., ¶¶ 10, 16-19, 21, 34-38, 40-41 & Exhs. B, D & F.) Dayal also alleges or effectively alleges the existence of an “account” or contract with Logix pertaining to the Loan. (Id. at ¶¶ 17, 21-24, 27, 37.) Information offered by defendants shows or indicates that Dayal obtained the Loan from which the claims alleged in the complaint arise as a member of Logix, and that Dayal maintains an account with Logix.

The information and evidence presented by defendants also shows that on November 23, 2021, Dayal was presented with and digitally signed the New Account Application which includes language purporting to bind Dayal to the terms and conditions of the Member Agreement. The Member Agreement, which Palma states was provided to Dayal in person at the time she signed the New Account Application, includes the Arbitration Agreement. Subject to exceptions which do not appear to apply here, the Arbitration Agreement requires that any claims or disputes affecting, arising out of, or relating to a member’s account with Logix, products or services provided by Logix, or any aspect of a member’s account relationship with Logix, be resolved by binding arbitration unless the member opts out as provided in the Arbitration Agreement.

The parties to a contract may incorporate by reference into the contract the terms of another document notwithstanding that the other document is not physically part of the parties’ contract. (Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 54.) For all reasons discussed above, defendants have sufficiently alleged the existence of an agreement to arbitrate the claims alleged by Dayal on the face of the complaint by alleging and presenting evidence of Dayal’s digital signature on the New Account Application, by providing and reciting the terms of the New Account Application purporting to bind Dayal to the Member Agreement, by providing a copy of the Member Agreement allegedly provided to Dayal which includes the Arbitration Agreement, by and by reciting and providing a copy of the relevant provisions of the Arbitration Agreement including those that provide for arbitration of the claims alleged on the face of the complaint. For these reasons, the Court finds that defendants have met their initial prima facie burden to provide evidence of a written agreement to arbitrate the present controversy. (Gamboa, supra, 72 Cal.App.5th at p. 165.)

“If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement.” (Gamboa, supra, 72 Cal.App.5th at p. 165.)

In her opposition to the motion, Dayal effectively asserts that the New Account Application pertains to, or forms a part of, the contract she entered into with Logix for the Loan. (Opp. at p. 2, ¶¶ 1-2.) Dayal also states that the documents forming the contract for the Loan consist of eight pages, including the New Account Application, which she signed electronically on November 23, 2021. (Id. at p. 2, ¶¶ 3-5.) Dayal does not appear to dispute that the New Account Application references the Member Agreement, that the New Account Application includes language stating that Dayal agrees to be bound to the terms of the Member Agreement. (Id. at p. 2, ¶¶ 2-5.) Dayal also does not appear to dispute that Member Agreement includes the Arbitration Agreement, or that the terms of the Arbitration Agreement, as presented in the motion, would generally require the submission of disputes relating to or arising from a member’s account with Logix to binding arbitration. (Id. at pp. 2-4, ¶¶ 6-15 [addressing but not disputing the terms of the Arbitration Agreement which Dayal asserts waives her right to a trial]; see also Dodd v. Ford (1984) 153 Cal.App.3d 426, 430 [by stipulating to binding arbitration, the parties “bargained away the right to a superior court trial”].)

Though Dayal does not dispute that she executed the New Account Application, Dayal asserts that she believed the eight pages of documents that she signed on November 23, 2021, which included the New Account Application, constituted the entirety of the contract between Dayal and Logix, and that Logix did not indicate that there were additional documents such as the Member Agreement that pertained to the contract. (Opp. at pp. 2-3, ¶ 13.) Dayal states that she never received the Member Agreement either prior to or at the time Dayal signed the New Account Application, and that the Member Agreement is not part of the contract signed by Dayal on November 23, 2021. (Id. at pp. 2-3, ¶¶ 607.)

Dayal also notes that the Member Agreement attached as exhibit 1 to the Palma declaration is dated July 5, 2023. (See Palma Decl., Exh. 2 at PDF p. 9.) Therefore, Dayal contends, she could not have agreed to the Member Agreement or its arbitration provision when she signed the New Account Application on November 23, 2021, nor could Dayal have opted out of an agreement that Dayal never received. (Opp. at p. 5, ¶ 27 & p. 6, ¶ 29.) In addition, Dayal states that she would not have agreed to any waiver of rights by agreeing to arbitration. (Id. at p. 4, ¶ 15 & p. 5, ¶ 21.) Dayal further states that she never had any interactions with Palma, and that there exists no evidence showing that Palma was an employee at the branch where Dayal executed the New Account Application. (Id. at p. 5, ¶¶ 23-24.)

Dayal also contends that the only purpose for Dayal to open an account with Logix was to obtain the Loan, that Dayal did not to open any other accounts with Logix, and that Dayal closed the account with Logix in March 2024. (Opp. at p. 6, ¶¶ 32 & 34-35.)

The evidence presented by defendants shows that the Member Agreement is not or does not appear to be physically a part of the New Account Application. Though the terms of another document may, under appropriate circumstances, be included in a contract, “ ‘ “ ‘each case must turn on its facts. For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.’ ” ’ [Citations.]” (Remedial Construction, supra, 65 Cal.App.5th at p. 663.) Though the New Account Application purports to bind Dayal to the terms of the Member Agreement, the New Account Application itself contains no arbitration provision. In addition, there is no language within the New Account Application indicating or advising a member or prospective member that there exists a separate arbitration provision or agreement within the referenced Member Agreement, or that by agreeing to be bound to the terms of the Member Agreement, the member will be required to arbitrate or opt out of the arbitration of any claims and disputes that may arise in connection with a member’s account or any products or services provided by Logix.

