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Tarrant Bell Property, LLC v. Superior Court of Alameda County

December 2, 2009

TARRANT BELL PROPERTY, LLC ET AL., PETITIONERS,
v.
THE SUPERIOR COURT OF ALAMEDA COUNTY RESPONDENT; REYNALDO ABAYA ET AL., REAL PARTIES IN INTEREST.
SPANISH RANCH I, L.P., PETITIONER,
v.
THE SUPERIOR COURT OF ALAMEDA COUNTY RESPONDENT; REYNALDO ABAYA ET AL., REAL PARTIES IN INTEREST.



Trial Court: Alameda County Superior Court. Alameda County Super. Ct. No. HG08418168 Trial Judge: Honorable George C. Hernandez.

The opinion of the court was delivered by: Sepulveda, J.

CERTIFIED FOR PUBLICATION

It is undisputed that a trial court may, in its discretion, refuse to compel arbitration between contracting parties where there are other individuals suing over the same matter and separate arbitration and court actions risk conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2, subd. (c).) The question presented here is whether the trial court is vested with comparable discretion when asked to compel a different form of alternative dispute resolution, trial by a private referee. (Code Civ. Proc., § 638 et seq.) We conclude that the answer is yes.

There are several forms of alternative dispute resolution that contracting parties may use to settle disputes arising under their contract, including arbitration (Code Civ. Proc., § 1280 et seq.) and trial by a referee (Code Civ. Proc., § 638 et seq.). Statutory law provides that an agreement to submit a controversy to arbitration "shall" be enforced unless specified circumstances exist. (Code Civ. Proc., § 1281.2.) Among those circumstances: the court may refuse to enforce the arbitration agreement where "[a] party to the arbitration agreement is also a party to a pending court action . . . 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." (Code Civ. Proc., § 1281.2, subd. (c).)

The reference statute has a different structure. The reference statute does not have a general provision mandating enforcement followed by exceptions to enforcement, as does the arbitration statute. Instead, the reference statute has a general provision making enforcement discretionary. A referee "may" be appointed "if the court finds a reference agreement exists between the parties." (Code Civ. Proc., § 638.)

The question here is whether the trial court may refuse to enforce a reference agreement, as it may an arbitration agreement, where there is a possibility of conflicting rulings on a common issue of law or fact. We conclude that the court has the discretion to refuse to enforce a reference agreement under these circumstances, or related considerations of judicial economy, and that no abuse of that discretion has been shown in this case.

I. Facts

Spanish Ranch I Mobile Home Park (the Park) is a 50-acre Hayward facility with 462 sites. In October 2008, 120 current and former residents of the Park sued the Park owners upon allegations that the owners failed to properly maintain the common areas and facilities within the Park, and otherwise subjected the residents to substandard living conditions. Defendant Monterey Coast, L.P., is the current owner, and defendants Tarrant Bell Property, LLC, and Spanish Ranch I, L.P., are former owners.

In December 2008, defendants moved to compel arbitration or, in the alternative, judicial reference. (Code Civ. Proc., § 638, 1281.2.) Many of the plaintiffs had signed Park leases containing an alternative dispute resolution (ADR) provision. The parties dispute the exact number of plaintiffs subject to an ADR lease provision. Defendants put the number at 100 while plaintiffs say 81. The exact number is not important here. It is sufficient to note that many, but not all, of the plaintiffs agreed to submit tenant disputes to ADR.*fn1

There were several standard form leases used over the years at the Park, with slight variation in the ADR provisions, but those differences are not material. In substance, the leases state that it is agreed that any tenancy dispute (with major exceptions for actions by the Park owner) shall be submitted to arbitration conducted under the provisions of Code of Civil Procedure section 1280 et seq. " `Dispute' " is defined to include claims regarding "maintenance, condition, nature, or extent of the facilities, improvements, services, and utilities provided to the space, park or common areas of the park."*fn2 The leases further state: "If these arbitration provisions are held unenforceable for any reason it is agreed that all arbitrable issues in any judicial proceeding will be subject to and referred on motion by any party or the court for hearing and decision by a referee (a retired judge or other person appointed by the court) as provided by California law, including Code of Civil Procedure section 638, et seq." Costs for the arbitration or reference "shall be advanced equally" between the tenant and Park owner.

Plaintiffs opposed the motion to compel arbitration or reference on a number of grounds. Plaintiffs argued that the ADR provision is unenforceable as an invalid waiver of rights protected under the Mobilehome Residency Law and landlord-tenant law. (Civ. Code, §§ 798.77, 798.87, subd. (a), 1953, subd. (a).) Plaintiffs also asserted that the ADR provision is unconscionable because it exploits the weak bargaining position of mobile home residents and requires ADR of the residents' disputes while exempting unlawful detainer and other Park owner actions from ADR. Finally, plaintiffs urged the court to refuse enforcement of the ADR provision because its enforcement risked conflicting rulings on common issues of law and fact by sending the claims of some Park residents to arbitration or reference, while others remained in the superior court for resolution.

In March 2009, the court denied defendants' motion to compel arbitration on two grounds: (1) the Mobilehome Residency Law precludes waiver of a resident's right to bring a civil action for a park's improper maintenance of the common facilities (Civ. Code, §§ 798.77, 798.87, subd. (a)); and (2) there is the risk of inconsistent rulings on common issues (Code Civ. Proc., § 1281.2, subd. (c)). It will be recalled that the lease provided alternative forms of ADR: arbitration preferentially, but reference if the "arbitration provisions are held unenforceable for any reason." The court, having held the arbitration provisions unenforceable, was asked by defendants to compel reference.

The court received supplemental briefing on defendants' alternative request for reference and, in May 2009, denied that request as well. The court found that sending some of the plaintiffs to a referee while others remained in the superior court risked inconsistent rulings. The court also found that splitting the action would defeat the purposes of the reference statute by duplicating efforts and increasing costs: "Ordering two groups of plaintiffs to try their cases in separate but parallel proceedings would not reduce the burdens on this court or the parties, result in any cost savings, streamline the proceedings, or achieve efficiencies of any kind. The parties would be required to conduct the same discovery, litigate and ultimately try the same issues in separate but parallel forums. A general reference would thus result in a duplication of effort, increased costs, and potentially, delays in resolution. Moreover, it would not reduce any burden on this Court, which would almost certainly have to hear, and decide, all of the same issues."

Defendants appealed the trial court's March 2009 order denying their motion to compel arbitration, and that appeal is pending. (Code Civ. Proc., ยง 1294, subd. (a).) Defendants also filed petitions for a writ of mandate to vacate the court's May 2009 order denying their alternative motion to compel reference. We now turn to ...


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