ROBERT KASPRZAK, Plaintiff and Respondent, v. CHARLES CHUNHUA HUANG et al., Defendants and Appellants. ROBERT KASPRZAK, Plaintiff and Respondent, v. PASACA CAPITAL, INC., Defendant and Appellant.
B332483 (Los Angeles County Super. Ct. No. 23STCV09342) B332499 (Los Angeles County Super. Ct. No. 23AHCP00291)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN
October 27, 2025
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS. California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Ellis George, Eric M. George, Christopher T. Berg, and David J. Carroll for Defendants and Appellants.
Wilmer Cutler Pickering Hale and Dorr, Thomas G. Sprankling, Christopher T. Casamassima, and Leah M. Fugere for Plaintiff and Respondent.
INTRODUCTION
These appeals arise from the trial court‘s orders denying two motions to compel arbitration under an employment arbitration agreement between appellant Pasaca Capital, Inc. (Pasaca) and respondent Robert Kasprzak, the former chief legal officer of Pasaca. Kasprzak filed the two underlying actions giving rise to these appeals: a civil complaint against Pasaca and co-appellant Charles Huang, Pasaca‘s founder and majority shareholder (the civil action); and a petition for writ of mandate seeking to review Pasaca‘s books and records pursuant to
Pasaca and Huang moved to compel arbitration of Kasprzak‘s breach of fiduciary duty and unjust enrichment causes of action in the civil action, contending these claims were subject to an arbitration clause covering “any dispute or claim relating to or arising out of [the] employment relationship.” Pasaca also moved to compel arbitration of Kasprzak‘s books and
FACTUAL AND PROCEDURAL BACKGROUND
A. Kasprzak, Huang, and Others Form a Business Relationship and Launch a COVID-19 Test Supply Business
In early 2020, Kasprzak, Huang, and three other individuals (Daniel Elliott, Kening Xu, and Shuning Luo) entered into an informal co-venture, initially envisioned as an international investments enterprise. When the COVID-19 pandemic began, the co-venture reinvented itself as a COVID-19 test supplier.
The co-venture‘s activities were ultimately folded into Pasaca, a shell company Huang created in 2016, with Pasaca‘s share ownership divided among the co-venturers. Pasaca created a wholly owned subsidiary, Innova Medical Group, Inc. (Innova), to conduct the COVID-19 testing business. Innova agreed to pay two third-party sales intermediaries, Nano LiquiTec LLC and Disruptive Nanotechnology Ltd., a percentage of the sale price of the COVID-19 tests as commission. Innova secured contracts with the United Kingdom to provide COVID-19 testing kits, generating approximately $5 billion in sales in approximately a year and a half.
B. Kasprzak‘s Employment Agreement and Termination
On June 21, 2021, over a year after he purchased his shares, Kasprzak accepted the position of Pasaca‘s chief legal officer, with his employment made retroactive to October 1, 2020. The two-page employment agreement included an arbitration provision stating, in relevant part: “in the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree to an arbitration in which . . . all disputes between you and the Company shall be fully and finally resolved by binding arbitration.” The agreement made no reference to stock ownership, Kasprzak‘s shares, or the subscription agreement.
From 2020 to 2022, Pasaca compensated Kasprzak with a total of: (1) $1,481,012.99 in total pre-tax salary; (2) a $110,000 director‘s fee; (3) a $15,000,000 director‘s bonus; (4) dividends in the amount of $60,633,236; and (5) a watch worth $163,705.
In early 2022, Kasprzak and Huang discussed Kasprzak‘s resignation from Pasaca and agreed Pasaca would repurchase Kasprzak‘s 750,000 shares for at least $75 million, and further agreed that Kasprzak would resign as an officer and director on a mutually agreed date. They eventually agreed the repurchase and resignation date would be September 30, 2022.
