Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC359545 Mark V. Mooney, Judge.
Law Offices of Stewart Levin and Stewart Levin and Law Offices of David Himelson and David I. Himelson for Defendants and Appellants.
Jonathan P. Chodos for Plaintiffs and Respondents.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
SUMMARY
Jacob Uri Mayerfeld and the Rav Tov Committee To Aid New Immigrants appeal from a trial court order denying their petition to compel arbitration. We conclude substantial evidence supports the trial court’s determination that appellants waived their right to arbitrate the dispute at issue. Accordingly, we affirm.
FACTS AND PROCEDURAL BACKGROUND
According to the complaint, in 2002, plaintiff Manochehr Nazarian and defendant Jacob Uri Mayerfeld entered into a joint venture to operate an adult day health care facility. In order to use the facility’s profits to fund charitable causes, Nazarian agreed to form a nonprofit corporation, Hayim Tovim, that eventually would own and operate the facility. Nazarian and Mayerfeld agreed that while Nazarian was forming Hayim Tovim and securing nonprofit tax status, the Rav Tov Committee To Aid New Immigrants (Rav Tov), an already-licensed entity affiliated with Mayerfeld, would hold the license to operate the new facility until the license could be transferred to Hayim Tovim. In the early phases of this joint venture, Nazarian loaned Rav Tov significant sums to cover the new facility’s start-up costs.
Although not explicitly mentioned in the complaint, Nazarian and Mayerfeld reduced at least some of their agreement to writing. On October 23, 2002, Nazarian and Mayerfeld entered into a written agreement that described, among other things, the joint venture and the formation of Hayim Tovim. The written agreement set forth various terms to govern the parties’ relationship, such as the day-to- day operations of the facility, Mayerfeld’s compensation, distribution of the facility’s profits, and Mayerfeld’s and Nazarian’s respective duties. The agreement also included an arbitration clause: “In the event of a dispute arises [sic] out of this contract, the parties agree to binding arbitration in this matter as per mutual agreement.” Only Mayerfeld and Nazarian signed this October 2002 agreement, and the opening clause stated that the agreement was entered into by “Mike Nazarian (Mike) and Jacob Uri Mayerfeld (Jacob) . . . .”
The complaint alleges that after the joint venture was underway, defendants refused to repay loans Nazarian made to Rav Tov, failed to pay rent for the use of space Nazarian owned and leased to Rav Tov, and refused to transfer the facility license to Hayim Tovim as Mayerfeld and Nazarian had agreed.
On September 29, 2006, Nazarian and Hayim Tovim (collectively respondents) sued Mayerfeld and Rav Tov (collectively appellants), alleging breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, and misappropriation.
On November 3, 2006, appellants served respondents with form interrogatories asking about respondents’ background, their damages contentions, and witnesses with knowledge of the dispute, as well as information relating to each agreement alleged in the complaint. On November 7, 2006, appellants answered the complaint. On December 8, 2006, respondents served verified responses to the form interrogatories.
This court has taken judicial notice, on its own motion, of the online superior court docket in this case, Los Angeles Superior Court No. BC359545, (as of Mar. 10, 2008). (Evid. Code, §§ 452, subd. (d), 459.)
On December 26, 2006, appellants noticed the depositions of both Nazarian and his wife for February 6, 2007, and attached 39 wide-ranging document requests to each deposition notice. On December 28, 2006, appellants filed a case management statement that made no mention of any intent or desire to pursue arbitration. Instead, appellants’ case management statement indicated only that they were willing to engage in mediation. Appellants also gave their estimate for the length of trial, listed dates on which they would not be available for trial, and indicated that they expected the case to be ready for trial within 12 months of the filing of the complaint. On January 4, 2007, appellants served each respondent with a set of 50 special interrogatories. At some point, respondents also propounded discovery to and received responses from appellants.
Appellants also apparently served respondents with a separate set of requests for production of documents. Although the parties referred to these requests for production, they did not submit a copy of the requests to the trial court.
On January 12, 2007, the trial court conducted a case management conference. Appellants made no mention of arbitration. The court set a trial date of October 9, 2007. Between January and early February 2007, counsel for the parties corresponded and negotiated about discovery responses and depositions. On February 12, 2007, in a letter demanding responses to various discovery requests, counsel for appellants also demanded -- for the first time -- that the parties submit the dispute to arbitration. Respondents refused to arbitrate the dispute.
