Filed 5/19/15 Alexander v. Market Street Apartments CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.


                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA



LILLIAN ALEXANDER et al.,                                           D066382

         Plaintiffs and Respondents,

         v.                                                         (Super. Ct. No. 37-2013-00074063-
                                                                     CU-OE-CTL)
MARKET STREET APARTMENTS, LLC,

         Defendant and Appellant.


         APPEAL from an order of the Superior Court of San Diego County, Joel R.

Wohlfeil, Judge. Affirmed.

         Kimball, Tirey & St. John, Karl P. Schlecht and Michaelene H. Dody for

Defendant and Appellant.

         Kevin C. Young for Plaintiffs and Respondents.

         Lillian and Robert Alexander (together the Alexanders) sued Market Street

Apartments, LLC (Market Street), among others, in San Diego Superior Court. Market

Street answered the complaint and included an affirmative defense that the Alexanders'
claims were subject to an arbitration provision contained in an employment agreement

signed by the Alexanders but not Market Street.

       Five months prior to trial, Market Street brought a petition to compel arbitration

and did so only after engaging in extensive discovery over several months. The superior

court denied Market Street's petition, finding the arbitration agreement was not

enforceable, Labor Code section 229 prohibited arbitration of the Alexanders' claims, and

Market Street waived its right to arbitrate.

       Market Street appeals, contending the arbitration agreement is enforceable, the

Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) preempts the Labor Code, and

substantial evidence does not support the court's finding that it waived its right to

arbitrate.

       We conclude that Market Street forfeited its arguments that the arbitration

agreement is enforceable and the FAA preempts the Labor Code because it failed to raise

them in superior court. In addition, by failing to provide us with a reporter's transcript of

the hearing on its petition, we have an incomplete record on which to analyze Market

Street's claims. This absence of a reporter's transcript undermines Market Street's

substantial evidence challenge to the court's finding of wavier. In any event, we are

satisfied based on the limited record before us that substantial evidence supports the

court's order. Therefore, we affirm.

                   FACTUAL AND PROCEDURAL BACKGROUND

       Market Street hired the Alexanders as resident managers of its apartments. Prior

to beginning their employment, Market Street informed the Alexanders they needed to

                                               2
sign a document entitled "On-Site Employee Agreement" (Agreement). The Agreement

consisted of 11 preprinted pages1 with blanks. Some of the blanks were completed with

handwritten words or numbers while others were left blank.

      The Alexanders were not told they could change or negotiate any of the

Agreement's terms. The Alexanders believed they had to sign the Agreement or they

would be terminated. As such, they signed it. Market Street did not sign the Agreement.

      The Agreement contained an arbitration provision that provided in part:

             "Arbitration of Disputes: Any controversy of [sic] claim arising out
             of or related to this Agreement, or the breach thereof, except for
             unlawful detainer actions or any dispute that arises from Employer's
             action to regain possession of the premises, or actions brought for
             wages before the California Labor Commissioner or related to
             workers' compensation, shall be settled by Arbitration in accordance
             with the rules of the American Arbitration Association. The
             Employer will pay the costs for the arbitrator and hearing room.
             Any arbitration award rendered must be in writing, setting forth the
             reasons for the decision and may be entered as a judgment in any
             court of competent jurisdiction. Arbitration decisions/awards issued
             pursuant to this judgment are final and binding."

      Subsequently, multiple disputes arose between the Alexanders and Market Street

regarding compensation and working hours. After the Alexanders requested their tax

statements from Market Street, Market Street terminated their employment.

      After being terminated, Robert Alexander applied for unemployment insurance

benefits. He was denied because Market Street had never reported him as an employee to

the Employment Development Department and did not provide for unemployment

insurance.


1     Only 10 of the 11 pages of the Agreement are included in the record.
                                              3
       On November 1, 2013, the Alexanders filed suit in San Diego Superior Court,

alleging causes of action for failure to pay wages; failure to pay overtime wages; waiting

time penalties; tortious termination in violation of public policy; violation of Labor Code

section 1182.8; and violation of Labor Code section 226. On December 16, 2013, Market

Street filed an answer, which included an affirmative defense that the claims were subject

to arbitration.

