Asvadi vs. Clear Vision Financial LLC

hearing. As such, there remains nothing showing Respondent was given notice of any hearing on the petition.

Based on Petitioner’s failure to give proper notice of hearing despite the court providing an additional opportunity, the petition is DENIED WITHOUT PREJUDICE.

Petitioner’s counsel is ordered to give notice of this ruling.

6. Asvadi vs. Before the court is the “Joint Petition for Order Clear Vision 1) Confirming Termination of Arbitration Proceedings, Financial LLC 2) Statutory Sanctions, Attorneys’ Fees, and Costs Pursuant to C.C.P. §§ 1287.98 & 1281.99; and 3) Order Maintaining Joinder and Denying Severance” filed by petitioners Amin Asvadi, Ramiro Castillo, Joseph Chavez, Abdon Garay, Aracely Gonzalez, Uriah Molle, John Park, Manuel Sepulveda, and Erik Venters (collectively, Petitioners) against respondent Clear Vision Financial, LLC, d/b/a Liberty1 Financial (Respondent).

As more fully set forth below, the petition is GRANTED IN PART, CONTINUED IN PART, and DENIED IN PART. The petition is GRANTED as to the request to withdraw from arbitration and permit Petitioners to pursue their claims against Respondent in court despite the existence of their arbitration agreements. The petition is GRANTED as to the requests for attorney fees, costs, expenses, and monetary sanctions under sections 1281.98, subdivision (c), and 1281.99, subdivision (a), and CONTINUED TO THURSDAY, DECEMBER 3, 2026, AT 2:00 P.M., IN DEPARTMENT C23, for further briefing as to the amount of attorney fees, costs, expenses, and monetary sanctions. The petition is DENIED as to the request for evidentiary and terminating sanctions under section 1281.99, subdivision (b). Finally, the petition is DENIED WITHOUT PREJUDICE as to the request for an order maintaining joinder and denying severance.

Withdrawal From Arbitration: Code of Civil Procedure section 1281.98, subdivision (a)(1), declares an employer is in material breach of an arbitration agreement, is in default of arbitration and waives its right to compel an employee to proceed with arbitration if the employer fails to timely pay the fees necessary to proceed with the arbitration. Specifically, that subdivision states, “In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.”

Section 1281.98, subdivision (b), grants the employee the ability to unilaterally choose from a variety of options if an employer is in material breach of an arbitration agreement under section 1281.98, subdivision (a)(1). As relevant here, those options include “Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.” (Code Civ. Proc., § 1281.98, subd. (b)(1).)

Here, it is undisputed each Petitioner initiated their arbitration against Respondent with JAMS, and Respondent initially paid the arbitration fees necessary to open and proceed with the arbitrations (with the exception of petitioner Aracely Gonzalez for whom Respondent never paid any arbitration fees). The parties selected arbitrators and proceeded with the arbitrations, including discovery. However, shortly after JAMS invoiced Respondents for the arbitration fees required to proceed with the evidentiary hearings in each Petitioners’ arbitration, and shortly after Petitioners filed discovery motions against Respondent, Respondents sent letters to Petitioners’ counsel and JAMS announcing it was withdrawing from all arbitrations and would not be paying the fees necessary to proceed any further with the arbitrations, or any other arbitration fees.

Respondent asserted the JAMS invoices were grossly inflated in relation to what Respondent perceives to be the minimal value of Petitioners’ claims—equating them to small claims matters. Respondent asserted Petitioner’s counsel was trying to leverage a settlement based on the high cost of proceeding with the arbitrations. Significantly, Respondent’s withdrawal letters accused both JAMS and Petitioners’ counsel of misconduct, but they did not assert an inability to pay the arbitration fees.

It is clear the time for Respondent to pay the arbitration fees necessary to proceed as long ago expired, and Respondent has refused to pay those fees. As such, Respondent is in material breach of the arbitration agreements, is in default of the arbitrations, and waived its right to compel Petitioners to proceed with the arbitrations. Indeed, Respondent concedes it will not proceed any further with the arbitrations and encouraged Petitioners to proceed with their claims in court.

As a result, Petitioners are entitled to withdraw from the arbitrations and file their claims in court. Their request to do so is GRANTED, and Petitioners may proceed to file their complaint asserting their various claims against Respondent.

As more fully discussed below, the request for an order maintaining joinder and denying severance is DENIED WITHOUT PREJUDICE. Petitioners have not cited any authority establishing that as an authorized sanctions under either section 1281.98 or 1281.99. Whether to allow Petitioners to join all their claims together in a single action is an issue for the court to decide in the case to be commenced by Petitioners against Respondent.

