Justia California Court of Appeals Opinion SummariesArticles Posted in Arbitration & Mediation
Gamma Eta Chapter of Pi Kappa Alpha v. Helvey
The chapter filed suit against defendant and the housing corporation for constructive fraud, breach of fiduciary duty, unjust enrichment, negligent misrepresentation, and others. The Court of Appeal reversed the trial court's denial of the housing corporation's motion to compel arbitration and held that the chapter must arbitrate its claims against the housing corporation. In this case, the international fraternity is an overarching and governing international organization, and the local chapter of this fraternity is merely a subordinate fraternal component of the international fraternity. Furthermore, the international fraternity and the housing corporation wanted arbitration, and thus this was in effect a stipulation for arbitration. Therefore, the chapter lacked legal power to disregard the instruction from the international fraternity. The court also held that the housing corporation has not waived its right to arbitrate. View "Gamma Eta Chapter of Pi Kappa Alpha v. Helvey" on Justia Law
Dos Vientos v. CalAtlantic Group, Inc.
After the condominium association sued the developer alleging construction defects, the association began arbitration without obtaining a vote of its members. However, the association's governing documents required arbitration of such disputes and a vote of at least 51 percent of the association's membership prior to beginning arbitration. The members later overwhelmingly voted to pursue the arbitration, but the arbitrator dismissed the arbitration for lack of a membership vote prior to its commencement. The Court of Appeal reversed the trial court's confirmation of the award and entry of judgment for the developer. The court disagreed with Branches Neighborhood Corp. v. CalAtlantic Group, Inc. (2018) 26 Cal.App.5th 743, which held that unless the association has obtained approval by a vote of at least 51 percent of its members prior to beginning arbitration, it has forever forfeited its right to pursue its claims in any forum in spite of an overwhelming ratifying vote. The court stated that this interpretation directly violates the public policy expressed in Code of Civil Procedure section 1286.2, subdivision (a)(4). In this case, the court held that the language of section 7.01B of the covenants, conditions, and restrictions (CC&R's) violates explicit legislative expressions of public policy. Furthermore, the Legislature has also determined that provisions such as section 7.01B are unconscionable. The court stated that Senate Bill No. 326 bars the use of provisions such as section 7.01B as a defense for developers against claims of condominium associations. View "Dos Vientos v. CalAtlantic Group, Inc." on Justia Law
Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc.
The issue this case presented for the Court of Appeal's review centered on whether a binding arbitration clause in an insurance policy issued by plaintiff Philadelphia Indemnity Ins. Co., applied to a third party, defendant SMG Holdings, Inc. The policy had been issued to Future Farmers of America, which was holding an event inside the Fresno Convention Center. Future Farmers had licensed the use of the convention center from its property manager, SMG. As part of the license, Future Farmers agreed to obtain coverage for itself and to name SMG as an additional insured. Thereafter, Future Farmers obtained a policy from Philadelphia Indemnity, which provided coverage for “managers, landlords, or lessors of premises” as well as for any organization “as required by contract.” The policy also contained an arbitration clause for coverage disputes. During the Future Farmers event, an attendee was injured in the convention center parking lot. When the injured man sued SMG, which also managed the parking lot, SMG tendered its defense to Philadelphia under the policy. Philadelphia refused, believing SMG was not covered under the policy for an injury occurring in the parking lot. After two years, Philadelphia petitioned the trial court to compel arbitration against SMG. The trial court denied the petition, concluding no evidence was presented that the parties to the policy intended to benefit SMG, and Philadelphia was equitably estopped from claiming SMG was required to arbitrate the dispute. Philadelphia contended: (1) the trial court erred in determining SMG was neither a third party beneficiary of the policy, nor equitably estopped from avoiding the policy’s arbitration clause; (2) alternatively, the court erred in finding Philadelphia estopped from compelling SMG to arbitrate; and (3) the coverage dispute was encompassed by the arbitration clause and arbitration should be ordered. The Court of Appeal agreed SMG could be compelled to arbitrate. Judgment was reversed, the trial court's order vacated, and the trial court directed to order arbitration of the coverage dispute. View "Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc." on Justia Law
Fabian v. Renovate America, Inc.
