Judge Salvatore Sirna, Case Number: 20PSCV00658, Date: 2023-10-11 Tentative Ruling

Judge: Salvatore Sirna, Case: 20PSCV00658, Date: 2023-10-11 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 20PSCV00658 Hearing Date: November 20, 2023 Dept: G

Plaintiff Vermont Avenue Lofts Homeowners’ Association’s Motion to Select Arbitrator

Respondent: Defendant Joseph Ruiz

TENTATIVE RULING

Plaintiff Vermont Avenue Lofts Homeowners’ Association’s Motion to Select Arbitrator is GRANTED.

The court appoints the Honorable Lisa Hart Cole (Ret.) of Signature Resolution as the arbitrator in this action.

BACKGROUND

This case arises from a dispute between the Vermont Avenue Lofts Homeowners’ Association (Vermont Avenue Lofts HOA) and Defendant Joseph Ruiz, a homeowner. Vermont Avenue Lofts HOA claims Ruiz has violated a declaration of covenants, conditions, and restrictions, as well as their bylaws, by harassing, intimidating, and interfering with their board members, employees, and vendors. On October 6, 2020, Vermont Avenue Lofts HOA filed a complaint against Ruiz and Does 1-25, alleging the following causes of action: (1) breach of covenant of governing documents; (2) declaratory relief; and (3) abatement of and nuisance per se.

On December 14, 2020, Ruiz answered by refusing to admit or deny the allegations and asserting affirmative defenses. Ruiz moved for summary judgment on Vermont Avenue Lofts HOA’s claims on May 10, 2021, which the court denied on August 12.

During a status conference on May 24, 2022, the parties agreed to an arbitrator and the court stayed this action pending the outcome of arbitration.

On September 28, 2022, Vermont Avenue Lofts HOA filed a motion to compel arbitration. On November 23, the court granted their motion and again stayed this action pending the outcome of arbitration.

On August 11, 2023, Vermont Avenue Lofts HOA filed the present motion. A hearing on the motion is set for October 11 with a case management conference and OSC Re: Arbitration Completion set for November 9.

ANALYSIS

Vermont Avenue Lofts HOA moves for the court to select a list of arbitrators after they and Ruiz were allegedly unable to agree on one. For the following reasons, the court GRANTS Plaintiff’s motion.

Legal Standard

Pursuant to Code of Civil Procedure section 1281.6, the following applies to the appointment of arbitrators:

“If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.” (Code Civ. Proc., § 1281.6.)

Discussion

As an initial matter, the court addresses the parties’ contentions during the first hearing on the present motion. There, parties disputed whether the agreed-upon arbitration was binding or nonbinding.

Judicial arbitration and contractual arbitration are two distinct forms of arbitration with significant differences. (Sy First Family Ltd. Partnership v. Cheung (1999) 70 Cal.App.4th 1334, 1341.) “Among other differences, private arbitration is by its essence binding while judicial arbitration offers the opportunity for a de novo trial after arbitration has been completed.” (Porreco v. Red Top RV Center (1989) 216 Cal.App.3d 113, 119.) In determining if parties stipulated to judicial arbitration or contractual arbitration, the court construes their stipulation “according to the ordinary rules for interpretation of contracts, with the paramount consideration being the parties' objective intention at the time of contracting.” (Ibid.)

“If the contract is capable of more than one reasonable interpretation, it is ambiguous [Citations], and it is the court’s task to determine the ultimate construction to be placed on the ambiguous language by applying the standard rules of interpretation in order to give effect to the mutual intention of the parties [Citation].” (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 798.) In considering extrinsic evidence, the court considers “other objective manifestations of the parties' intent” and can consider “the conduct of the parties after the execution of the contract, and before any controversy arose.” (Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1449; Crawford v. Continental Cas. Co. (1968) 261 Cal.App.2d 98, 102 [“It is well settled that although an agreement may be indefinite or uncertain in its inception, the subsequent performance of the parties will be considered in determining its meaning for they are least likely to be mistaken as to the intent. [Citations.]”].)

Here, the parties’ agreement to arbitrate was based on an oral stipulation before the court on February 4, 2022. (2/4/2022 Minute Order; see 11/23/2022 Ruling, p. 2.) But to the court’s knowledge, no recording or transcript of that proceeding was made. Furthermore, neither party reduced their oral stipulation to writing. Thus, the only record of this stipulation is the minute order entered by the court on February 4, 2022. According to that minute order, the court ordered parties “to meet and confer and agree upon an arbitration date.” (2/4/2022 Minute Order, p. 1.) In a later minute order on May 24, 2022, the court noted “it was previously determined that arbitration is appropriate for this case.” (5/24/2022 Minute Order.) But neither minute order states whether the arbitration is nonbinding judicial arbitration or binding private arbitration. Thus, the court finds the stipulation is ambiguous on this point.