On March 5, 2007, appellants filed a petition to compel arbitration. Appellants asserted that the parties’ dispute was governed by their October 23, 2002 written agreement, including the arbitration provision. Appellants explained that they had not sought arbitration earlier because “[i]t was not until Defense counsel received Plaintiffs’ responses to Form Interrogatories that it was confirmed that Plaintiffs are alleging that there is only one operative agreement, that there were no modifications or amendments and that said Agreement contained an Arbitration Clause.” Appellants argued that answering the complaint and propounding a “basic amount of discovery” should not be deemed conduct inconsistent with the right to arbitrate, and that merely participating in litigation without litigating a dispute to judgment could not result in a waiver of the right to arbitrate. Appellants also contended that respondents were estopped from arguing that appellants’ delay had prejudiced them because it was respondents who sued rather than arbitrating in the first place, thereby voluntarily incurring fees and costs in the judicial proceeding.
In opposition to the petition, respondents argued that appellants had waived the right to arbitrate by taking discovery, participating in a case management conference, and coordinating deposition scheduling without ever mentioning arbitration. Respondents asserted that appellants’ conduct had prejudiced them because they had expended substantial efforts in responding to discovery, identifying witnesses, and preparing for depositions. Respondents represented that they already had incurred more than $7,500 in legal fees, and that appellants had “garnered substantial detailed information regarding [respondents’] position and contentions.” Respondents also argued that neither Rav Tov nor Hayim Tovim was a party to the arbitration agreement, and that the agreement’s arbitration provision was “fatally vague” and therefore unenforceable.
In support of their opposition, respondents attached copies of the discovery appellants had propounded (except for the document requests), respondents’ form interrogatory responses, and correspondence between counsel about discovery. Respondents also submitted their attorney’s declaration that he had spent at least 15 hours “reviewing the file, preparing for and attending the [case management conference], propounding and responding to discovery and corresponding with counsel.” Respondents’ counsel further declared that appellants had not mentioned their desire to arbitrate at the case management conference.
In a two-page reply, appellants argued that the trial court should disregard respondents’ opposition because it was filed one court day late, and that respondents could not “have it both ways” by instituting and pursuing a judicial proceeding (instead of arbitration), while also implicitly admitting in their waiver arguments that appellants had a valid right to arbitrate the dispute. Appellants did not otherwise counter the arguments in respondents’ opposition brief.
At the hearing on the petition, the court stated: “[T]his case has been going on for awhile. Apparently, the parties have been involved in discovery. They’ve been here for trial setting. We’ve got dates set. It seems to me it might be a little late in the game to be insisting on that arbitration clause.” Following argument, the court denied the motion to compel arbitration “for the reasons the court stated.” In response to a question from appellants’ counsel, the trial court also indicated that it had considered everything the parties had submitted, including respondents’ tardy opposition.
Appellants filed a timely notice of appeal of the trial court’s order denying the petition to compel arbitration.
DISCUSSION
On appeal, appellants argue that the trial court erred in denying their petition to compel arbitration. Appellants concede they were “a little slow” in raising the issue of arbitration. But they contend that their conduct was insufficient to constitute a waiver of their right to arbitrate. We conclude that substantial evidence supports the trial court’s denial of appellants’ petition on the ground of waiver. Accordingly, we need not discuss or decide whether the entity parties, as non-signatories to the contract, have the right or obligation to arbitrate their claims. We also need not address appellants’ argument that the arbitration provision is not void for lack of detail about the arbitrator’s selection.
1. Applicable Legal Principles and the Standard of Review.
California law strongly favors arbitration as a means of resolving disputes. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 (St. Agnes).) Yet, Code of Civil Procedure section 1281.2 permits a court to deny a petition to compel arbitration on several grounds, including a determination that the petitioner has waived the right to compel arbitration. (§ 1281.2, subd. (a).) In light of the public policy favoring arbitration where a valid agreement to arbitrate exists, “waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes, supra, 31 Cal.4th at p. 1195.)
All further statutory references are to the Code of Civil Procedure unless otherwise noted.
There is no single test to determine if a petitioner has waived its right to arbitrate. In St. Agnes, the California Supreme Court cited with approval a list of factors identified in Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 992 that a court may consider in determining whether a party has waived the right to arbitrate:
“ ‘(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party. [Citations.]’ ”
St. Agnes also establishes that, when a party argues that the petitioner has waived the right to arbitrate by participating in litigation, prejudice is a critical element in the determination of waiver. (St. Agnes, supra, 31 Cal.4th at p. 1203.) “Prejudice typically is found only where the petitioning party’s conduct has substantially undermined [the important public policy of arbitration as a speedy and inexpensive means of dispute resolution], or substantially impaired the other side’s ability to take advantage of the benefits and efficiencies of arbitration.” (Id. at p. 1204.)
