Victor M. Quiroz Franco v. Greystone Ridge Condominium

In March 2018, employees of defendant Greystone Ridge Condominium

(Greystone), including plaintiff Victor M. Quiroz Franco (plaintiff), were presented with

and asked to sign an agreement requiring that each employee agree to submit to final and

binding arbitration “[a]ny and all claims . . . relating to any aspect of . . . employment

with Employer (pre-hire through post-termination).” About 10 days later, plaintiff filed a

complaint against Greystone, C & A Services, John Stokke, and Maher A.A. Azer

(defendants) asserting employment-related claims. Two days after that, plaintiff signed

the arbitration agreement and returned it to Greystone. Defendants filed a motion to

compel arbitration of plaintiff’s claims which plaintiff opposed on the ground the

arbitration agreement failed to expressly state that claims that had already accrued,

including the claims asserted in plaintiff’s complaint, were subject to arbitration. The

trial court agreed with plaintiff and denied the motion to compel arbitration.

We reverse. The parties’ arbitration agreement is clear, explicit, and

unequivocal with regard to the claims subject to it and contains no qualifying language

limiting its applicability to claims that had yet to accrue. On the contrary, the

agreement’s reference to claims relating to “pre-hire” matters expresses an intent to cover

all claims, regardless of when they accrued, that are not otherwise expressly excluded by

the arbitration agreement.

BACKGROUND

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Greystone is in the business of providing property management services for

C & A Services. Plaintiff has worked for Greystone or its predecessor since 2000 at an



1

The facts contained in this Background section are taken from the declaration of

Greystone’s vice-president John Stokke filed in support of defendants’ motion to compel

arbitration in this case. No other percipient witness declarations were filed either in

support of or in opposition to the motion.

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apartment complex Greystone manages in Anaheim. In early March 2018, Greystone’s

vice-president John Stokke was in the process of distributing arbitration agreements to all

of Greystone’s employees. On March 9, 2018, Stokke gave plaintiff a document entitled

“Agreement to Arbitrate All Covered Claims” (the Agreement).

The Agreement states in relevant part: “1. Final and Binding Arbitration:

Any and all claims, controversies or disputes (“Disputes”) relating to any aspect of

Employee’s employment with Employer (pre-hire through post-termination), which

Employer may have against Employee, or which Employee may have against Employer

or any related entity, owner, partner, officer, director, shareholder, employee, contractor,

representative or agent, shall be resolved through final and binding arbitration. Employer

and Employee acknowledge that Employer and Employee are relinquishing the right to a

court trial or jury trial of any Dispute, except as otherwise provided by law or this

Agreement. The Parties intend that this Agreement be enforced under the provisions of

the Federal Arbitration Act to the fullest extent permitted by law.

“2. Covered Claims: Disputes that are subject to this Agreement include,

but are not limited to, those arising under: (a) the federal or California Constitution;

(b) any federal, state or local statute, regulation, ordinance or order (including the

California Industrial Welfare Commission Wage Orders); (c) this Agreement, or the

enforceability of this Agreement, in whole or in part; (d) the California Private Attorneys

General Act if, and to the extent, permissible by law; and (e) case law/common law

(collectively, “Covered Claims”), except as otherwise preluded by law or by this

Agreement.

“3. Excluded Claims: The following claims are not subject to this

Agreement: (1) claims properly brought before the Workers’ Compensation Appeals

Board; (2) claims for unemployment insurance benefits; (3) claims for damages that fall

within the jurisdiction of Small Claims Court; (4) claims brought pursuant to the Ralph

Civil Rights Act or the Bane Civil Rights Act; (5) claims that may not be waived by an

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agreement to arbitrate as a matter of law, including claims that a federal or state agency

may pursue via an enforcement action (although if Employee chooses to pursue a claim

following the exhaustion of such administrative remedies, that claim would be subject to

the provisions of this Arbitration Agreement); (6) actions properly brought pursuant to

the National Labor Relations Act brought before the National Labor Relations Board; and

(7) claims for injunctive and/or other equitable relief, including but not limited to orders

sought pursuant to California Code of Civil Procedure Sections 527.6 and 527.8 to

restrain threats of and/or any act of harassment or violence, or the Uniform Trade Secrets

Act and related law to stop or prevent unfair competition and/or the misappropriate or

illegal conduct related to trade secrets or Confidential Information. Any excludable

action by Employer or by Employee shall be filed in the State of California, County of

Orange. Employee shall not be subject to disciplinary or retaliatory action for engaging

in protected, concerted activity, related to any portion of this Agreement, including this

provision.”