On September 30, 2022, Pasaca instead terminated Kasprzak for alleged employment misconduct (as described
C. Arbitration Proceedings
In February 2023, Pasaca initiated arbitration proceedings against both Kasprzak and Daniel Elliott, who had served as chief executive officer of Pasaca.1 Pasaca alleged Kasprzak and Elliott fraudulently negotiated reduced commission payments to the sales intermediaries, then siphoned the savings to themselves rather than passing them on to Innova or Pasaca. Pasaca also alleged Kasprzak and Elliott diverted over $106 million through this scheme, by creating a company (Nano Holdings LLC) with a similar name to the two legitimate third-party sales intermediaries (Nano LiquiTec LLC and Disruptive Nanotechnology Ltd.). Kasprzak, in his capacity as Pasaca‘s chief legal officer, also had negotiated Elliott‘s separation terms in 2022, which included Pasaca paying Elliott over $105 million and a release of all claims against Elliott. Pasaca sought to recover the alleged $106 million in fraudulent commission payments, the $77 million in salary and benefits Kasprzak received, and the $105 million payout to Elliott that Kasprzak negotiated.
In April 2023, Kasprzak responded to Pasaca‘s claims in arbitration and asserted two indemnification counterclaims. On the first page of his response, Kasprzak stated he was pursuing litigation against Pasaca and Huang, and that he “provides this Response out of an abundance of caution, does not concede jurisdiction by JAMS, the arbitrability of the claims asserted by
D. Kasprzak‘s Civil Action
In April 2023, on the same day he filed his arbitration response, Kasprzak filed a civil action against Pasaca and Huang, alleging causes of action for: (1) breach of oral contract; (2) breach of the implied covenant of good faith and fair dealing; (3) promissory estoppel; (4) fraud; (5) breach of fiduciary duty; (6) unjust enrichment; (7) accounting; (8) fraudulent transfer; and (9) defamation.
According to Kasprzak, Huang and Pasaca pretextually terminated him and refused to repurchase his shares based on “false and salacious” allegations. Kasprzak also alleged Huang‘s leadership became increasingly erratic, including failed investments based on Huang‘s belief in his own prophetic ability to see the future. Kasprzak further alleged Huang engaged in self-dealing, including using Pasaca funds to buy private jets, luxury vehicles, an $18 million house, and designer clothing for himself, his family, and his girlfriends. Kasprzak also alleged Huang misappropriated Pasaca assets, including transferring $200 million to Hong Kong and Singapore.
On May 24, 2023, Kasprzak served a formal demand to inspect Pasaca‘s books and records pursuant to
F. Motions To Compel Arbitration
On June 6, 2023, Pasaca and Huang moved to compel arbitration of all nine causes of action in Kasprzak‘s civil complaint and to stay the litigation. Kasprzak ultimately only opposed arbitration of his fifth and sixth causes of action for breach of fiduciary duty and unjust enrichment, respectively (the “co-venture claims“). Kasprzak argued those two claims arose from his role as a co-venturer, which predated and was independent of his employment relationship with Pasaca. Kasprzak agreed to stipulate to arbitration of his other claims, stating he was “willing to assert certain of [his] claims in arbitration if that is what it takes to have a finder of fact” determine those issues, but that the two “remaining claims are not arbitrable” under the employment arbitration clause. Kasprzak also asserted in communication about this stipulation with opposing counsel (attached to his opposition to the motion to compel) that he “continues to dispute the enforceability and applicability of [the] arbitration agreement” overall and did not believe the remaining two claims were even “colorably arbitrable.”
On August 10, 2023, one day before the scheduled hearing on Kasprzak‘s petition for writ of mandate, Pasaca filed a motion
On September 14, 2023, the trial court granted in part, and denied in part, Pasaca and Huang‘s motion to compel arbitration in the civil action. The court ordered arbitration of the seven causes of action Kasprzak agreed to arbitrate but denied the motion with regard to his causes of action for breach of fiduciary duty and unjust enrichment. The court determined these two claims were “not rooted in the relationship between the parties ‘which was created by the [employment] contract‘” because they arose from “Kasprzak‘s undisputed (and independent) role as a co-venturer.” The court stayed further proceedings on the co-venture claims until conclusion of the arbitration to avoid inconsistent rulings.
On September 15, 2023, the trial court granted Kasprzak‘s petition for writ of mandate, denied Pasaca‘s motion to compel arbitration in the books and records action, and ordered Pasaca to produce the requested books and records within 30 days. As relevant here, the court ruled that Kasprzak had a proper purpose for the inspection relating to ascertaining the value of his stock; Pasaca‘s evidence that Kasprzak‘s shares were voided was insufficient and improperly authenticated; and the books and records action did not relate to the parties’ employment relationship because it was “rooted in [Kasprzak‘s] shareholder status, which is governed by the pre-employment Subscription Agreement and not the parties’ subsequent employment relationship.”
