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Tarrant Bell Property, LLC et al v. the Superior Court of Alameda

February 10, 2011

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.



Alameda County Super. Ct. No. HG08418168

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

Alameda County ; Super. Ct. No. HG08418168

S179378

Ct.App. 1/4 A125496; Ct.App. 1/4 A125714.

We granted review in this case to decide whether, under Code of Civil Procedure section 638,*fn1 a trial court has discretion to refuse to enforce a predispute agreement providing that, in the event of dispute, a referee may hear and decide certain contested issues. The Court of Appeal held that a trial court has such discretion and that the trial court here properly exercised that discretion on the facts of this case. We agree with the Court of Appeal's holding and affirm its judgment.

FACTUAL BACKGROUND

In October 2008, 120 current and former lessees and residents of a mobilehome park in California (real parties in interest) sued the park's current and former owners (defendants) for failing properly to maintain the park's common areas and facilities and for otherwise subjecting park residents to substandard living conditions. The lease agreements between defendants and about 100 of the real parties in interest provide: (1) the parties will submit to arbitration any tenancy dispute (with certain exceptions for actions by the owner), including 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; and (2) "[i]f these arbitration provisions are held unenforceable for any reason . . . 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" section 638.*fn2

In December 2008, defendants moved to compel arbitration under section 1281.2 or, in the alternative, for appointment of a referee to hear the dispute under section 638, which provides in relevant part: "A referee may be appointed . . . upon the motion of a party to a written contract . . . that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties: [¶] (a) To hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision. [¶] (b) To ascertain a fact necessary to enable the court to determine an action or proceeding." Real parties in interest opposed the motion, arguing that the arbitration provision was unenforceable for various reasons and that, because some of their lease agreements did not provide for arbitration or reference, the court should deny defendants' motion as to all real parties in interest in order to avoid the risk of conflicting rulings on common issues of law and fact.

The trial court agreed with real parties in interest and refused to compel arbitration or appoint a referee under section 638. Regarding the latter determination, it first noted the possibility of "inconsistent judgments" were it to order reference only as to real parties in interest who had signed a predispute reference agreement, but, citing Greenbriar Homes Communities, Inc. v. Superior Court (2004) 117 Cal.App.4th 337 (Greenbriar), found that that circumstance was "not a proper basis for denying a motion for general reference." Nevertheless, as a matter of discretion, the court refused to appoint a referee, reasoning: "[I]n this case the purposes of section 638 would not be promoted by a general Reference of some claims and not others. [¶] Ordering two groups of real parties in interest 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 petitioned for a writ of mandate seeking to vacate the denial of their motion to appoint a referee.*fn3 The Court of Appeal denied relief, finding that the trial court had discretion to refuse to enforce the reference provisions because of the "possibility of conflicting rulings on a common issue of law or fact" and "other circumstances related to considerations of judicial economy," specifically, "the duplication of efforts, increased costs, potential delays in resolution, and an unmitigated burden on the superior court."

We then granted defendants' petition for review.

DISCUSSION

As they did in the Court of Appeal, defendants argue here that, under section 638, where the moving party shows the existence of a valid reference agreement, a trial court has no discretion to deny a reference motion based on concerns about judicial economy or the possibility of conflicting rulings on a common issue of law or fact. For reasons explained below, we disagree.

The starting point for determining this issue of statutory interpretation -- "the statutory language" (People v. Cole (2006) 38 Cal.4th 964, 975) -- does not support defendants' argument. As set forth above, section 638 provides that a referee "may be appointed" if, upon motion, a court finds that a reference agreement exists between the parties "that provides that any controversy arising therefrom shall be heard by a referee." (Italics added.) Under "well-settled principle[s] of statutory construction," we "ordinarily" construe the word "may" as permissive and the word "shall" as mandatory, "particularly" when a single statute uses both terms. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 443.) In other words, "[w]hen the Legislature has, as here, used both 'shall' and 'may' in close proximity in a particular context, we may fairly infer the Legislature intended mandatory and ...


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