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Kum Tat Ltd. v. Linden Ox Pasture, LLC

United States District Court, N.D. California

December 5, 2014

KUM TAT LIMITED, Plaintiff,
v.
LINDEN OX PASTURE, LLC, Defendant

For Kum Tat Limited, Plaintiff: Charles Michael Schaible, Cooley Godward Kronish LLP, San Francisco, CA; Patrick P. Gunn, Cooley Godward LLP, San Francisco, CA.

For Linden Ox Pasture, LLC, Defendant: Jeffrey L. Fillerup, LEAD ATTORNEY, Andrew S. Azarmi, McKenna Long & Aldridge LLP, San Francisco, CA.

ORDER DENYING MOTION TO COMPEL ARBITRATION Re: Dkt. No. 50

WILLIAM H. ORRICK, United States District Judge.

INTRODUCTION

Plaintiff Kum Tat Limited (" Kum Tat") and defendant Linden Ox Pasture, LLC (" Linden Ox") entered negotiations for the purchase of residential property owned by Linden Ox. When Linden Ox terminated negotiations and contracted to sell the property to a third-party, Kum Tat sued for breach of contract and specific performance. Kum Tat moves to compel Linden Ox to arbitrate the dispute. Because Kum Tat has not shown the existence of a binding contract between the parties, the motion is DENIED.

BACKGROUND

I. FACTUAL BACKGROUND

Except where otherwise indicated, the following facts are drawn from the Court's September 18, 2014 order granting Linden Ox's motion to expunge lis pendens. See Dkt. No. 43 at 1-4. I include them here for ease of reference.

The property at issue is a residential estate located in Atherton, California. In early 2014, Linden Ox listed the property for sale through its real estate agent, Mary Gullixson. On May 12, 2014, Kum Tat executed a Real Estate Purchase Contract (" REPC") offering to purchase the property for $38 million. Lam Decl. ¶ 2, Ex. A (Dkt. No. 27). The offer provided that the purchase price would include all the property's furniture, artwork, and other furnishings, and that Linden Ox would be required to submit an " exclusion list" -- i.e., a list of such items to be excluded from the sale -- within five days of accepting the offer. At the time, the property's furniture, artwork, and other furnishings were valued in the millions of dollars.

The REPC includes an arbitration provision, which Kum Tat initialed. It provides in relevant part:

ARBITRATION OF DISPUTES: By initialing Paragraph 29B . .., Buyer and Seller agree to submit any disputes between them concerning and/or arising out of this Contract to binding arbitration if those disputes are not resolved by mediation . . . Arbitration shall be conducted pursuant to Title 9 of the California Code of Civil Procedure including, but not limited to, the right of discovery under Section 1283.05.

Lam Decl., Ex. A § 29.B. The REPC also contains a choice-of-law provision that states, " This Contract and all other documents referenced in this Contract shall be governed by, and shall be construed according to, the laws of the State of California." Id. § 27.I.

Kum Tat sent the offer to Linden Ox on May 19, 2014. Gullixson Decl. ¶ 6 (Dkt. No. 5). On May 21, 2014, Linden Ox responded with a counteroffer to sell the property for $39.5 million. The counteroffer provided that, at the close of escrow, Kum Tat would pay an additional $3.5 million for the property's furnishings, excluding certain artwork and other items. Although the counteroffer specifically identified several pieces of art and other furnishings for exclusion, it did not enumerate all such items to be excluded from the sale. To that end, the counteroffer required Linden Ox to submit an exclusion list within seven days of Kum Tat's acceptance of the counteroffer; Kum Tat would then approve the list within seven days of receiving it. Linden Ox initialed the REPC's arbitration provision as part of the counteroffer. Lam Decl. ¶ 3, Ex. B.

Kum Tat did not accept the counteroffer. Instead, on May 25, 2014, Kum Tat countered at $41 million for the property and all its furnishings, excluding certain artwork and other personal items. Like Linden Ox's counteroffer, Kum Tat's counteroffer specifically identified several pieces of art and other furnishings for exclusion but did not enumerate all such items to be excluded. It provided instead that Linden Ox would submit an exclusion list to Kum Tat, which Kum Tat would then " review ...


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