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Taylor v. Eclipse Senior Living, Inc.
Factual and Procedural Background
Jennifer Janet Taylor worked as a nurse for Eclipse Senior Living, Inc. and related entities ("Eclipse") at the Grossmont Gardens senior living facility in La Mesa, California from approximately March 2019 to September 2019. In January 2019, Eclipse offered Taylor employment "with Elmcroft by Eclipse Senior Living at Grossmont Gardens," and Taylor signed an employee handbook on February 11, 2019, which included an arbitration agreement binding her to "Elmcroft Senior Living." Taylor's employment ended in September 2019, and four months later she filed a putative class action against Eclipse asserting multiple causes of action under federal and California labor laws. Eclipse moved to compel arbitration and to dismiss or stay the action based on the arbitration agreement. The court addressed whether Eclipse could enforce the arbitration agreement given the discrepancy in the named entity.
Legal Issues Presented
- Whether Eclipse Senior Living, Inc. and its related entities can enforce an arbitration agreement signed under the name "Elmcroft Senior Living," which is a fictitious business name not registered with the California Secretary of State.
- Whether failure to register the fictitious business name precludes Eclipse from compelling arbitration under California law.
Arguments of the Parties
Defendants' Arguments
- Eclipse argued that although the arbitration agreement names "Elmcroft Senior Living," Elmcroft is a fictitious name under which Eclipse operates, and therefore Eclipse should be able to enforce the arbitration agreement.
- Eclipse sought dismissal or a stay of the action pending arbitration.
Plaintiff's Arguments
- Taylor opposed the motion in part because the arbitration agreement did not mention any Eclipse entity but rather "Elmcroft Senior Living," which is not a registered fictitious business name of Eclipse.
- She argued that Eclipse cannot enforce the arbitration agreement until it registers the fictitious business name with the California Secretary of State as required by law.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Cal. Bus. & Prof. Code § 17900 | Definition of "fictitious business name" for foreign corporations. | Used to establish that "Elmcroft Senior Living" is a fictitious business name under California law. |
| Cal. Bus. & Prof. Code § 17910 | Requirement to file a fictitious business name statement within 40 days of transacting business under that name. | Applied to determine Eclipse's failure to timely register the fictitious name. |
| Cal. Bus. & Prof. Code § 17918 | Prohibition on maintaining actions based on contracts made under an unregistered fictitious business name. | Formed the basis for denying enforcement of the arbitration agreement until compliance. |
| Hydrotech Systems, Ltd. v. Oasis Waterpark, 52 Cal. 3d 988, 1001 (1991) | Noncompliance with fictitious business name statutes prevents enforcement of obligations until registration. | Supported the court's conclusion that Eclipse cannot enforce the arbitration agreement until it registers the fictitious name. |
| Platte River Ins. Co. v. P & E Automation, Inc., Case No. 12-05778 JGB-AJW, 2013 WL 12123688 | Application of Cal. Bus. & Prof. Code § 17918 in federal court. | Confirmed the applicability of the fictitious business name statute to federal court proceedings in California. |
Court's Reasoning and Analysis
The court examined the California Secretary of State records and confirmed that Eclipse is registered under its corporate name and that "Elmcroft Senior Living" is a fictitious business name. Under California law, a corporation transacting business under a fictitious name must register that name within 40 days or be precluded from enforcing contracts made under that name. Eclipse conceded it had not registered the fictitious name within the required timeframe despite operating under it since January 2018. Consequently, the court found that Eclipse could not enforce the arbitration agreement signed under the fictitious name "Elmcroft Senior Living." The court denied the motion to compel arbitration without prejudice, allowing Eclipse to renew the motion if it complies with the registration requirement. The court's decision was grounded in statutory interpretation and precedent emphasizing the importance of fictitious business name registration for contract enforcement.
Holding and Implications
The court DENIED WITHOUT PREJUDICE Eclipse's motion to compel arbitration and stay proceedings.
This decision means Eclipse cannot currently enforce the arbitration agreement signed under the unregistered fictitious name "Elmcroft Senior Living." However, Eclipse may renew its motion if it registers the fictitious business name in compliance with California law. The ruling directly affects the parties by allowing the litigation to proceed in court for now and does not establish new legal precedent beyond applying existing fictitious business name statutes.
