Judge: Joel L. Lofton, Case: 22AHCV00098, Date: 2022-09-06 Tentative Ruling
Case Number: 22AHCV00098 Hearing Date: September 6, 2022 Dept: X
Tentative Ruling
Judge Joel L. Lofton, Department X
THIS MOTION AS WELL AS THE CASE MANAGMENET CONFERENCE CURRENLTY SCHEDULED FOR SEPT 6, 2022, WILL BE CONTINUED AND HEARD ON SEPT 12, 2022, AT 8:30 AM
HEARING DATE: September 6, 2022 TRIAL DATE: No date set.
CASE: SERENA ANN BELL v. VIOLET Z. SCHMID, as Trustee for the GERALD and VIOLET SCHMID TRUST; VIOLET Z. SCHMID; RODEO REALTY, INC. – BEVERLY HILLS; and DOES 1-20 inclusive.
CASE NO.: 22AHCV00098
MOTION TO COMPEL ARBITRATION
MOVING PARTY: Plaintiff Serna Ann Bell
RESPONDING PARTY: Defendant Violet Z. Schmid
SERVICE: Filed August 8, 2022
OPPOSITION: Filed August 22, 2022
REPLY: Filed August 29, 2022
RELIEF REQUESTED
Plaintiff moves for an order compelling arbitration and for an order staying the judicial proceedings pending the arbitration proceedings.
BACKGROUND
This case arises out of a dispute regarding the purchase of real property located at 1968 El Molino Avenue, Altadena, California 91001 (“Subject Property”). Plaintiff Serena Ann Bell (“Plaintiff”) alleges that Defendants Violet Z. Schmid (“Schmid”), individually and as Trustee for the Gerald and Violet Schmid Trust, and Rodeo Realty, Inc. - Beverly Hills (“Defendants”) failed to comply with the terms of the purchase agreement. Plaintiff alleges that Defendant failed to obtain the necessary permits for an Accessory Dwelling Unit (“ADU”) and failed to provide $150,000 in agreed-upon, short-term financing to cover the shortfall between the purchase price and appraisal value.
Plaintiff alleges that Defendants attempted to enforce the purchase agreement. Plaintiff alleges that Defendants are also attempting to relist and market the Subject Property for sale. Plaintiff filed a first amended complaint (“FAC”) on April 25, 2022, alleging two causes of action for (1) breach of contract and (2) fraud.
TENTATIVE RULING
Plaintiff’s motion to compel arbitration is granted.
This case is stayed pursuant to Code of Civil Procedure section 1281.2, subdivision (d).
All requests for attorney’s fees are denied.
OBJECTIONS TO EVIDENCE
Schmid’s objections are overruled.
LEGAL STANDARD
“California and federal law both favor enforcement of valid arbitration agreements.” (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 889.) “A party who files a motion to compel arbitration ‘bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.’’ (Cisnero Alverez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 580.) “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc. section 1281.)
DISCUSSION
Overview
Plaintiff is seeking an order to compel Schmid to submit the present action to binding arbitration. Plaintiff provides that the purchase agreement between the parties has a valid and enforceable arbitration clause. Plaintiff continues that on March 23, 2022, Schmid’s counsel indicated Schmid’s intention to seek arbitration of the case. (Yassin Decl. ¶ 5, Exhibit C.) The parties submitted to private mediation on May 6, 2022, but the parties were unable to reach an agreement. (Id. ¶ 7.)
Plaintiff’s counsel attempted to contact Schmid’s counsel regarding submitting the matter to arbitration but provides that Schmid’s counsel never responded. (Yassin Decl. ¶¶ 16-17.) The arbitration clause in the purchase agreement provides, in 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.” (Id. ¶ 2, Exhibit A, section 22, subd. B.) Additionally, the arbitration agreement provides: “The following shall not constitute a waiver nor violation of the mediation and arbitration provisions: (i) the filing of a court action to preserve a statute of limitation; (ii) the filing of a court action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies; or (iii) the filing of a mechanic’s lien.” (Id. ¶ 2, Exhibit A, section 22, subd. C(2).)
Plaintiff has thus established that a valid arbitration agreement exists between the parties.
In opposition, Schmid argues that Plaintiff waived her right to enforce the arbitration clause of the purchase agreement by failing to comply with Code of Civil Procedure section 1298.5 and by delaying her motion.
Waiver
Schmid first argues that Plaintiff waived her right to arbitrate by failing to comply with Code of Civil Procedure section 1289.5, relying on Manhattan Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040 (“Manhattan Loft”).
Code of Civil Procedure section 1298.5 provides: “Any party to an action who proceeds to record a notice of pending action pursuant to Section 409 shall not thereby waive any right of arbitration which that person may have pursuant to a written agreement to arbitrate, nor any right to petition the court to compel arbitration pursuant to Section 1281.2, if, in filing an action to record that notice, the party at the same time presents to the court an application that the action be stayed pending the arbitration of any dispute which is claimed to be arbitrable and which is relevant to the action.”