A court also may find waiver if the petitioner has acted in bad faith or has engaged in willful misconduct or gamesmanship. (St. Agnes, supra, 31 Cal.4th at p. 1196; Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 784 (Christensen).)
Whether a party to an arbitration agreement has waived the right to arbitrate is a question of fact. “[T]he trial court’s finding, if supported by sufficient evidence, is binding on the appellate court. [Citations.] ‘When, however, the facts are undisputed and only one inference may reasonably be drawn, the issue is one of law and the reviewing court is not bound by the trial court’s ruling.’ [Citation.]” (St. Agnes, supra, 31 Cal.4th at p. 1196.) In other words, “the question is whether the trial court’s decision is supported by substantial evidence. If it is, we must affirm. If not, we may decide the issue as a matter of law.” (Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557 (Guess).)
Appellants argue that there are no disputed facts in this case and urge us to apply a de novo standard of review to the question of waiver. This is not the correct application of the standard as set forth in St. Agnes. If substantial evidence supports the trial court’s finding, we are bound by that ruling. Moreover, “[i]f more than one reasonable inference may be drawn from undisputed facts, the substantial evidence rule requires indulging the inferences favorable to the trial court’s judgment. [Citations.]” (Davis v. Continental Airlines, Inc. (1997) 59 Cal.App.4th 205, 211 (Davis).)
2. Substantial Evidence Supports the Trial Court’s Finding of Waiver.
The record before us reveals substantial evidence supporting the trial court’s determination of waiver. This evidence may be loosely grouped into three categories: (1) acts inconsistent with the right to arbitrate; (2) prejudice; and (3) unreasonable delay. We discuss each category in turn.
Respondents argue that appellants waived the arguments in their opening brief by failing to raise them below. However, on the issue of waiver of the right to arbitrate, appellants argued against waiver in their initial petition to compel arbitration, even though they did not reiterate or supplement their arguments on reply. Respondents, of course, also raised the issue of waiver and the trial court heard argument on the issue at the hearing. Thus, we consider the issue of waiver of the right to arbitrate to have been properly raised before the trial court. Because we affirm the trial court’s ruling on the ground of waiver, we do not consider whether appellants waived their arguments about the arbitration agreement’s application to nonsignatories by failing to raise those arguments below.
A. Acts Inconsistent with the Right to Arbitrate.
Appellants do not claim to have been unaware of the arbitration clause in the written agreement Mayerfeld and Nazarian signed. Yet, between the filing of the complaint and appellants’ demand for arbitration, they answered the complaint, propounded interrogatories and requests for production of documents, noticed depositions, and responded to discovery. During this period of active engagement in the case, appellants neglected to inform respondents that they intended to seek arbitration, even when faced with an obvious opportunity to do so in preparation for the case management conference, and at the conference itself, where the court set a trial date.
Appellants assert that they had no obligation to “reserve” their right to arbitrate, but they were in fact obligated to act consistently with that right to avoid waiving it. Appellants made no attempt to act in accordance with a right they knew they had until more than three months after they answered the complaint. Thus, substantial evidence supports the trial court’s express and implied findings that appellants’ actions were inconsistent with the right to arbitrate, the litigation machinery had been substantially invoked, and the parties were well into the preparation of a lawsuit before appellants notified respondents of their intent to arbitrate.
A trial court’s finding of waiver and the factors supporting waiver may be implied or explicit. (See Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1195 (Groom).)
B. Prejudice
As noted above, waiver arising from a party’s participation in litigation will be found only if the other side has been prejudiced by the party’s delay in seeking arbitration. Prejudice does not occur by a party’s participation in litigation alone. (St. Agnes, supra, 31 Cal.4th at pp. 1187, 1203.) In addition, “courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses.” (Id. at p.1203.) However, courts have found prejudice where a party seeking arbitration used discovery to gain information about the other side’s case that would not have been available in arbitration, or caused the other side to reveal trial tactics or legal strategies.
