Jenny-Ashley Colon-Perez brought a claim against her employer, Security Industry Specialists, Inc., which was subject to a pre-dispute arbitration agreement. During the arbitration process, the employer was required to pay arbitration fees by certain statutory deadlines under Code of Civil Procedure section 1281.98. The employer had timely paid all prior arbitration invoices, but missed one payment deadline because defense counsel was dealing with a natural disaster that caused extensive property damage and forced her and her family to evacuate their home. The overdue invoice was paid within six days of the statutory deadline.
After the employer missed the payment deadline, Colon-Perez moved under section 1281.98 to withdraw from arbitration, arguing the late payment triggered her right to return to court litigation. The trial court granted that motion, allowing her to withdraw from arbitration. The employer then filed a motion under Code of Civil Procedure section 473, subdivision (b), seeking equitable relief from the withdrawal order on grounds of excusable neglect. The trial court denied that motion as well, effectively ending the employer’s ability to enforce the arbitration agreement.
On the initial appeal, the First Appellate District affirmed the trial court, holding that section 1281.98 imposed a rigid, inflexible deadline and that section 473, subdivision (b) could not be used to excuse a failure to comply with that deadline, regardless of the reason for the late payment or how quickly payment was made afterward. That opinion was published as Colon-Perez v. Security Industry Specialists, Inc. (2025) 108 Cal.App.5th 403.
The California Supreme Court granted review and held the case pending its decision in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310. In Hohenshelt, the Supreme Court rejected the rigid construction that several Courts of Appeal, including this one, had applied to section 1281.98. The Supreme Court held that equitable relief statutes – specifically section 473, subdivision (b), Civil Code section 3275, and Civil Code section 1511 – remain available to excuse late arbitration fee payments. It also concluded that, construed in harmony with these background equitable relief statutes, section 1281.98 does not impermissibly burden arbitration contracts and is therefore not preempted by the Federal Arbitration Act.
Following Hohenshelt, the Supreme Court transferred Colon-Perez back to the Court of Appeal with directions to vacate the prior opinion and reconsider in light of the new ruling. On remand, the Court of Appeal in the unpublished case of Colon-Perez v. Security Industry Specialists -A168297 (February 2026) reversed the trial court’s denial of the employer’s section 473, subdivision (b) motion.
Rather than simply sending the case back for further proceedings, the court concluded that the record compelled granting the employer relief outright. The court found there was no suggestion whatsoever of strategic or willful nonpayment – the exact conduct section 1281.98 was designed to address. To the contrary, the employer had a consistent track record of timely payments, missed only one deadline due to a natural disaster, and cured the late payment within six days.
The court noted that the Supreme Court itself had cited this very case in Hohenshelt as an example of a non-deliberate late payment that should not result in forfeiture of arbitral rights. Given the six-day delay, the court also found no basis for any claim of prejudice to Colon-Perez.
The court reversed the order denying relief under section 473, subdivision (b) and remanded with directions to grant the employer’s motion and vacate the order that had allowed Colon-Perez to withdraw from arbitration. Each party was ordered to bear its own costs on appeal.