Attorney Fees, Costs, Expenses, and Sanctions: There are two separate statutory provisions authorizing some form of expense recovery and sanctions against Respondent based on its refusal to pay the arbitration fees.

Section 1281.98, subdivision (c), provides, “If the employee . . . withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply: [¶] (1) The employee . . . may bring a motion, or a separate action, to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney's fees shall be without regard to any findings on the merits in the underlying action or arbitration. [¶] (2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.”

Section 1281.99 provides, “(a) The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant . . . subdivision (a) of Section 1281.98, by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee . . . as a result of the material breach. [¶] (b) In addition to the monetary sanction described in subdivision (a), the court may order any of the following sanctions against a drafting party that materially breaches an arbitration agreement pursuant to . . . subdivision (a) of Section 1281.98, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. [¶] (1) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action. [¶] (2) A terminating sanction by one of the following orders: [¶] (A) An order striking out the pleadings or parts of the pleadings of the drafting party. [¶] (B) An order rendering a judgment by default against the drafting party. [¶] (3) A contempt sanction by an order treating the drafting party as in contempt of court.”

Initially, Respondent contends Petitioners request for attorney fees under section 1281.98, subdivision (c)(1), is premature because the language of that subdivision requires Petitioners to bring a motion or separate action apart from their request to terminate the arbitration proceedings. The court disagrees. As quoted above, that subdivision provides an employee “may bring a motion, or a separate action, to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding.” Nothing in this statutory language requires Petitioners to bring a motion or action separate and apart from its efforts to file a court case to pursue their claims in order to recover these attorney fees.

Indeed, there is nothing in any of the statutory provisions that required Petitioner to obtain any sort of court order or leave allowing them to proceed in court. Petitioners could have simply filed their complaint in court and then asserted the provisions of section 1281.98 in response to any efforts by Respondent to assert Petitioners must pursue their claims in arbitration or their claims are time barred. In that action, Petitioner could then have sought attorney fees under section 1281.98, subdivision (c)(1). Moreover, Petitioner have filed a separate action to recover their attorney fees and costs under section 1281.98, subdivision (c)(1). The court therefore rejects Respondent’s prematurity argument.

In Hohenshelt v. Superior Court (2025) 18 Cal.5th 310, the Supreme Court interpreted section 1281.98 as permitted the employer to obtain relief from its waiver of the right to compel arbitration based on existing law and in order to prevent the statute from being preempted by the Federal Arbitration Act. Specifically, the Hohenshelt court held an employer could obtain relief from section 1281.98’s waiver if the employer could meet the requirements of Civil Code section 3275, Civil Code section 1511, or Code of Civil Procedure section 473, subdivision (b). Significantly, however, the Hohenshelt court did not hold the employer could avoid the attorney fees and sanctions provided by section 1281.98, subdivision (c)(1), or section 1281.99.

Hohenshelt did not specifically address attorney fees under section 1281.98, subdivision (c)(1), but it did discuss sanctions under section 1281.99. Specifically, the court noted the monetary sanctions under section 1281.99, subdivision (a), are mandatory while the other sanctions under section 1281.99, subdivision (b), are discretionary. Indeed, the court explained, “section 1281.99’s mandatory sanction provision . . . requires the drafting party to pay any reasonable expenses incurred by the employee or consumer as a result of its failure to timely pay arbitration fees (§ 1281.99, subd. (a)) — in essence, to make the other party whole (Civ. Code, § 3275) — whether the nonpayment was willful or not.” (Hohenshelt, supra, 18 Cal.5th at pp. 339-340; see Wilson v. TAP Worldwide, LLC (2025) 114 Cal.App.5th 1077, 1088.)

Here, Respondent is not seeking relief from its waiver of the right to compel Petitioners to arbitrate their claims. Rather, Respondent has affirmed its waiver and made clear its desire to litigate Petitioners’ claims in court.

Respondent nonetheless asserts its failure to pay the arbitration fees was not strategic or done in bad faith, but rather was a result of its inability to pay the fees. Given the legislative purpose behind section 1281.98, Respondent appears to assert this alleged distinction somehow relieves it of its obligation to pay the fees and the consequences of that failure, but fails to cite any authority to support that position or overcome the mandatory nature of the sanctions.

