Judge Helen Zukin, Case Number: 22SMCV02041, Date: 2023-04-26 Tentative Ruling

Judge: Helen Zukin, Case: 22SMCV02041, Date: 2023-04-26 Tentative Ruling

Case Number: 22SMCV02041 Hearing Date: April 26, 2023 Dept: 207

Background

Plaintiff Justin Sheldon (“Plaintiff”) brings this action against Defendant WIB Holdings, LLC (“Defendant”) seeking to recover a security deposit previously given to Defendant in connection with Plaintiff’s former tenancy at a residential property for which Defendant was the landlord. Defendant moves the Court to compel arbitration of Plaintiff’s claims and for a stay of the instant action pending resolution of those arbitration proceedings. Plaintiff opposes Defendant’s motion.

Legal Standard

Under both the Title 9 section 2 of the United States Code (known as the Federal Arbitration Act) and the Title 9 of Part III of the California Code of Civil Procedure commencing at section 1281 (known as the California Arbitration Act, hereinafter “CAA”), arbitration agreements are valid, irrevocable, and enforceable, except on such grounds which exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

California Code of Civil Procedure section 1281.2 permits a party to file a motion to request the Court order the parties to arbitrate a controversy. (Code Civ. Proc., § 1281.2.) Under Code of Civil Procedure section 1281.2, the Court must grant the motion “if the Court determines that an agreement to arbitrate the controversy exists,” unless one of four limited exceptions apply. (Ibid.) The statutory exceptions arise where: (a) the right to compel arbitration has been waived by the petitioner; (b) grounds exist for rescission of the agreement; (c) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues; or (d) the petitioner is a state or federally chartered depository institution seeking to compel arbitration pursuant to a contract whose agreement was induced by fraud or without respondent’s consent. (Ibid.)

Under Code of Civil Procedure section 1281.2, the party moving to compel arbitration bears the burden of demonstration “that an agreement to arbitrate the controversy exists.” (Code Civ. Proc., § 1281.2.) “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 [emphasis in original].) “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.” (Ibid.; see also Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability”].)

Analysis

Defendant seeks to enforce an arbitration agreement entered into between the parties as part of a residential lease. (Bills Decl. at ¶¶4-6.) The agreement extends to any disputes between the parties arising out of the lease. Defendant argues Plaintiff’s claim here concerning the return of his safety deposit pursuant to the lease “falls squarely within the definition of an arbitrable claim under the parties’ agreement.” (Motion at 4.)

Plaintiff does not deny the existence of the agreement, but correctly argues public policy bars arbitration of residential lease agreements. “[A] tenant of residential premises cannot validly agree, in a residential lease agreement, to binding arbitration to resolve disputes regarding his or her rights and obligations as a tenant.” (Jaramillo v. JH Real Estate Partners, Inc. (2003) 111 Cal.App.4th 394, 404; see also Williams v. 3620 W. 102nd Street, Inc. (2020) 53 Cal.App.5th 1087, 1091 [an arbitration agreement requires waiver of the procedural right to a jury trial and “any lease provision in which a lessee agrees to modify or waive ‘procedural rights in litigation in any action involving his rights and obligations as a tenant’ is void as contrary to public policy”].) Defendant has not filed a reply or otherwise offered any rebuttal to this settled authority. The Court thus finds the subject arbitration agreement is void as contrary to public policy under California law.

The Court need not consider whether the agreement would also be void under federal law. The burden is on the party asserting federal law applies to an arbitration agreement to prove it. (Nixon v. AmeriHome Mortg. Co., LLC (2021) 67 Cal.App. 5th 934, 946; Williams, supra 53 Cal.App.5th at 1093.) Defendant here has made no such showing and indeed does not even suggest federal law applies to the subject agreement.

Conclusion

Defendant’s motion to compel arbitration is DENIED.