Avigai Hoping Media, LLC v. Signature Payments, LLC CA4/3

Opinion

Filed 9/29/26 Avigai Hoping Media, LLC v. Signature Payments, LLC CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

AVIGAI HOPING MEDIA, LLC,

Plaintiff and Respondent, G066127 v. (Super. Ct. No. 30-2025- 01467021) SIGNATURE PAYMENTS, LLC, et al., OPINION Defendants and Appellants.

Appeal from an order of the Superior Court of Orange County, Shaina H. Colover, Judge. Reversed and remanded with directions. Greenspoon Marder, Barbara Croutch and John H. Pelzer for Defendants and Appellants. Global Legal Law Firm, Bryce Van De Moere, Joshua J. Herndon and Jeffrey Simon for Plaintiff and Respondent. Defendants Signature Payments, LLC, North American Bancard, LLC, and Fresno First Bank appeal from an order denying their motion to compel arbitration. They contend the trial court wrongly reached the issue of unconscionability because the arbitration agreement delegated that issue to the arbitrator. We agree because, the arbitration agreement has a clear and unmistakable delegation clause. Plaintiff Avigai Hoping Media, LLC did not show the delegation clause itself (as opposed to the agreement as a whole) is unconscionable. Accordingly, we reverse. FACTS To obtain credit card payment processing for its Internet businesses, Avigai submitted two “Merchant Processing Application[s]” to defendants Signature Payments, LLC and Fresno First Bank. Avigai’s owner signed both applications electronically. Right above the signature line on each application is a section titled “Certification & Agreement” that references a “Merchant Processing Agreement.” The application states that the applying merchant “acknowledges that you have accessed our Merchant Processing Agreement (‘Agreement’) at www.merchantinfo.com/agreement.” It further states: “By signing below, Merchant agrees to all terms and conditions contained therein.” The first page of the Merchant Processing Agreement, in turn, states: “THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION IN SECTION 1.50 THAT AFFECTS MERCHANT’S RIGHTS. PLEASE REVIEW IT CAREFULLY.” In the arbitration provision, the parties agree to arbitrate all disputes. Section 1.50 is entitled “Dispute Resolution.” It provides: “BY ENTERING INTO THIS AGREEMENT AND ACCEPTING SERVICE 2 FROM SERVICERS, MERTCHANTS [sic] AGREE TO RESOLVE ALL DISPUTES (as defined below) THROUGH BINDING ARBITRATION BY THE AMERICAN ARBITRATION ASSOCIATION (‘AAA’).” The arbitration provision defines “Dispute” broadly. It provides: “Specifically, Servicers and Merchant each acknowledge and agree that any controversy, disagreement, dispute or claim arising out of or relating to this Agreement, or any breach thereof (each, a ‘Dispute’), shall be settled by following the procedures set forth in this Arbitration Provision.” The broad definition of “Dispute” includes disputes against certain third parties. The agreement states: “Without limitation, Servicers and Merchant agree that Disputes, shall include the following matters: (a) any Dispute by any party against any agent, employee, successor, or assign of the other party or parties, including to the full extent permitted by applicable law, third parties who are not signatories to this Agreement, whether related to this Agreement or otherwise . . . .” The arbitration provision also defines “Dispute” to include any claim about the arbitration provision itself or arbitrability. The definition covers: “(c) any Dispute as to the scope, validity or applicability of this Section 1.50, and/or the arbitrability of any Dispute . . . .” We refer to this provision as the delegation clause. Avigai sued defendants for breach of contract and other claims related to the payment processing services. Avigai asserted defendants “established a reserve fund for each of [Avigai’s] DBA merchant accounts” pursuant to the agreement, but wrongly withheld almost $200,000 in the fund after Avigai terminated the services. It alleged defendant North American Bancard, LLC is the parent company of Signature.

3 Defendants moved to compel arbitration. The trial court posted a tentative ruling granting the motion, then took the matter under submission after oral argument and denied it. The court found the agreement unconscionable. Addressing defendants’ contention that “the validity of the arbitration provision is for the arbitrator to decide,” the court noted “‘certain gateway issues are for a court to decide, including whether the parties entered into an agreement to arbitrate at all.’” In finding procedural unconscionability, the court found the agreement—“the only document that actually contained the arbitration clause”—“was never signed” and there was “no evidence that [Avigai] was ever presented with” the agreement. The court further noted that “[t]he only way for Plaintiff to find the [agreement]’s terms and conditions before submitting an application was to go to the URL provided in an outside website and scroll down . . . .” DISCUSSION Defendants contend the trial court should have granted their motion on the ground of unconscionability because the agreement’s delegation clause entrusted that issue to the arbitrator. We agree. First, as the court correctly noted, we must decide the “gateway issue[]” of “whether the parties entered into an agreement to arbitrate at all.” (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 774 [employee handbook did not create contract].) We decide this de novo where, as here, there is no conflicting evidence. (See Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 890 (Aanderud).) We hold Avigai entered into the agreement, with its arbitration provision, by signing the application. “‘The general rule is that the terms of an extrinsic document may be incorporated by reference in a contract so long 4 as (1) the reference is clear and unequivocal, (2) the reference is called to the attention of the other party and he consents thereto, and (3) the terms of the incorporated document are known or easily available to the contracting parties.’” (B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 952 (Blizzard) [website popup notice gave notice of agreement that validly incorporated arbitration clause by reference].) The application satisfies each Blizzard element. Its reference to the agreement is clear and unequivocal, it’s called to Avigai’s attention by being set forth right above Avigai’s undisputed electronic signature, and it “provided the exact web address to access” the agreement. (Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 393.) We also take guidance from “‘the full context of the transaction’”—an online business seeking payment processing—which “‘contemplates entering into a continuing, forward-looking relationship that would be governed by terms and conditions.’” (Singh v. Adobe Inc. (N.D. Cal. 2025) 797 F.Supp.3d 1038, 1049.)1 Indeed, Avigai is hard-pressed to deny entering into the agreement. Its own complaint alleges it “has a Merchant Processing Agreement (hereinafter the ‘MPA’) with Defendants.” It relies on the agreement in alleging Signature withheld reserve funds “even though as per the terms of the MPA they have no legal right to a continued withholding.” Second, as another gateway issue, we decide whether North American Bancard, LLC can invoke the agreement’s arbitration provision.