       Three days later, the Alexanders served form interrogatories on Market Street. On

January 9, 2014, Market Street served 10 sets of written discovery on the Alexanders,

including form interrogatories, employment litigation form interrogatories, 162 special

interrogatories, 30 requests for admissions, and 70 requests for production of documents.

Almost a month later, Market Street noticed the videotaped depositions of the

Alexanders, which were accompanied by additional requests for documents.

       The Alexanders responded to the written discovery and produced 698 pages of

documents.

       Market Street's counsel sent a letter dated March 5, 2014 to the Alexanders

demanding that the Alexanders dismiss their complaint and pursue any claims against

Market Street through arbitration with the American Arbitration Association per the

Agreement. On March 16, 2014, the Alexanders' counsel responded to the March 5

letter, refusing to dismiss the complaint. In addition, the Alexanders' counsel asserted

that there was no valid agreement to arbitrate, Market Street had waived arbitration, and

the Agreement was procedurally and substantively unconscionable.



                                             4
        On March 18 and 19, 2014, Market Street took the depositions of the Alexanders.

In response to the additional document demands, the Alexanders produced 91 pages of

documents at their depositions.

        On March 20, 2014, the Alexanders served Market Street with employment

litigation form interrogatories and 26 requests for production of documents. At its

request, Market Street was granted extensions of over a month to respond.

        In March, the parties filed case management conference statements. At the case

management conference on April 4, 2014, the court set the trial date of November 21,

2014.

        On May 29, 2014, Market Street served its responses to the written discovery

propounded by the Alexanders. Market Street did not object on the grounds that the

matter should be arbitrated. Nor did Market Street produce any documents.

        On June 5, 2014, Market Street filed a petition to compel arbitration. In the

petition, Market Street argued that the Alexanders' claims were subject to a valid

arbitration provision in the Agreement. It also argued that it had not waived arbitration.

A declaration from Market Street's counsel accompanied the petition. In that declaration,

Market Street's counsel implied she delayed demanding arbitration in the hope that the

parties would mediate the dispute.

        The Alexanders filed an opposition to the petition to compel arbitration. In that

opposition, they asserted: (1) the Agreement was not valid because of a lack of

mutuality; (2) the Agreement was void; (3) Market Street waived the right to seek

arbitration; and (4) the Agreement was unconscionable. In support of the opposition, the

                                              5
Alexanders submitted their declarations as well as the declaration of their counsel. They

also objected to portions of Market Street's counsel's declaration filed in support of the

petition.

        Apparently, Market Street did not file a reply.

        After hearing oral argument2 and considering the pleadings and evidence, the

court denied the petition. In doing so, the court found the arbitration provision in the

Agreement was not enforceable because Market Street never signed the Agreement. In

addition, the court found that Market Street had waived its right to arbitrate by

conducting discovery and actively litigating the matter in superior court. The court also

found that the Alexanders had been prejudiced by Market Street's actions. Finally, the

court determined that Labor Code section 229 prohibited arbitration of the Alexanders'

claims.

        Market Street timely appealed.

                                       DISCUSSION

        Market Street challenges the superior court's order denying its petition to compel

arbitration. Specifically, Market Street asserts: (1) the Agreement is enforceable; (2)

mutuality is not required; (3) even if mutuality is required, it can be implied by the

Agreement itself; (4) the FAA preempts Labor Code section 229; and (5) it did not waive

its right to arbitrate.




2       There is no transcript from the hearing in the record. We repeat many of the
court's findings from its minute order.
                                              6
                                              I

              MARKET STREET FORFEITED MOST ISSUES ON APPEAL

       The party petitioning to compel arbitration "bears the burden of proving the

existence of a valid arbitration agreement by the preponderance of the evidence, and a

party opposing the petition bears the burden of proving by a preponderance of the

evidence any fact necessary to its defense." (Engalla v. Permanente Medical Group, Inc.