HON. LARRY ALAN BURNS United States District Judge
ORDER DENYING MOTION TO COMPEL ARBITRATION WITHOUT PREJUDICE [Dkt. 17]Defendants Eclipse Senior Living, Inc., Eclipse Portfolio Operations LLC, and EC Opco CA Partner V LLC (collectively, "Eclipse") filed a motion to compel arbitration and to dismiss or stay this action. Plaintiff Jennifer Janet Taylor opposes, in part because the arbitration agreement in question doesn't mention any Eclipse entity—it purports to bind, instead, "Elmcroft Senior Living." Eclipse tries to avoid this problem by asserting that Elmcroft is its fictitious name, but if that's so, Eclipse hasn't registered that name with the California Secretary of State and so it can't enforce any agreements signed under that name until it does so. It can't enforce the arbitration agreement / / / against Taylor under the present circumstances, and so the Motion to Compel Arbitration and Stay Proceedings is DENIED WITHOUT PREJUDICE.
BACKGROUND"From approximately March 2019 to September 2019," Taylor allegedly worked as a nurse for Eclipse at the Grossmont Gardens senior living facility in La Mesa, California. Compl., Dkt. 1 ¶ 12. In January 2019, Eclipse sent Taylor a letter offering her employment "with Elmcroft by Eclipse Senior Living at Grossmont Gardens." Dkt. 17-3 at 9. Taylor signed an employee handbook on February 11, 2019. Id. at 12. Among other things, the handbook included a meal period policy, overtime protocol, and an arbitration agreement between her and "the Company," which was defined as "Elmcroft Senior Living."
In September of 2019, Taylor's employment ended. She filed a putative class action against Eclipse four months later, asserting ten causes of action under the Fair Labor Standards Act, the California Labor Code, and the California Business and Professions Code. Eclipse now moves to enforce the arbitration agreement.
DISCUSSIONThe California Secretary of State's Records show that Eclipse is registered in California under the name "Eclipse Senior Living, Inc." "Elmcroft Senior Living," to the extent it is a tradename under which Eclipse operates, is a fictitious business name under California law. Cal. Bus. & Prof. Code § 17900 (defining "fictitious business name," "[i]n the case of a . . . foreign corporation," as "any name other than the corporate name stated in its articles of incorporation filed with the California Secretary of State"). A corporation "regularly transact[ing] business in [California] for profit under a fictitious business name" must file a fictitious name statement with the California Secretary of State within 40 days of beginning to transact business under that name. Cal. Bus. & Prof. Code § 17910. If it fails to do so, it may not "maintain any action upon or on account of any contract made, or transaction had, in the fictitious business name in any court of this state until the fictitious business name statement has been executed, filed, and published." Cal. Bus. & Prof. Code § 17918; see also Platte River Ins. Co. v. P & E Automation, Inc., Case No. 12-05778 JGB-AJW, 2013 WL 12123688 (applying Section 17918 in federal court in California). "Noncompliance [with this statute] prevents a fictitiously-named business from enforcing obligations owed to it until it places on record its true nature and ownership." Hydrotech Systems, Ltd. v. Oasis Waterpark, 52 Cal. 3d 988, 1001 n.8 (1991). Failure to comply doesn't invalidate a business's agreements, though, it only precludes enforcement of those agreements until the fictitious name is registered. Id.
The Court takes judicial notice of these records. See Fed. R. Evid. 201(b), 201(c)(1). --------
Crediting (for the purposes of this analysis) Eclipse's representation that it signed the agreements, but under the Elmcroft name that it operates under, leads only to the conclusion that Eclipse can't enforce the arbitration agreement, albeit temporarily. It failed to register the Elmcroft name within 40 days of beginning to transact business under that name in California, as required. See Dkt. 17-3 at 2 (declaring that Eclipse started to manage Grossmont Gardens under the Elmcroft name on January 21, 2018); Cal. Bus. & Prof. Code § 17910. Since Eclipse is using that name in violation of California law, Cal. Bus. & Prof. Code § 17918, it can't enforce any agreements purporting to bind "Elmcroft Senior Living." Hydrotech, 52 Cal. 3d at 1001 n.8. The arbitration agreement that Eclipse seeks to enforce is via its Motion to Compel Arbitration is such an agreement, and so that Motion is DENIED WITHOUT PREJUDICE. (Dkt. 17.) Eclipse's response to the Complaint will be due within 21 days of this Order. If Eclipse brings itself into compliance with California's fictitious-name statutes prior to that deadline, it may renew its motion to compel arbitration by an ex parte motion to reconsider this Order based on that change in circumstances.
IT IS SO ORDERED. Dated: March 15, 2021
/s/_________
HON. LARRY ALAN BURNS
United States District Judge
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