In addition, it can be inferred from the evidence presented by defendants that a member signing the New Account Application in person, such as Dayal did here, must rely on Logix to provide a physical copy of the Member Agreement at the time the New Account Application is signed. Therefore, under circumstances where a member is not, whether due to inadvertence or otherwise, provided with a copy of the Member Agreement, there exists some question as to whether the Member Agreement is easily available to that member. For example, defendants offer no information to show the manner in which a member signing the New Account Application may request or obtain a copy of that document at each of Logix’s physical branch locations. For this reason and all further reasons discussed above, the evidence and information offered by defendants is insufficient to show that Dayal had any knowledge of the terms of the Member Agreement including the Arbitration Agreement, that the terms of the Member Agreement would necessarily be known to Dayal at the time Dayal signed the New Account Application in person, or that the Member Agreement was easily available to Dayal at the time she signed, or at the physical location where Dayal signed, the New Account Application. (Remedial Construction, supra, 65 Cal.App.5th at p. 663.)

Though Palma offers information to demonstrate Palma’s personal knowledge of Dayal’s account with Logix, Palma does not offer information regarding her knowledge of any practices or procedures employed by Logix when a prospective member such as Dayal opens an account with Logix by signing the New Account Application in person at a physical branch location, including at the Burbank branch identified in the Palma declaration. Available evidence and information also indicates that Palma was not present when Dayal signed the New Account Application. Palma also offers no information with respect to the identity of the person who provided copies of the Member Agreement to Dayal at the Burbank branch, which presumably would be known to Palma in her role as Senior Branch Manager. For these reasons, it appears to the Court that Palma does not possess sufficient personal knowledge regarding whether or not Dayal received a copy of the Member Agreement when she signed the New Account Application at the Burbank branch. (See Chambers v. Crown Asset Management, LLC (2021) 71 Cal.App.5th 583, 600-601.)

Though Dayal does not dispute the authenticity of her signature on the New Account Application, Dayal’s statement that she never received a copy of the Member Agreement is unequivocal. (Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1069-1070 [an opposing party may challenge the authenticity of an arbitration agreement by declaring that the party was not given a copy of the agreement].) Dayal also declares that she would not have agreed to waive any rights by consenting to arbitration of any disputes she may have with Logix. There is nothing to suggest that Dayal’s unequivocal representations, made under penalty of perjury, are untruthful. Under the totality of the circumstances present here, Dayal’s representations are sufficient to meet Dayal’s burden in opposing the motion also considering that the Member Agreement is not signed by Dayal and that the New Account Application makes no reference to arbitration or the Arbitration Agreement. (Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1124-1125 [unequivocal denial of agreement to arbitration was sufficient to carry burden] (Trinity).) The burden now shifts back to defendants to prove by a preponderance of the evidence that an agreement to arbitrate exists. (Id. at p. 1120.)

Though Palma declares, under penalty of perjury, that the July 5, 2023, version of the Member Agreement was provided to Dayal when she signed the New Account Application, in the supplemental Palma reply declaration, Palma states that Dayal was provided with a copy of the Member Agreement that was in effect when Dayal signed the New Account Application and which is dated August 10, 2021. (Supp. Palma Decl., ¶ 5& Exh. 3.) Though the Court will assume that the information offered in the moving Palma declaration includes an inadvertent error with respect to the version of the Member Agreement that was provided to Dayal, this conflicting information further underscores the issues regarding Palma’s personal knowledge of these matters as further discussed above. Notwithstanding these issues, Palma states that the Member Agreement in effect on the date Dayal signed the New Account Application also includes the same Arbitration This new information does not contradict Dayal’s unequivocal statement that she never received or consented to the Arbitration Agreement or that Dayal would not have consented to arbitration. For this reason, information offered in the supplemental Palma declaration does not change the Court’s analysis.

Defendants also contend that, because Dayal did not file opposition to the motion in a timely manner, the Court should exercise its discretion to disregard the opposition. The Court notes that the proof of service attached to the motion states that defendants served the motion on Dayal, who is self-represented, by electronic means. (Motion at p. 9.) There is no information to show that Dayal affirmatively consented to electronic service of the motion. Therefore, it appears that service of the motion on Dayal by electronic means was improper notwithstanding that Dayal opposed the motion on substantive grounds. (Cal. Rules of Court, rule 2.251(c)(3)(B).)

Though service of the motion on Dayal appears improper for reasons further discussed above, under Code of Civil Procedure section 1005, Dayal was required to file and serve the opposition no later than June 18, 2024. Dayal filed the opposition on June 20, 2024, and defendants do not dispute that they received the opposition on that same day. As proper service of the motion on Dayal is questionable, the Court will accept the opposition. (Jack v. Ring LLC (2023) 91 Cal.App.5th 1186, 1210.) The Court will, however, decline to consider Dayal’s untimely request for judicial notice filed on June 27, 2024, and the unauthorized surreply.

Additional information included in the reply of defendants does not alter the Court’s analysis. For all reasons discussed above, defendants have failed to meet their burden to prove by a preponderance of the evidence that a valid and clear agreement exists between Logix and Dayal to arbitrate the claims alleged in the complaint. In addition, to the extent that defendants contend that the parties delegated to the arbitrator the threshold question of arbitrability (see motion at p. 7), defendants have also failed to meet their burden to demonstrate that Dayal agreed to arbitrate the issue of arbitrability. (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1291; Trinity, supra, 78 Cal.App.5th at p. 1123.) Therefore, for all reasons discussed above, the Court will deny the motion.