G. Kasprzak‘s Additional Arbitration Counterclaims
On October 17, 2023, after the notices of appeal from the underlying trial court rulings were filed, Kasprzak filed additional and amended counterclaims in the arbitration. These included claims for breach of fiduciary duties owed to him as a minority shareholder and for an accounting.2 The shareholder fiduciary duty counterclaim alleged Huang, as controlling shareholder, breached “fiduciary duties owed by Huang to Kasprzak as minority shareholder” from the time Kasprzak became a shareholder in March 2020. The accounting counterclaim alleged Kasprzak “is entitled to a complete accounting of [Pasaca‘s] assets, investments, and transactions as a partial owner in [Pasaca], as evidenced by his equity stake in [Pasaca], and as a co-venturer,” and “requires an accounting to assess the value of his ownership interest in [Pasaca].” Kasprzak expressly incorporated all of his affirmative defenses from his
The arbitration between the parties remains ongoing.
DISCUSSION
A. Governing Law and Standard of Review
“Where, as here, the parties to a lawsuit have executed an arbitration agreement, a ‘threshold question . . . presented by every motion or petition to compel arbitration’ is ‘whether the parties’ dispute falls within the scope of that agreement.‘” (Mondragon v. Sunrun Inc. (2024) 101 Cal.App.5th 592, 601.) “‘In determining the scope of an arbitration [agreement], “[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.“‘” (Id. at p. 602, accord, Victoria v. Superior Court (1985) 40 Cal.3d 734, 744.) If the parties “presented no extrinsic evidence supporting its interpretation, we need only consider the language of the arbitration agreement.” (Mondragon, at p. 612.) “‘“[W]hile California public policy favors arbitration, ‘“‘there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.‘“‘“‘” (Mar v. Perkins (2024) 102 Cal.App.5th 201, 212 (Mar).)
“Where ‘the evidence is not in conflict, we review the trial court‘s denial of arbitration de novo.‘” (Mar, supra, 102 Cal.App.5th at p. 211; accord, Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)
As a preliminary matter, we consider whether these appeals have been rendered moot and whether Kasprzak waived the right to proceed in a judicial forum due to his subsequent filing of arbitration counterclaims that appear to seek the same relief as the court claims at issue. Appellants argued in their briefing that Kasprzak “waived” his right to pursue his co-venture claims and books and records action in superior court through his subsequent submission of the counterclaims in arbitration. Kasprzak argued appellants’ argument of waiver or consent to arbitration was not properly before this court because it involved post-appeal events not presented to the trial court, and Kasprzak‘s arbitration filings were under protest. (See Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 391 (Douglass) [“a party‘s participation in an arbitral forum does not constitute a waiver if it is preceded by an objection“].) We requested supplemental briefing on whether the appeals from the trial court‘s orders denying the motions to compel arbitration were rendered moot by Kasprzak‘s subsequent arbitration counterclaims. We conclude the appeals are not moot and the judicial forum was not waived.3
The parties both contend, and we agree that, despite the potential overlap between Kasprzak‘s litigation causes of action and his arbitration counterclaims, the present appeals are not moot. If we affirm the trial court‘s ruling that the co-venture causes of action and books and records action are not subject to arbitration, the trial court can grant meaningful relief that exceeds the scope of relief available in arbitration if Kasprzak prevails. The co-venture causes of action involve a different legal relationship and time period than Kasprzak‘s employment13 Cal.App.5th 1228, 1237-1238 [appellate courts have “discretion to address questions not raised in the trial court when the theory presented for the first time on appeal involves only a legal question determinable from facts that are (1) uncontroverted in the record and (2) could not have been altered by the presentation of additional evidence“].)
We also conclude Kasprzak did not waive the judicial forum. In their appellate briefing and at oral argument, appellants argued that under Douglass, supra, 20 Cal.App.5th 376, and O‘Malley v. Petroleum Maintenance Co. (1957) 48 Cal.2d 107 (O‘Malley), Kasprzak waived his right to a judicial forum for his shareholder/co-venture causes of action and the books and records action by voluntarily filing similar counterclaims in the arbitration after the trial court denied appellants’ motions to compel arbitration of those causes of action. We examine both cases in detail.