Appellants assert that respondents should not be allowed to argue waiver or prejudice because respondents disregarded the arbitration provision of the parties’ contract and filed their case in superior court. Appellants argue that the onus should not have been on them promptly to demand arbitration when respondents are in violation of the contract. Despite the repeated appearances of this argument, appellants do not cite a single legal authority or provide any legal analysis to support the proposition they advance. The argument is therefore waived and we need not consider it. (McComber v. Wells (1999) 72 Cal.App.4th 512, 522-523.) In addition, waiver aside, appellants’ argument is unsound, as explained in Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1795: “[T]here is nothing to prevent one of the parties to a contractual arbitration provision from resorting initially to an action at law. [Citations.] The other party, if determined to pursue arbitration, must then take action to compel arbitration. [Citation.]”
For example, in Berman v. Health Net (2000) 80 Cal.App.4th 1359 (Berman), the defendants propounded substantial discovery -- including demands for production of documents, special interrogatories, form interrogatories, notices of deposition, and third-party document subpoenas -- before they petitioned to compel arbitration. (Id. at p. 1364.) The plaintiff responded to some of the written discovery and produced requested documents. (Id. at p. 1367, fn. 7.) The Berman court found that substantial evidence supported the trial court’s inference that the defendant “had sought and obtained information not available in arbitration, thus causing prejudice to plaintiff.” (Id. at p. 1366.)
Similarly, in Guess, supra, 79 Cal.App.4th 553, the court of appeal affirmed a finding of waiver where the defendant answered the complaint but did not plead arbitration as an affirmative defense, participated in discovery, and waited three months after answering the complaint before demanding arbitration. (Id. at p. 555.) The Guess court noted that, even though the defendant had not propounded discovery, its conduct had prejudiced the plaintiff nonetheless. The court explained that the defendant’s participation in the litigation and discovery processes “exposed [plaintiff] to the substantial expense of pretrial discovery and motions that would have been avoided had [the defendant] timely and successfully asserted a right to arbitrate. Through its use of the discovery process, [the plaintiff] has disclosed at least some of its trial tactics to [defendant], certainly more so than would have been required in the arbitral arena. Through [defendant’s] delay -- which it has not even tried to explain -- [plaintiff] has lost whatever efficiencies that would otherwise have been available to it through arbitration.” (Id. at p. 558; see also Davis, supra, 59 Cal.App.4th at pp. 213-215.)
Here, while appellants did not receive complete responses to the discovery they propounded, the responses they did receive would support an inference on the trial court’s part that they used discovery processes to gain information that would not be available to them in arbitration. Although appellants apparently discount the value of form interrogatories, respondents’ responses covered a range of topics and gave more than a minimal amount of information to appellants. For example, respondents provided a broad outline of the damages they were -- and were not -- claiming. Respondents also named the people they believed had knowledge of the “incident” at issue, and they were compelled to reveal some information about the factual investigation they had conducted.
Were these disclosures different from what would be available to appellants at arbitration, or illustrative of strategies or tactics that respondents would not have been forced to disclose at arbitration? Where, as here, the parties have not incorporated discovery procedures into their agreement to arbitrate, “their failure to do so is taken as an agreement to operate without such procedures. (Code Civ. Proc., § 1283.1, subd. (b).)” (Christensen, supra, 33 Cal.3d at p. 783, fn. 1.) Thus, the trial court reasonably could start from the presumption that discovery -- including interrogatories -- would not be available to appellants in arbitration.
However, appellants assert we cannot know what discovery would have been available in an arbitration because the parties were free to reach an agreement on their own about what discovery they would pursue. While anything is possible, one of the significant benefits of arbitration is that it provides a faster and, one hopes, a less expensive method of resolving disputes. (St. Agnes, supra, 31 Cal.4th at p. 1204.) This goal would be hindered if arbitrations incorporated the full-blown discovery that typically takes place in a judicial proceeding. Indeed, “[l]imited discovery rights are the hallmark of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 689; see also Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 118 [“[D]iscovery limitations are an integral part of the arbitration process”].) Because the parties did not agree in advance to discovery procedures for arbitration, the trial court would have no reason to assume that anything more than basic prehearing exchanges of witness and exhibit lists would be available to appellants. (See § 1282.2, subd. (a)(2).)
Although the parties here could have agreed to broader discovery than that provided by statute, they did not do so in their agreement to arbitrate or at any later time. In this situation, the trial court reasonably could infer that the discovery responses appellants received from respondents -- while incomplete -- still were more than what would have been available to them in arbitration. (See Guess, supra, 79 Cal.App.4th at p. 558; Berman, supra, 80 Cal.App.4th at p. 1366; cf. Groom, supra, 82 Cal.App.4th at p. 1192 [finding no prejudice where defendants propounded discovery requests before demanding arbitration, but plaintiff did not respond]; St. Agnes, supra, 31 Cal.4th at p. 1204 [no prejudice where no discovery was conducted].)
