Cobb v. Ironwood Country Club

Appeal from an order of the Superior Court of Riverside County, No. INC1205888 Harold W. Hopp, Judge.

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COUNSEL

Green, Bryant & French, Matthew T. Poelstra; Boudreau Williams and Jon R. Williams for Defendant and Appellant.

Robert L. Bouchier for California State Club Association as Amici Curiae on behalf of Defendant and Appellant.

Slovak Baron Empey Murphy & Pinkney, Thomas S. Slovak and Charles L. Gallagher for Plaintiffs and Respondents.

Arbogast and Bowen and David M. Arbogast for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Respondents.

OPINION

RYLAARSDAM, J.

Ironwood Country Club (Ironwood or the Club) appeals from an order denying its motion to compel arbitration of the declaratory relief action brought by plaintiffs William S. Cobb, Jr., and Elizabeth Richards, who are former members of Ironwood, and Patrick J. Keeley and Helen Riedstra, who are current members. The motion to compel was based on an arbitration provision Ironwood incorporated into its bylaws four months after plaintiffs’ complaint was filed. Ironwood argues (1) that its new arbitration provision was fully applicable to this previously filed lawsuit because the lawsuit concerned a dispute which was “ongoing” between the parties, and (2) that its right to amend its bylaws meant that any such amendment would be binding on both current and former members.

The trial court disagreed, reasoning that Ironwood’s subsequent amendment of its bylaws was insufficient to demonstrate that any of these plaintiffs agreed to arbitrate this dispute, and that if Ironwood’s basic premise were

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accepted, it would render the agreement illusory. We agree with both conclusions and affirm the order.

When one party to a contract retains the unilateral right to amend the agreement governing the parties’ relationship, its exercise of that right is constrained by the covenant of good faith and fair dealing which precludes amendments that operate retroactively to impair accrued rights. Plaintiffs certainly did not agree to any such illegal impairment in this case.

And Ironwood’s basic premise, which is that each member’s agreement to the bylaw provision allowing for future amendments to its bylaws means those members are automatically bound by whatever amendments the Club makes in accordance with that provision – even after the members have resigned their membership ...