Case Number:?EC068186????Hearing Date:?January 11, 2019????Dept:?A
Gomez v Martinez
MOTION TO COMPEL ARBITRATION
Calendar:?????????7
Case No:?????????EC068186
Hearing Date:??1/11/19
Action Filed:???5/14/18
Trial:???????????????Not set
MP:?????????????????Defendants (1) Richard Martin Martinez and (2) Ricky Martinez and Associates Investments, Inc.
RP:??????????????????Plaintiffs Alejandro Gomez and Andrea Gomez
ALLEGATIONS:
????????????Plaintiffs Alejandro Gomez and Andrea Gomez alleges that Defendant Richard Martin Martinez (?Martinez?) bought the property located at 369 E. Montana Street, Pasadena, CA 91104 on April 1, 2015.??On October 30, 2015, Martinez listed the property for sale for $580,000.00.??Plaintiffs submitted an offer to Martinez in April 2016 on the property at a purchase price of $530,000.00.?Escrow was opened and Martinez provided a Transfer Disclosure Statement (?TDS?) and a Seller Property Questionnaire (?SPQ?), making representations as to the condition of the property.??Martinez, Defendant Ricky Martinez and Associates Investments, Inc. (?RMAI?), and Plaintiffs entered into an agreement, stating that Plaintiffs agreed to accept $3,000 in a promise not to sue Defendants in the event the property was non-compliant with the codes and ordinance requirements of the City of Pasadena.??After Plaintiffs moved in, they allege that Martinez failed to disclose that the property was not compliant with the City of Pasadena and there were many issues with the property.
????????????The complaint, filed May 14, 2018, alleges causes of action for: (1) breach of contract; (2) violation of Civil Code, ?1102; (3) fraudulent concealment; (4) fraud in the inducement; (5) negligence; (6) negligent misrepresentation; and (7) breach of covenant of good faith and fair dealing.
RELIEF REQUESTED:
????????????Defendants Martinez and RMAI move to compel arbitration against Plaintiffs, and an order staying this action.
DISCUSSION:
Legal Standard
CCP ?1281.2 permits a party to file a petition to request that the Court order the parties to arbitrate a controversy.??Under section 1281.2, the trial court determines if there is a duty to arbitrate the particular controversy which has arisen between the parties.?(Engineers & Architects Assn. v. Community Development Dept.?(1994) 30 Cal. App. 4th 644, 652-53.)??In performing its duty to determine if the parties have agreed to arbitrate that type of controversy, the Court is necessarily required to examine and, to a limited extent, construe the underlying agreement.??(Id.)
????????????Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.??(Id.)??The Court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.??(Id.)??Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.??(Id.)
????????????The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.??(Id.)??There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.??(Id.)
Analysis
- Terms of the Agreement to Arbitrate??
The Residential Purchase Agreement states in relevant part at paragraph 22 on page 8:
- DISPUTE RESOLUTION:
- MEDIATION: The Parties agree to mediate any dispute or claim arising between them out of this agreement, or any resulting transaction, before resorting to arbitration or court action through the C.A.R. Real Estate Mediation Center for Consumers (www.consumermediation.org) or through any other mediation provider or service mutually agreed to by the Parties. The Parties also agree to mediate any disputes or claims with Broker(s) who, in writing agree to such mediation prior to, or within a reasonable time after, the dispute or claim is presented to the Broker. Mediation fees, if any, shall be divided equally among the Parties involved.If, for any dispute or claim to which this paragraph applies, any Party (i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencing of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney fees, even if they would otherwise be available to that Party in any such action.???THIS MEDIATION PROVISION APPLIES WHETHER OR NOT THE ARBITRATION PROVISION IS INITIALED.??Exclusions from this mediation agreement are specified in paragraph 22C.
- ARBITRATION OF DISPUTES: The Parties agree that any dispute or claim in Law or 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 Parties also agree to arbitrate any dispute or claims with Broker(s), who, in writing, agree to such arbitration prior to, or within a reasonable time after, the dispute or claim is presented to the Broker. 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 the 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. Exclusions from this arbitration agreement are specified in paragraph 22C.
