Judge: Robert P. Dahlquist, Case: 37-2022-00049473-CU-OR-NC, Date: 2023-09-29 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - September 28, 2023

09/29/2023  01:30:00 PM  N-29 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Robert P Dahlquist

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Civil - Unlimited  Other Real Property Motion Hearing (Civil) 37-2022-00049473-CU-OR-NC PHILLIPS VS. PARAMOUNT PROPERTY ADVISOR INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 08/03/2023

Defendants Paramount Property Advisors, Inc. and Michael Najar's petition to compel arbitration (ROA # 25) is granted.

On December 9, 2022, plaintiffs Brianne Phillips and Krystle Butler filed a complaint asserting claims for breach of contract, failure to disclose, intentional misrepresentation, negligent misrepresentation, and negligence. ROA # 1.

Plaintiffs allege that they purchased a home sold by defendant Paramount in 2020. Plaintiffs then allegedly discovered issues with the foundation (repair costs are estimated to be between $110,000-$150,000), and problems with the walls (requiring repairs at an additional cost of $150,000).

Defendants move to compel arbitration pursuant to a mandatory arbitration provision contained in the California Residential Purchase Agreement and Joint Escrow Instructions dated October 29, 2020. This agreement was executed by Paramount and plaintiffs on October 30, 2020. Najir Decl. (ROA # 27), Exhibit 1.

Plaintiffs oppose the motion. ROA # 29.

The court finds that the moving parties have met their burden of demonstrating the existence of an agreement to arbitrate. See Najir Decl. (ROA # 27), Exhibit 1 [California Residential Purchase Agreement and Joint Escrow Instructions dated October 29, 2020].

The court further finds that the causes of action asserted in the complaint are subject to the arbitration agreement.

Turning to the issue of whether grounds exist for revocation or non-enforcement of the agreement, plaintiffs argue that agreement is unduly oppressive or unconscionable because: (1) it is contained in an adhesion contract; (2) plaintiffs have alleged fraud against Najar, Paramount and Keller Williams which 'may have the effect of voiding the entire contract;' and (3) the parties have been mediating this case for months and this is the first time arbitration has been raised. The latter argument appears to be an argument that defendants have waived their right to compel arbitration).

The court finds that plaintiffs have failed to establish a basis for not enforcing the arbitration agreement.

'[T]here are degrees of procedural unconscionability. At one end of the spectrum are contracts that have Calendar No.: Event ID:  TENTATIVE RULINGS

2996404 CASE NUMBER: CASE TITLE:  PHILLIPS VS. PARAMOUNT PROPERTY ADVISOR INC [IMAGED]  37-2022-00049473-CU-OR-NC been freely negotiated by roughly equal parties, in which there is no procedural unconscionability....

Contracts of adhesion that involve surprise or other sharp practices lie on the other end of the spectrum.

[Citation.] Ordinary contracts of adhesion, although they are indispensable facts of modern life that are generally enforced [citation], contain a degree of procedural unconscionability even without any notable surprises, and bear within them the clear danger of oppression and overreaching.' [Citation.]' [Citation.].' Nguyen v. Applied Med. Res. Corp. (2016) 4 Cal. App. 5th 232, 246.

Both procedural and substantive unconscionability must be present for the court to refuse to enforce a contract under the doctrine of unconscionability, although 'they need not be present in the same degree.' Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243. Essentially, the court applies a sliding scale to the determination: '[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247.

The court finds that plaintiffs have failed to meet their burden of establishing that the arbitration agreement should not be enforced due to alleged unconscionability. In particular, the court notes: (1) arbitration agreements are generally enforceable even if they are offered on a take it or leave it basis (Da Loc Nguyen v. Applied Med. Res. Corp. (2016) 4 Cal.App.5th 232, 247-248 [holding arbitration agreement enforceable where agreement is an adhesion contract offered on a take-it-or-leave-it basis with no opportunity for negotiation]); (2) 'claims that the contract as a whole was obtained through fraud in the inducement are, in the absence of evidence of the parties' contrary intent, arbitrable under Prima Paint. Included in this rule of arbitrability are claims of a 'grand scheme' of fraud, or fraud 'permeating' the transaction.' (Rosenthal v. Great W. Fin. Sec. Corp. (1996) 14 Cal. 4th 394, 419 citing to Prima Paint v. Flood & Conklin (1967) 388 US 395, 403-404); and (3) to the extent plaintiffs are arguing that defendants waived the right to arbitrate, plaintiffs have failed to establish that the defendants waived the right to arbitrate by attempting to mediate this case. (See St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 ['In light of the policy in favor of arbitration, waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.']).

For these reasons, the court grants the defendants' petition to compel arbitration.

This is the tentative ruling for an appearance (in person or remote) hearing at 1:30 p.m. on Friday, September 29, 2023. If no party appears at the hearing, this tentative ruling will become the order of the court as of September 29, 2023. If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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