Cvejic v. Skyview Capital, LLC
Arbitration
Motion to compel arbitration
Affirmed
Prevailing party: Employee
Code Civ. Proc. §§ 1281.97–1281.99
By Jonathan J. DelshadFounder & Editor-in-Chief
01Facts
Milan Cvejic worked for Skyview Capital, LLC. After his employment ended, he sued Skyview and others in Los Angeles County Superior Court. Skyview moved to compel arbitration; the trial court granted the motion and stayed the lawsuit, and the dispute proceeded before a three-arbitrator American Arbitration Association panel under its commercial rules. As the drafting party, Skyview was required to pay the arbitration fees, which came due June 4, 2021. By early July the fees were still unpaid; on July 8, 2021, the case manager confirmed by e-mail that Skyview had not paid, and Skyview’s counsel offered “no further explanation.” The panel set a new payment deadline of July 14. Within about an hour of the call discussing the missed payment, Cvejic’s counsel notified the panel that Cvejic was withdrawing from the arbitration under Code of Civil Procedure section 1281.98. Skyview ultimately paid by July 14, and the panel declared section 1281.98 inapplicable because Skyview had “come into compliance.”
02Procedural posture
Cvejic filed his section 1281.98 election to withdraw in the trial court on July 21, 2021, and refiled it in December 2021 with a request for statutory sanctions and a motion to vacate the order staying the court proceedings. In February 2022 the trial court granted Cvejic’s request to withdraw from arbitration, vacated the stay, and awarded him expenses under section 1281.99. Skyview appealed. The Court of Appeal treated the order — which effectively undid the earlier order compelling arbitration — as functionally equivalent to an order denying arbitration, and therefore appealable, and it reviewed the statutory question de novo on undisputed facts.
03Issue
Whether a drafting party’s failure to pay arbitration fees within the statutory window is a material breach under Code of Civil Procedure section 1281.98 that entitles the employee to withdraw unilaterally from arbitration and return to court — and whether the arbitrator, rather than the trial court, may cure that missed payment by setting a new deadline.
04 · Holding
Yes. A drafting party that does not pay required arbitration fees within 30 days of the due date is in material breach as a matter of law, and the employee may unilaterally withdraw from arbitration and proceed in court. The arbitrator has no power to cure the missed payment by extending the deadline. The trial court’s order — including the sanctions award — was affirmed.
05Reasoning
The court read section 1281.98 against the abuse the Legislature enacted it to stop in 2019: a defendant forcing a case into arbitration and then stalling by refusing to pay fees, leaving the claimant in what the Legislature called “procedural limbo.” The statute supplies a bright-line rule — if the fees needed to continue an employment or consumer arbitration are not paid within 30 days of the due date, the drafting party is in material breach, is in default, and waives the right to compel the employee to continue. Applying that rule, Skyview’s fees were due June 4 and remained unpaid well past the 30-day mark, so Skyview was in material breach and Cvejic was entitled to withdraw. The court rejected Skyview’s forfeiture and waiver arguments: Cvejic had reserved his rights, and the earlier deadline extension predated any breach and reflected only the rescheduling of the hearing, not consent to a breach. It also rejected the contention that the arbitrator’s later deadline cured the default — the section 1281.98 election is decided by the trial court, not the arbitrator, and the statute leaves no “escape hatch” for a drafting party or for an arbitrator inclined to keep the matter. Distinguishing authority on respect for arbitrators’ procedural rulings, the court emphasized that it was not reviewing an arbitral procedural decision but enforcing a statutory right exercised in court. The 2021 amendments requiring that any extension be agreed by all parties did not change the result, because the case involved a new deadline set after a breach, not a pre-breach extension. The sanctions stood because Skyview never separately showed the award was erroneous.
For employee-side counsel, section 1281.98 is a hard-edged tool — calendar the drafting party’s fee due date the moment a case is ordered to arbitration. If the employer misses the 30-day window, the late payment is a material breach as a matter of law, with no prejudice or intent analysis to litigate: file the section 1281.98 election in the trial court to withdraw and return to a judicial forum, and seek expenses and sanctions under section 1281.99. Do not be deterred by an arbitrator’s “cure” deadline or a panel’s declaration that the breach was excused — under Cvejic, that election belongs to the court, not the arbitrator. Move promptly and reserve your rights on the record once the deadline passes.
06Open questions
Cvejic enforced sections 1281.97–1281.98 as a matter of California law and noted that Skyview had forfeited any federal-preemption argument by failing to raise it in its opening brief. The larger question of whether the Federal Arbitration Act preempts these strict fee-default provisions was therefore left for another day — a question that has since drawn appellate and California Supreme Court attention and that readers should track independently when the FAA governs the agreement. Also unresolved here is how the 2021 amendment’s “agreed upon by all parties” extension language operates when an extension is negotiated before any breach, a scenario the court expressly distinguished rather than decided.