(1997) 15 Cal.4th 951, 972.) In its petition to compel arbitration, Market Street

maintained that the Agreement was enforceable, contained a valid arbitration provision,

and it did not waive its right to arbitrate. In opposition, the Alexanders contended the

Agreement was unenforceable because of a lack of mutuality, the Agreement was void

because it violated Labor Code section 1194, subdivision (a), the Agreement was

unconscionable, and Market Street waived arbitration by litigating the matter in superior

court. As part of its unconscionability argument, the Alexanders asserted Labor Code

section 229 prohibits arbitration of claims for unpaid wages. Market Street did not file a

reply to the opposition. Also, we do not have the benefit of the transcript of the hearing

on the petition to compel arbitration so we do not know what was argued to the superior

court or what additional evidence, if any, Market Street offered.

       Here, in its opening brief, Market Street, for the first time, finally addresses the

arguments the Alexanders raised with the superior court. We ordinarily will not consider

for the first time on appeal claims that could have been but were not presented to the trial

court. (See Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 184-185, fn. 1;

Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316 ["It is a firmly entrenched principle of

                                              7
appellate practice that litigants must adhere to the theory on which a case was tried.

Stated otherwise, a litigant may not change his or her position on appeal and assert a new

theory. To permit this change in strategy would be unfair to the trial court and the

opposing litigant."]; Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th

820, 847 ["[P]arties are not permitted to ' "adopt a new and different theory on

appeal." ' "].)

       Market Street acknowledges that it is raising these issues for the first time on

appeal, but insists that we have the "discretion to consider a new theory on appeal when it

is purely a matter of applying the law to undisputed facts." (Brown v. Boren, supra, 74

Cal.App.4th at p. 1316.) Although we agree we do have such discretion, we determine

this is not the case in which to consider these newly raised issues.

       As a threshold matter, we observe Market Street did little, in the superior court, to

prove the existence of an enforceable arbitration agreement. It simply submitted the

declaration of its trial counsel who declared, among other things, that the Alexanders

entered into the Agreement with Market Street that required the parties to arbitrate their

disputes. However, the court sustained the Alexanders' objection to this portion of the

attorney's declaration. As such, Market Street offered no evidence that the parties entered

into an enforceable Agreement requiring the arbitration of disputes. On appeal, Market

Street does not take issue with this ruling nor does it provide any citations to the record

that it provided evidence that the parties entered into an enforceable agreement.

       In opposition to the petition to compel arbitration, the Alexanders offered

evidence, by way of their declarations, that: (1) Robert Alexander was instructed to sign

                                              8
on the employee signature line; (2) Lillian Alexander was instructed to sign on the

employer signature line; (3) the Alexanders were not told that they could change or

negotiate any of the Agreement's terms; (4) no one informed the Alexanders that they did

not have to agree to arbitrate claims; (5) the Alexanders signed the Agreement under the

belief that if they did not do so, they would be terminated; and (6) Market Street refused

to sign the Agreement. In addition, a cursory review of the Agreement indicates that it is

a preprinted form with handwritten terms in some blanks in the Agreement, but it also

appears that other blanks in the Agreement were not completed. For example, the section

concerning employee compensation (section 8) is blank although the Agreement clearly

calls for the parties to check either 8(a) or 8(b). The Alexanders' declarations as well as

their opposition to the petition raise questions regarding the validity of the Agreement.

We find nothing in the record where Market Street challenged these assertions. Nor is

there any indication that Market Street submitted any admissible evidence regarding the

drafting or execution of the Agreement.

       In short, the Alexanders raised factual issues regarding the enforceability of the

Agreement to be resolved by the superior court. Based on the limited record before us,

Market Street did not respond to any of the issues raised by the Alexanders.

       Now, Market Street urges this court to ignore the factual disputes, but instead,

answer purely legal questions regarding the enforceability of the Agreement, specifically

whether mutuality is required or can be implied from the Agreement. Against Market

Street's utter failure to make these arguments to the superior court or even address the

significant factual issues raised by the Alexanders with the superior court, we deem

                                             9
Market Street has forfeited its claims that the Agreement contains an enforceable

arbitration provision. (See Kern County Dept. of Child Support Services v. Camacho

(2012) 209 Cal.App.4th 1028, 1038 (Kern County).) We thus do not address any of

Market Street's arguments regarding mutuality.