A few days after Stokke presented the Agreement to plaintiff, plaintiff

asked Stokke to provide him with a Spanish translation of the Agreement; on

March 16, 2018, Stokke did so. At that time, plaintiff told Stokke that he “had a meeting

scheduled with a lawyer on March 19, 2018.” Stokke and plaintiff did not discuss the

nature of the meeting plaintiff had scheduled with a lawyer, but Stokke “assumed he

would discuss the Arbitration Agreement with his counsel.”

On March 19, 2018, plaintiff filed a complaint against defendants in which

he asserted claims for (1) disparate treatment in violation of the Fair Employment and

Housing Act (FEHA) (Gov. Code, § 12900 et seq.); (2) hostile work environment in

violation of FEHA; (3) failure to prevent discrimination, harassment, or retaliation in

violation of FEHA; (4) failure to pay overtime compensation (Lab. Code, §§ 218.5, 510,

& 1194); (5) failure to pay minimum wage (id., §§ 218.5, 510 & 1194); (6) failure to

provide accurate itemized wage statements (id., § 226); (7) failure to indemnify employee

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for business expenses (id., § 2802); and (8) violation of Business and Professions Code

section 17200 et seq.

On March 21, 2018, plaintiff personally handed to Stokke the Agreement

which plaintiff had signed and dated “3/21/18.” At that time, Stokke was unaware that

plaintiff had filed the complaint. Plaintiff and Stokke did not discuss the substance of the

Agreement and no threats were ever made to plaintiff if he chose not to sign it.

Defendants filed a motion to compel arbitration of plaintiff’s claims on the

ground plaintiff had signed the Agreement and thereby agreed to submit any claims

arising from his employment to binding arbitration.

Plaintiff filed an opposition to the motion to compel arbitration in which he

argued the claims in his complaint were not subject to the Agreement because plaintiff

filed the complaint before he signed the Agreement. He argued it is “well-settled in

California that legal claims embodied in a lawsuit which is filed before the Plaintiff signs

an arbitration agreement cannot be subject to arbitration unless the agreement expressly

covers a pre-existing lawsuit” and “Plaintiff filed a valid lawsuit in California Superior

Court before signing an agreement to arbitrate.”2



The trial court denied the motion to compel, stating its reasoning in a

minute order as follows: “Defendants move to compel arbitration based on an arbitration

agreement (‘Agreement’) executed by Plaintiff a few days after he had filed this action.

[Citation.] However, the claims at issue had accrued before the Agreement was signed.

(Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 62 [the

‘critical point in time is when the claims accrued’—i.e. when the conduct at issue

occurred].) Defendants have not shown that Plaintiff had either agreed in advance to



2

Plaintiff also argued his pending claims under the Labor Code Private Attorneys

General Act of 2004 and his claim for injunctive relief under Business and Professions

Code section 17200 et seq. were not subject to arbitration. He does not raise this

argument on appeal and we therefore do not address it further.

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arbitrate those claims, or that he gave express consent in the Agreement that it would

have retroactive application. Arbitration thus cannot be compelled here. (See Cobb v.

Ironwood Country Club (2015) 233 Cal.App.4th 960, 966-968, and Avery v. Integrated

Healthcare Holdings, Inc. [2013] 218 Cal.App.4th [50], 61-62.)”

Plaintiff appealed. (Code of Civ. Proc., § 1294, subd. (a).)

DISCUSSION

I.

Governing Legal Principles and Standard of Review

“Both the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) and

the FAA [Federal Arbitration Act] (9 U.S.C. § 1 et seq.) recognize ‘“‘arbitration as a

speedy and relatively inexpensive means of dispute resolution’” and are intended “‘to

encourage persons who wish to avoid delays incident to a civil action to obtain an

adjustment of their differences by a tribunal of their own choosing.’” [Citation.]’

[Citations.] The fundamental policy underlying both acts ‘is to ensure that arbitration

agreements will be enforced in accordance with their terms.’ [¶] Arbitration is therefore

a matter of contract.” (Avery v. Integrated Healthcare Holdings, Inc., supra, 218

Cal.App.4th at p. 59 (Avery).)

General contract law principles include that “[t]he basic goal of contract

interpretation is to give effect to the parties’ mutual intent at the time of contracting.

[Citations.] . . . ‘The words of a contract are to be understood in their ordinary and

popular sense.’” (Founding Members of the Newport Beach Country Club v. Newport

Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955.) Furthermore, “‘[t]he whole

of a contract is to be taken together, so as to give effect to every part, if reasonably

practicable, each clause helping to interpret the other.’ (Civ. Code, § 1641.)” (Mitri v.

Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1170.)

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“The ‘“‘“‘. . . policy favoring arbitration cannot displace the necessity for a

voluntary agreement to arbitrate.’” [Citation.] “Although ‘[t]he law favors contracts for

arbitration of disputes between parties’ [citation], ‘“there is no policy compelling persons

to accept arbitration of controversies which they have not agreed to arbitrate . . . .”’

[Citations.]”’ [Citation.] ‘Absent a clear agreement to submit disputes to arbitration,

courts will not infer that the right to a jury trial has been waived.’”’” (Avery, supra, 218

Cal.App.4th at p. 59.)

“‘There is no uniform standard of review for evaluating an order denying a

motion to compel arbitration. [Citation.] If the court’s order is based on a decision of

fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the

court’s denial rests solely on a decision of law, then a de novo standard of review is

employed. [Citations.]’ [Citation.] Interpreting a written document to determine

whether it is an enforceable arbitration agreement is a question of law subject to de novo

review when the parties do not offer conflicting extrinsic evidence regarding the

document’s meaning.” (Avery, supra, 218 Cal.App.4th at p. 60.)

Here, because the parties offered no extrinsic evidence, we review the

court’s order denying the motion to compel arbitration under the de novo standard of

review.

II.

The Plain Language of the Arbitration Agreement Provides for the Arbitration of All

Employment Claims, Including Those Contained in the Complaint.

The issue presented is whether plaintiff’s claims are subject to mandatory

arbitration under the Agreement even though the complaint was filed before plaintiff

signed the Agreement. Resolution of that issue is primarily based on the interpretation of

the following provision of the Agreement: “Any and all claims, controversies or disputes

(‘Disputes’) relating to any aspect of Employee’s employment with Employer (pre-hire

through post-termination), which Employer may have against Employee, or which

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Employee may have against Employer or any related entity, owner, partner, officer,

director, shareholder, employee, contractor, representative or agent, shall be resolved

through final and binding arbitration.” (Italics added.) Plaintiff argues that the

Agreement cannot apply to claims that existed before he signed the Agreement unless the

Agreement expressly so states. Defendants argue the Agreement should be interpreted to

require arbitration of all claims relating to plaintiff’s employment, including those claims

that already existed at the time plaintiff signed the Agreement.

The appellate court in Salgado v. Carrows Restaurants, Inc. (2019)

33 Cal.App.5th 356 (Salgado), faced a similar issue of contractual interpretation. In

Salgado, the plaintiff, who in 1984 began working for Carrows Restaurant, filed a lawsuit

alleging claims for employment discrimination and violation of civil rights. (Id. at

p. 358.) The following month, she signed an arbitration agreement, which the appellate

court described as follows: “The arbitration agreement contained two relevant

provisions. The first provision provided, ‘The Company and I agree and acknowledge

that we will utilize binding arbitration as the sole and exclusive means to resolve all

disputes which may arise out of or be related in any way to my application for

employment and/or employment, including but not limited to the termination of my

employment and my compensation.’ [¶] The second provision provided, in relevant part,

‘Both the Company and I agree that any claim, dispute, and/or controversy that I may

have against the Company . . . or the Company may have against me, shall be submitted

to and determined exclusively by binding arbitration.’” (Id. at p. 359.)

The plaintiff thereafter amended the complaint to add the two respondent

entities, referred to in the appellate court’s opinion as “Carrows,” as defendants in her

lawsuit. (Salgado, supra, 33 Cal.App.5th at p. 358.) Several months after that, Carrows

filed a motion to compel arbitration which the plaintiff opposed on the grounds her

lawsuit had been filed before she signed the arbitration agreement, the arbitration

agreement was “‘not retroactive,’” and the arbitration agreement was procedurally and

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substantively unconscionable. (Id. at p. 359.) The trial court denied the motion to

compel arbitration on the ground Carrows “‘failed to demonstrate that the arbitration

agreement applies to a suit that was filed prior to its signature.’” (Ibid.)

The appellate court reversed. (Salgado, supra, 33 Cal.App.5th at p. 358.)

With regard to the first provision of the arbitration agreement, the appellate court stated:

“Carrows notes that the ‘may arise’ language is followed by the second phrase, ‘or be

related in any way to my application for employment and/or employment.’ (Italics

added.) Carrows contends the ‘use of the word “or” means the preceding terms “may

arise” are not exclusive or controlling. So long as [Salgado’s] employment dispute is the

type of claim that is “related in any way to [her] employment,” it falls within the terms of

the Agreement.’ [¶] Carrows’s interpretation is reasonable. Salgado focuses only on one

phrase in the arbitration agreement. But the word ‘or’ shows that there is an alternative.