Setting aside the fact Respondent did not assert its inability to pay the arbitration fees when it refused to do so and withdrew from the arbitrations, the costs, expenses, and damages caused by Respondent’s failure to pay the arbitration fees are nonetheless properly borne by Respondent. Indeed, as Hohenshelt explained, the sanctions under 1281.99, subdivision (a), to compensate the employee for the reasonable expenses incurred by the employee as a result of the employer’s material breach of the arbitration agreement are mandatory. (Hohenshelt, supra, 18 Cal.5th at pp. 339-340.) Moreover, Respondent has failed to explain how it can be relieved of the sanctions arising from its waiver of the right to compel arbitration when it is not seeking to be relieved of the waiver.

Nonetheless, the court will examine the three statutes recognized in Hohenshelt as potentially providing a basis for relief from a waiver of the right to compel arbitration by failing to timely pay the fees. Civil Code section 3275 provides an avenue for a party to obtain relief from a waiver of a contractual right “‘upon making full compensation to the other party, except in case of a grossly negligent, willful, or fraudulent breach of duty.’” (Hohenshelt, supra, 18 Cal.5th at p. 332.) “Under this provision, a nonperforming party is not entitled to relief from forfeiture when its delay was willful, fraudulent, or grossly negligent.

But ‘when it appears that [the party] has acted in good faith, given some reasonable excuse for the delay, and thereafter tendered performance promptly and with reasonable diligence,’ equity can excuse nonperformance so long as the breaching party can and does ‘adequately compensate[]’ the nonbreaching party for any harm caused by the delay.” (Id. at pp. 332-33.) Here, Respondent has not tendered prompt performance, but rather has affirmed its repudiation of its contractual and legal obligations.

It also has not compensated Petitioners for the harm caused, but rather has sought to avoid or minimize any compensation it may be required to pay Petitioners. Finally, Respondent has failed to show it was not grossly negligent, willful, or fraudulent in its breach of its obligation to pay the fees. To the contrary, the court finds the breach or failure to pay was willful. As explained above, Respondent intentionally and knowingly did not pay and withdrew from the arbitration. Respondent now claims an inability to pay the arbitration fees, but as more fully explained below, the court is not convinced of that.

Rather, it is an after the fact rationalization that was not offered at the time.

Hohenshelt also recognized Code of Civil Procedure section 473, subdivision (b), as a basis for obtaining relief from the waiver of the right to compel arbitration. That provision authorizes relief upon a showing of mistake, inadvertence, surprise, or excusable neglect. (Hohenshelt, supra, 18 Cal.5th at pp. 333-34.) Respondent has not identified or argued any basis for obtaining relief under section 473, subdivision (b). Nonetheless, its claim of inability to pay would not meet the standards of section 473, subdivision (b).

That leaves just Civil Code section 1511, “which provides that a breach may be excused when performance of the contractual obligation would be impossible, illegal, or impracticable ‘because of extreme and unreasonable difficulty, expense, injury, or loss involved.’” (Hohenshelt, supra, 18 Cal.5th at p. 333.) Respondent contends this exception applies because of its “documented insolvency-inprogress.” It asserts it simply cannot pay the fees.

Respondent, however, has not presented sufficient evidence or argument to convince the court. First, as stated above, the inability to pay the fees was not asserted at the time Respondent withdrew from the arbitrations and refused to pay. Instead, Respondent accused JAMS and Petitioners’ counsel of misconduct. Second, Respondent has not presented sufficient evidence to establish its inability to pay when the invoices were due in late 2025. To support its claimed inability, Respondent presented a highly conclusory declaration by its managing director that fails to provide sufficient details to establish the proffered inability.

Todd Betlejewski does not provide a balance sheet or any other financial records of Respondent. Instead, he simply states the alleged amount of Respondent’s net loss for 2025 and the first half of 2026, Respondent’s alleged expenses for those same times periods, and Respondent’s alleged revenue from those same time periods. No other information is provided, and no foundation is provided for the stated numbers—e.g., what documents they were taken from.

Accordingly, assuming for the sake of argument that Respondent could assert any of the statutory basis for relief from waiver as a basis for avoiding an award of attorney fees, costs, expenses, and sanctions under sections 1281.98, subdivision (c)(1), and 1281.99, Respondent has failed to show any of those bases apply here.

Based on the foregoing, the court finds Petitioners are entitled to (1) recover all attorney fees and costs associated with the abandoned arbitration proceeding pursuant to section 1281.98, subdivision (c)(1), and (2) monetary sanctions under section 1281.99, subdivision (a), in the form of the reasonable expenses, including attorney fees and costs, Petitioner incurred as a result of Respondent’s material breach. The request for the fees, costs, and sanctions therefore is GRANTED.

