Judge: Robert C. Longstreth, Case: 37-2023-00039722-CU-FR-CTL, Date: 2024-04-05 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 04, 2024

04/05/2024  08:30:00 AM  C-65 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Robert Longstreth

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Civil - Unlimited  Fraud Motion Hearing (Civil) 37-2023-00039722-CU-FR-CTL KIM VS CORONADO BY DESIGN LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Defendants Coronado by Design, LLC ('CBD') and Victoria Rogers' (collectively, 'Defendants') Verified Petition to Compel Arbitration and Request to Stay Proceedings (ROA 65, 37) is DENIED.

Defendants seek to compel Plaintiffs' claims against them to arbitration pursuant to a November 14, 2022 Interior Design – Project Management Services Agreement. (Pet. at Exh. 1, ¶ 4.10.) Defendants have met their initial burden to provide prima facie evidence of a written arbitration agreement. (See Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) There is no dispute the California Arbitration Act, Code of Civil Procedure section 1280 et seq., applies here. 'A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract.' (Code Civ. Proc. § 1281.) Plaintiffs contend the contract is illegal and void because Rogers and/or CBD were required to have a general contractors license and did not have one. They also contend that plaintiff Helen Kim is not bound to arbitrate because she did not sign the Agreement. The court need not resolve either of these issues, however, since it believes that regardless of whether or not the arbitration agreement is enforceable against both Plaintiffs, the third-party litigation exception applies. Under this exception, the court may refuse to enforce an arbitration agreement if it determines '[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.' (Code Civ. Proc. § 1281.2(c).) Along with Defendants Coronado by Design, LLC and Victoria Rogers there are two other Defendants, William A. Harris and American Contractors Indemnity Company, who are not parties to the Agreement.

Having a portion of this dispute resolved by an arbitrator and a portion resolved in this action would not only be inefficient and duplicative, but, as Plaintiffs point out, create a substantial risk that findings by one trier of fact would be inconsistent with those of the other trier of fact, and/or that inconsistent legal rulings would be made.

Defendants argue that Defendant Harris's purported liability in this case is derivative of their liability as to fraud, but they do not address the other causes of action. (Petition, ROA 65, at 9:18.) Moreover, the argument highlights that decisions as to Defendants' liability must necessarily made in this action regardless of whether those matters are addressed in arbitration as well. The court notes that Defendants did not respond to Plaintiffs' argument on this point in their reply papers.

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3088463  6 CASE NUMBER: CASE TITLE:  KIM VS CORONADO BY DESIGN LLC [IMAGED]  37-2023-00039722-CU-FR-CTL Accordingly, the court finds that the third-party litigation exception applies. (Code Civ. Proc. § 1281.2(c).) The court exercises its discretion under this exception to refuse to enforce the arbitration provision in the Agreement. (Id. at subd. (d).) Once confirmed, this ruling shall be the final ruling of the court and no further written order is required.

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