Appellants also submit that respondents’ discovery responses revealed no more than they already had disclosed in the complaint, so respondents could not have been prejudiced by having to disclose the same information in the form of interrogatory responses. The court in Berman considered and rejected nearly identical arguments. As the Berman court explained, discovery responses may be revealing not only for what they contain, but also for what they omit, and “even discovery responses totally devoid of substantive content . . . can reveal volumes about the strength and weakness of a party’s case.” (Berman, supra, 80 Cal.App.4th at p. 1367.) In addition, responses that do no more than repeat allegations of the complaint may have strategic importance when, as here, they are submitted as a verified discovery response and thus become sworn testimony. (Ibid.) Even if the trial court credited appellants’ complaints about the quality and content of respondents’ interrogatory responses, substantial evidence still supports the court’s implied finding that, by being forced to make such disclosures in discovery, respondents revealed more of their trial tactics or information about their case to appellants than would have been required in arbitration.
Appellants rely on Lake Communications, Inc. v. ICC Corp. (9th Cir. 1984) 738 F.2d 1473 (Lake), overruled on other grounds by Mitsubishi Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614, 632-635, to support their argument that plaintiffs were not prejudiced. Lake does not help appellants’ case. In Lake, the Ninth Circuit ruled that the defendants had not waived their right to arbitrate by waiting one year before seeking arbitration. However, during the one-year period the defendants did not answer the complaint; instead, they filed a motion to dismiss alluding to the relevant arbitration provision and giving notice that they intended to seek arbitration. (Lake, supra, 738 F.2d at p. 1477.) In addition, the court found that the delay had not prejudiced the plaintiffs because only limited discovery had taken place, consisting mainly of one deposition. (Ibid.) Here, appellants did not give early notice that they intended to seek arbitration, and they propounded a fully panoply of discovery. Substantial evidence establishes that appellants’ conduct was inconsistent with the right to arbitrate, and that their use of discovery processes was not so limited, thus prejudicing respondents.
C. Unreasonable Delay
In determining whether a party has waived the right to arbitrate, courts also have considered whether the party seeking arbitration “ ‘ “has unreasonably delayed” in seeking arbitration . . . or has acted in “bad faith” or with “willful misconduct.” ’ [Citations].” (Christensen, supra, 33 Cal.3d at p. 782.) Unreasonable delay, gamesmanship, and bad faith have been predominate factors in some cases, (id. at pp. 783-784); in others, courts evaluate unreasonable or bad faith conduct as integrally connected to the determination of prejudice and the petitioning party’s use of discovery processes available in litigation.
For example, in Davis, supra, 59 Cal.App.4th 205, the court noted: “There is more prejudice in the present case than plaintiff’s mere incurring of court costs or legal expenses. The vice involved here, whether characterized as ‘unreasonable delay,’ ‘bad faith misconduct,’ ‘gamesmanship’ or ‘unilateral discovery’ . . . is that defendants used the discovery processes of the court to gain information about plaintiff’s case which defendants could not have gained in arbitration.” (Id. at p. 215.) Courts also “will consider the existence or absence of a reasonable explanation for the party’s delay in asserting its arbitration right in making a determination of waiver. [Citation.])” (Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1100-1101.) Although appellants here repeatedly argue that they were just “a little slow” to demand their arbitration rights and that there is no gamesmanship in their dilatory conduct, the record before us presents substantial evidence to the contrary.
As mentioned above, appellants do not contend that they were unaware of the October 2002 contract when respondents filed their complaint. Instead, they argued to the trial court and on appeal that “[i]t was not until Defense counsel received Plaintiffs’ responses to Form Interrogatories that it was confirmed that Plaintiffs are alleging that there is only one operative agreement, that there were no modifications or amendments and that said Agreement contained an Arbitration Clause.” This explanation rings hollow for several reasons. First, Mayerfeld’s sworn declaration states that he and Nazarian signed the October 2002 agreement and: “I [Mayerfeld] retain the Original in my possession.” So appellants did not need discovery to determine that at least one written agreement between the parties included an arbitration clause.
Second, that respondents might challenge the contract’s validity, or argue that it had been modified, did not prevent appellants from taking at least preliminary steps consistent with their desire to arbitrate, such as notifying respondents of their belief that the dispute was subject to the arbitration provision in the October 2002 agreement.