[Citation.] Each phrase must be considered. ‘“Courts must interpret contractual

language in a manner which gives force and effect to every provision, and not in a way

which renders some clauses nugatory, inoperative or meaningless.”’ [Citation.] The

second phrase following ‘or’ broadly applies to ‘all disputes’ related ‘in any way’ to

employment. This language is ‘clear and explicit.’ [Citation.] Salgado’s current action

is a dispute that falls within the meaning of this provision.” (Id. at pp. 360-361.)

As to the second provision, the appellate court stated: “Carrows claims the

trial court also failed to consider the second provision of the arbitration agreement. It

provides: ‘Both the Company and I agree that any claim, dispute, and/or controversy that

I may have against the Company . . . or the Company may have against me, shall be

submitted to and determined exclusively by binding arbitration . . . .’ (Italics added.) [¶]

This provision is broad in scope. [Citation.] Here the language is ‘clear and explicit.’

[Citation.] There is no language containing a limitation or restriction based on the age of

the claim. [Citation.] There is no qualifying language. This provision unequivocally

requires arbitration for ‘any claim’ Salgado has against Carrows. Salgado’s current

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lawsuit is such a claim. Her brief does not discuss this provision. Nor has she shown

why this language does not apply to the current action.” (Salgado, supra, 33 Cal.App.5th

at p. 361.)3

Here, plaintiff agreed to submit to final and binding arbitration “[a]ny and

all claims . . . relating to any aspect of Employee’s employment with Employer (pre-hire

through post-termination).”4

As in Salgado, the language of the Agreement is clear and

explicit; there is no language containing a limitation or restriction based on the age of

covered claims; there is no qualifying language; and the language unequivocally requires

arbitration for “[a]ny and all claims” plaintiff has against, inter alia, his employer, its

agents, and related entities. Furthermore, the Agreement specifically refers to claims

relating to any aspect of employment including those of a “pre-hire” variety, thereby

reasonably supporting the interpretation that the Agreement applies to all claims, whether

they had already accrued, or not, at the time the Agreement was executed.

In his appellate respondent’s brief, plaintiff argues that already accrued

claims at the time an arbitration agreement is executed are not subject to arbitration

unless they are otherwise expressly referenced in that agreement. It is reasonable to

interpret the Agreement’s reference to “pre-hire” claims as such an express reference to

require the arbitration of claims that accrued prior to execution of the Agreement. But

even if that were not so, the Salgado court rejected the argument that claims that have

accrued before an arbitration agreement is executed are generally excluded from

arbitration, stating: “[T]he ‘contention that an agreement to arbitrate a dispute must predate

the actions giving rise to the dispute is misplaced. Such a suggestion runs contrary



3

The appellate court in Salgado, supra, 33 Cal.App.5th at pages 362 to 363 remanded

the matter to the trial court to determine whether the arbitration agreement in that case

was unconscionable. Here, plaintiff has not challenged the Agreement on

unconscionability grounds either in the trial court or on appeal.

4

Plaintiff does not argue that any claim in the complaint fails to qualify as a covered

claim as defined in the Agreement.

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to contract principles which govern arbitration agreements.’ [Citation.] ‘[A]n arbitration

agreement may be applied retroactively to transactions which occurred prior to execution

of the arbitration agreement.’ (Merrill Lynch, Pierce, Fenner & Smith, Inc. v. King

(M.D.Fla. 1992) 804 F.Supp. 1512, 1514; see Shotto v. Laub (D.Md. 1986) 632 F.Supp.

516, 522 [‘whether plaintiffs signed the agreements before or after opening their

accounts, or even before or after the claim arose, does not change the fact that they signed

written agreements to arbitrate claims arising out of their account’]; see also Desert

Outdoor Advertising v. Superior Court [(2011)] 196 Cal.App.4th [866,] 877 [the broad

language of the arbitration agreement applied to a dispute occurring before the signing of

the arbitration agreement]; In re Currency Conversion Fee Antitrust Litigation (S.D.N.Y.

2003) 265 F.Supp.2d 385, 407 [the broad language—‘“any dispute, claim, or

controversy . . . arising out of or relating to this Agreement, your Account . . . ”’—

required arbitration for claims plaintiff had prior to agreeing to arbitration].)” (Salgado,

supra, 33 Cal.App.5th at pp. 361-362.)

