Weischadle v. Vo CA2/1
B304845
| Cal. Ct. App. | Jul 2, 2021Background
- Plaintiff Gloria Weischadle was injured at LAX and retained Santiago & Jones (S&J) on a contingency basis; she signed a retainer containing a clause requiring "commercial" AAA arbitration of malpractice claims.
- S&J later substituted Weischadle back into the underlying LAWA personal-injury action; Weischadle proceeded pro per, the trial court granted nonsuit and judgment for LAWA, which was affirmed on appeal.
- Weischadle sued S&J for legal malpractice; S&J sought an automatic 30-day extension under CCP §§ 430.41/435.5 and then moved to compel arbitration.
- The trial court found the arbitration clause procedurally and substantively unconscionable (citing undisclosed costs, choice of commercial vs. consumer AAA rules, and unequal bargaining power) and also held S&J waived arbitration by invoking the extension then filing to compel.
- The Court of Appeal reversed: it held the unconscionability finding was unsupported by substantial evidence (Weischadle bore the burden but submitted no declarations or testimony), and waiver was not shown under controlling law; the Court directed the trial court to compel arbitration and stay proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability — unconscionability of arbitration clause | Clause procedurally and substantively unconscionable: adhesive retainer, client vulnerability, undisclosed choice of "commercial" AAA and potential costs | Agreement is enforceable; not adhesive as drafted, client acknowledged being advised of arbitration consequences, no evidence of coercion or surprise | Reversed — no substantial evidence of unconscionability; plaintiff bore burden and submitted no evidentiary support; court erred to rely on retainer alone |
| Waiver of arbitration by using CCP §430.41/435.5 extension | S&J abused extension intended for demurrers, prejudiced and misled plaintiff — constitutes waiver | No waiver: motion to compel was filed early, little litigation occurred, invoking an extension is not substantial invocation of litigation machinery and caused no prejudice | Reversed — no waiver; St. Agnes factors not met (no substantial litigation, no prejudice) |
| Effect of alleged breach of retainer on arbitration clause | S&J breached retainer, which voids the entire agreement including arbitration | Breach does not destroy arbitration clause; arbitration is the appropriate forum to resolve breach claims | Held for defendants — alleged contractual breach does not void arbitration provision |
Key Cases Cited
- OTO, L.L.C. v. Kho, 8 Cal.5th 111 (describing procedural and substantive unconscionability and the sliding-scale analysis)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (California law favors enforcement of valid arbitration agreements; unconscionability is a defense)
- St. Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal.4th 1187 (setting waiver factors and noting heavy burden to prove waiver)
- Khalatian v. Prime Time Shuttle, Inc., 237 Cal.App.4th 651 (filing an answer or demurrer does not necessarily waive arbitration)
- Thorup v. Dean Witter Reynolds, Inc., 180 Cal.App.3d 228 (contractual breach does not, by itself, void an arbitration provision)