In Manhattan Loft, supra, 173 Cal.App.4th at p.1051, the Court was deciding on whether the respondents were authorized to file a lis pendens based on an arbitration proceeding without any court proceedings. The Court held that a necessary “action” to file a lis pendens did not include arbitration proceedings. (Id. at p. 1056.) The Court did not, as Schmid contends, hold that a party was required to strictly comply with Code of Civil Procedure section 1289.5 to avoid waiving their right to arbitration. The Court discussed section 1289.5 to explain the proper procedure a party to an agreement should follow to utilize the lis pendens statute while simultaneously seeking to arbitrate the claims. (Id. at p. 1054.)
Here, Plaintiff could have more effectively demonstrated a lack of waiver by following the proper procedure set out in section 1298.5. However, Manhattan Loft does not support Schmid’s claim that Plaintiff was forced to comply with section 1289.5 or else waive her right to arbitrate.
The next issue, then, is whether Plaintiff waived her right to arbitrate this claim.
“ ‘In the arbitration context, “[t]he term ‘waiver’ has ... been used as a shorthand statement for the conclusion that a contractual right to arbitration has been lost.” ’ ” (Pulli v. Pony Internat., LLC (2012) 206 Cal.App.4th 1507, 1515.)
In St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196 (“St. Agnes”), the California Supreme Court provided that relevant factors for a court determining whether a party waived their right to arbiter include: “ ‘(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and (6) whether the delay “affected, misled, or prejudiced” the opposing party.’ ”
Further, “[a]lthough a court may deny a petition to compel arbitration on the ground of waiver (§ 1281.2, subd. (a)), waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes, supra, 31 Cal.4th at p. 1195.)
Schmid argues that Plaintiff waived her right to arbitrate the claims based on her failure to properly serve the lis pendens and by failing to comply with Code of Civil Procedure section 1289.5. Schmid’s arguments do not address the factors laid out in St. Agnes. In contrast, Plaintiff provides that as early as March 23, 2022, roughly a month after the inception of this action, the parties were in discussion to arbitrate this case. (Yassin Decl. ¶ 5.) The parties attempted to mediate the case before submitting it to arbitration, in accordance with the purchase agreement. (Id. ¶ 7.) Plaintiff further provides that, besides filing a First Amended Complaint, there has been limited action in the present case and no discovery has been conducted. (Id. ¶ 20.)
Plaintiff has established, despite some procedural missteps, that she has continuously sought to arbitrate this present claim. Furthermore, Plaintiff has established that there has been little activity in the present judicial proceedings. Plaintiff has also sought a stay of the present proceedings. Lastly, the purchase agreement provides that Plaintiff’s act of filing a court action to record a lis pendens does not constitute a waiver of the arbitration provision. Schmid, therefore, has failed to establish that Plaintiff has waived her right to arbitrate the present case.
Other Causes of Actions and Other Defendants
Schmid argues that the case should not be ordered submitted to arbitration because Plaintiff pleads a fraud cause of action and alleges claims against Rodeo Realty, Inc. – Beverly Hills, who is not a party to the arbitration agreement.
The first issue is whether Plaintiff’s fraud claim is covered by the arbitration agreement.
“[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’ ” (Rice v. Downs, supra, (248 Cal.App.4th 175, 186 “Rice”.) “A ‘broad’ clause includes those using language such as ‘any claim arising from or related to this agreement’ ” [citation] or “arising in connection with the [a]greement”. (Ibid.) “But clauses requiring arbitration of a claim, dispute, or controversy ‘arising from’ or ‘arising out of’ an agreement, i.e., excluding language such as “relating to this agreement” or ‘in connection with this agreement,’ are 'generally considered to be more limited in scope than would be, for example, a clause agreeing to arbitrate “ ‘any controversy ... arising out of or relating to this agreement,’ ” which might thus cover misconduct arising out of the agreement as well as contractual issues.” ’ ” (Ibid.)
The arbitration clause at issue here provides: “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.” (Id. ¶ 2, Exhibit A, section 22, subd. B.) The arbitration clause encompasses any disputes arising out of the agreement “or any resulting transaction” which supports a finding that the purchase agreement contains a broad clause. Further, Plaintiff’s fraud claims are based on allegations involving the transaction provided for by the purchase, and Plaintiff alleges Schmid acted wrongfully in connection with the transaction. Plaintiff’s fraud claim is thus covered by the arbitration agreement.
Plaintiff and Schmid both provide that Rodeo Realty is not a party to the arbitration agreement. Plaintiff requests that the present judicial proceeding be stayed pending the arbitration. Schmid, in contrast, argues that arbitration should be denied.
Code of Civil Procedure section 1281.2, subdivision (d), provides: “If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”
The Court declines to deny arbitration based on Rodeo Realty’s inclusion in the present action.
CONCLUSION
This motion will be continued to Sept 12, 2022 in order to be heard in conjunction with the motion to reconsider.
Plaintiff’s motion to compel arbitration is granted.
This case is stayed pursuant to Code of Civil Procedure section 1281.2, subdivision (d).
All requests for attorney’s fees are denied.
Dated: September 6, 2022 ___________________________________
Joel L. Lofton
Judge of the Superior Court
Parties who intend to submit on this tentative must send an email to the court indicating their
intention to submit. Parties intending to appear are strongly encouraged to appear remotely. alhdeptx@lacourt.org
Submitting on this tentative simply means that you acknowledge and waive notice that the motion as well as the CMC is going to be continued to Sept 12, 2022 at 8:30.