Renovate America, Inc. (Renovate) appealed an order denying its petition to compel arbitration of Rosa Fabian's claims related to the financing and installation of a solar energy system in her home. Fabian filed a complaint against Renovate alleging that solar panels she purchased for her home were improperly installed. Fabian alleged that, in early 2017, Renovate made an unsolicited telephone call to her home about financing the solar panels and "signed" her name on a financial agreement. All communications between Fabian and Renovate's representative occurred telephonically and she was never presented with any documents to sign. Fabian claims she did not sign a financial agreement with Renovate; nevertheless, Renovate incorporated the solar panel payments set forth in the financial agreement into her mortgage loan payments. Fabian thus alleged that Renovate violated: (1) the Consumers Legal Remedies Act; (2) the Unfair Competition Law; and (3) the California Contract Translation Act. Renovate petitioned to compel arbitration of Fabian's claims and stay judicial proceedings pending arbitration, supported by an Assessment Contract (Contract) that Renovate claimed Fabian had signed electronically. Renovate contended the trial court erred in ruling that the company failed to prove by a preponderance of the evidence that Fabian electronically signed the subject contract. The Court of Appeal found that by not providing any specific details about the circumstances surrounding the Contract's execution, Renovate offered little more than a bare statement that Fabian "entered into" the Contract without offering any facts to support that assertion. "This left a critical gap in the evidence supporting Renovate's petition." The Court therefore affirmed denial of the petition to compel arbitration. View "Fabian v. Renovate America, Inc." on Justia Law
Soni v. SimpleLayers, Inc.
Under the LACBA's Rules for Conduct of Mandatory Arbitration of Fee Disputes Pursuant to Business & Professions Code Section 6200 et seq., service is complete at the time of deposit in the mail and not extended for service by mail. In this case, the Court of Appeal held that the arbitration award became binding when the attorney did not file an action within 30 days after service, and section 6206 did not extend the deadline. Therefore, the attorney was barred under Code of Civil Procedure section 1288 from asserting a ground that supports vacating the award, because the attorney did not file a petition or a response within 100 days of service of the award. Furthermore, even if the attorney was not barred from raising arbitrability issues, the LACBA rules provide that the arbitrator has the authority to determine jurisdiction and the arbitrator’s ruling that the fee dispute was arbitrable was not reviewable for errors of law or fact. Accordingly, the court reversed the trial court's judgment denying the petition to confirm the arbitration award. View "Soni v. SimpleLayers, Inc." on Justia Law
Prima Donna Development Corp. v. Wells Fargo Bank, N.A.
Prima Donna’s president, opened commercial bank accounts at Wells Fargo; he signed or agreed to be bound by several agreements, including wire transfer agreements. The commercial account agreement contained an arbitration agreement. A Prima employee was the victim of fraud and authorized wire transfers to foreign banks. Before Prima reported the fraud, $638,400 had been transferred and could not be recovered. Prima sued, alleging that Wells Fargo did not employ reasonable commercial standards of fair dealing and failed to follow the agreement's security procedures. The court ordered arbitration, stating “The fact that UCC provisions displace common law provisions and provide the law under which claims are analyzed" is unrelated to what type of fact-finder can apply that law. The arbitrator concluded that Wells Fargo was not liable for the loss. The court of appeal concluded the trial court properly ordered the matter to arbitration and confirmed the award. The court rejected arguments that the arbitration agreement was substantively unconscionable because the arbitrator would not necessarily decide the dispute under California law, because it denied Prima its right to a jury trial, or because of the limited nature of judicial review. The arbitration process allowed for discovery, an arbitrator who voluntarily recused himself after Prima expressed concern about his impartiality, a multi-day hearing, written discovery, evidentiary rulings, and a reasoned, written award that applied relevant California law, View "Prima Donna Development Corp. v. Wells Fargo Bank, N.A." on Justia Law
Bakersfield College v. Cal. Community College Athletic Assn.
