Judge: Colin Leis, Case: 23STCV19340, Date: 2025-01-08 Tentative Ruling

Case Number: 23STCV19340    Hearing Date: January 8, 2025    Dept: 74

Ferrell et al. v. Lopez

Defendant Richard Lopez’s Motion to Compel Arbitration

BACKGROUND 

            This motion arises from a real property dispute.

            Plaintiffs David Ferrell and Michael Woloz (Plaintiffs) filed the Complaint against defendant Richard Lopez (Defendant) alleging (1) Nondisclosure of Material Facts, (2) Fraudulent Concealment, (3) Negligent Concealment, and (4) Professional Negligence in the sale of 1016 Clement Street, Los Angeles, CA 90033 (the Property). 

            Defendants Century 21 Real Estate LLC and Rudy Rodriquez were added as defendants.

            Defendant Richard Lopez moves to compel arbitration.

LEGAL STANDARD

Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract.  (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)  The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties.  (Code of Civ. Proc. § 1281.2.)  This is usually done by presenting a copy of the signed, written agreement to the court.  “A petition to compel arbitration . . . must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration.  The provisions must be stated verbatim, or a copy must be physically or electronically attached to the petition and incorporated by reference.”  (Cal. Rules of Court, rule 3.1330.)

            The Court shall order arbitration unless it determines that grounds exist for the revocation of the agreement.  (Code Civ. Proc. § 1281.2.)  Under California law, and the Federal Arbitration Act, an arbitration agreement may be invalid based upon grounds applicable to any contract, including unconscionability, fraud, duress, and public policy, which would be matters for the court to decide.  (Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 165-166.)

DISCUSSION

            The parties entered into a Residential Purchase Agreement on July 16, 2020, as evidenced by Plaintiffs’ signature on the ninth page, and Defendant’s signature on the tenth page.  (Miller Decl., Ex. “A.”)  The agreement states, in pertinent part:

The Parties agree that any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.  The Parties also agree to arbitrate any disputes or claims with Broker(s) who, in writing, agree to such arbitration prior to, or within a reasonable time after, the dispute or claim is presented to the Broker….

Brokers shall not be obligated nor compelled to mediate or arbitrate unless the agree to do so in writing.  Any Broker(s) participating in mediation shall not be deemed a party to this Agreement.

(Miller Decl., Ex. “A” § 22(B), (C).)  Defendant has met its burden establishing that an Arbitration Agreement exists.

Citing the third-party litigation exception under Code of Civil Procedure section 1281.2, subdivision (c), Plaintiff opposes arbitration. Under that exception, courts have broad discretion whether to deny arbitration when third parties exist in a pending court action arising out of the same transaction or series of related transactions and the existence of those third parties creates the possibility of conflicting rulings on a common issue of law or fact.  (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 704-705.)  To avoid conflicting rulings, the Court may elect to stay the arbitration or the court proceeding while the other continues, but the optimal procedure when some parties are not legally bound to arbitrate is to deny the motion to compel arbitration.  (C. V. Starr & Co. v. Boston Reinsurance Corp. (1987) 190 Cal.App.3d 1637, 1642.) In this case, all four of Plaintiff’s causes of action are against all defendants and arise from the sale of the same Property.  There are several important factual allegations ripe for conflicting rulings, such as whether Plaintiff could have reasonably ascertained the condition of the subfloor or foundation.  (FAC, ¶ 38, 48.) Because that common issue is central to determining liability for all parties, the Court denies the motion to compel arbitration.

CONCLUSION

            The Court denies Defendant’s Motion to Compel Arbitration.

            Defendant to give notice.