       Likewise, we are unimpressed by Market Street's contention that the FAA dictates

that this matter be arbitrated. For the first time on appeal, Market Street argues this case

involves interstate commerce; thus, it falls under the FAA and arbitration is required.

Market Street did not mention the FAA in its petition, filed no reply, and we have no

record of what occurred at the hearing on the petition. Moreover, the issue of whether a

case involves interstate commerce, and thus falls under the FAA, is a factual question.

(Strauch v. Eyring (1994) 30 Cal.App.4th 181, 185, fn. 1; Goodwin v. Elkins & Co.

(3d Cir. 1984) 730 F.2d 99, 108-109.) There are no facts in the record from which a

determination could be made whether this case involves interstate commerce. As such,

Market Street has forfeited this issue. (See Kern County, supra, 209 Cal.App.4th at

p. 1038.) We therefore decline to address this argument as well.

       In conclusion, we determine that Market Street has forfeited its claims that the

Agreement is enforceable, mutuality is not required, mutuality can be implied from the

Agreement, and the FAA requires arbitration of the instant matter. (See Kern County,

supra, 209 Cal.App.4th at p. 1038.)




                                             10
                                              II

    SUBSTANTIAL EVIDENCE SUPPORTS THE COURT'S FINDING OF WAIVER

       Even if we assume that the Agreement contained an enforceable arbitration

provision, we nevertheless would conclude substantial evidence supports the superior

court's finding that Market Street waived its right to arbitrate.

                                   A. Standard of Review

       Whether a party waived the right to contractual arbitration is a factual question we

review under the substantial evidence standard of review. (Augusta v. Keene &

Associates (2011) 193 Cal.App.4th 331, 337; Burton v. Cruise (2010) 190 Cal.App.4th

939, 946 (Burton).) The trial court's "determination of this factual issue, ' "if supported

by substantial evidence, is binding on an appellate court." ' [Citations.] Only ' "in cases

where the record before the trial court establishes a lack of waiver as a matter of law,

[may] the appellate court . . . reverse a finding of waiver made by the trial court." ' "

(Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1450 (Adolph);

Zamora v. Lehman (2010) 186 Cal.App.4th 1, 12 (Zamora).)

       We imply all necessary findings supported by substantial evidence (Berman v.

Health Net (2000) 80 Cal.App.4th 1359, 1364 (Berman); Sobremonte v. Superior Court

(1998) 61 Cal.App.4th 980, 992 (Sobremonte)) and "construe any reasonable inference in

the manner most favorable to the judgment, resolving all ambiguities to support an

affirmance." (Burton, supra, 190 Cal.App.4th at p. 946.) "If more than one reasonable

inference may be drawn from undisputed facts, the substantial evidence rule requires



                                              11
indulging the inferences favorable to the trial court's judgment." (Davis v. Continental

Airlines, Inc. (1997) 59 Cal.App.4th 205, 211 (Davis).)

                                   B. Incomplete Record

       As its name implies, a substantial evidence review requires our analysis of the

evidence submitted to the superior court. Often critical in such analysis is our review of

what occurred at the hearing. Here, we do not have the benefit of a transcript of the

subject hearing.

       It is universally recognized that the appellant has the burden of showing error by

an adequate record. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) Appellate courts

"adopt all intendments and inferences to affirm the judgment or order unless the record

expressly contradicts them." (Nielsen v. Gibson (2009) 178 Cal.App.4th 318, 324.)

Where an appeal is presented to us with no reporter's transcript, the trial court's findings

of fact and conclusions of law are presumed to be supported by substantial evidence,

"unless the judgment is not supported by the findings or reversible error appears on the

face of the [available] record." (Krueger v. Bank of America (1983) 145 Cal.App.3d 204,

207; accord, Nielsen, supra, at pp. 324-325; National Secretarial Service, Inc. v.

Froehlich (1989) 210 Cal.App.3d 510, 521.) Put another way, "[w]here no reporter's

transcript has been provided and no error is apparent on the face of the existing appellate

record, the judgment must be conclusively presumed correct as to all evidentiary matters.

