Verizon Wireless v. Villasenor

















Filed 2/7/13 Verizon Wireless v. Villasenor CA4/1

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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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.





COURT OF APPEAL, FOURTH APPELLATE DISTRICT



DIVISION
ONE



STATE
OF CALIFORNIA






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VERIZON WIRELESS (VAW), LLC, Plaintiff and Respondent, v. MARISOL VILLASENOR, Defendant and Appellant.

D060986 (Super. Ct. No. 37-2010-00074865- CU-PA-SC)

APPEAL from
a judgment of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">San Diego
County, William S. Cannon, Judge. Affirmed.



Marisol
Villasenor appeals from a judgment confirming an arbitration award in favor of
Verizon Wireless (VAW), LLC (Verizon).
Villasenor also appeals from the court's earlier order granting
Verizon's motion to compel arbitration.href="#_ftn1" name="_ftnref1" title="">[1] We reject Villasenor's contentions and affirm
the judgment.

FACTUAL
AND PROCEDURAL BACKGROUND

In 1996,
Verizon's predecessor in interest (AirTouch Cellular) leased property in Chula
Vista from the property owner, Sin Fin
Corporation. The property was to be used
for a cell phone tower and support building.
The written lease agreement (Lease) was for an initial five-year term
with four options to extend. The Lease
required the lessor to execute necessary documents for permits and contained an
arbitration provision requiring
arbitration for "all controversies or claims arising out of or relating to
this Lease."href="#_ftn2" name="_ftnref2"
title="">[2]


Six years
later, in 2002, Verizon acquired AirTouch Cellular and became the tenant on the
property and began paying rent. The next
year, in about August 2003, Villasenor purchased the property and took title
subject to the Lease. Although the Lease
itself was not recorded, Villasenor had notice of the Lease through her
purchase agreement and a recorded Memorandum of Lease incorporating the Lease
terms by reference. Beginning in January
2004 and during the next five or six years, Verizon paid monthly rent to
Villasenor and Villasenor accepted each rent payment.

In January
2010, Verizon filed a petition in the superior court seeking to compel
arbitration of various disputes between Verizon and Villasenor. Verizon attached a copy of the Lease that had
been signed by the parties' predecessors in interest, Sin Fin Corporation and
AirTouch Cellular. Verizon submitted a
declaration from one of its managers indicating that Verizon was a successor in
interest to AirTouch Cellular and that Villasenor was a successor to the
original landlord. The manager also
attached a letter reflecting that Villasenor's agent had previously
acknowledged that Verizon was AirTouch Cellular's successor tenant on the
property.

Villasenor
opposed the petition on several grounds:
(1) Villasenor was unaware of the arbitration provision because the
Memorandum of Lease was the only recorded document putting her on notice of the
Lease, and this document did not contain the arbitration provision; (2) Verizon
was in default of the Lease for unpaid rent; (3) Verizon failed to renew
necessary governmental permits for the cell tower; (4) Verizon's notice to
exercise its option violated the Lease terms; and (5) the arbitration clause
was unconscionable. Villasenor did not
raise any challenge to the fact that Verizon was a tenant on the property and a
proper successor party to the original tenant on the Lease.

After
considering the papers and holding a hearing, the court found Villasenor's
contentions did not provide a basis for refusing to enforce the contractual
arbitration provision. Villasenor filed
a writ petition challenging the order.
We summarily denied the petition.

Several
months later, in October 2010, an arbitration hearing was held in which both
parties were represented by counsel and both parties presented documentary
evidence and witness testimony. At the
hearing, Villasenor reasserted her argument that the arbitration was an
improper forum for the parties' disputes because she was not the original
signatory on the Lease and was unaware of the Lease terms. Villasenor additionally argued that: (1) Verizon owed back rent for several months
in 2003 when Villasenor first acquired the property; (2) Verizon did not
properly exercise its option under the Lease terms and thus the Lease was
terminated; and (3) Verizon was in default of the Lease because Verizon failed
to renew its governmental permit.
Verizon opposed these arguments, and asserted that Villasenor breached
the Lease by refusing to: (1) execute
documents necessary to renew its governmental permit; and (2) recognize
Verizon's proper exercise of its option to extend the Lease term.

