Judge: Michael E. Whitaker, Case: 24SMCP00119, Date: 2024-03-27 Tentative Ruling

Case Number: 24SMCP00119    Hearing Date: April 11, 2024    Dept: 207

TENTATIVE RULING

MOTION

Plaintiff WIB Holdings LLC (“Petitioner”) petitions to compel its tenant, Defendant Kristi Pinocchio (“Respondent”) to arbitrate the dispute arising from the parties’ rental agreement.  Respondent opposes the petition and Petitioner replies.[1] 

ANALYSIS

1.     MOTION TO COMPEL ARBITRATION – LEGAL STANDARDS

            “[T]he advantages of arbitration include a presumptively less costly, more expeditious manner of resolving disputes.  It follows a party to a valid arbitration agreement has a contractual right to have its dispute with another party to the contract resolved quickly and inexpensively.”  (Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 99–100 [cleaned up].)  Thus, “on petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists.”  (Code Civ. Proc., § 1281.2; see also

EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 [the language in section 1281.2 compelling arbitration is mandatory].) The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.  (Code Civ. Proc., § 1281.2, subds. (a)-(c).)   

            “On a petition to compel arbitration, the trial court must first determine whether an agreement to arbitrate the controversy exists.  Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.  The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent's signature.”  (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 [cleaned up].)  The party seeking to compel arbitration must also “plead and prove a prior demand for arbitration and a refusal to arbitrate under the agreement.”  (Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 640-641.) 

            And while the moving party on a motion to compel arbitration “bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, [a] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.”  (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [cleaned up]; 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”].) 

2.     ENFORCEABLE ARBITRATION AGREEMENTS

Petitioner contends the parties entered two agreements: (1) rental agreement and (2)  arbitration agreement.  Paragraph 47 of the rental agreement provides:

47. MEDIATION.  The following matters are excluded from mediation hereunder: Any lawsuit which is filed as a Limited Civil case (i.e. as set forth in Code of Civil Procedure Section 86).  The parties agree to mediate all disputes they have with each other (including all factual, legal, and equitable issues) which arise between them: (i) under this Agreement, or (ii) based on TENANT’s tenancy at the Premises and/or Property, or (iii) out of their landlord-tenant relationship.  […]  No party can be required to attend a mediation however, the loss of costs and fees is the sole remedy available for this paragraph’s breach.

(Bills Decl. ¶ 5, Ex. A.)

The arbitration agreement provides that matters subject to arbitration include “any dispute, controversy or claim arising out of or relating in any way to Tenant’s occupancy of the Premises or to any breach of the Rental Agreement between the parties concerning the Premises, or […] enforcement, interpretation or validity of the Rental Agreement[.]”  (Bills Decl. ¶ 6, Ex. B.)

Every page of the arbitration agreement is initialed by Respondent.  (Ibid.)  Although the Bills declaration indicates “I also signed an arbitration agreement with the tenant” the arbitration agreement attached as Exhibit B is signed by Respondent, but not by Petitioner.  (Ibid.)  Because Petitioner has not presented an agreement that was signed by both parties, Petitioner has not demonstrated that there exists a valid, binding arbitration agreement between the parties.

After the Court posted its tentative ruling, the hearing was continued, and Plaintiff subsequently filed the Supplemental Declaration of Barbara Bills, with a copy of the arbitration agreement Plaintiff has now signed.

First, as discussed in footnote 1 above, the Court does not generally consider evidence offered in connection with the reply (or after the reply is filed, as is the case with the Supplemental Bills declaration), because it deprives the opposing party of notice and a fair opportunity to respond, in violation of their due process rights. 

Second, “[a] contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.”  (Code Civ. Proc., § 1636, emphases added.)  Plaintiff’s belated decision to sign the arbitration agreement approximately six years later, after a dispute has arisen, does not demonstrate that a mutual intent to arbitrate existed at the time Defendant signed the agreement. 

Moreover, because Plaintiff did not previously sign the agreement, Defendant would have been unable to compel Plaintiff to arbitration.  As such, the purported agreement lacks mutuality. 

CONCLUSION

            Because the evidence does not demonstrate Petitioner entered into an arbitration agreement with Respondent, the Court denies Petitioner’s petition to compel arbitration. 

            Further, because the petition is denied, the Court vacates the Case Management Conference set for June 27, 2024 and dismisses the action with prejudice. 

            Petitioner shall provide notice and file a proof of service of such.

DATED:  April 11, 2024                                                        ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court