. . . [I]t is presumed that the unreported trial testimony would demonstrate the absence of

error." (Estate of Fain (1999) 75 Cal.App.4th 973, 992, italics omitted.) The general

effect of this rule is that "an appellant who attacks a judgment but supplies no reporter's

                                             12
transcript will be precluded from raising an argument as to the sufficiency of the

evidence." (Ibid.)

       In the instant matter, because of the lack of a reporter's transcript, we must limit

our review of the evidence to the pleadings and evidence submitted in support of the

pleadings that are contained in the clerk's transcript. Here, Market Street's evidence

consists of a declaration from its counsel, the Agreement, a March 5, 2014 letter

demanding arbitration, and the Alexanders' response declining to arbitrate the dispute.

                                         C. Analysis

       California law reflects a strong public policy favoring arbitration as " ' "a speedy

and relatively inexpensive means of dispute resolution." ' " (St. Agnes Medical Center v.

PacifiCare of California (2003) 31 Cal.4th 1187, 1204 (St. Agnes).) Nonetheless

California courts may refuse to enforce an arbitration agreement "upon such grounds as

exist at law or in equity for the revocation of any contract," including waiver. (See Code

Civ. Proc., § 1281; St. Agnes, supra, at p. 1194.) Based on the public policy favoring

arbitration, claims of waiver receive "close judicial scrutiny" and the "party seeking to

establish a waiver bears a heavy burden." (Ibid.)

       "Although the statute[s and case law] speak[ ] in terms of 'waiver,' the term is used

' "as a shorthand statement for the conclusion that a contractual right to arbitration has

been lost." ' [Citation.] This does not require a voluntary relinquishment of a known

right; to the contrary, a party may be said to have 'waived' its right to arbitrate by an

untimely demand, even without intending to give up the remedy. In this context, waiver



                                              13
is more like a forfeiture arising from the nonperformance of a required act." (Burton,

supra, 190 Cal.App.4th at p. 944.)

       "[N]o single test delineates the nature of the conduct that will constitute a waiver

of arbitration." (St. Agnes, supra, 31 Cal.4th at pp. 1195-1196.) In St. Agnes, the

California Supreme Court adopted as the California standard the same multifactor test

employed by federal courts for evaluating waiver claims. (Id. at p. 1196; Zamora, supra,

186 Cal.App.4th at p. 15.)

       Specifically, the court in St. Agnes identified the following as "factors [that] are

relevant and properly considered in assessing waiver claims": "(1) whether the party's

actions are inconsistent with the right to arbitrate; (2) whether 'the litigation machinery

has been substantially invoked' and the parties 'were well into preparation of a lawsuit'

before the party notified the opposing party of an intent to arbitrate; (3) whether a party

either requested arbitration enforcement close to the trial date or delayed for a long period

before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim

without asking for a stay of the proceedings; (5) 'whether important intervening steps

[e.g., taking advantage of judicial discovery procedures not available in arbitration] had

taken place'; and (6) whether the delay 'affected, misled, or prejudiced' the opposing

party." ' " (St. Agnes, supra, 31 Cal.4th at p. 1196.) No one of these factors

predominates and each case must be examined in context. (Burton, supra, 190

Cal.App.4th at pp. 944-945.)

       Here, the court found Market Street waived the right to arbitrate the Alexanders'

claims by (1) delaying the filing of its petition to compel arbitration demand for over six

                                             14
months; (2) acting inconsistently with the right to arbitration; and (3) prejudicing the

Alexanders through the delay. These findings justify the court's ruling and substantial

evidence supports each finding. Accordingly, we affirm the trial court's waiver

determination.

                                  1. Unreasonable Delay

       " '[A] demand for arbitration must not be unreasonably delayed. . . . [A] party

who does not demand arbitration within a reasonable time is deemed to have waived the

right to arbitration.' " (Sobremonte, supra, 61 Cal.App.4th at pp. 992-993.) The party

seeking to compel arbitration, "ha[s] the responsibility to 'timely seek relief either to

compel arbitration or dispose of the lawsuit, before the parties and the court have wasted

valuable resources on ordinary litigation.' " (Id. at pp. 993-994.)