After
considering the parties' arguments and evidence, the arbitrator (Retired
Superior Court Judge Richard Haden) found in Verizon's favor. With respect to Villasenor's argument that
the matter should not be in the arbitration forum, Judge Haden stated:

"Villasenor objects to the
arbitration forum because she was not an original signator of the lease and
claims the party from whom she purchased the property never provided her a
copy. However, her purchase agreement
provides seller shall provide buyer with all current leases . . . . Further, she must have known she had a lease
with Verizon because she has accepted their rent for five years . . . . The lease provides any controversies arising
out of the lease shall be resolved by binding arbitration at JAMS . . . . As a rent-paying tenant under the lease,
Verizon is entitled to arbitration. See Melchor
Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587. The covenant to arbitrate, like the covenant
to pay rent, runs with the land. The
lessor-lessee relationship involves both privity of contract and privity of
estate. [Citation.]"



On the
parties' remaining claims, Judge Haden found:
(1) Villasenor did not prove Verizon owed any money for back rent, and
in any event the statute of limitations expired on this claim; (2) Verizon
properly exercised its option to extend the Lease; and (3) Verizon is not
liable for failing to renew its permit because Villasenor refused to cooperate
with city requirements for obtaining the permit. Judge Haden ordered Villasenor to cooperate
with Verizon and issued a final award finding Verizon was the prevailing party
entitled to reasonable attorney fees and costs of $55,700.50.

Verizon
then moved to confirm the award in superior court. (Code Civ. Proc., §§ 1285, 1293.2.) Villasenor (in propria persona) opposed the
motion and petitioned to vacate the arbitration award, arguing that the award
must be set aside because there was no contractual relationship between herself
and Verizon and therefore the arbitrator had no jurisdiction to hear the
matter. In support, she submitted two
lengthy declarations discussing (primarily on information and belief) facts
relevant to the parties' assumption of the Lease from their predecessors in
interest.

In her
declaration, Villasenor said that when she purchased the property in August
2003, she understood Verizon was a lessee on the premises. The seller told Villasenor that she no longer
had a copy of the lease, but gave Villasenor a copy of the recorded Memorandum
of Lease document. Villasenor said she
was told by the seller that "while
Air Touch Cellular was the tenant which executed the subject lease, that
Verizon Wireless had become Air Touch Cellular and that Verizon Wireless made
all lease payments under the agreement." (Italics added.) Villasenor further stated that it "is my
understanding from my review of the public records filed on behalf of Verizon
Wireless that Verizon Wireless was a new entity created in 2000 AFTER the
purchase of Air Touch Cellular by Great Britain
based Vodafone in 1999. Months later,
Vodafone merged with Atlantic Bell.
Allegedly, Verizon was created out of a merger of the assets of these
companies and their holdings."
Based on these asserted facts, Villasenor requested the court to vacate
the arbitration award, claiming that there has never been a lease contract
between herself and Verizon and thus the arbitrator "exceeded his powers .
. . ."

In reply
Verizon submitted a lengthy declaration from its manager Steven Wechsler
explaining the manner in which Verizon acquired ownership over the prior tenant
(AirTouch Cellular) and that the prior landlord was given notice of this change
in February 2002.href="#_ftn3" name="_ftnref3"
title="">[3] Wechsler also asserted that Verizon was an
" 'affiliate' " of AirTouch Cellular under the Lease, and
therefore no landlord approval was required for the assignment.

Villasenor
later submitted an additional declaration, stating she was not aware of the
contents of the Lease when she purchased the property, nor was she ever aware
the Lease contained an arbitration provision.


After
considering the papers, the court denied Villasenor's motion to vacate the
award and granted Verizon's motion to confirm the arbitration award. The court also awarded Verizon $1,440 in
attorney fees incurred in bringing the motion to confirm.

DISCUSSION

Villasenor
appeals from the order granting Verizon's motion to compel arbitration and the
orders confirming the arbitration award and denying her motion to vacate the
award. We address these challenges
separately.

I. Order
Compelling Arbitration

Villasenor
first contends the court erred in granting Verizon's motion to compel primarily
because the parties were not signatories to the original Lease agreement. In examining this contention, we review only
the facts that were before the court when it ruled on the motion. (See In
re Zeth S. (2003) 31 Cal.4th 396, 405.)