The court, however, CONTINUES this hearing as stated above for further evidence and briefing regarding the appropriate amount to be awarded. There are 9 Petitioners who have joined in this petition. They each filed and pursued separate individual arbitrations against Respondent. Nonetheless, they seek a single, undifferentiated award of $239,953.50 in attorney fees and costs associated with the abandoned arbitrations and $44,327.50 in sanctions for these proceedings.

In the declaration of attorney John J. Weber, Petitioners provide a breakdown as to how much each Petitioner incurred in attorney fees and expenses, but no evidentiary basis is provided for that breakdown. Given each Petitioner engaged in a separate arbitration with Respondent, Petitioners must present sufficient evidence showing how much each Petitioner incurred because the court will need to make separate awards to each Petitioner, not an undifferentiated cumulative award.

Moreover, the declaration of counsel and the attachments thereto are insufficient to support an award of fees because they fail to provide sufficient information to allow a meaningful review of the reasonableness of the fees and costs. In the declaration, counsel provides a very conclusion summary and the total number of hours expended on all arbitrations combined without any differentiation. Attached to the declaration, counsel provides summary tables relating to the work performed by each professional who has worked on these cases. These tables, however, provide vague, conclusory categories of work over large periods of time without differentiating individual tasks or between cases.

Petitioners argue they cannot provide more detail due to significant concerns regarding the disclosure of privileged and sensitive information that could prejudice Petitioners’ interest given the litigation is ongoing. The court is not requiring the disclosure of truly privileged information, but much more detailed is required on a Petitioner-by-Petitioner basis. Indeed, by counsel’s own admission there are a lot of similarities between the claims of each Petitioner, and therefore this fee claim is ripe for duplicative and repetitive work. Moreover, the court finds Petitioners’ offer of an in camera review inappropriate because it deprives Respondent of the opportunity to review and object to the evidence submitted in support of the fee claim.

Accordingly, Petitioners are ordered to file and serve a supplement declaration that attached the relevant billing records or provides vastly more detail as to the work and time billed for each Petitioner no later than November 6, 2026. Petitioner also may file a brief in support of the request not to exceed seven pages. Respondent may file an opposition or objection to Petitioners’ filing no later than November 23, 2026. Any brief Respondent submits is not to exceed seven pages.

Evidentiary and Terminating Sanctions: As noted above, section 1281.99, subdivision (b) grants the court the discretion to award evidentiary and/or termination sanctions. Indeed, that subdivision provides the court “may” award such sanctions unless it finds the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of sanctions unjust.

Although Respondent has not provided sufficient evidence to support the inability to pay for the arbitration fees, or as to why it permitted arbitration to proceed for so long before withdrawing, the monetary sanctions to be awarded will make Petitioners “whole” from the costs and fees already incurred and Petitioners will have the opportunity to prove their cases before a trier of fact. Accordingly, the court declines to impose the permissible non-monetary sanctions, and the request for same therefore is DENIED.

Maintaining Joinder and Denying Severance: Petitioners also request an order maintaining joinder and denying severance so that they may all pursue their claims against Respondent in a single court case. As noted above, that request is DENIED WITHOUT PREJUDICE.

Petitioners have not cited any authority that authorizes such a rule based on a material breach under section 1281.98. Petitioners argue the prohibition against joinder is included in the arbitration provisions, and because Respondent has waived the right to arbitrate, it also has waived the right to require separate actions. The court finds this to be unsupported bootstrapping.

Whether all Petitioners should be permitted to join together in a single case is for the judicial officer assigned to that case to decide. To the extent Respondent seeks to assert any waiver of the right to join claims, the enforceability of any such waiver also will be for the assigned judicial officer to decide.

Respondent’s Evidentiary Objections: Respondent asserts various evidentiary objections to the declaration submitted by Petitioners’ counsel. Those objections are overruled as to objection nos. 1, 4–7, 20, 21, 23, 24; and 2 and 3 (first sentence; sustained as to rest), and sustained as to objection nos. 2 (overruled as to first sentence; remainder lacks foundation, speculation, argumentative); 3 (overruled as to first sentence; remainder argumentative and opinion); 8–11 (argumentative, speculative, opinion); 12 (irrelevant, legal conclusion); 13 (best evidence); 14 (irrelevant, speculative, argumentative); 15–17 (lacks foundation, speculative, argumentative); and 18–19, and 22 (lacks foundation, speculative, argumentative, calls for legal conclusion).

Petitioner’s counsel is ordered to give notice of this ruling.