       Here, we are concerned with Market Street's perfunctory attempt to arbitrate the

matter. There is no dispute that Market Street was aware of the possibility that the

Alexanders' claims could be arbitrated under the Agreement. On December 16, 2013,

Market Street's answer to the complaint included an affirmative defense that the claims

were arbitrable. However, Market Street did nothing to effectuate its arbitration rights

until almost three months later, when its counsel sent a letter to the Alexanders' counsel

dated March 5, 2014, demanding that the Alexanders dismiss their complaint and agree to

arbitration. The Alexanders' counsel sent a letter to Market Street's counsel dated

March 16, 2014, refusing to dismiss the complaint or arbitrate the matter. Market Street

continued to litigate the matter in superior court, engaging in additional discovery and

appearing at a case management conference where the court set a trial date. There is no

                                              15
indication in the record that Market Street did anything during this period to facilitate

arbitration.

       Finally, over seven months after the complaint was filed, three months after it first

demanded that the Alexanders dismiss their complaint and agree to arbitrate, and two

months after the superior court set a trial date, Market Street filed a petition to compel

arbitration.

       We cannot fault the court's conclusion that a delay of over six months in filing a

petition to compel arbitration was unreasonable under these circumstances. Indeed, other

courts have found comparable delays to be unreasonable and justification for a waiver

finding. (See Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 446

(Lewis) [four-month delay in seeking arbitration unreasonable]; Augusta, supra, 193

Cal.App.4th at pp. 338-339 [six and one-half months between filing lawsuit and motion

to compel arbitration]; Adolph, supra, 184 Cal.App.4th at pp. 1449, 1451-1452 [six

months between filing lawsuit and demand for arbitration]; Guess?, Inc. v. Superior

Court (2000) 79 Cal.App.4th 553, 556 (Guess?) [less than four months between filing

lawsuit and motion to compel arbitration].)

       Market Street argues "much of the delay was in its efforts to work with [the

Alexanders] to this end [arbitration]." The record does not support Market Street's

argument. There is no indication why Market Street waited four months after the

complaint was filed and three months after it filed its answer to send a letter discussing

arbitration. Moreover, the letter, by itself, was not necessarily sufficient to invoke the

right to arbitrate. "Mere announcement of the right to compel arbitration is not enough.

                                              16
To properly invoke the right to arbitrate, a party must . . . timely raise the defense and

take affirmative steps to implement the process." (Sobremonte, supra, 61 Cal.App.4th at

p. 997; Davis, supra, 59 Cal.App.4th at p. 217.)

       In addition, Market Street does not explain why it took an additional three months

to petition the court to compel arbitration after it was clear the Alexanders were not

amenable to arbitration. In a declaration filed in support of the petition, Market Street's

counsel claimed that she had been working with the Alexanders' counsel to set up

mediation since the case management conference. However, it is unclear if the superior

court found this explanation credible because there is no transcript of the hearing and the

court's minute order does not address this evidence. Indeed, the superior court's

discussion of waiver in the minute order implies that the court was not impressed by any

of Market Street's justifications for the delay: "[Market Street's] delay of over six months

constitutes a waiver of its ability to compel arbitration." Again, we do not have the

benefit of the transcript of the hearing to arrive at any other conclusion. (Cf. Nielsen v.

Gibson, supra, 178 Cal.App.4th at pp. 324-325; Estate of Fain, supra, 75 Cal.App.4th at

p. 992.)

       As explained in Burton, "a party's unreasonable delay in demanding or seeking

arbitration, in and of itself, may constitute a waiver of a right to arbitrate." (Burton,

supra, 190 Cal.App.4th at p. 945.) Here, based on the limited record before us, we

conclude the superior court was unimpressed with Market Street's explanation for its

delay in seeking arbitration. We therefore agree that the delay was unreasonable, and, on

this ground alone, we affirm the court's order.

                                              17
                      2. Steps Inconsistent with an Intent to Arbitrate

       The court also found Market Street had taken steps inconsistent with an intent to

arbitrate: "During this time [over sixth-month delay], [Market Street] conducted

discovery and actively litigated this action. These actions . . . are inconsistent with an

intent to invoke arbitration." Market Street disagrees, arguing that the taking of

discovery alone cannot waive the right to arbitrate. In addition, it claims it was permitted

to conduct such discovery under Code of Civil Procedure3 section 1283.05 and the

arbitration provision in the Agreement. We disagree.

