Judge: Theresa M. Traber, Case: 21STCV35818, Date: 2022-08-08 Tentative Ruling

Case Number: 21STCV35818    Hearing Date: August 8, 2022    Dept: 47

aTentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     August 8, 2022                       TRIAL DATE: NOT SET

CASE:                         Stephen Choi et al. v. Antelope Valley Residential Development, LLC, et al.

CASE NO.:                 21STCV35818           

MOTION TO COMPEL ARBITRATION

MOVING PARTY:               Defendants Antelope Valley Residential Development, LLC; Steven Goldstein

RESPONDING PARTY(S): Plaintiffs Stephen Choi and Ji Eun Lee Choi

CASE HISTORY:

·         09/29/21: Complaint filed

·         11/29/21: Cross-Complaint filed by Antelope Valley Residential Development, LLC and Steven Goldstein as to Forward Calabasas, Inc. and Jordan Davies

·         12/16/21: Cross-Complaint filed by Forward Calabasas, Inc. and Jordan Davies as to Antelope Valley Residential Development, LLC and Steven Goldstein

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for fraud based on the sale of real property. Plaintiffs contends that Defendants sold Plaintiffs a piece of real property with substantial defects that were actively concealed prior to the sale.

Defendants Antelope Valley Residential Development LLC and Steven Goldstein move to compel arbitration.

TENTATIVE RULING:

Defendants’ motion to compel arbitration is GRANTED as to Defendants Antelope Valley Residential Development, LLC and Steven Goldstein only.

The Court orders this matter stayed pending resolution of the arbitration.  Any and all future dates are advanced and vacated. A Status Conference re: Arbitration is set for August 8, 2023, at 8:30 a.m.

DISCUSSION:

Defendants Antelope Valley Residential Development LLC and Steven Goldstein move to compel arbitration.

Existence of Arbitration Agreement

Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the enforcement or revocation of any contract. (Blake v. Ecker (2001) 93 Cal.App.4th 728, 741 (overruled on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094).) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing the petition has the burden of proving, by a preponder-ance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356-57.)

No party disputes the existence of the arbitration agreement under which Defendants seek to compel arbitration.  The agreement states:

The arbitration provision entitled “Arbitration of Disputes” provides in pertinent part: The Parties agree that any dispute or claim in Law or in 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 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.

(Declaration of Benjamin Kiss ISO Mot. Exh. A. p.8.)  Plaintiffs initialed on the page where this language is located and signed the agreement at the end. (Id., pp. 8, 10.)

The Notice of Arbitration provision provides, in relevant part

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION DECIDED BY NEUTRAL ARBITRATION…IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISISON, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.

(Id. p. 8.) Plaintiffs initialed next to this passage in the agreement. (Id.) Plaintiffs do not contest the existence of the arbitration agreement. The Court finds that an arbitration agreement exists between Plaintiffs and the moving Defendants.

Applicability of the FAA

            The Arbitration Agreement states that it is governed by the Federal Arbitration Act, and Plaintiffs do not dispute this. The Court therefore finds that the FAA applies to this agreement.

Scope of the Arbitration Agreement

            Defendants contend, and Plaintiffs do not dispute, that the scope of the arbitration agreement covers the dispute in this case.

Section 1281.2(c)

            Plaintiffs contend that the Court should not compel arbitration under its authority under subdivision (c) of Code of Civil Procedure section 1281.2. Section 1281.2 requires that the Court compel arbitration when there is an enforceable agreement, unless one of several exceptions apply. Subdivision (c) creates an exception when:

(c) 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. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

(Code Civ. Proc. § 1281.2(c).) Under the circumstances described in the statute, the Court:

(1)   may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding;

(2)   may order intervention or joinder as to all or only certain issues;

(3)   may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or

(4)    may stay arbitration pending the outcome of the court action or special proceeding.

(Code. Civ. Proc. § 1281.2.)

            Here, Plaintiffs contend that the remaining Defendants in this case, the real estate agent and broker in this action Jordan Davies and Forward Calabasas, Inc., doing business as Keller Williams Realty Calabasas, do not consent to arbitration in this matter. (Declaration of Stanley Denis ISO Opp. ¶ 5, Exh. 1.) Davies and Keller Williams are not parties to the arbitration agreement, as the Purchase Agreement expressly states “Broker shall not be compelled to mediate or arbitrate unless they agree to do so in writing. Any broker(s) participating in mediation or arbitration shall not be deemed a party to this Agreement.” (Kiss Decl. Exh. A. p.9.) For purposes of section 1281.2 (c), a third party is a party who is not bound by the arbitration agreement. (Bush v. Horizon West (2012) 205 Cal.App.4th 924, 928.) Plaintiffs contend that the possibility of conflicting rulings is readily apparent, as the liability of the Broker Defendants rests on their status as agents of the Seller Defendants who seek to compel arbitration. Thus, both the Court and the arbitrator would necessarily be deciding whether the Seller Defendants should be liable, either directly, or as a threshold question to determine the liability of the Broker Defendants.

            In reply, Defendants contend that there is no exception to the general rule that an arbitration provision can be enforced against a signatory, but not against a non-signatory such as the co-Defendants. In reliance, Defendants cite Nguyen v. Tran, (2007), 157 Cal.App.4th 1032, in which the Court of Appeal held that buyers and sellers can compel each other into binding arbitration, but not a real estate broker or someone else not a party to the arbitration clause. (Nguyen v. Tran (2007), 157 Cal.App.4th 1032, 1036.) However, Defendants’ reliance on this case is misplaced. The Nguyen Court expressly stated:

Our determination that cooperating brokers are entitled to have buyers’ claims against them resolved by contractual arbitration is without prejudice to the trial court's consideration of Code of Civil Procedure section 1281.2, subdivision (c), providing an exception to mandatory contractual arbitration in certain situations where third parties are involved. Although listing brokers cited the statute in their opposition to the petition to compel arbitration, the court did not discuss it in its ruling and the issue was not raised on appeal. We thus have no occasion to consider it and offer no opinion on whether it applies.

(Id. at 1039.) Defendants also make a conclusory assertion that, even if section 1281.2(c) applies, there is no possibility of conflicting rulings on a common issue of law or fact. Defendants offer no facts or contentions in support of this conclusory assertion.

            The Court concludes, based on the foregoing, that the parties to the arbitration agreements are parties to a pending court action with third parties to the agreement—namely, this action—which arises out of the same transaction. The Court also concludes based on the foregoing that there is a possibility of conflicting rulings on a common issue of law or fact. In the Court’s view, given that the common question turns on the liability of the principal Defendants, who are unquestionably party to the arbitration agreement, to give effect to the arbitration agreement, conform with the public policy in favor of arbitration, and avoid conflicting rulings, the appropriate solution is to compel arbitration of the dispute between the principal Defendants and Plaintiffs and stay the remainder of the action pending resolution of the arbitration.

CONCLUSION:

            Accordingly, Defendants’ motion to compel arbitration is GRANTED as to Defendants Antelope Valley Residential Development, LLC and Steven Goldstein only.

The Court orders this matter stayed pending resolution of the arbitration. Any and all future dates are advanced and vacated. A Status Conference re: Arbitration is set for August 8, 2023 at 8:30 a.m.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated: August 8, 2023                                    ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.