Judge: Gail Killefer, Case: 24STCV27459, Date: 2025-02-14 Tentative Ruling
Case Number: 24STCV27459 Hearing Date: February 14, 2025 Dept: 37
HEARING DATE: Friday, February 14, 2025
CASE NUMBER: 24STCV27459
CASE NAME: American Outdoor Advertising LLC, et al. v. KBS Holdco, LLC dba Regency
Outdoor Advertising, Inc.
MOVING PARTY: Defendant KBS Holdco, LLC
OPPOSING PARTY: Plaintiffs America Outdoor
Advertising LLC and Riddle Legacy LLC
TRIAL DATE: Not set.
PROOF OF SERVICE: OK
PROCEEDING: Motion to Compel
Arbitration
OPPOSITION: 30 January 2025
REPLY: 05
February 2025
TENTATIVE: Defendant KBS’s motion to compel arbitration
and stay the action is granted.
Background
On October 18, 2024, American Outdoor Advertising, LLC and Riddle
Legacy LLC (collectively “Plaintiff” or “Riddle”) filed this unlawful detainer
action against KBS Holdco, LLC dba Regency Outdoor Advertising, Inc.
(“Defendant” or “KBS”).
Defendant KBS now moves to compel arbitration of the entire
action. Plaintiff opposes the motion. The matter is now before the court.
I. Legal Standard
Parties may be compelled to
arbitrate a dispute upon the court finding that: (1) there was a valid
agreement to arbitrate between the parties; and (2) said agreement covers the
controversy or controversies in the parties’ dispute.¿(CCP § 1281.2; Omar v.
Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)¿¿¿¿
¿A party petitioning to compel
arbitration has the burden of establishing the existence of a valid agreement
to arbitrate and the party opposing the petition has the burden of proving, by
a preponderance of the evidence, any fact necessary to its defense. (Banner
Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348,
356-57.)¿¿¿¿¿
¿¿¿¿
“If a court of competent
jurisdiction, whether in this State or not, has ordered arbitration of a
controversy which is an issue involved in an action or proceeding pending
before a court of this State, the court in which such action or proceeding is
pending shall, upon motion of a party to such action or proceeding, stay the
action or proceeding until an arbitration is had in accordance with the order
to arbitrate or until such earlier time as the court specifies.” (CCP §
1281.4.)¿
II. Discussion
A. Factual Summary
Plaintiff Riddle leased to Defendant KBS seven billboard
properties located in Southern California. (Lemieux Decl., ¶ 2.) Seven leases exist between the Parties. (Id.)
Plaintiff asserts that since September 2021, Defendant has ceased paying rent
on all seven billboards and continues to remain possession of all the
billboards. (Id. ¶¶ 2, 3.)
The Parties' dispute resulted in the underlying action, KBS
Holdco, LLC v. Stuart Riddle et al. (LASC Case No. 22STCV34698) (the
“Underlying Action”). (Berardi Decl., ¶ 2.) The Parties mediated the Underlying
Action before Bruce A. Friedman and on November 6, 2023, they executed a
“Settlement Term Sheet.” (Lemieux Decl., ¶ 4, Ex. A.)
Plaintiff asserts that since November 2023 to the present,
Defendant has continued to operate the billboards but has made no payment under
the existing leases. (Lemieux Decl., ¶ 7.)
On August 20, 2024, Plaintiff served Three-Day Notices to Pay or Quit. (Id.)
On October 18, 2024, Plaintiff filed this Unlawful Detainer (“UD”) action
concerning the Property located at 1320 S. Santa Fe Ave., in the City of Los
Angeles, CA 90021. (Compl., ¶¶ 2, 16.)
Defendant KBS moves to compel arbitration pursuant to the
Settlement Term Sheet. (Lemieux Decl., Ex. A.) Plaintiff asserts that the
Settlement Term Sheet does not compel this action to arbitration because
Defendant seeks broader relief “including claims for declaratory relief, breach
of contract, breach of the covenant of good faith and fair dealing, specific
performance, and fraud.” (Id. ¶ 8.)
Plaintiff’s Complaint is a UD Action that asserts no other claims
for relief other than possession of the billboard located at 1320 S. Santa Fe
Ave. (See e.g. Complaint). Defendant KBS has filed no other
Cross-Complaint and seeks no other relief. Therefore, the issue before this
court is whether the Settlement Term Sheet covers this dispute and requires
that the claims be settled in Arbitration.
B. The Scope of the
Settlement Term Sheet
The Settlement Term Sheet states in the relevant part:
Settlement Term Sheet
KBS Holdco, LLC dba Regency Outdoor Advertising
(“Regency”) and Riddle Legacy LLC and American Outdoor Adversting LLC
(collectively, the “Riddle Parties,” and together with Regency, the “Parties”)
hereby enter the following binding and enforceable Settlement Term Sheet
(“Settlement Term Sheet”) to settle the claims alleged by Regency and the
Riddle Parties in the litigation captioned KBS Holdco, LLC v. Stuart Riddle et
al. (Case No. 22STCV34698, Los Angeles Superior Court) (the “KBS-Riddle
Litigation”). The parties intend to
enter a mutually agreeable long form, formal settlement agreement; however, to
the extent such a formal settlement is not executed for any reason, this
Settlement Term Sheet shall be binding and enforceable in and of itself on the
Parties. This Settlement Term Sheet is entered as of November 6, 2023.
The Parties hereby agree upon the following terms:
[ . . . ]
4. Mutual Releases.
[ . . . ]
iii.