In the same minute order where the court first determined arbitration was appropriate, the court ordered parties to submit their discovery requests to each other and meet and confer on dates for depositions. (2/4/2022 Minute Order.) The court finds this is consistent with judicial arbitration as “contractual arbitration does not permit full and unconditional discovery [Citations], whereas judicial arbitration does [Citations].” (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 344.) On the other hand, in the court’s second minute order on this issue, the court ordered Vermont Avenue Lofts HOA’s counsel to provide Ruiz with the Civil Code section for the division of arbitration fees between the parties. (5/24/2022 Minute Order.) This is consistent with contractual arbitration where the parties are responsible for arbitration costs and inconsistent with judicial arbitration where the arbitrator’s costs are covered by the court unless a party is subsequently unsuccessful in a trial de novo. (See Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 405, fn. 5; see also Code Civ. Proc., § 1141.28.) If the parties had intended for judicial arbitration, it is unclear why the splitting of arbitration fees became an issue. Ultimately, the court finds the minute orders alone are inconclusive and turns to the parties’ conduct after the stipulation.

With regards to Vermont Avenue Lofts HOA, when the court requested authority to justify the splitting of arbitration fees, Vermont Avenue Lofts HOA’s counsel responded by citing Civil Code section 5940, subdivision (c) in their notice of ruling and did not argue fees were covered by the court pursuant to Code of Civil Procedure section 1141.28. (5/26/2022 Notice of Ruling.) When Vermont Avenue Lofts HOA sought to compel arbitration on September 28, 2022, they argued Ruiz agreed to arbitration and did not reference judicial arbitration. Thus, the court finds Vermont Avenue Lofts HOA’s actions have been consistent with parties agreeing to contractual arbitration and not judicial arbitration.

With regards to Ruiz, Ruiz’s opposition to Vermont Avenue Lofts HOA’s motion to compel arbitration states Ruiz was “ready for arbitration” but did not want to pay Ruiz’s portion of the arbitration fees. But while Ruiz objected to arbitration fees, Ruiz did not do so on the grounds that such fees should have been covered by the court in judicial arbitration. Instead, Ruiz argued Vermont Avenue Lofts HOA failed to exhaust alternative dispute remedies before bringing the present action and claimed they “could conceivably pay more to [Ruiz] for not using all internal means before filing in superior court.” (Ruiz Opp., p. 4.) Thus, the court finds Ruiz’s actions have also been consistent with parties agreeing to contractual arbitration and not judicial arbitration.

While the court finds the minute orders inconclusive, the court notes the subsequent conduct by Vermont Avenue Lofts HOA and Ruiz support a finding that they intended to stipulate to binding contractual arbitration, not judicial arbitration. Moreover, when interpreting an arbitration agreement, such ambiguity is interpreted as an implied agreement to binding arbitration. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 [“[I]t is the general rule that parties to a private arbitration impliedly agree that the arbitrator's decision will be both binding and final.”].)

Accordingly, the court finds the parties agreed to binding arbitration, and now turns to the issue of selection and appointment of an arbitrator.

Because the parties’ agreement was oral and not written, the process for the appointment of an arbitrator is governed by Code of Civil Procedure section 1281.6. Here, the previously agreed-upon arbitrator withdrew, and Ruiz has allegedly refused to participate in the selection of a new arbitrator. (Moreno Decl., ¶ 3-4.) While Vermont Avenue Lofts HOA proposed a list of five arbitrators in their motion, Ruiz failed to select an arbitrator from that list or propose other arbitrators. (Moreno Decl., ¶ 3-4, Ex. B.) Furthermore, while Ruiz filed an opposition to Vermont Avenue Lofts HOA’s motion, Ruiz did not address the selection of arbitrators. Thus, the court finds Ruiz waived any challenge to the proposed list of arbitrators.

Accordingly, the court GRANTS Vermont Avenue Lofts HOA’s motion.

CONCLUSION

Based on the foregoing, Vermont Avenue Lofts HOA’s motion is GRANTED.

The court hereby appoints the Honorable Lisa Hart Cole (Ret.) of Signature Resolution as the arbitrator in this action.