Serafin v. Balco Props. Ltd.

235 Cal.App.4th 165

185 Cal.Rptr.3d 151

Madeline SERAFIN, Plaintiff and Appellant

v.BALCO PROPERTIES LTD., LLC et al., Defendants and Respondents.

A141358

Court of Appeal, First District, Division 4, California.

Filed March 16, 2015

Review Denied June 10, 2015

Law Offices of Stephen M. Fuerch, Stephen M. Fuerch, Pleasanton, Michael J. Greathouse, Counsel for Plaintiff and Appellant.

Littler Mendelson, San Francisco, Eugene Ryu, Counsel for Defendants and Respondents.

RUVOLO, P.J.

I.INTRODUCTION

Madeline Serafin (Serafin) sued her former employer Balco Properties Ltd., LLC, and related individuals and entities¹ (collectively Balco) alleging claims arising from her employment, including wrongful termination, harassment, and defamation. The trial court granted Balco's motion to stay the litigation until the completion of binding arbitration based upon an arbitration agreement Serafin signed when she was hired by Balco. The arbitrator ultimately found in Balco's favor on all issues, and the trial court granted Balco's petition to confirm the arbitration award, entering judgment in Balco's favor.

On appeal, Serafin argues the trial court erred in concluding her claims against Balco were subject to arbitration, contending she never entered into a binding agreement to arbitrate her employment-related claims. Alternatively, assuming the parties formed an agreement to arbitrate, Serafin contends the arbitration agreement was unenforceable because it was procedurally and substantively unconscionable. We disagree, and affirm the judgment in Balco's favor.

II.FACTS AND PROCEDURAL HISTORY

Serafin was employed by Balco, an affiliate of Bay Alarm, as director of property management on or about June 26, 2009. A few days after she began work, she executed a two-page arbitration agreement, entitled

“MANDATORY ARBITRATION POLICY.”

The terms of the arbitration agreement will be described in great detail during the course of this opinion. Vastly abbreviated, the arbitration agreement states, in pertinent part: “In the event of a disagreement or dispute between an employee and Bay Alarm, or any of its owners, manager, or other employees, arising out of or connected with his or her employment with Bay Alarm, it is the policy of Bay Alarm that the disputed matter shall be submitted to binding arbitration under the Rules of the American Arbitration Association applicable to employment disputes. All employees will be required to sign an acknowledgment stating that they understand this policy and will comply with it.” Serafin's signature, dated June 29, 2009, appears at the bottom of page 2 stating, “I have read and understand this policy.”

Balco terminated Serafin's employment on May 17, 2010. On January 19, 2011, Balco submitted a demand to the American Arbitration Association (AAA) to arbitrate a conversion claim against Serafin for return of $10,798.08,² which allegedly represented an overpayment of wages. Balco also included a copy of a civil complaint Serafin had submitted to Balco, but had not yet filed in court, alleging numerous employment-related claims.

In April 2011, the parties selected an arbitrator. On April 15, 2011, Serafin initiated the underlying lawsuit in Contra Costa County Superior Court, alleging numerous employment-related causes of action against Balco, including retaliation, harassment, wrongful termination, unpaid earnings, breach of oral contract, common counts, conversion, and defamation.

On May 27, 2011, Balco filed a motion to stay pending litigation based on the arbitration agreement Serafin signed shortly after she was hired. Despite Serafin's opposition, the trial court granted Balco's motion to stay on August 23, 2011, and directed the parties to complete arbitration.

On June 28, 2013, following a six-day arbitration hearing, the arbitrator issued a 59-page “Arbitration Decision and Award.” The arbitrator found in Balco's favor on all of Serafin's employment-related claims. The arbitrator also determined that Balco was entitled to return of the $10,798.08 overpayment from Serafin.

On January 15, 2014, the trial court confirmed the arbitration decision and award, and entered judgment in Balco's favor. On March 19, 2014, Serafin filed this appeal, claiming the trial court erred in ordering this case into arbitration.³

III.DISCUSSION

A. Existence of an Agreement to Arbitrate

Serafin contends no valid agreement to arbitrate employment-related disputes was formed because she never consented to arbitration. She claims she “promised nothing by her signature that she ‘read and understand[s]’ ” Balco's mandatory arbitration policy. She goes on to argue, her “written acknowledgement of [Balco's] arbitration policy, therefore, carries no legal significance and does not create such a contract.”

