Gemini Basketball Holdings v. Williams Group Holdings CA2/3

INTRODUCTION

Plaintiff Gemini Basketball Holdings, LLC (GBH) appeals from the court’s denial of its motion to compel arbitration, asserting that the court erred in concluding that GBH waived its right to arbitration. We reverse because GBH did not act inconsistently with the intent to arbitrate, did not unreasonably delay in seeking arbitration, did not engage in misconduct or act in bad faith, and did not prejudice the defendants.

FACTS AND PROCEDURAL BACKGROUND

On October 25, 2012, GBH sued attorney Marc Samotny and his law firm, Patzik, Frank & Samotny, Ltd. (collectively Samotny) alleging four causes of action: legal malpractice, breach of fiduciary duty, fraud and negligent misrepresentation (the malpractice action). As explained in the complaint, GBH served as the managing member of a limited liability company, Gemini Basketball LLC (Gemini), after Gemini bought the Los Angeles Sparks basketball team in 2006. GBH borrowed $3.25 million (#07 loan) from Broadway Federal Bank (the Bank) to finance the purchase. Williams Group Holdings, LLC (Williams) invested in Gemini in 2007, and by 2010, became a co- managing member of Gemini along with GBH. Meanwhile, GBH borrowed…