In O‘Malley, a union and company entered into a written agreement to submit both the arbitrability and merits of an employee discharge dispute to arbitration after the trial court ordered that the merits of the discharge were subject to arbitration. The company had previously argued that the merits of the parties’ dispute (i.e., the discharge of the employee) was not subject to arbitration. (See O‘Malley, supra, 48 Cal.2d at p. 108.) The parties’ written agreement provided that, “‘[i]n submitting this matter to arbitration neither party shall be deemed to have waived any rights given them by law.‘” (Ibid.) The arbitration panel concluded “the dispute was not arbitrable
In Douglass, the plaintiff responded to a demand for arbitration without objection, stated to the arbitrator he was “voluntarily” submitting to arbitration to avoid litigation costs, appeared at several prehearing conferences without objection, and then 10 months into the proceedings and after an adverse ruling, attempted to rescind his voluntary participation shortly before the evidentiary hearing because the defendant refused to post a bond for attorney fees. (Douglass, supra, 20 Cal.App.5th at pp. 381-383, 388.) When the plaintiff failed to show up for the evidentiary hearing, the arbitrator ruled against him. (See id. at p. 383.) Douglass concluded that a party who “substantially invoked the machinery of the arbitral forum in asking the arbitrator for relief, delayed until the eve of the evidentiary
Douglass explained that the test for assessing whether a party has waived the right to a judicial forum is “less onerous” than the test for assessing whether a party has waived the right to arbitrate, because public policy militates in favor of arbitration. (Douglass, supra, 20 Cal.App.5th at pp. 389-390.) But, in either case “[w]hether a party‘s conduct constitutes consent is necessarily fact specific,” with particular attention to the party‘s objection or lack thereof to the forum. (Id. at p. 388.) Douglass reasoned that: “On the one hand, consent to arbitration . . . will not be inferred solely from a party‘s conduct of appearing in the arbitral forum to object to the arbitrator‘s exercise of jurisdiction, at least if the party makes that objection ‘prior to participat[ing]’ in the arbitration. [Citations.] On the other hand, consent to arbitration . . . will be inferred from a party‘s conduct of litigating an issue up to the point of submitting it for decision in the arbitral forum, at least if the party does so without objection.” (Id. at pp. 387-388, emphasis added.) Under the facts in Douglass, the court concluded that the plaintiff‘s “voluntarily participation in an arbitration . . . , without any objection or reservation and done for tactical reasons, constitutes clear and unmistakable evidence of [his] consent to have the arbitrator decide that issue.” (Id. at p. 389.)
Under the circumstances presented, we conclude Kasprzak has not waived the judicial forum as to his co-venture causes of action and his books and records action because he submitted his arbitration counterclaims under protest, and he has consistently
C. The Trial Court Properly Denied the Motions To Compel Arbitration
1. Kasprzak‘s Co-venture Causes of Action
As stated, the parties’ arbitration agreement here covers “any dispute or claim relating to or arising out of [the] employment relationship” between Kasprzak and Pasaca. The parties dispute whether Kasprzak‘s fifth and sixth causes of
Pasaca and Huang argue that the arbitration provision‘s use of “relating to” is broader than claims merely “arising out of” the employment relationship, such that they encompass Kasprzak‘s claims because Kasprzak was a de facto employee starting in March 2020, his claims “overlap” with those in arbitration, and Kasprzak‘s purchase of shares was “in connection with his work.” Kasprzak argues his co-venture claims (breach of fiduciary duties and unjust enrichment) are not “rooted in” the employment agreement because they predate it by many months and exist independently of his contractual employment relationship with Pasaca. Kasprzak‘s interpretation of the arbitration agreement is correct.