The Riddle Parties for
themselves, and on behalf other members, managers, shareholders, directors,
officers, employees, predecessors (including any trusts involving Stuart
Riddles), successors, assigns, investors, and partners (collectively, the
“Riddle arty Releasors”) hereby forever release, relive, and discharge Regency
and its respective officers, members, managers, shareholders, directors,
attorneys, employees, predecessors (including Regency Outdoor Advertising,
Inc.), successors, assigns, investors, and partners (collectively the “Regency
Releasees”) of and from any and all claims, demands, obligations, and
liabilities of every kind and nature whatsoever, whether known or unknown,
suspected or unsuspected, that the Riddle Party Releasors asserted or could
have asserted in connection with eh KBS-Riddle Litigation.
iv.
The Riddle Party Releasors
acknowledge and agree that the facts in respect to which the releases in favor
of the Regency Releasees are given may turn out to be other than or different
than expected, and expressly waive any and all benefits and rights granted to
the pursuant to Section 1542 of the California Civil Code, with which section
the Riddle Party Releasors are familiar and which section reads as follows: “A
general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing
the release and that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party.”
4. Billboards. With
respect to the billboards located at . . . and 1320 S. Santa Fe Ave, Los
Angeles, CA 90021 (collectively, the “Billboards”), the Riddle Parties shall
have two options to choose from at their sole discretion: (1) lease these
billboards to Regency on similar terms to those in the previous leases between
the Parties, with updates to the terms as necessary to reflect Fair Market
Value, or (2) sell one or more of the Billboards to Regency at Fair Market
Value. For the avoidance of doubt, the Riddle Parties shall either sell or
lease each of Billboards to Regency.
However, to the extent the
Riddle Parties choose to sell a particular Billboard to Regency, Regency shall
have the right to elect to lease the Billboard instead of purchasing the
Billboard. The Parties agree to negotiate the terms of the leases or sales within
50 days from the date of this Settlement Term Sheet. If the Parties cannot come
to an agreement as to the terms of such leases or sales, the Parties agree that
they will submit to a binding arbitration of the lease and/or sale terms to
Bruce A. Friedman at JAMS. The arbitration shall be conducted according to JAMS
Commercial Arbitration Rules on an expedited basis.
[ . . . ]
9. Enforceable Pursuant to Code of Civil
Procedure § 664.6. This Settlement Term Sheet, which among other things, settles the
claims between Regency and the Riddle Parties, shall be binding and fully
enforceable pursuant to California Code of Civil Procedure § 664.6.
(Lemieux Decl., ¶ 4, Ex. A.)
Plaintiff asserts that “to the extent there has been delay beyond
the 50-day negotiation period contemplated by the Settlement, both Parties have
waived that provision of the Settlement.” (Lemieux Decl., ¶ 6.) Plaintiff
asserts that Defendant “has continued to operate the billboards and sell
advertising copy but has made no rent payments under the existing leases.” (Id.
¶ 7.) Plaintiff served the Three-Day Notice to Pay or Quit on August 20, 2024.
(Id.) Plaintiff asserts that Defendant has failed to pay rent since
January 2024 and rent owed exceeds $300,000. (Lemieux Decl., ¶ 7; Compl., ¶
17.)
Plaintiff asserts that this action should not be compelled to
arbitration because the arbitration provision in the Settlement Term Sheet is
limited to determining the lease or sales terms, not the broader relief
Defendant seeks. (Lemieux Decl., ¶ 8.)
The Settlement Term Sheet gave Plaintiff two options, sell or
lease the Billboard. Plaintiff chooses to continue to lease the Billboards.
Therefore, any disputes regarding unpaid rent due under the leases concern the
lease terms and should be resolved by JAMS. Defendant asserts that “Plaintiffs
failed to comply with their obligations to sell or lease the Property and now
seek to improperly obtain possession of Property that was already supposed to
be sold or leased to Regency.” (Motion, at p. 11:26-28.) Defendant asserts that
Plaintiff has “failed to comply with their obligations to sell or lease the
Property at issue to Regency.” (Berardi Decl., ¶ 5.)
Here, Plaintiff fails to show this action does not involve a
dispute over the lease terms and the court can give Plaintiff possession of the
Santa Fe Avenue Billboard without relying on the lease terms. “It is the party
opposing arbitration who bears the burden to show the arbitration provision
cannot be interpreted to cover the claims in the complaint.” (Aanderud v.
Superior Court (2017) 13 Cal.App.5th 880, 890.)
The court finds that Defendant has shown that there is a valid
agreement to arbitrate the dispute.
Defendant also argues that any arbitrability issues should be
decided by the arbitrator, as the Settlement Term Sheet explicitly references
JAMS rules. (See Aanderud v. Superior Court (2017) 13 Cal.App.5th 880,
892 [“An arbitration provision's reference to, or incorporation of, arbitration
rules that give the arbitrator the power or responsibility to decide issues of
arbitrability may constitute clear and unmistakable evidence the parties
intended the arbitrator to decide those issues.”].) This would contrast with
the holding in Jack v. Ring LLC (2023) 91 Cal.App.5th 1186, which states
that “mere reference to JAMS Rules in the arbitration provision does not
constitute clear and unmistakable delegation to the arbitrator of threshold
issues of enforceability.” (Id. at p. 1201.) Even if the court were to
decide the issue of arbitrability, Plaintiff fails to show that this UD action
concerns issues not encompassed in the Settlement Term Sheet and should not be
compelled to arbitration.
Based on the above, the Motion is granted, and this action is
stayed pending arbitration.
Conclusion
Defendant KBS’s motion to compel
arbitration and stay the action is granted.