Judge Alison Mackenzie, Case Number: 23STCV14348, Date: 2024-01-22 Tentative Ruling

Judge: Alison Mackenzie, Case: 23STCV14348, Date: 2024-01-22 Tentative Ruling

Case Number: 23STCV14348 Hearing Date: January 23, 2024 Dept: 55

NATURE OF PROCEEDINGS: Defendants’ Motion to Compel Arbitration and Dismiss This Matter or, In The Alternative, Stay Proceedings Pending the Completion of Arbitration [CCP §§ 1281.2 & 1281.4].

The motion is denied.

Background

Plaintiff 6524 HOLLYWOOD ASSOCIATES, LLC (“Plaintiff”) alleges Defendants breached the 2005 lease agreement with Plaintiff by failing to pay the agreed-upon rent starting in May 2023, and also breached the 2011 guarantee agreement with regards to the lease.

Defendants 1650 SCHRAEDER BLVD., LLC and SBE RESTAURANT GROUP, LLC (“Defendants”) have filed a motion to compel arbitration and stay this case pending the arbitration. Plaintiff opposes the motion.

Legal Standard

Under CCP § 1281.2, the party moving to compel arbitration bears the burden of demonstrating that “an agreement to arbitrate the controversy exists.” “With respect to the moving party’s burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court.” Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160. “Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges.” (Id.)

Analysis

Defendants seek to compel arbitration based on two parts of the lease agreement. Paragraph 49 of the Lease is a form that has a box to check in front of the word “is” and in front of the phrase “is not” in the following statement, “[a]n addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of the Lease is/is not attached to the Lease.” (Compl., Ex. A, ¶ 49). The box next to “is” is checked. Paragraph 58 of the Addendum to the lease, provides, in relevant part:

ARBITRATION: IF A CONTROVERSY OR CLAIM BETWEEN THE PARTIES ARISES OUT OF, OR AS IT RELATES TO THE DISPOSITION OF THE LESSEE’S DEPOSIT OR A CLAIM OF MISUNDERSTANDING AGAINST ANY PARTY TO THIS TRANSACTION … SUCH ARBITRATION SHALL BE DETERMINED IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION…

(Compl., Ex. A, ¶ 58 (emphasis added).)

The Court agrees with Plaintiff that this arbitration agreement cannot be interpreted to cover the claims in the Complaint regarding unpaid rent. Doubts or ambiguities regarding the scope of arbitration provisions are not resolved in favor of arbitrability, where the provisions “do not exist or were so poorly drafted that another party cannot be presumed to have agreed to them.” Thompson v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1370. Such is the case here. The lease mentions arbitration in two locations, which are seemingly inconsistent. The form paragraph 49 is not worded as a stand-alone arbitration agreement, because it lacks all material terms. Instead, Paragraph 49 merely incorporates-by-reference paragraph 58 in the Addendum, which directly contradicts Paragraph 49’s description of an arbitration agreement as to all disputes about the transaction. The specific paragraph 58 references narrow and unique topics for arbitration, i.e., claims arising out of the lessee’s deposit disposition or a claim of misunderstanding. These topics clearly do not include an action for allegedly unpaid rent as in this case.

Defendants’ briefs simply ignore the specific language in Paragraph 58 listing the specific types of claims covered in the arbitration agreement. But the Court finds that this specific language in Paragraph 58 limits the scope of the arbitration agreement because particular contract provisions control over general ones where they are inconsistent. Thompson v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1370. Accord Brady v. Bayer Corp. (2018) 26 Cal. App. 5th 1156, 1178 (citing Civ. C., § 3534 (as to contract and statutory interpretation, specific language controls over the general)).

The Court therefore denies the motion.