The phrase “‘relating to‘” in an employment arbitration agreement “expands the reach of the agreement to encompass claims rooted in the employment relationship“—i.e., both contract claims and tort claims rooted in the contract. “[T]he inclusion of ‘relating to’ typically justifies applying arbitration agreements to claims that do not arise from the contract.” (Vaughn v. Tesla, Inc. (2023) 87 Cal.App.5th 208, 220-221 (Vaughn).) But “the phrase normally encompasses extracontractual claims only ‘so long as they have their roots in the relationship between the parties which was created by the contract.‘” (Id. at p. 221; accord, Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651, 660.) Claims still must be “rooted in the employment relationship established by the contract containing an arbitration provision” to be arbitrable. (Vaughn, at p. 221 [arbitration
Vaughn rejected the argument “that the ‘relating to’ phrase means [an] [a]rbitration [p]rovision applies to any past dispute between the parties, based on events occurring before commencement of the contractual ‘employment’ relationship.” (Vaughn, supra, 87 Cal.App.5th at p. 222.) Vaughn also rejected the contention that “factual commonalities are sufficient to justify extension of an arbitration agreement to precontractual employment claims absent any indication the parties understood the agreement would apply in that manner.” (Ibid.) Rather, the critical inquiry is whether the claims are legally rooted in the contractual relationship containing the arbitration clause, not whether they involve overlapping facts or time periods. (See ibid.) Similarly, in Howard v. Goldbloom (2018) 30 Cal.App.5th 659, 670-671 (Howard), the court determined that shareholder claims against a former employer were not arbitrable under an employment arbitration clause covering claims “in any way related to” the plaintiff‘s employment, even though the plaintiff had received company stock as employment compensation. The court explained the employee became a minority shareholder of the company before he became an employee, therefore the “obligations allegedly breached [by the company] preexist [plaintiff‘s] employment relationship” and were not claims “related to” his employment under the employment arbitration clause. (Howard, at pp. 666, 670.)
Although appellants argue that Vaughn and Howard present factual and temporal circumstances that were more “clearly segregable between arbitrable and non-arbitrable claims,” the record here also reflects a clear and intentional delineation of the period covered by the employment agreement. Kasprzak‘s co-venture relationship with Huang began in early 2020, months before any formal employment arrangement. As part of this co-venture, Kasprzak purchased 750,000 shares of Pasaca through a subscription agreement effective March 1, 2020. The employment agreement containing the arbitration clause was not signed until June 2021 and was retroactive only to October 1, 2020—months after the co-venture formation and share purchase. The parties could have chosen to make it retroactive to March 2020 or earlier, but did not. Had the parties intended the arbitration clause to govern pre-existing relationships, they could have so specified. But the employment agreement makes no reference to Kasprzak‘s pre-existing business relationship or share ownership, the subscription agreement, or any shareholder rights.
Under the circumstances presented, “the inclusion of the language ‘relating to’ does not justify applying the [a]rbitration [p]rovision to those claims.” (Vaughn, supra, 87 Cal.App.5th at p. 222.) The alleged wrongful conduct underlying the co-venture
2. Kasprzak‘s Books and Records Action
We similarly conclude Kasprzak‘s books and records action is rooted in his shareholder status, not in his employment. Under
To the extent Pasaca contends Kasprzak‘s shareholder status is disputed in the arbitration proceeding because Pasaca purportedly voided Kasprzak‘s shares after his termination, the threshold question for arbitrability remains whether the books
Appellants argue in their reply briefs that the arbitration clause requires resolution of “all disputes” between Kasprzak and the company without limitation once any employment-related dispute arises. Generally, “‘“points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before.“‘” (Doe v. California Dept. of Justice (2009) 173 Cal.App.4th 1095, 1115.) In all events, the “all disputes” language appears in a clause describing the arbitration procedure once a covered dispute arises: “in the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree to an arbitration in which . . . (ii) we agree that all disputes between you and the Company shall be fully and finally resolved by binding arbitration.”5 That is, this language does not expand the substantive scope of the arbitration clause beyond disputes “relating to or arising out of [the] employment relationship.”
Although appellants argue some arbitration agreements may
Further, the language of the employment agreement is prospective and forward-looking, describing Kasprzak as a “potential employee” and stating that Pasaca “is excited about your joining and looks forward to a beneficial and fruitful relationship.” The arbitration clause also uses future-oriented language, applying ”in the event of any dispute or claim relating to or arising out of our employment relationship.” (Emphasis added.) This language and structure suggest it was not intended to encompass pre-existing relationships beyond the stated retroactive date. (See Vaughn, supra, 87 Cal.App.5th at p. 223 [“forward-looking language suggests the intent of the [a]rbitration [p]rovision is to address claims based on incidents occurring during the period of direct employment“].)
We therefore affirm the trial court‘s denial of the motion to compel arbitration of the fifth and sixth causes of action for breach of fiduciary duty and unjust enrichment in Kasprzak‘s civil action, and the trial court‘s denial of the motion to compel arbitration in the books and records action.
The orders of the trial court are affirmed. Kasprzak is to recover his costs on appeal.
MARTINEZ, P. J.
We concur:
FEUER, J.
STONE, J.