Judge: John J. Kralik, Case: 22BBCV00171, Date: 2023-03-17 Tentative Ruling

Case Number: 22BBCV00171    Hearing Date: March 17, 2023    Dept: NCB

22

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff Lorenzo Espinosa (“Plaintiff” or “Espinosa”) alleges that he entered into a Residential Income Property Purchase Agreement and Joint Escrow Instructions (“Agreement”) with Defendant Jay Schermer and Leslie Druss as individuals and as trustees of the Schermer Trust dated March 7, 1984 (“Schermer Trust”) on January 11, 2022 involving the real property located at 6833-6835 Simpson Ave., North Hollywood, CA 91604.  Plaintiff alleges that escrow was opened on January 11, 2022 with Time Escrow, Inc., but alleges that the listing broker failed to disclose a conflict of interest between Time Escrow Inc. and Defendant Razmik (Ray) Mirzakhanian (broker of the transaction and owner of Time Escrow Inc.).  Plaintiff also alleges that Schermer Trust had refused to make all of the seller’s disclosures under the Agreement and refused to allow access to Plaintiff for inspection of the property.  Plaintiff believes that a second sale has been orchestrated with a different buyer. 

The complaint, filed March 17, 2022, alleges causes of action for: (1) breach of contract; (2) specific performance; and (3) intentional interference with contractual relations. 

On May 2, 2022, Defendant/Cross-Complainant Jay Schermer and Leslie Druss as individuals and as trustees of the Shermer Trust dated March 7, 1984, Raznik Mirzakhanian, Berkshire Hathaway Homeservices Crest, Poli Hernandez, and Julianne Whitaker filed a cross-complaint against Plaintiff/Cross-Defendant Espinosa for: (1) breach of contract; (2) fraud; (3) intentional interference with contractual relations; (4) declaratory relief; and (5) injunctive relief.

B.     Relevant Background

On November 4, 2022, the Court granted Defendant’s motion to compel arbitration.

On January 30, 2023, the Court denied Plaintiff’s motion for reconsideration on the motion to compel arbitration. 

C.     Motion on Calendar

On November 28, 2022, Defendant Jay Schermer, Trustee of the Schermer Trust dated 3/7/84 filed a motion to compel Plaintiff to arbitrate his complaint by a specific date with the Court selecting an arbitrator. 

The Court is not in receipt of an opposition brief.

DISCUSSION

Defendant moves for an order compelling Plaintiff to arbitrate his complaint by a specific date and to select an arbitrator.

The Real Estate Purchase Agreement (“Purchase Agreement”) signed on January 11, 2022 contains the parties’ arbitration agreement.  It states in relevant part:

            31. ARBITRATION OF DISPUTES

A. 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 Agents(s), who, in writing, agree to such arbitration prior to, or within a reasonable time after, the dispute or claim is presented to the Agent. The arbitration shall be conducted through any arbitration provider or service mutually agreed to by the Parties …. The arbitrator shall be a retired judge or justice, or an attorney with at least 5 years of residential real estate Law experience, unless the Parties mutually agree to a different arbitrator. Enforcement of, and any motion to compel arbitration pursuant to, this agreement to arbitrate shall be governed by the procedural rules of the Federal Arbitration Act, and not the California Arbitration Act, notwithstanding any language seemingly to the contrary in this Agreement. The Parties shall have the right to discovery in accordance with Code of Civil Procedure § 1283.05. The arbitration shall be conducted in accordance with Title 9 of Part 3 of the Code of Civil Procedure. Judgment upon the award of the arbitrator(s) may be entered into any court having jurisdiction.

(Purchase Agreement, § 31 [bold added].) 

            The arbitration agreement does not provide for how the arbitrator will be chosen by the parties.  In the absence of a guideline on how the arbitrator shall be chosen, CCP § 1281.6 states:

If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.

(CCP § 1281.6.)

Defense counsel, Marvin L. Benson, states that he suggested two well-qualified attorneys as possible arbitrators for Plaintiff to choose from to handle the arbitration on November 9, 2022.  (Benson Decl., ¶3.)  Mr. Benson states that on November 16, 2022, Plaintiff sent an email stating he would appeal the Court’s ruling and demanded mediation of this matter.  (Id., ¶4, Ex. A.)  (As far as the Court is aware based on a review of the documents filed in this action, Plaintiff has not filed a Notice of Appeal.)

As the parties do not appear to have agreed on the choosing of an arbitrator, the Court will employ the method set forth in section 1281.6 in order to provide the parties the opportunity to present their respective choice of arbitrators.  Plaintiff and Defendants are each ordered to provide a list of 5 qualified arbitrators (who are retired judges or justices, or attorneys with at least 5 years of experience with residential real estate law), along with their credentials and hourly billing rates, if possible.  From this list, the Court will nominate 5 persons from the lists and the parties will have a 5-day period to mutually select an arbitrator.  If the parties fail to select an arbitrator by the deadline, the Court will appoint the arbitrator from the nominees. 

CONCLUSION AND ORDER

Defendant Jay Shermer, Trustee of the Shermer Trust dated March 7, 1984’s motion to compel Plaintiff to submit to arbitration by a specific date and choose in arbitrator is continued to March 30, 2023 at 8:30 a.m. 

By the end of the business day on March 23, 2023, the parties are each ordered to file with the Court and serve (by email) a list of 5 proposed arbitrators.  At the March 24, 2023 hearing, the Court will review the proposed list of arbitrators and nominate 5 arbitrators for the parties to mutually choose one arbitrator. The parties will have 5 days, or until March 29, 2023, to mutually agree upon a neutral arbitrator.  By the end of the business day on March 29, 2023, the parties are ordered to file a joint stipulation stating they reached an agreement on choosing an arbitrator, or otherwise stating that they were unable to pick an arbitrator together.  If the parties fail to mutually agree upon an arbitrator by March 29, 2023, the Court will choose an arbitrator from the list of nominees on March 30, 2023 at the hearing.

Defendants shall provide notice of this order.