       Ordinarily, discovery is not available in aid of arbitration, except as provided in

section 1283.05, due to the expedited nature of such a proceeding. Where a defendant

engages in extensive discovery from plaintiff before moving to compel arbitration, the

trial court may properly find that defendant waived arbitration. (Davis, supra, 59

Cal.App.4th at p. 214; Guess?, supra, 79 Cal.App.4th at p. 558.)

       Here, Market Street argues it was entitled to the same discovery in arbitration as it

was in superior court. To support its position, Market Street refers to the arbitration

provision in the Agreement: "The parties shall be allowed to conduct relevant discovery

as is allowed under the California Code of Civil Procedure in arbitration matters and as

further allowed under the National Rules for the Resolution of Employment Disputes."

Section 1283.05 addresses a party's right to discovery in arbitration. It allows for fairly

robust discovery consistent with discovery in cases pending before the superior court (see



3      Statutory references are to the Code of Civil Procedure unless otherwise specified.
                                             18
§ 1283.05, subd. (a)) subject to the arbitrator granting leave to take depositions (see

§ 1283.05, subd. (e)). However, discovery in arbitration is curtailed by section 1283.1:

"To the extent provided in Section 1283.1 depositions may be taken and discovery

obtained in arbitration proceedings as follows: . . ." (§ 1283.05.)

       Section 1283.1 provides:

          "(a) All of the provisions of Section 1283.05 shall be conclusively
          deemed to be incorporated into, made a part of, and shall be
          applicable to, every agreement to arbitrate any dispute, controversy,
          or issue arising out of or resulting from any injury to, or death of, a
          person caused by the wrongful act or neglect of another.

          "(b) Only if the parties by their agreement so provide, may the
          provisions of Section 1283.05 be incorporated into, made a part of,
          or made applicable to, any other arbitration agreement."

Thus, if the matter in dispute is a personal injury case, the parties may conduct discovery

pursuant to section 1283.05. The instant matter is not a personal injury case; therefore,

subdivision (b) applies. So the provisions of section 1283.05 apply if the Agreement here

specifies as such.

       The Agreement only states that the parties "shall be allowed to conduct relevant

discovery as is allowed under the California Code of Civil Procedure in arbitration

matters . . . ." It does not specifically reference section 1283.05. Accordingly, the parties

may only conduct discovery as allowed by the code in arbitration proceedings. Here, it is

not clear the parties intended to agree to discovery under section 1283.05 without regard

to section 1283.1. At best, the Agreement is ambiguous as to this issue.

       Market Street does not focus on the actual language regarding discovery in the

Agreement. Nor does it explain how the language should be interpreted or point to any

                                             19
extrinsic evidence that may be helpful in interpreting the Agreement to allow expansive

discovery. Our review of the record did not uncover any evidence offered by any of the

parties to interpret the scope of discovery permitted under the arbitration clause. Because

of the lack of any conflict of extrinsic evidence, we review the interpretation of the

Agreement de novo. (Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000)

85 Cal.App.4th 836, 843.)

       Here, the minute order indicates the superior court did not agree with Market

Street that the Agreement allowed broad discovery under section 1283.05,

subdivision (a). Instead, the court found that the scope of discovery was at the arbitrator's

discretion. We see nothing in the language of the subject arbitration clause that leads us

to believe the superior court incorrectly interpreted the Agreement. Indeed, our

independent interpretation of the Agreement yields the same results. The Agreement

merely references the Code of Civil Procedure discovery mechanisms for arbitration in

general without a specific reference to agreeing to use discovery under section 1283.05,

subdivision (a). Accordingly, we do not interpret the Agreement as allowing for broad

discovery. To the extent discovery would be permitted in an arbitration of the instant

matter, it must be conducted under the National Rules for the Resolution of Employment

Disputes as set forth in the Agreement. Market Street offers no argument regarding the

scope of discovery under these rules.