A. Applicable
Legal Principles

A party to
an arbitration agreement may petition the court to compel other parties to
arbitrate a dispute governed by their agreement. (Code Civ. Proc., § 1281.2; see Jones v.
Jacobson (2011) 195 Cal.App.4th 1, 15 (Jones);
Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.) The petitioner bears the burden of proving by
a preponderance of the evidence the existence of a valid arbitration agreement
and that the dispute falls within the scope of the href="http://www.fearnotlaw.com/">arbitration clause. (See Jones,
supra, 195 Cal.App.4th at p. 15.)
When the party seeking arbitration was not a signatory to the
arbitration agreement, the party must also show its right to enforce the
agreement. (Ibid.)

Although
generally only a signatory to a contract can enforce a contractual arbitration
clause, there are exceptions to this rule.
(Jones, supra, 195 Cal.App.4th
at pp. 16-18; Boucher v. Alliance Title
Co., Inc. (2005) 127 Cal.App.4th 262, 268.)
Three exceptions are relevant here.


First, a
successor in interest or an assignee of a signatory party has the right to
enforce contractual provisions, including an arbitration provision. (See California
Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96
Cal.App.4th 598, 605; Whittaker v. Otto (1961)
188 Cal.App.2d 619, 624; K. & M.,
Inc. v. LeCuyer (1951) 107 Cal.App.2d 710, 716-717.) In this case, the Lease specifically stated
that "each and every covenant and condition herein is intended to benefit
the Premises and shall extend to and bind the heirs, personal representatives,
successors and assigns of the parties hereto."

Second,
under California law, when a tenant assigns a lease, the new tenant — while in
possession of the property — is bound by the arbitration clause, even if the
new tenant did not expressly assume the lease obligations. (Melchor
Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587, 592-593 (>Melchor); accord, Kelly v. Tri-Cities
Broadcasting, Inc. (1983) 147 Cal.App.3d 666, 679.) "An arbitration clause
in a lease is held to 'touch and concern' and 'run with' the land . . . . Thus, an assignee or sublessee >in possession of the property may compel
and be compelled to arbitrate disputes regardless of whether he or she assumed
the lease." (Knight et al., Cal.
Practice Guide: Alternative Dispute Resolution (The Rutter
Group 2011) ¶ 5:277, p. 5-198.2.) Under
these principles, a tenant in possession of the property may compel arbitration
against the lessor, regardless whether the tenant specifically assumed the
obligations of the lease. (See >Melchor, supra, 3 Cal.App.4th at pp.
592-593.)

Third,
under an estoppel theory, a nonsignatory party is bound by an arbitration
provision in the contract if the party obtained direct benefits from the
contract and/or sought to enforce other provisions in the contract. (See JSM
Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237-1239; >Boucher v. Alliance Title Co., Inc., supra,
127 Cal.App.4th at pp. 268-273.)

In
reviewing a court's order granting a motion to compel arbitration, we examine
the court's factual findings under the substantial evidence standard and review
the court's legal conclusions under the de novo standard. (See Bono
v. David (2007) 147 Cal.App.4th 1055, 1061-1062; City of Vista v. Sutro & Co. (1997) 52 Cal.App.4th 401,
407.)

B. Analysis

On appeal,
Villasenor contends the court erred in granting Verizon's motion to compel
arbitration because Verizon did not sign the original Lease. The argument lacks merit. In support of its motion to compel, Verizon
submitted a declaration of one of its managers who indicated that Verizon was
the successor in interest to the signatory party (AirTouch Cellular) and that
Verizon is currently in possession of the property. Verizon additionally submitted letters
written by Villasenor's agent acknowledging that Verizon was in possession of
the property, had been paying rent, and was a successor to the original
tenant. Under tenant-in-possession
principles and/or an estoppel theory, this evidence was sufficient to meet
Verizon's burden to show it was a proper party to enforce the arbitration
provision contained in the Lease. (See >Melchor, supra, 3 Cal.App.4th at pp.
592-593; Boucher, supra, 127
Cal.App.4th at pp. 269-272.)

In
opposition to the motion, Villasenor did not challenge Verizon's status as a
successor in interest and tenant-in-possession, nor did she present any
evidence to counter Verizon's right to enforce the Lease. Thus, Villasenor has waived any such
challenge on appeal. In her appellate
brief, Villasenor asserts numerous arguments concerning Verizon's corporate
status and its corporate relationship to the original signatory party (AirTouch
Cellular), and cites to various supporting documents. Because Villasenor never raised these arguments
or presented these documents in the motion to compel proceedings, these
arguments are waived. (See> Brantley v. Pisaro (1996) 42
Cal.App.4th 1591, 1601.)

