Superior Court of California

County of Los Angeles

North Central District

Department B

GAYLE BUNTING, et al.,

Plaintiffs,

12517 HORTENSE, LLC,

Defendant.

Case No.: 24BBCV00402

Hearing Date: May 31, 2024

[TENTATIVE] order RE:

MOTION TO COMPEL ARBITRATION

BACKGROUND

A. Allegations

Plaintiffs Gayle Bunting, Marc Bunting, Jack Bunting, Sandra Bunting, Paul Bunting, Nicola Bunting, and Joshua Bunting (“Plaintiffs”) seek damages against Defendant 12517 Hortense, LLC (“Defendant”) for failure to properly maintain, control, or repair Plaintiffs’ rented house located at 12517 Hortense St., Studio City, CA 91604. Plaintiffs allege that they entered into a rental agreement for their stay at the subject property on or about July 14, 2023 through July 31, 2023 as a guest at Defendant’s AirBnB property. Plaintiffs allege that there was a bed bug infestation in the house, making the house uninhabitable.

The complaint, filed February 15, 2024, alleges causes of action for: (1) breach of the implied warranty of habitability; (2) negligence – premises liability/failure to warn/negligence per se; (3) nuisance; (4) IIED; (5) breach of contract; (6) breach of the covenant of quiet enjoyment; (7) fraudulent concealment; and (8) elder abuse/neglect.

B. Motion on Calendar

On April 18, 2024, Defendant filed a motion to compel arbitration against Plaintiffs and their complaint. Defendant seeks a stay of the action pending the arbitration.

On May 17, 2024, Plaintiffs filed an opposition to the motion.

On May 23, 2024, Defendant filed a reply brief.

DISCUSSION

Defendant moves to compel arbitration against Plaintiffs.

A. Terms of the Arbitration Agreement

Defendant provides the declaration of Chris Bruno, the Operations Manager for Million Dollar Luxe LLC (“MDL”), which provides property management services and was the authorized agent for owner/Defendant. (Bruno Decl., ¶¶3-5.) With respect to the subject rental, Mr. Bruno states that Plaintiff Marc Bunting primarily dealt with him regarding the Short Term Rental Agreement. (Id., ¶6.)

The Short Term Rental Agreement states at paragraph 33:

33. Governing Law. This Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the Parties hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of California without regard to its conflicts of laws principles, and irrespective of the fact that one or more Parties hereto now, or may hereafter be, a resident of a different state or country. All Parties expressly consent All claims and disputes arising under or relating to this Agreement are to be settled by binding arbitration in the state of California or another location mutually agreeable to the parties. The arbitration shall be conducted on a confidential basis pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any decision or award as a result of any such arbitration proceeding shall be in writing and shall provide an explanation for all conclusions of law and fact and shall include the assessment of costs, expenses, and reasonable attorneys' fees. Any such arbitration shall be conducted by an arbitrator experienced in real estate and shall include a written record of the arbitration hearing. The parties reserve the right to object to any individual who shall be employed by or affiliated with a competing organization or entity. An award of arbitration may be confirmed in a court of competent jurisdiction.

34. Forum/Jurisdiction. If any action is necessary to enforce this Agreement, or any provision of this Agreement, the action shall be exclusively initiated, regardless of the Party initiating the action, in the California Superior Court in and for the County of Los Angeles, which Court shall be the sole and exclusive venue for any suits arising under this Agreement.

(Bruno Decl., Ex. A [Rental Agreement, ¶¶33-34].) The Rental Agreement provided by Mr. Bruno is not signed and dated by MDL or by Guest Marc Bunting. (Rental Agreement at p.15.) At most, Mr. Bruno states that he informed Marc Bunting during a phone conversation that all family members staying at the property would be subject to and bound by the Rental Agreement, to which Marc Bunting agreed; thus, Mr. Bruno states that all Plaintiffs are bound by the arbitration provision in the Rental Agreement. (Bruno Decl., ¶11.) Mr. Bruno provides documentary evidence showing that Marc Bunting made a deposit for the rental and paid the entirety of the booking payment. (Id., Exs. B-E.)

In opposition, Plaintiffs argue that Defendant has not established that there is an agreement to arbitrate between the parties. Plaintiffs argue that the Rental Agreement provided by Defendant does not include any signatures by Plaintiffs or even by Defendant. They argue that Mr. Bruno only states that he conversed about the Rental Agreement generally, but did not inform Plaintiffs that they would be bound by the arbitration agreement nor does Mr. Bruno know which Plaintiffs were aware of the arbitration provision. Thus, Plaintiffs argue that they never agreed to arbitration and by Defendant’s failure to obtain their signatures on the Rental Agreement, Defendant waived its right to arbitrate.

In reply, Defendant argues that even if Plaintiffs are nonsignatories to the Rental Agreement, they are suing for breach of contract. The complaint alleges that Defendant and Plaintiffs entered into a valid rental agreement. (Compl., ¶116.) The general allegations allege that Plaintiffs entered into a rental agreement with Defendant on July 14, 2023 and that Defendant breached the Rental Agreement by failing to maintain the premises in a habitable condition. (Id., ¶¶32, 43.) The 1^st cause of action for statutory violation of habitability alleges that Plaintiffs entered into a rental agreement with Defendant to stay as guests at the subject property and Plaintiffs were third-party beneficiaries of the Rental Agreement. (Id., ¶58.) The 6^th cause of action for breach of the covenant of quiet enjoyment also alleges that implied in the Rental Agreement was a covenant that Defendant would not interfere with Plaintiffs’ quiet enjoyment of the premises. (Id., ¶127.) “When a plaintiff brings a claim which relies on contract terms against a defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement. [Citations.]

There is no apparent reason why this doctrine of estoppel should not be equally applicable to a nonsignatory plaintiff. When that plaintiff is suing on a contract—on the basis that, even though the plaintiff was not a party to the contract, the plaintiff is nonetheless entitled to recover for its breach, the plaintiff should be equitably estopped from repudiating the contract's arbitration clause.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1239–1240.) While none of the parties signed the Rental Agreement, Plaintiffs still obtained the benefit of the agreement—a short term rental of a property in exchange for payment. In addition, each of the Plaintiffs are suing Defendant for breach of contract based on a “valid rental agreement.” (Compl., ¶116.) Thus, it appears that Plaintiffs may be estopped from relying on the written agreement without the arbitration clause.

Both the FAA and the California Code of Civil Procedure make reference to a written agreement. However, neither party cites to cases that are on point with the particular situation at hand—where the parties had a written agreement but both failed to sign the agreement. In the event that no specific cases are brought to the Court’s attention, the Court will allow supplemental briefing on this limited issue regarding the enforcement (or lack thereof) of an arbitration agreement that has no signatories to the agreement.

CONCLUSION AND ORDER

Defendant’s motion to compel arbitration is continued to June 28, 2024 at 8:30 a.m. The parties are ordered to file supplemental briefing not to exceed 5 pages as follows: (a) Defendant shall file and serve (by electronic mail) a supplemental brief by the end of the business day of June 11, 2024; and (b) Plaintiffs are to file and serve (by electronic mail) a responsive brief by the end of the business day of June 21, 2024. The supplemental briefs shall be limited to the issue where the parties had a written agreement but both failed to sign the agreement that contained the arbitration clause.

Defendant shall provide notice of this order.

DATED: May 31, 2024 ___________________________

John Kralik

Judge of the Superior Court