Promenade at Playa
Western Pacific Housing
Filed 12/6/12 Promenade at Playa Vista
HOA v. Western Pacific Housing CA2/1
Opinion following remand from Supreme Court
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
ONE
PROMENADE AT PLAYA VISTA
HOMEOWNERS ASSOCIATION,
Plaintiff and Respondent,
v.
WESTERN PACIFIC HOUSING, INC.,
et al.,
Defendants and Appellants.
B225086
(Los Angeles
County
Super. Ct.
No. BC424950)
APPEAL from
an order of the Superior Court
of
County, Emilie H. Elias, Judge. Reversed with directions.
Wood,
Smith, Henning & Berman, Stephen J. Henning, Sheila E. Fix, Tracy M.
Lewis and Robert G. Amundson for Defendants and Appellants.
Fenton
Grant Mayfield Kaneda & Litt, Daniel H. Clifford, Joseph Kaneda and Bruce Mayfield
for Plaintiff and Respondent.
___________________________________________
This appeal
presents the question of whether, in response to a construction defect action
brought by a condominium homeowners association, the developer can compel
binding arbitration of the litigation pursuant to an arbitration provision in
the declaration of covenants, conditions, and restrictions (CC&R’s). The answer is yes.
The facts
and allegations in this appeal are taken from the pleadings, the exhibits
submitted in connection with the motion
to compel arbitration, and the standard procedure for creating a common
interest development.
Defendants
Western Pacific Housing, Inc., and Playa Capital Company, LLC (Developers),
constructed, marketed, and sold a 90-unit condominium complex located on West
Pacific Promenade in Playa Vista, California.
Before the homeowners association (Association) came into existence or a
single unit was sold, the Developers drafted and recorded the CC&R’s. Only the Developers signed that document.
The
CC&R’s contained a mandatory arbitration
provision, requiring that any disputes between the Developers, on the one
hand, and the Association or a condominium owner, on the other hand, be
submitted to binding arbitration.
According to its terms, the provision could not be amended without the
consent of the Developers. The
CC&R’s made the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1–16) applicable
in interpreting and enforcing the arbitration provision.
Sales of
the units began in 2004. In addition to
the CC&R’s, each “Purchase Agreement and Escrow Instructions†contained a
mandatory arbitration provision, requiring that postclosing disputes between
the Developers and the buyer be submitted to binding arbitration. The purchase agreements, unlike the
CC&R’s, were signed by both the Developers and the buyer.
Initially,
the members of the Association’s board of directors were appointed by the
Developers. Ultimately, the Developers
sold all the units and no longer had any ownership interest in the
complex. The owners replaced the initial
board members with individuals of their own choosing.
On October 29, 2009, the
Association filed this action against the Developers, alleging construction
defects in the roofs, stucco, windows, and doors, and the structural,
electrical, plumbing, and mechanical components and systems. The Developers responded with a motion to
compel arbitration, relying on the arbitration provision in the CC&R’s and
the individual purchase agreements.
The Association filed opposition,
contending the CC&R’s did not permit the Developers to compel arbitration
because they were equitable servitudes, not a contract, and, alternatively, if
they were a contract, enforcement was barred because the contract was
unconscionable. The Association also
pointed out that 30 of the original buyers had sold their units, and the
arbitration provision in their purchase agreements with the Developers did not
apply to the subsequent purchasers.
The motion
was heard on April 12, 2010. By order of the same date, the trial court
denied the motion to compel. The Developers appealed.
This case
is before us for the second time. In
Western Pacific Housing, Inc. (Nov. 8, 2011, B225086), we affirmed the
trial court, concluding that the CC&R’s, including the arbitration
provision, were equitable servitudes, not a contract, and that only the
Association or a condominium owner — not the Developers — could
compel arbitration under the CC&R’s.
On December 16, 2011, the
Developers filed a petition for review with the California Supreme Court. On January 25,
2012, the court granted the petition but deferred further action in
the case “pending consideration and disposition of a related issue in
Market Development S186149.†(
2012) 136 Cal.Rptr.3d 667.)
On
August 16, 2012, the Supreme Court filed its opinion in
Market Development (US), LLC (2012) 55 Cal.4th 223 (
transferred this case back to us “with directions to vacate [our] decision and
to reconsider the cause in light of Pinnacle[, supra,] 55 Cal.4th
223.†(Promenade at Playa Vista Homeowners Assn. v. Western Pacific Housing,
Inc. (Cal. 2012) 148 Cal.Rptr.3d 496.)
The parties did not file any supplemental briefs. (See Cal. Rules of Court,
rule 8.200(b).)
In
under the FAA, a developer can compel the arbitration of disputes with a
homeowners association based on an arbitration provision in the
CC&R’s. The high court concluded
that the CC&R’s, including the arbitration provision, constitute an
enforceable contract (Pinnacle,
pp. 236–246) and that such an arbitration
provision is not unconscionable (id.
at pp. 246–251).
Our prior
decision in this case is inconsistent with Pinnacle. Accordingly, the trial court’s order denying
the motion to compel arbitration must be reversed, and, on remand, the trial
court must grant the motion.
The prior opinion in this case is vacated, the trial
court’s order denying the motion to compel arbitration is reversed, and, on
remand, the trial court shall enter a new order granting the motion to compel
arbitration. Appellants are entitled to
NOT TO BE PUBLISHED.
MALLANO,
P. J.
We concur:
CHANEY, J.
JOHNSON, J.