1 Shortly before oral argument, defendants filed a letter brief inviting us to consider new authority on mutual assent to arbitrate. (Wilkins v. Cruise, LLC (2026) 121 Cal.App.5th 927, 953 [consumer sign-in process sufficiently conspicuous to effect notice].) It extensively quotes Blizzard, supra, 76 Cal.App.5th 931 and does not add anything to our analysis.

5 We conclude it can. Avigai agreed to arbitrate disputes with “third parties who are not signatories to this Agreement” “to the full extent permitted by applicable law.” And under California law, “if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement.” (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 714.) Here, all Avigai’s claims against North American Bancard, LLC arise from the alleged breach of the agreement by withholding the reserve fund. Finally, we reach the key issue of whether defendants have shown the delegation clause is enforceable. We conclude it is. “‘There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.’”2 (Aanderud, supra, 13 Cal.App.5th at p. 892.) As to the first prerequisite, the delegation clause is clear and unmistakable. It requires the parties to arbitrate “any Dispute as to the scope, validity or applicability of this Section 1.50 [i.e., the arbitration provision], and/or the arbitrability of any Dispute . . . .” This is clearer than the delegation clause enforced in Aanderud, whereby the parties agreed to arbitrate disputes over “‘the determination of the scope or applicability of this 2 Avigai’s counsel asserted for the first time at oral argument that a separate paragraph in the Agreement shows the delegation clause is not clear and unmistakeable. We do not consider the point. (People v. Thompson (2010) 49 Cal.4th 79, 110, fn. 13.)

6 Section 5 [the “Arbitration of Disputes” section].’”3 (Aanderud, supra, 13 Cal.App.5th at p. 892.) On the second prerequisite, Avigai has not shown the delegation clause is revocable under state law. (See Aanderud, supra, 13 Cal.App.5th at pp. 892, 895 [“[t]he party opposing arbitration has the burden of proving unconscionability”].) Critically, “unless [Avigai] challenged the delegation provision specifically, we must treat it as valid . . . leaving any challenge to the validity of the Agreement as a whole for the arbitrator.” (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 72 (Rent-A-Center).) “[W]e need not consider [an unconscionability] claim because none of [the] substantive unconscionability challenges was specific to the delegation provision.” (Id. at p. 73.) “Rent-A- Center held that delegation clauses are valid absent a challenge specific to the delegation clause.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 248.) “When determining whether a delegation clause is unconscionable, any claim of unconscionability must be specific to the delegation clause.” (Aanderud, supra, 13 Cal.App.5th at p. 895.) Here, we agree with defendants that Avigai “has not identified any aspect of the Delegation Clause that is substantively unconscionable.” All Avigai’s challenges are directed to the contract as a whole: e.g., the agreement gave defendants “an unqualified right to modify or terminate the contract,” and thus lacks “consideration” and “mutuality” and is “‘unenforceable as illusory.’”

3 The AAA arbitration rules are not in the record so we express no opinion on how they might affect our analysis. (Cf. Aanderud, supra, 13 Cal.App.5th at p. 893 [“the reference to the JAMS Rules” giving arbitrator authority to decide arbitrability “further evidences the parties’ clear and unmistakable intent . . . .”].)

7 We find no guidance in Avigai’s cited U.S. Supreme Court case regarding “the third-order question of who decides arbitrability” when “parties have multiple agreements that conflict” on that issue. (Coinbase, Inc. v. Suski (2024) 602 U.S. 143, 149 (Coinbase).)4 This case does not require deciding who chooses between conflicting contracts—e.g., between one contract containing a delegation clause entrusting the issue to the arbitrator and a different contract containing a forum selection clause sending the same issue to the court. Moreover, Coinbase does not criticize Rent-A-Center but instead quotes it: “‘If a party challenges the validity . . . of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that [arbitration] agreement.’” (Coinbase, at p. 151.) Here, we fulfill this mandate by holding the parties validly entered into the agreement. After that, as “none of [Avigai’s] substantive unconscionability challenges was specific to the delegation provision” (Rent- A-Center, supra, 561 U.S. at p. 73), we “leav[e] any challenge to the validity of the Agreement as a whole for the arbitrator” (id. at p. 72). If Coinbase had intended to overrule Rent-A-Center and hold courts must determine unconscionability in the first instance regardless of delegation clauses, it would have said so.

4 The first-order issue is who should win on the merits; the second-order issue is whether the merits should be arbitrated; the third-order issue is who should decide whether the merits go to arbitration. (See Coinbase, supra, 602 U.S. at pp. 148–149.)

8 DISPOSITION The order is reversed. The trial court is directed to issue an order granting appellants’ motion to compel arbitration and staying court proceedings. Appellants shall recover their costs on appeal.

SCOTT, J.

WE CONCUR:

GOODING, ACTING P. J.

SCHWARM, J.* *Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.