Judge Michael D. Washington, Case Number: 37-2023-00026501-CU-OR-NC, Date: 2024-04-26 Tentative Ruling

Judge: Michael D. Washington, Case: 37-2023-00026501-CU-OR-NC, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - April 25, 2024

04/26/2024 01:30:00 PM N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Michael D Washington

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Civil - Unlimited Other Real Property Motion Hearing (Civil) 37-2023-00026501-CU-OR-NC CONSUMERS ALLIANCE PROCESSING CORPORATION VS WIMATEX, INC CAUSAL DOCUMENT/DATE FILED: Motion to Compel Discovery, 12/18/2023

The Motion to Compel Arbitration and Stay Pending Action brought by cross-defendant CCSD LLC is DENIED.

Admonishment The moving papers filed by cross-defendant CCSD LLC have a caption identifying them to be a 'Motion to Compel Arbitration and Stay Pending Action.' (ROA 27.) However, in the Court's formal Register of Actions, the 'Document Name' selected is a 'Motion to Compel Discovery.' (ROA 27.) This mislabeling creates confusion and judicial inefficiency when reviewing motions, and, in more extreme cases, can lead to entire documents being overlooked. It is the responsibility of the filing party to properly label the documents they are filing. The Court is mindful that such labeling is often done by attorney services, but to the extent that counsel selects the appropriate attorney service to use for filing the Court expects counsel to be reviewing the work product and noting the deficiencies created by the agents that counsel hires and relies upon, lest these seemingly small errors multiply and significantly reduce judicial efficiency and economy.

Background This case has a bit of a two-in-one quality in that defendant/cross-complainant Wimatex Inc. stands in the shoes of a landlord as it relates to a lawsuit being brought against it by a tenant, but stands in the shoes of a buyer in a real estate transaction as it relates to the lawsuit being brought by it against the seller who allegedly failed to disclose the problems that the tenant is not suing about. As such, Wimatex Inc. will be referenced herein as the Buyer-Landlord.

The case concerns a commercial property consisting of a three-story building in Carlsbad, California. It is alleged that there are water leak problems in the men's bathroom that have caused considerable problems. These problems led the tenant – plaintiff Consumer Alliance Processing Corporation (the Tenant) – to sue the Buyer-Landlord. That was the original lawsuit in this case and it included causes of action for: (1) rescission (2) declaratory relief (3) negligence (gross) (4) negligence (gross) (5) breach of contract These claims are made against both the Buyer-Landlord and its property management company.

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3093599 CASE NUMBER: CASE TITLE: CONSUMERS ALLIANCE PROCESSING CORPORATION VS 37-2023-00026501-CU-OR-NC The seller, as set forth above, is cross-defendant CCSD LLC (the Former Owner). After being sued by the Tenant, the Buyer-Landlord proceeded to file a cross-claim against the Former Owner alleging the following causes of action: (1) total equitable indemnity (2) comparative equitable indemnity and contribution (3) intentional misrepresentation and concealment The Former Owner now moves to compel arbitration and stay the claims being made against it in this litigation. Both the Tenant and the Buyer-Landlord oppose the motion.

Merits of Motion Because of the confusion created by the two-in-one nature of this landlord-tenant, but also buyer-seller dispute, the Court will first address the simple issue of the fact that the Tenant is not a party to any arbitration agreements. The Tenant opposes the motion on this ground, and while that opposition is well-taken in terms of the fact that the Tenant is not a party to any arbitration agreement – it is also somewhat superfluous in that the proposed order submitted by the moving party specifically spells out that it only will order arbitration of the cross complaint. (ROA 28.) While the Tenant's frustration is understandable due to the chosen wording in the Notice of Motion (ROA 27), which seems include both the complaint and the cross-complaint, the mistake is not so egregious as to warrant sanctions.

Moreover, to the extent that monetary sanctions are being requested under Code of Civil Procedure § 128.5, the Court notes that such requests must be brought in a separate motion and only after providing a 'safe harbor' period for the offending party. Nonetheless, even if those procedural prerequisites were met, the conduct here simply does not rise to the level of sanctionable conduct.

The motion is different with respect to the claims between the Buyer-Landlord and the Former Owner.

There are two arbitration clauses potentially at play. The first begins with the language: ANY CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF THE DEPOSIT SHALL BE DETERMINED BY BINDING ARBITRATION ADMINISTERED BY THE JUDICIAL ARBITRAITON & MEDIATION SERVICE, INC. ('JAMS') IN ACCORDANCE WITH ITS COMMERCIAL ARBITRATION RULES ('COMMERCIAL RULES').

The second uses the language: Dispute Resolution. In the event the parties are unable to resolve any dispute regarding the Deposit Account or any disbursement therefrom (a 'Dispute') by mutual agreement, the matter shall be settled exclusively by a binding arbitration ('Arbitration'), conducted by a single arbitrator (the 'Arbitrator') chosen by the parties as described below.

The instant case for indemnity does not appear to be about the seller (the Former Owner) being entitled to liquidated damages or about the return of a deposit to the buyer (the Buyer-Landlord). It further does not appear to be a dispute regarding a 'Deposit Account or any disbursement therefrom...' Based thereon, while the moving party has established the existence of two arbitration clauses, it has not persuasively established that the instant case (i.e. the cross-claim against the Former Owner) falls within the scope of those clauses. For that reason, the motion is denied as between the Former Owner and the Buyer-Landlord as well.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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3093599