2151 Michelson, L.P. v. Corp of the Presiding Bishop

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 22, 2019
• Docket: 17-56106
• Status: Unpublished

Opinion

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT FEB 22 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS 2151 MICHELSON, L.P., a California No. 17-56106 limited partnership, D.C. No. Plaintiff-Appellant, 8:17-cv-00781-DOC-DFM

v. MEMORANDUM* CORPORATION OF THE PRESIDING BISHOP OF THE CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS, a Utah Corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding

Argued and Submitted February 8, 2019 Pasadena, California

Before: WARDLAW and BEA, Circuit Judges, and MURPHY,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Stephen J. Murphy, III, United States District Judge for the Eastern District of Michigan, sitting by designation. 2151 Michelson, L.P. (“Michelson”) appeals the district court’s order

denying its motion to remand and granting the Corporation of the Presiding Bishop

of the Church of Jesus Christ of Latter-Day Saints’s (“CPB”) motion to dismiss

and compel arbitration in an action brought by Michelson challenging the

provisions of a lease. We have jurisdiction under 28 U.S.C. § 1291, and we affirm

in part and reverse in part the district court’s order granting CPB’s motion to

dismiss and compel arbitration.

1. The district court correctly determined that CPB’s litigation of a rent

reset dispute with Michelson in 2002 was not a waiver of CPB’s right to arbitrate

the current rent reset dispute. “[A] party seeking to prove waiver of a right to

arbitration must demonstrate: (1) knowledge of an existing right to compel

arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the

party opposing arbitration resulting from such inconsistent acts.” Richards v. Ernst

& Young, LLP, 744 F.3d 1072, 1074 (9th Cir. 2013).

CPB’s actions in the present dispute are not inconsistent with the right to

arbitrate. In its complaint, Michelson acknowledged that CPB intended to

arbitrate. Furthermore, “litigation machinery” has not been “‘substantially

invoked’” in this case. See Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1124

(9th Cir. 2008). CPB has filed only a motion to remove and a motion to dismiss

2 and compel arbitration. No discovery has been conducted. Moreover, Michelson

has not cited any controlling authority for the proposition that CPB’s actions in the

prior state court proceeding may be considered in a waiver analysis.

In addition, Michelson failed to address in its opening brief the district

court’s finding that it failed to meet its burden of demonstrating prejudice.

Accordingly, any argument against the district court’s finding that Michelson has

not suffered prejudice is waived. See Kumar v. Gonzales, 444 F.3d 1043, 1056

(9th Cir. 2006).

2. The district court erred by concluding that the state court preclusion

issue is not subject to arbitration. The parties agree that the preclusive effect of

prior litigation is arbitrable. See Collins v. D.R. Horton, Inc., 505 F.3d 874, 880

(9th Cir. 2007) (“Arbitrators are not free to ignore the preclusive effect of prior

judgments under the doctrines of res judicata and collateral estoppel, although they

generally are entitled to determine in the first instance whether to give the prior

judicial determination preclusive effect.”). Michelson may therefore present

arguments to the arbitration panel about what preclusive effect the earlier state

court proceedings have on the current dispute.

3. The district court correctly dismissed the action on the basis that all

the claims are arbitrable. A district court may dismiss an action, rather than stay it,

3 when all of the issues are arbitrable. See, e.g., Sparling v. Hoffman Constr. Co.,

864 F.2d 635, 638 (9th Cir. 1988). Here, as explained above, all the claims are

arbitrable. Thus, the district court did not err by dismissing the action without

prejudice.

Each party shall bear its own costs of appeal.

AFFIRMED IN PART AND REVERSED IN PART.