Judge: Teresa A. Beaudet, Case: 23STCV07982, Date: 2024-05-07 Tentative Ruling

Case Number: 23STCV07982    Hearing Date: May 7, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiffs Nika Caroline Clelland and Phillip Perry-Lara Roush (jointly, “Plaintiffs”) filed this action on April 11, 2023 against Defendants The Elite Group Property Inspection Service, Inc. and Oakley Ross. The Complaint alleges causes of action for (1) breach of contract,

(2) negligence, (3) intentional misrepresentation, (4) negligent misrepresentation, (5) recovery on bond, and (6) declaratory relief.

            The Complaint alleges that on or about January of 2022, Ivan Halpern entered into a written purchase agreement for the sale of 417 N Ave 54, Los Angeles, CA 90042 (the “Subject Property”) on behalf of CAM Venture 1 REO, LLC with Plaintiffs. (Compl., ¶ 13.) On or about February 7, 2022, the seller executed a grant deed and shortly thereafter completed the sale of the Subject Property to Plaintiffs. (Compl., ¶ 13.) 

Plaintiffs allege that on or about February 2, 2022, “Elite Group Inspection Group” and their inspector, Oakley Ross performed an inspection of the Subject Property. (Compl., ¶ 14.) Plaintiffs allege that “[t]he Defendants failed to discover the significant defects and state of disrepair of the foundation of the Subject Property. The inspection report only identified separation of a post from the beam.” (Compl., ¶ 14.)

Plaintiffs allege that “[i]t has now come to Plaintiffs attention that the Sellers, the Sellers Agent and the Defendants made material misrepresentation and/or concealed the foundation issues to induce Plaintiffs to proceed with the purchase of the Subject Property. Additionally, the Sellers, the Sellers’ Agents, and the Defendants failed to disclosure [sic] material information which was known by them at the time of sale of the Subject Property to Plaintiffs. There is significant cracking on the ceiling and around the windows throughout the Subject Property due to the foundation issues. Additionally, the substandard subflooring and the concealed foundation issues have caused significant damage to the flooring throughout the Subject Property.” (Compl., ¶ 16.)

The Elite Group Property Inspection Service, Inc. (“Elite Group”) now moves for an order “1) providing that all claims between [Plaintiffs] and Elite Group be submitted to binding arbitration…except that the parties shall select an arbitrator from Construction Dispute Resolution Services, Inc., who is familiar with the real estate profession, and utilizing its Rules and Procedures; and 2) staying the civil litigation only as between Plaintiffs and Elite Group pending completion of the arbitration proceedings.” The motion is unopposed.

Legal Standard

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414.)   

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

            Discussion

A.    Existence of Arbitration Agreement

In support of the motion, Elite Group submits the Declaration of Tim Maher, the Director of Operations of Elite Group. (Maher Decl., ¶ 1.) Mr. Maher states that “[o]n or about January 31, 2022, Plaintiffs and Elite Group entered into a written agreement for Elite Group to perform an inspection of the Property for Plaintiffs…” (Maher Decl., ¶ 3.) Exhibit “A” to Mr. Maher’s declaration includes a “Standard Inspection Agreement” (herein, the “Agreement”). (Maher Decl., ¶ 3.)

The Agreement references “Client Name: Nika Clelland & Perry Roush,” and Mr. Maher states that the Agreement was signed by Nika Caroline Clelland on January 31, 2022. (Maher Decl., ¶ 3, Ex. A.) The Agreement provides, inter alia, as follows:

“BINDING ARBITRATION: Any dispute, based in contract or tort, concerning the inspection, the inspection report, the interpretation or enforcement of this Agreement, or any other dispute arising out of this relationship, shall be resolved between the parties by binding arbitration conducted in accordance with Federal Arbitration Act 9 U.S.C Section 1 et seq., ARBITRATION AND WAIVER OF JURY TRIAL: Any dispute concerning: the interpretation or enforcement or interpretation of this Agreement; the adequacy of the Inspection, the adequacy of the Report, any allegation that Inspector breach this Agreement or the standard of care; or any claims, causes of action, or damages, whether in tort, contract, or equity (collectively “Claims”), shall be submitted to and resolved by binding arbitration conducted by Construction Dispute Resolution Services, Inc., utilizing their Rules and Procedures. Client and Inspector shall be entitled to all discovery rights and legal motions as provided in the California Code of Civil Procedure and propounding or responding to discovery shall not be considered a waiver of the right to compel binding arbitration. The decision of the Arbitrator shall be final

and binding and judgment on the award may be entered in any Court of competent jurisdiction. This arbitration agreement shall be interpreted pursuant to the terms of the Federal Arbitration Act and then by California law. Any dispute as to whether any Claims between Client and Inspector are subject to binding arbitration shall be decided by the arbitrator, not the court. The parties agree that by agreeing to this binding arbitration agreement they are waiving their right to trial by jury. The parties agree that they shall be entitled to discovery procedures within the discretion of the arbitrator. The award of the arbitrator shall be final, and a judgment may be entered on by any court having jurisdiction. Each party is to pay their own fees and costs of arbitration.” (Maher Decl., ¶ 3, Ex. A.)

The Agreement further provides that “[c]lient expressly acknowledges that this Agreement contains a Binding Arbitration Agreement that waives the right to jury trial…” (Maher Decl., ¶ 3, Ex. A.)

Elite Group argues that “[t]he dispute between Elite Group and Plaintiffs is covered by the binding arbitration agreement.” (Mot. at p. 12:9-10.) Elite Group asserts that “[t]he language of the arbitration agreement specifically states that the arbitration agreement applies to all disputes based in contract or tort, and is broad enough to encompass all causes of action alleged by Plaintiffs against Elite Group in the Complaint.” (Mot. at p. 12:22-25.)

In addition, as set forth above, Elite Group moves, inter alia, for an order that the parties shall select an arbitrator from Construction Dispute Resolution Services, Inc. As set forth above, the subject Agreement provides, inter alia, that “[a]ny dispute concerning: the interpretation or enforcement or interpretation of this Agreement; the adequacy of the Inspection, the adequacy of the Report, any allegation that Inspector breach this Agreement or the standard of care; or any claims, causes of action, or damages, whether in tort, contract, or equity (collectively ‘Claims’), shall be submitted to and resolved by binding arbitration conducted by Construction Dispute Resolution Services, Inc., utilizing their Rules and Procedures.” (Maher Decl., ¶ 3, Ex. A.)

As set forth above, Plaintiffs do not oppose the instant motion. Thus, Plaintiffs do not dispute that they entered into the Agreement or that it covers the claims alleged by Plaintiffs in the Complaint. Based on the foregoing, the Court finds that Elite Group has established that an arbitration agreement exists and that it covers the claims asserted by Plaintiffs in this action. In addition, as Plaintiffs do not oppose the instant motion, they have not raised any grounds for denial.  

Conclusion

For the foregoing reasons, Elite Group’s motion to compel arbitration is granted. The action is stayed as between Plaintiffs and Elite Group pending completion of arbitration of Elite Group’s arbitrable claims.[1]

The Court sets an arbitration completion status conference on May 7, 2025, at 10:00 a.m. in Dept. 50. The parties are ordered to file a joint report regarding the status of the arbitration five court days prior to the status conference, with a courtesy copy delivered directly to Department 50. Elite Group is ordered to provide notice of this Order.

DATED:  May 7, 2024                                  

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court