In his respondent’s brief, plaintiff cites Avery, supra, 218 Cal.App.4th 50

and Cobb v. Ironwood Country Club (2015) 233 Cal.App.4th 960 (Cobb) in support of

his argument the motion to compel arbitration was properly denied by the trial court. The

cited cases, however, are distinguishable from the instant case.

In Avery, supra, 218 Cal.App.4th at page 55, a panel of this court affirmed

the trial court’s order denying motions to compel arbitration because the moving party

failed to establish the plaintiff employees agreed to the specific arbitration agreement the

employer submitted to the trial court. The court held: “Without sufficient evidence of

the actual arbitration policy to which Plaintiffs agreed when they signed the

acknowledgements and other documents, we may not enforce the policy against

Plaintiffs.” (Ibid.) The court’s analysis of the retroactive application of an arbitration

agreement to preexisting claims was in the context of the employer’s attempt to enforce

an arbitration agreement that it had unilaterally modified to apply to preexisting claims.

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(Id. at p. 61.) The Avery court explained: “An arbitration agreement between an

employer and an employee may reserve to the employer the unilateral right to modify the

agreement. [Citation.] But the covenant of good faith and fair dealing implied in every

contract requires the employer to exercise that right fairly and in good faith so as not to

deprive the employee of his or her reasonable expectations under the agreement.

[Citations.] Accordingly, an employer may not make unilateral changes to an arbitration

agreement that apply retroactively to ‘accrued or known’ claims because doing so would

unreasonably interfere with the employee’s expectations regarding how the agreement

applied to those claims. [Citation.] Similarly, the employer must give the employee

reasonable notice regarding changes the employer makes so the employee is aware of his

or her rights under the agreement. [Citation.] Both of these rules prevent [the employer]

from applying the Alternative Dispute Resolution Process to Plaintiffs’ claims.” (Ibid.)

The Avery court cited Peleg v. Neiman Marcus Group, Inc. (2012) 204

Cal.App.4th 1425, 1465 in which the appellate court held: “A unilateral modification

provision that is silent as to whether contract changes apply to claims, accrued or known,

is impliedly restricted by the [implied] covenant [of good faith and fair dealing] so that

changes do not apply to such claims. . . . If, however, a modification provision expressly

addresses whether contract changes apply to claims that have accrued or are known to the

employer, the covenant cannot create implied terms that contradict the express language.

[Citations.] An arbitration agreement that expressly exempts all claims, accrued or

known, from contract changes is valid and enforceable without resort to the covenant. If,

on the other hand, an arbitration agreement expressly applies a contract change to such

claims, the covenant cannot vary the plain language, and the agreement is illusory.”

Avery and Peleg show that in the context of unilateral modification of an arbitration

agreement, the implied covenant of good faith and fair dealing requires an employer to

provide reasonable and express notice to employees regarding the applicability of such

modifications to already existing claims.

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Plaintiff similarly cites Cobb, supra, 233 Cal.App.4th 960 for the

proposition that “the parties’ express consent to an arbitration agreement’s retroactive

effect is imperative.” Cobb, like Avery, involved an issue of a retroactive application of

an arbitration agreement to pre-existing claims by way of a unilateral modification of the

parties’ agreement. In Cobb, supra, 233 Cal.App.4th at page 963, a panel of this court

held: “When one party to a contract retains the unilateral right to amend the agreement

governing the parties’ relationship, its exercise of that right is constrained by the

covenant of good faith and fair dealing which precludes amendments that operate

retroactively to impair accrued rights. Plaintiffs certainly did not agree to any such

illegal impairment in this case.”

The instant case does not involve a unilateral modification of an arbitration

agreement. There is no dispute plaintiff agreed to the terms of the Agreement. He did

not argue in the trial court and does not argue on appeal that the Agreement or any of its

terms is unconscionable. In any event, as discussed ante and unlike Avery and Cobb, the

Agreement contains language that refers to claims related to “pre-hire” issues and thus

contains an express reference that the Agreement applies to claims existing before it was

executed. Avery and Cobb, therefore, are distinguishable. (See State Farm General Ins.

Co. v. Watts Regulator Co. (2017) 17 Cal.App.5th 1093, 1100 [“We agree with the Avery

principle, but it has no application here. This is not a case where one party unilaterally

changed its agreement with another party”].) The motion to compel arbitration should

have been granted.

The order is reversed. Appellants shall recover costs on appeal.