Third, appellants did not limit their initial discovery to asking respondents about which agreements they contended applied to the dispute. Instead, even appellants’ first set of form interrogatories also sought information about respondents’ contentions on damages and the identification of relevant witnesses. (See Davis, supra, 59 Cal.App.4th at p. 214.)
Fourth, respondents served responses to the form interrogatories in early December. Even though appellants claim these responses provided the clarification they needed to pursue arbitration, they did not demand arbitration -- or even mention it -- for another two months. In that two-month period, appellants responded to discovery, propounded additional written discovery that went well beyond questions about the written agreement, noticed two depositions, and participated in a case management conference at which they failed to inform respondents or the trial court of their desire to arbitrate.
Under these circumstances, substantial evidence supports the trial court’s implied finding of waiver on the ground that appellants’ delay was unreasonable, suggested procedural gamesmanship, and ultimately prejudiced respondents.
D. Appellants’ Analysis of Other Waiver Cases Does Not Require
a Different Result.
Appellants assert that several of the arbitration waiver cases respondents cite on appeal are so distinguishable as to “reflect a different world” from the situation presented here. We cannot agree. For example, the facts presented in Guess are far more similar to this case than appellants would allow. In Guess, the defendants were nonsignatories to the arbitration agreement they tried to enforce, yet they were aware of the arbitration agreement at the time they were sued. (Guess, supra, 79 Cal.App.4th at pp. 556-557.) Here, one of the appellants was a signatory to the agreement, and appellants knew of the arbitration provision well before they sought to compel arbitration. The Guess defendants waited three months after they answered the complaint before they demanded arbitration; during that time, they objected to the plaintiffs’ discovery requests and actively participated in third-party depositions. (Id. at pp. 557-558.) In this case, appellants also waited three months after answering the complaint to demand arbitration. In the meantime, they actively participated in discovery by both propounding and responding to discovery. In Guess, the defendants had no explanation for their failure to demand arbitration promptly. In this case, while appellants offered an explanation for their delay, as explained above, the record contains substantial evidence that would allow the trial court to find their explanation less than persuasive. In short, the Guess court’s affirmance of the trial court’s implied finding of prejudice is instructive here.
Appellants also try to distinguish Christensen, supra, 33 Cal.3d 778. In Christensen, the plaintiffs sought arbitration and admitted that they had filed a lawsuit just to get a set of verified pleadings that would reveal the defendants’ legal theories and strategy. (Id. at p. 783.) The California Supreme Court upheld the trial court’s ruling that the plaintiffs acted in bad faith and thereby waived the right to arbitrate. (Id. at p. 784.) The facts of Christensen are obviously different from those before us. But the general principle set forth in Christensen applies: a litigant who maximizes the benefits of a lawsuit while it knows it eventually will seek arbitration engages in gamesmanship and bad faith that may waive the right to arbitrate. Substantial evidence supports the trial court’s implied inference that appellants delayed enforcing their right to arbitrate to try to gain an advantage that they likely would have lost in arbitration. (See Davis, supra, 59 Cal.App.4th at p. 214.)
Appellants’ arguments regarding Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, are equally unpersuasive. Moreover, contrary to appellants’ representations in their briefing, respondents do not rely on Martinez in their arguments on waiver of the right to arbitrate.
3. The Trial Court Did Not Abuse Its Discretion by Accepting Respondents’ Opposition to the Petition To Compel Arbitration.
Finally, appellants argue that the trial court erred by accepting respondents’ opposition to the petition to compel arbitration. Respondents filed the opposition one court day late due to their counsel’s failure to account for the Cesar Chavez court holiday when he calculated the filing deadline.
California Rules of Court, rule 3.1300(d) provides that no paper may be rejected for filing on the ground that it was untimely submitted, but the court may refuse to consider a late-filed paper. Respondents filed a supplemental brief with the trial court explaining why their opposition was late and asking the court to consider the late filing excusable neglect under section 473. While appellants’ reply to respondents’ opposition focused almost exclusively on the late filing issue, it did not suggest that appellants had been prejudiced, or even affected, by the late filing. (See Kapitanski v. Von’s Grocery Co. (1983) 146 Cal.App.3d 29, 32-33.) We therefore conclude that the trial court did not abuse its discretion by accepting respondents’ opposition to appellants’ petition to compel arbitration.
DISPOSITION
The order denying the motion of defendants and appellants to compel arbitration is affirmed. Respondents are to recover their costs on appeal.
We concur: COOPER, P. J. FLIER, J.