Defendant California Community College Athletic Association (Athletic Association) administered intercollegiate athletics for the California community college system. The parties agreed that, as a condition of participating in the intercollegiate football league, plaintiff Bakersfield College (the College) agreed to be bound by the Athletic Association’s bylaws and constitution, including a provision requiring the College to resolve any sanctions and penalty disputes by binding arbitration. Instead of proceeding through binding arbitration to challenge the sanctions and penalty decisions issued by the Athletic Association and codefendant the Southern California Football Association (the Football Association) against the College, the College and coplaintiffs Jeffrey Chudy and the Kern Community College District elected to file civil litigation. Plaintiffs argued they were excused from pursuing binding arbitration because the arbitration provision was unconscionable. The trial court said the “issue [wa]s close,” but ultimately, after severing the one-sided attorney fees subsections, found the arbitration provision was not unconscionable. The trial court, therefore, found plaintiffs’ litigation was barred by the failure to exhaust their administrative remedies. The Court of Appeal agreed with the trial court that this was a close case but concluded the arbitration provision was unconscionable. Accordingly, it reversed. View "Bakersfield College v. Cal. Community College Athletic Assn." on Justia Law
Davis v. TWC Dealer Group, Inc.
TWC operated a Walnut Creek Toyota dealership. The Davises sought employment at TWC, to run its special finance department. The Davises are African-American, and Donald Davis is over the age of 40. The Davises were required to sign agreements providing that the Davises agreed to arbitration. The three agreements are all different. After the Davises became employed, TWC hired a new General Manager, Colon. The Davises claim that Colon “began to systematically undermine [the Davises’s] programs,” an effort “punctuated by shockingly inappropriate ageist and racist comments to and about them.” The Davises eventually resigned, filed complaints with the Department of Fair Employment and Housing, and obtained right to sue letters. The defendants filed an unsuccessful petition to compel arbitration. The court found there was an agreement to arbitrate, but found both procedural and substantive unconscionability. The court of appeal affirmed, noting TWC’s “lack of candor” concerning the agreements. The court noted the “take it or leave it” pressure under which the agreements were signed, the inconsistency between the agreements, how hard it would be for a layman to read the agreements, and the inclusion of broad provisions in violation of public policy. View "Davis v. TWC Dealer Group, Inc." on Justia Law
Gerawan Farming, Inc. v. Agricultural Labor Relations Board
After the Board issued a decision in which it held that the public does not have a constitutional right to attend mandatory mediation and conciliation (MMC) proceedings, Gerawan filed a declaratory relief action seeking a judicial declaration that the Board's decision violates the right of public access protected under the federal and state Constitutions. A Gerawan employee also intervened in the same action. The Court of Appeal held that Gerawan lacked standing to challenge the Board's policy on First Amendment grounds. The court also held that there was no right of access under the federal and state Constitutions to on-the-record MMC proceedings. Accordingly, the court affirmed the judgment. View "Gerawan Farming, Inc. v. Agricultural Labor Relations Board" on Justia Law
Spracher v. Paul M. Zagaris, Inc.
Almost two years into active litigation, defendants moved to compel arbitration of this class action brought on behalf of persons who employed the services of PMZ to buy or sell a residence. The court of appeal affirmed the denial of the motion. A motion to compel arbitration is properly denied when the moving party has waived its right to do so, Civ. Proc. Code, 1281.2(a). The California Supreme Court has identified relevant factors: whether the party’s actions are inconsistent with the right to arbitrate; whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; whether a party either requested arbitration close to the trial date or delayed for a long period before seeking a stay; whether a defendant seeking arbitration filed a counterclaim without asking for a stay; whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and whether the delay affected, misled, or prejudiced the opposing party. The trial court properly applied the factors; its determination that defendants’ delay of nearly two years constituted an unreasonably long period of time, and defendants’ explanation for their delay was unavailing, is “copiously supported by the evidence.” View "Spracher v. Paul M. Zagaris, Inc." on Justia Law