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Tutti Mangia Italian Grill, Inc., et al v. American Textile Maintenance Company

July 18, 2011

TUTTI MANGIA ITALIAN GRILL, INC., ET AL, PLAINTIFFS AND APPELLANTS,
v.
AMERICAN TEXTILE MAINTENANCE COMPANY, DEFENDANT AND RESPONDENT.



(Los Angeles County Super. Ct. No. KC057761) APPEAL from a judgment of the Superior Court of Los Angeles County, Steven D. Blades, Judge.

The opinion of the court was delivered by: Manella, J.

CERTIFIED FOR PUBLICATION

Affirmed.

INTRODUCTION

Tutti Mangia Italian Grill, Inc. (TMIG) and Absolutely Italian Claremont, Inc. (AIC, collectively appellants) appeal from a judgment of the superior court confirming arbitration awards against them. They contend the judgment should be reversed and the arbitration awards should be vacated because (1) the arbitration provisions are invalid, and (2) respondent American Textile Maintenance Company failed to file a petition to compel arbitration. Finding no error, we affirm.

FACTUAL AND PROCEDURAL HISTORY

On January 21, 2010, appellants filed a complaint for declaratory relief in Los Angeles Superior Court. In the complaint, TMIG alleged that it is "purportedly a party to a written agreement with [respondent] dated January 30, 2009, for the provision of restaurant linens." The written agreement, attached as Exhibit A to the complaint, shows that Todd Christian, whose title was "General Manager," signed the agreement on behalf of TMIG. The agreement contained an arbitration clause providing that "[u]nless the monetary sum sought is within the jurisdiction of the Small Claims Court, any and all disputes with respect to this Agreement shall be resolved pursuant to the rules of the American Arbitration Association, at its Los Angeles Office." In the first cause of action, TMIG sought a judicial determination (1) that Christian did not have authority to execute the agreement and bind it to the terms thereof; (2) that the damages claimed by respondent under the agreement were illegal liquidated damages; and (3) that the arbitration clause was unenforceable under California law.

Similarly, AIC also sought declaratory relief and a judicial determination of its obligations under "a written agreement with [respondent] dated January 8, 2008, for the provision of restaurant linens." The agreement, attached as Exhibit B to the complaint, shows that it was signed by Ed Inglese, the president of AIC. It contained an arbitration clause identical to that in the agreement between TMIG and respondent. It also provided that the agreement "will automatically renew for an additional 12 months, unless [respondent] receives [written] notice of termination." In the second cause of action, AIC sought a judicial determination (1) that the damages claimed under this agreement were illegal liquidated damages; (2) that the arbitration clause was unenforceable under California law; and (3) that the contract expired on January 8, 2009 and was not renewed.

Respondent did not answer the complaint, but instead, filed a petition to confirm an arbitration award against TMIG and for attorney fees and costs.*fn1 In the petition, respondent alleged (1) that TMIG had "prematurely terminated" the written agreement; (2) that respondent had sent a "Demand for Arbitration" to TMIG and filed a copy of the demand with the American Arbitration Association (AAA); (3) that an arbitrator had been appointed and the parties had been notified of the fact; (4) that an arbitration hearing had occurred on January 12, 2010; (5) that TMIG had elected to not participate in the arbitration process for reasons stated in several letters from TMIG's counsel; (6) that an arbitration award in favor of respondent had been made on January 20, 2010; and (7) that TMIG had been served with a copy of the arbitration award.

Respondent attached as an exhibit to the petition a January 6, 2010 letter from TMIG's counsel, stating that TMIG's position was that "the document signed by [its] former employee, Todd Christian, was neither authorized [n]or ratified" and that "[t]he issue of whether a valid and enforceable arbitration clause exists [was] within the sole jurisdiction of the Superior Court." In support of the latter contention, TMIG's counsel cited Gilbert Street Developers, LLC v. La Quinta Homes, LLC (2009) 174 Cal.App.4th 1185 (Gilbert Street), in which the appellate court held that an arbitration clause incorporating a future arbitration rule did not clearly and unmistakably allow the arbitrator to determine arbitrability. (Id. at pp. 1190-1191.) The January 6 letter also referenced Code of Civil Procedure section 1281.2, which authorizes a party to file a motion to compel arbitration where the other party declines to participate in arbitration.*fn2

In the arbitration award, attached as an exhibit to respondent's petition to confirm, the arbitrator addressed the arguments raised by TMIG's counsel. The arbitrator determined that he could rule on whether a valid and enforceable clause existed under Rule 7(a) of the Commercial Arbitration Rules and Mediation Procedures of the AAA. He distinguished Gilbert Street from the instant case on the ground that Rule 7(a) was enacted in 2000 and the instant agreement was entered into on January 30, 2009. Thus, the arbitration clause did not incorporate a future arbitration rule; rather, it incorporated a pre-existing rule. The arbitrator also determined that the agreement was self-executing, and because it was self-executing, respondent was not required to resort to section 1281.2 prior to proceeding with the arbitration. Finally, the arbitrator found that the agreement "was signed by Todd Christian as General Manager of [TMIG] which fact was confirmed by witness testimony at the [Arbitration] Hearing namely by Mr. Maximo Escobar who, on behalf of [respondent], signed the Agreement concurrently. Testimony established that Mr. Christian was in fact holding himself out as the General Manager and as one authorized to sign. There was never any disavowal of said Agreement by [TMIG] who impliedly accepted the benefits of same by operating thereunder."

In support of the petition to confirm the arbitration award, respondent also attached declarations by two of its employees, Cesar Velasco and Escobar, explaining the circumstances of the execution of the agreement by Christian. Although Velasco and Escobar described the events from their respective viewpoints and signed the declarations under penalty of perjury, they did not explicitly state that their declarations were made on the basis of personal knowledge.

In addition to the petition to confirm the arbitration award, respondent also filed a motion to strike the first cause of action by TMIG on the basis that it had no merit in light of the arbitration award. In support, respondent attached a declaration by Lawrence D. Levine attaching certain correspondence. He did not aver that the declaration was made on the basis of personal knowledge.

Respondent also filed a motion to strike the second cause of action by AIC, or to abate that cause of action. In support, respondent attached declarations by Pete Calzada and Levine. Calzada stated that he found no written notice from AIC that the AIC agreement had been terminated. Levine's ...


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