(Mot., Ex. A [Residential Purchase Agreement, ?22 at p.8.)??The arbitration provision is initiated and the Residential Purchase Agreement is signed by Plaintiffs and Martinez.
- Enforceable Agreement
Defendants have provided a copy of the Residential Purchase Agreement, which includes the arbitration provision that they seek to enforce.
In opposition, Plaintiffs argue that they did not agree to arbitrate this dispute with all the named Defendants with Martinez as the seller, but not Martinez as a broker or RMAI.??Plaintiffs argue that they filed suit against the seller, broker, and corporate entity.
However, the arbitration provision itself states that the parties agree to arbitrate any dispute or claims with brokers who, in writing, agree to such arbitration prior to or within a reasonable time after the dispute or claim is present to the broker.??Here, it is apparent from the motion filed by Martinez and RMAI that Martinez is willing to submit to arbitration in his capacity as a seller and as broker.??Further, RMAI is merely a corporate structure to which Martinez holds all positions in the corporation.??(See Compl., ?3.)?Plaintiffs even allege in the complaint that Defendants are each the agents and employees of one another, and were acting in the course and scope of that employment and agency during the relevant times.??(Compl., ?5.)
In addition, while ordinarily, an arbitration agreement cannot bind nonsignatories, absent a judicial determination that the nonsignatory falls within the limited class of third-parties who can be compelled to arbitrate (Benaroya v. Willis?(2018) 23 Cal.App.5th 462, 468),??[t]here are circumstances in which nonsignatories to an agreement containing an arbitration clause can be compelled to arbitrate under that agreement. As one authority has stated, there are six theories by which a nonsignatory may be bound to arbitrate: ?(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary? [citations].? (Benaroya v. Willis?(2018) 23 Cal.App.5th 462, 469.)???As discussed above, there is an alleged agency agreement between the defendants.??Thus, there is merit to granting this motion.
Plaintiffs also argue that Martinez (in his capacity as seller) waived his right to compel arbitration because Plaintiffs? counsel sent 2 demands for Martinez to submit to mediation, but Martinez disregarded all demands.
Public policy favors arbitration such that claims of waiver receive ?close judicial scrutiny? and the party seeking to establish waiver bears a heavy burden.??(Lewis v. Fletcher Jones Motor Cars, Inc.?(2012) 205 Cal.App.4th 436, 444.)??Waiver in the arbitration context does not require a voluntary relinquishment of a known right; rather, a party may be have said to waive its right to arbitration by an untimely demand, without intending to give up that remedy.??(Id.)??In this context, waiver is more like a forfeiture arising from the nonperformance of a required act.??(Id.)??Relevant factors to consider in determining whether a party waived its right to arbitrate claims include:??(1)?whether the party’s actions are inconsistent with the?right?to?arbitrate; (2) 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; (3) whether a party either requested?arbitration?enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking?arbitration?filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in?arbitration] had taken place; and (6) whether the delay ?affected, misled, or prejudiced? the opposing party.???(Id.?at 444 [internal quotation marks omitted].)
Here, the mere fact that Martinez (as seller) failed to submit to mediation is not sufficient to establish Plaintiffs? heavy burden of showing that Martinez waived his right to mediate this case.??Also, none of the other factors have been discussed by Plaintiffs.??Upon its own cursory review of the factors, the Court notes that this action was filed in May 2018 and that this is first substantive proceeding held in this action.??Trial has not yet been set, there is no indication that the ?litigation machinery? has been invoked, and it does not appear that this case has progressed in any other manner that the parties are well into the preparation of this lawsuit.??There is also no showing that Martinez misled or prejudiced Plaintiffs.??Thus, the Court does not find any waiver on the part of Martinez.
Thus, the Court will find an enforceable agreement to arbitrate between the parties in this action.??Further, the scope of the arbitration provision encompasses the disputes at issue between the parties (i.e., ?any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction?).??Finally, there are no arguments regarding whether the agreement is unconscionable or otherwise unenforceable.
RULING:
Grant the motion to compel arbitration and stay the action.