       Based on our interpretation of the scope of discovery under the arbitration clause

in the Agreement, we are satisfied that substantial evidence supports the superior court's

finding that Market Street's extensive use of discovery that may not have been permitted

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in arbitration was inconsistent with an intent to invoke arbitration. (See Davis, supra, 59

Cal.App.4th at p. 214; Guess?, supra, 79 Cal.App.4th at p. 558.)

                                          3. Prejudice

       Substantial evidence also supports the trial court's finding of prejudice. "In

California, whether or not litigation results in prejudice . . . is critical in waiver

determinations." (St. Agnes, supra, 31 Cal.4th at p. 1203.) Prejudice does not occur by a

party's mere participation in litigation. (Ibid.) Nor does it result simply because " 'the

party opposing arbitration shows . . . it incurred court costs and legal expenses.' " (Lewis,

supra, 205 Cal.App.4th at p. 452.) But prejudice can be shown where a delayed

arbitration request deprived the party opposing arbitration "of the benefits available

through arbitration, including a speedy resolution of the dispute." (Burton, supra, 190

Cal.App.4th at p. 949.) And prejudice can be shown where a party seeking arbitration

used discovery to gain information about the other side's case that would not have been

available in arbitration, or caused the other side to reveal trial tactics or legal strategies.

(Berman, supra, 80 Cal.App.4th 1359, 1366.)

       Here, the superior court found that the Alexanders had been prejudiced because

they have "revealed litigation strategies and impressions." In addition, the court observed

that the Alexanders had "incurred costs in responding to discovery that might not

otherwise have been incurred." Market Street does not specifically address these two

findings by the court. Instead, it merely concludes that substantial evidence does not

support a finding of prejudice.



                                               21
       Market Street's argument in its petition to the superior court that the Alexanders

had not been prejudiced was cursory. It did not cite to any evidence. In their opposition

to the petition, the Alexanders submitted a declaration from their attorney describing the

significant written discovery Market Street propounded and served on the Alexanders.

This discovery included form interrogatories, employment form interrogatories, 81

special interrogatories, 15 requests for admission, and 35 requests for production served

on each plaintiff. The Alexanders produced 698 pages of documents. And Market Street

took the deposition of the Alexanders.

       The declaration also indicated that Market Street had not adequately responded to

written discovery propounded on it and did not produce any documents. Based on

Market Street's conduct in discovery, the Alexanders maintained that they were

prejudiced because Market Street petitioned the court to compel arbitration only after it

completed discovery it would not otherwise be entitled to in arbitration while not

adequately responding to the Alexanders' discovery. Further, the declaration indicates

the number of hours the Alexanders' attorney has worked on this matter, including

responding to discovery.

       Finally, the Alexanders claimed they were prejudiced because they were deprived

of the efficiencies available through arbitration.

       Market Street did not file a reply in support of its petition to compel arbitration. It

does not address any of the Alexanders' claims of prejudice in its opening brief. And,

once again, Market Street's position is undermined by the absence of a transcript of the

hearing of the record. We have no way of knowing what arguments regarding prejudice

                                             22
Market Street made at the hearing or if it presented evidence on this issue. We thus are

left only with the pleadings and evidence filed with the superior court to analyze this

substantial evidence issue.

       We see no error on the face of the record and as such we presume the order is

correct on all evidentiary matters. (See Estate of Fain, supra, 75 Cal.App.4th at p. 992.)

Moreover, the evidence submitted by the Alexanders (specifically the large amount of

written discovery propounded by Market Street; the fact the Alexanders were deposed;

the amount of time the Alexanders' counsel devoted to litigating this case in superior

court; Market Street's failure to adequately respond to written discovery; and Market

Street filing a petition to compel arbitration only after it completed discovery it might not

have been permitted to obtain in arbitration) is sufficient to support the court's finding of

prejudice.

                                       4. Conclusion

       In summary, the record before us does not establish a lack of waiver as a matter of

law. (See Adolph, supra, 184 Cal.App.4th at p. 1450.) We are satisfied substantial

evidence supports the court's finding of waiver.




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                                 DISPOSITION

    The order is affirmed. The Alexanders are awarded their costs on appeal.




                                                            HUFFMAN, Acting P. J.

WE CONCUR:


                McINTYRE, J.


                O'ROURKE, J.




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