“The right to arbitration depends on a contract. [Citations.] Accordingly, a party can be compelled to submit a dispute to arbitration only where he has agreed in writing to do so. [Citation.]” (Boys Club of San Fernando Valley, Inc. v. Fidelity & Deposit Co. (1992) 6 Cal.App.4th 1266, 1271, 8 Cal.Rptr.2d 587, fn. omitted.) In a motion to compel arbitration, “the party seeking arbitration bears the burden of proving the existence of an arbitration agreement by a preponderance of the evidence, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any defense, such as unconscionability. [Citations.]” (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1468, 162 Cal.Rptr.3d 545 (Peng ); Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972, 64 Cal.Rptr.2d 843, 938 P.2d 903.)

“In California, ‘[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.’ [Citations.]” (Pinnacle v. Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) “An essential element of any contract is the consent of the parties, or mutual assent. [Citation.]” (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270, 109 Cal.Rptr.2d 807, 27 P.3d 702 (Donovan ).) Further, the consent of the parties to a contract must be communicated by each party to the other. (Civ. Code, § 1565, subd. 3.) “Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings. [Citation.]” (Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141, 127 Cal.Rptr.2d 145, disapproved on other grounds in Reid v. Google, Inc. (2010) 50 Cal.4th 512, 524, 113 Cal.Rptr.3d 327, 235 P.3d 988.) Because there are no facts in dispute, the existence of a contract is a question we decide de novo. (Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1519, 145 Cal.Rptr.3d 318 (Sparks ).)

Serafin cites numerous cases indicating that an employee's acknowledgment of receipt of an employee handbook, or an agreement to be bound by the handbook's contents generally, may not be enough to bind the employee to arbitrate under an arbitration policy that is buried among a host of other policies. For example, in Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 69 Cal.Rptr.3d 223, the plaintiffs received and signed a general employee handbook which discussed the employer's arbitration policy. (Id. at p. 1168, 69 Cal.Rptr.3d 223.) The court found this was insufficient to show mutual assent to arbitrate because the arbitration agreement provision contained in the handbook also placed the plaintiffs on notice that they would be required to sign and enter into a separate arbitration agreement with the defendant. (Id. at p. 1167, 69 Cal.Rptr.3d 223.) However, no separate arbitration agreement was ever produced. (Id . at p. 1168, 69 Cal.Rptr.3d 223.) As there was no signature from any of the employees specifically agreeing to arbitrate, the court concluded that there was no arbitration agreement. (Id. at pp. 1172-1173, 69 Cal.Rptr.3d 223.)

In Romo v. Y-3 Holdings, Inc. (2001) 87 Cal.App.4th 1153, 105 Cal.Rptr.2d 208, the court held that no agreement to arbitrate resulted from the plaintiff's signature at the end of the employee's handbook, which contained an arbitration provision. The court found that the handbook contained two separate and severable agreements: (1) the agreement to arbitrate, which was the subject of one section and (2) an agreement to be bound by the “benefits,” “policies,” “rules” and “procedures” contained within the remaining sections of the employee handbook. (Id. at p. 1159, 105 Cal.Rptr.2d 208.) The plaintiff did not sign the arbitration section, but did sign an acknowledgment at the end of the other sections. (Ibid. ) The court concluded that, because the employee had not signed the separate section about arbitration, the employee therefore did not agree to binding arbitration. (Id. at pp. 1159-1160, 105 Cal.Rptr.2d 208.)

In Sparks, supra, 207 Cal.App.4th 1511, 145 Cal.Rptr.3d 318, the agreement to arbitrate was found in an employee handbook that contained a provision stating the employer could modify it at any time without notice, as well as a provision stating that the handbook was “ ‘not intended to create a contract of employment....’ ” (Id . at p. 1516, 145 Cal.Rptr.3d 318.) In addition, the arbitration provision was buried in the handbook, and was not prominently distinguished from the other provisions or otherwise highlighted. (Id. at p. 1519, 145 Cal.Rptr.3d 318.)

The Sparks court concluded that no contract to arbitrate existed, focusing primarily on the language that the handbook was not intended to create a contract of employment--which suggested that the handbook was “informational rather than contractual”--and on the fact that the acknowledgment signed by the employee “failed to point out or call attention to the arbitration requirement....” (207 Cal.App.4th at p. 1520, 145 Cal.Rptr.3d 318.) The court exp...