Judge: Peter A. Hernandez, Case: 24STCV32444, Date: 2025-03-11 Tentative Ruling
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Case Number: 24STCV32444 Hearing Date: March 11, 2025 Dept: 34
Defendants Marmont Investments, LLC and Ronen Henn’s Motion to Compel Arbitration is DENIED.
Background
On December 9, 2024, Plaintiffs Jacob
Charles Maguire and Elizabeth Ann Sandor (“Plaintiffs”) filed a complaint
against Defendants Marmont Investments, LLC and Ronen Henn (“Defendants”)
arising from Plaintiffs purchase of a residential property from Defendants
alleging a single cause of action for negligence.
On January
13, 2025, Defendants filed this Motion to Compel Arbitration. On February 26,
2025, Plaintiffs filed an opposition. On March 3, 2025, Defendants filed a
reply.
“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, unless it determines that: (a) The right to compel
arbitration has been waived by the petitioner; or (b) Grounds exist for
rescission of the agreement.” (Code Civ. Proc., § 1281.2, subds. (a) and (b).)
The party seeking to compel
arbitration bears the burden of proving the existence of a valid arbitration
agreement by the preponderance of the evidence. (Hotels Nevada v. L.A.
Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761.) The burden
then shifts to the opposing party to prove by a preponderance of the evidence a
defense to enforcement (e.g., fraud, unconscionability, etc.) (Id.) “In
these summary proceedings, the trial court sits as a trier of fact, weighing
all the affidavits, declarations, and other documentary evidence, as well as
oral testimony received at the court’s discretion, to reach a final
determination.” (Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 972.)
“If a court of competent jurisdiction.
. . has ordered arbitration of a controversy which is an issue involved in an
action or proceeding pending before a court of this State, the court in which
such action or proceeding is pending shall, upon motion of a party to such
action or proceeding, stay the action or proceeding until an arbitration is had
in accordance with the order to arbitrate or until such earlier time as the
court specifies.” (Code Civ. Proc., § 1281.4).
Discussion
Defendants move to compel arbitration of
Plaintiffs’ claim and staying all further judicial proceedings in this action
pending completion of arbitration.
Existence of an Arbitration Agreement
¿ Defendants
argue that Plaintiffs entered into an arbitration agreement on November 21,
2020, as part of the purchase contract between the parties for the residential
property located at 724 Crane Boulevard, Los Angeles, CA 90065. (Henn Decl.,
Exh. 1.) Defendants provide evidence of such agreement and Plaintiffs’
acceptance. (Ibid.) The arbitration provision provides as follows:
“ARBITRATION OF DISPUTES: 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 Broker(s), who, in writing, agree to such arbitration
prior to, or within a reasonable time after, the dispute or claim is presented
to the Broker. 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. The Parties shall
have the right to discovery in accordance with Code of Civil Procedure
§1283.05. In all other respects, 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. Enforcement of this agreement to arbitrate shall be governed
by the Federal Arbitration Act. Exclusions from this arbitration agreement
are specified in paragraph 22C.”
(Henn Decl., Exh. 1, ¶ 22(B) [emphasis added].)
The arbitration agreement clearly provides that the “[e]nforcement
of this agreement to arbitrate shall be governed by the Federal Arbitration
Act.” (Ibid.) The court also notes that Plaintiffs do not dispute that
the Federal Arbitration Act (“FAA”) applies as expressly stated in the
agreement. As such, the FAA governs this motion to compel arbitration. (Victrola
89, LLC v. Jamon Properties 8 LLC (2020) 46 Cal.App.5th 337, 346 [finding
the FAA governs a motion to compel arbitration when an agreement provides its
‘enforcement’ shall be governed by the FAA].) Therefore, the court’s
inquiry is limited to a determination of (1) whether a valid arbitration
agreement exists and (2) whether the arbitration agreement covers the dispute. (9
U.S.C., section 4;¿Chiron Corp. v. Ortho Diagnostics Systems, Inc.¿(9th
Cir. 2000) 207 F.3d 1126, 1130;¿Howsam¿v. Dean Witter Reynolds, Inc.¿(2002)
537 U.S. 79, 84;¿see¿Simula, Inc. v. Autoliv, Inc.¿(9th Cir. 1999) 175
F.3d 716 [if the finding is affirmative on both counts the FAA requires the
Court to enforce the arbitration agreement in accordance with its
terms].)
The court finds that a valid arbitration agreement exists
between the parties as evidenced by Exhibit 1 in the declaration of Ronen Henn.
Scope
of Arbitration Clause
In opposition, Plaintiffs argue that
their negligence claim does not arise out of the parties’ purchase contract,
thus not subject to arbitration. (Opp., at p. 3.) Instead, Plaintiffs contend
that this action attempts to enforce Plaintiffs’ common-law and statutory right
to a product free from defects. (Ibid.)
In addition to determining whether a valid
arbitration agreement exists, the court is required to determine whether the
arbitration agreement covers the dispute at hand. Generally, a court will look
to the arbitration agreement itself to determine its scope. (United Teachers
of Los Angeles v. Los Angeles Unified School Dist. (2012) 54 Cal.4th 504,
516.)
Here, Defendants argue that Plaintiffs signed an
arbitration agreement, agreeing to submit to final and binding arbitration “any
dispute or claim in Law or equity arising between them out of this Agreement or
any resulting transaction.” (Henn Decl., Exh. 1, ¶ 22(B).)
Defendants’ motion is based on the argument that this provision encompasses
tort claims, such as Plaintiffs’ negligence action. The court disagrees.
An arbitration provision that includes the “arising
from” or “arising out of” language and a phrase such as “in connection with” or
“relating to” extends the scope of an¿arbitration provision to also encompass
tort claims having “‘their roots in the relationship between the parties which
was created by the contract”. (Rice v. Downs (2016) 248 Cal.
App.4th 175, 189.) In contrast, arbitration provisions using only phrases
such as “arising out of” or “‘arising from’” are narrower in application and
extend only to disputes relating to the interpretation and performance of the
agreement. (Ibid., citing Cobler v. Stanley,¿Barber, Southard,
Brown & Associates¿(1990) 217 Cal.App.3d 518, 530; Mediterranean
Enterprises v. Sangyong Corp.¿(9th Cir. 1983) 708 F.2d 1458, 1461, 1464;¿Tracer
Research Corp. v. National Environmental Services Co.¿(9th Cir. 1994) 42
F.3d 1292, 1295.)
Rice is instructive. There, the
parties agreed to arbitrate “any controversy between the parties arising out”
of the agreements. The trial court compelled arbitration of tort claims
for legal malpractice, breach of fiduciary duty and rescission claims.
The appellate court reversed. It held that a narrowly worded
arbitration¿provision that applied only to controversies¿“arising out of” the
agreements did not encompass¿tort claims based upon violation of an independent
duty or right originating outside of the agreements. (Rice v. Downs,
supra,248 Cal.App.4th at 198.)
As in Rice, here, the
arbitration provision applies only to disputes “arising out of” the purchase
contract. The provision is narrow and
does not require arbitration of disputes “in connection with” or “relating to”
the agreement. Tort claims are not
encompassed within this arbitration provision.
Plaintiffs have alleged only a single tort claim for negligence.
Accordingly, the claims are not subject to binding arbitration.
Conclusion
Defendants Marmont Investments, LLC
and Ronen Henn’s Motion to Compel Arbitration is DENIED.