In any
event, even assuming Villasenor is correct regarding the details of Verizon's
assumption of the Lease, a tenant in possession has the right to enforce an
arbitration provision in an existing lease regardless of how the tenant came
into the possession. (>Melchor, supra, 3 Cal.App.4th at pp.
592-593; Kelly v. Tri-Cities
Broadcasting, Inc., supra, 147 Cal.App.3d at p. 679; Knight, et al., Cal.
Practice Guide: Alternative Dispute Resolution, supra, ¶ 5:277, p. 5-198.2.)
This is particularly true where, as here, Villasenor obtained the
benefits of the Lease by knowingly accepting Verizon's rent payments for many
years and seeking to enforce other terms of the Lease. (See Boucher,
supra, 127 Cal.App.4th at pp. 269-272.)

Villasenor
alternatively argues that she was not
bound by the arbitration provision because she was unaware of the Lease terms. However, she provided no supporting evidence
in opposition to Verizon's motion to compel.
A landlord who is an assignee of a lease is presumed to know the
contents of the lease. An assignee
stands in the shoes of the assignor with respect to contract terms, and the
relevant knowledge is that of the original landlord. (See 1 Witkin, Summary of Cal. Law (10th ed.)
Contracts, § 734.) Additionally, because the undisputed evidence
shows that Villasenor had been collecting rent payments under the Lease from
Verizon for at least five years, she was estopped from denying the existence of
the Lease agreement with Verizon. (See >Boucher, supra, 127 Cal.App.4th at pp.
271-273.)

Villasenor's
reliance on Benasra v. Marciano
(2001) 92 Cal.App.4th 987 is misplaced.
In that case the court held an individual is not bound to an arbitration
agreement if he signed the agreement solely in his corporate capacity. That holding has no relevance to the specific
issues before us.

During oral
argument, Villasenor's counsel argued for the first time that under a recent
California Supreme Court decision pertaining to arbitration provisions in
CC&R's, an arbitration provision in a lease is not binding on successor
parties unless the lease is recorded. (>Pinnacle Museum Tower Assn. v. Pinnacle
Market Development (US), LLC (2012) 55 Cal.4th 223 (Pinnacle).) The argument is
waived because it was not raised in Villasenor's appellate brief filed after
the Pinnacle decision was issued.

Moreover,
counsel's argument has no merit. In >Pinnacle, the issue was whether a
developer could compel the arbitration of disputes with a homeowners
association based on an arbitration provision in the governing CC&R's. (Pinnacle,
supra, 55 Cal.4th at pp. 231-232.)
The court held that under the Davis-Stirling Act, each condominium unit
owner is deemed to have accepted the terms in a recorded declaration, and thus an arbitration clause contained in
the recorded declaration is subject to enforcement against the homeowners
association. (Id. at pp. 236-246.) This
holding does not suggest an arbitration provision in a lease cannot be enforced
against a successor party unless the lease was recorded. In Pinnacle,
the recording was an essential part of the court's holding because—under the
applicable statutes—it is the act of recording that binds the later-purchasing
individual condominium purchasers and the homeowners association to the
CC&R's terms. (Id. at pp. 236-238.) There
is no similar statutory recording requirement applicable to private lease agreements.

The trial
court did not err in granting Verizon's motion to compel arbitration.

II. Order
Confirming Arbitration Award and Denying Motion To Vacate

Villasenor
next contends the court erred in confirming the arbitration award and denying
her motion to vacate the award.

A. Applicable
Legal Principles

California
law reflects a " 'strong public policy in favor of arbitration as a
speedy and relatively inexpensive means of dispute resolution' [and therefore]
courts will ' "indulge every intendment to give effect to such
proceedings." '
[Citations.]" (Moncharsh
v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh).) To further that policy, arbitration awards
are generally final. (Id. at p.
10.) Unless the parties' contract
expressly provides otherwise or certain exceptional circumstances exist, courts
may review an arbitration award only on the extremely narrow statutory grounds
identified in Code of Civil Procedure sections 1286.2 and 1286.6. (Id.
at pp. 27-28, 32; see Cable Connection,
Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1340; Richey v. AutoNation, Inc. (2012) 210 Cal.App.4th 1516, 1524-1526; Pierotti
v. Torian (2000) 81 Cal.App.4th 17, 23-26.)

