Unreported / Non-Citable
Background
Steve and Grant Gidaro and Angelo and Kyriakos Tsakopoulos, two father-son pairs, each held a combined 50 percent stake in Greener Farms, LLC, which managed hunting rights on the 17,240-acre Conaway Ranch in Yolo County. After tensions over Steve's management boiled over in August 2023, Angelo and Kyriakos voted several months later to nonjudicially dissolve Greener Farms under Corporations Code section 17707.01, subdivision (b), which permits dissolution by a 50 percent member vote. When Steve refused to sign or file a certificate of dissolution or wind up the company, they filed a dissolution petition in late October 2023.
Greener Farms had no operating agreement, so Steve based his petition to compel arbitration on the operating agreement of Tri-City Investors, LLC, an entity in the ownership chain for Conaway Ranch. That agreement required arbitration of 'any dispute … regarding the interpretation or execution of this Agreement' under the AAA Commercial Arbitration Rules. Steve argued dissolving Greener Farms would breach Tri-City Investors' duty to support a hunting-rights agreement with Greener Farms and would be a 'Major Decision' requiring a majority vote.
The trial court heard argument in February 2024 and continued the hearing several times, including a July 2024 stipulation for supplemental briefing on Coinbase, Inc. v. Suski, after which the court cautioned that no further briefing would be allowed without leave. Steve's supplemental brief went beyond Coinbase to argue in conclusory fashion that the AAA rules delegated arbitrability to the arbitrator—a change from his earlier briefing urging the court to decide arbitrability. At a second hearing in February 2025, the court denied the arbitration petition, finding Steve failed to prove an arbitration agreement covering the dissolution dispute, that Coinbase was inapposite, and that the new delegation arguments were without leave; it granted the dissolution petition the same day. Steve appealed both orders but focused on the arbitration denial.
The Court’s Holding
The Court of Appeal first held that Steve forfeited his delegation argument by raising it for the first time in supplemental briefing, without analysis and without leave of court. The court said it need not decide whether incorporating AAA rules is clear and unmistakable evidence of intent to delegate because 'the delegation ship has sailed': a delegation clause is a specialized arbitration agreement that can be forfeited like any contract right, and Steve's late, cursory argument deprived the Tsakopouloses of the chance to present fact-specific contract defenses and deprived the trial court of a developed record. The court also declined to consider the new theory in its discretion because enforceability of a delegation clause is not a pure question of law.
On the merits, the court held Steve failed to establish an agreement to arbitrate the dissolution dispute. The controversy was whether the Revised Uniform Limited Liability Company Act's default provisions allowed dissolution of Greener Farms by a 50 percent vote. The Tri-City Investors clause was 'particularly narrow,' covering only disputes regarding interpretation or execution of that agreement and omitting 'related to' language. The dissolution petition neither enforced nor required interpretation of the operating agreement and disclaimed reliance on it.
The court rejected Steve's claim that a dispute existed because he viewed dissolving Greener Farms as contrary to the operating agreement while Kyriakos did not; the duty to support a hunting-rights agreement did not transform the statutory dissolution petition into an arbitrable interpretation dispute. Finding no other arbitration agreement, the court affirmed both orders and awarded costs on appeal to Angelo and Kyriakos Tsakopoulos.
Key Takeaways
- A party forfeits a delegation-clause argument by raising it for the first time in supplemental briefing without leave of court and without reasoned analysis, even if incorporation of AAA rules might otherwise support delegation.
- Forfeiture rests on fairness: a late assertion deprives opponents of the chance to present fact-specific contract defenses such as waiver and deprives the trial court of a developed record.
- A narrow arbitration clause covering only disputes 'regarding the interpretation' of an agreement does not reach a statutory LLC dissolution petition that neither enforces nor requires interpretation of that agreement.
- The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence that an agreement to arbitrate the specific controversy exists.
- An appellate court will not exercise discretion to consider a newly raised delegation theory because enforceability of a delegation clause is not a pure question of law.
Why It Matters
This unpublished decision reinforces that delegation arguments must be timely and properly presented, consistent with Mendoza v. Trans Valley Transport and Haydon v. Elegance at Dublin, which find forfeiture when such arguments surface late and cursorily. It confirms that delegation clauses are treated as separate arbitration agreements subject to ordinary contract defenses.
The opinion also shows how the breadth of an arbitration clause controls scope: a clause limited to disputes over interpretation of a specific agreement will not capture statutory dissolution proceedings against a different entity, even where the entities share members. Practitioners should ensure the entity at issue has its own operating agreement with an arbitration provision.