Code of
Civil Procedure section 1286.2 authorizes a court to vacate an arbitration
award if (1) "[t]he award was procured by corruption, fraud or other undue
means"; (2) "[t]here was corruption in any of the arbitrators; (3)
"[t]he rights of the party were substantially prejudiced by misconduct of
a neutral arbitrator"; (4) "[t]he arbitrators exceeded their powers
and the award cannot be corrected without affecting the merits of the decision
upon the controversy submitted"; (5) the arbitrator substantially
prejudiced a party's rights by refusing to postpone the hearing despite a
showing of good cause or by refusing to hear material evidence; or (6) the
arbitrator failed to make the required disclosures or disqualify himself or
herself based upon a proper request.
Code of Civil Procedure section 1286.6 sets forth the limited
circumstances under which a court may correct and then confirm the award.

Unless the
parties' agreement expressly provides otherwise or exceptional circumstances
exist, courts may not review an arbitrator's decision for errors of law
or fact, nor may they review an arbitrator's reasoning or the sufficiency of
the evidence to support his or her award.
(Moncharsh, supra,
3 Cal.4th at p. 11; see Cable Connection,
Inc. v. DIRECTV, Inc., supra, 44 Cal.4th at p. 1340.)

B. Analysis

Villasenor
contends the trial court erred in confirming the award because Verizon was not
a proper party to the Lease and thus the arbitration agreement was
unenforceable. She relies on facts she
presented for the first time in responding to Verizon's motion to confirm the
arbitration award. However, Villasenor
raised the issue of enforceability of the arbitration clause in the superior
court before proceeding to arbitration.
Thus, all evidence relevant to the issue should have been presented at
that time. In ruling on the motion to
confirm, the trial court properly rejected Villasenor's attempts to relitigate
the issue in the superior court on new facts.

Moreover,
Villasenor requested the arbitrator to rule on the issue of the enforceability
of the arbitration provision, and the arbitrator ruled against Villasenor based
on the factual record before it. The
arbitrator's ruling is binding on the trial court and on this court. The correctness of an arbitrator's factual or
legal conclusion is not a basis to vacate an arbitration award.

In apparent
recognition of the limited grounds upon which an arbitration award can be
vacated, Villasenor sets forth several arguments in support of her claim the
arbitrator "exceeded [its] powers."
None has merit.

For
example, Villasenor claims the arbitrator "exceeded" his authority in
concluding Verizon was a party to the Lease and that she was bound by the
agreement despite that she had no knowledge of the agreement. However, Villasenor raised these issues at
the arbitration hearing, and in response to her arguments the arbitrator found
Verizon had the right to enforce the contract terms as a
"rent-paying" tenant in possession of the property and that
Villasenor had constructive knowledge of the Lease terms based on her purchase
agreement and on the recorded Memorandum of Lease. Given the comprehensive nature of the
arbitration provision and the issues presented to the arbitrator by the
parties, these conclusions were within the scope of the arbitrator's authority.

Villasenor
also contends the arbitrator exceeded his jurisdiction when he ruled on issues
other than payment of rent. For example,
Villasenor contends the arbitrator's order requiring that she execute the
documents necessary for Verizon to obtain a conditional use permit from the
city was beyond the court's jurisdiction because this Lease requirement does
not "run[ ] with the land." This argument is unsupported. The arbitrator's ruling that Villasenor must
reasonably cooperate with her tenant in obtaining a new permit for the cell tower
was not beyond the arbitrator's jurisdiction.


Villasenor
devotes much of her brief to discussing legal and factual issues raised during
the arbitration proceeding and/or the new evidence presented for the first time
at the motion to compel/vacate proceeding.
However, in ruling on a petition to confirm and/or vacate an arbitration
award, neither the trial court nor the appellate court has the power to review
the merits of the issues determined during arbitration or to consider new
evidence that could have been — but was not — presented at the hearing. The sole task of the trial court and this
court is to determine whether there was any statutory ground for vacating the
award. Because there were none, the
court did not err and we do not further discuss these issues.href="#_ftn4" name="_ftnref4" title="">[4]

DISPOSITION

Judgment affirmed.
Appellant to bear respondent's costs on appeal.







HALLER, J.



WE CONCUR:







NARES, Acting P. J.







O'ROURKE, J.